Quarterly report
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2026 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 001-36896 CHAINCE DIGITAL HOLDINGS INC. (Exact name of registrant as specified in its charter) Cayman Islands 57-1150621 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1251 Avenue of the Americas, Floor 41 10020 New York, NY (Zip Code) (Address of principal executive offices) (949) 678-9653 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of exchange on which registered Ordinary Shares, par value US$0.004 per share CD NASDAQ Global Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of ordinary shares of the registrant outstanding as of August 14, 2026 was 110,003,800.
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CHAINCE DIGITAL HOLDINGS INC. AND SUBSIDIARIES INDEX TO FORM 10-Q FOR THE QUARTER ENDED June 30, 2026 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Unaudited Consolidated Balance Sheets 2 Unaudited Consolidated Statements of Operations 4 Unaudited Consolidated Statements of Changes in Shareholders’ Equity 7 Unaudited Consolidated Statements of Cash Flows 9 Notes to Unaudited Condensed Consolidated Financial Statements 11 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 58 ITEM 4. Controls and Procedures 58 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 59 ITEM 1A. Risk Factors 59 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 59 ITEM 3. Defaults Upon Senior Securities 59 ITEM 4. Mine Safety Disclosures 59 ITEM 5. Other Information 59 ITEM 6. Exhibits 60 SIGNATURES 61 i
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Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, including statements based on our current expectations, assumptions, estimates and projections about us and our industry. In some cases, these forward-looking statements can be identified by words or phrases such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “going forward,” “intend,” “ought to,” “plan,” “project,” “potential,” “seek,” “may,” “might,” “can,” “could,” “will,” “would,” “shall,” “should,” “is likely to” and the negative form of these words and other similar expressions. The forward-looking statements included in this Quarterly Report relate to, among others: ● our business strategies and objectives; ● the development and growth of our financial services and advisory businesses, including capital markets advisory, brokerage and related professional services; ● our ability to expand our client base, strengthen strategic partnerships and enhance our service offerings; ● our expectations regarding the demand for financial advisory and capital markets services; ● competition within the financial services and advisory industry; and ● general economic, financial market and business conditions that may affect our operations and financial performance. These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations could later be found to be incorrect. Our actual results could be materially different from our expectations. You should thoroughly read this Quarterly Report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements. Forward-looking statements speak only as of the date the statements are made. Except as required under the federal securities laws and rules and regulations of the United States Securities and Exchange Commission, we undertake no obligation to update or revise forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Foreign Private Issuer Status The Company currently qualifies as a “foreign private issuer” under Rule 3b-4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Beginning with its Annual Report on Form 10-K for the fiscal year ended December 31, 2025, the Company has voluntarily elected to file periodic and current reports with the Securities and Exchange Commission (the “SEC”) using domestic issuer forms, including Forms 10-K, 10-Q and 8-K, in lieu of forms customarily used by foreign private issuers, including Forms 20-F and 6-K. 1
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PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. dollars, except for number of shares and per share data) Note June 30, 2026 December 31, 2025 ASSETS: Current assets: Cash and cash equivalents 6 30,973,382 33,820,069 Clearing deposit 90,065 132,536 Short-term investments 7 12,803,368 2,243,567 Stablecoins 8 562,481 2,904,894 Digital assets 9 738,653 1,122,628 Accounts receivable 109,450 300,076 Interest receivable 204,502 38,056 Other receivables 10 2,212,968 2,231,491 Prepaid expenses and other current assets, net 14,833 19,807 Current assets of discontinued operations 5 19,195 2,366,332 Total current assets $ 47,728,897 $ 45,179,456 Non-current assets: Operating right-of-use assets, net 11 829,066 989,530 Property and equipment, net 16,102 7,007 Intangible assets, net 120,000 120,000 Deferred tax assets 12 249,320 112,832 Security deposit 63,648 63,648 Other long-term investments 122,600 122,600 Total non-current assets $ 1,400,736 $ 1,415,617 TOTAL ASSETS $ 49,129,633 $ 46,595,073 LIABILITIES AND SHAREHOLDERS’ EQUITY: Current liabilities: Deferred revenue 805,687 230,653 Accounts payable 271,139 149,018 Other payables 88,181 189,000 Accrued expenses and other current liabilities 222,689 459,923 Operating lease liabilities 11 346,192 270,497 Current liabilities of discontinued operations 5 — 457,985 Total current liabilities $ 1,733,888 $ 1,757,076 2
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Note June 30, 2026 December 31, 2025 LIABILITIES AND SHAREHOLDERS’ EQUITY (CONTINUED): Non-current liabilities: Lease liabilities 11 603,367 780,603 Deferred tax liabilities 12 25,200 25,200 Total non-current liabilities $ 628,567 $ 805,803 TOTAL LIABILITIES $ 2,362,455 $ 2,562,879 Commitments and contingencies 16 Shareholders’ equity: Ordinary shares ($0.004 par value, 1,000,000,000 shares authorized as of June 30, 2026, 79,443,800 and 72,883,130 shares issued and outstanding as of June 30, 2026 and December 31, 2025 respectively) 13 317,794 291,551 Subscription receivable 13 (882,360) — Additional paid-in capital 734,260,961 728,211,983 Accumulated deficit (688,004,085) (685,546,641) Accumulated other comprehensive income 1,074,868 1,075,301 Total shareholders’ equity $ 46,767,178 $ 44,032,194 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 49,129,633 $ 46,595,073 The accompanying notes are an integral part of these consolidated financial statements. 3
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In U.S. dollars, except for number of shares and per share data) For the three months ended June 30, For the six months ended June 30, Notes 2026 2025 2026 2025 Revenues: Financial services and advisory businesses 2 463,206 233,504 970,752 258,569 Total revenues $ 463,206 $ 233,504 $ 970,752 $ 258,569 Cost of revenue: Financial services and advisory businesses 2 (240,651) (93,139) (530,172) (160,551) Total cost of revenue $ (240,651) $ (93,139) $ (530,172) $ (160,551) Gross profit $ 222,555 $ 140,365 $ 440,580 $ 98,018 Operating expenses: Sales and marketing (12,918) (29,065) (34,066) (58,131) General and administrative (1,482,328) (984,740) (2,626,440) (1,698,162) Research and development (83,542) — (167,084) — Provision for doubtful accounts (41,853) — (40,795) — Total operating expenses $ (1,620,641) $ (1,013,805) $ (2,868,385) $ (1,756,293) Operating loss from continuing operations $ (1,398,086) $ (873,440) $ (2,427,805) $ (1,658,275) Interest income/(expenses), net 273,978 120,250 525,891 171,431 Other (expenses)/income, net 3 — (111) 15 (Loss)/gain from market price of short-term investment 82,191 315 19,119 3,474 Loss on market price of stablecoins and digital assets 8, 9 (110,597) (13,831) (388,967) (82,423) Gain/loss on share-based payment liability — (73,500) — (73,500) Loss before provision for income taxes $ (1,152,511) $ (840,206) $ (2,271,873) $ (1,639,278) Income tax benefits 12 103,779 58,786 136,488 154,096 Loss from continuing operations $ (1,048,732) $ (781,420) $ (2,135,385) $ (1,485,182) Discontinued operations: Loss from discontinued operations 5 (56,268) (764,932) (322,059) (1,362,648) Net loss $ (1,105,000) $ (1,546,352) $ (2,457,444) $ (2,847,830) Net loss attributable to holders of ordinary shares of Chaince Digital Holdings Inc. $ (1,105,000) $ (1,546,352) $ (2,457,444) $ (2,847,830) 4
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) For the three months ended June 30, For the six months ended June 30, Notes 2026 2025 2026 2025 (as restated) Numerator Net loss attributable to holders of ordinary shares of Chaince Digital Holdings Inc. $ (1,105,000) $ (1,546,352) $ (2,457,444) $ (2,847,830) Continuing operations (1,048,732) (781,420) (2,135,385) (1,485,182) Discontinued operations (56,268) (764,932) (322,059) (1,362,648) Denominator Weighted average shares used in calculating basic net loss per ordinary share 15 78,053,051 63,694,896 76,027,737 63,562,650 Weighted average shares used in calculating diluted net loss per ordinary share 15 78,053,051 63,694,896 76,027,737 63,562,650 Net loss per ordinary share Basic 15 (0.01) (0.02) (0.03) (0.04) Diluted 15 (0.01) (0.02) (0.03) (0.04) Net loss per ordinary share from continuing operations Basic 15 (0.01) (0.01) (0.03) (0.02) Diluted 15 (0.01) (0.01) (0.03) (0.02) Net loss per ordinary share from discontinued operations Basic 15 (0.00) (0.01) (0.00) (0.02) Diluted 15 (0.00) (0.01) (0.00) (0.02) The accompanying notes are an integral part of these consolidated financial statements. 5
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) For the three months ended June 30, For the six months ended June 30, Notes 2026 2025 2026 2025 (as restated) Net loss $ (1,105,000) $ (1,546,352) $ (2,457,444) $ (2,847,830) Change in cumulative foreign currency translation adjustment (207) (8,501) (433) (12,248) Comprehensive loss $ (1,105,207) $ (1,554,853) $ (2,457,877) $ (2,860,078) The accompanying notes are an integral part of these consolidated financial statements. 6
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In U.S. dollars, except for number of shares and per share data) Ordinary shares Accumulated Total Chaince Digital Number of shares Amount Additional paid-in Capital Accumulated deficit other comprehensive income/(loss) Subscription receivables Holdings Inc. shareholders’ equity Total Shareholders’ equity Balance as of April 1, 2026 79,409,800 317,658 733,662,716 (686,899,085) 1,075,075 (1,191,960) 46,964,404 46,964,404 Share-based compensation (Note 14) 18,000 72 24,976 — — — 25,048 25,048 Issuance of shares in the private placement (Note 13) — — — — — 309,600 309,600 309,600 Issuance of shares as consideration for professional services (Note 14) 16,000 64 573,269 — — — 573,333 573,333 Net loss — — — (1,105,000) — — (1,105,000) (1,105,000) Foreign currency translation — — — — (207) — (207) (207) Balance as of June 30, 2026 79,443,800 317,794 734,260,961 (688,004,085) 1,074,868 (882,360) 46,767,178 46,767,178 Ordinary shares Accumulated Total Chaince Digital Number of shares Amount Additional paid-in Capital Accumulated deficit other comprehensive income/(loss) Subscription receivables Holdings Inc. shareholders’ equity Total Shareholders’ equity Balance as of January 1, 2026 72,883,130 291,551 728,211,983 (685,546,641) 1,075,301 — 44,032,194 44,032,194 Share-based compensation (Note 14) 44,670 179 136,543 — — — 136,722 136,722 Issuance of shares in the private placement (Note 13) 6,500,000 26,000 5,005,000 — — (882,360) 4,148,640 4,148,640 Issuance of shares as consideration for professional services (Note 14) 16,000 64 907,435 — — — 907,499 907,499 Net loss — — — (2,457,444) — — (2,457,444) (2,457,444) Foreign currency translation — — — — (433) — (433) (433) Balance as of June 30, 2026 79,443,800 317,794 734,260,961 (688,004,085) 1,074,868 (882,360) 46,767,178 46,767,178 7
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Ordinary shares Accumulated Total Chaince Digital Number of shares Amount Additional paid-in Capital Accumulated deficit other comprehensive loss Holdings Inc. shareholders’ equity Total Shareholders’ equity Balance as of April 1, 2025 63,686,563 254,765 711,252,377 (681,750,288) 1,185,968 30,942,822 30,942,822 Share-based compensation (Note 14) 24,999 100 175,893 — — 175,993 175,993 Net loss — — — (1,546,352) — (1,546,352) (1,546,352) Foreign currency translation — — — — (8,501) (8,501) (8,501) Balance as of June 30, 2025 63,711,562 254,865 711,428,270 (683,296,640) 1,177,467 29,563,962 29,563,962 Ordinary shares Accumulated Total Chaince Digital Number of Shares Amount Additional paid-in Capital Accumulated deficit other comprehensive loss Holdings Inc. shareholders’ equity Total Shareholders’ equity (as restated) (as restated) (as restated) Balance as of January 1, 2025 62,299,897 249,218 703,098,695 (680,448,810) 1,189,715 24,088,818 24,088,818 Share-based compensation (Note 14) 41,665 167 293,155 — — 293,322 293,322 Issuance of shares in the private placement (Note 13) 1,370,000 5,480 8,036,420 — — 8,041,900 8,041,900 Net loss — — — (2,847,830) — (2,847,830) (2,847,830) Foreign currency translation — — — — (12,248) (12,248) (12,248) Balance as of June 30, 2025 63,711,562 254,865 711,428,270 (683,296,640) 1,177,467 29,563,962 29,563,962 8
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. dollars, except for number of shares and per share data) For the six months ended June 30, 2026 2025 (as restated) Cash flows from operating activities: Net loss (2,457,444) (2,847,830) Less: Net loss from discontinued operations (322,059) (1,362,648) Net loss from continuing operations (2,135,385) (1,485,182) Adjustments to reconcile net loss to net cash used in operating activities: Provision for doubtful accounts 40,795 — Depreciation of property and equipment 2,241 127,198 Exchange gains and losses 325 1,012 Loss/(gain) from market price of short-term investment (19,119) (3,474) Loss on market price of stablecoins and digital assets 388,967 82,423 Gain/loss on share-based payment liability — 73,500 Interest income from short-term investment and providing loans (87,476) (114,249) Interest cost of convertible note and borrowing Filecoins — 103,767 Share-based compensation 1,044,202 293,322 Non-cash revenue or gain (246,249) — Non-cash expenses 11,667 — Changes in operating assets and liabilities, net of effect of acquisitions: Clearing deposit 42,471 (100,445) Accounts receivable 119,831 (118,876) Other receivables 1,509,409 202,703 Prepaid expenses and other current assets (44,621) (172,081) Right-of-use assets 160,464 158,887 Deferred tax assets (136,488) (154,096) Accounts payable 215,991 — Advance from customers and deferred revenues (83,717) 285,307 Other payables 44,137 258,740 Accrued expenses and other current liabilities (412,441) (282,926) Lease liabilities (101,541) (187,281) Net cash provided by / (used in) operating activities in continuing operations $ 313,463 $ (1,031,751) Net cash used in operating activities in discontinued operations (214,835) (297,187) Net cash provided by/ (used in) operating activities $ 98,628 $ (1,328,938) The accompanying notes are an integral part of these consolidated financial statements. 9
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) For the six months ended June 30, 2026 2025 Cash flows from investing activities: Cash from receiving short-term investment interest and dividends 4,914 301 Cash from selling short-term investments 154,871 — Cash from selling cryptocurrencies 2,891,714 — Payments for purchasing digital assets (125,828) — Payments for purchasing property and equipment (11,336) — Cash paid for short-term investments (9,698,900) (1,094,896) Net cash (used in)/provided by investing activities in continuing operations $ (6,784,565) $ (1,094,595) Net cash provided by investing activities in discontinued operations — — Net cash (used in)/provided by investing activities $ (6,784,565) $ (1,094,595) Cash flows from financing activities: Issuance of ordinary shares 3,839,040 8,041,900 Convertible notes — (4,000,000) Financing costs — (375,000) Net cash provided by financing activities in continuing operations $ 3,839,040 $ 3,666,900 Net cash provided by financing activities in discontinued operations — — Net cash provided by financing activities $ 3,839,040 $ 3,666,900 Effect of exchange rate changes by continuing operations 210 53 Effect of exchange rate changes by discontinued operations — — Effect of exchange rate changes $ 210 $ 53 (Decrease)/increase in cash and cash equivalents $ (2,846,687) $ 1,243,420 Cash and cash equivalents, beginning of the period $ 33,820,069 $ 24,009,331 Cash and cash equivalents of continuing operations, end of the period 30,973,382 25,252,751 Cash and cash equivalents of discontinued operations, end of the period — — Cash and cash equivalents, end of the period $ 30,973,382 $ 25,252,751 The accompanying notes are an integral part of these consolidated financial statements. 10
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In U.S. dollars, except for number of shares and per share data) 1. ORGANIZATION AND PRINCIPAL ACTIVITIES The Company’s current continuing operations are focused on financial services and advisory businesses. Set forth below is a description of the Company’s principal business activities. Financial services and advisory businesses Since August 2022, the Company has operated in the financial services and advisory sector. Following the approval of Chaince Securities, LLC’s Continuing Membership Application (“CMA”) by the Financial Industry Regulatory Authority (“FINRA”) in March 2025, the financial services and advisory business has become the Company’s primary operating focus and a core component of its long-term strategy. These activities are conducted primarily through the Company’s wholly owned subsidiary, Chaince Securities, Inc., and its affiliated entities. Chaince Securities, LLC, a subsidiary of Chaince Securities, Inc., is a FINRA-registered broker-dealer and registered investment advisor (“RIA”). Chaince Securities, LLC provides investment banking services and related business consulting services to companies pursuing securities offerings in the U.S. capital markets, as well as investment solutions to institutional investors, high-net-worth individuals, and emerging issuers globally. The operations team is based in New York, United States, and actively conducts business with clients primarily located in the United States. In addition, Ucon Capital (HK) Limited (“Ucon”), together with its wholly owned subsidiary in the People’s Republic of China, Chaince (Shenzhen) Consulting Co., Ltd., provides business consulting and advisory services to clients in the Asia-Pacific region, with a focus on capital markets advisory, corporate restructuring, and related professional services. Discontinued operations Historically, the Company also conducted blockchain- and digital asset-related activities through Mercurity Fintech Technology Holding Inc. (“MFH Tech”), including distributed storage and computing services consisting primarily of Filecoin (“FIL”) mining operations. In December 2022, the Company acquired certain Web3 decentralized storage infrastructure, including cryptocurrency mining servers and related equipment, and commenced Filecoin mining operations. These mining operations were located in New Jersey, United States, and were operated through a third-party data center service provider. In December 2025, the Company’s Board of Directors approved a strategic decision to discontinue the Filecoin mining business, as such operations were no longer aligned with the Company’s long-term business strategy and capital allocation priorities. Following this decision, the Company ceased making new investments in Filecoin mining activities and initiated an orderly wind-down of the business. On December 12, 2025, the Company entered into a comprehensive agreement pursuant to which substantially all Filecoin mining equipment was sold to a third party. Under the terms of the agreement, the Company leased back the equipment through April 30, 2026 solely to allow existing Filecoin mining nodes to naturally expire. All of the mining nodes had ceased operations by June 30, 2026. MFH Tech will continue to exist as a legal entity following the completion of the wind-down process and may be used to conduct other digital asset-related or technology-enabled businesses in the future. The discontinuation relates solely to the Filecoin mining business and does not represent a liquidation or dissolution of MFH Tech. The results of the Filecoin mining business have been classified as discontinued operations in the accompanying consolidated financial statements for all periods presented. 11
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) As of June 30, 2026, the Company’s subsidiaries are as follows: Date of Place of Percentage acquisition/ establishment/ of legal registration incorporation ownership Subsidiaries: Chaince Securities, Inc. April 12, 2023 United States 100% Chaince Securities, LLC December 6, 2024 United States 100% Ucon Capital (HK) Limited May 21, 2019 Hong Kong 100% Chaince (Shenzhen) Consulting Co., Ltd. July 23, 2025 China 100% Mercurity Fintech Technology Holding Inc. July 15, 2022 United States 100% 2. RECLASSIFICATION AND RESTATEMENT Revenue and Cost of Revenue Presentation Reclassification Certain prior-period amounts in the consolidated statements of operations have been reclassified to conform to the current period presentation. To better reflect the Company’s current business structure and operating focus, revenues previously presented under categories such as “Business consultation services” and “Other services” have been combined and reclassified as “Financial services and advisory businesses.” In addition, certain cost of revenue items previously presented separately have been reclassified to conform to the current period presentation. These reclassifications have been applied retrospectively to the comparative prior-period presentations, including the three and six months ended June 30, 2025, to conform to the current period presentation. These reclassifications did not affect previously reported total revenues, cost of revenues, gross profit, net loss, total assets, total liabilities, shareholders’ equity, or cash flows for any period presented. Reclassification of Stablecoins and Digital Asset Fair Value Changes Certain prior-period amounts in the condensed consolidated statements of operations have been reclassified to conform to the current period presentation and to better reflect the nature of the Company’s operating activities. Historically, gains and losses arising from changes in the market prices of stablecoins and digital assets held by the Company were presented as operating items. During the current period, management reassessed the nature of these activities and determined that the Company’s current business operations are primarily focused on financial services and advisory businesses. Accordingly, passive gains or losses arising from the market price fluctuations of stablecoins and digital assets held as investments, rather than generated through active trading or investment strategies, are not considered part of the Company’s operating performance. Therefore, such gains and losses have been reclassified and presented as non-operating income or expenses in the condensed consolidated statements of operations. This presentation reflects management’s view that passive changes in the fair value of digital assets and investment holdings are financing or investment-related activities rather than operating activities. These reclassifications have been applied retrospectively to the comparative prior-period presentations, including the three and six months ended June 30, 2025, to conform to the current period presentation. These reclassifications did not affect previously reported total revenues, operating income (loss), net loss, total assets, total liabilities, shareholders’ equity, or cash flows for any period presented. 12
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Reclassification of Balance Sheet and Cash Flow Statement Presentation Reclassification of Financial Statement Presentation Certain prior-period amounts in the condensed consolidated balance sheets and consolidated statements of cash flows have been reclassified to conform to the current period presentation and to provide more transparent disclosure of the nature of the Company’s assets, liabilities, and operating activities. As of December 31, 2025, certain balances previously included within “Prepaid expenses and other current assets, net” have been separately presented as “Other receivables” in the condensed consolidated balance sheets. These balances primarily consist of loan receivables from non-related parties and other receivables from non-related parties. In addition, certain balances previously included within “Accrued expenses and other current liabilities” have been separately presented as “Other payables” and “Amounts due to related parties” in the condensed consolidated balance sheets. The Company has also revised the presentation of certain prior-period amounts in the consolidated statements of cash flows to conform to the current period presentation. Specifically, amounts previously presented within changes in “Prepaid expenses and other current assets” have been separately presented as changes in “Other receivables” and “Prepaid expenses and other current assets.” In addition, amounts previously presented within changes in “Accrued expenses and other current liabilities” have been separately presented as changes in “Other payables,” “Amounts due to related parties,” and “Accrued expenses and other current liabilities.” These reclassifications were made solely to improve the presentation and transparency of the Company’s financial position and cash flows and did not affect previously reported total assets, total liabilities, total shareholders’ equity, net loss, or net cash provided by (used in) operating activities for any period presented. Reclassification and Presentation of Discontinued Operations Certain prior-period amounts have been reclassified to reflect the presentation of the Company’s Filecoin mining business as discontinued operations. Such reclassifications were made to conform the comparative financial statement presentation with the current period presentation and did not affect previously reported total revenues, net loss, total assets, total liabilities, shareholders’ equity, or cash flows. Following the Company’s decision in December 2025 to discontinue its Filecoin mining business, the Company classified the related operations as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements — Discontinued Operations. The operating results of that business, which had previously been reported within “Distributed storage and computing services,” have been reclassified to discontinued operations. Accordingly, the comparative prior-period results of operations for the three and six months ended June 30, 2025 have been reclassified to present the Filecoin mining business as discontinued operations in the consolidated statements of operations. Cash flows attributable to the discontinued operations have also been reclassified and presented separately in the consolidated statements of cash flows. In addition, assets and liabilities directly associated with the discontinued operations have been reclassified and presented as separate line items in the condensed consolidated balance sheets for all periods presented. See Note 5 — “Discontinued Operations.” 13
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Restatement of Previously Issued Interim Financial Statements Related to Income Tax Items During the preparation of the Company’s consolidated financial statements for the three and six months ended June 30, 2026, the Company identified an error in the accounting for income taxes included in its previously issued consolidated financial statements for the three and six months ended June 30, 2025. The error related to the recognition and measurement of deferred tax assets arising from deductible losses generated by the Company’s U.S. subsidiary. In the previously issued interim financial statements, the Company considered only the U.S. federal income tax effect when calculating the deferred tax benefit associated with such deductible losses and did not appropriately consider the applicable state income tax effect. As a result, the income tax benefit, deferred tax assets, and related income tax rate reconciliation disclosures were not presented appropriately. The Company has corrected this error by revising the comparative financial information for the three and six months ended June 30, 2025 included in these condensed consolidated financial statements. The correction resulted in an increase in deferred tax assets and a corresponding adjustment to income tax benefit (expense). The correction did not have any impact on the Company’s total revenues, operating results before income taxes, cash flows, or total shareholders’ equity as of June 30, 2025. The following table summarizes the effects of the correction on the previously issued consolidated financial statements for the six months ended June 30, 2025. The amounts presented also reflect the impact of the discontinued operations reclassification described in Note 5 — “Discontinued Operations.” For the six months ended June 30, 2025 Consolidated Statements of Operations As previously reported Adjustment As restated Income tax benefits 13,334 140,762 154,096 Loss from continuing operations (2,988,592) 1,503,410 (1,485,182) Loss from discontinued operations — (1,362,648) (1,362,648) Net loss (2,988,592) 140,762 (2,847,830) For the six months ended June 30, 2025 Consolidated Statements of Cash Flows As previously reported Adjustment As restated Net loss (2,988,592) 140,762 (2,847,830) Less: Net loss from discontinued operations — (1,362,648) (1,362,648) Net loss from continuing operations (2,988,592) 1,503,410 (1,485,182) Adjustments to reconcile net (loss)/income to net cash used in operating activities: Deferred tax assets (13,334) (140,762) (154,096) Net cash used in continuing operations (1,328,938) 297,187 (1,031,751) Net cash used in discontinued operations — (297,187) (297,187) Net cash used in operating activities (1,328,938) — (1,328,938) 14
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going concern The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate continuation of the Company as a going concern. As of June 30, 2026, the Company had an accumulated deficit of approximately $688 million and incurred a net loss of approximately $2.46 million for the six months ended June 30, 2026. The Company has experienced recurring operating losses. Although the Company generated positive cash flows from operating activities during the current period, it has historically experienced negative cash flows from operating activities. These conditions, when considered in the aggregate, initially raised substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued, in accordance with ASC 205-40, Presentation of Financial Statements—Going Concern. As of June 30, 2026, the Company had cash and cash equivalents of approximately $31 million. Management believes that the Company’s existing cash resources are sufficient to fund its planned operations, capital expenditures, and working capital requirements for at least the twelve months following the issuance of these consolidated financial statements. In response to the conditions described above, management has implemented and continues to implement plans designed to improve the Company’s operating results and liquidity. These plans include (i) increasing customer acquisition efforts and expanding service offerings within the Company’s financial services and advisory businesses, which have become the Company’s primary revenue-generating activities, (ii) continuing to strengthen and expand the Company’s professional services team to support revenue growth and operational scalability, and (iii) pursuing selective growth opportunities in blockchain and digital asset solutions and AI-enabled intelligent manufacturing, where management believes the Company can leverage its existing expertise and infrastructure. Management believes that these actions, together with the Company’s current liquidity position, will enable the Company to meet its obligations as they become due and support the continued execution of its business strategy. While management’s plans are subject to inherent uncertainties, including the Company’s ability to successfully attract new clients and execute its growth initiatives, management has concluded that the implementation of these plans, combined with the Company’s available cash resources, alleviates the substantial doubt previously identified regarding the Company’s ability to continue as a going concern for a period of at least one year from the date of issuance of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. Basis of presentation and use of estimates The accompanying consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s consolidated financial statements include, but are not limited to, allowance for credit losses, useful lives of property and equipment and intangible assets, impairment of long-lived assets, long-term investments and goodwill, the valuation of cryptocurrencies, realization of deferred tax assets, uncertain income tax positions, share-based compensation, valuation of contingent consideration from business combination and purchase price allocation for business combinations and asset acquisitions. Actual results could materially differ from those estimates. 15
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Principle of consolidation The consolidated financial statements of the Group include the financial statements of the Company, its subsidiaries in which it has a controlling financial interest. The results of the subsidiaries are consolidated from the date on which the Group obtained control and continue to be consolidated until the date that such control ceases. A controlling financial interest is typically determined when a company holds a majority of the voting equity interest in an entity. All significant intercompany balances and transactions among the Company and its subsidiaries have been eliminated on consolidation. Reclassification Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on previously reported total net loss, total assets, total liabilities, shareholders’ equity, or cash flows. Business combinations The Group accounts for its business combinations using the purchase method of accounting in accordance with ASC 805 (“ASC 805”), “Business Combinations”. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Group acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. Contingent consideration is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value as of each reporting date until the contingency is resolved, and subsequent changes in fair value are recognized in earnings. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over, (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings. If an investment involves the acquisition of an asset or group of assets that does not meet the definition of a business, the transaction is accounted for as an asset acquisition. An asset acquisition is recorded at cost, which includes capitalized transaction costs, and does not result in the recognition of goodwill. The cost of the acquisition is allocated to the assets acquired on the basis of relative fair values. Discontinued operations Discontinued operations are reported in accordance with Accounting Standards Codification (“ASC”) 205-20, Presentation of Financial Statements—Discontinued Operations. A discontinued operation represents a component of the Company that has been disposed of or is classified as held for sale and that constitutes a strategic shift that has, or will have, a major effect on the Company’s operations and financial results. 16
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The results of operations of a discontinued operation are presented separately from continuing operations in the consolidated statements of operations for all periods presented. Prior period financial information has been reclassified to conform to the current period presentation. Amounts reported as discontinued operations include revenues, costs, operating expenses, impairment losses, gains or losses on disposal, and other items that are directly attributable to the discontinued component. Cash flows attributable to discontinued operations are presented separately from cash flows from continuing operations in the consolidated statements of cash flows. Prior period cash flow information has been reclassified to conform to the current period presentation. Assets and liabilities directly associated with discontinued operations are presented separately on the face of the consolidated balance sheets as current or non-current assets of discontinued operations and current liabilities of discontinued operations, as applicable. The Company does not allocate general corporate overhead or shared costs to discontinued operations unless such costs are directly attributable to the discontinued component. For foreign subsidiaries classified as discontinued operations, cumulative foreign currency translation adjustments related to such subsidiaries are reclassified from accumulated other comprehensive income to earnings upon disposal or substantial liquidation, in accordance with ASC 830, Foreign Currency Matters. Foreign currency The functional and reporting currency of the Company is the United States dollar (“U.S. dollars”, “US$” or “$”). The functional currencies of the Company’s U.S. subsidiaries, Chaince Securities, Inc., Chaince Securities, LLC, and Mercurity Fintech Technology Holding Inc., are U.S. dollars. The functional currency of the Company’s Hong Kong subsidiary, Ucon Capital (HK) Limited, is the U.S. dollar. The functional currency of the Company’s PRC subsidiary Chaince (Shenzhen) Consulting Co., Ltd is the Renminbi (“RMB”). Transactions denominated in currencies other than the respective entities’ functional currencies are re-measured into the functional currencies, in accordance with Accounting Standards Codification (“ASC”) 830 (“ASC 830”) Foreign Currency Matters, at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreign currencies are re-measured into the functional currencies at the exchange rates prevailing at the balance sheet date. All foreign exchange gains or losses are included in the consolidated statements of operations. Assets and liabilities are translated to the reporting currency at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and Revenue, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of consolidated statements of comprehensive loss. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and demand deposits placed with banks or other financial institutions which are unrestricted as to withdrawal and use and have original maturities less than three months. Security Deposit Security deposit is money that is given to a landlord, lender, or seller of a home or apartment as proof of intent to move in and care for the domicile. Clearing deposit The clearing deposit is required to support the Company’s clearing activities and is considered restricted cash, not available for general corporate use. 17
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) According to the clearing agreement signed between the Company’s subsidiary Chaince Securities, LLC (a broker-dealer firm registered with FINRA) and Velocity Clearing LLC (“Velocity”), Chaince Securities, LLC is obligated to establish an account at Velocity which shall at all times contain deposited cash, securities, or a combination of both. As of June 30, 2026, the balance of the Company’s clearing deposit account was $90,065. Short-term Investment Short-term investment represents certificates of deposits and fixed coupon notes with original maturities of greater than three months but less than a year, as well as stocks and ETFs held in the short term and readily available for sale. Allowance for Expected Credit Losses The Company adopted the Current Expected Credit Loss (“CECL”) model under ASC Topic 326 on January 1, 2020. The Company estimates expected credit losses for financial assets measured at amortized cost, including accounts receivable and other receivables, and records an allowance for expected credit losses to reflect the lifetime expected credit losses associated with these assets. Accounts receivable primarily arise from financial advisory and consulting services provided to corporate clients, including publicly listed companies and companies preparing for public offerings. Other receivables primarily consist of loans to business partners and security deposits. In estimating expected credit losses, the Company applies a risk-based grouping approach and evaluates receivables based on similar credit risk characteristics, including the type of counterparty, nature of the business relationship, historical payment experience, and financial condition of the counterparty. Expected credit losses are estimated based on management’s evaluation of: ● historical credit loss experience, ● current economic conditions, and ● reasonable and supportable forecasts. Accounts receivable are generally evaluated collectively by customer type, while certain receivables may be evaluated individually when appropriate. Loans to business partners are assessed based on the financial condition of the counterparties, the nature of the business relationship, and management’s assessment of repayment ability. Security deposits, such as office rental deposits, are generally considered to have minimal credit risk due to the contractual nature of the arrangements and the financial stability of the counterparties. Management reassesses the adequacy of the allowance for expected credit losses at each reporting date. Changes in the allowance are recorded in provision for doubtful accounts. Receivables are written off when management determines that collection is no longer probable. Stablecoins Stablecoins represent digital assets that are designed to maintain a stable value relative to a fiat currency. As of June 30, 2026, the Company’s stablecoin holdings consist of USD Coin (“USDC”) and Tether USD (“USDT”), which are blockchain-based digital tokens designed to maintain a value of one U.S. dollar per token and are commonly used for settlement and liquidity management within the digital asset ecosystem. 18
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The Company accounts for its USDC and USDT holdings as digital assets measured at fair value in accordance with ASC 350-60, Accounting for and Disclosure of Digital assets, as adopted by the Company on January 1, 2024. Stablecoins are presented separately from other digital assets when material due to their distinct economic characteristics and relatively stable value compared with other cryptocurrencies. Changes in the fair value of USDC and USDT are recognized in “Loss on market price of digital assets” (or “Gain/(loss) on digital assets”) in the consolidated statements of operations in the period in which the changes occur. Due to the nature of USDC and USDT as stablecoins designed to maintain parity with the U.S. dollar, fluctuations in fair value are generally minimal. Stablecoins are classified as current assets in the consolidated balance sheets because they are highly liquid and are typically used for transaction settlement and liquidity management within the Company’s digital asset activities. Digital assets The Company holds certain digital assets, including Bitcoin (“BTC”), Solana (“SOL”), and Filecoin (“FIL”), which are recorded as digital assets in the consolidated balance sheets. These digital assets are secured through cryptographic protocols on decentralized blockchain networks and do not represent ownership interests in any entity or contractual rights to receive cash flows. Effective January 1, 2024, the Company adopted Accounting Standards Update (“ASU”) No. 2023-08, Accounting for and Disclosure of Digital assets, which requires digital assets within the scope of the standard to be measured at fair value, with changes in fair value recognized in net income in the period in which the changes occur. Accordingly, the Company measures its digital assets at fair value at each reporting date, and changes in fair value are recognized in “Loss on market price of digital assets” in the consolidated statements of operations. The Company presents digital assets separately from other intangible assets in the consolidated balance sheets in accordance with the presentation requirements of ASU 2023-08. Digital assets that are readily convertible into cash through active markets and are expected to be sold, utilized, or otherwise converted into cash within the Company’s normal operating cycle are classified as current assets. The Company previously operated a Filecoin mining business through its subsidiary, MFH Tech. In connection with the Company’s decision to discontinue its Filecoin mining operations, certain FIL held in Filecoin node accounts that are pledged or otherwise restricted for mining operations have been reclassified to non-current assets of discontinued operations in the consolidated balance sheets. These assets are presented as non-current assets of discontinued operations because they are not expected to be realized until the underlying Filecoin mining nodes expire and the pledged FIL are released. See Note 5 – Discontinued Operations for further details. The Company determines the fair value of its digital assets based on quoted market prices in active markets for identical assets, primarily using prices from major cryptocurrency trading platforms at the reporting date. Property and equipment, net Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, as follows: Category Estimated Useful Life Estimated Residual Machinery and equipment 6 years 10% Electronics and office equipment 5 years 5% Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts, with any resulting gain or loss reflected in the consolidated statements of operations. 19
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Following the Company’s strategic decision in December 2025 to discontinue its Filecoin mining business, machinery and equipment previously used in the cryptocurrency mining operations have been reclassified as non-current assets of discontinued operations in the consolidated balance sheets. Depreciation, impairment, and gains or losses on disposal related to such assets are included within loss from discontinued operations in the consolidated statements of operations for all periods presented. Prior period amounts have been reclassified to conform to the current period presentation. Intangible Assets, net The Company’s intangible assets consist of the following categories: (a) an acquired broker-dealer license with an indefinite useful life, and (b) the right to recover certain digital assets previously seized by a local authority. Acquired broker-dealer license deemed to have an indefinite life On May 1, 2023, the Company’s U.S. subsidiary, Chaince Securities, Inc., entered into a Purchase and Sale Agreement to acquire a fully licensed broker-dealer entity for total consideration of $120,000. On November 18, 2024, Chaince Securities, Inc. received approval from the Financial Industry Regulatory Authority (“FINRA”) for the change in ownership of the broker-dealer. On December 6, 2024, Chaince Securities, Inc. obtained control of the broker-dealer and all associated rights and benefits. As the acquired entity did not contain other significant identifiable assets or liabilities, management determined that the purchase price was attributable entirely to the broker-dealer license. The broker-dealer license is considered to have an indefinite useful life because there is no legal, regulatory, contractual, or economic limit to the period over which the license is expected to contribute to the Company’s operations, provided that regulatory requirements continue to be satisfied. Accordingly, the license is classified as an indefinite-lived intangible asset and is not amortized. Instead, it is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired, in accordance with ASC 350- 30, Intangibles—Goodwill and Other. The Company’s acquired broker-dealer license is measured at cost minus impairment loss. We estimated the fair values of the acquired broker dealer license, and no impairment loss was recognized for the three and six months ended June 30, 2026. The right to recover the digital assets On February 16, 2022, certain digital assets previously held in the Company’s custody were seized by the Sheyang County Public Security Bureau in Jiangsu Province, People’s Republic of China during an investigation involving the Company’s former acting Chief Financial Officer. Based on the available information, the seized assets included approximately 95.23843 Bitcoins and 2,005,537.5 USD Coins, which were transferred from the Company’s hardware cold wallet to an external wallet outside of the Company’s control. The Company believes it retains legal recourse to seek recovery of these digital assets and therefore initially recognized an intangible asset representing the right to recover the digital assets. However, during 2023, management determined that the recovery of these assets was highly uncertain and recorded a full impairment of the related intangible asset in order to eliminate potential uncertainty in the financial statements. As of June 30, 2026, the carrying amount of the right to recover the digital assets is zero. The Company continues to pursue legal remedies to recover these assets; however, the timing and outcome of such efforts remain uncertain. 20
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Revenue recognition On January 1, 2019, the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), which superseded the revenue recognition requirements in ASC Topic 605. The Company adopted ASC 606 using the modified retrospective transition method applied to contracts that were not completed as of January 1, 2019. Results for reporting periods beginning after January 1, 2019 are presented under ASC 606, while prior period amounts continue to be reported in accordance with legacy guidance under ASC 605. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements and did not result in an adjustment to opening retained earnings. Under ASC 606, revenue is recognized when, or as, the Company satisfies a performance obligation by transferring control of a promised good or service to a customer, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. To determine the appropriate timing and amount of revenue recognition, the Company applies the following five-step model: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when, or as, the performance obligations are satisfied. The Company applies the five-step model only to contracts for which it is probable that it will collect the consideration to which it is entitled. Once a contract is determined to be within the scope of ASC 606, the Company evaluates the promised goods or services to determine whether they represent distinct performance obligations. Revenue is recognized based on the portion of the transaction price allocated to each performance obligation when that obligation is satisfied or as it is satisfied. For the six months ended June 30, 2026 and 2025, the Company’s revenues from continuing operations were derived entirely from financial services and advisory activities. Revenue previously generated from distributed storage and computing services, consisting of Filecoin mining operations, has been classified as discontinued operations and is excluded from the Company’s continuing revenue recognition policies. The Company’s revenue recognition policies for continuing operations are described below. Financial services and advisory businesses The Company provides a range of financial services and advisory offerings, including PIPE advisory and placement-related services, underwriter-related services, securities brokerage and transaction execution services, clearing-related brokerage services, IPO financial advisory and consulting services, industry-specific business advisory and consulting services, and other financial services such as escrow agent services and referral services. Contracts for financial services and advisory activities are typically evidenced by written service agreements that define the scope of services, fee arrangements, and payment terms. Each contract generally contains a single performance obligation, as the promised services are highly integrated and not separately identifiable. Revenue from financial services and advisory businesses is recognized either at a point in time or over time, depending on the nature of the services provided: ● Point-in-time revenue recognition applies to PIPE advisory services, underwriter-related services, securities brokerage and transaction execution services, clearing-related brokerage services, and referral services. Revenue is recognized when the underlying transaction is completed, the Company has satisfied its contractual obligations, and the Company has obtained an enforceable right to payment. ● Over-time revenue recognition applies to IPO financial advisory and consulting services, industry-specific business advisory and consulting services, and escrow agent services. Revenue is recognized over the service period because customers simultaneously receive and consume the benefits of the services as they are performed, the services are highly customized, and the Company has an enforceable right to payment for services performed to date. The Company measures progress toward complete satisfaction of the performance obligation using output-based methods, including milestone achievement or percentage-of-completion based on advisory deliverables. 21
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The transaction price for financial services and advisory contracts generally consists of fixed or contractually determinable consideration. Certain arrangements include success-based fees, which are recognized only when the relevant performance obligations are satisfied. The Company does not identify significant financing components in its revenue arrangements, as service periods are generally short-term or fees are prepaid. The Company evaluates whether it acts as a principal or an agent for each revenue stream. For most financial services and advisory arrangements, the Company acts as principal because it controls the services prior to transfer, is primarily responsible for fulfilling the performance obligation, and bears responsibility for service quality and outcomes. Accordingly, revenue from these arrangements is recognized on a gross basis. For referral services and certain clearing-related brokerage services, the Company acts as an agent and recognizes revenue on a net basis, equal to the commission or net amount retained. Distributed storage and computing services (discontinued operations) Revenue from distributed storage and computing services, which consisted entirely of Filecoin mining operations, is classified as discontinued operations for all periods presented. The revenue recognition policies related to such activities are disclosed separately in the Company’s discontinued operations note and are not included in the Company’s revenue recognition policies for continuing operations. Contract liabilities Contract liabilities represent advance payments received from customers for services that have not yet been satisfied under the Company’s performance obligations. These amounts are recognized as revenue when the related services are performed or when the performance obligations are otherwise satisfied. Changes in contract liabilities primarily relate to the timing difference between the Company’s satisfaction of performance obligations and the receipt of consideration from customers. During the six months ended June 30, 2026, the Company recognized revenue that was included in contract liabilities at the beginning of the period as the related services were performed. Contract liabilities are presented within advance from customers and deferred revenues in the consolidated balance sheets. The Company generally expects to recognize the related revenue within one year as the underlying services are performed. Cost of revenue Cost of revenue consists of costs directly attributable to the generation of the Company’s revenues and are recognized in the same period as the related revenues. For the six months ended June 30, 2026, the Company’s cost of revenue from continuing operations relates solely to its financial services and advisory businesses. Costs associated with distributed storage and computing services, consisting of Filecoin mining operations, have been classified as discontinued operations and are excluded from cost of revenue from continuing operations. The accounting policies for cost of revenue by business line are described below. Financial services and advisory businesses Cost of revenue for financial services and advisory businesses consists primarily of personnel-related costs, including salaries, bonuses, benefits, and share-based compensation, incurred by employees and consultants who are directly involved in providing advisory, consulting, brokerage, underwriting-related, clearing-related, escrow, referral, and other financial services. Cost of revenue also includes professional service fees and other directly attributable costs incurred in connection with the delivery of financial services and advisory engagements. Such costs are expensed as incurred and recognized in the same period as the related revenues. 22
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Certain revenue streams within financial services and advisory businesses, such as referral services, do not incur significant directly attributable costs. Accordingly, no material cost of revenue is recognized for those services. General and administrative expenses, corporate overhead, and other indirect costs are not included in cost of revenue and are presented separately in operating expenses. Distributed storage and computing services (discontinued operations) Costs related to distributed storage and computing services, which consisted entirely of Filecoin mining operations, are classified as discontinued operations for all periods presented. Such costs included depreciation of mining equipment, data center lease costs (including electricity), direct labor costs, software licensing and technical service costs, and interest costs associated with borrowings of digital assets used in mining operations. The cost recognition policies related to these activities are disclosed separately in the Company’s discontinued operations note and are not included in the Company’s cost of revenue accounting policies for continuing operations. Sales and marketing expenses Sales and marketing expenses consist primarily of project referral fees for consultation services business. These costs are expensed as incurred. Research and Development Expenses Research and development expenses primarily consist of costs incurred in connection with the development and enhancement of the Company’s technology platforms, including blockchain-related technology development, tokenization platform development, and related technical infrastructure. The Company enters into technology service arrangements with third-party service providers to support its research and development activities. Certain arrangements provide for compensation in the form of the Company’s ordinary shares. The fair value of equity instruments issued for research and development services is measured based on the fair value of the equity instruments on the grant date and is recognized as research and development expense over the applicable service period when the services are rendered. In connection with the development of the Company’s tokenization platform network, the Company issued equity instruments to a service provider for technology development services, including the development of tokenization service networks, asset token issuance and trading platforms, compliance and anti-money laundering supporting systems, and related technical architecture. The Company recognizes the related share-based compensation expense ratably over the service period as the Company receives the related research and development services. The Company evaluates whether costs incurred in connection with technology development activities qualify for capitalization in accordance with applicable accounting guidance. Costs incurred under these arrangements are expensed as incurred unless the criteria for capitalization are met. During the periods presented, the Company determined that the tokenization platform development activities did not meet the criteria for capitalization, and accordingly, the related costs were recognized as research and development expenses. Operating leases The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term. For leases with a term exceeding 12 months, an operating lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding operating lease right-of-use asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company’s incremental
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borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease. For the Company’s operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the Company’s consolidated balance sheet as an accounting policy election. Leases qualifying for the short-term lease exception were insignificant. Variable lease costs are recognized as incurred and primarily consist of common area maintenance and utility charges not included in the measurement of right of use assets and operating lease liabilities. The leasing activities of the Company during the six months ended June 30, 2026 are all for the Company to lease the office as the lessee and the Company classified them as operating leases, among which, the Company signed a long-term lease contract with a term of about 40 months for the New York office. The Company recognized right-of-use assets and lease liabilities on the consolidated balance sheet as of June 30, 2026. 23
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Income taxes The Company accounts for income taxes under the liability method in accordance with ASC Topic 740, Income Taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the periods in which those temporary differences are expected to reverse. Deferred tax assets are recognized to the extent that it is more-likely-than-not that they will be realized. In evaluating the realizability of deferred tax assets, the Company considers available positive and negative evidence, including historical operating results, projected future taxable income, the reversal of existing taxable temporary differences, and tax planning strategies. A valuation allowance is recorded to reduce 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 Company applies the provisions of ASC 740 related to accounting for uncertainty in income taxes. This guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. Tax positions are recognized only if it is more-likely-than-not that the position will be sustained upon examination by taxing authorities based on the technical merits of the position. The Company classifies interest and penalties related to uncertain tax positions, if any, as a component of income tax expense in the consolidated statements of operations. Share-based payments In the second quarter of 2017, the Company elected to early adopt ASU No. 2016-09, Compensation Stock Compensation (“ASC 718”): Improvement to Employee Share based Payment Accounting. Share options and restricted shares granted to employees and directors are accounted for under ASC 718, “Compensation – Stock compensation”. In accordance with ASC 718, the Company determines whether a share option or restricted shares should be classified and accounted for as an equity award. All grants of share options and restricted shares to employees and directors classified as equity awards are recognized in the financial statements based on their grant date fair values. Share-based payment awards with employees are measured based on the grant date fair value of the equity instrument issued, and recognized as compensation costs using the straight-line method over the requisite service period, which is generally the vesting period of the options, with a corresponding impact reflected in additional paid-in capital. The total amount of compensation cost recognized at the end of the requisite service period for an award of share-based compensation shall be based on the number of instruments for which the requisite service has been rendered (that is, for which the requisite service period has been completed). Previously recognized compensation cost shall not be reversed if an employee share option (or share unit) for which the requisite service has been rendered expires unexercised (or unconverted). To determine the amount of compensation cost to be recognized in each period, the Company shall make an entity wide accounting policy for all employee share-based payment awards to do the following: Recognize the effect of awards for which the requisite service is not rendered when the award is forfeited (that is, recognize the effect of forfeitures in compensation cost when they occur). Previously recognized compensation cost for an award shall be reversed in the period that the award is forfeited. For share-based payment awards with market conditions, such market conditions are included in the determination of the estimated grant- date fair value. If the incentivized employee does not meet the agreed market conditions on the grant-date, then the corresponding shares will be forfeited, or the corresponding percentage of the proposed shares will be forfeited in proportion to the failure to meet the market conditions. The fair value of the shares granted to employees at the grant-date is the consideration adjusted for the satisfaction of market conditions. 24
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Some awards contain a market condition. The effect of a market condition is reflected in the grant-date fair value of an award. Compensation cost thus is recognized for an award with a market condition provided that the good is delivered or the service is rendered, regardless of when, if ever, the market condition is satisfied. A change in any of the terms or conditions of share-based payment awards is accounted for as a modification of awards. The Company measures the incremental compensation cost of a modification as the excess of the fair value of the modified awards over the fair value of the original awards immediately before its terms are modified, based on the share price and other pertinent factors at the modification date. For vested awards, the Company recognizes incremental compensation cost in the period the modification occurred. For unvested awards, the Company recognizes, over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. Net loss per share Basic loss per ordinary share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted loss per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Company had stock options and restricted share units, which could potentially dilute basic loss per share in the future. To calculate the number of shares for diluted loss per ordinary share, the effect of the stock options and restricted share units is computed using the treasury stock method. Potential ordinary shares in the diluted net loss per share computation are excluded in periods of losses from operations, as their effect would be anti-dilutive. In accordance with ASC Topic 260, Earnings per Share (“ASC 260”), basic loss per share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of unrestricted ordinary shares outstanding during the year. Diluted loss per share is calculated by dividing net loss attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Contingently issuable shares, including performance-based share awards and contingent considerations to be settled in shares, are included in the computation of basic earnings per share only when there is no circumstance under which those shares would not be issued. Contingently issuable shares are included in the denominator of the diluted loss per share calculation as of the beginning of the period or as of the inception date of the contingent share arrangement, if later, only when dilutive and when all the necessary conditions have been satisfied as of the reporting period end. For contracts that may be settled in ordinary shares or in cash at the election of the Company, share settlement is presumed, pursuant to which incremental shares relating to the number of shares that would be required to settle the contract are included in the denominator of diluted loss per share calculation if the effect is more dilutive. For the contracts that may be settled in ordinary shares or in cash at the election of the counterparty, the more dilutive option of cash or share settlement is used for the purposes of diluted loss per share calculation, pursuant to which share settlement requires the number of shares that would be required to settle the contract be included in the denominator whereas cash settlement requires an adjustment to be made to the numerator for any changes in income or loss that would result as if the contract had been classified as an asset or a liability for accounting purposes during the period for a contract that is classified as equity for accounting purposes, if the effect is more dilutive. Ordinary equivalent shares consist of the ordinary shares issuable upon the exercise of the share options, using the treasury stock method. Ordinary share equivalents are excluded from the computation of diluted loss per share if their effects would be anti-dilutive. Comprehensive gain (loss) Comprehensive gain (loss) is defined as the decrease in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Comprehensive gain (loss) is reported in the consolidated statements of comprehensive loss, including net loss and foreign currency translation adjustments, presented net of tax. 25
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Segment reporting The Company operates as a single operating segment and has one reportable segment. Operating segments are identified based on the manner in which the Company’s CODM reviews financial information for purposes of assessing performance and allocating resources. The Company’s Chief Executive Officer serves as the CODM. The CODM reviews the Company’s consolidated financial results, including revenues, cost of revenues, operating expenses, and loss from continuing operations, to evaluate the Company’s financial performance and make resource allocation decisions. The CODM does not regularly review discrete financial information by business line, legal entity, product category, or geographic region for purposes of making operating decisions. Although the Company conducts business through multiple legal entities and across different jurisdictions, the Company’s operations are managed by a unified management team, and resource allocation and performance evaluation decisions are made based on the Company’s consolidated results. Accordingly, the Company has determined that it operates as one operating segment and one reportable segment. The following table presents information regularly provided to the CODM and included in the measure of segment profit or loss reviewed by the CODM for the three and six months ended June 30, 2026 and 2025: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Revenues 463,206 233,504 970,752 258,569 Significant segment expenses: Cost of revenue (240,651) (93,139) (530,172) (160,551) Sales and marketing (12,918) (29,065) (34,066) (58,131) General and administrative (1,482,328) (984,740) (2,626,440) (1,698,162) Research and development (83,542) — (167,084) — Provision for doubtful accounts (41,853) — (40,795) — Non-operating income/(expenses) and gain/(losses) 245,575 33,234 155,932 18,997 Loss before provision for income taxes $ (1,152,511) $ (840,206) $ (2,271,873) $ (1,639,278) Income tax benefits 103,779 58,786 136,488 154,096 Loss from continuing operations $ (1,048,732) $ (781,420) $ (2,135,385) $ (1,485,182) Non-operating income/(expenses) and gain/(losses) represent the aggregation of multiple non-operating income and expense items and gains and losses presented separately in the Company’s consolidated statements of operations, including, as applicable, interest income/(expenses), gains or losses from market price changes of short-term investments, gains or losses from stablecoins and digital assets, gains or losses related to share-based payment liabilities, and other non-operating income or expenses. Management believes that presenting these items in an aggregated manner in the segment reporting disclosure provides a more meaningful presentation of the information regularly reviewed by the Company’s chief operating decision maker (“CODM”) while maintaining consistency with the consolidated statements of operations. The significant segment expenses regularly provided to the CODM consist primarily of cost of revenues, sales and marketing expenses, general and administrative expenses, research and development expenses, provision for doubtful accounts, and loss on market price of stablecoins and digital assets. The CODM uses these amounts, together with the consolidated revenue and other income/(expenses) items presented above, to evaluate the Company’s operating performance, monitor cost structure, assess liquidity and capital allocation needs, and determine whether to expand or reduce resources devoted to the Company’s financial services and advisory businesses. 26
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Entity-Wide Geographic Information The Company operates as a single operating segment and has one reportable segment. Although the Company’s CODM does not regularly review discrete profit or loss information by geographic region for purposes of assessing segment performance or allocating resources, the Company provides entity-wide geographic information in accordance with ASC 280. Revenues from external customers are attributed to geographic areas based on the jurisdiction in which the relevant advisory or consulting services are primarily provided. The following table presents the Company’s revenues from continuing operations by geographic area for the three and six months ended June 30, 2026 and 2025: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Geographic area United States 404,873 182,504 801,886 207,569 Hong Kong 58,333 51,000 168,866 51,000 Total revenues $ 463,206 $ 233,504 $ 970,752 $ 258,569 Long-lived assets consist primarily of operating right-of-use assets and property and equipment. Long-lived assets exclude intangible assets, financial instruments, deferred tax assets, security deposits, long-term investments and other financial assets. Long-lived assets are attributed to geographic areas based on the physical location of the assets or the jurisdiction in which the assets are primarily used. The following table presents the Company’s long-lived assets by geographic area as of June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 Geographic area US$ US$ United States 845,168 996,537 Total long-lived assets 845,168 996,537 The Company’s Chief Executive Officer serves as the CODM and reviews the consolidated financial results of the Company on an overall basis. The CODM does not regularly review discrete financial information by business line or by geographic region for purposes of making operating decisions. Accordingly, the Company has determined that it operates as a single operating segment and, therefore, has one reportable segment. For the six months ended June 30, 2026, the Company’s revenues from continuing operations were derived primarily from its financial services and advisory businesses, which are conducted through its U.S. subsidiaries, Chaince Securities, Inc. and Chaince Securities, LLC, and its Hong Kong subsidiary, Ucon Capital (HK) Limited. Revenues from distributed storage and computing services, consisting of Filecoin mining operations, were generated through the Company’s U.S. subsidiary, MFH Tech, and have been classified as discontinued operations. Although the Company conducts business through multiple legal entities and across different jurisdictions, the Company’s operations are managed by a unified management team and business team, and resource allocation and performance evaluation decisions are made based on the Company’s consolidated results. As such, management has concluded that the Company continues to operate as a single operating segment for segment reporting purposes. 27
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Fair value measurement and financial instruments Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Company applies ASC 820, “Fair Value Measurements and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value and requires disclosures to be provided on fair value measurement. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 - inputs are based upon quoted prices for instruments traded in active markets. Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based calculation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, cash flow models, and similar techniques. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach, and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Company’s non-financial assets, including stablecoins, digital assets, intangible assets and property and equipment are measured at fair value when an impairment charge is recognized. Fair value of digital assets is based on quoted prices in active markets. The Company measures its stablecoins and digital assets at fair value on a recurring basis in accordance with ASC 820 and ASC 350-60. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 inputs are observable inputs other than quoted prices included within Level 1. Level 3 inputs are unobservable inputs. 28
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The following table presents the Company’s stablecoins and digital assets measured at fair value on a recurring basis by fair value hierarchy level as of June 30, 2026: Fair Value Level 1 Level 2 Level 3 Description US$ US$ US$ US$ Stablecoins – USDC 309,445 309,445 — — Stablecoins – USDT 253,036 253,036 — — Digital assets – Bitcoin 593,126 593,126 — — Digital assets – Solana 75,460 75,460 — — Digital assets – Filecoin, continuing operations 70,067 70,067 — — Total stablecoins and digital assets of continuing operations $ 1,301,134 $ 1,301,134 $ — $ — Digital assets – Filecoin, classified as current assets of discontinued operations 19,195 19,195 — — Total stablecoins and digital assets measured at fair value on a recurring basis $ 1,320,329 $ 1,320,329 $ — $ — The Company did not have any liabilities measured at fair value on a recurring basis as of June 30, 2026. The Company determines the fair value of stablecoins and digital assets based on quoted prices in active markets that are accessible to the Company at the measurement date. During the six months ended June 30, 2026, the Company used quoted prices from Coinbase as the pricing source for USDC, USDT, Bitcoin, Solana and Filecoin. In evaluating the principal market under ASC 820-10-35-5 and ASC 820-10-35-5A, the Company considered the market with the greatest volume and level of activity for the relevant asset that the Company could access. The Company also considered the market through which the Company has historically transacted, maintains access to liquidity, or could reasonably access liquidity for the relevant asset. The Company determined that Coinbase represented an active market accessible to the Company for the relevant stablecoins and digital assets held by the Company. Accordingly, the Company used quoted prices from Coinbase to measure the fair value of such stablecoins and digital assets. To the extent a digital asset is held in a wallet, custodial account, or Filecoin node account that is not itself an active trading market, the Company considers whether the asset can be transferred to or sold through an active market accessible to the Company. The quoted price used for fair value measurement reflects the price in the principal market accessible to the Company at the measurement date. The Company does not adjust Level 1 quoted prices for transaction costs. The Company classified the fair value measurements described above within Level 1 of the fair value hierarchy because they are based on quoted prices in active markets for identical assets. Financial instruments The carrying amounts of financial instruments, which consist of cash and cash equivalents, security deposit, short-term investment, interest receivable, equity investments, convertible notes, interest payable, accounts payable, amounts due to related parties, accrued expenses and other current liabilities, approximate their fair values due to the short-term nature of these instruments. 29
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The Company adopts ASU No.2020-06 to measure the convertible notes it issued. As ASU No.2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost and a convertible preferred stock will be accounted for as a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. Recent accounting pronouncements On December 13, 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-08, Intangibles —Goodwill and Other—Digital assets (Subtopic 350-60): Accounting for and Disclosure of Digital assets, which requires that an entity to subsequently measure assets that meet those criteria at fair value with changes recognized in net income each reporting period. The amendments in ASU 2023-08 are required to be adopted for fiscal years beginning after December 14, 2024, with early adoption permitted. The Company has decided to adopt this standard starting from the 2024 fiscal year. On November 27, 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the chief operating decision maker. The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The amendments in ASU 2023-07 are required to be adopted for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted ASU 2023-07 beginning January 1, 2025. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures because the Company operates as a single reportable segment. On December 14, 2023, FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires that entities disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The new standard is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2023-09 beginning January 1, 2025. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. On March 21, 2024, the FASB issued Accounting Standards Update No. 2024-01, Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification. This standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not currently have profits interest or similar awards. Accordingly, the adoption of ASU 2024-01 would not have a material impact on the Company’s consolidated financial statements. 4. CONCENTRATION OF RISK Customer concentration The Company’s revenues from continuing operations are derived from a limited number of customers due to the nature of its financial services and advisory engagements. For the six months ended June 30, 2026, the Company generated revenues from approximately 12 customers across its various financial services and advisory offerings. For the six months ended June 30, 2025, the Company generated revenues from financial services and advisory business from six customers. Due to the project-based nature of the Company’s services, revenue may be concentrated among a limited number of customers in a given period. The loss of one or more significant customers could have an adverse impact on the Company’s operating results. 30
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share (or ADS) data) Customers that individually represent greater than 10% of the Company’s total revenues for the three and six months ended June 30, 2026 and 2025, are as follows: For the three months ended June 30, 2026 2025 US$ % US$ % Customer A 246,249 53.2% — — Customer B 60,000 13.0% — — Customer C 48,008 10.4% — — Customer D 50,000 10.8% — — Customer E 50,000 10.8% — — Customer F — — 75,676 32.4% Customer G — — 69,935 30.0% Customer H — — 51,000 21.8% Customer I — — 23,266 10.0% For the six months ended June 30, 2026 2025 US$ % US$ % Customer A 533,540 55.0% — — Customer C 105,001 10.8% Customer F — — 75,676 29.3% Customer G — — 69,935 27.0% Customer H — — 51,000 19.7% Vendor concentration The Company’s financial services and advisory businesses primarily rely on its internal professional personnel to deliver services to clients. However, the Company may engage external professional service providers to assist in the delivery of certain projects. For the six months ended June 30, 2026, the Company engaged three external professional service providers to support certain advisory engagements. Payments to this service providers totaled approximately $250,185, representing approximately 47% of the Company’s total cost of revenues for the six months ended June 30, 2026. For the six months ended June 30, 2025, the Company engaged one external professional service provider to support certain advisory engagements. Payments to this service provider totaled approximately $27,000, representing approximately 17% of the Company’s total cost of revenues for the six months ended June 30, 2025. The Company maintains ongoing relationships with a limited number of external professional teams that are familiar with the Company’s service offerings and client engagements. The loss of these service providers could temporarily affect the Company’s ability to deliver certain services until alternative providers are engaged. 31
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share (or ADS) data) Suppliers that individually represent greater than 10% of the Company’s total purchases for the three and six months ended June 30, 2026 and 2025, are as follows: For the three months ended June 30, 2026 2025 US$ % US$ % Supplier A 83,542 77.0% — — Supplier B 25,000 23.0% — — Supplier C — — 27,000 100% For the six months ended June 30, 2026 2025 US$ % US$ % Supplier A 167,083 66.8% — — Supplier B 78,452 31.4% — — Supplier C 4,650 1.8% 27,000 100% Credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, loan receivables from non-related parties, and, to a lesser extent, accounts receivable. The Company maintains its cash and cash equivalents with financial institutions located in various jurisdictions that management believes to be of high credit quality. At times, the Company’s cash balances held with financial institutions may exceed federally insured limits or may not be fully insured, particularly for accounts maintained outside the United States. As of June 30, 2026, substantially all of the Company’s cash balances exceeded applicable insured limits. The Company’s accounts receivable are primarily derived from financial services and advisory engagements with customers located in various jurisdictions, including Hong Kong, Singapore, Malaysia, the United States, and other regions. Management performs ongoing credit evaluations of its customers and generally does not require collateral. The Company also has loan receivables from non-related parties arising from financing arrangements with certain business partners. As of June 30, 2026, the outstanding balance of such loan receivables was approximately $2.2 million. These receivables are subject to credit risk if the counterparties fail to perform under the contractual terms. Management monitors the creditworthiness of these counterparties and evaluates collectability on an ongoing basis. Historically, the Company has not experienced material credit losses and management believes that the overall credit risk associated with its financial assets is limited. 32
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share (or ADS) data) Currency convertibility risk The Company conducts its operations primarily through subsidiaries located in the United States and Hong Kong and provides services to customers across multiple jurisdictions. As a result, the majority of the Company’s transactions are denominated in U.S. dollars and, to a lesser extent, Hong Kong dollars and other foreign currencies, all of which are generally freely convertible. Foreign currency exchange rate risk The Company is exposed to foreign currency exchange rate risk primarily related to transactions denominated in currencies other than its reporting currency, the U.S. dollar. Such exposure arises from providing services to customers located in multiple jurisdictions, including Hong Kong, Singapore, Malaysia, and the United States, and from operating through subsidiaries in different geographic regions. Fluctuations in foreign currency exchange rates may affect the Company’s results of operations and financial position to the extent that assets, liabilities, revenues, or expenses are denominated in foreign currencies. While the Hong Kong dollar is currently pegged to the U.S. dollar, other currencies in which the Company conducts business are subject to market-driven exchange rate fluctuations. Management does not currently engage in hedging activities to mitigate foreign currency exchange risk and believes that such risk is not material to the Company’s consolidated financial statements for the six months ended June 30, 2026. 5. DISCONTINUED OPERATIONS In December 2025, the Company’s Board of Directors approved a strategic decision to discontinue its distributed storage and computing services business, which consisted entirely of Filecoin (“FIL”) mining operations. The Company determined that continuing the Filecoin mining business was no longer aligned with its long-term strategic direction and capital allocation priorities. This decision represents a strategic shift that is expected to have a major effect on the Company’s operations and financial results. The Filecoin mining operations were conducted through the Company’s wholly owned U.S. subsidiary, Mercurity Fintech Technology Holding Inc. (“MFH Tech”). Following the Board’s approval, the Company ceased making new investments in mining activities and initiated an orderly wind-down of the business. On December 12, 2025, the Company entered into a comprehensive agreement pursuant to which substantially all mining equipment previously used in the Filecoin mining operations was sold to a third party. Under the terms of the agreement, the Company leased back the equipment through April 30, 2026 solely to allow existing mining nodes to naturally expire. All of the mining nodes had ceased operations by June 30, 2026. Accordingly, the results of operations of the Filecoin mining business have been classified as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements—Discontinued Operations, and are presented separately from continuing operations in the consolidated statements of operations and cash flows for all periods presented. Assets and liabilities directly associated with the discontinued operations are presented separately in the consolidated balance sheets. Prior period financial information has been reclassified to conform to the current period presentation. 33
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The following table summarizes the assets and liabilities associated with the Company’s discontinued operations: June 30, 2026 December 31, 2025 Consolidated Balance Sheets US$ US$ Other receivables — 1,501,651 Prepaid expenses and other current assets, net — 101,690 Digital assets (i) 19,195 762,991 Current assets of discontinued operations $ 19,195 $ 2,366,332 Accrued expenses and other current liabilities — 457,985 Current liabilities of discontinued operations $ — $ 457,985 (i) Digital assets primarily represent Filecoin (“FIL”) generated from or used in connection with the Company’s discontinued Filecoin mining operations and held in the Filecoin node accounts of the Company’s subsidiary, MFH Tech. Following the Company’s decision in December 2025 to discontinue its distributed storage and computing services (Filecoin mining) business, FIL directly associated with the mining operations, including FIL pledged or otherwise locked in connection with the mining nodes, was classified as assets associated with discontinued operations. As of June 30, 2026, the majority of the FIL previously pledged or locked in connection with the mining nodes had been released following the expiration of the related mining nodes on or around April 30, 2026, and a substantial portion of the released FIL had been sold and converted into cash. The remaining pledged or locked FIL is expected to be released by the end of 2026. Accordingly, the remaining digital assets associated with the discontinued Filecoin mining operations are classified as current assets of discontinued operations as of June 30, 2026, as such assets are expected to be released and available for disposition within the next twelve months. The following table summarizes the results of the Company’s discontinued operations for the periods presented: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Consolidated Statements of Operations Revenue 11,275 91,675 49,002 208,009 Cost of revenue (93,995) (246,428) (269,663) (495,221) General and administrative expenses (290) — (1,424) — Gain/(loss) on market price of digital assets 26,742 (105,486) (99,974) (570,742) Impairment of Fixed assets — (504,693) — (504,693) Loss from discontinued operations $ (56,268) $ (764,932) $ (322,059) $(1,362,647) The following table summarizes the cash flows attributable to discontinued operations for the periods presented: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Consolidated Statements of Cash Flows Net loss from discontinued operations (56,268) (764,932) (322,059) (1,362,647) (Loss)/gain on market price of digital assets (26,742) 105,486 99,974 570,742 Impairment loss of property and equipment — 504,693 — 504,693 Depreciation of property and equipment — 125,903 — 125,903 Non-cash revenue of Filecoin mining (11,275) (91,675) (49,002) (208,008) Non-cash costs and expenses 2,524 84,566 11,706 252,192 Prepaid expenses and other current assets — — 76,532 — Other payables — (180,077) — (180,077) Accounts payable (157) (21,370) (31,986) 15 Net cash used in discontinued operations $ (91,918) $ (237,406) $ (214,835) $ (297,187) 34
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) 6. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of the following: June 30, December 31, 2026 2025 US$ US$ Cash (i) 4,818,498 21,820,069 Cash equivalents (ii) 26,154,884 12,000,000 Total $ 30,973,382 $ 33,820,069 (i) As of June 30, 2026, the Company’s cash includes: 1) Cash in hand of $200; 2) Demand deposit of $4,694,289 in bank accounts; 3) Cash of $124,009 in the securities investment accounts and the Coinbase account. As of December 31, 2025, the Company’s cash includes: 1) Cash in hand of $200; 2) Demand deposit of $19,959,733 in bank accounts; 3) Cash of $1,860,136 in the securities investment accounts and the Coinbase account. (ii) As of June 30, 2026, the Company’s cash equivalents were all certificates of deposits with a balance of $26,154,884 with a maturity date less than 3 months. As of December 31, 2025, the Company’s cash equivalents were all certificates of deposits with a balance of $12,000,000 with a maturity date less than 3 months. 7. SHORT-TERM INVESTMENTS Short-term investments consist of the following: June 30, December 31, 2026 2025 US$ US$ Certificate of Deposits (i) 3,112,374 2,224,404 ETF (ii) 8,710,858 1,363 Common Stock (iii) 980,136 17,800 Total short-term investments $ 12,803,368 $ 2,243,567 (i) On April 15, 2026, the Company deposited a Certificate of Deposits of $1,000,000 in East West Bank, with an annual interest rate of 3.534% and the mature date of October 12, 2026. As of June 30, 2026, the balance of this Certificate of Deposits is $1,007,483. On February 14, 2025, the Company deposited a Certificate of Deposits of $943,690.46 with a term of 180 days in East West Bank, with an annual interest rate of 3.925%. On August 24, 2025, the Company renewed the Certificate of Deposits with another term of 180 days. As of December 31, 2025, the balance of this Certificate of Deposits was $970,990. On February 20, 2026, the Company renewed the Certificate of Deposits with another term of 180 days. As of June 30, 2026, the balance of this Certificate of Deposits was $984,530. On October 7, 2025, the Company deposited a Certificate of Deposits of $1,088,000 in Morgan Stanley Private Bank, with an annual interest rate of 4.1% and the mature date of September 9, 2026. As of December 31, 2025, the balance of this Certificate of Deposits is $1,100,577. As of June 30, 2026, the balance of this Certificate of Deposits is $1,120,361. On May 2, 2025, the Company deposited a Certificate of Deposits of $150,000 with a term of 12 months in Bank of America, with an annual interest rate of 3.2%. As of December 31, 2025, the balance of this CD is $152,837. (ii) In the first half of 2026, the Company totally purchased 86,514 units ISHARES TREASURY BOND ETF as part of the investment portfolio. As of June 30, 2026, the market value of the 86,514 units ISHARES TREASURY BOND ETF was $8,709,364. On March 31, 2025, the Company purchased 2 units SPDR S&P 500 ETF as part of the investment portfolio at a cost of $1,205.52. As of December 31, 2025, the market value of the 2 units ETF was $1,363. As of June 30, 2026, the market value of the 2 units ETF was $1,494.
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(iii) As of December 31, 2025, the Company holds common stocks of KIDZ, with the amount of $17,800. As of June 30, 2026, the Company holds common stocks of KIDZ with the amount of $136, and common stocks of ZJK with the amount of $980,000. 8. STABLECOINS Stablecoins consist of the following: June 30, 2026 December 31, 2025 US$ US$ USD Coins (USDC) 309,445 2,904,894 Tether USD (USDT) 253,036 — Total Stablecoins $ 562,481 $ 2,904,894 As of June 30, 2026, the Company held 309,600 USD Coins with the carrying amount of $309,445 and 253,391 Tether USD with the carrying amount of $253,036. The movement of the stablecoins for the three and six months ended June 30, 2026 and 2025 is as follows: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Beginning balance 2,893,518 — 2,904,894 — Received 562,991 — 562,991 — Payments (2,891,714) — (2,903,381) — Gain/loss on market price changes (2,314) — (2,023) — Ending balance $ 562,481 $ — $ 562,481 $ — 35
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) 9. DIGITAL ASSETS Digital assets consist of the following: June 30, 2026 December 31, 2025 US$ US$ Filecoin 70,067 122,638 Bitcoin 593,126 875,250 Solana 75,460 124,740 Total digital assets $ 738,653 $ 1,122,628 The following table presents the quantity of each type of digital asset held by the Company and the corresponding market value used to determine the fair value of such digital assets as of June 30, 2026 and December 31, 2025. The quantities and market values presented below are based on the digital assets held by the Company as of the respective reporting dates. As of June 30, 2026 As of December 31, 2025 Custodial platforms Quantity held Cost basis Fair value Quantity held Cost basis Fair value Filecoin BitGo 0.979 1 1 0.979 1 1 Filecoin Coinbase 97858.35132 205,731 70,066 94810.22031 202,875 122,637 Bitcoin BitGo 10.00994 1,216,774 593,126 10.00994 1,216,774 875,250 Solana BitGo 1000.0004711 125,828 75,460 1000.0004711 125,828 124,740 Total digital assets $1,548,334 $ 738,653 $1,545,478 $1,122,628 The Company determines the fair value of its digital assets based on the quantities held and quoted market prices reported by the custodial platforms on which the respective digital assets are held, including BitGo and Coinbase, as of each reporting date. The fair value of each digital asset is determined by multiplying the quantity held by the applicable quoted market price reported by the respective custodial platform. For digital assets received by the Company, the initial cost basis is determined based on the quoted market price reported by the applicable custodial platform on the date the digital asset is received. Subsequent to initial recognition, digital assets are remeasured at fair value at each reporting date, with changes in fair value recognized in earnings. The movement of the digital assets for the three and six months ended June 30, 2026 and 2025 is as follows: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Beginning balance 843,968 88,039 1,122,628 156,623 Received 2,968 — 2,968 9 Gain/loss on market price changes (108,283) (13,830) (386,944) (82,423) Others — — 1 — Ending balance $ 738,653 $ 74,209 $ 738,653 $ 74,209 10. OTHER RECEIVABLES Other receivables consist of the following: June 30, December 31, 2026 2025 US$ US$ Loan receivables from non-related parties (i) 2,205,000 2,205,000 Other receivables from non-related parties 7,968 26,491 Total other receivables $ 2,212,968 $ 2,231,491 (i) On December 12, 2023, the Company entered into a loan agreement with Honor Star Ventures Limited, pursuant to which the Company provided a loan of $2,000,000 with a term of one year and an annual interest rate of 5%. On December 14, 2024, the Company entered into a supplementary agreement to extend the maturity date of the loan by an additional 12 months. On December
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14, 2025, the Company and Honor Star Ventures Limited executed a further supplementary agreement to extend the maturity of the loan for an additional 12 months. Interest on the loan accrues at an annual rate of 5% and has been paid and collected on schedule prior to each maturity extension. As of June 30, 2026, the outstanding principal balance of the loan remained $2,000,000. On September 16, 2025, the Company also entered into a loan agreement with Global Innovation Wisdom Consultant, Inc., pursuant to which the Company provided a loan of $250,000 with a term of one year. The loan is interest-free for the first three months and thereafter bears interest at a simple annual rate of 5%. As of June 30, 2026, the outstanding principal balance of the loan remained $250,000. In accordance with the Company’s allowance for expected credit losses policy under the Current Expected Credit Loss (“CECL”) model, the Company evaluates the collectability of loan receivables and other receivables on a periodic basis considering the financial condition of the counterparties, historical repayment experience, and other relevant factors. Based on this assessment, the Company recorded an allowance for expected credit losses of $45,000 related to loan receivables from non-related parties as of June 30, 2026. The allowance reflects management’s estimate of lifetime expected credit losses associated with these receivables. No allowance for credit losses was recorded for other receivables from non-related parties as management believes the credit risk associated with these balances is minimal. 36
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) 11. LEASES As of June 30, 2026, the Company had operating leases for its New York offices. The remaining lease term is 2.57 years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of June 30, 2026, the weighted average remaining lease term was 2.57 years and the weighted average discount rate was 5%. The following table presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheet. June 30, 2026 December 31, 2025 US$ US$ Right-of-use assets 829,066 989,530 Impairment of right-of-use assets — — Right-of-use assets, net 829,066 989,530 Operating lease liabilities – current 346,192 270,497 Operating lease liabilities – non-current 603,367 780,603 Total operating lease liabilities 949,559 1,051,100 The following table presents the components of the Company’s office lease expense for the three and six months ended June 30, 2026 and 2025, which are included in general and administrative expenses on the consolidated statements of operations: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Operating lease cost 92,794 81,417 186,219 164,002 Variable lease cost — — — — Operating lease expense 92,794 81,417 186,219 164,002 Short-term lease rent expense 30,024 — 66,546 4,357 Total lease expense $ 122,818 $ 81,417 $ 252,765 $ 168,359 The following table summarizes the maturity of operating lease liabilities as of June 30, 2026: US$ 2026 190,944 2027 390,640 2028 400,406 2029 33,435 Total 1,015,425 Less: imputed interest (65,866) Present value of lease liabilities 949,559 37
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) 12. INCOME TAXES Loss before income taxes The components of loss before income taxes from continuing operations were as follows: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 US$ US$ US$ US$ Domestic loss before income taxes (498,053) (409,479) (850,660) (909,075) Foreign loss before income taxes (654,458) (430,727) (1,421,213) (730,203) Total loss before income taxes (1,152,511) (840,206) (2,271,873) (1,639,278) Provision for income taxes The provision for income taxes from continuing operations was comprised of the following: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 US$ US$ US$ US$ Current: Federal — — — — State — — — — Foreign — — — — Total current income taxes — — — — Deferred: Federal (79,250) (44,891) (104,228) (110,444) State (24,529) (13,895) (32,260) (43,652) Foreign — — — — Total deferred income taxes (103,779) (58,786) (136,488) (154,096) Total income tax (benefit)/provision (103,779) (58,786) (136,488) (154,096) Deferred tax assets and liabilities The significant components of deferred income tax assets and liabilities from continuing operations were as follows: As of June 30, 2026 As of December 31, 2025 US$ US$ Deferred tax assets: Net operating losses carry forwards 343,262 206,416 Provision for doubtful accounts 83 441 Unrealized loss on short-term investments, net of tax effect 32,413 26,180 Impairment of intangible assets 238,821 238,821 Gross deferred tax assets 614,579 471,858 Less: valuation allowance (365,259) (359,026) Net deferred tax assets 249,320 112,832 Deferred tax liabilities: Temporary difference of intangible asset 25,200 25,200 Gross deferred tax liabilities 25,200 25,200 Net deferred tax liabilities 25,200 25,200 38
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The Company evaluates the realizability of its deferred tax assets on a jurisdiction-by-jurisdiction basis. In assessing the need for a valuation allowance, management considers all available positive and negative evidence, including historical operating results, cumulative losses in recent years, projections of future taxable income, the reversal of existing taxable temporary differences, and feasible tax planning strategies. Based on this assessment, management determined that it is more likely than not that a significant portion of the Company’s deferred tax assets will not be realized, primarily due to cumulative losses incurred in certain jurisdictions and the absence of sufficient objectively verifiable positive evidence to support future taxable income. Accordingly, the Company recorded a valuation allowance of $365,259 as of June 30, 2026. Deferred tax assets are recognized for deductible temporary differences and net operating loss carryforwards. Certain temporary differences, including unrealized losses on short-term investments, give rise to deferred tax assets; however, due to the Company’s valuation allowance position, no corresponding tax benefit has been recognized in the current period. Effective income tax rate reconciliation The reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate from continuing operations was as follows: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 US federal statutory tax rate 21.0% 21.0% 21.0% 21.0% Effect of foreign tax rate differential -11.6% -11.0% -12.9% -9.2% State income taxes, net of federal benefit 1.9% 1.7% 1.5% 2.1% Non-deductible expenses -0.1% 0.0% -0.1% 0.0% Utilization of prior-year net operating loss carryforwards 0.0% 0.0% 0.1% 0.0% Current year losses with no deferred tax benefit recognized -3.2% -4.7% -3.3% -5.0% Deferred tax benefit related to prior-year losses 0.0% 0.0% 0.0% 0.6% Tax effect of temporary differences subject to valuation allowance 0.9% 0.0% -0.3% 0.0% Effective income tax rate 8.9% 7.0% 6.0% 9.5% The reconciliation of income tax expense (benefit) computed at the U.S. federal statutory income tax rate to the actual income tax provision (benefit) from continuing operations was as follows: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 US federal statutory tax rate (242,027) (176,443) (477,093) (344,248) Effect of foreign tax rate differential 133,613 92,022 293,773 151,409 State income taxes, net of federal benefit (21,996) (13,895) (33,734) (34,157) Non-deductible expenses 1,030 — 2,163 — Utilization of prior-year net operating loss carryforwards — — (2,498) — Current year losses with no deferred tax benefit recognized 36,319 39,530 74,668 82,486 Deferred tax benefit related to prior-year losses — — — (9,586) Tax effect of deferred tax assets not recognized due to valuation allowance (10,718) — 6,233 — Income tax provision (benefit) (103,779) (58,786) (136,488) (154,096) 39
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) Valuation allowance The Company evaluates the realizability of its deferred tax assets on a jurisdiction-by-jurisdiction basis. In assessing the need for a valuation allowance, management considers both positive and negative evidence, including historical operating results, projections of future taxable income, the reversal of existing taxable temporary differences, and tax planning strategies. Based on this assessment, management determined that it is more likely than not that a significant portion of the deferred tax assets will not be realized, primarily due to cumulative losses incurred in certain jurisdictions and limited sources of future taxable income. Accordingly, the Company recorded a valuation allowance of $365,259 as of June 30, 2026. The valuation allowance relates primarily to net operating loss carryforwards and certain temporary differences, including unrealized losses on investments, for which realization is uncertain. 13. SHAREHOLDERS’ EQUITY On April 8, 2015, the Company completed its IPO on NASDAQ by offering 4,000,000 ADSs, representing 72 million ordinary shares at price of $10 per ADS. On April 27, 2015, the Company issued an additional 220,000 ADSs, representing 3.96 million ordinary shares to the underwriter for exercising the overallotment option at price of $10 per ADS. The total proceeds from issuance of ordinary shares upon IPO are $37,294,600, after deducting the IPO related cost of $3,000,000. Upon the completion of the IPO, all of the Company’s then outstanding Series A-1, Series A-2 and Series B preferred shares were automatically converted into 12,202,988, 122,029,877 and 30,507,471 ordinary shares respectively, and immediately after the completion of the IPO, the indebtedness owed to Mr. Maodong Xu (“Mr. Xu”), one of the Company’s shareholders, amounting to $69.4 million was converted into 124,835,802 ordinary shares. On June 8, 2015, the Company issued 741,422,780 ordinary shares to the Company’s original shareholders for the acquisition of the Company. In addition, the Company initially agreed to issue 72,000,000 ordinary shares of the Company to Mr. Xu at a purchase price of $0.5556 per share, for a total purchase price of $40,000,000. On September 7, 2015, the Company and Mr. Xu reduced the number of shares to be purchased through a supplemental agreement resulting in a final subscription amount of $15,000,000 for 27,000,000 shares. On the same date, the Company issued an additional 27,000,000 ordinary shares to Mr. Xu in relation to his additional subscription. On September 27, 2015, the Company issued and transferred 38,363,112 ordinary shares to its depositary bank representing 2,131,284 ADSs, to be issued to employees and former employees upon the exercise of their vested share options and the registration of their vested RSUs. On July 31, 2018, the Company decided to change the ADS-to-Share ratio from the ratio of one (1) ADS to eighteen (18) Shares to a new ratio of one (1) ADS to one hundred eighty (180) Shares. On May 21, 2019, the Company issued 632,660,858 ordinary shares to Unicorn’s original shareholders for the acquisition of Unicorn. On May 3, 2020, the Company issued 761,789,601 ordinary shares to NBpay’s original shareholders for the acquisition of NBpay. On May 20, 2020, the Company issued 90,000,000 ordinary shares to an investor through private placement for $300,000. On August 13, 2020, the Company issued and transferred 36,000,000 ordinary shares to its depositary bank representing 1,000,000 ADSs, to be issued to employees and former employees upon the exercise of their vested share options and the registration of their vested RSUs. On January 27, 2021 and March 3, 2021, the Company issued an aggregate of 210,000,000 ordinary shares to an investor for the private investment in public equity of $700,000. On March 1, 2021, the Company issued and transferred 394,200,000 ordinary shares to its depositary bank representing 1,095,000 ADSs, to be issued to employees and former employees upon the exercise of their vested share options and the registration of their vested RSUs. 40
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) On September 8, 2021, the Company issued 571,428,570 ordinary shares to three investors for the private investment in public equity of 105.2385 Bitcoins with a market value of $5 million. On September 27, 2021, the Company issued and transferred 399,999,960 ordinary shares to its depositary bank representing 1,111,111 ADSs, to be issued to employees and former employees upon the exercise of their vested share options and the registration of their vested RSUs. On October 19, 2021, the Company issued 571,428,570 ordinary shares to three investors for the private investment in public equity of 5,000,000 USD Coins with a market value of approximately $5 million. On November 21, 2022, the Company issued 2,423,076,922 ordinary shares to three investors for the private investment in public equity (the “PIPE”) of $3.15 million, and issued 108,000,000 ordinary shares to pay the financing service fee of the PIPE. On December 20, 2022, the Company issued 3,676,470,589 ordinary shares to two investors for the private investment in public equity (the “PIPE”) of $5 million. On December 15, 2022, the Company entered into an asset purchase agreement with Huangtong International Co., Ltd., providing for the acquisition and purchase of Web3 decentralized storage infrastructure, including cryptocurrency mining servers, cables, and other electronic devices, for an aggregate consideration of USD$5,980,000, payable in the Company’s 2,718,181,818 ordinary shares. The Company issued the 2,718,181,818 ordinary shares on December 23, 2022. On December 23, 2022, the Company entered into a Securities Purchase Agreement in connection with a private investment in public equity (the “PIPE”) financing with an accredited non-U.S. investor to offer and sell the Company’s units, each consisting of one ordinary share and three warrants for total gross proceeds of USD$5 million. The Company issued the 4,545,454,546 ordinary shares to the investor upon receiving the $5 million from the investor on January 10, 2023. On December 29, 2022, the Company’s Board of Directors approved the following: 1) the share consolidation and simultaneous change of the ADR ratio; 2) the transfer of the register of members of the Company; and 3) the termination of the deposit agreement. The Board approved the share consolidation of the authorized share capital (the “Share Consolidation”) at a ratio of four hundred (400)-for-one (1) with the par value of each ordinary share changed to US$0.004 per ordinary share. Further, as approved by the Board, the Company will effect a simultaneous change of the American Depositary Receipts (“ADRs”) to ordinary share ratio from 1-to-360 to 1-to-1 (the “ADR Ratio Change”). The Board approved the termination of the Deposit Agreement, as amended (the “Deposit Agreement”) effective on February 28, 2023, by and among the Company, Citibank, N.A., and the holders and beneficial owners of American Depositary Shares outstanding under the terms of the Deposit Agreement dated as of April 13, 2015 and as amended. On February 28, 2023, when the Share Consolidation was effective, the Company’s outstanding ordinary shares changed from 18,614,900,104 shares with a par value of $0.00001 per share to 46,538,116 shares with a par value of $0.004 per share. We have revised the number of ordinary shares amounts in the revised consolidated statements of Changes in Shareholders’ Equity for the year ended December 31, 2022 and 2021, to retroactively present our 1-for-400 share consolidation in February 2023 back to the earliest period presented as stipulated in SAB 4C. On September 8, 2023, the Company issued an aggregate of 30,000 ordinary shares to two former independent directors as compensation for their previous services, and one legal advisor as advisory fees. On November 30, 2023, the Company priced a private investment in public equity (“PIPE”) offering, through which it sold an aggregate of 14,251,781 units of its securities, each consisting of one (1) ordinary share and three (3) warrants, to one non-U.S. institutional investor at an offering price of $0.421 per unit, for the gross proceeds of $6 million, prior to the deduction of fees and offering expenses payable by the Company. The warrants are exercisable to purchase up to a total of 42,755,344 ordinary shares, for a period of three years commencing from November 30, 2023, at an exercise price of US$1.00 per ordinary share. The Company intends to utilize the net proceeds derived from the PIPE for general working capital purposes, enhancing its human capital and business development. The PIPE financing proceeds were received on December 4, 2023. In August 2024, the Company issued 10,000 ordinary shares to a former independent director as compensation for his previous services. 41
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) On December 19, 2024, the Company entered into a Securities Purchase Agreement with a non-U.S. investor (the “Purchaser”) for a private placement offering, providing the sale and issuance of 1,470,000 ordinary shares of the Company, par value $0.004 per share, for a total purchase price of US$10,010,700 at $6.81 per share (the “Offering”). The Offering was closed on December 26, 2024. Upon closing, the Company issued a total of 1,470,000 Ordinary Shares to the Purchaser following receipt of a total purchase price of US$10,010,700. On January 9, 2025, the Company entered into a Securities Purchase Agreement with a non-U.S. investor for a private placement offering, providing the sale and issuance of 1,370,000 ordinary shares of the Company, par value $0.004 per share, for a total purchase price of $8,041,900 at $5.87 per share (the “Offering”). The Offering closed on January 16, 2025. Upon closing, the Company issued a total of 1,370,000 Ordinary Shares to the Purchaser following receipt of a total purchase price of $8,041,900. On August 14, 2025, the Company entered into Securities Purchase Agreements with three investors for a private placement offering, providing for the sale and issuance of 5,357,144 ordinary shares of the Company, par value $0.004 per share, for a total purchase price of approximately $6 million at $1.12 per share (the “Offering”). The Offering was closed on August 19, 2025. On August 26, 2025, within the “First Election Period” as outlined in the Securities Purchase Agreement signed between the Company and the investor (the “Investor”) of the Unsecured Convertible Promissory Note issued by the Company, the Investor informed the Company that it intended to convert the note into the Company’s ordinary shares. The number of conversion shares equaled the amount of the principal amount being converted (the “Conversion Amount”) divided by the Conversion Price. The Conversion Amount was $3,500,000, and the Conversion Price was determined by taking 90% of the closing price of the Company’s ordinary shares on August 26, 2025, which was $4.662, resulting in 750,751 shares. On September 2, 2025, the Company issued the 750,751 shares to the Investor. In November 2025, the Company agreed to convert the accumulated unpaid interest on the Unsecured Convertible Promissory Note, amounting to $102,602.74, into the Company’s ordinary shares at the same conversion price as the principal, which is $4.662 per share. The number of conversion shares of the interest was 22,008 shares. On November 14, 2025, the Company issued the 22,008 shares to the Investor. On December 15, 2025, the Company completed a private placement with an institutional investor for gross proceeds of approximately US$6.14 million. Under the terms of the Securities Purchase Agreement, the investor purchased an aggregate of 1,000,000 ordinary shares of the Company at a per share purchase price equal to the closing price of Chaince’s ordinary shares on the Nasdaq Stock Market on December 5, 2025 ($6.14), for total gross proceeds of US$6.14 million before deducting fees and expenses. Between February 2025 and January 2026, the Company granted ordinary shares to its Chief Strategy Officer, Wilfred Zhongkei Daye, as part of his compensation arrangement. Under the terms of the agreement, the Company issued ordinary shares on a monthly basis in consideration for executive services provided during the year. Each monthly issuance represents a separate grant and is accounted for based on the fair value of the Company’s ordinary shares on the respective grant dates. As of June 30, 2026, the Company had issued 100,000 ordinary shares to him. On December 31, 2025, the Company issued an aggregate of 2,000,000 restricted ordinary shares to certain non-employee service providers, including consulting and technical service providers, as consideration for advisory and technology-related services. These share-based payments were accounted for in accordance with ASC 718, with compensation expense measured at the fair value of the Company’s ordinary shares on the respective grant dates. On January 15, 2026, the Company issued 10,000 ordinary shares to an independent director as compensation for his previous services. On February 25, 2026, the Company entered into a Securities Purchase Agreement with certain non-U.S. investors (the “Purchasers”), pursuant to which the Company agreed to issue and sell an aggregate of 6,500,000 ordinary shares, par value $0.004 per share, at a purchase price of $0.774 per share, for total gross proceeds of $5,031,000, in reliance upon the exemption provided by Rule 903 of Regulation S under the Securities Act of 1933, as amended. The Offering closed on March 16, 2026, at which time the Company issued the 6,500,000 ordinary shares to the Purchasers. As of June 30, 2026, $882,360 of the subscription proceeds had not yet been received and was recorded as a subscription receivable. On April 17, 2026, the Company issued 10,000 ordinary shares to Ms. Qian Sun, the Company’s former COO and Director, as part of the compensation arrangement related to her resignation from the Company in December 2025. On May 27, 2026, the Company issued 16,000 ordinary shares to a non-employee service provider as consideration for services provided under a service agreement. During May 2026, the Company issued an aggregate of 8,000 ordinary shares to three employees pursuant to the Company’s 2025 Equity Incentive Plan.
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As of June 30, 2026, the total number of ordinary shares outstanding was 79,443,800. 42
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) 14. SHARE-BASED COMPENSATION The Company accounts for share-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). Share-based compensation cost is measured at the grant-date fair value of the equity awards and is recognized as compensation expense over the requisite service period, which is generally the vesting period of the awards. The Company classifies share-based compensation expense based on the nature of the services received and presents such expense within cost of revenue, general and administrative expenses, or other operating expense categories, as applicable. 2025 Equity Incentive Plan On March 18, 2025, the Company adopted the 2025 Equity Incentive Plan (the “2025 Plan”), which was approved by the Company’s Board of Directors and administered by the Compensation Committee. The purpose of the 2025 Plan is to promote the success of the Company and increase shareholder value by providing equity-based incentives to attract, retain and motivate employees, directors, officers, consultants and other eligible service providers. Under the 2025 Plan, the Company is authorized to issue up to 6,300,000 ordinary shares in the form of equity-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other share-based or cash-settled awards. Awards may vest based on service conditions, performance conditions, or a combination thereof, as determined by the Compensation Committee at the time of grant. The fair value of ordinary shares is generally determined based on the closing market price on the grant date. Share-Based Compensation to Executive Officers Between February 2025 and January 2026, the Company granted equity awards to its Chief Strategy Officer (“CSO”) under the 2025 Plan as part of his compensation arrangement. The CSO’s equity compensation is structured as monthly equity grants, with each grant measured at fair value on its respective grant date and recognized as compensation expense over the related service period. Share-based compensation expense related to the CSO is included in general and administrative expenses. Employee and Director Equity Incentive Awards During the year 2025 and the six months ended June 30, 2026, the Company granted restricted ordinary shares to certain employees under the 2025 Plan. Although certain awards were legally issued during 2025, such shares are subject to service-based vesting conditions and transfer restrictions, including minimum holding periods under Rule 144 of the Securities Act of 1933, as amended. For employee awards granted in 2025 for which the first tranche of shares is scheduled to vest or be released in February 2026, the Company recognized share-based compensation expense in 2025 and the first half of 2026 based on the grant-date fair value of the awards and the portion of the requisite service period completed as of June 30, 2026. Unvested awards are subject to forfeiture if the employee fails to satisfy the applicable service conditions. The table below presents the share-based payment expenses under the 2025 Equity Incentive Plan for the three and six months ended June 30, 2026 and 2025: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 2025 Equity Incentive Plan Cost of revenues 19,223 — 38,445 — General and administrative expenses — 175,993 92,451 293,322 Total share-based compensation expense 19,223 175,993 130,896 293,322 43
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Shares Shares Shares Shares 2025 Equity Incentive Plan Outstanding at beginning of period 20,500 — 26,000 — Grant — 24,999 18,337 41,665 Vested / released (10,000) (24,999) (33,837) (41,665) Forfeited / cancelled — — — — Outstanding at end of period 10,500 — 10,500 — Weighted-Average Grant-Date Fair Value of Employee and Director Awards The weighted-average grant-date fair value of equity awards granted to employees under the 2025 Equity Incentive Plan during the six months ended June 30, 2026 was $5.04 per share. Unrecognized Compensation Cost – Employee and Director Awards As of June 30, 2026, the Company had unrecognized share-based compensation cost related to unvested employee equity awards granted under the 2025 Equity Incentive Plan. This cost is expected to be recognized over the remaining weighted-average service period of the awards, generally within the next one to three years. Shares Available for Future Grant under the 2025 Plan As of June 30, 2026, 6,164,000 ordinary shares remained available for future issuance under the 2025 Equity Incentive Plan. Non-Employee Share-Based Compensation The Company also granted restricted ordinary shares during 2025 to certain non-employee service providers, including Palantir Innovation Technologies Corporation and Power Tech Digital Trading Co., Ltd., in exchange for technology advisory and consulting services. These awards were granted pursuant to written service agreements and approved by the Board of Directors or the Compensation Committee. In February 2026, the Company entered into an advisory agreement with Sen Li to provide Asian capital market advisory services, including assistance with capital market development strategies, strategic partner expansion, client relationship maintenance, and business development activities in the Asia-Pacific region. Pursuant to the agreement, the Company agreed to compensate the advisor through the issuance of 100,000 ordinary shares over a twelve-month service period. The shares are issued monthly in arrears in accordance with the terms of the agreement. Non-employee share-based compensation is measured at the grant-date fair value of the equity instruments issued and recognized as an expense over the period during which the related services are rendered, consistent with ASC 718. Share-based compensation expense related to non-employee services is classified within operating expenses based on the nature of the services received. The table below presents the non-employee share-based payment expenses for the three and six months ended June 30, 2026 and 2025: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Non-Employee Share-Based Compensation Cost of revenues 83,542 — 167,083 — General and administrative expenses 406,250 — 573,333 — Research and development expenses 83,542 — 167,083 — Total non-employee share-based compensation expense 573,334 — 907,499 — For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Shares Shares Shares Shares
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Non-Employee Share-Based Compensation Outstanding at beginning of period 2,000,000 — 2,000,000 — Shares issued for consulting and technology services 16,000 — 16,000 — Outstanding at end of period 2,016,000 — 2,016,000 — 44
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) In December 2025, the Company issued an aggregate of 2,000,000 ordinary shares to certain non-employee service providers in exchange for consulting and technology-related services. The shares are subject to transfer restrictions under Rule 144 of the Securities Act of 1933. The shares were issued as consideration for services to be provided over a future service period. Accordingly, the Company recognizes the related share-based compensation expense over the service period in accordance with ASC 718. In May 2026, the Company issued an aggregate of 16,000 ordinary shares to one certain non-employee service provider in exchange for capital market advisory services. 15. NET LOSS PER ORDINARY SHARE Basic net loss per ordinary share is computed by dividing net loss attributable to holders of ordinary shares of the Company by the weighted-average number of ordinary shares outstanding during the period. Diluted net loss per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. For the three and six months ended June 30, 2026 and 2025, diluted net loss per ordinary share is the same as basic net loss per ordinary share because the inclusion of potential ordinary shares would be anti-dilutive. For the three months ended June 30, 2026 and 2025, the weighted-average number of ordinary shares used in the calculation of both basic and diluted net loss per share was 78,053,051 and 63,694,896, respectively. For the six months ended June 30, 2026 and 2025, the weighted-average number of ordinary shares used in the calculation of both basic and diluted net loss per share was 76,027,737 and 63,562,650, respectively. Net loss per ordinary share is presented for continuing operations, discontinued operations, and on a combined basis. Net loss from continuing operations and discontinued operations are allocated to ordinary shareholders in determining net loss per ordinary share. On December 31, 2025, the Company issued 2,000,000 ordinary shares to certain non-employee service providers in exchange for consulting and technology services to be rendered over a three-year service period commencing July 23, 2025. Although the shares were legally issued and outstanding as of the issuance date, the arrangement contains a substantive service condition. Accordingly, such shares are treated as nonvested share-based compensation for purposes of earnings per share in accordance with ASC 260 and ASC 718. The Company recognizes that portion of the shares attributable to services rendered through the reporting date as vested. For the three months ended June 30, 2026, approximately 8.3% of such shares, or 166,210 shares, were considered vested based on the proportion of the service period completed. Only the vested portion of such shares is included in the computation of weighted-average ordinary shares outstanding for basic earnings per share, and such shares are weighted based on the period outstanding. Because the shares were issued on the last day of the fiscal year, their impact on the weighted-average number of ordinary shares outstanding for the year ended December 31, 2025 was not material. The ordinary shares issued to non-employee service providers are subject to transfer restrictions under Rule 144 of the Securities Act of 1933; however, such restrictions do not affect their classification for purposes of earnings per share calculation. 45
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CHAINCE DIGITAL HOLDINGS INC. (FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.) NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (In U.S. dollars, except for number of shares and per share data) The computation of net loss per ordinary share and weighted-average ordinary shares outstanding is presented for the three and six months ended June 30, 2026 and 2025 as follows: For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 (as restated) Numerator Net loss attributable to holders of ordinary shares of Chaince Digital Holdings Inc. $ (1,105,000) $ (1,546,352) $ (2,457,444) $ (2,847,830) Continuing operations (1,048,732) (781,420) (2,135,385) (1,485,182) Discontinued operations (56,268) (764,932) (322,059) (1,362,648) Denominator Weighted average shares used in calculating basic net loss per ordinary share 78,053,051 63,694,896 76,027,737 63,562,650 Weighted average shares used in calculating diluted net loss per ordinary share 78,053,051 63,694,896 76,027,737 63,562,650 Net loss per ordinary share Basic (0.01) (0.02) (0.03) (0.04) Diluted (0.01) (0.02) (0.03) (0.04) Net loss per ordinary share from continuing operations Basic (0.01) (0.01) (0.03) (0.02) Diluted (0.01) (0.01) (0.03) (0.02) Net loss per ordinary share from discontinued operations Basic (0.00) (0.01) (0.00) (0.02) Diluted (0.00) (0.01) (0.00) (0.02) 16. COMMITMENTS AND CONTINGENCIES Operating lease commitments The Company leases certain office premises under non-cancellable leases. Rental expense under operating leases for the six months ended June 30, 2026 was $252,765. The future aggregate minimum lease payments under non-cancellable operating lease agreements were as follows: Future Periods US$ For the year ending December 31, 2026 190,944 For the year ending December 31, 2027 390,640 For the year ending December 31, 2028 400,406 For the year ending December 31, 2029 33,435 Total 1,015,425 17. SUBSEQUENT EVENTS Subsequent Financing On August 8, 2026, Chaince Digital Holdings Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain purchasers (collectively, the “Purchasers”) named on the signature pages thereto, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Offering”), an aggregate of 30,560,000 ordinary shares, par value US$0.004 per share, at a purchase price of US$0.53 per Ordinary Share. The ordinary shares were offered pursuant to the Company’s effective shelf registration statement on Form F-3 (File No. 333-287428), originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 20, 2025, as subsequently amended, and declared
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effective by the SEC on June 27, 2025, including the prospectus forming a part thereof, as supplemented by a prospectus supplement dated August 10, 2026 relating to the Offering. The closing of the Offering occurred on August 11, 2026, in accordance with the terms and conditions set forth in the Securities Purchase Agreement. Upon the closing, the Company received aggregate gross proceeds of US$16,196,800 before deducting offering expenses. A portion of the purchase price was paid in USDT and USDC, each of which was treated as functionally equivalent to U.S. dollars on a 1:1 basis pursuant to the Securities Purchase Agreement. The Company intends to use the net proceeds from the Offering for its digital asset reserve, working capital and/or general corporate purposes. The Company has evaluated subsequent events through August 14, 2026, the date on which these unaudited consolidated financial statements were available to be issued. Except for the subsequent financing described above, the Company has determined that there were no other material subsequent events requiring recognition or disclosure in the accompanying condensed consolidated financial statements. 46
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This management’s discussion and analysis is designed to provide you with a narrative explanation of our financial condition and results of operations for the three and six months ended June 30, 2026 and 2025. This section should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this report. See Unaudited Condensed Consolidated Financial Statements of Chaince Digital Holdings Inc. (formerly known as Mercurity Fintech Holding Inc.) as of December 31, 2026 and June 30, 2025, and for the three and six months ended June 30, 2026 and 2025. We also recommend that you read our management’s discussion and analysis and our audited consolidated financial statements for the fiscal year ended December 31, 2025, and the notes thereto, which appear in our Annual Report on Form 10-K for the year ended December 31, 2025, or the Annual Report, filed with the U.S. Securities and Exchange Commission, or the SEC, on March 26, 2026. Unless otherwise indicated or the context otherwise requires, all references to “our company,” “we,” “our,” “ours,” “us” or similar terms refer to Chaince Digital Holdings Inc. (formerly known as Mercurity Fintech Holding Inc.), its predecessor entities, its subsidiaries and consolidated affiliated subsidiaries. All such financial statements were prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. We have made rounding adjustments to some of the figures included in this management’s discussion and analysis. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors. RECENT DEVELOPMENTS During the six months ended June 30, 2026, the Company continued to focus on its financial services and advisory businesses as its primary line of business. No material change occurred in the Company’s principal business strategy during the period. The Company conducts its financial services operations primarily through Chaince Securities, Inc. and its affiliated entities. Chaince Securities, LLC, a subsidiary of Chaince Securities, Inc., is a FINRA-registered broker-dealer and registered investment advisor (“RIA”), and continues to provide investment banking, transaction execution, brokerage-related, and other financial advisory services to clients participating in the U.S. capital markets. In addition, Ucon Capital (HK) Limited, together with its PRC subsidiary, Chaince (Shenzhen) Consulting Co., Ltd., continued to provide business consulting and advisory services to clients in the Asia-Pacific region during the quarter. These operations remain focused on capital markets advisory, corporate consulting, and related professional services. For the six months ended June 30, 2026, the Company’s overall business operations remained consistent with the strategic direction established in 2025. Management continued to focus on expanding the Company’s financial services platform, developing its client base, and increasing revenue contribution from both IPO-related and non-IPO-related financial services engagements. Looking ahead, the Company expects to continue pursuing growth in its financial services and advisory businesses while maintaining operational discipline and supporting the expansion of its customer base across multiple service lines. As of August 11, 2026, the Company had a total of 110,003,800 ordinary shares issued and outstanding, including 109,993,800 ordinary shares held by non-affiliates. The aggregate market value of the registrant’s ordinary shares held by non-affiliates (or “Public Float”) as of August 11, 2026 was $337,680,966. This amount is based on the closing price of the ordinary shares on Nasdaq of $3.07 per share on August 11, 2026. Ordinary shares held by executive officers, directors and 10% or greater stockholders have been excluded since such persons may be deemed affiliates. As of August 11, 2026, 86,569,508 ordinary shares of the Company were freely tradable without contractual lock-up restrictions or other resale restrictions. The number of freely tradable ordinary shares differs from the Company’s Public Float because Public Float excludes shares held by affiliates, while freely tradable shares are determined based on applicable contractual and regulatory transfer restrictions. Overview The Company’s continuing operations are focused on its financial services and advisory businesses, which are conducted primarily through its wholly owned subsidiary, Chaince Securities, Inc., together with Chaince Securities, LLC and Ucon Capital (HK) Limited and its subsidiaries in China. These entities are engaged in investment banking, capital markets advisory, transaction execution, brokerage-related services, and related business consulting services. Set forth below is an update of the Company’s business lines as presented in the accompanying condensed consolidated financial statements for the six months ended June 30, 2026. 47
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Financial services and advisory businesses Since August 2022, the Company has operated in the financial services and advisory sector. Following FINRA’s approval of Chaince Securities, LLC’s Continuing Membership Application (“CMA”) in March 2025, the financial services and advisory business became the Company’s primary operating focus and remains its sole continuing business line as of June 30, 2026. These activities are conducted primarily through the Company’s wholly owned subsidiary, Chaince Securities, Inc., and its affiliated entities. Chaince Securities, LLC, a subsidiary of Chaince Securities, Inc., is a FINRA-registered broker-dealer and registered investment advisor (“RIA”). Chaince Securities, LLC provides investment banking, transaction execution, brokerage-related, and other business consulting services to companies pursuing securities offerings in the U.S. capital markets, as well as investment-related solutions to institutional investors, high-net-worth individuals, and emerging issuers. Its operations team is based in New York and primarily conducts business with clients located in the United States. In addition, Ucon Capital (HK) Limited (“Ucon”), together with its wholly owned subsidiary in the People’s Republic of China, Chaince (Shenzhen) Consulting Co., Ltd., provides business consulting and advisory services to clients in the Asia-Pacific region, with a focus on capital markets advisory, corporate restructuring, and related professional services. Discontinued Filecoin mining business Historically, the Company also conducted blockchain and digital asset-related activities through Mercurity Fintech Technology Holding Inc. (“MFH Tech”), including distributed storage and computing services consisting primarily of Filecoin (“FIL”) mining operations. In December 2025, the Company’s Board of Directors approved a strategic decision to discontinue the Filecoin mining business, as such operations were no longer aligned with the Company’s long-term business strategy and capital allocation priorities. Following this decision, the Company ceased making new investments in Filecoin mining activities and initiated an orderly wind-down of that business. On December 12, 2025, the Company entered into a comprehensive agreement pursuant to which substantially all Filecoin mining equipment was sold to a third party. Under the terms of that agreement, the Company leased back the equipment through April 30, 2026 solely to allow existing Filecoin mining nodes to naturally expire. All of the mining nodes had ceased operations by June 30, 2026. The results of the Filecoin mining business have been classified as discontinued operations in accordance with ASC 205-20 and are presented separately from continuing operations in the accompanying condensed consolidated financial statements. Prior-period financial information has been reclassified to conform to the current period presentation. MFH Tech continues to exist as a legal entity following the Company’s decision to discontinue the Filecoin mining business and may be used for other digital asset-related or technology-enabled activities in the future. The discontinuation relates solely to the Filecoin mining business and does not represent a liquidation or dissolution of MFH Tech. As of June 30, 2026, the Company’s subsidiaries are as follows: Date of Place of Percentage acquisition/ establishment/ of legal registration incorporation ownership Subsidiaries: Chaince Securities, Inc. April 12, 2023 United States 100% Chaince Securities, LLC December 6, 2024 United States 100% Ucon Capital (HK) Limited May 21, 2019 Hong Kong 100% Chaince (Shenzhen) Consulting Co., Ltd. July 23, 2025 China 100% Mercurity Fintech Technology Holding Inc. July 15, 2022 United States 100% 48
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Results of Operations Comparison of Results of Operations for the three and six months ended June 30, 2026 and 2025 The following summary of the unaudited consolidated financial data for the periods and as of the dates indicated is qualified by reference to, and should be read in conjunction with, our unaudited consolidated financial statements and related notes. Our historical results do not necessarily indicate our results to be expected for any future period. (Amounts expressed in U.S. dollars, except share data and per share data, or otherwise noted) For the three months ended June 30, Variance in 2026 2025 Amount % Revenue 463,206 233,504 229,702 98.37% Cost of revenue (240,651) (93,139) (147,512) 158.38% Gross profit $ 222,555 $ 140,365 $ 82,190 58.55% Selling and marketing expenses (12,918) (29,065) 16,147 -55.55% General and administrative expenses (1,482,328) (984,740) (497,587) 50.53% Research and development (83,542) — (83,542) — Provision for doubtful accounts (41,853) — (41,853) — Operating loss $ (1,398,086) $ (873,440) $ (524,646) 60.07% Interest income/(expenses), net 273,978 120,250 153,728 127.84% Other (expenses)/income, net 3 — 3 — Gain/loss on share-based payment liability — (73,500) 73,500 -100% Gain/loss on market price of stablecoins and digital assets (110,597) (13,831) (96,766) 699.63% Gain/(Loss) from market price of short-term investment 82,191 315 81,876 25992.38% Loss before provision for income taxes $ (1,152,511) $ (840,206) $ (312,305) 37.17% Income tax benefits 103,779 58,786 44,993 76.54% Loss from continuing operations $ (1,048,732) $ (781,420) $ (267,312) 34.21% Loss from discontinued operations (56,268) (764,932) 708,664 -92.64% Net loss $ (1,105,000) $ (1,546,352) $ 441,352 -28.54% For the six months ended June 30, Variance in 2026 2025 Amount % Revenue 970,752 258,569 712,183 275.43% Cost of revenue (530,172) (160,551) (369,621) 230.22% Gross profit $ 440,580 $ 98,018 $ 342,562 349.49% Selling and marketing expenses (34,066) (58,131) 24,065 -41.40% General and administrative expenses (2,626,440) (1,698,162) (928,278) 54.66% Research and development (167,084) — (167,084) — Provision for doubtful accounts (40,795) — (40,795) — Operating loss $ (2,427,805) $ (1,658,275) $ (769,530) 46.41% Interest income/(expenses), net 525,891 171,431 354,460 206.77% Other (expenses)/income, net (111) 15 (126) -840.00% Gain/loss on share-based payment liability — (73,500) 73,500 -100% Loss on market price of stablecoins and digital assets (388,967) (82,423) (306,544) 371.92% Gain/(Loss) from market price of short-term investment 19,119 3,474 15,645 450.35% Loss before provision for income taxes $ (2,271,873) $ (1,639,278) $ (632,595) 38.59% Income tax benefits 136,488 154,096 (17,608) -11.43% Loss from continuing operations $ (2,135,385) $ (1,485,182) $ (650,203) 43.78% Loss from discontinued operations (322,059) (1,362,648) 1,040,589 -76.37% Net loss $ (2,457,444) $ (2,847,830) $ 390,386 -13.71% Revenue Our revenues mainly represent revenues from financial services and advisory activities. Revenue previously generated from distributed storage and computing services, consisting of Filecoin mining operations, has been classified as discontinued operations and is excluded from the Company’s continuing revenue recognition policies.
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The following table sets forth the revenues of our different types of businesses: For the three months ended June 30, Variance in 2026 2025 Amount % Revenue Financial services and advisory businesses 463,206 233,504 229,702 98.37% Total revenue $ 463,206 $ 233,504 $ 229,702 98.37% For the six months ended June 30, Variance in 2026 2025 Amount % Revenue Financial services and advisory businesses 970,752 258,569 712,183 275.43% Total revenue $ 970,752 $ 258,569 $ 712,183 275.43% For the three months ended June 30, 2026 and 2025, total revenue from financial services and advisory businesses was $463,206 and $233,504, respectively, representing an increase of $229,702, or 98.37%. For the six months ended June 30, 2026 and 2025, total revenue from financial services and advisory businesses was $970,752 and $258,569, respectively, representing an increase of $712,183, or 275.43%. 49
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As disclosed in the consolidated financial statements, the Company’s revenues for 2026 and 2025 were derived entirely from financial services and advisory businesses. Revenue previously generated from distributed storage and computing services (Filecoin mining operations) has been classified as discontinued operations and is presented separately from continuing operations. Revenue Composition Revenue for the three months ended June 30, 2026 was diversified across multiple service categories, as follows: ● Industry Advisory & Consulting services: $354,582 ● IPO-related financial advisory and consulting services: $60,000 ● Transaction execution and brokerage services: $48,008 ● Other services – referral services: $616 Revenue for the six months ended June 30, 2026 was diversified across multiple service categories, as follows: ● Industry Advisory & Consulting services: $691,187 ● IPO-related financial advisory and consulting services: $173,948 ● Transaction execution and brokerage services: $105,001 ● Other services – referral services: $616 In contrast, revenue for the three months ended June 30, 2025 was primarily concentrated in: ● Industry Advisory & Consulting services: $75,676 ● IPO-related financial advisory and consulting services: $157,828 Revenue for the six months ended June 30, 2025 was primarily concentrated in: ● Industry Advisory & Consulting services: $75,676 ● IPO-related financial advisory and consulting services: $167,893 ● Other services – referral services: $15,000 The increase in revenue during 2026 was primarily attributable to: (a) a higher volume of advisory and consulting engagements; (b) increased transaction execution activities. Revenue growth reflects an expansion in both the number of engagements and the diversity of services provided during 2026 compared to 2025. Revenue Recognition Characteristics Revenue from financial services and advisory businesses is recognized in accordance with ASC 606 when performance obligations are satisfied. Depending on the nature of the engagement: ● IPO-related advisory and industry consulting services are generally recognized over time as services are performed; ● PIPE advisory and transaction execution services are generally recognized at a point in time upon completion of the relevant transaction milestone; ● Referral services are recognized when the referral obligation is fulfilled; ● Certain brokerage-related services may be presented on either a gross or net basis depending on the Company’s role in the transaction. Changes in revenue mix between 2026 and 2025 reflect an increased contribution from advisory and consulting engagements relative to referral-based activities. Cost of revenue The following table sets forth the cost of revenue of our different types of businesses: For the three months ended June 30, Variance in 2026 2025 Amount % Cost of revenue Financial services and advisory businesses (240,651) (93,139) (147,512) 158.38% Total cost of revenue $ (240,651) $ (93,139) $ (147,512) 158.38%
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For the six months ended June 30, Variance in 2026 2025 Amount % Cost of revenue Financial services and advisory businesses (530,172) (160,551) (369,621) 230.22% Total cost of revenue $ (530,172) $ (160,551) $ (369,621) 230.22% For the three months ended June 30, 2026 and 2025, total cost of revenue from financial services and advisory businesses was $240,651 and $93,139, respectively, representing an increase of $147,512, or 158.38%. For the six months ended June 30, 2026 and 2025, total cost of revenue from financial services and advisory businesses was $530,172 and $160,551, respectively, representing an increase of $369,621, or 230.22%. 50
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The increase in cost of revenue was primarily attributable to the expansion of revenue-generating activities during 2026. As disclosed above, total revenue increased by $712,183 for the six months ended June 30, 2026, compared with the six months ended June 30, 2025, driven by growth in IPO-related financial advisory services, industry advisory and consulting services, and transaction execution and brokerage services engagements. The increase in cost of revenue is consistent with the higher level of transaction volume and consulting activity during the period. Cost of revenue for financial services and advisory businesses primarily consists of: (a) salaries and benefits of advisory and project execution personnel directly involved in revenue-generating activities; (b) transaction-based compensation arrangements; (c) brokerage clearing fees and execution-related charges; and (d) directly attributable professional service costs. Gross profit/(loss) and gross profit/(loss) margin Gross profit/(loss) represents our net revenues less cost of revenue. Our gross profit/(loss) margin represents our gross profit/(loss) as a percentage of our net revenues. The following table sets forth the gross profit/(loss) and gross profit/(loss) margin of our different types of businesses: For the three months ended June 30, Variance in 2026 2025 Amount % Gross profit Financial services and advisory businesses 222,555 140,365 82,190 58.55% Total gross profit $ 222,555 $ 140,365 $ 82,190 58.55% Gross profit margin Financial services and advisory businesses 48.05% 60.11% -12.07% -20.07% Overall gross profit margin 48.05% 60.11% -12.07% -20.07% For the six months ended June 30, Variance in 2026 2025 Amount % Gross profit Financial services and advisory businesses 440,580 98,018 342,562 349.49% Total gross profit $ 440,580 $ 98,018 $ 342,562 349.49% Gross profit margin Financial services and advisory businesses 45.39% 37.91% 7.48% 19.73% Overall gross profit margin 45.39% 37.91% 7.48% 19.73% For the three months ended June 30, 2026 and 2025, gross profit from financial services and advisory businesses was $222,555 and $140,365, respectively. The Company’s results improved by $82,190, or 58.55%. For the six months ended June 30, 2026 and 2025, gross profit from financial services and advisory businesses was $440,580 and $98,018, respectively. The Company’s results improved by $342,562 for the six months ended June 30, 2026, demonstrating year-over-year improvement in profitability. Gross profit margin was 48.05% for the three months ended June 30, 2026, compared to 60.11% for the three months ended June 30, 2025. This represented a decrease of 12.07 percentage points, primarily due to a larger increase in cost of revenue. Gross profit margin was 45.39% for the six months ended June 30, 2026, compared to 37.91% for the six months ended June 30, 2025. This represented an increase of 7.48 percentage points, primarily due to increased revenue scale and improved operating leverage in the Company’s financial services and advisory businesses. The improvement in gross profit and gross margin was primarily driven by higher revenue generated from advisory and consulting engagements during the 2026 period. Although cost of revenue also increased in absolute terms due to higher personnel-related and transaction-related costs, the increase in revenue more than offset the increase in direct costs. Sales and marketing expenses Sales and marketing expenses primarily consist of (i) labor costs of sales personnel, and (ii) referral and promotion fees for businesses. These costs are expensed as incurred. The sales and marketing expenses for the three months ended June 30, 2026 and 2025 amounted to $12,918 and $29,065, respectively, all of which were attributable to labor costs of sales personnel.
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The sales and marketing expenses for the six months ended June 30, 2026 and 2025 amounted to $34,066 and $58,131, respectively, all of which were attributable to labor costs of sales personnel. The definition of our main business has undergone some restructuring in recent years, and as it becomes more well-defined, and as current structural business investments mature and begin to yield revenue, we have plans to steadily increase our marketing and promotional investment and efforts. 51
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General and administrative expenses The Company’s general and administrative expenses consist primarily of (i) salaries and benefits for employees, which are the salaries and benefits for our management, merchant service representatives and general administrative staff, (ii) office expenses, which consist primarily of office rental, maintenance and utilities expenses, depreciation of office equipment and other office expenses, and (iii) professional expenses, which consist primarily of legal expense and audit fees. The Company’s general and administrative expenses for the three months ended June 30, 2026 amounted to $1,482,328, and consisted primarily of $303,496 in employment costs, $838,821 in professional fees, and $340,011 in other office expenses. The Company’s general and administrative expenses for the six months ended June 30, 2026 amounted to $2,626,440, and consisted primarily of $567,433 in employment costs, $1,279,635 in professional fees, and $779,372 in other office expenses. The Company’s general and administrative expenses for the three months ended June 30, 2025 amounted to $984,740, consisting primarily of $667,979 in employment costs, $222,136 in professional fees, and $94,625 in other office expenses. The Company’s general and administrative expenses for the six months ended June 30, 2025 amounted to $1,698,162, consisting primarily of $893,372 in employment costs, $464,012 in professional fees, and $340,778 in other office expenses. Due to the expansion of the Company’s financial services and advisory business teams, all employee salaries and benefits, professional expenses, and office and other miscellaneous expenses have increased significantly compared to the same period in the previous year. Research and development expenses Research and development expenses consist primarily of costs incurred in connection with the development of the Company’s tokenization platform network and related blockchain infrastructure initiatives. For the three and six months ended June 30, 2026, research and development expenses were $83,542 and $167,084, respectively, compared to nil for both the three and six months ended June 30, 2025. The increase was primarily attributable to equity-based compensation recognized in connection with system development services provided under the Comprehensive Technology Services Agreement entered into on July 23, 2025 with Palantir Innovation Technologies Corporation. Pursuant to the agreement, the Company engaged the service provider to assist with the development and implementation of a tokenization platform network, including blockchain architecture design, RWA (Real World Assets) tokenization framework development, smart contract advisory, and related compliance-supporting technical systems. As consideration, the Company issued ordinary shares to the service provider, which are accounted for under ASC 718, Compensation—Stock Compensation. The equity awards granted under the agreement have a three-year service period. Accordingly, the total grant-date fair value of the shares issued is being recognized as an expense on a straight-line basis over the requisite service period. During the three and six months ended June 30, 2026, the Company recognized $83,542 and $167,084, respectively, of share-based compensation expense attributable to development-related services, which has been classified within research and development expenses in the consolidated statements of operations. The Company did not incur material research and development expenses in 2025, as no comparable system development agreements were in effect during that period. Management believes that continued investment in technology infrastructure and tokenization-related development initiatives is strategically important to support potential future blockchain- and digital asset–enabled service offerings. However, the Company will continue to evaluate the scope and pace of such investments in light of its broader capital allocation priorities and financial performance objectives. Loss on market price of stablecoins and digital assets Loss on market price of stablecoins and digital assets represents changes in the fair value of the Company’s digital assets holdings and certain cryptocurrency-denominated balances recognized in earnings during the reporting period. Effective January 1, 2024, the Company adopted ASU 2023-08, which requires in-scope digital assets to be measured at fair value at each reporting date, with changes in fair value recognized in net income. Accordingly, changes in fair value are recognized in net income in the period in which they arise. 52
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Classification Between Continuing and Discontinued Operations For presentation purposes, the Company classifies fair value changes based on the operational nature and business association of the underlying digital assets: ● Digital assets held in the wallet of the parent company, Chaince Digital Holdings Inc. (“Chaince Cayman”), are associated with treasury and corporate-level activities and are therefore classified within continuing operations. ● Filecoins held in the mining node accounts of the Company’s wholly owned subsidiary, MFH Tech, which relate directly to the Filecoin mining business, are classified within discontinued operations following the Board’s decision to wind down the distributed storage and computing services business. ● Adjustments arising from FIL-denominated receivables and payables associated with the Filecoin mining business are likewise classified within discontinued operations, as such balances are directly attributable to the mining operations. Continuing Operations For the three months ended June 30, 2026, loss on market price of stablecoins and digital assets from continuing operations totaled $110,597, consisting of: (a) loss on market price of Bitcoin of $88,694; (b) loss on market price of USD Coin of $1,959; (c) loss on market price of Solana (SOL) of $7,900; (d) loss on market price of Filecoin (held outside the mining node structure) of $11,690; and (e) loss on market price of Tether USD of $354. For the six months ended June 30, 2026, loss on market price of stablecoins and digital assets from continuing operations totaled $388,967, consisting of: (a) loss on market price of Bitcoin of $282,124; (b) loss on market price of USD Coin of $1,669; (c) loss on market price of Solana (SOL) of $49,280; (d) loss on market price of Filecoin (held outside the mining node structure) of $55,540; and (e) loss on market price of Tether USD of $354. For the three and six months ended June 30, 2025, loss on market price of stablecoins and digital assets from continuing operations totaled $13,831 and $82,423, respectively, both of which were solely derived from loss on market price of Filecoin (held outside the mining node structure). These losses relate primarily to digital assets held in Chaince Cayman’s corporate wallet and reflect declines in market prices during the period. These amounts are included in “Loss on market price of stablecoins and digital assets” within continuing operations in the consolidated statements of operations. Discontinued Operations For the three months ended June 30, 2026, gain on market price of stablecoins and digital assets from discontinued operations totaled $26,742, consisting of: (a) $25,577 gain attributable to Filecoins held in MFH Tech’s Filecoin mining node accounts; and (b) $1,165 gain arising from fair value adjustments to FIL-denominated receivables and payables associated with the Filecoin mining business. For the six months ended June 30, 2026, loss on market price of stablecoins and digital assets from discontinued operations totaled $99,974, consisting of: (a) $102,109 loss attributable to Filecoins held in MFH Tech’s Filecoin mining node accounts; and (b) $2,135 gain arising from fair value adjustments to FIL-denominated receivables and payables associated with the Filecoin mining business. For the three months ended June 30, 2025, loss on market price of stablecoins and digital assets from discontinued operations totaled $105,486, consisting of: (a) $89,232 loss attributable to Filecoins held in MFH Tech’s Filecoin mining node accounts; and (b) $16,254 loss arising from fair value adjustments to FIL-denominated receivables and payables associated with the Filecoin mining business. For the six months ended June 30, 2025, loss on market price of stablecoins and digital assets from discontinued operations totaled $570,742, consisting of: (a) $576,020 loss attributable to Filecoins held in MFH Tech’s Filecoin mining node accounts; and (b) $5,278 gain arising from fair value adjustments to FIL-denominated receivables and payables associated with the Filecoin mining business. The FIL-denominated receivables and payables were settled or measured in Filecoin and were therefore subject to remeasurement based on changes in FIL market prices. Because these balances are directly related to the mining business, the associated fair value adjustments have been classified within discontinued operations in accordance with ASC 205-20. Overall Volatility Considerations The increase in total fair value losses in 2026 compared to prior periods was primarily driven by declines in Filecoin market prices and continued price volatility in major cryptocurrencies. Under the fair value model required by ASU 2023-08, the Company’s results of operations are subject to increased volatility as both upward and downward market movements are recognized in earnings each reporting period. Interest income/(expenses), net
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The Company’s interest income/(expenses), net consists of (i) convertible note interest costs, and (ii) interest income from cash deposits and short-term investments. The Company’s interest income/(expenses), net for the three and six months ended June 30, 2026 amounted to $273,978 and $525,891, respectively, and consisted of nil in convertible notes interest costs, and positive $273,978 and $525,891, respectively, in interest income from cash deposits and short-term investments. The Company’s interest income/(expenses), net for the three months ended June 30, 2025 amounted to $120,250, and consisted of negative $43,630 in convertible note interest costs, and positive $163,880 in interest income from cash deposits and short-term investments and providing loans to external parties. The Company’s interest income/(expenses), net for the six months ended June 30, 2025 amounted to $ 171,431, and consisted of negative $103,767 in convertible notes interest costs, and positive $275,198 in interest income from cash deposits and short-term investments and providing loans to external parties. 53
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Gain/(loss) from market price of short-term investment The gain from market price of short-term investment for the three and six months ended June 30, 2026 and 2025 consists primarily of the net gain from the market price changes of the common stocks and ETFs held by the Company. Loss before income taxes Loss before income taxes was $1,152,511 for the three months ended June 30, 2026, compared with loss before income taxes of $840,206 for the three months ended June 30, 2025. Loss before income taxes was $2,271,873 for the six months ended June 30, 2026, compared with loss before income taxes of $1,639,278 for the six months ended June 30, 2025. Income tax benefits We recorded income tax benefits of $103,779 for the three months ended June 30, 2026 and income tax benefits of $58,786 for the three months ended June 30, 2025. We recorded income tax benefits of $136,488 for the six months ended June 30, 2026 and income tax benefits of $154,096 for the six months ended June 30, 2025. Loss from continuing operations Loss from continuing operations was $1,048,732 for the three months ended June 30, 2026, compared with loss from continuing operations of $781,420 for the three months ended June 30, 2025. Loss from continuing operations was $2,135,385 for the six months ended June 30, 2026, compared with loss from continuing operations of $1,485,182 for the six months ended June 30, 2025. Loss from discontinued operations For the three months ended June 30, 2026, the Company recognized a loss from discontinued operations of $56,268, compared to $764,932 for the three months ended June 30, 2025. For the six months ended June 30, 2026, the Company recognized a loss from discontinued operations of $322,059, compared to $1,362,648 for the six months ended June 30, 2025. The discontinued operations relate entirely to the Company’s distributed storage and computing services business, which consisted of Filecoin (“FIL”) mining activities conducted through its wholly owned U.S. subsidiary, Mercurity Fintech Technology Holding Inc. (“MFH Tech”). In December 2025, the Company’s Board of Directors approved a strategic decision to discontinue this business, and the results of the Filecoin mining operations have been classified as discontinued operations in accordance with ASC 205-20. Operating Results of the Mining Business For the three months ended June 30, 2026, revenue from the Filecoin mining operations was $11,275, compared to $91,675 in 2025. Revenue fluctuations were primarily driven by changes in mining output and market prices of FIL at the time rewards were received. For the six months ended June 30, 2026, revenue from the Filecoin mining operations was $49,002, compared to $208,008 in 2025. Revenue fluctuations were primarily driven by changes in mining output and market prices of FIL at the time rewards were received. Cost of revenue for the three months ended June 30, 2026 was $93,994, primarily consisting of mining equipment depreciation, facility lease and electricity costs, software-related expenses, and other operational costs necessary to maintain node operations compared to $246,428 in 2025. The mining business continued to generate negative gross margins during the period. Cost of revenue for the six months ended June 30, 2026 was $269,662, primarily consisting of mining equipment depreciation, facility lease and electricity costs, software-related expenses, and other operational costs necessary to maintain node operations, compared to $495,222 in 2025. The mining business continued to generate negative gross margins during the period. Nature of the Loss The 2026 loss from discontinued operations was driven primarily by: (a) ongoing negative operating margins from mining activities; (b) impairment charges recognized in connection with the wind-down decision; and (c) fair value volatility of FIL holdings and FIL- denominated balances. A significant portion of the loss relates to non-cash items, including impairment and fair value adjustments.
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Following the Board’s approval in December 2025, the Company ceased making new investments in the Filecoin mining business and initiated an orderly wind-down of the related operations. By June 30, 2026, substantially all of the related mining nodes had expired and the majority of the pledged FIL had been released, with a substantial portion of the released FIL subsequently sold and converted into cash. A limited amount of FIL remained pledged in connection with certain remaining nodes as of June 30, 2026 and is expected to be released by the end of 2026. The Company does not intend to make additional investments in or resume its Filecoin mining operations. Net loss As a result of the foregoing factors, we recorded a net loss of $1,105,000 for the three months ended June 30, 2026, as compared to a net loss of $1,546,352 for the three months ended June 30, 2025. As a result of the foregoing factors, we recorded a net loss of $2,457,444 for the six months ended June 30, 2026, as compared to a net loss of $2,847,830 for the six months ended June 30, 2025. 54
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Liquidity and Capital Resources Primary Sources of Liquidity Our primary sources of liquidity consist of existing cash and cash equivalents, cash flows from operating activities, and proceeds from financing activities. As of June 30, 2026, we had cash and cash equivalents of $30,973,382, stablecoins of $562,481, digital assets of $738,653, and total equity of $46,767,178. The decrease in cash during 2026 was primarily driven by outflows from investing activities, partially offset by cash generated from operating and financing activities. Subsequent to June 30, 2026, the closing of the Company’s registered direct offering (the “Offering”) occurred on August 11, 2026. Upon the closing, the Company received aggregate gross proceeds of US$16,196,800 before deducting offering expenses. The Company intends to use the net proceeds from the Offering for its digital asset reserve, working capital and/or general corporate purposes. See Note 17 —“Subsequent Events.” Management continuously monitors liquidity levels, operating cash flow trends, capital expenditure requirements, and contractual commitments to assess the Company’s ability to meet its short-term and long-term obligations. Based on current cash balances and expected operating activities, management believes that the Company has sufficient liquidity to fund its operations and anticipated commitments for at least the next twelve months. The Company may, from time to time, pursue additional equity or debt financing to support business expansion, strategic investments, or working capital needs. The availability and terms of such financing are subject to market conditions and the Company’s financial performance. Issuance of additional equity securities may result in dilution to existing shareholders, while the incurrence of debt may require the Company to allocate cash toward debt service and may impose certain operational or financial covenants. Cash Flows Cash Flows for the six months ended June 30, 2026, compared to the six months ended June 30, 2025 The following table sets forth a summary of our cash flows for the periods indicated: For the six months ended June 30, Variance in 2026 2025 Amount % Net cash provided/(used) in operating activities 98,628 (1,328,938) 1,427,566 -107.42% Net cash used in investing activities (6,784,565) (1,094,595) (5,689,970) 519.82% Net cash provided by financing activities 3,839,040 3,666,900 172,140 4.69% Effect of exchange rate changes 210 53 157 296.23% Net change in cash and cash equivalents $ (2,846,687) $ 1,243,420 $ (4,090,107) -328.94% Cash and cash equivalents, beginning of the year 33,820,069 24,009,331 9,810,738 40.86% Cash and cash equivalents, end of the period $ 30,973,382 $ 25,252,751 $ 5,720,631 22.65% For the six months ended June 30, 2026, the net decrease in cash and cash equivalents amounted to $2,846,687, compared to a net increase of $1,243,420 for the six months ended June 30, 2025. Cash and cash equivalents were $30,973,382 as of June 30, 2026, compared to $25,252,751 as of June 30, 2025. The decrease in cash during the six months ended June 30, 2026 was primarily driven by outflows from investing activities, partially offset by cash generated from operating and financing activities. 55
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Operating Activities Net cash provided by operating activities was $98,627 for the six months ended June 30, 2026, compared with net cash used of $1,328,938 for the six months ended June 30, 2025. 2026 Operating Cash Flow For the six months ended June 30, 2026, our net cash provided by operating activities was $98,628, reflecting a combination of net cash provided by continuing operations of $313,463 and net cash used in discontinued operations of $214,835. The net cash provided by continuing operations was primarily attributable to (i) our net loss from continuing operations of $2,135,385, (ii) an adjustment of deducted non-cash profit and loss items of a positive net amount of $1,135,353, mainly provision for doubtful accounts, inclusive of depreciation, loss from selling short-term investments, exchange gains and losses, loss on market price of short-term investment, loss on market price of stablecoins and digital assets, loss on share-based payment liabilities, interest income/(expenses), share-based compensations, gain from debt forgiveness, non-cash revenue or gain, non-cash expenses, gain from deregistration of subsidiaries, and other income or loss, (iii) changes in working capital that positively affected the cash flow from operating activities, primarily including: a decrease of $42,471 in clearing deposits, a decrease of $119,831 in accounts receivable, a decrease of $1,509,409 in other receivable, an increase of $44,621 in prepaid expenses and other current assets, an increase of $215,991 in accounts payable, a decrease of $83,717 in advance from customers and deferred revenues, an increase of $44,137 in other payables, and a decrease of $412,441 in accrued expenses and other current liabilities, and (iv) changes in non-current assets and liabilities negatively affected cash flows from operating activities, primarily as a result of a decrease in right-of-use assets of $160,464, an increase in deferred tax assets of $136,488, partially offset by a decrease in operating lease liabilities of $101,541. Operating cash flows also included the effects of discontinued operations. Cash flows attributable to the Filecoin mining business primarily consisted of operating lease payments, electricity and hosting expenses, and mining-related costs incurred during the wind-down period. Operating cash flow remained positive as the company continued to generate advisory revenue growth in the six months ended June 30, 2026. 2025 Operating Cash Flow For the six months ended June 30, 2025, our net cash used in operating activities was $1,328,938, reflecting a combination of net cash used in continuing operations of $1,031,751 and net cash used in discontinued operations of $297,187. The net cash used in continuing operations was primarily attributable to: (i) our net loss from continuing operations of $1,485,182; (ii) an adjustment of deducted non-cash profit and loss items of a positive net amount of $563,499, mainly inclusive of provision for doubtful accounts, depreciation, gain from selling short-term investments, exchange gains and losses, gain from market price of short-term investment, Loss on market price of stablecoins and digital assets, interest income/(expenses), non-cash revenue or gain, non-cash expenses, and other income or loss; (iii) changes in working capital that positively affected the cash flow from operating activities, primarily including: an increase of $100,445 in clearing deposits, an increase of $118,876 in accounts receivable, a decrease of $202,703 in other receivable, a decrease of $172,081 in prepaid expenses and other current assets, an increase of $285,307 in advance from customers and deferred revenues, an increase of $258,740 in other payables and a decrease of $282,926 in accrued expenses and other current liabilities; and (iv) changes in non-current assets and liabilities that negatively affected the cash flow from operating activities, primarily including: a decrease of $158,887 in right-of-use assets, a decrease of $154,096 in deferred tax assets and a decrease of $187,281 in lease liabilities. Operating cash flows in 2025 also included cash outflows related to Filecoin mining activities, which were presented within discontinued operations. The improvement in operating cash flow of continuing operations in 2026 compared to 2025 was primarily attributable to reduced working capital outflows and changes in other receivables. Investing Activities Net cash used in investing activities was $6,784,565 for the six months ended June 30, 2026, compared to net cash used in investing activities of $1,094,595 for the six months ended June 30, 2025. 2026 Investing Cash Flow For the six months ended June 30, 2026, our net cash used in investing activities was $6,784,565, reflecting net cash used in continuing operations of $6,784,565. The net cash used in continuing operations was primarily attributable to cash received from short-term investment interest and dividends of $4,914, cash received from selling short-term investments of $154,871, cash received from selling cryptocurrencies of $ 2,891,714, cash paid for purchasing digital assets of $125,828, cash paid for property and equipment of $11,336, and cash paid for short-term investments of $9,698,900.
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2025 Investing Cash Flow For the six months ended June 30, 2025, our net cash used in investing activities was $1,094,595, reflecting net cash used in continuing operations of $1,094,595. The net cash used in continuing operations was primarily attributable to cash received from short-term investment interest and dividends of $301, and cash paid for short-term investments of $1,094,896. 56
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Financing Activities Net cash provided by financing activities was $3,839,040 for the six months ended June 30, 2026, compared to net cash provided by financing activities of $3,666,900 for the six months ended June 30, 2025. 2026 Financing Cash Flow For the six months ended June 30, 2026, our net cash provided by financing activities was $3,839,040. This cash flow was solely derived from continuing operations and was primarily attributed to cash received from equity financing of $3,839,040. 2025 Financing Cash Flow For the six months ended June 30, 2025, our net cash provided by financing activities was $3,666,900. This cash flow was solely derived from continuing operations and was primarily attributed to cash received from private placement of $8,041,900, cash paid for repaying the convertible notes of $4,000,000, and cash paid for financing-related financial advisory fees of $375,000. Cash and Cash Equivalents, and Restricted Cash As of June 30, 2026, the Company had cash and cash equivalents of $30,973,382, compared to $33,820,069 as of December 31, 2025. The decrease in cash and cash equivalents in the six months ended June 30, 2026 was primarily driven by outflows from investing activities, partially offset by cash generated from operating and financing activities. Short-term Investments As of June 30, 2026, the Company held short-term investments of $12,803,368, primarily consisting of U.S. Treasury Bills, ETFs, certificates of deposit, and common stock received in exchange for consulting services, compared to $2,243,567 as of December 31, 2025. Stablecoins and Digital Assets As of June 30, 2026, the Company held stablecoins and digital assets from continuing operations with an aggregate fair value of $1,301,134, consisting of USD Coin, Tether USD, Bitcoin, Solana, and Filecoin, compared to $4,027,522 as of December 31, 2025. Effective January 1, 2024, the Company adopted ASU 2023-08, under which digital assets are measured at fair value with changes in fair value recognized in net income. Accordingly, the carrying amounts of digital assets as of June 30, 2026 and December 31, 2025 reflect fair value measurement at the respective reporting dates. As previously disclosed, digital assets associated with the Company’s discontinued Filecoin mining operations are presented separately within discontinued operations in the consolidated financial statements. Contingencies From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business. As of June 30, 2026, management is not aware of any pending or threatened claims that, if adversely determined, would have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Capital Expenditures Capital expenditures for the six months ended June 30, 2026 and 2025 were $6,784,565 and $1,094,595, respectively. Capital expenditures in the six months ended June 30, 2026 primarily related to purchases of short-term investments of $9,698,900. Capital expenditures in the six months ended June 30, 2025 were $1,094,896, primarily related to purchases of short-term investments. The Company expects to fund future capital expenditures primarily through existing cash and cash equivalents. The level and timing of future capital expenditures will depend on the Company’s strategic initiatives, operating performance, and market conditions. 57
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Contractual Obligations The following table sets forth our contractual obligations as of June 30, 2026: Payment Due by Period Total Less than 1 year 1-3 years More than 3 years Operating lease commitments 1,015,425 190,944 791,046 33,435 Total $ 1,015,425 $ 190,944 $ 791,046 $ 33,435 Other than those shown above, we did not have any significant capital and other commitments as of June 30, 2026. Off-balance Sheet Commitments and Arrangements We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We qualify as a smaller reporting company, as defined by SEC Rule 229.10(f)(1) and are not required to provide the information required by this Item 3. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our management has concluded that, as of June 30, 2026, our disclosure controls and procedures were not effective, due to the material weaknesses identified by us, including (i) insufficient formal documentation of internal control policies and procedures relating to financial reporting processes; (ii) limited segregation of duties due to the relatively small size of the Company’s accounting and finance staff, which results in certain individuals performing multiple roles in accounting, financial reporting, and operational functions; and (iii) insufficient number of personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements, and lack of a fully developed internal accounting and financial reporting infrastructure. These material weaknesses are described under “Management’s Annual Report on Internal Control over Financial Reporting” of our Annual Report on Form 10-K. (b) Changes in Internal Control Over Financial Reporting. There has been no change in our internal control over financial reporting during the three months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 58
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PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, the Company or its subsidiaries may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to governmental or regulatory examinations or investigations. Examinations or investigations can result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the Company will seek to include in its financial statements the necessary provisions for losses that it believes are probable and estimable. Furthermore, the Company will seek to evaluate whether there exist losses which may be reasonably possible and, if material, make the necessary disclosures. The Company currently does not have any material pending legal proceedings to which it or any of its subsidiaries is a party or of which any of their property is the subject. See also Item 3 of Part I of our Annual Report on Form 10-K. ITEM 1A. RISK FACTORS We qualify as a smaller reporting company, as defined by SEC Rule 229.10(f)(1) and are not required to provide the information required by this Item 1A. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (a) None. (b) None. (c) None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES (a) None. (b) None. ITEM 4. MINE SAFETY DISCLOSURES None. ITEM 5. OTHER INFORMATION (a) None. (b) None. (c) During the three months ended June 30, 2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408 of Regulation S-K). 59
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ITEM 6. EXHIBITS Exhibit Number Description 3.1 Fifth Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 1.1 of the Annual Report on Form 20-F filed with the SEC on April 23, 2024) 10.1 Form of Securities Purchase Agreement, dated as of August 8, 2026, by and among Chaince Digital Holdings Inc. and the Purchasers party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2026). 31.1* Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 31.2* Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes - Oxley Act of 2002 32.1** Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 32.2** Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes - Oxley Act of 2002 101* Interactive Data File (formatted as Inline XBRL) 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Filed herewith ** Furnished herewith 60
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SIGNATURES 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. Chaince Digital Holdings Inc. (Registrant) Date: August 14, 2026 By:/s/ Shi Qiu Shi Qiu Chief Executive Officer and Director Date: August 14, 2026 By:/s/ Yukuan Zhang Yukuan Zhang Chief Financial Officer 61
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Exhibit 31.1 Certification by the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Shi Qiu, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Chaince Digital Holdings Inc. (the “Company”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the Quarterly Report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and 5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. Date: August 14, 2026 By: /s/ Shi Qiu Name:Shi Qiu Title: Chief Executive Officer (Principal Executive Officer)
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Exhibit 31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Yukuan Zhang, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Chaince Digital Holdings Inc. (the “Company”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the Quarterly Report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and 5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. Date: August 14, 2026 By: /s/ Yukuan Zhang Name:Yukuan Zhang Title: Chief Financial Officer (Principal Financial Officer)
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Exhibit 32.1 Certification by the Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of Chaince Digital Holdings Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shi Qiu, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 14, 2026 By: /s/ Shi Qiu Name:Shi Qiu Title: Chief Executive Officer (Principal Executive Officer)
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Exhibit 32.2 Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of Chaince Digital Holdings Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Yukuan Zhang, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 14, 2026 By: /s/ Yukuan Zhang Name:Yukuan Zhang Title: Chief Financial Officer (Principal Financial Officer)