AGM Group Holdings Inc.
Annual Report 2020

Plain-text annual report

2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 20-F 1 f20f2020_agmgrouphold.htm ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR For the transition period from to Commission file number: 001-38309 AGM Group Holdings Inc. (Exact name of Registrant as specified in its charter) British Virgin Islands (Jurisdiction of incorporation or organization) c/o Creative Consultants (Hong Kong) Limited Room 1502-3 15/F., Connuaght Commercial Building, 185 Wanchai Road Wanchai, Hong Kong (Address of principal executive offices) Wenjie Tang, Chief Executive Officer +86-010-65020507 wj.tang@angaomeng.com c/o Creative Consultants (Hong Kong) Limited Room 1502-3 15/F., Connuaght Commercial Building, 185 Wanchai Road Wanchai, Hong Kong (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Class A ordinary shares, par value $0.001 per share   Trading Symbol(s) AGMH   Name of each exchange on which registered The Nasdaq Stock Market LLC (Nasdaq Capital Market) Securities registered or to be registered pursuant to Section 12(g) of the Act: None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 1/115     2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 21,356,290 shares of Class A ordinary shares and 7,100,000 shares of Class B ordinary shares issued and outstanding as of December 31, 2019. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒ If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐ If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☒ No ☐ Yes ☐ No https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 2/115     2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Table of Contents IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS OFFER STATISTICS AND EXPECTED TIMETABLE KEY INFORMATION INFORMATION ON THE COMPANY UNRESOLVED STAFF COMMENTS OPERATING AND FINANCIAL REVIEW AND PROSPECTS DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS FINANCIAL INFORMATION THE OFFER AND LISTING ADDITIONAL INFORMATION QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES PART I ITEM 1. ITEM 2. ITEM 3. ITEM 4. ITEM 4A. ITEM 5. ITEM 6. ITEM 7. ITEM 8. ITEM 9. ITEM 10. ITEM 11. ITEM 12. PART II DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ITEM 13. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS ITEM 14. CONTROLS AND PROCEDURES ITEM 15. CONTROLS AND PROCEDURES ITEM 15T. [RESERVED] ITEM 16. AUDIT COMMITTEE FINANCIAL EXPERT ITEM 16A. CODE OF ETHICS ITEM 16B. PRINCIPAL ACCOUNTANT FEES AND SERVICES ITEM 16C. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES ITEM 16D. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS ITEM 16E. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT ITEM 16F. CORPORATE GOVERNANCE ITEM 16G. ITEM 16H. MINE SAFETY DISCLOSURE PART III ITEM 17. ITEM 18. ITEM 19. FINANCIAL STATEMENTS FINANCIAL STATEMENTS EXHIBITS i Page 1 1 1 18 29 29 42 51 54 55 56 67 67 68 68 68 70 70 70 70 70 71 71 71 71 71 72 72 72 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 3/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Conventions Used in this Annual Report Except where the context otherwise requires and for purposes of this annual report on Form 20-F only, “we,” “us,” “our company,” “Company,” “our” and “AGM Holdings” refer to: ● AGM Group Holdings Inc., a British Virgin Islands company limited by shares (“AGM Holdings” when individually referenced); ● AGM Technology Limited, a Hong Kong SAR limited company (“AGM HK” when individually referenced) and a wholly-owned subsidiary of AGM Holdings; ● AGM Tianjin Construction Development Co., Ltd. (“AGM Tianjin”) (also referred to as 天津安⾼盟建设发展有限 公司 in China), formerly known as AGM Tianjin Construction Development Co., Ltd. (or 深圳安⾼盟⾦融科技服务 有限公司 in China), a wholly foreign-owned enterprise (“WFOE”) formed under the laws of the People’s Republic of China (the “PRC”) and a wholly-owned subsidiary of AGM HK; ● Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”) (also referred to as 北京安⾼盟科技服务有限 公司 in China), a PRC company and a wholly-owned subsidiary of AGM Tianjin; ● AGM Software Service LTD (“AGM Software”), a British Virgin Islands company limited by shares and a wholly- owned subsidiary of AGM Holdings; and ● AGM Tianjin International Financial Leasing Co. Ltd. (“AGM Leasing”) (also referred to as 安⾼盟（天津）国际融 资租赁有限公司 in China), a WFOE formed under the law of People’s Republic of China and a wholly-owned subsidiary of AGM HK. This annual report contains translations of certain RMB amounts into U.S. dollar amounts at a specified rate solely for the convenience of the reader. The Consolidated Balance Sheets balances, with the exception of equity at December 31, 2020 and 2019, were translated at RMB6.5378 and RMB6.9630 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to the Consolidated Statements of Operations and Comprehensive Income and the Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 were RMB6.9003, RMB6.9074 and RMB6.6146 to $1.00, respectively. We obtained the industry and market data used in this annual report or any document incorporated by reference from industry publications, research, surveys and studies conducted by third parties and our own internal estimates based on our management’s knowledge and experience in the markets in which we operate. We did not, directly or indirectly, sponsor or participate in the publication of such materials, and these materials are not incorporated in this annual report other than to the extent specifically cited in this annual report. We have sought to provide current information in this annual report and believe that the statistics provided in this annual report remain up-to-date and reliable, and these materials are not incorporated in this annual report other than to the extent specifically cited in this annual report. SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS Certain matters discussed in this report may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” and similar expressions are intended to identify such forward-looking statements. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under “Item 3. Key Information—Risk Factors,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects,” and elsewhere in this report, as well as factors which may be identified from time to time in our other filings with the Securities and Exchange Commission (the “SEC”) or in the documents where such forward-looking statements appear. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this report reflect our views and assumptions only as of the date this report is signed. Except as required by law, we assume no responsibility for updating any forward-looking statements. ii https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 4/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS PART I Not applicable for annual reports on Form 20-F. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable for annual reports on Form 20-F. ITEM 3. KEY INFORMATION A. Selected Financial Data The following table presents the selected consolidated financial information for our company. The selected consolidated statements of operations and comprehensive income (loss) data for the three years ended December 31, 2020, 2019 and 2018, and the selected consolidated balance sheets data as of December 31, 2020 and 2019 have been derived from our audited consolidated financial statements, which are included in this annual report beginning on page F-1. Our historical results do not necessarily indicate results expected for any future periods. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” below. Our audited consolidated financial statements are prepared and presented in accordance with US GAAP. (All amounts in thousands of U.S. dollars, except Dividend per share in Renminbi and Shares outstanding) For the Years Ended December 31, 2018 2019 2020 53,305 $ 14,771 $ (7,656) $ (76,343) $ 330,000 $ 5,112,520 $ $ 286,944 $ 3,459,492 $ 1,027,920 $ 1,496,818 $ 5,828,338 $ (1,013,149) $ (1,209,874) $ (2,368,845) (12,837) $ $ 595,421 $ (1,097,148) $ (1,485,911) $ (1,786,261) (76,944) $ (6,626,470) $ (0.09) $ $ (0.31) $ 21,787,892 $ 21,298,540 $ 20,951,074 25,500 $ (0.05) $ 0.00 $ (211,422) $ (64,615) $ (0.07) $ (0.00) $ $ 6,085,521 $ 7,305,317 $ 8,397,634 $ 6,114,954 $ 14,514,013 $ 8,849,685 $ 2,422,344 $ 2,662,888 $ 3,130,766 $ 2,422,344 $ 2,662,888 $ 3,130,766 $ 3,692,610 $ 11,851,125 $ 5,718,920 Statement of operation data: Revenues, net Gross profit Operating expenses Loss from operations Other non-operating expenses, net Provision for income taxes (benefits) Net loss from continued operations Net gain (loss) from discontinued operations Continued loss per share, basic and diluted Discontinued loss per share, basic and diluted Weighted average Ordinary Shares outstanding Balance sheet data: Current assets Total assets Current liabilities Total liabilities Total equity B. Capitalization and Indebtedness Not applicable for annual reports on Form 20-F. C. Reasons for the Offer and Use of Proceeds Not applicable for annual reports on Form 20-F. D. Risk Factors 1 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 5/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Risks Related to Our Business and Industry We have a limited operating history in a new and evolving market, which makes it difficult to evaluate our future prospects. The software industry is developing rapidly. The regulatory framework for this market is also evolving and may remain uncertain for the foreseeable future. Potential users may have difficulty distinguishing our services from those of our competitors. Convincing potential new users of the value of our services is critical to the success of our business. Our company was incorporated on April 27, 2015 and have a limited operating history. As our business develops or in response to competition, we may continue to introduce new features or make adjustments to our existing services and our business model. Any significant change to our business model may not achieve expected results and may have a material and adverse impact on our financial conditions and results of operations. It is therefore difficult to effectively assess our future prospects. You should consider our business and prospects in light of the risks and challenges we encounter or may encounter in this developing and rapidly evolving market. These risks and challenges include our ability to, among other things: ● navigate an evolving regulatory environment; ● expand the user base; ● broaden our services; ● increase awareness of our brand and continue to develop customer loyalty; ● enhance our risk management capabilities; ● raise sufficient capital to sustain and expand our business; ● attract, retain and motivate qualified personnel; ● upgrade our technology to support additional research and development of new services; ● improve our operational efficiency; ● cultivate a vibrant online social trading system; ● maintain the security of our platform and the confidentiality of the information provided and utilized across our platform; ● attract, retain and motivate talented employees; and ● defend ourselves against litigation, regulatory, intellectual property, privacy or other claims. If we fail to educate potential users about the value of our software, if the software market does not develop as we expect, or if we fail to address the needs of our target market, or other risks and challenges, our business and results of operations will be harmed. We are dependent on our major customers for the majority of our revenues. The loss of one or more significant customers could adversely affect our financial condition, prospects and results of operations. For the year ended December 31, 2020, we only had one customer. For the year ended December 31, 2019, our two largest customers collectively accounted for approximately 92% of total revenues. If we were to lose any key alliances over a relatively short period of time or if one of our largest customers fails to pay or delays in paying a significant amount of our outstanding receivables, we could experience an adverse impact on our business, financial condition, results of operations, cash flows and prospects. Additionally, changes in ownership of our customers may result in the loss of, or reduction in, business from those customers, which could materially and adversely affect our business, financial condition, results of operations and prospects. 2 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 6/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm We are dependent on a limited number of suppliers, and delays in deliveries or increases in the cost could harm our business, results of operations and financial condition. Our ability to meet our customers’ demand for our service depends upon obtaining adequate supplies on a timely basis. We have established relationships with a limited number of suppliers. For the year ended December 31, 2020, we had only one supplier. For the year ended December 31, 2019, no supplier collectively accounted for over 10% of total cost. Should any of our current suppliers be unable to deliver their service or otherwise fail to deliver in a timely manner and at acceptable prices and quality, we would have to identify and quality replacements from alternative sources of supply. However, the process of qualifying new suppliers for complex components is also lengthy and could have a material adverse effect on our business, financial condition and results of operations. Additionally, increase in costs may adversely impact demand for our services or the results of our business operations. Any failure to offer high-quality product support may adversely affect our relationships with our customers and our financial results. In deploying and using our solutions, our customers depend on our support services team to resolve complex technical and operational issues. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for product support. We also may be unable to modify the nature, scope and delivery of our product support to compete with changes in product support services provided by our competitors. Increased customer demand for product support, without corresponding revenue, could increase costs and adversely affect our operating results. Our sales are highly dependent on our business reputation and on positive recommendations from our existing customers. Any failure to maintain high-quality product support, or a market perception that we do not maintain high-quality product support, could adversely affect our reputation, our ability to sell our solutions to existing and prospective customers, our business, operating results, and financial position. We might require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all. We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new features or enhance our existing solutions, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, or at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired. 3 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 7/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Our financial and operating performance may be adversely affected by epidemics, natural disasters and other catastrophes. Our business could be materially and adversely affected by the outbreak of epidemics including but not limited to the novel coronavirus (COVID-19), swine influenza, avian influenza, middle east respiratory syndrome (MERS-CoV) and severe acute respiratory syndrome (SARS-CoV). Our financial and operating performance may be adversely affected by epidemics such as the on-going COVID-19, natural disasters and other catastrophes. Our business could be materially and adversely affected in the event that the slowdown or suspension carries for a long period of time. The restrictive measures against the on-going COVID-19 outbreak adversely affected and slowed down the national economic development. Any prolonged restrictive measures in order to control the contagious disease or other adverse public health developments in China or our targeted markets may have a material and adverse effect on our business operations. Similarly, natural disasters, wars (including the potential of war), terrorist activity (including threats of terrorist activity), social unrest and heightened travel security measures instituted in response, and travel-related accidents, as well as geopolitical uncertainty and international conflict, will affect travel volume and may in turn have a material adverse effect on our business and results of operations. In addition, we may not be adequately prepared in contingency planning or recovery capability in relation to a major incident or crisis, and as a result, our operational continuity may be adversely and materially affected, which in turn may harm our reputation. The COVID-19 pandemic has adversely impacted, and poses risks to, our business, the nature and extent of which are highly uncertain and unpredictable. In recent months, the continued, global spread of COVID-19 has led to disruption and volatility in the global capital markets, which has increased the cost of, and adversely impacted access to, capital (including the commercial paper markets) and increased economic uncertainty. It is likely that the pandemic will cause an economic slowdown of potentially extended duration, and it is possible that it could cause a global recession. COVID-19 is adversely affecting, and is expected to continue to adversely affect, certain elements of our business, including as a result of impacts associated with preventive and precautionary measures that we, other businesses, our communities and governments are taking. Due to these impacts and measures, we have experienced and expect to continue to experience delays in our internal product development and unpredictable reductions in demand for certain of our products and services. Our employees have been required to work from home or not go into their offices. Such restrictions are slowly being lifted. If the pandemic continues and conditions worsen, we expect to experience additional adverse impacts on our operational and commercial activities and customer orders, which adverse impacts may be material, and it remains uncertain what impact these adverse impacts would have on future sales and customer orders even if conditions begin to improve. In addition to existing travel restrictions, jurisdictions may continue to close borders, impose prolonged quarantines and further restrict travel and business activity, which could significantly impact our ability to support our operations and customers. Further, such travel restrictions and slowed-down business activities may affect the operation of our customer and result in decrease of our products and services, which could adversely affect our financial results. Due to the speed with which the COVID-19 situation is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate impact; therefore, any negative impact on our overall financial and operating results (including without limitation our liquidity) cannot be reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and the impact on our financial and operating results could be material. If we are not able to continue to innovate or if we fail to adapt to changes in our industry, our business, financial condition and results of operations would be materially and adversely affected. The software industry is characterized by rapidly changing technology, evolving industry standards, new service introductions and changing customer demands. Furthermore, our competitors are constantly developing innovations in online marketing, communications, social networking and other services to enhance users’ online experience. We continue to invest significant resources in our infrastructure, research and development and other areas in order to introduce more content and enhance our existing services that will attract more users to our software. The changes and developments taking place in our industry may also require us to re-evaluate our business model and adopt significant changes to our long-term strategies and business plan. Our failure to innovate and adapt to these changes would have a material adverse effect on our business, financial condition and results of operations. 4 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 8/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm If we are unable to maintain existing clients, attract new clients or broaden our market, our business and results of operations will be adversely affected. We intend to continue to dedicate significant resources to our user acquisition efforts, including establishing new acquisition channels, particularly as we continue to grow and introduce new services. The overall number of users may be affected by several factors, including our brand recognition and reputation, the effectiveness of our risk control, the efficiency of our platform, the macroeconomic environment and other factors. Currently, we promote our brand through direct communications with schools and learning centers. However, we do we have sufficient human resource to market our services, which will result in an increase in operation cost. If we are unable to broaden our market or attract new users, or if the existing users do not continue to use our software, we might be unable to increase our revenues as we expect, and our business and results of operations may be adversely affected. If we do not compete effectively, our results of operations could be harmed. The market of software is in rapid growth due to rapid growth of actual and predicted demand. The market, thus, has become more competitive. For our commodity trading platform, we compete with traditional financial institutions and other online trading platforms. For our education software, we compete with schools and learning centers and online education programs. Our competitors operate with different business models, have different cost structures or participate selectively in different market segments. They may ultimately prove more successful or more adaptable to new regulatory, technological and other developments. Some of our current and potential competitors have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their platforms. Our competitors may also have longer operating histories, more extensive customer bases, greater brand recognition and brand loyalty and broader partner relationships than us. Additionally, a current or potential competitor may acquire one or more of our existing competitors or form a strategic alliance with one or more of our competitors. Our competitors may be better at developing new services, offering more attractive investment returns or lower fees, responding faster to new technologies and undertaking more extensive and effective marketing campaigns. In response to competition and in order to grow or maintain the client base, we may have to offer more content and features in the software or charge lower fees, which could materially and adversely affect our business and results of operations. If we are unable to compete with such companies and meet the need for innovation in our industry, the demand for our service could stagnate or substantially decline, we could experience reduced revenues or our services could fail to achieve or maintain more widespread market acceptance, any of which could harm our business and results of operations. If we fail to promote and maintain our brand in an effective and cost-efficient way, our business and results of operations may be harmed. We believe that developing and maintaining awareness of our brand effectively is critical to attracting new and retaining existing clients. Successful promotion of our brand and our ability to attract clients depend largely on the effectiveness of our marketing efforts and the success of the channels we use to promote our services. It is likely that our future marketing efforts will require us to incur significant additional expenses. These efforts may not result in increased revenues in the immediate future or at all and, even if they do, any increases in revenues may not offset the expenses incurred. If we fail to successfully promote and maintain our brand while incurring substantial expenses, our results of operations and financial condition would be adversely affected, which may impair our ability to grow our business. Unauthorized disclosure of sensitive or confidential customer information or our failure or the perception by our customers that we failed to comply with privacy laws or properly address privacy concerns could harm our business and standing with our customers. We collect, store, process, and use certain personal information and other user data in our business. A significant risk associated with our business is the secure transmission of confidential information over public networks. The perception of privacy concerns, whether or not valid, may adversely affect our business and results of operations. We must ensure that any processing, collection, use, storage, dissemination, transfer and disposal of data for which we are responsible complies with relevant data protection and privacy laws. The protection of our customer, employee and company data is critical to us. We rely on commercially available systems, software, tools and monitoring to provide secure processing, transmission and storage of confidential customer information. Despite the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, or other similar events. Any security breach, or any perceived failure involving the misappropriation, loss or other unauthorized disclosure of confidential information, as well as any failure or perceived failure to comply with laws, policies, legal obligations or industry standards regarding data privacy and protection, whether by us or our vendors, could damage our reputation, expose us to litigation risk and liability, subject us to negative publicity, disrupt our operations and harm our business. We cannot assure you that our security measures will prevent security breaches or that failure to prevent them will not have a material adverse effect on our business. Further, we do not carry cybersecurity insurance to compensate for any losses that may result from any breach of security. Therefore, our results of operations or financial condition may be materially adversely affected if our existing general liability policies did not cover a security breach. https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 9/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 5 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 10/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm New lines of business or new services may subject us to additional risks. From time to time, we may implement new lines of business or offer new services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new services may not be achieved and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new service. Furthermore, any new line of business and/or new service could have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new services could have a material adverse effect on our business, results of operations and financial condition. We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position. We regard our trademarks, copyrights, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality, invention assignment and non-compete agreements with our employees and others to protect our proprietary rights. We have purchased and registered with the National Copyright Administration of PRC certain copyrights. See “Item 4. Information on the Company – Intellectual Property.” Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. In addition, because of the rapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable terms, or at all. It is often difficult to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in China. Preventing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. To the extent that our employees or consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related know-how and inventions. Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of operations. We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations. We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how or other intellectual property rights held by third parties. We may be from time to time in the future subject to legal proceedings and claims relating to the intellectual property rights of others. In addition, there may be third-party trademarks, patents, copyrights, know-how or other intellectual property rights that are infringed by our services or other aspects of our business without our awareness. Holders of such intellectual property rights may seek to enforce such intellectual property rights against us in China, the United States or other jurisdictions. If any third-party infringement claims are brought against us, we may be forced to divert management’s time and other resources from our business and operations to defend against these claims, regardless of their merits. Additionally, the application and interpretation of China’s intellectual property right laws and the procedures and standards for granting trademarks, patents, copyrights, know-how or other intellectual property rights in China are still evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we were found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. As a result, our business and results of operations may be materially and adversely affected. 6 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 11/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm From time to time, we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results. We may evaluate and consider strategic investments, combinations, acquisitions or alliances to further increase the value of our services and better serve our clients. These transactions could be material to our financial condition and results of operations if consummated. If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction and, even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction. Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; ● inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from our normal daily operations; ● difficulties in successfully incorporating licensed or acquired technology and rights into our services; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with clients, employees and suppliers of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre- closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; ● failure to successfully further develop the acquired technology; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; ● potential disruptions to our ongoing businesses; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions. We may not make any investments or acquisitions, or any future investments or acquisitions may not be successful, may not benefit our business strategy, may not generate sufficient revenues to offset the associated acquisition costs or may not otherwise result in the intended benefits. In addition, we cannot assure you that any future investment in or acquisition of new businesses or technology will lead to the successful development of new or enhanced services or that any new or enhanced services, if developed, will achieve market acceptance or prove to be profitable. 7 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 12/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Our business depends on the continued efforts of our senior management. If one or more of our key executives were unable or unwilling to continue in their present positions, our business may be severely disrupted. Our business operations depend on the continued services of our senior management, particularly the executive officers named in this annual report. While we have provided different incentives to our management, we cannot assure you that we can continue to retain their services. If one or more of our key executives were unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, our future growth may be constrained, our business may be severely disrupted and our financial condition and results of operations may be materially and adversely affected, and we may incur additional expenses to recruit, train and retain qualified personnel. In addition, although we have entered into confidentiality and non-competition agreements with our management, there is no assurance that any member of our management team will not join our competitors or form a competing business. If any dispute arises between our current or former officers and us, we may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at all. Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business. We believe our success depends on the efforts and talent of our employees, including software engineering, financial and marketing personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled technical, and financial personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. A lack of insurance could expose us to significant costs and business disruption. We have not yet purchased insurance to cover our assets and property of our business, which could leave our business inadequately protected from loss. If we were to incur substantial losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of operations could be materially and adversely affected. Furthermore, Insurance companies in China currently do not offer as extensive an array of insurance products as insurance companies in more developed economies. Currently, we do not have any business liability or disruption insurance to cover our operations. We have determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. Any uninsured business disruptions may result in our incurring substantial costs. We may not be able to complete the acquisition of Yushu Kingo City Real Estate Development Co., Ltd. (“Yushu Kingo”) within a reasonable time frame or at all, which could have a negative impact on our business expansion. We entered into an equity transfer agreement with Yushu Kingo and its shareholder in January 2020 and a supplement agreement in April 2021, subject to customary closing conditions contained therein. Due to the COVID-19 and various factors, we may not be able to complete the planned acquisition of Yushu Kingo within a reasonable time frame or at all, which could have a negative impact on our business expansion. If the acquisition is delayed for a prolonged period of time, we will not be able to diversify our business to real estate development and management as planned, our management’s attention may be distracted, and the cost of due diligence and auditing of Yushu Kingo may increase. In addition, even if we complete the acquisition, we may not realize the anticipated benefits of the planned acquisition of Yushu Kingo, and the integration of the planned acquisition may disrupt our business and divert management’s time and attention. The planned acquisition may require us to spend a substantial portion of our available cash, issue stock, incur debt or other liabilities, amortize expenses related to intangible assets, or incur write-offs of goodwill or other assets. Finally, we would be required to issue additional equity securities in connection with the planned acquisition, which would cause dilution to our stockholders. 8 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 13/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm We have identified material weaknesses in our internal control over financial reporting. If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations or prevent fraud. As required by Form 20-F, our management is required to assess the effectiveness of our internal control over financial reporting and include a report in our annual report on Form 20-F. In preparing our consolidated financial statements for the years ended December 31, 2019 and December 31, 2020, our management identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, and other significant deficiencies. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified are as follows: (i) no sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP; (ii) ineffective oversight of our financial reporting and internal control by those charged with governance; and (iii) inadequate design of internal control over the preparation of the financial statements being audited. These material weaknesses remained as of December 31, 2020. As a result of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements, errors or omissions. In addition, once we cease to be an “emerging growth company” as such term is defined under the Jumpstart Our Business Startups Act, or JOBS Act, Section 404 of the Sarbanes-Oxley Act of 2002 and related rules promulgated by the Securities and Exchange Commission, we will be subject to Section 404 of the Sarbanes-Oxley Act of 2002, pursuant to which our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation. During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Generally, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements, errors or omissions in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, and harm our results of operations. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. 9 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 14/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Risks Related to Doing Business in China The PRC laws and regulations governing the Company’s business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations as well as in the PRC economic, political, and social conditions may have a material and adverse effect on the PRC economy, and in turn the Company’s business. There are substantial uncertainties regarding the interpretation and application of the PRC laws and regulations, including but not limited to the laws and regulations governing the Company’s business, or the enforcement and performance of the Company’s arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy, and criminal proceedings. The Company and any future subsidiaries are considered foreign persons or foreign funded enterprises under the PRC laws, and as a result, the Company is required to comply with the PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our services and materially and adversely affect our competitive position. Substantially all of our business operations and R&D are conducted in China. Accordingly, our business, results of operations, financial condition and prospects are subject to economic, political and legal developments in China. Although the Chinese economy is no longer a planned economy, the PRC government continues to exercise significant control over China’s economic growth through direct allocation of resources, monetary and tax policies, and a host of other government policies such as those that encourage or restrict investment in certain industries by foreign investors, control the exchange between RMB and foreign currencies, and regulate the growth of the general or specific market. These government involvements have been instrumental in China’s significant growth in the past 30 years. In response to the recent global and Chinese economic downturn, the PRC government has adopted policy measures aimed at stimulating the economic growth in China. We voluntarily ceased our forex trading brokerage business and suspended all activities on AGMTrade, a trading network platform, to ensure compliance with PRC laws, regulations and policies. While we do not foresee our business will be further restricted or affected by the PRC laws and regulations, we may need to further revise our business model to remain compliant. If any aspect of the PRC government’s policies limits the growth of our industry or otherwise negatively affects our business, our growth rate or strategy, our results of operations could be adversely affected as a result. A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition. Any prolonged slowdown in the Chinese or global economy may have a negative impact on our business, results of operations and financial condition. In particular, general economic factors and conditions in China or worldwide, including the general interest rate environment and unemployment rates, may affect our customer’s participation in forex trading. Economic conditions in China are sensitive to global economic conditions. There is considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. If present Chinese and global economic uncertainties persist, many of our customers may reduce the service they require from us. Adverse economic conditions could also reduce the number of customers seeking our service, as well as their ability to make payments. Should any of these situations occur, our net revenues will decline, and our business and financial conditions will be negatively impacted. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs. Labor laws in the PRC may adversely affect our business and results of operations. On June 29, 2007, the PRC government promulgated a new labor law, namely, the Labor Contract Law of the PRC, which became effective on January 1, 2008, which was further amended on December 28, 2012 (effective July 1, 2013). The Labor Contract Law imposes greater liabilities on employers and significantly affects the cost of an employer’s decision to reduce its workforce. Further, it requires certain terminations be based upon seniority and not merit. In the event we decide to significantly change or decrease our workforce, the Labor Contract Law could adversely affect our ability to enact such changes in a manner that is most advantageous to our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition and results of operations. The Labor Contract Law also mandates that employers provide social welfare packages to all employees, increasing our labor costs. To the extent competitors from outside China are not affected by such requirements, we could be at a comparative disadvantage. 10 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 15/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Under the Enterprise Income Tax Law, we may be classified as a “Resident Enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders. China passed an Enterprise Income Tax Law (the “EIT Law”) and implementing rules, both of which became effective on January 1, 2008. Under the EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. On April 22, 2009, the State Administration of Taxation of China issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application of the EIT Law and its implementation to offshore entities controlled by a Chinese enterprise or group. Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a “non-domestically incorporated resident enterprise” if (i) its senior management in charge of daily operations reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets and properties, accounting books, corporate stamps, board and stockholder minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management are often resident in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC stockholders. However, it remains unclear as to how tax authorities will determine tax residency based on the facts of each case. If the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Currently, approximately 82% of our revenue is non-China source income, so could be adversely affected. Second, under the EIT Law and its implementing rules, dividends paid to us from our PRC subsidiaries would qualify as “tax-exempt income.” Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC stockholders and with respect to gains derived by our non-PRC stockholders from transferring our shares. PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits. The State Administration of Foreign Exchange, or SAFE, promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing. Moreover, failure to comply with the various SAFE registration requirement could result in liability under PRC law for evasion of foreign exchange controls. According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (the “2015 Notice”) released on February 13, 2015 by SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015. We have not filed SAFE Circular 37 reports on behalf of our shareholders who are PRC residents before. The failure of our beneficial owners who are PRC residents to register or amend their SAFE registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, or the failure of future beneficial owners of our company who are PRC residents to comply with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject such beneficial owners or our PRC subsidiaries to fines and legal sanctions. Furthermore, it is unclear how SAFE Circular 37 and the 2015 Notice, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant PRC government authorities, we cannot predict how these regulations will affect our business operations or future strategy. Failure to register or comply with relevant requirements may also limit our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividends to our company. These risks may have a material adverse effect on our business, financial condition and results of operations. 11 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 16/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Uncertainties with respect to the PRC legal system could adversely affect us. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the PRC legal system is based on written statutes and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules may not be uniform and enforcement of these laws, regulations and rules involves uncertainties. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. In particular, PRC laws and regulations concerning the businesses that we are involved in are developing and evolving. Although we have taken measures to comply with the laws and regulations that are applicable to our business operations and avoid conducting any non-compliant activities under the applicable laws and regulations, the PRC governmental authorities may promulgate new laws and regulations regulating the industry in the future. We cannot assure you that our practice would not be deemed to violate any new PRC laws or regulations relating to the industry. Moreover, developments in the industry may lead to changes in PRC laws, regulations and policies or in the interpretation and application of existing laws, regulations and policies that may limit or restrict online reading marketplaces like us, which could materially and adversely affect our business and operations. A change in trading rules of the trading exchanges could adversely affect our revenue and profitability. We are under the supervision of various trading exchanges such as the China Financial Futures Exchange, which provide trading platforms and set trading model and rules for all participants on the exchanges. Those exchanges formulate their trading rules covering various aspects of trading, including but not limited to, commission and fee rates, leverage ratio, trade settlement procedures, membership qualifications, risk control mechanism, as well as information management. Those trading exchanges usually adjust their trading rules in response to changing market conditions and changes to these rules may adversely affect our revenue or business. In addition, futures companies have discretion to set the fee rates and the adjustments of the fee rates will have an impact on our income and profitability. We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law. We are subject to the U.S. Foreign Corrupt Practices Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We are also subject to Chinese anti-corruption laws, which strictly prohibit the payment of bribes to government officials. We have operations, agreements with third parties, and make sales in China, which may experience corruption. Our activities in China create the risk of unauthorized payments or offers of payments by one of the employees, consultants or distributors of our company, because these parties are not always subject to our control. We are in process of implementing an anticorruption program, which prohibits the offering or giving of anything of value to foreign officials, directly or indirectly, for the purpose of obtaining or retaining business. The anticorruption program also requires that clauses mandating compliance with our policy be included in all contracts with foreign sales agents, sales consultants and distributors and that they certify their compliance with our policy annually. It further requires that all hospitality involving promotion of sales to foreign governments and government-owned or controlled entities be in accordance with specified guidelines. In the meantime, we believe to date we have complied in all material respects with the provisions of the FCPA and Chinese anti-corruption law. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption law may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire. Since our operations and assets are located in the PRC, shareholders may find it difficult to enforce a U.S. judgment against the assets of our company, our directors and executive officers. https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 17/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Our operations and assets are located in the PRC. In addition, most of our executive officers and directors are non- residents of the U.S., and substantially all the assets of such persons are located outside the U.S. As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons. 12 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 18/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China. From time to time, we may receive requests from certain U.S. agencies to investigate or inspect our operations, or to otherwise provide information. While we will be compliant with these requests from these regulators, there is no guarantee that such requests will be honored by those entities who provide services to us or with whom we associate, especially as those entities are located in China. Furthermore, an on-site inspection of our facilities by any of these regulators may be limited or entirely prohibited. Such inspections, though permitted by us and our affiliates, are subject to the capricious nature of Chinese enforcers, and may therefore be impossible to facilitate. The regulation of Internet website operators in China is subject to interpretation, and our operation of online trading platform and education programs could be harmed if we are deemed to have violated applicable laws and regulations. The interpretation and application of existing Chinese laws and regulations, the stated positions of the main governing authority, the MIIT, and the possibility of adopting new laws or regulations have created significant uncertainties regarding the legality of the businesses and activities of Chinese companies with Internet operations. In particular, according to the Internet Information Services Administrative Measures promulgated by the State Council on September 25, 2000, the activities of Internet content providers are regulated by various Chinese governmental authorities, including, the MOE, the State Administration of Radio, Film and Television, the General Administration of Press and Publication, or GAPP, and the Ministry of Culture, or MOC, depending on the specific activities conducted by the Internet content provider. In addition, MIIT promulgated a notice titled “Notice on Strengthening Management of Foreign Investment in Operating Value-Added Telecom Services” on July 13, 2006, which prohibits PRC Internet content providers from leasing, transferring or selling their ICP licenses or providing facilities or other resources to foreign investors. The notice states that PRC Internet content providers (or their shareholders) should directly own the trademarks and domain names for websites operated by them, as well as servers and other infrastructure used to support these websites and a PRC Internet content provider’s failure to comply with the notice by November 1, 2006 may result in revocation of its ICP license. Except for our corporate website (www.agmprime.com), we only have contractual control over our websites, as the domains are held by our subsidiaries. Among the subsidiaries which holds domain names, AGM Beijing is subject to the PRC laws and regulations. AGM Beijing has submitted ICP filings with the MIIT for all the domain names it holds. However, AGM Beijing may be deemed to be providing commercial internet information services, which would require AGM Beijing to obtain an ICP License. An ICP License is a value-added telecommunications business operating license required for provision of commercial internet information services. Furthermore, as we are providing service through mobile applications to mobile device users, it is uncertain if AGM Beijing will be required to obtain a separate operating license in addition to the ICP License. Although we believe that not obtaining an ICP License or such separate license is in line with the current market practice, there can be no assurance that we will not be required to apply for an operating license for our mobile applications in the future. Dividends payable to our foreign investors and gains on the sale of our ordinary shares by our foreign investors may become subject to PRC tax law. Under the Enterprise Income Tax Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have such establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the extent such dividends are derived from sources within the PRC. Similarly, any gain realized on the transfer of our ordinary shares by such investors is also subject to PRC tax at a current rate of 10%, subject to any reduction or exemption set forth in relevant tax treaties, if such gain is regarded as income derived from sources within the PRC. If we are deemed a PRC resident enterprise, dividends paid on our ordinary shares, and any gain realized from the transfer of our ordinary shares, would be treated as income derived from sources within the PRC and would as a result be subject to PRC taxation. See “Item 4. Information on the Company – Regulation — Regulations on Tax.” Furthermore, if we are deemed a PRC resident enterprise, dividends payable to individual investors who are non-PRC residents and any gain realized on the transfer of our ordinary shares by such investors may be subject to PRC tax at a current rate of 20%, subject to any reduction or exemption set forth in applicable tax treaties. It is unclear whether if we or any of our subsidiaries established outside China are considered a PRC resident enterprise, holders of our ordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. If dividends payable to our non-PRC investors, or gains from the transfer of our ordinary shares by such investors are subject to PRC tax, the value of your investment in our ordinary shares may decline significantly. 13 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 19/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Restrictions on currency exchange may limit PRC investors’ ability to make investment. In response to the persistent capital outflow in China and RMB’s depreciation against U.S. dollar in the fourth quarter of 2016, the PBOC and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures over recent months, including stricter vetting procedures for Chinese citizens to transfer foreign currency overseas and for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, on January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control, or the SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put in place by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of our PRC investors to make capital contribution or make other kinds of payments to us could materially and adversely limit our ability to grow. Our Class A Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. The delisting of our Class A Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections. The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our Class A Ordinary Shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. Our auditor, the independent registered public accounting firm that issues the audit report included in our annual report on Form 20-F, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations were more stringent than the HFCA Act. For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022. The SEC has announced that the SEC staff is preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report. It is unclear when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations will be adopted. The implications of this possible regulation in addition the requirements of the HFCA Act are uncertain. Such uncertainty could cause the market price of our Class A Ordinary Shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCA Act. If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our Class A Ordinary Shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our Class A Ordinary Shares. 14 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 20/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The PCAOB’s inability to conduct inspections in China prevents it from fully evaluating the audits and quality control procedures of our independent registered public accounting firm. As a result, we and investors in our ordinary shares are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the China Securities Regulatory Commission (the “CSRC”) and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB in the PRC or by the CSRC or the PRC Ministry of Finance in the United States. The PCAOB continues to be in discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges. Risks Related to Our Capital Structure and Class A Ordinary Shares The dual-class structure of our ordinary shares has the effect of concentrating voting control with certain shareholders, including our executive officers, employees and directors and their affiliates, which will limit your ability to influence the outcome of important transactions, including a change in control. Under our memorandum and articles of association, we are authorized to issue 200,000,000 Class A ordinary shares of $0.001 par value per share and 200,000,000 Class B ordinary shares of $0.001 par value per share. As of the date of this report, there are 21,356,290 Class A ordinary shares and 7,100,000 Class B ordinary shares issued and outstanding. Each of our Class B ordinary shares has five (5) votes per share, and each of our Class A ordinary shares has one (1) vote per share. Because of the five- to-one voting ratio between our Class B ordinary shares and Class A ordinary shares, the holders of our Class B ordinary shares collectively control a majority of the combined voting power of our ordinary shares and therefore are able to control all matters submitted to our shareholders for approval even when the shares of Class B ordinary shares represent a minority of all outstanding shares of our Class A ordinary shares and Class B ordinary shares. These holders of our Class B ordinary shares may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. The directors and executive officers beneficially own a majority of the outstanding Class A ordinary shares and all of the outstanding Class B ordinary shares as of the date hereof. As of the date of this report, our directors and executive officers directly and indirectly hold an aggregate of approximately 74.93% of the combined voting power of Class A and Class B ordinary shares. Our directors and executive officers have voting and dispositive power of all the outstanding Class B ordinary shares. Mr. Wenjie Tang, our CEO, holds approximately 68.59% of the combined voting power of Class A and Class B ordinary shares. This concentrated control may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our shareholders of an opportunity to receive a premium for their ordinary shares as part of a sales of our company and might ultimately affect the market price of our Class A Ordinary Shares. British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of the ability to protect their interests. British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The British Virgin Islands courts are also unlikely to recognize or enforce against us judgments of courts in the United States based on certain liability provisions of U.S. securities law; and to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain liability provisions of U.S. securities laws that are penal in nature. There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will generally recognize and enforce the non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered. 15 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 21/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The laws of the British Virgin Islands provide little protection for minority shareholders, so minority shareholders will have little or no recourse if they are dissatisfied with the conduct of our affairs. Under the law of the British Virgin Islands, there is little statutory law for the protection of minority shareholders other than the provisions of the BVI Business Companies Act (the “BVI Act”) dealing with shareholder remedies. The principal protection under statutory law is that shareholders may bring an action to enforce the company’s memorandum and articles of association. Shareholders are entitled to have the affairs of the company conducted in accordance with the general law and the company’s memorandum and articles of association. There are common law rights for the protection of shareholders that may be invoked, largely dependent on English company law, since the common law of the British Virgin Islands for business companies is limited. Under the general rule pursuant to English company law known as the rule in Foss v. Harbottle, a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express dissatisfaction with the conduct of the company’s affairs by the majority or the board of directors. However, every shareholder is entitled to have the affairs of the company conducted properly according to law and the constituent documents of the corporation. As such, if those who control the company have persistently disregarded the requirements of company law or the provisions of the company’s memorandum and articles of association, then the courts will grant relief. Generally, the areas in which the courts will intervene are the following: (1) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (2) acts that constitute fraud on the minority where the wrongdoers control the company; (3) acts that infringe on the personal rights of the shareholders, such as the right to vote; and (4) where the company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than the rights afforded minority shareholders under the laws of many states in the United States. The trading price of our Class A Ordinary Shares has been, and is likely to continue to be, volatile; you might not be able to sell your shares at or above the price that you paid for them and we may not be able to stop the decline of our stock price. The trading price of our Class A ordinary shares has been, and is likely to continue to be, volatile, and may be influenced by numerous factors, some of which are beyond our control; you might not be able to sell your shares at or above the price that you paid for them. Factors that could cause volatility in the market price of our common stock include, but are not limited to: ● actual or anticipated fluctuations in our revenue and other operating results; ● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; ● actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● announcements by us or our competitors of significant services or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; ● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● other events or factors, including those resulting from war or incidents of terrorism, or responses to these events In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business. 16 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 22/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm We are a “foreign private issuer,” and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance. We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime. As a foreign private issuer, we will also be exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. However, we will still be subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies. We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary Shares less attractive to investors. We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our Class A ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our Class A ordinary shares less attractive because we may rely on these exemptions. If some investors find our Class A ordinary shares less attractive as a result, there may be a less active trading market for our Class A ordinary shares and our stock price may be more volatile. Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail our company of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a “controlled company” under the rules of the Nasdaq Capital Market, we may exempt our company from certain corporate governance requirements that could adversely affect our public shareholders. Our directors and officers beneficially own a majority of the voting power of our outstanding ordinary shares. Under the Rule 4350(c) of the Nasdaq Capital Market, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors to be independent, as defined in the Nasdaq Capital Market rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of independent directors. Although we do not intend to rely on the “controlled company” exemption under the Nasdaq Capital Market rules, we could elect to rely on this exemption in the future. If we elected to rely on the “controlled company” exemption, a majority of the members of our board of directors might not be independent directors and our nominating and compensation committees might not consist entirely of independent directors. Accordingly, while we remain a controlled company relying on the exemption and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq Capital Market corporate governance requirements. 17 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 23/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm We do not intend to pay dividends for the foreseeable future. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Class A ordinary shares if the market price of our Class A ordinary shares increases. The requirements of being a public company may strain our resources and divert management’s attention. As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the securities exchange on which we list, and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. As a result of disclosure of information in this annual report and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, brand and reputation and results of operations. We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers. The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies. As a publicly listed company, we are required to file periodic reports with the Securities and Exchange Commission upon the occurrence of matters that are material to our company and shareholders. In some cases, we will need to disclose material agreements or results of financial operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as a U.S.-listed public company, we will be governed by U.S. laws that our competitors, which are mostly private Chinese companies, are not required to follow. To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing could affect our results of operations. ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company AGM Group Holdings Inc. (“AGM Holdings”) was incorporated on April 27, 2015 under the laws of the British Virgin Islands (“BVI”). AGM Technology Limited (“AGM HK”) was incorporated on May 21, 2015 under the law of Hong Kong. AGM HK is a wholly-owned subsidiary of AGM Holdings and its principal activity is providing our core service to customers. AGM Tianjin Construction Development Co., Ltd. (“AGM Tianjin”) was incorporated on October 13, 2015 in Shenzhen under the laws of the People’s Republic of China. AGM Tianjing a wholly-owned subsidiary of AGM HK. AGM Tianjin was incorporated for the purpose of being a holding company for the equity interests in PRC. AGM Tianjin did not conduct any operations or own any material assets or liabilities except for cash, insignificant expense and the 100% of the equity interests in AGM Beijing. 18 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 24/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”) was incorporated on November 13, 2015 in Beijing under the laws of the People’s Republic of China. AGM Beijing is a wholly-owned subsidiary of AGM Tianjin and its principal activities include software design, technology transfer, technology consulting, technology promotion and data processing AGM Beijing holds an ICP filing for our online trading platform and education programs. AGM Beijing was incorporated in Beijing because almost all of our employees were and still are located in Beijing. In order to comply with the PRC law regarding employee’s social benefits, which are regulated separately in each city or province, it is more practical for us to locate our office in Beijing so that we can pay for the employees’ social benefits with the local government agency. AGM Software Service LTD (“AGM Software”) was incorporated on June 14, 2017 under the laws of BVI. AGM Software is a wholly-owned subsidiary of AGM Holdings and its principal activity will be assisting AGM HK in providing our core technology services to customers. On July 26th, 2019, AGM Holdings acquired 100% of the equity interest in Anyi Network, Inc. (“Anyi Network”), and in consideration therefor, AGM Holdings paid $400,000 in cash and issued an aggregate of 475,000 Class A ordinary shares of AGM Holdings to the shareholders of Anyi Network. On April 16, 2019, AGMTrade UK LTD (“AGM UK”), a wholly owned subsidiary incorporated on July 18, 2017, was dissolved under the law of England and Wales. On November 20, 2019, AGM Trade Global PTY LTD (“AGM Australia”), a wholly owned subsidiary incorporated on July 25, 2017, was dissolved under the law of Australia. On October 8, 2019, AGM Holdings transferred its 100% ownership of AGMClub Service Limited (“AGMClub”), a Hong Kong company incorporated on August 14, 2017. On August 15, 2019, AGM Global Asset Management Limited (“AGM Global”), a wholly owned subsidiary acquired on May 24, 2018, was dissolved under the law of Cayman Islands. AGM UK, AGM Australia, AGMClub and AGM Global were for business development purposes. They are holding companies and have not engaged any substantial businesses. As the business strategies developed, AGM Holdings wound up AGM UK, AGM Australia, AGMClub and AGM Global. On May 19, 2020, Nanjing XinGaoMeng Software Technology Co., Ltd. (“AGM Nanjing”), an indirectly wholly owned subsidiary incorporated on September 28, 2016, was dissolved under the law of PRC. AGM Nanjing was a holding company and did not have any substantial assets or liabilities On December 14, 2020, AGM Holdings sold all the equity interest of Anyi Network by entering into a share purchase agreement with certain buyers, pursuant to which the Company sold to the buyers 100% equity interest in Anyi Network in exchange for a total consideration of $8,000,000, payable in the form of canceling 475,000 ordinary shares of AGM Holdings held by the buyers, valued at $16.00 per share, and payment of $400,000 in cash. The disposition of Anyi Network includes the disposition of the subsidiaries of Anyi Network. On October 19, 2020, AGM Tianjin International Financial Leasing Co. Ltd. (“AGM Leasing”) was incorporated in the People’s Republic of China under the laws of the People’s Republic of China. AGM Leasing is a wholly-owned subsidiary of AGM HK and a wholly foreign-owned entity under the PRC laws. AGM Leasing was incorporated for the purpose of conducting financial leasing services for the Company. AGM Leasing did not conduct any operations or own any material assets or liabilities. B. Business Overview Core Products and Services We position ourselves as a software company, currently conducting two main business: 1) fintech software and 2) trading education software and website service. Fintech software We provide multi-assets trading and management system to small and mid-size broker and institutional clients. Broker and institutional can use the system to conduct account management, agent commission calculation and distribution, multi-assets reports, automatic deposit and withdrawal for clients, KYC and AML integration, etc. In addition to use the standard version, brokers and institutions usually will request new features or integrations, such as integration new payment API, new KYC API, adding new reports, adding new currency as accounting currency. These may lead to customization projects. 19 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 25/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Retail trading education, retail trading software and website service We have developed an interactive trading education website that uses subscription-based method. On July 1, 2020, we have officially launched FXSC, an online trading education and social trading network platform for forex traders. FXSC provides trading education to users through interactive trading simulation and trading contests, which enables users to choose and participate available contests and compete for prizes in a real-time streamed, interactive demo trading environment. FXSC also provides demo trading, also referred as virtual trading, paper trading, or trading simulation, which is designed to give users, especially the ones with limited knowledge and skills, a risk-free trading environment to get familiar with the markets and trading tools. We plan to charge subscription fee directly to end-user for using social and educational features of the website. In addition, through partnership with brokers that integrate its accounts management system with FXSC, we plan to charge brokers introducing fee per clients introduced and monthly service fee for their clients using FXSC. We developed our first version of China exchange-based futures/commodity trading software in September 2019. We aimed to offer to small and medium sized financial institutions in China with solutions that could enhance the offering they provide to their end-users. We have conducted trials among a small group of users and upgraded the software several rounds based on the feedbacks. At the 3rd quarter of 2020 however, most futures brokers started to accept new third-party software API connection method in order to comply with newly China Futures regulatory rule about the trading terminal API pass-through regulation. New method needs “pass through monitoring” API usage information directly to end client. Broker will need to know exact who is using API from what third-party software, while traditionally brokers didn’t need to collect such information. All other software products on the markets are required to be comply with the new rule. Accordingly, we were obliged to upgrade and transform our system to enable this new API connection method. Major upgrading and transformation of the system is now complete at the end of 1st quarter of 2021. We are conducting new round of trials from invited clients. We plan to charge subscription fee directly to end-user for using the trading software. We plan to integration this product/feature into FXSC by the end of June of 2021, and thus now classified in trading education and website service. Discontinued Business Forex trading brokerage business Prior to September 5, 2018, we owned 100% equity interest in AGM Group Ltd. (“AGM Belize”), a Belize corporation, through which we engaged in the forex trading brokerage service with a license provided by the International Financial Services Commission of Belize (“IFSC”) under the license number IFSC/60/448/FX/17 (the “IFSC License”). AGM Belize also operated a social trading network platform under AGMTrade. Aggregate revenue generated from AGM Belize’s services accounted for approximately 2.5% (1.5% of change from 1% due to reclassification) of the Company’s total revenue in fiscal years ended December 31, 2017. AGM Belize held approximately $15.9 million in assets (including approximately $12.5 million categorized as transaction monetary assets held for clients) and $14.2 million in liabilities (including approximately $12.5 million categorized as deposits payable, which offset the total transaction monetary assets held for clients) as of December 31, 2017. AGM Belize’s assets and liabilities consisted of approximately 64% and 85% of the Company’s total assets and liabilities, respectively, with customers deposits consisting of the majority of such. In September 2018, the central government of the People’s Republic of China initiated a certain policy change that would no longer support local Chinese clients/users to trade FX with offshore regulated body. In order to ensure compliance with PRC laws, regulations and policies, the Company voluntarily ceased its FX trading brokerage business and suspended such activities on AGMTrade. On September 5, 2018, we entered into an equity acquisition agreement with the former Chairman of the Board, Zhentao Jiang, pursuant to which we agreed to sell to Jiang a 90% equity interest in AGM Belize for $450,000, which is 90% of AGM Belize’s estimated value of $500,000. The transaction has been duly authorized by our shareholders, audit committee and the board of directors, and has been approved by the Belize Registry and The Nasdaq Stock Market LLC. Upon consummation of the Transaction, we maintain a 10% equity interest in AGM Belize to continue to hold the IFSC License. As a result, we no longer engage in and does not expect to generate any revenue from the forex trading brokerage business, including AGMTrade. Online Forex Trading Service https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 26/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Prior to September 2018, we, through AGM Belize, hold licenses to a core trading platform known as the MetaTrader. Due to the same legal compliance reasons, we have discontinued the online forex trading service since September 2018. Accounting and ERP software During the period between April 2019 to December 2020, we were engaged in the development and sale of enterprise application software through Anyi Network, including accounting software and Enterprise Resource Planning (ERP) software, and the software-related after-sales services in China. In December 2020, we sold all the equity interest in Anyi Network and therefore discontinued the accounting and ERP software business. 20 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 27/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Recent Development Equity Transfer Agreement with Yushu Kingo City Real Estate Development Co., Ltd. On January 16, 2020, AGM Tianjin entered into an equity transfer agreement with the shareholders of Yushu Kingo City Real Estate Development Co., Ltd. (“Yushu Kingo”), who collectively owns 100% of the equity interest in Yushu Kingo. Pursuant to the Agreement, in exchange for 100% of the equity interest in Yushu Kingo, AGM Tianjin agrees to pay $20,000,000 in cash (the “Cash Payment”) and cause AGM Holdings to issue 2,000,000 Class A ordinary shares, valued at $15 per share, subject to the terms and conditions of the Agreement (the “Acquisition”). As of the date of this report, AGM Tianjin has made advance payments upon execution of a letter of intent and upon completion of due diligence (the “Advance Payments”). The parties further agreed in the Agreement that the Advance Payments shall count towards the Cash Payment and that AGM Tianjin shall pay the remaining Cash Payment amount to Yushu Kingo Shareholders if and only if Yushu Kingo sells no less than 15,000 square meters of real property or generates revenue of no less than RMB 150 million (approximately $21.6 million) during the 24 months after the closing of the Acquisition (the “Cash Payment Condition”). If Yushu Kingo fails to meet the Cash Payment Condition, Yushu Kingo shall return the Advance Payments to AGM Tianjin and AGM Tianjin is not obligated to make the Remaining Payment. On April 6, 2021, AGM Tianjin and Yushu Kingo entered into a supplement agreement to the equity transfer agreement. Pursuant to the supplement agreement, Yushu Kingo’s shareholders shall return the Advance Payment and pay an additional 10% interest to AGM Tianjin if AGM Tianjin decides not to proceed with the acquisition contemplated by the equity transfer agreement and terminate such agreement on or before October 31, 2021. If Yushu Kingo is unable to make such payment, it will transfer the titles of real properties of Yushu Kingo to AGM Tianjin, valued with a 20% discount to market price. The parties further agreed to conduct a new evaluation of Yushu Kingo’s assets and to enter into supplement agreement based on such evaluation. The Acquisition will close after all closing conditions are met, which include, among other things, completion of registration with local government authority and completion of auditing and appraisal. However, we may not be able to complete the Acquisition within a reasonable time frame or at all, given the substantial uncertainty surrounding the COVID-19 outbreak and its economic impact. See “Risk Factors – Risks Related to Our Business and Industry – We may not be able to complete the acquisition of the Yushu Kingo within a reasonable time frame or at all, which could have a negative impact on our business expansion.” Memorandum of Understanding with GMTK Global Pty Ltd. On July 15, 2020, AGM HK entered into a Memorandum of Understanding with GMTK Global Pty Ltd., an Australia- based brokerage firm, to jointly promote the Company’s newly launched online trading education and social trading network platform FXSC in the Australia market. By the end of March 2021, the Company has completed three rounds of tests with GMTK Global Pty Ltd. The purpose of test was to confirm the integration of GMTK Global Pty Ltd’s account management system with our FXSC user center and live contest data synchronization. The final partnership contract was delayed due to two reasons: (1) more tests will need to be conducted; and (2) GMTK needs additional time to update its account management system per Australian newly imposed CFD trading rules; the upgrade was near completion and we expect the execute the final partnership contract in May 2021. Letter of Intent with the shareholders of Safe Gold Financial Holdings Limited On August 7, 2020, AGM HK entered into a letter of intent with the shareholders of Safe Gold Financial Holdings Limited ("Safe Gold") to acquire 100 percent equity interest in Safe Gold and its wholly owned subsidiary Safe Gold Securities and Futures Limited ("Safe Gold SF"), for a proposed total consideration of all-cash transaction that equals the combined net asset value for Safe Gold and Safe Gold SF as of June 30, 2020, plus a premium of HK$8.5 million, deducting a due from shareholders of HK$14 million, subject to certain adjustments and definitive agreements at the closing. Safe Gold is a Hong Kong-based financial services company which, through its wholly-owned subsidiary Safe Gold SF, holds Hong Kong Financial Services Licenses Type 1 (Dealing of Securities), Type 2 (Dealing in Futures Contracts), Type 4 (Advertising on Securities), Type 5 (Advertising on Futures Contracts), and Type 9 (Asset Management). Safe Gold is also a participant and trading right holder of both HKEX and HKFE. Private Placement In July 2020, we consummated a private placement offering whereby the Company entered into private placement subscription agreements with certain investors. Pursuant to the Subscription Agreements, in which we issued an aggregate of 40,235 Class A ordinary shares to the investors, at a purchase price of $16.6 per share, for an aggregate amount of $667,901. All of https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 28/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm the Shares were issued to non U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933, as amended. Disposition of Anyi Network, Inc. On December 14, 2020, we disposed of Anyi Network by entering into a share purchase agreement with Haiyan Huang, Feng Zhi and Yinglu Gao (the “Buyers”), pursuant to which the Company agreed to sell to the Buyers 100% equity interest in Anyi Network, including its subsidiaries, in exchange for a total consideration of $8,000,000, payable in the form of canceling 475,000 ordinary shares of AGM Holdings held by the Buyers, valued at $16.00 per share, and payment of $400,000 in cash. 21 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 29/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The COVID-19 Pandemic We are monitoring the global outbreak and spread of the novel strain of coronavirus (COVID-19) and taking steps in an effort to identify and mitigate the adverse impacts on, and risks to, our business (including but not limited to our employees, customers, other business partners, our manufacturing capabilities and capacity and our distribution channels) posed by its spread and the governmental and community reactions thereto. We continue to assess and update our business continuity plans in the context of this pandemic, including taking steps in an effort to help keep our workforces healthy and safe. The spread of COVID- 19 has caused us to modify our business practices (including employee travel, employee work locations in certain cases, and cancellation of physical participation in certain meetings, events and conferences), and we expect to take further actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, customers and other business partners. We are also working with our suppliers to understand the existing and future negative impacts to our supply chain and take actions in an effort to mitigate such impacts. Due to the speed with which the COVID-19 situation is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate impact; therefore, any negative impact on our overall financial and operating results (including without limitation our liquidity) cannot be reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and the impact on our financial and operating results could be material. See “Risk Factors—Risks Related to our Business—The COVID-19 pandemic has adversely impacted, and poses risks to, our business, the nature and extent of which are highly uncertain and unpredictable.” Sales Channels and Long-Term Opportunities Due to our limited operating history, we have not developed a comprehensive marketing strategy. For fintech software, currently we are marketing our services through direct communication with potential broker or institutional clients. As for retail trading education, retail trading software and website service, we plan to acquire seed clients from partnership with brokers that integrating accounts system with FXSC. Furthermore, we plan to use search engine marketing, search engine optimization, inherent virus marketing features developed within our products and social network marketing to targeted users. We believe the brand value will develop rapidly as our product inherently bring more educational value to retail clients as comparing to competitors’ product. Customers and Suppliers Customers Our main clients are institutional clients. We consider our major customers to be those customers that accounted for more than 10% of sales revenue. We only had one customer during the fiscal year ended December 31, 2020, which accounted for all of our sales revenue. We had two such customers during the fiscal year ended December 31, 2019, which were Algoal Technology Pte Ltd. and Dalian Aoyuan Electronics Co., Ltd. and accounted for 75% and 17%, respectively, of our sales revenue. Suppliers We consider our major supplier to be those suppliers that accounted for more than 10% of our cost of revenue. We only had one supply during the fiscal year ended December 31, 2020, which accounted for all of our cost of revenue. We had no such supplier during the fiscal years ended December 31, 2019. Employees As of December 31, 2020, we have a total of 11 full-time employees. Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes. We are required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time. As required by regulations in China, we participate in various employee social security plans that are organized by local governments. 22 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 30/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Legal Proceedings As of the date of this annual report, there is no legal proceeding pending or threatened against to which we are a party of. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise. Regulations Regulation of Internet Information Services Internet information services are regulated by the Administrative Measures on Internet Information Services, or the ICP Measures, promulgated on September 25, 2000 by the State Council and amended on January 8, 2011. “Internet information services” are defined as services that provide information to online users through the internet. Internet information services providers, also called Internet content providers, or ICPs, that provide commercial services are required to obtain an operating license from the MIIT or its provincial counterpart. To the extent the internet information services provided relate to certain matters, including news, publication, education or medical and health care (including pharmaceutical products and medical equipment), approvals must also be obtained from the relevant industry regulators in accordance with the laws, rules and regulations governing those industries. Regulation of Internet Content The PRC government has promulgated measures relating to Internet content through various ministries and agencies, including the MIIT, the News Office of the State Council, the Ministry of Culture and the General Administration of Press and Publication. In addition to various approval and license requirements, these measures specifically prohibit internet activities that result in the dissemination of any content which is found to contain pornography, promote gambling or violence, instigate crimes, undermine public morality or the cultural traditions of the PRC or compromise State security or secrets. ICPs must monitor and control the information posted on their websites. If any prohibited content is found, they must remove such content immediately, keep a record of it and report to the relevant authorities. If an ICP violates these measures, the PRC government may impose fines and revoke any relevant business operation licenses. Regulation of Internet Security The Decision in Relation to Protection of the Internet Security enacted by the SCNPC on December 28, 2000 provides that the following activities conducted through the Internet are subject to criminal punishment: ● gaining improper entry into a computer or system of strategic importance; ● disseminating politically disruptive information or obscenities; ● leaking State secrets; ● spreading false commercial information; or ● infringing intellectual property rights. The Administrative Measures on the Security Protection of Computer Information Network with International Connections, issued by the Ministry of Public Security on December 16, 1997 and amended on January 8, 2011, prohibit the use of the Internet in a manner that would result in the leakage of State secrets or the spread of socially destabilizing content. If an ICP violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and shut down its websites. 23 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 31/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Regulation Relating to Privacy Protection Under the ICP Measures, ICPs are prohibited from producing, copying, publishing or distributing information that is humiliating or defamatory to others or that infringes upon the lawful rights and interests of others. Depending on the nature of the violation, ICPs may face criminal charges or sanctions by PRC security authorities for such acts, and may be ordered to suspend temporarily their services or have their licenses revoked. Under the Several Provisions on Regulating the Market Order of Internet Information Services, issued by the MIIT on December 29, 2011, ICPs are also prohibited from collecting any user personal information or providing any such information to third parties without the consent of a user. ICPs must expressly inform the users of the method, content and purpose of the collection and processing of such user personal information and may only collect such information necessary for its services. ICPs are also required to properly maintain the user personal information, and in case of any leak or likely leak of the user personal information, ICPs must take remedial measures immediately and report any material leak to the telecommunications regulatory authority. In addition, the Decision on Strengthening Network Information Protection promulgated by the Standing Committee of the National People’s Congress on December 28, 2012 emphasizes the need to protect electronic information that contains individual identification information and other private data. The decision requires ICPs to establish and publish policies regarding the collection and use of personal electronic information and to take necessary measures to ensure the security of the information and to prevent leakage, damage or loss. Furthermore, MIIT’s Rules on Protection of Personal Information of Telecommunications and Internet Users promulgated on July 16, 2013 contain detailed requirements on the use and collection of personal information as well as the security measures to be taken by ICPs. The PRC government retains the power and authority to order ICPs to provide an Internet user’s personal information if such user posts any prohibited content or engages in any illegal activities through the Internet. Regulations on Intellectual Property Rights Patent. Patents in the PRC are principally protected under the Patent Law of the PRC. The duration of a patent right is either 10 years or 20 years from the date of application, depending on the type of patent right. Copyright. Copyright in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC and related rules and regulations. Under the Copyright Law, the term of protection for copyrighted software is 50 years. Trademark. Registered trademarks are protected under the Trademark Law of the PRC and related rules and regulations. Trademarks are registered with the Trademark Office of the SAIC. Where registration is sought for a trademark that is identical or similar to another trademark which has already been registered or given preliminary examination and approval for use in the same or similar category of commodities or services, the application for registration of such trademark may be rejected. Trademark registrations are effective for a renewable ten-year period, unless otherwise revoked. We are in the process of having our trademark registered in PRC, and we have registered some trademarks in Hong Kong. Domain Names. Domain name registrations are handled through domain name service agencies established under the relevant regulations, and applicants become domain name holders upon successful registration. Regulations on Dividend Distributions One of our PRC subsidiaries, AGM Tianjin, is a wholly foreign-owned enterprise under the PRC law. The principal regulations governing the distribution of dividends paid by wholly foreign-owned enterprises include: ● Corporate Law (1993) as amended in 2005 and 2013; ● The Wholly Foreign-Owned Enterprise Law (1986), as amended in 2000; ● The Wholly Foreign-Owned Enterprise Law Implementation Regulations (1990), as amended in 2001; and ● The Enterprise Income Tax Law (2007) and its Implementation Regulations (2007). 24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 32/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Under these regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. In addition, an enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until its cumulative total reserve funds reaches 50% of its registered capital. Our Company’s reserve fund has not yet reached this level. The board of directors of a wholly foreign-owned enterprise has the discretion to allocate a portion of its after-tax profits to its employee welfare and bonus funds. These reserve funds, however, may not be distributed as cash dividends. On March 16, 2007, the National People’s Congress enacted the Enterprise Income Tax Law, and on December 6, 2007, the State Council issued the Implementation Regulations on the Enterprise Income Tax Law, both of which became effective on January 1, 2008. Under this law and its implementation regulations, dividends payable by a foreign-invested enterprise in the PRC to its foreign investor who is a non-resident enterprise will be subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a lower withholding tax rate. Nevertheless, AGM Tianjin currently do not have assets or operation of business, and we have no present plans to declare dividends and plan to retain our earnings to continue to grow our business. Regulations on Tax PRC Enterprise Income Tax The PRC enterprise income tax, or EIT, is calculated based on the taxable income determined under the applicable EIT Law and its implementation rules, which became effective on January 1, 2008. The EIT Law imposes a uniform enterprise income tax rate of 25% on all resident enterprises in China, including foreign-invested enterprises. Uncertainties exist with respect to how the EIT Law applies to our tax residence status and our offshore subsidiaries. Under the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. Although the implementation rules of the EIT Law define “de facto management body” as a managing body that exercises substantive and overall management and control over the production and business, personnel, accounting books and assets of an enterprise, the only official guidance for this definition currently available is set forth in Circular 82 issued by the State Administration of Taxation, which provides guidance on the determination of the tax residence status of a Chinese-controlled offshore incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC enterprise or enterprise group as its primary controlling shareholder. According to Circular 82, a Chinese-controlled offshore incorporated enterprise will be regarded as a PRC tax resident by virtue of having a “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following criteria are met: ● the primary location of the day-to-day operational management is in the PRC; ● decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; ● the enterprise’s primary assets, accounting books and records, company seals, and board and shareholders meeting minutes are located or maintained in the PRC; and ● 50% or more of voting board members or senior executives habitually reside in the PRC. We believe that we meet the conditions outlined in the immediately preceding paragraph and should be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in Circular 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we will continue to monitor our tax status. See “Risk Factors — Risks Related to Doing Business in China — Under the Enterprise Income Tax Law, we may be classified as a “Resident Enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders.” 25 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 33/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm In the event that we or any of our offshore subsidiaries is considered to be a PRC resident enterprise: (1) we or our offshore subsidiaries, as the case may be, may be subject to the PRC enterprise income tax at the rate of 25% on our worldwide taxable income; (2) dividend income that we or our offshore subsidiaries, as the case may be, receive from our PRC subsidiaries may be exempt from the PRC withholding tax; and (3) dividends paid to our overseas shareholders who are non-PRC resident enterprises as well as gains realized by such shareholders from the transfer of our shares may be regarded as PRC-sourced income and as a result be subject to PRC withholding tax at a rate of up to 10%, and similarly, dividends paid to our overseas shareholders who are non-PRC resident individuals, as well as gains realized by such shareholders from the transfer of our shares, may be regarded as PRC-sourced income and as a result be subject to PRC withholding tax at a rate of 20%, subject to the provision of any applicable agreement for the avoidance of double taxation. Under SAT Circular 698 and Bulletin 7, if a non-resident enterprise transfers “PRC taxable assets” of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas non-public holding company without reasonable commercial purpose, the parties involved in the indirect transfer of the PRC taxable assets and the PRC resident enterprise whose equity is transferred indirectly, may report such equity transfer matter to the PRC competent tax authority of the PRC resident enterprise. The PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding, or deferring PRC tax. As a result, gains derived from such disposition may be subject to a PRC withholding tax rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price which is not on an arm’s length basis and results in reducing the taxable income, the relevant tax authority has the power to make a reasonable adjustment as to the taxable income of the transaction. Circular 698 was retroactively effective on January 1, 2008. On February 3, 2015, the State Administration of Taxation released SAT Bulletin 7 to amend and clarify several issues related to Circular 698. According to SAT Bulletin 7, the term “PRC taxable assets” includes assets attributed to an establishment in China, immoveable properties located in China, and equity investments in PRC resident enterprises; and when determining whether there is a “reasonable commercial purpose” of the transaction arrangement, factors to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income mainly derives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements. If Circular 698 and Bulletin 7 were determined by the tax authorities to be applicable to us, our offshore subsidiaries and our non-resident enterprise investors, we, our offshore subsidiaries and our non-resident enterprise investors might be required to expend valuable resources to comply with this circular, which may materially and adversely affect us or our non- resident enterprise investors. See “Risk Factors — Risks Related to Doing Business in China — We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a PRC establishment of a non-PRC company, or other assets attributable to a PRC establishment of a non-PRC company.” Under applicable PRC laws, payers of PRC-sourced income to non-PRC residents are generally obligated to withhold PRC income taxes from the payment. In the event of a failure to withhold, the non-PRC residents are required to pay such taxes on their own. Failure to comply with the tax payment obligations by the non-PRC residents will result in penalties, including full payment of taxes owed, fines and default interest on those taxes. PRC Value-added Tax Pursuant to the Pilot Measure for Imposition of Value-Added Tax to Replace Business Tax for Transport and Shipping Industry and Some of the Modern Service Industries, promulgated by the Ministry of Finance and the State Administration of Taxation on November 16, 2011 (the “PilotMeasure”),any entity or individual conducting business in some modern service industry, such as the service we are engaging in, is generally required to pay a value-added tax, or VAT, at the rate of 6% on the revenues generated from providing such services. A taxpayer is allowed to offset the qualified input VAT paid on taxable purchases against the output VAT chargeable on the modern services provided. On March 30, 2016, the Ministry of Finance and the State Administration of Taxation promulgated the Notice of the Ministry of Finance and the State Administration of Taxation on Overall Implementation of the Pilot Program of Replacing Business Tax with Value-added Tax. Pursuant to this notice, from May 1, 2016, a value-added tax will generally be imposed to replace the business tax in the construction industry, real estate industry, finance industry, consumer service industry and other industries on a nationwide basis. 26 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 34/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm SAFE Circular 37 SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls. Share Option Rules Under the Administration Measures on Individual Foreign Exchange Control issued by the PBOC on December 25, 2006, all foreign exchange matters involved in employee share ownership plans and share option plans in which PRC citizens participate require approval from SAFE or its authorized branch. Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. In addition, under the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Share Incentive Plans of Overseas Publicly-Listed Companies, or the Share Option Rules, issued by SAFE on February 15, 2012, PRC residents who are granted shares or share options by companies listed on overseas stock exchanges under share incentive plans are required to (i) register with SAFE or its local branches, (ii) retain a qualified PRC agent, which may be a PRC subsidiary of the overseas listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the share incentive plans on behalf of the participants, and (iii) retain an overseas institution to handle matters in connection with their exercise of share options, purchase and sale of shares or interests and funds transfers. Employment Laws In accordance with the PRC National Labor Law, which became effective in January 1995, and the PRC Labor Contract Law, which became effective in January 2008, as amended subsequently in 2012, employers must execute written labor contracts with full-time employees in order to establish an employment relationship. All employers must compensate their employees equal to at least the local minimum wage standards. All employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards and provide employees with appropriate workplace safety training. In addition, employers in China are obliged to pay contributions to the social insurance plan and the housing fund plan for employees. We have contributed to the basic and minimum social insurance plan. Due to a high employee turnover rate in our industry, it is difficult for us to comply fully with the law. While we believe that we have made adequate provision of such outstanding amounts of contributions to such plans in our financial statements, any failure to make sufficient payments to such plans would be in violation of applicable PRC laws and regulations and, if we are found to be in violation of such laws and regulations, we could be required to make up the contributions for such plans as well as to pay late fees and fines. 27 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 35/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm C. Organizational structure. Below is a chart illustrating our corporate structure: D. Property, Plant and Equipment Intellectual Property We regard our intellectual property rights as critical to our operations. We rely on a combination of patents, copyrights, trademarks and trade secret laws to protect our intellectual property. As of December 31, 2020, we had two registered trademarks in China and owned 10 domain names. 28 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 36/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Property and Equipment As of December 31, 2020 and 2019, property and equipment, net consisted of the following: Electronic equipment Office equipment Total property and equipment Less: accumulated depreciation Total property and equipment, net December 31, 2020 December 31, 2019 $ $ 163,891 $ 14,034 177,925 (158,605) 19,320 $ 172,969 15,050 188,019 (139,013) 49,006 Depreciation expenses for the fiscal years ended December 31, 2020, 2019 and 2018 were $31,957, $48,793 and $53,697, respectively. There was no impairment recorded for these property and equipment for the years ended December 31, 2020, 2019 and 2018. Lease commitments We lease offices and residential properties for employee’s dormitories Rent expenses for the years ended December 31, 2020, 2019 and 2018 were $91,043, $173,259 and $447,363, respectively. The Company has future minimum lease obligations as of December 31, 2020 as follows: Year of 2021 Year of 2022 Year of 2023 Year of 2024 Year of 2025 Thereafter Less: lease commitments on terminations Total ITEM 4A. UNRESOLVED STAFF COMMENTS None. Commitment Amount $ $ 18,116 - - - - - - 18,116 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this annual report. 29 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 37/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm A. Operating Results. Revenue The Company derives revenue from the sale of packaged software products, technical support plans, software customization services, and bundle of products or services that may include a combination of these items. We enter into contracts with customers that include promises to transfer various products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. We recorded and recognized revenues from both products and services in one account, which we present as revenues and revenues from related parties in the accompanying consolidated statements of operations and comprehensive income. During the fiscal years ended December 31, 2020 and 2019, the Company derives revenue from the sale of the following three items: (1) Retail Software Products The Company’s packaged software products consist of accounting software, fintech software, trading education software products and other online based management products. Revenue is recognized at a point in time upon the delivery of the perpetual license, and in a period of time throughout the effective period for the technical support plan, which generally is recognized over twelve months period. However, we did not record this revenue stream on our total revenue in fiscal 2020, 2019 and 2018 since we discontinued business related to these products. We are continuing to develop retail software products for different industries. (2) Technical Support Plans The Company sells our technical support plan either as a package with our sale of software products or separately on its own. Each technical support plan has a unified effective period of one year. Revenue is recognized in a period of time throughout the effective period for the technical support plan, generally is recognized over twelve months period. (3) Software Customization Services The Company delivers its software customization services by developing customized features on the software products to suit customers’ special needs. Upon receiving the purchase request from the customers, the Company designs, develops, tests, and implements the specified features to our software products. The Company also includes a one-year technical support plan specifically for the developed feature(s). Customers are able to request and purchase the service together with a purchase of our software product, or separately if the customer has our software products in-use. Revenue is recognized at a point in time upon customers’ acceptance of the feature(s), and revenue for the technical support plan is recognized over its service term, which generally is for twelve months period. Costs and Expenses We primarily incur the following costs and expenses: Costs of revenues. Our cost of revenues consists primarily of the salaries, payroll taxes and employee benefit costs of our technology and management services associate and other operations personnel. Cost of revenues also includes direct information technology costs and facilities support costs directly related to our services. Selling, general and administrative expenses. Selling, general and administrative expenses consist primarily of compensation expense for our corporate staff and personnel supporting our corporate staff, marketing costs, office supplies, welfare expenses, training expenses, professional fees (including consulting, audit and legal fees), travel and business hospitality expenses. Selling, general and administrative expenses also include depreciation and amortization expenses. We record property and equipment at cost and calculate depreciation using the straight-line method over the estimated useful lives of our assets, which generally range from three to five years. 30 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 38/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Research and development expenses. Research and development expenses consist primarily of compensation expense for our staff in research and development teams, including the salaries, payroll taxes, employee benefit costs and facilities support costs related to our research and development. Bad debt expenses. Based on our periodic review of accounts receivable balances, we adjusted the allowance for doubtful accounts after considering management’s evaluation of the collectability of individual receivable balances, including the analysis of subsequent collections, the customers’ collection history, the write off of uncollectible receivables against the existing reserve, and recent economic events. $ Results of Operations Revenues, net Revenues - related party Total revenues, net Cost of revenue Gross profit Gross margin Operating expenses Selling, general and administrative expenses Research and development expenses Bad debt expenses Total operating expenses Loss from operations Other income (expense) Other income Other expense Loss on equity method investment Total other expense Loss before provision of income taxes Provision for income taxes For the Years Ended December 31, 2018 2019 2020 $ 3,871,812 330,000 1,240,708 - 5,112,520 330,000 1,653,028 43,056 53,305 - 53,305 38,534 $ 14,771 286,944 3,459,492 28% 87% 68% 964,470 63,450 - 1,369,701 127,117 - 3,876,872 1,028,249 923,217 1,027,920 1,496,818 5,828,846 (1,013,149) (1,209,874) (2,368,846) 1,687 (9,343) - 118,709 (363,815) 33,684 534,246 (511,908) (35,174) (7,656) (211,422) (12,836) (1,020,805) (76,343) (1,421,296) (64,615) (2,381,682) 595,421 Loss from continued operation (1,097,148) (1,485,911) (1,786,261) Discontinued operation Loss from discontinued operation, net of income tax Gain from sale of discontinued operation, net of income tax Gain (loss) from discontinued operation, net of income tax (322,490) 347,990 25,500 (76,944) (11,698,538) 5,072,068 (6,626,470) (76,944) - Net loss $ (1,071,648) $ (1,562,855) $ (8,412,731) 31 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 39/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Revenues Our total revenues decreased by $276,695 or 84%, from $330,000 in fiscal 2019 to $53,305 in fiscal 2020. All of our total revenues for both fiscal 2020 and fiscal 2019 generated from third parties and no revenues incurred from related party. Our total revenues decreased by $4,782,520 or 94%, from $5,112,520 in fiscal 2018 to $330,000 in fiscal 2019. Our total revenues – third parties decreased by $3,541,812 or 91%, from $3,871,812 in fiscal 2018 to $330,000 in fiscal 2019, and a decreased in total revenues – related parties of $1,240,708 or 100%, from $1,240,078 in fiscal year 2018 to $0 in fiscal 2019. The decrease in revenues was primarily due to the continued business as described in detail in the section titled “Discontinued Business” starting on page 20. During 2020 and 2019, we developed new products and services using technology derived from the discontinued business. These newly developed products and services have not started to contribute to our revenue stream. Cost of Revenues and Gross Margin Cost of revenues decreased by $4,522 or 11%, from $43,056 in fiscal 2019 to $38,534 for the fiscal 2020. The decrease of cost of revenue was primarily attributable to in line with decrease of revenues. Gross margin for fiscal 2020 was 28%, as compared to 87% for fiscal 2019. The decreased in gross margin of continuing operations was primarily due to higher cost in the wage, payroll taxes and higher overhead costs. Cost of revenues decreased by $1,609,972 or 97%, from $1,653,028 in fiscal 2018 to $43,056 for the fiscal 2019. The decrease of cost of revenue was primarily attributable to in line with decrease of revenues. Gross margin for fiscal 2019 was 87%, as compared to 68% for fiscal 2018. Selling, General and Administrative expenses Selling, general and administrative expenses consist primarily of sales and administrative employee-related expenses, professional fees, travel costs, research and development costs, and other corporate expenses. Selling, general and administrative expenses were $1,027,919 for the year of 2020, a decrease of $341,782, or 25% from December 31, 2019 to December 31, 2020. The decrease in selling, general and administrative expenses was primarily due to decrease in payroll expense, depreciation and amortization expenses, and advertising and marketing expenses, reflecting the down sized of our business in fiscal 2020. Selling, general and administrative expenses consist primarily of sales and administrative employee-related expenses, professional fees, travel costs, research and development costs, and other corporate expenses. Selling, general and administrative expenses were $1,369,701 for the year of 2019, a decrease of $2,507,171, or 65% from December 31, 2018 to December 31, 2019. The decrease in selling, general and administrative expenses was primarily due to decrease in payroll expense, professional service and consulting fees, depreciation and amortization expenses, and advertising and marketing expenses, reflecting the decreased number of employees required to change our business, and offset by increase in regulatory compliance, auditing and filing primarily due to expenses on the acquisitions of new subsidiaries in fiscal 2019. Research and Development Expenses We incurred $63,450 and $127,117 in research and development in fiscal 2020 and 2019, respectively. Research and development expenses decreased by $63,667, or 50%, for fiscal 2020 compared to fiscal 2019. Research and development expenses decreased by $901,132, or 88%, for fiscal 2019 compared to fiscal 2018, since the Company closed research and development projects and dismissed most of employees of research in the middle of fiscal 2019. 32 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 40/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Bad debt expense We did not have expenses in bad debt expense in fiscal 2020 and 2019. We collected all the accounts receivables as of December 31, 2020 and 2019, due to the Company’s sales arrangement usually requires advanced payment since fiscal 2018. We incurred $923,217 in bad debt expense in fiscal 2018. Loss from operations As a result of the factors described above, operating loss was $1,013,149 for fiscal 2020, compared to operation loss was $1,209,874 for fiscal 2019, a decrease in operation loss of $196,725, or 16%. Our operation loss in fiscal 2019 was $1,209,874, compared to operating income was $2,368,846 for fiscal 2018, a decrease in operation loss of $1,158,971, or 49%. Other expenses For fiscal 2020, other expense, net of other income, were $7,656, compared to other expenses, net of other income, were 211,422 for fiscal 2019, a change of $203,766. The decrease of other expense was primarily attributable to a decrease of gain on foreign currency transactions and other non-operating income. The Company also incurred a non-operating expense on impairment of disposal of $1,517. For fiscal 2019, other expense, net of other income, were $211,422, compared to other expenses, net of other income, were $12,836 for fiscal 2018, a change of $198,585. The increase of other expense was primarily attributable to a decrease of gain on foreign currency transactions and offset by a decrease expense of $68,858 incurred in the 2018 periods related to our equity method investment. Loss from continuing operations As a result of the foregoing, our loss from continuing operations was $1,097,148, or $(0.05) per share (basic and diluted), for the year ended December 31, 2020, as compared with loss from continuing operations of $1,485,911, or $(0.07) per share (basic and diluted), for the year ended December 31, 2019. Our continuing operating income was $1,786,261 for fiscal 2018, or $$(0.09) per share (basic and diluted), for the year ended December 31, 2018. Income Tax For fiscal 2020, we had provision for income tax of $76,343, an increase of $11,728, or 18%, as compared to expense for income tax of $64,615 for fiscal 2019. The increase is primarily due to recording of tax liability of $76,343 and tax liability of $64,615 in relation to uncertain tax positions for the uncertainty surrounding the PRC residency of our non-PRC entities for the years ended December 31, 2020 and 2019. For fiscal 2019, we had expenses for income tax of $64,615, an increase of $660,036, or 111%, as compared to benefit for income tax of $595,421 for fiscal 2018. The increase is primarily due to recording of tax liability of $64,615 and tax asset of $595,421 in relation to uncertain tax positions for the uncertainty surrounding the PRC residency of our non-PRC entities for the years ended December 31, 2019 and 2018. Gain (loss) from discontinued operation, net of income taxes Our gain from discontinued operations was $25,500, or $0.00 per share (basic and diluted), for the year ended December 31, 2020, as compared with a loss from discontinued operations of $76,944, or $(0.00) for the year ended December 31, 2019. Our loss from discontinued operations was $6,626,470, or $(0.31) per share (basic and diluted), for the year ended December 31, 2018. 33 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 41/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The summarized operating result of discontinued operation included our consolidated statements of operation is as follows: Revenues Cost of revenues Gross profit Operating expenses Other income (expenses), net Loss before income tax Income tax expense Loss from discontinued operation Gain from disposal, net of tax Total gain (loss) from discontinued operations, net of income taxes $ $ Years Ended December 31, 2018 2019 486,244 379,630 $ 400,513 199,888 179,742 85,732 196,060 (11,844,769) 60,499 (2,240) (18,558) (11,698,538) 58,386 - (76,944) (11,698,538) 5,072,068 (76,944) $ (6,626,470) 2020 237,431 $ 160,810 76,621 412,686 (45,125) (381,190) 767 (322,490) 347,990 25,500 $ - We realized a gain of $347,990 from the disposal of 100% equity of Anyi Network including its subsidiaries and offset by a loss of $322,490 from discontinued operation of the year ended December 31, 2020. As the result, total gain amounted $25,500 from discontinued operation for the year ended December 31, 2020. We reclassified Anyi Network and its subsidiaries as discontinued operation and recorded a loss of $76,944 from discontinued operation in the year ended December 31, 2019. We recognized impairment loss on intangible assets of approximately $2,712,000 when the Company decided to discontinue AGM Belize’s operation in the year ended December 31, 2018. We realized a gain of $450,000 from the disposal of 90% equity of AGM Belize with an investment cost basis of $0. The Company also realized a gain of approximately $4,172,000 resulted from 90% of liabilities being assumed by the acquirer pursuant to the equity transfer agreement. Together, the Company recognized a total gain on disposal of operation of $5,072,068 for the year ended December 31, 2018. Net loss As a result of the factors described above, our net loss for fiscal 2020 was $1,071,648, compared to net loss of $1,562,855 for fiscal 2019, a decrease in net loss of $491,207, or 31%. Our net loss for fiscal 2018 was $8,412,731, a decrease in net loss of $7,072,596, or 84%. Foreign currency translation The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. The functional currency of AGM Holdings, Anyi Technology, Anyi Network, AGM Belize, AGM HK, AGM Software, AGM UK, AGM Australia, AGMClub, and AGM Global are United States dollar. The functional currency of AGM Tianjin, its subsidiaries, Jiangsu AnYiWang and its subsidiaries are Renminbi (“RMB”). For the subsidiaries whose functional currencies are RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates. The Consolidated Balance Sheets balances, with the exception of equity at December 31, 2020 and 2019, were translated at RMB6.5378 and RMB6.9630 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to the Consolidated Statements of Operations and Comprehensive Income and the Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 were RMB6.9003, RMB6.9074 and RMB6.6146 to $1.00, respectively. 34 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 42/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Net gains and losses resulting from foreign exchange translations are included in the Comprehensive income on the consolidated statements of operations. As a result of foreign currency translations, which are a non-cash adjustment, the Company reported a foreign currency translation loss of $154,767 for the year ended December 31, 2020. The Company reported a foreign currency translation gain of $95,060 and $284,923 for the year ended December 31, 2019 and 2018, respectively. This non-cash loss had the effect of increasing our reported comprehensive loss. B. Liquidity and Capital Resources. Liquidity For the years ended December 31, 2020 and 2019 Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. As of December 31, 2020 and 2019, we had working capital of $3,663,177 and $4,642,429, including cash and cash equivalents of $664,605 and $1,462,590, respectively. As a result, we believe that our current cash and cash to be generated from our operations will be sufficient to meet our working capital needs for at least the next twelve months. We are not dependent upon the access to borrow loans from our related parties. We plan to expand our business to implement our growth strategies to broaden our service and strengthen our position in the marketplace. The following table sets forth a summary of changes in our working capital from December 31, 2019 to December 31, 2020: Working capital: Total current assets Total current liabilities Working capital December 31, 2020 December 31, 2019 Change Percentage Change $ $ 6,085,521 $ 2,422,344 3,663,177 $ 7,305,317 $ (1,219,796) (348,814) 2,662,888 (870,982) 4,642,429 $ (17)% (9)% (21)% Because the exchange rate conversion is different for the consolidated balance sheets and the consolidated statements of cash flows, the changes in assets and liabilities reflected on the consolidated statements of cash flows are not necessarily identical with the comparable changes reflected on the consolidated balance sheets. Cash Flow Summary The following table sets forth certain items in our consolidated statements of cash flows for 2020, 2019 and 2018. Net cash used in by operating activities Net cash used in investing activities Net cash provided by (used in) financing activities Exchange rate effect on cash, cash equivalents and restricted cash Net change in cash and cash equivalents Cash and cash equivalents, beginning of the year Cash and cash equivalents, end of the year Less cash and cash equivalents of discontinued operations–end of period Cash and cash equivalents of continuing operations–end of period 35 (5,010,387) (526,329) (55,667) For the Years Ended December 31, 2019 2020 2018 (196,393) $ (2,833,234) $ (1,652,022) $ (435,458) (1,195) 6,063,054 111,878 442,591 129,376 $ (1,411,964) $ (5,788,776) $ 3,236,953 4,628,392 7,865,345 7,865,345 2,076,569 - 613,979 664,605 $ 1,462,590 $ 7,865,345 2,076,569 664,605 - $ https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 43/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm We have cash and cash equivalents held in financial institutions in the following countries (regions): Country (Region) China (Mainland) China (Hong Kong) Singapore Total continuing operations Additional discontinued operation Total continuing operations Operating Activities: December 31, 2020 December 31, 2019 $ $ $ 148,747 $ 271,212 244,646 664,605 $ - 664,605 $ 281,319 536,864 644,407 1,462,590 - 1,462,590 Net cash used in operating activities of continuing operations was $1,355,330 (total of $1,652,022 including discontinued operations of $296,692), for fiscal 2020, primarily due to a net loss of $1,071,648 adjusted by a gain on discontinued operations of $25,500, adjusted by non-cash gain from disposal of subsidiary of $347,990 and working capital primarily included depreciation and amortization expenses of $33,437. The adjustments for changes in assets and liabilities primarily included (i) prepaid expenses and other current assets of $103,145, (ii) accounts payable of $1,763, and (iii) accrued expenses and other current liabilities of $48,537. Net cash used in operating activities of continuing operations was $160,926 (total of $196,393 including discontinued operations of $35,467), for fiscal 2019, primarily due to a net loss from continuing operations of $1,485,911 and adjusted by non- cash working capital primarily included depreciation and amortization expenses of $50,273 and a gain on equity method investment of $33,684. The adjustments for changes in assets and liabilities primarily included (i) prepaid expenses and other current assets of $347,763, (ii) accounts payable of $76,441, and (iv) accrued expenses and other current liabilities of $1,042,072. Net cash used in operating activities of discontinued operations was $296,692, $35,467 and $757,948 in fiscal 2020, 2019 and 2018, respectively. The increase in cash out flows from our continuing operating activities for the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily resulted from the decrease in our accrued expenses and other payable, offset by decrease in our net loss in the year ended December 31, 2020. For the year ended December 31, 2020, net cash provided by our prepaid expense and other current assets of $103,145 and our accrued expenses and other payable decrease of $48,537, compared to net cash provided by our prepaid expense and other current assets of $347,763 and our accrued expenses and other payable increase of $1,042,072 in 2019. For the year ended December 31, 2020, our net loss from continuing operations totaled $1,097,148, compared to net loss from continuing operations of $1,485,911 in 2019. Investing Activities: Net cash used in investing activities of continuing operations was $810 for the purchase of office equipment in fiscal 2020. Net cash used in investing activities of continuing operations was $4,976,431 for fiscal 2019. It was attributable to the purchase of office equipment for $700, an acquisition of subsidiaries in cash of $400,000, an advance deposit for intent acquisition of $4,937,664 and offset by the proceeds from sales of equity investment of $361,933. Net cash used in investing activities from discontinued operations was $385 and $33,956 for fiscal 2020 and 2019, respectively. There was no net cash provided or used by investing activities of discontinued operations for fiscal 2018. One of our primary use of cash in our investing activities for each period was for our purchase of equipments and intangible assets. We spent $110 more than the year of 2019 in purchasing equipments for the year ended December 31, 2020. We also spent $5,337,664 less in 2020 than in 2019 for acquisition or intent acquisition of new business. 36 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 44/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Financing Activities: Net cash provided by financing activities was of continuing operations $198,226 for fiscal 2020. It was attributable to proceeds from issuance of ordinary shares of $667,901 and borrowings from related parties of $125,212, offset by repayment of related party loans and advances of $594,887. Net cash used in financing activities was of continuing operations $580,297 for fiscal 2019. It was attributable to repayment of related party loans and advances of $587,120 and offset by borrowings from related parties of $6,823. Net cash used by financing activities of discontinued operations was $86,348 for fiscal 2020. Net cash provided by financing activities of discontinued operations of $53,968 for fiscal 2019. There was no net cash provided by or used in financing activities of discontinued operations for fiscal 2018. We received capital contribution from stockholders of $667,901 more in 2020 than in 2019. During the year ended December 31, 2020, we received proceeds of $118,389 more than 2019 in borrowings from related parties, and also paid $7,767 more than the year of 2019 in repayments to related parties. We expect to incur additional costs associated with becoming a public company in the United States, primarily due to increased expenses related to accounting and tax services, legal expenses and investor and stockholder-related expenses. These additional long-term expenses may require us to seek other sources of financing, such as additional borrowings or public or private equity or debt capital. The availability of these other sources of financing will depend upon our financial condition and results of operations as well as prevailing market conditions and may not be available on terms reasonably acceptable to us or at all. Regulatory Restrictions on Capital Injections We plan to use proceeds from potential offering to fund our business from time to time. In order to do so, we will be required to comply with the following Chinese regulations regarding capital injections to foreign-invested enterprises. Chinese regulations relating to investments in offshore companies by Chinese residents. SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Financing and Round trip Investment through Offshore Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014. SAFE Circular 37 requires Chinese residents to register and update certain investments in companies incorporated outside of China with their local SAFE branch. SAFE also subsequently issued various guidance and rules regarding the implementation of SAFE Circular 37, which imposed obligations on Chinese subsidiaries of offshore companies to coordinate with and supervise any Chinese-resident beneficial owners of offshore entities in relation to the SAFE registration process. We may not be aware of the identities of all of our beneficial owners who are Chinese residents. We do not have control over our beneficial owners and cannot assure you that all of our Chinese -resident beneficial owners will comply with SAFE Circular 37 and subsequent implementation rules. The failure of our beneficial owners who are Chinese residents to register or amend their SAFE registrations in a timely manner pursuant to SAFE Circular 37 and subsequent implementation rules, or the failure of future beneficial owners of our Company who are Chinese residents to comply with the registration procedures set forth in SAFE Circular 37 and subsequent implementation rules, may subject such beneficial owners or our Chinese subsidiaries to fines and legal sanctions, which may be substantial. Failure to register may also limit our ability to contribute additional capital to our Chinese subsidiaries and limit our Chinese subsidiaries’ ability to distribute dividends to our Company. These risks may have a material adverse effect on our business, financial condition and results of operations. China regulates loans to and direct investment in Chinese entities by offshore holding companies and there is governmental control of currency conversion. We are an offshore holding company conducting our operations in China through our wholly owned subsidiaries. As an offshore holding company, we may make loans and additional contributions to subsidiaries subject to certain government authorities’ registration and/or approvals, including MOFCOM, SAIC and SAFE, or their local counterparts. 37 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 45/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Any loan to subsidiaries, which is treated as a foreign-invested enterprise under Chinese law, is subject to Chinese regulations and foreign exchange loan registrations. In January 2003, the China State Development and Reform Commission, SAFE and Ministry of Finance jointly promulgated the Circular on The Interim Provisions on the Management of Foreign Debts, or the Circular 28, limiting the total amount of foreign debt a foreign-invested enterprise may incur to the difference between the amount of total investment approved by the Ministry of Commerce or its local counterpart for such enterprise and the amount of registered capital of such enterprise, and requiring registration of any such loans with SAFE. On January 11, 2017, the People’s Bank of China (the “PBOC”), promulgated the Circular on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, or the PBOC Circular 9. Pursuant to PBOC Circular 9, the foreign debt upper limit for both foreign- invested companies and domestic-invested companies is calculated as twice the net asset of such companies. As to net assets, the companies shall take the net assets value stated in their latest audited financial statement. The PBOC Circular 9 does not supersede the Circular 28. It provides a one-year transitional period from its promulgation date for foreign-invested companies, during which foreign-invested companies, such as our WFOE, could choose their calculation method of foreign debt upper limit based on either the Foreign Debts Provisions or the PBOC Circular 9. The transitional period ended on January 11, 2018. Upon its expiry, pursuant to the PBOC Circular 9, the PBOC and SAFE will determine the cross-border financing administration mechanism for the foreign- invested enterprises after evaluating the overall implementation of the PBOC Circular 9. As of the date hereof, neither PBOC nor SAFE has promulgated and made public any further rules, regulations, notices or circulars in this regard. It is uncertain which mechanism will be adopted by PBOC and SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiaries. We may choose to finance subsidiaries by means of capital contributions. These capital contributions must be registered with the Ministry of Commerce or its local counterpart. In March 2015, SAFE issued the Circular Concerning the Reform of the Administration of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular No.19, which became effective in June 2015. SAFE Circular No.19 regulates the conversion by a foreign-invested enterprise of foreign currency registered capital into RMB by restricting how the converted RMB may be used. Furthermore, SAFE promulgated a circular in June 2016, SAFE Circular No.16, which further revises some clauses in the SAFE Circular No.19. SAFE Circular No. 19 and No.16 provide that the capital-account foreign exchange incomes of a domestic enterprise shall not be used for expenditures that are forbidden by relevant laws and regulations, for purposes that are not included in the business scope approved by the applicable government authority, shall not be used for direct or indirect equity investments within China or for any other kind of investment except principal-guaranteed wealth-management products, unless otherwise prescribed by other laws and regulations, shall not be used for issuing RMB entrusted loans (except included in the business scope approved by the applicable government authority or issuing RMB entrusted loans to affiliated enterprises), repaying inter-enterprise loans, repaying bank loans which has been refinanced to third parties, issuing RMB loans to non-affiliated enterprises unless expressly permitted in the business scope and shall not be used to purchase real estate that is not for personal use except if the company is a real estate enterprise. In addition, SAFE supervises the flow and use of the RMB capital converted from foreign currency registered capital of a foreign-invested company by further focusing on ex post facto supervision and violations. Previously, for FIEs the increase of capital contribution shall be approved by MOFCOM. In 2016, the approval was changed to registration. Currently, China is holding more open and tolerate attitude toward FIEs. Even with more and more open policy toward FDI and FIEs, Circulars mentioned above may still have some limit on our ability to use the net proceeds from offering to invest in or acquire any other Chinese companies in China, which may adversely affect our liquidity and our ability to fund and expand our business in China. On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the company, to date, the Company is not expecting to experience any adverse effects other than: 1. Difficulty in communicating with potential acquisition targets. 2. Fund-raising events may be limited. Additionally, it is possible that estimates made in the financial statements have been, or will be, materially and adversely impacted in the near term as a result of these conditions, including the ability to raise additional funding. 38 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 46/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Capital Resources As of December 31, 2020 and 2019 The following table provides certain selected balance sheets comparisons as of December 31, 2020 and December 31, 2019: December 31, December 31, 2020 2019 Increase (Decrease) Cash and cash equivalents Prepaid expenses and other current assets Assets of discontinued operations - current Total current assets Property and equipment, net Intangible assets, net Assets of discontinued operations- non-current Total non-current assets Total assets Accounts payable Accrued expenses and other payables Due to related parties Liabilities of discontinued operations Total current liabilities Total liabilities Cash $ $ $ $ 664,605 $ 5,420,916 - 6,085,521 19,320 10,113 - 29,433 (797,985) 1,462,590 $ 299,466 5,121,450 (721,277) 721,277 (1,219,796) 7,305,317 (29,686) 49,006 (1,480) 11,593 (7,148,097) 7,148,097 (7,179,263) 7,208,696 6,114,954 $ 14,514,013 $ (8,399,059) 4,974 $ 1,819,544 597,826 - 2,422,344 2,422,344 $ 3,209 $ 1,749,161 609,180 301,338 2,662,888 2,662,888 $ 1,765 70,383 (11,354) (301,338) (240,544) (240,544) % (55)% 6% (100)% (17)% (61)% (13)% (100)% (101)% (58)% 55% 4% (2)% (100)% (9)% (9)% As of December 31, 2020, we have a total of $664,605 in cash and cash equivalents, among which $148,747 (RMB972,481) was held inside China (Mainland), and $515,858 was held outside of China (Mainland). As of December 31, 2019, we have a total of $1,462,590 in cash and cash equivalents, among which $281,319 (RMB1,958,832) was held inside China (Mainland), and $1,181,271 was held outside of China (Mainland). We have not transferred and do not plan to transfer our cash in RMB outside of China (Mainland) in order to avoid unnecessary currency exchange cost. Our subsidiaries in China (Mainland) incur expenses from time to time, and we have spent and plan to spend our cash in RMB to cover those expenses. Prepaid expenses and other current assets, net As of December 31, 2020, balances of prepaid expenses and other current assets were $5,420,916, an increase of $299,466, or 6%, compared to $5,121,450 as of December 31, 2019. This increase primarily due to the note receivable of $400,000 from the buyers of Anyi Network, while the Company sold 100% equity interest in Anyi Network including its subsidiaries, the Company entered into a Promissory Note, pursuant to which the buyers Anyi Network agreed to pay $400,000 in cash before June 30, 2020. Balance of prepaid expenses increased by $51,705, or 1,873%, and balance of security deposit and others decreased by $152,239, or 84% as of December 31, 2020, as shown in the following table. Prepaid expenses Note receivable Other receivable Security deposits and others Total prepaid expenses and other current assets 39 December 31, 2020 December 31, 2019 $ $ 54,466 $ 400,000 4,937,664 28,786 5,420,916 $ 2,761 - 4,937,664 181,025 5,121,450 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 47/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Current assets Current assets as of December 31, 2020 totaled $6,085,521, a decrease of $1,219,796, or 17% from our December 31, 2019 balance. This decrease primarily resulted from a $1,411,964 decrease in cash and a $66,535 decrease in accounts receivable, offset by a $258,703 increase in prepaid expenses and other current assets. Accrued liabilities and other payables Accrued liabilities and other payables mainly included wages payable, VAT payable, income tax payable, deposit payables and other payable at the year end. Accrued liabilities and other payables as of December 31, 2020 were $1,819,544, an increase of $70,383, compared to $1,749,161 as of December 31, 2019. The increase was mainly due to the increase of tax and wages payable. Credit Facility We mainly finance our operations through proceeds borrowed from related parties. As of December 31, 2020, due to related parties were $597,826, a decrease of $127,059, compared to $724,885 as of December 31, 2019. Due to related parties as of December 31, 2020 and 2019 include: Zhentao Jiang Wenjie Tang Guofu Zhang Yufeng Mi Total December 31, 2020 December 31, 2019 $ $ 712,485 $ (116,610) - 1,951 597,826 $ 607,349 - 1,831 - 609,180 The balance of due to related parties represents expenses incurred by related parties in the ordinary course of business and expenses related parties paid on behalf of the Company. These loans are interest free, unsecured and repayable on demand. For the year ended December 31, 2020 and 2019, related parties paid operating expenses on behalf of the Company of $0 and $61,864, respectively. From time to time, the Company borrowed $125,212, $6,823, and $8,581,150 from related parties in the years ended December 31, 2020, 2019 and 2018, respectively, and repaid $594,887, $587,120, and $6,837,611 in the years ended December 31, 2020, 2019 and 2018, respectively. Critical Accounting Policies The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these audited consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates. The critical accounting policies summarized in this section are discussed in further detail in the notes to the audited consolidated financial statements appearing elsewhere in this annual report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. 40 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 48/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Revenue Recognition The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all years presented. The core principle of this new revenue standard is that a company should recognize revenue when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle by the Company in its determination of revenue recognition: ● Step 1: Identify the contract(s) with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: Recognize revenue when or as the Company satisfies a performance obligation. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. The Company derives revenue from the sale of packaged software products, technical support plans, software customization services, and bundle of products or services that may include a combination of these items. We enter into contracts with customers that include promises to transfer various products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. We recorded and recognized revenues from both products and services in one account, which we present as revenues and revenues from related parties in the accompanying consolidated statements of operations and comprehensive income. Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, income taxes including the valuation allowance for deferred tax assets. While we believe that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Fair Value of Financial Instruments ASC 825 requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which fair value option was not elected. The Company’s financial instruments mainly include cash and cash equivalents, transaction monetary assets held for clients, mark to market assets for open trading positions, net accounts receivable, prepaid expenses and other current assets, accounts payable, deposits payable, mark to market liabilities for open trading positions, accrued expenses and other current liabilities, advance from customers, and income tax payable. The carrying values of these financial instruments approximate their fair values due to short-term maturities. 41 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 49/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Recent Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year- to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income- based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, we have not determined whether implementation of such proposed standards would be material to our consolidated financial statements. C. Research and Development, Patent and Licenses, etc. Please refer to “Item 4. Information on the Company – D. Property, Plant and Equipment – Intellectual Property.” D. Trend Information. Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition or results of operations. E. Off-Balance Sheet Arrangements. There were no off-balance sheet arrangements for the fiscal years ended December 31, 2020 and 2019, or that in the opinion of management are likely to have, a current or future material effect on our financial condition or results of operations. ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Management The following table provides information regarding our executive officers and directors as of the date of this annual report: Name Bin Cao Wenjie Tang Zhihe Yang Yufeng Mi Jialin Liu Tingfu Xie Fangjie Wang Yafang Wang Age 61 39 36 44 62 73 31 43 Position(s) Chairman of the Board Chief Executive Officer and Director Chief Financial Officer Chief Technology Officer Independent Director and Chairman of Compensation Committee. Independent Director and Chairman of Nominating Committee Independent Director and the Chairwomen of the Audit Committee Secretary of the Board 42 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 50/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The business address of each of the officers and directors is c/o Creative Consultants (Hong Kong) Limited Room 1502-3 15/F., Connuaght Commercial Building, Wanchai, Hong Kong. Bin Cao. Mr. Cao has more than twenty years of management experience. He is experienced with financing, real estate and asset management. He has been providing industry, investment and asset management consultation to individuals, private equity funds, and banks since 2005. From 2001 to 2005, Mr. Cao was the Chairman of the Board of Changchun Weide Paratheatrical Co., Ltd., where he developed and supervised the implementation of business strategies and plans, supervised the making and implementation of human resource training and management and supervised and managed the budgeting and implementation of material projects and financial management. From 1996 to 1998, Mr. Cao was the Chairman of the Board of the Changchun Zhisheng City Credit Union, where he managed the day-to-day operation, provided external investment and financing consultation to customers, supervised financial planning and developed risk control and daily management mechanism. Wenjie Tang. Mr. Tang is the co-founder of our Company and has served as Chief Executive Officer since the beginning and serve as director of the Company commencing February 9, 2018. Before co-founding our subsidiary AGM Beijing, he co- founded and held the Chief Executive Officer position in Beijing Miteke Technology Co. Ltd. from 2011 to 2015, and was Chief Representative and Chief Business Officer in MeiZhi Huangqiu Beijing Technology Co. Ltd. from 2009 to 2011. Mr. Tang earned his master’s degree in Economics from Tufts University in Boston, and his bachelor’s degree in Economics from Shanghai Fudan University. He is a Certified Financial Analyst (level 3 candidate), and has passed series 3 of the National Commodities Futures Examination in the United States. Mr. Tang has 12 years of experience in forex trading, more than 15 years of experience in stock and futures investment. He also has a profound understanding of the operation principles, market microstructure, macro trading, trading system and risk control. Zhihe Yang. Mr. Yang has been the Financial Manager at Beijing AnGaoMeng Technology Service Co., Ltd. since August 2018. Mr. Yang has extensive experience working in accounting firms with regard to financial management and internal control system construction. From September 2017 to July 2018, he spent a year as a freelance financial advisor. Prior to that, Mr. Yang served as the Audit Manager at Beijing Zongheng United Certified Public Accountants Co., Ltd. from May 2013 to September 2017. From April 2012 to March 2013, he was the Financial Manager at Wuhan Fengze Agricultural Science and Technology Development Co., Ltd. From July 2007 to August 2011, he was the Audit Manager at Zhong Cheng Xin An Rui (Beijing) Certified Public Accountants Co., Ltd. Mr. Yang served as the Audit Assistant at Beijing Biaoguan Certified Public Accountants Co., Ltd. from August 2006 to July 2007. Mr. Yang acquired his Associate’s Degree in Accounting from Inner Mongolia University of Technology in 2006. Yufeng Mi. Mr. Mi has served as Chief Technology Officer since the beginning. Before co-founding our subsidiary AGM Beijing, he co-founded Beijing Miteke Technology Co. Ltd. with Wenjie Tang and was the IT department manager in MeiZhi Huangqiu Beijing Technology Co. Ltd. from 2011 to 2015. Mr. Mi earned his master’s degree in Computer Science from Université Pierre et Marie Currie, his master’s degree in finance from Université Dauphine, and his bachelor’s degree in communication technology from Shanghai Jiaotong University. He is a Certified Financial Analyst (level 1) in the United States and a Financial Risk Manager. Mr. Mi is experienced in B2C e-commerce, forex trading system, and system design. Jialin Liu. Mr. Liu has served as our Independent Director and Chairman of Compensation Committee since March 2017. He has been the Chairman of the Board of Profit Well Gold Investment (Beijing) Co., Ltd. since 2006. He earned his bachelor’s degree from Central University of Finance and Economics. He is very experienced with administrative management and finance. Tingfu Xie. Mr. Xie has served as our Independent Director and Chairman of Nominating Committee since March 2017. He has been the president of Ji Shang Capital Group since 2015. He was the Chief Executive Officer of China Finance Think Tank from 2011 to 2014. Mr. Xie earned his master’s degree in EMBA from Peking University, his master’s degree in economics and his bachelor’s degree in finance from Jilin University. Mr. Xie has 37 years of practical and research experience in finance. 43 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 51/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Fangjie Wang. Ms. Wang has been working as an Audit Manager at Beijing Hua Long Ding Jia Certified Public Accountants Co., Ltd since March 2018. Prior to that, she worked at Zhongxinghua Certified Public Accountants LLP as an Audit Assistant from August 2017 to February 2018. She worked as the Lecturer of International Economics and Trade at Hubei Vocational Technical Institute from June 2016 to July 2017. She interned as a teacher of Ecological Tourism at Adult Education Academy of Guangxi Normal University. She interned as an assistant at Tian Jia Bing Academy of Guangxi Normal University from June 2014 to March 2016. From August 2013 to May 2014, she worked as an Internal Assistant to Duty Manager at Xiaogan Branch of Agricultural Bank of China. Ms. Wang graduated from Guangxi Normal University in 2016 and received a master’s degree in Management. Before that, she received a bachelor’s degree in International Economics and Trade from Hubei University. Ms. Fangjie Wang is an accounting expert and is experienced with establishing effective internal control system. There are no family relationships between Fangjie Wang and any other employees or members of the Board of Directors of the Company. Yafang Wang. Ms. Wang has been the Assistant to the Chairman of the Board at Beijing AnGaoMeng Technology Service Co., Ltd. since May 2015, where she translates financial and legal documents, updates statistical data, and provides administrative support to the Chairman. From April 2012 to May 2015, Ms. Wang worked as a researcher at Beijing Tongzhou New City Investment & Operation Co., Ltd. where her job responsibilities were mainly consisted of searching and collecting urban construction data and real estate trend, preparing Real Estate Weekly for the company, and translating and updating the company’s English website. Prior to that, Ms. Wang was a translator at HVS from June 2011 to December 2011 and an editor at Commercial Express of Embassies and Overseas Agencies form June 2007 to December 2010, where she edited and translated reports and publications. Ms. Wang obtained her bachelor’s degree from Beijing Foreign Studies University in English major in 2005, and an associate degree in public relations from Jilin University in 1997. Ms. Huang has extensive experience in business administration and is proficient in English. There are no family relationships between Yafang Wang and any other employee or member of the board of directors of the Company. Election of Officers Our executive officers are appointed by, and serve at the discretion of, our board of directors, including Bin Cao. There is no family relationship among any of our directors or executive officers. Board of Directors and Board Committees Our board of directors currently consists of five directors, a majority of whom are independent as such term is defined by the Nasdaq Capital Market. The directors are re-elected at our general meeting of shareholders every year. A director may vote in respect of any contract or transaction in which he is interested, provided, however that the nature of the interest of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter. A general notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors or any committee thereof of the nature of a director’s interest shall be sufficient disclosure and after such general notice it shall not be necessary to give special notice relating to any particular transaction. A director may be counted for a quorum upon a motion in respect of any contract or arrangement which he shall make with our company, or in which he is so interested and may vote on such motion. We do not have a lead independent director because of the foregoing reason and also because we believe our independent directors are encouraged to freely voice their opinions on a relatively small company board. We believe this leadership structure is appropriate because we are a relatively small company in the process of listing on a public exchange; as such we deem it appropriate to be able to benefit from the guidance of Mr. Jiang as our Chair of the Board and Mr. Tang as our principal executive officer and director. Our board of directors plays a key role in our risk oversight. The board of directors makes all relevant Company decisions. As a smaller company with a small board of directors, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters. 44 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 52/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Board Committees The business and affairs of the company are managed under the direction of our Board. We have conducted Board meetings regularly since inception. Each of our directors has attended all meetings either in person, via telephone conference, or through written consent for special meetings. In addition to the contact information in this annual report, the Board has adopted procedures for communication with the officers and directors on September 15, 2017. Stockholders will be given specific information on how he/she can direct communications to the officers and directors of the Company at our annual stockholders’ meetings. All communications from stockholders are relayed to the members of the Board. Board Committees We have established and adopted charters for three standing committees under the board: the Audit Committee, the Compensation Committee, the Nominating Committee. Each Committee consists of only independent directors of the Company. ● Audit Committee: Fangjie Wang (Chair), Tingfu Xie, Jialin Liu ● Compensation Committee: Jialin Liu (Chair), Tingfu Xie, Fangjie Wang ● Nominating Committee: Tingfu Xie (Chair), Fangjie Wang, Jialin Liu The Board also adopted an insider trading policy that allows insiders to sell securities of the Company pursuant to pre- arranged trading plans. Effective October 23, 2000, the Securities and Exchange Commission (the “SEC”) adopted rules related to insider trading. One of these rules, Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, provides an exemption to the insider trading rules in the form of an affirmative defense. Rule 10b5-1 recognizes the creation of formal programs under which executives and other insiders may sell the securities of publicly traded companies on a regular basis pursuant to written plans that are entered into at a time when the plan participants are not aware of material non-public information and that otherwise comply with the requirements of Rule 10b5-1. Audit Committee Our Audit Committee consisted of Ms. Fangjie Wang, Mr. Jialin Liu and Mr. Tingfu Xie. Ms. Fangjie Wang is the chairman of our audit committee. We have determined that Ms. Fangjie Wang, Mr. Jialin Liu and Mr. Tingfu Xie satisfy the “independence” requirements of Nasdaq Rule 5605 and Rule 10A-3 under the Securities Exchange Act of 1934. Our board of directors has determined that Ms. Wang qualifies as an audit committee financial expert and has the accounting or financial management expertise as required under Item 407(d)(5)(ii) and (iii) of Regulation S-K. The audit committee will oversee our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee will be responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 45 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 53/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Compensation Committee Our compensation committee consists of Mr. Jialin Liu, Ms. Fangjie Wang and Mr. Tingfu Xie. Mr. Jialin Liu is the chairman of our compensation committee. We have determined that Mr. Jialin Liu, Ms. Fangjie Wang and Mr. Tingfu Xie satisfy the “independence” requirements under Nasdaq Rule 5605. The compensation committee will assist the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee will be responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. Nominating Committee Our nominating committee consists of Mr. Tingfu Xie, Ms. Fangjie Wang and Mr. Jialin Liu. Mr. Tingfu Xie is the chairperson of our nominating committee. We have determined that Mr. Tingfu Xie, Ms. Fangjie Wang and Mr. Jialin Liu satisfy the “independence” requirements under Nasdaq Rule 5605. The nominating committee will assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating committee will be responsible for, among other things: ● selecting and recommending to the board nominees for election by the shareholders or appointment by the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. Copy of our committee charters are also available on our website at www.agmprime.com. Duties of Directors Under British Virgin Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association. We have the right to seek damages if a duty owed by our directors is breached. 46 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 54/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The functions and powers of our board of directors include, among others: ● appointing officers and determining the term of office of the officers; ● authorizing the payment of donations to religious, charitable, public or other bodies, clubs, funds or associations as deemed advisable; ● exercising the borrowing powers of the company and mortgaging the property of the company; ● executing checks, promissory notes and other negotiable instruments on behalf of the company; and ● maintaining or registering a register of mortgages, charges or other encumbrances of the company. Controlled Company Our directors and officers currently own and beneficially own a majority of the voting power of our outstanding ordinary shares. Under the Rule 4350(c) of The Nasdaq Capital Market, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors to be independent, as defined in The Nasdaq Capital Market rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of independent directors. If we elected to rely on the “controlled company” exemption, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. See Risk Factors — As a “controlled company” under the rules of The Nasdaq Capital Market, we may exempt our company from certain corporate governance requirements that could adversely affect our public shareholders. Interested Transactions A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested. A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into. A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction. Remuneration and Borrowing The directors may receive such remuneration as our board of directors may determine from time to time. Each director is entitled to be repaid or prepaid all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our board of directors or committees of our board of directors or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors. Our board of directors may exercise all the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party. Qualification There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting. There are no other arrangements or understandings pursuant to which our directors are selected or nominated. 47 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 55/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Limitation of Director and Officer Liability Under British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in good faith with a view to our best interests and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. British Virgin Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any indemnification may be held by the British Virgin Islands courts to be contrary to public policy (for example, a provision for indemnification against civil fraud or the consequences of committing a crime). Under our memorandum and articles of association, we may indemnify our directors, officers and liquidators against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with civil, criminal, administrative or investigative proceedings to which they are party or are threatened to be made a party by reason of their acting as our director, officer or liquidator. To be entitled to indemnification, these persons must have acted honestly and in good faith with a view to the best interest of the company and, in the case of criminal proceedings, they must have had no reasonable cause to believe their conduct was unlawful. The decision of our board of directors as to whether such a person acted honestly and in good faith with a view to the best interests of the company and as to whether the person had no reasonable to cause to believe that his or her conduct was unlawful is, in the absence of fraud, sufficient for the purposes of the indemnification, unless a question of law is involved. The termination of any proceedings by any judgment, order, settlement, conviction or the entry of a nolle prosequi does not, by itself, create a presumption that a director did not act honestly and in good faith and with a view to our best interests or that the director had reasonable cause to believe that his or her conduct was unlawful. Such limitation of liability does not affect the availability of equitable remedies such as injunctive relief or rescission. These provisions will not limit the liability of directors under United States federal securities laws. We may indemnify anyone serving at our request as a director of another entity against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings. To be entitled to indemnification, such a person must have acted honestly and in good faith with the view to our best interests and, in the case of criminal proceedings, must have had no reasonable cause to believe that his or her conduct was unlawful. The decision of our board of directors as to whether the person acted honestly and in good faith with a view to our best interests and as to whether the director had no reasonable cause to believe that his or her conduct was unlawful, is in the absence of fraud sufficient for the purposes of indemnification, unless a question of law is involved. The termination of any proceedings by any judgment, order, settlement, conviction or the entry of no plea does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to our best interests or that the person had reasonable cause to believe that his or her conduct was unlawful. We may purchase and maintain insurance in relation to any of our directors or officers against any liability asserted against the directors or officers and incurred by the directors or officers in that capacity, whether or not we have or would have had the power to indemnify the directors or officers against the liability as provided in our memorandum and articles of association. Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers or persons controlling our company under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Involvement in Certain Legal Proceedings To the best of our knowledge, none of our directors or officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has any been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Related Party Transactions,” our directors and officers have not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. 48 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 56/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Insider Trading Policy The Board also adopted an insider trading policy that allows insiders to sell securities of the Company pursuant to pre- arranged trading plans. This insider trading policy was put into place because effective October 23, 2000, the Securities and Exchange Commission (the “SEC”) adopted rules related to insider trading. One of these rules, Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, provides an exemption to the insider trading rules in the form of an affirmative defense. Rule 10b5-1 recognizes the creation of formal programs under which executives and other insiders may sell the securities of publicly traded companies on a regular basis pursuant to written plans that are entered into at a time when the plan participants are not aware of material non-public information and that otherwise comply with the requirements of Rule 10b5-1. Code of Business Conduct and Ethics and other Corporate Governance Policies We have adopted a code of business conduct and ethics that applies to our directors, officers and employees. Our standards are in writing and have been posted on our website at www.agmprime.com. The following is a summation of the key points of the Code of Ethics we adopted: ● Honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationships; ● Full, fair, accurate, timely, and understandable disclosure reports and documents that a small business issuer files with, or submits to, the Commission and in other public communications made by our Company; ● Full compliance with applicable government laws, rules and regulations; ● The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and ● Accountability for adherence to the code. B. Compensation Executive Compensation The Compensation Committee of the Board of Directors determined the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers to our success. And our compensation committee approved our salary and benefit plans. Each of the named officers will be measured by a series of performance criteria by the board of directors, or the compensation committee on a yearly basis. Such criteria will be set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance. Our employment agreements with our officers generally provide for employment for a specific term and pay annual salary, health insurance, pension insurance, and paid vacation and family leave time. The agreement may be terminated by either party as permitted by law. In the event of a breach or termination of the agreement by our company, we may be obligated to pay the employee twice the ordinary statutory rate. In the event of a breach or termination causing loss to our company by the employee, the employee may be required to indemnify us against loss. We have executed employment agreements with Mr. Bin Cao, Mr. Wenjie Tang, Mr. Yufeng Mi, Mr. Zhihe Yang, and Ms. Yafang Wang. 49 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 57/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The following table presents summary information regarding the total compensation awarded to, earned by, or paid to each of the named executive officers for services rendered to us for the years ended December 31, 2020 and 2019. Stock Awards ($) All Other Compensation ($) Name and Principal Position Wenjie Tang Chief Executive Officer Fiscal Year or Period 2020 2019 Salary ($) 40,200 43,200 Bonus ($) Guofu Zhang Former Chief Financial Officer(1) Zhihe Yang Chief Financial Officer(1) Chengchun Zhang Former Chief Operating Officer(2) Xiaoding Wu Former Chief Operating Officer(3) Yufeng Mi Chief Technology Officer Yafang Wang Secretary of the Board 2020 54,448 2019 48,856 2020 2019 2020 15,861 - - 2019 35,000 2020 29,820 2019 13,348 2020 2019 2020 2019 11,225 30,000 20,916 11,582 0 0 0 0 0 - - 0 0 0 0 0 0 0 0 0 0 0 0 - - 0 0 0 0 0 0 0 Total ($) 40,200 43,200 0 0 0 54,448 0 48,856 0 - - 15,861 - - 0 35,000 0 29,820 0 13,348 0 0 0 0 11,225 30,000 20,916 11,582 (1) Guofu Zhang resigned as Chief Financial Officer in October 2020, effective October 14, 2020. Zhihe Yang was appointed by the Board as the Chief Financial Officer, effective October 14, 2020. (2) Chengchun Zhang resigned as Chief Operating Officer in October 2019, effective October 25, 2019. (3) Xiaoding Wu resigned as Chief Operating Officer in December 2020, effective December 31, 2020. Director Compensation All directors hold office until the next annual meeting of shareholders at which they are re-elected and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of the board of directors. Employee directors are entitled receive compensation for their services. Non-employee directors are entitled to receive a set amount of cash fee for serving as directors. In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for each board of directors meeting attended, and any out-of-pocket expenses incurred by them in connection with their services provided in such capacity. We have entered into agreements with our directors Bin Cao, Fangjie Wang, Jialin Liu and Tingfu Xie. In addition, our director Wenjie Tang receives compensation for his service as an officer of the Company. He has not received and will not receive compensation as a director of the Company. 50 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 58/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The table below indicates the compensations we paid to our board of directors in their capacity as directors for fiscal years 2020 and 2019: Name Zhentao Jiang Former Chairman of the Board(1) Bin Cao Chairman of the Board(1) Wenjie Tang Director(2) Fangjie Wang Independent Director and Chairman of Audit Committee Jialin Liu Independent Director and Chairman of Compensation Committee Tingfu Xie Independent Director and Chairman of Nominating Committee Fiscal Year or Period 2020 Salary ($) - Bonus ($) 2019 22,500 2020 52,800 2019 31,500 2020 2019 0 0 2020 10,616 2019 10,424 2020 8,847 2019 8,686 2020 10,616 Stock Awards ($) All Other Compensation ($) Total ($) - 0 0 0 0 0 0 0 0 0 0 - 0 0 0 0 0 0 0 0 0 0 - - 0 22,500 0 0 0 0 52,800 31,500 0 0 0 10,616 0 10,424 0 8,847 0 8,686 0 10,616 2019 10,424 0 0 0 10,424 (1) Zhentao Jiang resigned as a director and Chairman of the Board in May 2019, effective May 19, 2019. Bin Cao was elected by the Board as the Chairman of the Board, effective May 19, 2019. (2) Wenjie Tang is a director and the Chief Executive Officer. Mr. Tang receives an annual salary for his service as the CEO. He does not receive any compensation as a director. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS Major Shareholders The following table sets forth information with respect to beneficial ownership of our Class A ordinary shares and Class B ordinary shares as of the date of this report by: ● Each person who is known by us to beneficially own more than 5% of our outstanding Class A ordinary shares and Class B ordinary shares; ● Each of our director, director nominees and named executive officers; and ● All directors and named executive officers as a group. Our company is authorized to issue 200,000,000 Class A ordinary shares of $0.001 par value per share and 200,000,000 Class B ordinary shares of $0.001 par value per share. The number and percentage of ordinary shares beneficially owned are based on 21,356,290 Class A ordinary shares of $0.001 par value per share and 7,100,000 Class B ordinary shares of $0.001 par value per share issued and outstanding as of the date of this report. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our ordinary shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of ordinary shares beneficially owned by a person listed below and the percentage ownership of such person, ordinary shares underlying options, warrants or convertible securities held by each such person that are exercisable or convertible within 60 days of April 6, 2021 are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. Except as otherwise indicated in the footnotes to this table, or as required by applicable community https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 59/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm property laws, all persons listed have sole voting and investment power for all ordinary shares shown as beneficially owned by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is in the care of our Company c/o Creative Consultants (Hong Kong) Limited, Room 1502-3 15/F., Connuaght Commercial Building, 185 Wanchai Road, Wanchai, Hong Kong. As of the date of this report, we have 200 registered shareholders of record of Class A Ordinary Shares and 3 registered shareholders of record of Class B Ordinary Shares. 51 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 60/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Amount of Beneficial Ownership (Class A) Percentage Ownership (Class A) Amount of Beneficial Ownership (Class B) Percentage Ownership (Class B) Named Executive Officers and Directors Directors and Named Executive Officers: Combined Voting Power of Class A and Class B Ordinary Shares as a Percentage(2) Combined Voting Power of Class A and Class B - 0% - 0% - 0% Bin Cao, Chairman of the Board Wenije Tang, Chief Executive Officer and Director(1) Zhihe Yang, Chief Financial 6,500,000 31.44% 6,500,000 91.64% 39,000,000 68.59% Officer Yufeng Mi, Chief Technology Officer Yafang Wang, Secretary of the Board Fangjie Wang, Independent Director and Chairman of Audit Committee Jialin Liu, Independent Director and Chairman of Compensation Committee Tingfu Xie, Independent Director and Chairman of Nominating Committee All directors and executive officers as a group (9 persons) 5% Beneficial Owners: Firebull Holdings Limited(1) Zhentao Jiang Chengchun Zhang - 0% - 0% - 0% 600,000 2.81% 600,000 8.45% 3,600,000 6.33% - - - - 0% 0% 0% 0% - - - - 0% 0% 0% 0% - - - - 0% 0% 0% 0% 7,100,000 32.58% 7,100,000 100% 42,600,000 74.93% 5,000,000 2,400,000 2,400,000 23.41% 11.23% 11.23% 5,000,000 - - 70.43% 30,000,000 2,400,000 2,400,000 0% 0% 52.76% 4.22% 4.22% (1) Wenjie Tang individually holds 1,500,000 shares of Class A ordinary shares and 1,500,000 shares of Class B Ordinary Shares. In addition, Wenjie Tang and Bin Cao jointly and indirectly hold the 5,000,000 shares of Class A ordinary shares and the 5,000,000 shares of Class B ordinary shares beneficially owned by Firebull Holdings Limited, a company formed under the laws of Hong Kong SAR. Wenjie Tang has the voting and dispositive power of the 5,000,000 shares of Class A ordinary shares and 5,000,000 shares of Class B ordinary shares beneficially owned by Firebull Holdings Limited. (2) Each Class B Ordinary Share in the Company confers upon the shareholder the right to five (5) votes at a meeting of the shareholders of the Company or on any resolution of shareholders. Holders of our Class B Ordinary Share will vote together with holders of our Class A Ordinary Share as a single class on all matters presented to our shareholders for their vote approval. 52 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 61/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Related Party Transactions Related parties of the Company during the fiscal years ended December 31, 2020 and 2019 consist of the following: Name of Related Party Zhentao Jiang Wenjie Tang Bin Cao Yufeng Mi Bin Liu Guofu Zhang Chengchun Zhang IIG Ltd. Firebull Holdings Limited Nanjing Yunxinhe Software Technology Co., Ltd. Beijing Maiteke Technology Co., Ltd. Northnew Management Limited Nature of Relationship Former Director and principal shareholder Chief Executive Officer (“CEO”), Director, and shareholder Chairman of the Board Chief Technical Officer (“CTO”) and shareholder Former Chief Risk Officer (“CRO”) Former Chief Financial Officer (“CFO”) Former Chief Operational Officer (“COO”) and principal shareholder Company under common control of Zhentao Jiang, dissolved in November 2019 Company under common control of Wenjie Tang and Bin Cao Company formerly controlled by Zhentao Jiang, dissolved in April 2020 Company where Wenjie Tang assumed a key management position Company under common control of Zhentao Jiang prior to June 2020 (i) Revenues from related party and accounts receivable from related party The Company had no revenues from related parties during the years ended December 31, 2020 and 2019. The Company provides technical support service to IIG Ltd. and generated related party revenues from IIG Ltd. in the amount of $1,240,708 in the year ended December 31, 2018. (ii) Acquisition and Dissolution of AGM Global Asset Management Ltd. On May 25, 2018, the Company purchased AGM Global Asset Management Ltd from a third-party entity which was owned by two related parties, Mr. Wenjie Tang and Mr. Yufeng Mi. On August 15, 2019, AGM Global Asset Management Ltd was dissolved and the Company recognized a loss in the amount of $16,537 for the year ended. (iii) Due to (from) related parties The Company mainly finance its operations through proceeds borrowed from related parties. As of December 31, 2020 and 2019, due to related parties consisted the following: Zhentao Jiang Wenjie Tang Guofu Zhang Yufeng Mi Total December 31, 2020 December 31, 2019 $ $ 712,485 $ (116,610) - 1,951 597,826 $ 607,349 - 1,831 - 609,180 The balance of due to related parties represents expenses incurred by related parties in the ordinary course of business and expenses paid by related parties on behalf of the Company. These amounts are interest free, unsecured and repayable on demand. For the years ended December 31, 2020 and 2019, related parties paid operating expenses on behalf of the Company of $0 and $61,864, respectively. From time to time, the Company borrowed $125,212, $6,823 and $8,581,150 from related parties in the years ended December 31, 2020, 2019 and 2018, respectively, and repaid $594,887, $587,120 and $6,837,611 in the years ended December 31, 2020, 2019 and 2018, respectively. 53 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 62/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm ITEM 8. FINANCIAL INFORMATION A. Consolidated Statements and Other Financial Information Please refer to Item 18. Legal and Administrative Proceedings To the best of our knowledge, none of our directors or officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has any been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Related Party Transactions,” our directors and officers have not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. Dividend Policy We have never declared or paid any cash dividends on our Class A Ordinary Shares. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors the board of directors may deem relevant. Under British Virgin Islands law and our memorandum and articles of association, the board of directors may only authorize the payment of a dividend or another distribution if the directors are satisfied on reasonable grounds that, immediately after the dividend or other distribution is paid, the value of the company’s assets will exceed its liabilities and the company will be able to pay its debts as they fall due. The resolution of directors authorizing the payment of the dividend or other distribution must contain a statement that, in the directors’ opinion, the company will satisfy these two tests immediately after the payment of the dividend or other distribution. If we determine to pay dividends on any of our Class A ordinary shares in the future, as a holding company, we will be dependent on receipt of funds from our operating subsidiaries. Current Hong Kong regulations permit our HK subsidiary, AGM HK to pay dividends to AGM Holdings only out of profits available for distribution. Withholding tax regarding dividends is exempted in Hong Kong. Current PRC regulations permit our PRC subsidiaries to pay dividends to AGM HK only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of our subsidiaries in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. In addition, pursuant to the EIT Law and its implementation rules, dividends generated after January 1, 2008 and distributed to us by our PRC subsidiaries are subject to withholding tax at a rate of 10% unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations in China may be used to pay dividends to our company. 54 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 63/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm B. Significant Changes We have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report. ITEM 9. THE OFFER AND LISTING A. Offer and listing details Not applicable for annual reports on Form 20-F. B. Plan of distribution Not applicable for annual reports on Form 20-F. C. Markets Our Class A ordinary shares have been listed on the Nasdaq Capital Market since April 18, 2018 under the symbol “AGMH.” The table below shows, for the periods indicated, the high and low market prices for our shares. Quarterly: April 18, 2018 to June 30, 2018 July 1, 2018 to September 30, 2018 October 1, 2018 to December 31, 2018 January 1, 2019 to March 31, 2019 April 1, 2019 to June 30, 2019 July 1, 2019 to September 30, 2019 October 1, 2019 to December 31, 2019 January 1, 2020 to March 31, 2020 April 1, 2020 to May 8, 2020 May 9, 2020 to June 30, 2020 July 1, 2020 to September 30, 2020 October 1, 2020 to December 31, 2020 January 1, 2021 to March 31, 2021 Market Price Per Share High Low $ $ $ $ $ $ $ $ $ $ $ $ $ 37.63 $ 39.00 $ 50.00 $ 35.90 $ 20.94 $ 19.4 $ 24.49 $ 17.55 $ 19.74 $ 26.44 $ 26.01 $ 16.16 $ 17.32 $ 5.01 12.34 18.00 18.05 12.46 14.06 13.95 14.32 14.87 19.05 14.12 14.16 11.70 On January 31, 2020, we received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that we were not in compliance with Nasdaq Listing Rule 5550(a)(3), which requires the Company to have at least 300 public holders for continued listing by Nasdaq. The notification has no immediate effect on the Company’s Nasdaq listing. Subsequently, we submitted to Nasdaq a plan to regain compliance. On March 26, 2020, we received an extension until July 29, 2020 to regain compliance with Listing Rules 5550(a)(3). During the compliance period, the Company’s shares of common stock continued to be listed and traded on The Nasdaq Capital Market. To regain compliance, the Company must have at least 300 public holders during this 180-day grace period. On July 23, 2020, the Company received a letter from the Listing Qualifications Department of The Nasdaq, confirming that the Company has regained compliance with Listing Rule 5550(a)(3) and the matter was closed. D. Selling shareholders Not applicable for annual reports on Form 20-F. 55 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 64/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm E. Dilution Not applicable for annual reports on Form 20-F. F. Expenses of the issue Not applicable for annual reports on Form 20-F. ITEM 10. ADDITIONAL INFORMATION A. Share capital Not applicable for annual reports on Form 20-F. B. Memorandum and articles of association AGM Holdings was incorporated on April 27, 2015 under the BVI Companies Act, 2004 as a company limited by shares. As of the date of this annual report, the Company is authorized to issue 200,000,000 Class A ordinary shares of $0.001 par value per share and 200,000,000 Class B ordinary shares of $0.001 par value per share. As of the date of this report, there are 21,356,290 Class A ordinary shares and 7,100,000 Class B ordinary shares issued and outstanding. Our memorandum and articles of association do not permit a director to decide what compensation he or she will receive. All decisions about the compensation of directors will be recommended by the compensation committee, upon its formation, and approved by the board of directors as a whole, both acting only when a quorum of members is present. The following are summaries of the material provisions of our memorandum and articles of association and the BVI Act, insofar as they relate to the material terms of our Class A Ordinary Shares. As a convenience to potential investors, we provide the below description of BVI law and our memorandum and articles of association together with a comparison to similar features under Delaware law. General Class A Ordinary Shares Each Class A Ordinary Share in the Company confers upon the shareholder the right to one vote per share at a meeting of the shareholders of the Company or on any resolution of shareholders. Holders of our Class A Ordinary Share will vote together with holders of our Class B Ordinary Share as a single class on all matters presented to our shareholders for their vote approval. Each Class A Ordinary Share in the Company confers upon the shareholder the right to an equal share in any dividend paid by the Company. Each Class A Ordinary Share in the Company confers upon the shareholder the right to an equal share in the distribution of the surplus assets of the Company on its liquidation. All of our issued Class A ordinary shares are fully paid and non-assessable. Certificates representing the Class A ordinary shares are issued in registered form. Our shareholders who are non-residents of the British Virgin Islands may freely hold and vote their Class A Ordinary Shares. 56 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 65/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm General Class B Ordinary Shares Each Class B Ordinary Share in the Company confers upon the shareholder the right to five votes at a meeting of the shareholders of the Company or on any resolution of shareholders. Holders of our Class B Ordinary Share will vote together with holders of our Class A Ordinary Share as a single class on all matters presented to our shareholders for their vote approval. No Class B Ordinary Share may be sold, assigned, transferred, alienated, commuted, anticipated, or otherwise disposed of (including by will or the laws of descent and distribution), or pledged or hypothecated as collateral for a loan or as security for the performance of any obligation, or be otherwise encumbered, and are not subject to attachment, garnishment, execution or other legal or equitable process, and any attempt to do so shall be null and void. Each Class B Ordinary Share shall only be issued to the Company’s or its subsidiaries’ employees or those entities of which its principal shareholder is an employee of the Company or its subsidiaries. Shareholder’s termination of employment with the Company or its subsidiaries shall immediately result in the cancellation of any and all issued and outstanding shares of Class B ordinary shares held by such shareholder on the date of termination. Sale, assignment, transfer, alienation, or otherwise disposition of any Class A Ordinary Share by common shareholder of Class B ordinary shares shall immediately result in the cancellation of equal number of shares of Class B ordinary share on the date of such disposition. Shareholder(s) of Class B ordinary share in the Company shall not: ● receive the right to any dividend paid by the Company; ● receive the right to any distribution of the surplus assets of the Company on its liquidation. Transfer Agent and Registrar The transfer agent and registrar for the Class A ordinary shares and Class B ordinary shares is VStock Transfer, LLC, 18 Lafayette Pace, Woodmere, NY 11598. Distributions The holders of our Class A ordinary shares are entitled to such dividends or other distributions as may be authorized by our board of directors, subject to the BVI Act and our memorandum and articles of association. Shareholders’ voting rights Any action required or permitted to be taken by the shareholders must be taken at a duly called meeting of the shareholders entitled to vote on such action. At each meeting of shareholders, each shareholder who is present in person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative) will have one vote for each Class A Ordinary Share or five votes for each Class B Ordinary Share. Holders of our Class A Ordinary Share will vote together with holders of our Class B Ordinary Share as a single class on all matters presented to our shareholders for their vote approval. An action that may be taken by the shareholders at a meeting may also be taken by a resolution of shareholders consented to in writing. Election of directors Delaware law permits cumulative voting for the election of directors only if expressly authorized in the certificate of incorporation. The laws of the British Virgin Islands do not specifically prohibit or restrict the creation of cumulative voting rights for the election of our directors. Cumulative voting is not a concept that is accepted as a common practice in the British Virgin Islands, and we have made no provisions in our memorandum and articles of association to allow cumulative voting for elections of directors. 57 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 66/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Meetings of shareholders Any of our directors may convene a meeting of shareholders at any time and in any manner and place the director considers necessary or desirable. The director convening a meeting must not give less than seven days’ notice of the meeting to those shareholders whose names appear as shareholders in the register of shareholders on the date of the notice and are entitled to vote at the meeting, and the other directors. Our board of directors must convene a meeting of shareholders upon the written request of shareholders entitled to exercise 30% or more of the voting rights in respect of the matter for which the meeting is requested within 28 days of receiving the written request. A meeting of shareholders held in contravention of the requirement to give notice is valid if shareholders holding at least 90% of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall constitute waiver in relation to all the shares which that shareholder holds. The quorum for a meeting of shareholders is duly constituted if, at the beginning of the meeting, there are present in person or by proxy not less than 50% of the votes of the shares (or class or series of shares) entitled to vote on the resolutions to be considered at the meeting. A quorum may comprise a single shareholder or proxy. If within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of the shareholders, will be dissolved. In any other case, it will stand adjourned to the next business day in the jurisdiction in which the meeting was to have been held at the same time and place or to such other time and place as the directors may determine, and if at the adjourned meeting there are present within one hour from the time appointed for the meeting in person or by proxy not less than one third of the votes of the shares or each class or series of shares entitle to vote on the matter to be considered by the meeting, those present will constitute a quorum but otherwise the meeting will be dissolved. Meetings of directors Our business and affairs are managed by our board of directors, who will make decisions by voting on resolutions of directors. Our directors are free to meet at such times and in such manner and places within or outside the BVI as the directors determine to be necessary or desirable A director must be given not less than 3 days’ notice of a meeting of directors. At any meeting of directors, a quorum will be present if not less than one half of the total number of directors is present, unless there are only 2 directors in which case the quorum is 2. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented to in writing by a majority of the directors. A person other than an individual which is a shareholder may by a resolution of its directors or other governing body authorize any individual it thinks fit to act as its representative at any meeting of shareholders. The duly authorized representative shall be entitled to exercise the same powers on behalf of the person which he represents as that person could exercise if it were an individual. Protection of minority shareholders We would normally expect British Virgin Islands courts to follow English case law precedents, which would permit a minority shareholder to commence a representative action, or derivative actions in our name, to challenge (1) an act which is ultra vires or illegal, (2) an act which constitutes a fraud against the minority by parties in control of us, (3) an infringement of individual rights of the minority shareholder (such as the right to vote and pre-emptive rights), and (4) an irregularity in the passing of a resolution which requires a special or extraordinary majority of the shareholders. Pre-emptive rights There are no pre-emptive rights applicable to the issue by us of new Class A ordinary shares under either British Virgin Islands law or our memorandum and articles of association. Transfer of Class A Ordinary Shares Subject to the restrictions in our memorandum and articles of association and applicable securities laws, any of our shareholders may transfer all or any of his or her Class A ordinary shares by written instrument of transfer signed by the transferor and containing the name and address of the transferee. Our board of directors may not resolve to refuse or delay the transfer of any Ordinary Share unless the shareholder has failed to pay an amount due in respect of it. 58 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 67/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Liquidation If we are wound up and the assets available for distribution among our shareholders are more than sufficient to repay all amounts paid to us on account of the issue of shares immediately prior to the winding up, the excess shall be distributable pari passu among those shareholders in proportion to the amount paid up immediately prior to the winding up on the shares held by them, respectively. If we are wound up and the assets available for distribution among the shareholders as such are insufficient to repay the whole of the amounts paid to us on account of the issue of shares, those assets shall be distributed so that, to the greatest extent possible, the losses shall be borne by the shareholders in proportion to the amounts paid up immediately prior to the winding up on the shares held by them, respectively. If we are wound up, the liquidator appointed by us may, in accordance with the BVI Act, divide among our shareholders in specie or kind the whole or any part of our assets (whether they shall consist of property of the same kind or not) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and may determine how such division shall be carried out as between the shareholders or different classes of shareholders. Calls on Class A Ordinary Shares and forfeiture of Class A Ordinary Shares Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their Class A ordinary shares in a notice served to such shareholders at least 14 days prior to the specified date of payment. Where such a notice has been issued its requirements have not been complied with, the directors may, at any time before the tender of payment, forfeit and cancel the Class A ordinary shares to which the notice relates. Issuance of Class A Ordinary Shares Subject to the provisions of the BVI Act, our board of directors may authorize the issuance of shares at such times, to such persons, for such consideration and on such terms as they may determine by a resolution of directors, subject to the BVI Act, our memorandum and articles of association and any applicable requirements imposed from time to time by the SEC, The Nasdaq Capital Market or any recognized stock exchange on which our securities are listed. Variation of rights All or any of the rights attached to any class of shares may, subject to the provisions of the BVI Act, be varied only with the consent in writing of, or pursuant to a resolution passed at a meeting by the holders of more than 50% of the issued shares of that class. Changes in the number of shares we are authorized to issue and those in issue We may from time to time by resolution of our board of directors: ● amend our memorandum of association to increase or decrease the maximum number of shares we are authorized to issue; ● subject to our memorandum of association, divide our authorized and issued shares into a larger number of shares; and ● subject to our memorandum of association, combine our authorized and issued shares into a smaller number of shares. Inspection of books and records Under the BVI Act, holders of our Class A ordinary shares are entitled, upon giving written notice to us, to inspect (i) our memorandum and articles of association, (ii) our register of shareholders, (iii) our register of directors and (iv) minutes of meetings and resolutions of our shareholders, and to make copies and take extracts from these documents and records. However, our directors can refuse access if they are satisfied that to allow such access would be contrary to our interests. 59 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 68/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Rights of non-resident or foreign shareholders There are no limitations imposed by our memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed. C. Material contracts Other than those described in this annual report, we have not entered into any material agreements other than in the ordinary course of business. D. Exchange controls Regulations on Foreign Currency Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended in August 2008. Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China. In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated another circular in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. On February 28, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration. On March 30, 2015, SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19 came into force and replaced both previous Circular 142 and Circular 36 on June 1, 2015. On June 9, 2016, SAFE promulgated Circular 16 to further expand and strengthen such reform. Under Circular 19 and Circular 16, foreign-invested enterprises in the PRC are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure under current accounts within its business scope or expenditure under capital accounts permitted by laws and regulations, except that such funds shall not be used for (i) expenditure beyond the enterprise’s business scope or expenditure prohibited by laws and regulations; (ii) investments in securities or other investments than banks’ principal-secured products; (iii) granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) construction or purchase of real estate for purposes other than self-use (except for real estate enterprises). 60 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 69/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits. Further, according to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment. Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents SAFE issued SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, that became effective in July 2014, replacing the previous SAFE Circular 75. SAFE Circular 37 regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under SAFE Circular 37, a SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while “round trip investment” refers to direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 provides that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations. We are aware that our PRC resident beneficial owners subject to these registration requirements have registered with the Beijing SAFE branch and/or qualified banks to reflect the recent changes to our corporate structure. E. Taxation The following brief description of Chinese enterprise laws is designed to highlight the enterprise-level taxation on our earnings, which will affect the amount of dividends, if any, we are ultimately able to pay to our shareholders. 61 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 70/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm PRC enterprise income tax is calculated based on taxable income determined under PRC accounting principles. The Enterprise Income Tax Law (the “EIT Law”), effective as of January 1, 2008, enterprises pay a unified income tax rate of 25% and unified tax deduction standards are applied equally to both domestic-invested enterprises and foreign-invested enterprises. Under the EIT Law, an enterprise established outside of the PRC with “de facto management bodies” within the PRC is considered a resident enterprise and will normally be subject to the enterprise income tax at the rate of 25% on its global income. If the PRC tax authorities subsequently determine that AGM Holding and its subsidiaries in PRC or any future non-PRC subsidiary should be classified as a PRC resident enterprise, then such entity’s global income will be subject to PRC income tax at a tax rate of 25%. In addition, under the EIT Law, payments from the subsidiaries in PRC to us may be subject to a withholding tax. The EIT Law currently provides for a withholding tax rate of 20%. If AGM Holdings or any of its subsidiaries in PRC is deemed to be a non- resident enterprise, then it will be subject to a withholding tax at the rate of 20% on any dividends paid by its Chinese subsidiaries to such entity. In practice, the tax authorities typically impose the withholding tax rate of 10% rate, as prescribed in the implementation regulations; however, there can be no guarantee that this practice will continue as more guidance is provided by relevant government authorities. We are actively monitoring the proposed withholding tax and are evaluating appropriate organizational changes to minimize the corresponding tax impact. According to the Sino-U.S. Tax Treaty which was effective on January 1, 1987 and aimed to avoid double taxation disadvantage, income that is incurred in one nation should be taxed by that nation and exempted from the other nation, but for the dividend that is generated in China and distributed to foreigner in other nations, a rate 10% tax will be charged. Our company will have to withhold that tax when we are distributing dividends to our foreign investors. If we do not fulfill this duty, we will receive a fine up to five times of the amount we are supposed to pay as tax or other administrative penalties from government. The worst case could be criminal charge of tax evasion to responsible persons. The criminal penalty for this offense depends on the tax amount the offender evaded, and the maximum penalty will be 3-7 years imprisonment plus fine. PRC Value Added Tax Pursuant to the Provisional Regulation of China on Value Added Tax and its implementing rules, issued in December 1993, all entities and individuals that are engaged in the businesses of sales of goods, provision of repair and placement services and importation of goods into China are generally subject to a VAT at a rate of 17% (with the exception of certain goods which are subject to a rate of 13%) of the gross sales proceeds received, less any VAT already paid or borne by the taxpayer on the goods or services purchased by it and utilized in the production of goods or provisions of services that have generated the gross sales proceeds. PRC Business Tax Companies in China are generally subject to business tax and related surcharges by various local tax authorities at rates ranging from 3% to 20% on revenue generated from providing services and revenue generated from the transfer of intangibles. However, since May 1st of 2016, the Business Tax has been incorporated into Value Added Tax in China, which means there will be no more Business Tax and accordingly some business operations previously taxed in the name of Business Tax will be taxed in the manner of VAT thereafter. In general, this newly implemented policy is intended to relieve many companies from heavy taxes under currently slowing down economy. In the case of AGM Holdings’ Chinese subsidiaries, even though the VAT rate is 17%, with the deductibles the company may get in the business process, it will bear less burden than previous Business Tax. 62 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 71/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm British Virgin Islands Taxation Under the BVI Act as currently in effect, a holder of ordinary shares who is not a resident of the British Virgin Islands is exempt from British Virgin Islands income tax on dividends paid with respect to the ordinary shares and a holder of ordinary shares is not required to pay any income tax in the British Virgin Islands on gains realized during that year on sale or disposal of such shares. The laws of the British Virgin Islands do not impose a withholding tax on dividends paid by a company incorporated or re- registered under the BVI Act. There are no capital gains, gift or inheritance taxes levied by the British Virgin Islands government on companies incorporated or re-registered under the BVI Act. In addition, shares of companies incorporated or re-registered under the BVI Act are not subject to transfer taxes, stamp duties or similar charges. There is no income tax treaty or convention currently in effect between the United States and the British Virgin Islands or between China and the British Virgin Islands. The following does not address the tax consequences to any particular investor or to persons in special tax situations such United States Federal Income Taxation as: ● banks; ● financial institutions; ● insurance companies; ● regulated investment companies; ● real estate investment trusts; ● broker-dealers; ● traders that elect to mark-to-market; ● U.S. expatriates; ● tax-exempt entities; ● persons liable for alternative minimum tax; ● persons holding our ordinary shares as part of a straddle, hedging, conversion or integrated transaction; ● persons that actually or constructively own 10% or more of our voting shares; ● persons who acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as consideration; or ● persons holding our ordinary shares through partnerships or other pass-through entities. Prospective purchasers are urged to consult their own tax advisors about the application of the U.S. Federal tax rules to their particular circumstances as well as the state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Ordinary Shares. 63 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 72/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Tax Treaties As above mentioned, according to the Sino-U.S. Tax Treaty which was effective on January 1st, 1987 and aimed to avoid double taxation disadvantage, income that is incurred in one nation should be taxed by that nation and exempted from the other nation, but for the dividend that is generated in China and distributed to foreigners in other nations, a rate 10% tax will be charged. Taxation of Dividends and Other Distributions on our Ordinary Shares Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us to you with respect to the ordinary shares (including the amount of any taxes withheld therefrom) will generally be includable in your gross income as dividend income on the date of receipt by you, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). The dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations. With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will be taxed at the lower capital gains rate applicable to qualified dividend income, provided that (1) the ordinary shares are readily tradable on an established securities market in the United States, or we are eligible for the benefits of an approved qualifying income tax treaty with the United States that includes an exchange of information program, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend is paid or the preceding taxable year, and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, ordinary shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the United States if they are listed on The Nasdaq Capital Market. You are urged to consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to our Ordinary Shares, including the effects of any change in law. Dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our ordinary shares will constitute “passive category income” but could, in the case of certain U.S. Holders, constitute “general category income.” To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits (as determined under U.S. federal income tax principles), it will be treated first as a tax-free return of your tax basis in your Ordinary Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. Taxation of Dispositions of Ordinary Shares Subject to the passive foreign investment company rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to the difference between the amount realized (in U.S. dollars) for the share and your tax basis (in U.S. dollars) in the Ordinary Shares. The gain or loss will be capital gain or loss. If you are a non- corporate U.S. Holder, including an individual U.S. Holder, who has held the ordinary shares for more than one year, you will be eligible for reduced tax rates of 0% (for individuals in the 10% or 15% tax brackets), 20% (for individuals in the 39.6% tax brackets) or 15% for all other individuals. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as United States source income or loss for foreign tax credit limitation purposes. 64 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 73/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Passive Foreign Investment Company Based on our current and anticipated operations and the composition of our assets, we do not expect to be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our current taxable year ending December 31, 2020. Our actual PFIC status for the current taxable year ending December 31, 2019 will not be determinable until the close of such taxable year and, accordingly, there is no guarantee that we will not be a PFIC for the current taxable year. Because PFIC status is a factual determination for each taxable year which cannot be made until the close of the taxable year. A non-U.S. corporation is considered a PFIC for any taxable year if either: ● at least 75% of its gross income is passive income, defined as income from interest, dividends, rents, royalties, gains on property producing foreign personal holding company income and certain other income that does not involve the active conduct of a trade or business; or ● at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the “asset test”). We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change. In particular, because the value of our assets for purposes of the asset test will generally be determined based on the market price of our Ordinary Shares, our PFIC status will depend in large part on the market price of our Ordinary Shares. Accordingly, fluctuations in the market price of the ordinary shares may cause us to become a PFIC. If we are a PFIC for any year during which you hold Ordinary Shares, we will continue to be treated as a PFIC for all succeeding years during which you hold Ordinary Shares. However, if we cease to be a PFIC, you may avoid some of the adverse effects of the PFIC regime by making a “deemed sale” election with respect to the Ordinary Shares. If we are a PFIC for any taxable year during which you hold Ordinary Shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Ordinary Shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the ordinary shares will be treated as an excess distribution. Under these special tax rules: ● the excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares; ● the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and ● the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the ordinary shares cannot be treated as capital, even if you hold the ordinary shares as capital assets. 65 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 74/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If you make a mark-to-market election for the Ordinary Shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the ordinary shares as of the close of your taxable year over your adjusted basis in such Ordinary Shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Ordinary Shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the Ordinary Shares, as well as to any loss realized on the actual sale or disposition of the Ordinary Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Ordinary Shares. Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. If you make a valid mark-to-market election, the tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under “Taxation of Dividends and Other Distributions on our Ordinary Shares” generally would not apply. The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market (as defined in applicable U.S. Treasury regulations), including The Nasdaq Capital Market. If the ordinary shares are regularly traded on The Nasdaq Capital Market and if you are a holder of Ordinary Shares, the mark-to-market election would be available to you were we to be or become a PFIC. Alternatively, a U.S. Holder of stock in a PFIC may make a “qualified electing fund” election with respect to such PFIC to elect out of the tax treatment discussed above. A U.S. Holder who makes a valid qualified electing fund election with respect to a PFIC will generally include in gross income for a taxable year such holder’s pro rata share of the corporation’s earnings and profits for the taxable year. However, the qualified electing fund election is available only if such PFIC provides such U.S. Holder with certain information regarding its earnings and profits as required under applicable U.S. Treasury regulations. We do not currently intend to prepare or provide the information that would enable you to make a qualified electing fund election. If you hold ordinary shares in any year in which we are a PFIC, you will be required to file U.S. Internal Revenue Service Form 8621 regarding distributions received on the ordinary shares and any gain realized on the disposition of the Ordinary Shares. You are urged to consult your tax advisors regarding the application of the PFIC rules to your investment in our ordinary shares and the elections discussed above. Information Reporting and Backup Withholding Dividend payments with respect to our ordinary shares and proceeds from the sale, exchange or redemption of our ordinary shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification on U.S. Internal Revenue Service Form W-9 or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information. Under the Hiring Incentives to Restore Employment Act of 2010, certain United States Holders are required to report information relating to Ordinary Shares, subject to certain exceptions (including an exception for ordinary shares held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold Ordinary Shares. U.S. Holders are urged to consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules. 66 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 75/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm F. Dividends and paying agents Not applicable for annual reports on Form 20-F. G. Statement by experts Not applicable for annual reports on Form 20-F. H. Documents on display We are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the SEC. I. Subsidiary Information Not applicable. ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of the latest fiscal year ended December 31, 2020, we had immaterial derivative financial instruments (open FX positions with a total fair value of $0) and did not have any derivative commodity instruments. Our other financial instruments, including cash and cash equivalents, transaction monetary assets held for clients, net accounts receivable, prepaid expenses and other current assets, accounts payable, deposits payable, accrued expenses and other current liabilities, advance from customers, and income tax payable, are exposed to certain market risk such as foreign currency risk and interest rate risk. Our overall risk management program focuses on preservation of capital and the unpredictability of financial markets and has sought to minimize potential adverse effects on our financial performance and position. Our other financial instruments primarily include cash and cash equivalents, accounts receivable and accounts payable for whose carrying values approximate to their fair value due to the short term nature of these balances. Therefore, we do not expect our other financial instruments to be exposed to material impacts from market risk. However, we have still summarized the relevant market risk and its potential impacts to our other financial instruments as below: Foreign Currency Exchange Risk While our reporting currency is the U.S. Dollar, some of our consolidated financial liability instruments are in the functional currency of RMB. As a result, we are exposed to foreign exchange risk as our results of operations may be affected by fluctuations in the exchange rate between the U.S. Dollar and the RMB. If the RMB depreciates against the U.S. Dollar, the value of our RMB liabilities as expressed in our U.S. Dollar financial statements will decline. Assets and liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and shareholders’ equity is translated at historical exchange rates. Any resulting translation adjustments are not included in determining net income but are included in determining other comprehensive income, a component of shareholders’ equity. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk. The value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions. Since July 2005, the RMB has not been pegged to the U.S. dollar and, although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar or the Euro in the medium to long term. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in RMB exchange rate and lessen intervention in the foreign exchange market. We estimated that as of December 31, 2020 and 2019, a 10% appreciation in RMB against the U.S. dollar would have resulted in a decrease of $90,174 and $95,060 to our financial liabilities denominated in RMB and would have resulted in a corresponding decrease in our consolidated comprehensive loss, respectively. As of December 31, 2020 and 2019, our financial assets denominated in RMB were material and therefore may be subject to material market fluctuation. ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES We do not have securities other than equity securities issued and outstanding. We do not have any American Depositary Shares. https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 76/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 67 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 77/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES PART II We do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITIES HOLDERS AND USE OF PROCEEDS Material Modifications to the Rights of Security Holders There have been no material modifications to the rights of our security holders. Use of Proceeds Not applicable. ITEM 15. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Exchange Act in Rule 13a-15(f ) and 15d-15(f ) defines this as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the Board, management and other personnel, 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 and includes those policies and procedures that: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that may have a material effect on the financial statements. Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, our management used the criteria, established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Management’s annual report on internal control over financial reporting. Based on its assessment, our management concluded that as of December 31, 2020, our disclosure controls and procedures were not effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Exchange Act. 68 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 78/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm In preparing our consolidated financial statements for the years ended December 31, 2019 and December 31, 2020, our management identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, and other significant deficiencies. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified are as follows: (i) no sufficient personnel with appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP; (ii) ineffective oversight of our financial reporting and internal control by those charged with governance; and (iii) inadequate design of internal control over the preparation of the financial statements being audited. These material weaknesses remained as of December 31, 2020. As a result of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements, errors or omissions. To remedy our previously identified material weakness, we have undertaken and will continue to undertake steps to strengthen our internal control over financial reporting, including: (i) hiring more qualified resources including financial controller, equipped with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework, (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel, (iii) establishing effective oversight and clarifying reporting requirements for non-recurring and complex transactions to ensure consolidated financial statements and related disclosures are accurate, complete and in compliance with SEC reporting requirements, and (iv) enhancing an internal audit function as well as engaging an external consulting firm to help us assess our compliance readiness under rule 13a-15 of the Exchange Act and improve overall internal control. However, such measures have not been fully implemented and we concluded that the material weakness in our internal control over financial reporting had not been remediated as of December 31, 2020. This annual report does not include an attestation report of the Company’s Independent Registered Public Accounting Firm as we qualified as an “emerging growth company” as defined under the JOBS Act as of December 31, 2020. (c) Attestation report of the registered public accounting firm. Not applicable. (d) Changes in internal control over financial reporting. 69 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 79/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm There have been no changes in our internal controls over financial reporting occurred during the fiscal year ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 15T. CONTROLS AND PROCEDURES Not applicable. ITEM 16. [RESERVED] ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT The Company’s board of directors has determined that Fangjie Wang qualifies as an “audit committee financial expert” in accordance with applicable Nasdaq Capital Market standards. The Company’s board of directors has also determined that members of the Audit Committee are all “independent” in accordance with the applicable Nasdaq Capital Market standards. ITEM 16B. CODE OF ETHICS The Company has adopted a Code of Business Conduct and Ethics that applies to the Company’s directors, officers, employees and advisors. The Code of Business Conduct and Ethics is attached as an exhibit to this annual report. Copy of the Code of Business Conduct and Ethics is also available on our website at www.agmprime.com. ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES JLKZ CPA LLP was appointed by the Company to serve as its independent registered public accounting firm for fiscal years ended December 31, 2020, 2019 and 2018. Audit services provided by JLKZ CPA LLP for fiscal years ended December 31, 2020, 2019 and 2018 included the examination of the consolidated financial statements of the Company; and services related to periodic filings made with the SEC. Fees Paid to Independent Registered Public Accounting Firm Audit Fees JLKZ CPA LLP’s fee for the annual audit of our financial statements for the fiscal year ended December 31, 2020 and 2019 were $90,000 and $100,000, respectively. Audit-Related Fees The Company has not paid JLKZ CPA LLP for audit-related services for the fiscal year ended December 31, 2020 and 2019. Tax Fees The Company has not paid JLKZ CPA LLP for tax services for the fiscal year ended December 31, 2020 and 2019. All Other Fees The Company has not paid JLKZ CPA LLP for any other services in fiscal year ended December 31, 2020 and 2019. 70 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 80/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Audit Committee Pre-Approval Policies Before JLKZ CPA LLP was engaged by the Company to render audit or non-audit services, the engagement was approved by the Company’s audit committee. All services rendered by JLKZ CPA LLP have been so approved. ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not applicable. ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Neither the Company nor any affiliated purchaser has purchased any shares or other units of any class of the Company’s equity securities registered by the Company pursuant to Section 12 of the Securities Exchange Act during the fiscal year ended December 31, 2020. ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. ITEM 16G. CORPORATE GOVERNANCE See “Item 6. Directors, Senior Management and Employees – A. Directors and Management – Board Committees.” ITEM 16H. MINE SAFETY DISCLOSURE Not applicable. 71 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 81/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm PART III ITEM 17. FINANCIAL STATEMENTS See Item 18. ITEM 18. FINANCIAL STATEMENTS Our consolidated financial statements are included at the end of this annual report, beginning with page F-1. ITEM 19. EXHIBITS Exhibit No. Description of Exhibit 1.1 Amended and Restated Memorandum and Articles of Association of AGM Group Holdings Inc., filed as exhibit 3.2 to the Form F-1 filed on May 15, 2017 and incorporate by reference herein 4.1* 4.2 4.3* 4.4* 4.5* 4.6 4.7 4.8 4.9 English translation of Employment Agreement with Wenjie Tang English translation of Employment Agreement with Zhihe Yang, filed as exhibit 10.2 to the Form 6-K filed on October 16, 2020 and incorporate by reference herein English translation of Employment Agreement with Yufeng Mi English translation of Employment Agreement with Bin Cao English translation of Employment Agreement with Yafang Wang English translation of Agreement with Jialin Liu, filed as exhibit 10.14 to the Form F-1 filed on September 28, 2017 and incorporate by reference herein English translation of Agreement with Tingfu Xie, filed as exhibit 10.15 to the Form F-1 filed on September 28, 2017 and incorporate by reference herein English translation of Agreement with Fangjie Wang, filed as exhibit 10.2 to the Form 6-K filed on January 9, 2019 and incorporate by reference herein English translation of Equity Transfer Agreement with Yushu Kingo City Real Estate Development Co., Ltd. Dated January 16, 2020, filed as exhibit 10.1 to the Form 6-K filed on January 22, 2020 and incorporate by reference herein 4.10 Share Purchase Agreement, dated December 14, 2020, filed as exhibit 10.1 to the Form 6-K filed on December 31, 2020 and incorporate by reference herein 4.11 Promissory Note, dated December 14, 2020, filed as exhibit 10.2 to the Form 6-K filed on December 31, 2020 and incorporate by reference herein 4.12 English translation of Equity Transfer Agreement with Yushu Kingo City Real Estate Development Co., Ltd. Dated April 6, 2021, filed as exhibit 10.1 to the Form 6-K filed on April 9, 2021 and incorporate by reference herein 72 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 82/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 8.1* 11.1 List of Subsidiaries Code of Business Conduct and Ethics, filed as exhibit 14.1 to the Form F-1 filed on September 19, 2017 and incorporate by reference herein 12.1* Certification of Chief Executive Officer Required by Rule 13a-14(a) 12.2* Certification of Chief Financial Officer Required by Rule 13a-14(a) 13.1** Certification of Chief Executive Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code 13.2** Certification of Chief Financial Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code 101.INS* XBRL Instance Document. 101.SCH* XBRL Taxonomy Extension Schema Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document. * Filed with this annual report on Form 20-F ** Furnished with this annual report on Form 20-F 73 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 83/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. SIGNATURES AGM GROUP HOLDINGS INC. By: /s/ Wenjie Tang Name: Wenjie Tang Title: Chief Executive Officer (Principal Executive Officer) Date: April 22, 2021 74 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 84/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm AGM GROUP HOLDINGS INC. TABLE OF CONTENTS Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2020 and 2019 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2020, 2019 and 2018 Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018 Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 Notes to Consolidated Financial Statements F-1 F-2 F-3 F-4 F-5 F-6 F-7 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 85/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To: The Board of Directors and Stockholders of AGM Group Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of AGM Group Holdings, Inc. and subsidiaries (collectively, the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph Regarding Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had incurred substantial losses during the year, which raises substantial doubt about its ability to continue as a going concern. Management’s plan in regards to these matters are described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The Critical Audit Matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ JLKZ CPA LLP JLKZ CPA LLP Flushing, New York April 22, 2021 We have served as the Company’s auditor since February 2019. F-2 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 86/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm AGM GROUP HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS ASSETS Cash and cash equivalents Prepaid expenses and other current assets Assets of discontinued operations - current Total current assets Property and equipment, net Intangible assets, net Assets of discontinued operations - non-current Total assets LIABILITIES AND SHAREHOLDERS’ EQUITY Accounts payable Accrued expenses and other payables Due to related parties Liabilities of discontinued operations Total current liabilities Total liabilities December 31, December 31, 2020 2019 $ $ $ 664,605 $ 5,420,916 - 6,085,521 19,320 10,113 - 1,462,590 5,121,450 721,277 7,305,317 49,006 11,593 7,148,097 6,114,954 $ 14,514,013 4,974 $ 1,819,544 597,826 - 2,422,344 2,422,344 3,209 1,749,161 609,180 301,338 2,662,888 2,662,888 SHAREHOLDERS’ EQUITY: Class A Ordinary Shares (200,000,000 shares authorized with par value of $0.001, 21,356,290 and 21,791,055 shares issued and outstanding as of December 31, 2020 and 2019, respectively) Class B Ordinary Shares (200,000,000 shares authorized with par value of $0.001, 7,100,000 and 7,100,000 shares issued and outstanding as of December 31, 2020 and 2019, respectively) Additional paid-in capital Retained earnings Accumulated other comprehensive income Total shareholders’ equity Total liabilities and shareholders’ equity $ 21,356 21,791 7,100 7,100 15,299,930 8,368,266 (3,876,167) (4,947,815) 398,471 243,704 3,692,610 11,851,125 6,114,954 $ 14,514,013 The accompanying notes are an integral part of these consolidated financial statements F-3 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 87/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm AGM GROUP HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Revenues Revenues Revenues - related parties Total Revenues Cost of Revenues Cost of revenues Total cost of revenues Gross profit Operating expenses Selling, general & administrative expenses Research and development expenses Bad debt expenses Total operating expenses For The Years Ended December 31, 2018 2019 2020 $ 53,305 $ 53,305 330,000 $ 3,871,812 1,240,708 5,112,520 - 330,000 38,534 38,534 43,056 43,056 1,653,028 1,653,028 14,771 286,944 3,459,492 964,470 63,450 - 1,027,920 1,369,701 127,117 - 1,496,818 3,876,872 1,028,249 923,217 5,828,338 Loss from operations (1,013,149) (1,209,874) (2,368,846) Other income (expenses) Other income Other expense Gain (loss) on equity method investment Total other expense 1,687 (9,343) - (7,656) 118,709 (363,815) 33,684 (211,422) 534,246 (511,908) (35,174) (12,836) Loss from continuing operation before provision of income taxes Provision for income taxes expenses (1,020,804) (76,343) (1,421,296) (64,615) (2,381,682) 595,421 Net loss from continuing operation (1,097,148) (1,485,911) (1,786,261) Discontinued operation Loss from discontinued operation, net of income tax Gain from disposal Gain (loss) from discontinued operation, net of income tax Net loss Comprehensive loss Net loss Other comprehensive income Foreign currency translation adjustment Total comprehensive loss (Loss) earnings per common share Continuing operations - Basic and Diluted Discontinued operations - Basic and Diluted Net loss per common share - basic and diluted (322,490) 347,990 25,500 (76,944) (11,698,538) 5,072,068 (6,626,470) - (76,944) $ (1,071,648) $ (1,562,855) $ (8,412,731) $ (1,071,648) $ (1,562,855) $ (8,412,731) (154,767) 284,923 $ (1,226,415) $ (1,467,795) $ (8,127,808) 95,060 $ $ (0.05) $ 0.00 (0.05) $ (0.07) $ (0.00) (0.07) $ (0.09) (0.31) (0.40) Weighted average Class A ordinary shares outstanding, basic and diluted 21,787,892 21,298,540 20,951,074 The accompanying notes are an integral part of these consolidated financial statements https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 88/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm F-4 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 89/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm AGM GROUP HOLDINGS INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Number of Class A Ordinary Shares Number of Class B Ordinary Shares Class A Ordinary Class B Ordinary Share Share Additional paid-in capital Retained Earnings Accumulated Other Comprehensive Income Total 20,010,000 11,900,000 $ 20,010 $ 11,900 $ 1,968,100 $ 6,099,419 $ (8,412,731) 18,488 $ 8,117,917 (8,412,731) 1,306,055 1,306 5,727,505 5,728,811 21,316,055 11,900,000 $ 21,316 $ 11,900 $ 7,695,605 $(2,313,312) $ (1,562,855) 303,411 $ 5,718,920 (1,562,855) 284,923 284,923 475,000 475 7,599,525 7,600,000 (4,800,000) (4,800) 4,800 - 21,791,055 7,100,000 $ 21,791 $ 7,100 $15,299,930 $(3,876,167) $ (1,071,648) 398,471 $11,851,125 (1,071,648) 40,235 40 667,861 667,901 95,060 95,060 (475,000) (475) (7,599,525) (7,600,000) 21,356,290 7,100,000 $ 21,356 $ 7,100 $ 8,368,266 $(4,947,815) $ 243,704 $ 3,692,610 The accompanying notes are an integral part of these consolidated financial statements (154,767) (154,767) F-5 Balance, December 31, 2017 Net loss Issuance of common stock for cash Foreign currency translation adjustment Balance, December 31, 2018 Net loss Issuance of common shares for acquisition equities of Anyi Cancelled shareholders’ common stocks Foreign currency translation adjustment Balance, December 31, 2019 Net loss Issuance of common shares Cancelled shareholders’ common stocks Foreign currency translation adjustment Balance, December 31, 2020 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 90/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm AGM GROUP HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For The Years Ended December 31, 2018 2019 2020 Cash flows from operating activities Net loss Net gain (loss) from discontinued operations, net of tax Net loss from continuing operations $ (1,071,648) $ (1,562,855) $ (8,412,730) (6,626,470) (1,786,261) 25,500 (1,097,148) (76,944) (1,485,911) Adjustment to reconcile net income to net cash provided by operating activities Depreciation and amortization Allowance for doubtful accounts Gain on equity method investment Gain from disposal of subsidiary Changes in operating assets and liabilities: Accounts receivable Accounts receivable - related parties Prepaid expense and other current assets Accounts payable Accrued expenses and other payables Income tax payable Net used in by operating activities from continuing operations Net cash used in by operating activities from discontinued operations Net cash used in by operating activities 33,437 - - (347,990) 50,273 - (33,684) - 382,680 (450,000) 923,217 35,174 - - 103,145 1,763 (48,537) - (1,355,330) (296,692) (1,652,022) - - 347,763 (76,441) 1,042,072 (4,998) (160,926) (35,467) (196,393) 411,070 168,937 (1,065,753) 66,687 (761,037) - (2,075,286) (757,948) (2,833,234) Cash flows from investing activities Purchase of property and equipment Process from sale of equity investment Acquisition of investment Acquisition of subsidiaries Advance deposit for intent acquisition Net cash used in investing activities from continuing operations Net cash used in investing activities from discontinued operations Net cash used in investing activities Cash flows from financing activities Proceeds from issuance of ordinary shares Proceeds from related parties Repayments to related parties Net cash provided by (used in) financing activities from continuing operations Net cash used in financing activities from discontinued operations Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents, beginning of the year Cash and cash equivalents, end of the year Less cash and cash equivalents of discontinued operations–end of period Cash and cash equivalents of continuing operations–end of period Supplemental cash flow information Interest paid Income taxes paid Non-cash investing and financing activities Common stock issued on acquisition Cancelled common stocks issued $ $ $ (810) - - - - (810) (385) (1,195) (700) 361,933 - (400,000) (4,937,664) (4,976,431) (33,956) (5,010,387) (57,506) - (377,952) - - (435,458) - (435,458) 667,901 125,212 (594,887) 198,226 (86,348) 111,878 - 6,823 (587,120) (580,297) 53,968 (526,329) 5,728,811 9,293,654 (8,959,411) 6,063,054 - 6,063,054 129,376 (1,411,964) 2,076,569 664,605 - 442,591 (55,667) 3,236,953 (5,788,776) 4,628,392 7,865,345 7,865,345 2,076,569 - 613,979 664,605 $ 1,462,590 $ 7,865,345 - $ - $ - $ 6,400 $ $ $ 7,600,000 $ $ 7,600,000 $ 4,800 $ - - - - https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 91/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Expense paid by related party $ - $ 61,864 $ 419,645 The accompanying notes are an integral part of these consolidated financial statements F-6 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 92/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm AGM GROUP HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES AGM Group Holdings Inc. (“AGM Holdings”) was incorporated on April 27, 2015 under the laws of the British Virgin Islands. AGM Holdings is a holding company and do not own any material assets or liabilities other than holding equity interest of multiple entities and certain cash and cash equivalents. On May 21, 2015, AGM Holdings incorporated a wholly owned subsidiary, AGM Technology Limited (“AGM HK”) in Hong Kong. AGM HK provides advanced online trading service for financial institutions in Asian areas. On October 13, 2015, AGM HK incorporated a Chinese limited liability subsidiary, AGM Tianjin Construction Development Co., Ltd. (“AGM Tianjin”) formerly known as Shenzhen AnGaoMeng Financial Technology Service Co., Ltd., for the purpose of being a holding company for the equity interests in China. On October 19, 2020, AGM Holdings also incorporated a wholly owned subsidiary, AGM Tianjin International Financial Leasing Co. Ltd. (“AGM Leasing”) was in China under the laws of PRC. On November 13, 2015 and September 28, 2016, AGM Tianjin incorporated two wholly owned Chinese limited liability subsidiaries, Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”), and Nanjing Xingaomeng Software Technology Co., Ltd. (AGM Nanjing”), respectively. AGM Nanjing was dissolved under the law of China on May 19, 2020. On June 14, 2017, AGM Software Service LTD (“AGM Software”) was incorporated under the laws of BVI. AGM Software is a wholly-owned subsidiary of AGM Holdings and its principal activity will be assisting AGM HK in providing our core technology services to customers. On July 26, 2019, AGM Holdings acquired 100% of Anyi Network Inc. (“Anyi Network”) and its subsidiaries. Anyi Network was incorporated on September 29, 2017 under the laws of the Cayman Islands. Anyi Network and its subsidiaries (“Anyi”) provide information accounting software technology and services for small and medium enterprises in China. See more on Note 4. On December 14, 2020, AGM Holdings sold all the equity interest of Anyi Network by entering into a share purchase agreement with certain buyers, pursuant to which the Company sold to the buyers 100% equity interest in Anyi Network in exchange for a total consideration of $8,000,000, payable in the form of canceling 475,000 ordinary shares of AGM Holdings held by the buyers, valued at $16.00 per share, and payment of $400,000 in cash. The disposition of Anyi Network includes the disposition of the subsidiaries of Anyi Network. See more on Note 5. AGM Holdings’ subsidiaries are as follows: Name AGM Technology Limited (“AGM HK”) AGM Tianjin Construction Development Co., Ltd. (“AGM Tianjin”) formerly Shenzhen AnGaoMeng Financial Technology Service Co., Ltd. Beijing AnGaoMeng Technology Service Co., Ltd. (“AGM Beijing”) Date of Incorporation May 21, 2015 Place of Incorporation Hong Kong Percentage of Effective Ownership Principal Activities 100% Online trading service October 13, 2015 China 100% Holding entity Nanjing Xingaomeng Software Technology Co., Ltd. (AGM Nanjing”) September 28, 2016 China AGM Software Service LTD (“AGM Software”) November 13, 2015 China June 14, 2017 BVI September 29, 2017 Cayman *Anyi Network Inc. (“Anyi Network”) *Anyi Technology Limited (“Anyi Technology”) *Jiangsu AnyiWang Network Technology Co., Ltd. (“Jiangsu AnYiWang”) *Beijing AnyiWang Technology Co., Ltd. (“Beijing AnYiWang”) October 23, 2017 Hong Kong 100% November 13, 2017 China January 2, 2018 China Software development and provider Software development and provider 100% 100% 100% 100% 100% 100% Software development and provider Software development and provider Core technology service provider Software development and provider Product marketing hub https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 93/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm *Changzhou AnyiWang Network Technology November 27, 2017 China 100% Software development Co., Ltd. (“Changzhou AnYiWang”) *Lianyungang AnyiWang Software Co., Ltd. (“Lianyungang AnYiWang”) November 20, 2017 China *Tongshan Naquan Technology Service Co., Ltd. (“Tongshan Naquan”) *Hubei AnYiWang Network Technology Co., Ltd. (“Hubei AnYiWang”) May 3, 2018 March 8, 2018 China China and provider Software development and provider Software development and provider Software development and provider 100% 100% 100% * Anyi Network and its subsidiaries were disposed as of December 31, 2020 and are classified as discontinued operations retrospectively. Anyi Network and its subsidiaries are collectively referred to herein as the “Anyi”, unless specific reference is made to an entity. AGM HK, AGM Tianjin, AGM Beijing, AGM Nanjing, AGM Software, and Anyi, are referred to as subsidiaries. AGM Holdings and its consolidated subsidiaries are collectively referred to herein as the “Company” unless specific reference is made to an entity. F-7 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 94/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Note 2 - SUMMARY OF SIGNIFICANT POLICIES Basis of Presentation The Company’s year-end is December 31; as such the year ended December 31, 2020 is referred to as “fiscal 2020”, the year ended December 31, 2019 is referred to as “fiscal 2019”, and the year ended December 31, 2018 is referred to as “fiscal 2018”. The accompanying consolidated financial statements are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules. The Company included all adjustments that are necessary for the fair presentation of our financial position, results of operations, and cash flows for the periods presented. This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in China (“China GAAP”), the accounting standards used in the places of their domicile. The accompanying consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company to present them in conformity with U.S. GAAP. Principles of Consolidation The accompanying consolidated financial statements include the accounts for AGM Holdings and all its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Foreign Currency Translation The accompanying consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. For the subsidiaries whose functional currencies are Renminbi (“RMB”), results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income or loss. Transaction gains and losses are reflected in the consolidated statements of income. The consolidated balance sheet balances, with the exception of equity at December 31, 2020, 2019 and 2018 were translated at RMB6.5378, RMB6.9630 and RMB6.8764 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to consolidated statements of income and cash flows for the year ended December 31, 2020, 2019 and 2018 were RMB6.9003, RMB6.9074 and RMB6.6146 to $1.00, respectively. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, and income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. F-8 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 95/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Cash and cash equivalents Cash and cash equivalents are financial assets that are either cash or highly liquid investments with an original maturity term of 90 days or less. At December 31, 2020, the Company’s cash equivalents primarily consist cash in various financial institutions. Fair Value of Financial Instruments The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). It clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other payables, due to related parties, deferred revenue and income tax payable approximate their fair value based on the short-term maturity of these instruments. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists principally of amounts due from trade customers. Credit is extended based on an evaluation of the customer’s financial condition and collateral is not generally required. The Company maintains allowances for doubtful accounts for estimated losses from the receivable amount that cannot be collected. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. In determining these estimates, the Company examines historical write-offs of its receivables and reviews each client’s account to identify any specific customer collection issues. Management believes that the accounts receivable are fully collectable. Therefore, no allowance for doubtful accounts is deemed to be required on its accounts receivable at December 31, 2020 and 2019. The Company historically has not experienced uncollectible accounts from customers granted with credit sales. Cost method investment Investments in which the Company does not have the ability to exercise significant influence and does not have any control (generally 0-20 percent ownership), are accounted for under the cost method of accounting and are included in the long-term assets on the consolidated balance sheets. The Company evaluates its cost method investment whenever events or changes in circumstance indicate that the carrying amounts of such investment may be impaired. If a decline in the value of a cost method investment is determined to be other than temporary, a loss is recorded in the current period. Equity method investment Investments in which the Company has the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in the long-term assets on the consolidated balance sheets. Under this method of accounting, the Company’s share of the net earnings or losses of the investee is presented below the income tax line on the consolidated statements of operations. The Company evaluates its equity method investment whenever events or changes in circumstance indicate that the carrying amounts of such investment may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in the current period. F-9 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 96/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Identifiable significant improvements are capitalized and expenditures for maintenance, repairs, and betterments, including replacement of minor items, are charged to expense. Depreciation is computed based on cost, less the estimated residual value, if any, using the straight-line method over the estimated useful life. The residual value rate and useful life of property and equipment are summarized as follows: Property and Equipment Electronic equipment Office equipment Business Acquisition Residual value rate Useful life 5% 5% 3 years 5 years A contingency should be recognized at its acquisition date fair value if that value can be determined. (The guidance in Topic 820 is used to determine fair value). If the acquisition-date fair value of contingency cannot be determined, then an asset or liability is recognized for the contingency if it’s probable at the acquisition date that such asset or liability exists and if its amount is reasonable estimable. A contingency is not recognized for a contingency in the accounting for a business combination if: a) its fair value cannot be determined and b) the probable and reasonably estimate criteria are not met. Instead, the contingency is disclosed and accounted for subsequent to the acquisition date in accordance with Topic 450. Pursuant to the Acquisition Agreement, the contingent consideration consisted of compensatory arrangement for services to be performed by the officers of the acquiree, and such amounts are to be determined in the future by both parties; therefore the fair value cannot be determined at the acquisition date. The Company as an acquirer did not recognize a liability at the acquisition date. Goodwill and Other Intangible Assets Goodwill arises from business acquisition and is generally determined as the excess of fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquire, over the fair value of the nets assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently in events and circumstances exists that indicate that a goodwill impairment test should be performed. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet. Acquired intangible assets other than goodwill with finite lives are stated at cost less accumulated amortization if there is any. Intangible assets mainly represent the domain name at cost, less accumulated amortization on a straight-line basis over an estimated life of ten years. Intangible Asset AGM domain Impairment of Long-lived Assets Residual value rate Useful life 0% 10 years In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and carrying amount. F-10 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 97/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Lease Commitments On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company determined if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and short and long-term lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets. As of adoption of ASC 842 and as of January 1, 2019, the adoption did not have an impact on the Company s financial statements as the Company did not commitment any lease that are over twelve months at time of adoption. Revenue Recognition The Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all years presented. The core principle of this new revenue standard is that a company should recognize revenue when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle by the Company in its determination of revenue recognition: ● Step 1: Identify the contract(s) with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: Recognize revenue when or as the Company satisfies a performance obligation. The Company is a software developer, engaging in the development and sale of enterprise application software, including accounting software and ERP software, and the software-related after-sales services in China. Its mission is to provide easy-to use and effective solutions to minimize error, comply with the increasing regulatory complexity, accommodate transactions volumes of businesses of various sizes, and thus streamlining their accounting and finance operations. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. The Company derives revenue from the sale of the following three items: (1) packaged software products, (2) technical support plans, (3) software customization services, and bundle of products or services that may include a combination of these items. We enter into contracts with customers that include promises to transfer various products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration allocated to the respective performance obligation. We recorded and recognized revenues from both products and services in one account, which we present as revenues and revenues from related parties in the accompanying consolidated statements of operations and comprehensive income. During the fiscal years ended December 31, 2020 and 2019, the Company derives revenue from the sale of the following three items: (1) Retail Software Products The Company’s packaged software products consist of accounting software, fintech software, trading education software and other online-based management products. Each packaged software product includes a perpetual software license and a one-year technical support plan. Revenue is recognized at a point in time upon the delivery of the perpetual license, and in a period of time throughout the effective period for the technical support plan, which generally is recognized over twelve months period. However, we did not record this revenue stream on our total revenue in fiscal 2020, 2019 and 2018 since we discontinued business related to these products. We are continuing to develop retail software products for different industries. https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 98/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm F-11 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 99/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm (2) Technical Support Plans The Company sells our technical support plan either as a package with our sale of software products or separately on its own. Each technical support plan has a unified effective period of one year. Revenue is recognized in a period of time throughout the effective period for the technical support plan, generally is recognized over twelve months period. (3) Software Customization Services The Company delivers its software customization services by developing customized features on software products to suit customers’ special needs. Upon receiving the purchase request from the customers, the Company designs, develops, tests, and implements the specified features to our software products. The Company also includes a one-year technical support plan specifically for the developed feature(s). Customers are able to request and purchase the service together with a purchase of our software product, or separately if the customer has our software products in-use. Revenue is recognized at a point in time upon customers’ acceptance of the feature(s), and revenue for the technical support plan is recognized over its service term, which generally is for twelve months period. The Company reports revenues net of applicable sales taxes and related surcharges. Costs of Revenues Our cost of revenues has two components: (1) cost of product revenue, which includes direct costs of software products; labor costs and employee benefits for software development, data testing, bug fixes and hacker prevention; research and development expenses (2) cost of services and other revenue, which reflects direct costs associated with providing services, including data center and support costs related to delivering online services. Operating Leases The Company determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used. Upon adoption of ASU 2016-02 and related standards, operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company includes options to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. The Company also takes into considerations when certain lease contains fair value purchase and termination options with an associated penalty. The Company reviews all leases for capital or operating classification at their inception. The Company uses its incremental borrowing rate in the assessment of lease classification and define the initial lease term to include the construction build-out period but to exclude lease extension periods. We conduct our operations primarily under operating leases as of adoption of ASC 842 and as of January 1, 2019, the adoption did not have an impact on the Company’s s financial statements as the Company did not commitment any lease that are over twelve months at time of adoption. Research and Development Expenses Research and development costs are expensed as incurred. The costs primarily consist of the wage expenses incurred to continuously improve and upgrade the Company’s services. Research and development expenses of the years ended December 31, 2020, 2019 and 2018 were $63,450, $127,117 and $1,028,249, respectively. F-12 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 100/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Income Taxes The Company is governed by the Income Tax Law of China, Inland Revenue Ordinance of Hong Kong and the U.S. Internal Revenue Code of 1986, as amended. The Company accounts for income taxes using the asset/liability method prescribed by ASC 740, “Accounting for Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset 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 effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Act has caused the Company’s deferred income taxes to be revalued. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2017, the Company recognized the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. Since the Company has provided a full valuation allowance against its deferred tax assets, the revaluation of the deferred tax assets did not have a material impact on any period presented. The ultimate impact of the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may be issued as a result of the Act. The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the Company’s financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of December 31, 2020, 2019 and 2018, the Company had uncertain tax positions accrued, and will continue to evaluate for uncertain positions in the future. Value Added Tax The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of software service provided. The Company reports revenue net of China’s VAT for all the periods presented in the accompanying consolidated statements of operations. Comprehensive Income ASC 220 “Comprehensive Income” established standards for reporting and display of comprehensive income, its components and accumulated balances. Components of comprehensive income include net income and foreign currency translation adjustments. For the years ended December 31, 2020, 2019 and 2018, the only component of accumulated other comprehensive income was foreign currency translation adjustments. Related Party Transactions A related party is generally defined as (i) any person and or their immediate family hold 10% or more of the company’s securities (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business. Related parties may be individuals or corporate entities. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. F-13 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 101/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk are cash and cash equivalents, transaction monetary assets held for clients, mark to market assets for open trading positions, and accounts receivable arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions or trading platforms. The Company routinely assesses the financial strength of the customer and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. Reclassification Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings and financial position. Earnings per Ordinary Share Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted- average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted-average number of ordinary shares outstanding and dilutive potential ordinary shares during the period. Segment Reporting The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker has been identified as the chief executive officer of the Company who reviews financial information of separate operating segments based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by customer. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company has determined that it has only one operating segment. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, we have not determined whether implementation of such proposed standards would be material to our consolidated financial statements. F-14 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 102/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Note 3 - GOING CONCERN Substantial doubt about the Company’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Our current operating results indicate that substantial doubt exists related to the Company’s ability to continue as a going concern. Management’s plans include attempting to improve its business profitability, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely basis, obtain additional working capital funds through debt and equity financings, and restructure on-going operations to eliminate inefficiencies to raise cash balance in order to meet its anticipated cash requirements for the next twelve months from the date of this report. However, we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional debt financing, or whether such actions would generate the expected liquidity as currently planned. Note 4 - BUSINESS ACQUISITIONS On July 26, 2019 (“the Acquisition Date”), the Company completed the acquisition of 100% of the issued and outstanding capital stock of Anyi Network from its shareholders pursuant to the terms and conditions of a Share Exchange Agreement (the “Acquisition Agreement”) entered into among the Company and Anyi Network’s shareholders. In connection with the Acquisition Agreement, AGM Holdings acquired 100% of the equity of Anyi and pay $400,000 in cash and issue an aggregate of 475,000 duly authorized, fully paid and nonassessable Class A ordinary shares of the Company, valued at $16.00 per share to the shareholders of Anyi. The total consideration underlying the Share Exchange shall be $8,000,000. This is referred to herein as the “the Acquisition”. The Acquisition has been accounted for as a business combination, under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their fair values as of the Acquisition Date. As of the Acquisition Date, goodwill is measured as the excess of consideration transferred, which is also generally measured at fair value of the net acquisition date fair values of the assets acquired and liabilities assumed. Based upon the purchase price allocations, the following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the Acquisition Date: Cash Accounts receivable, net Contract assets Other current assets Property and equipment Total assets acquired at fair value Accounts payable Contract liabilities Other current liabilities Other payables Accrued salaries and benefits Total liabilities assumed Net assets acquired Goodwill Total purchase price $ 553,633 210,036 511,096 6,618 17,825 1,299,208 (59) (80,168) (16,121) (252,343) (72,229) (420,920) 878,288 7,121,712 $ 8,000,000 The consolidated financial statements for the year ended December 31, 2019 including the operations of Anyi from the Acquisition Date through December 31, 2019. The Company recognized goodwill in the amount of $7,121,712 which represents the amount of total consideration transferred in excess of the fair value assigned to identifiable assets acquired and liabilities assumed in a business acquisition at the Acquisition Date. The Company recorded no value of goodwill as of December 31, 2020 as the Company sold 100% equity interest in Anyi Newtork in December 2020 disclosed in Note 5. F-15 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 103/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Note 5 - DISCONTINUED OPERATIONS AND DISPOSITION On December 14, 2020, the Company entered into a share purchase agreement (the “Agreement”) with Haiyan Huang, Feng Zhi and Yinglu Gao (the “Buyers”), pursuant to which the Company agreed to sell to the Buyers 100% equity interest in Anyi Network including its subsidiaries, in exchange for a total consideration of $8,000,000, payable in the form of canceling 475,000 ordinary shares of the Company held by the Buyers, valued at $16.00 per share, and payment of $400,000 in cash (the “Cash Consideration”). The Buyers are former shareholders of Anyi Network. and there is no affiliation between the Buyers and the Company. The Buyers entered into a promissory note (the “Promissory Note”), pursuant to which the Buyers agreed to pay the Cash Consideration to the Company on or prior to June 30, 2021. The promissory note is not secured and bears no interest. On December 14, 2020, the AGM Shares were duly cancelled pursuant to the Agreement. On December 20, 2020, the Buyers amended the register of members of Anyi Network Inc. with the Cayman Islands corporate registry. On September 5, 2018, the Company sold 90% equity of wholly owned subsidiary AGM Holdings incorporated AGM Group Ltd (“AGM Belize”) to Mr. Zhentao Jiang (the “Buyer”), a related party, at a sales price of $450,000 (the “Transfer Price”). Pursuant to an equity transfer agreement, the Buyer shall pay the Transfer Price in available cash to the seller’s designated bank account. A 20% initial payment shall be paid by the Buyer within five working days upon the signing of the equity transfer agreement. A 30% shall be paid by the Buyer after the completion of legal and financial due diligence, and the remaining 50% shall be paid after the approval by The International Business Company Registry of Belize. Pursuant to equity transfer agreement dated September 5, 2018, AGM Belize has ceased to be a wholly-owned subsidiaries of the Company. Additionally, the Company has ceased to provide forex trading brokerage business. As a result, the Company’s current shareholders will no longer benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of the forex trading brokerage business. Pursuant to ASC Topic 205-20, Presentation of Financial Statements - Discontinued Operations, the results of operations for the years ended December 31, 2020, 2019 and 2018 from Anyi Network and AGM Belize have been classified to loss from discontinued operations line on the accompanying consolidated statements of operations and comprehensive loss presented herein. The assets and liabilities also have been classified as discontinued operations in the Company’s consolidated financial statements as of December 31, 2020, 2019 and 2018. The carrying amount of the major classes of assets and liabilities of discontinued operation as of December 31, 2020 and 2019 consist of the following: Assets of discontinued operation: Current assets: Cash and cash equivalents Accounts receivables Prepaid expenses and other current assets Current assets of discontinued operation Assets of discontinued operation – non-current Total assets of discontinued operation Liabilities of discontinued operation: Current liabilities: Accounts payable Accrued expenses and other payables Advanced from customers Due to related parties Total liabilities of discontinued operation F-16 December 31, 2020 December 31, 2019 $ $ $ $ - $ - - - - - $ 613,980 66,535 40,762 721,277 7,148,097 7,869,374 - $ - - - - $ 59 118,090 67,484 115,705 301,338 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 104/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The summarized operating result of discontinued operations included in the Company’s consolidated statements of operations consist of the following: Revenues Cost of revenues Gross profit Operating expenses Other income (expenses), net Loss before income tax Income tax expense Loss from discontinued operations Gain from disposal, net of tax Total gain (loss) from discontinued operations, net of income taxes $ $ Years Ended December 31, 2018 2019 486,244 379,630 $ 400,513 199,888 179,742 85,732 196,060 (11,844,769) 60,499 (2,240) (18,558) (11,698,538) 58,386 - (76,944) (11,698,538) 5,072,068 (76,944) $ (6,626,470) 2020 237,431 $ 160,810 76,621 412,686 (45,125) (381,190) 767 (322,490) 347,990 25,500 $ - The Company realized a gain of $347,990 from the disposal of 100% equity of Anyi Network including its subsidiaries, offset by loss from discontinued operations of $322,490 in the year ended December 31, 2020. As the result, total gain from discontinued operation for the year ended December 31, 2020 amounted $25,500. The Company reclassified Anyi Network and its subsidiaries as discontinued operation and recorded a loss of $76,944 from discontinued operation in the year ended December 31, 2019. On November 20, 2019, AGM Trade Global PTY LTD (“AGM Australia”), a wholly owned subsidiary incorporated on July 25, 2017, was dissolved under the law of Australia. As the result, AGM Australia had ceased business activities, no gain or loss was realized for the year ended December 31, 2019. On October 8, 2019, AGM Holdings transferred its 100% ownership of AGMClub Service Limited (“AGMClub”), a Hong Kong company incorporated on August 14, 2017, for total considerations of $971. As the result, the Company realized loss of $319 for the year ended December 31, 2019 and recognized no gain or loss on the disposal. On August 15, 2019, AGM Global Asset Management Limited (“AGM Global”), a wholly owned subsidiary acquired on May 24, 2018, was dissolved under the law of Cayman Islands. As the result, the AGM Global had ceased business and realized loss of $16,537. On April 16, 2019, AGMTrade UK LTD (“AGM UK”), a wholly owned subsidiary incorporated on July 18, 2017, was dissolved under the law of England and Wales. As the result, AGM UK had ceased business activities, no gain or loss was realized for the year ended December 31, 2019. The Company decided to discontinue AGM Belize’s operation and recognized impairment loss on intangible assets of $2,711,535 in fiscal 2018. The Company realized a gain of $450,000 from the disposal of 90% equity of AGM Belize with an investment cost basis of $0. The Company also realized a gain of $4,172,068 resulted from 90% of liabilities being assumed by the acquirer pursuant to the equity transfer agreement. Together, the Company recognized a total gain on disposal of operation of $5,072,068 for the year ended December 31, 2018 and recognized the remaining 10% equity in AGM Belize under cost method investment. F-17 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 105/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Note 6 - PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of prepaid expenses, other receivables, and deposits. Prepaid expenses principally include rent prepayments and prepaid expenses. Deposits principally include license deposit and rent deposits. As of December 31, 2020 and 2019 prepaid expenses and other current assets consisted of the following: Prepaid expenses Note receivable (1) Advance deposit for intent acquisition (2) Deposits and others Total prepaid expenses and other current assets December 31, 2020 December 31, 2019 $ $ 54,466 $ 400,000 4,937,664 28,786 5,420,916 $ 2,761 - 4,937,664 181,025 5,121,450 (1) While the Company entered into the purchase Agreement with the Buyers to sell 100% equity interest in Anyi Network including its subsidiaries, the Company entered into a Promissory Note, pursuant to which the Buyers agreed to pay the Cash Consideration of $400,000 to the Company on or prior to June 30, 2021. The promissory note is not secured and bears no interest. (2) The Company entered into a letter of intent of equity acquisition with Yushu Kingo City Real Estate Development Co., Ltd. on February 26, 2019, and made advance payments upon execution of a letter of intent for completion of due diligence of $4,937,664. The Company wrote-off other receivables in the amount of $nil and $16,856 for the years ended December 31, 2020 and 2019, respectively. Other receivables prior to dissolutions for AGMClub and AGM Global were $319 and $16,537 in fiscal 2019, respectively. Note 7 - INVESTMENTS Investment Valuation The Company continually reviews its investments to determine whether a decline in fair value below the carrying value is other than temporary. The primary factors the Company considers in its determination are the length of time that the fair value of the investment is below the Company’s carrying value; the financial condition, operating performance and the prospects of the equity investee; and other company specific information such as industry data, general economic conditions, cash flows forecasts or any recent financing rounds. If the decline in fair value is deemed to be other than temporary, the carrying value of the equity investee is written down to fair value. Cost method of investments On September 5, 2018, the Company sold 90% equity of its subsidiary AMG Belize and recognized the remaining 10% equity in AGM Belize under cost method of investment in the amount of $0 as its initial investment was immaterial. The Company evaluates its cost method investments in accordance to ASC 325-20-35. Impairment charges in connection with its cost method investments were $0 for the year ended December 31, 2019. The carrying amount of the investment was $0 at December 31, 2019. F-18 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 106/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Equity method of investments On August 8, 2018, AGM Beijing entered into an investment agreement with the shareholders of Guochuang Shenzhen Investment Co. Ltd. (“Guochuang”) to invest RMB2,500,000 (approximately $365,802 at August 8, 2018) in Guochuang’s equity, for which AGM Beijing received a 20% interest. AGM Beijing made the full payment on August 5, 2018. Guochuang was incorporated under the laws of People’s Republic of China. Yufeng Mi, Chief Technology Officer of the Company, held 40% and 32% of Guochuang’s interest before and after AGM Beijing’s investment, respectively. From August 8, 2018 to December 31, 2018, the Company recognized loss from Guochuang in the amount of $35,174 (RMB 232,665). At December 31, 2018, Guochuang’s assets consisted of cash, prepaid expense and other current and fixed assets of approximately $160,000, $34,000, $2,000 and $16,000, respectively, and had total liabilities of approximately $7,000. The Company evaluates its equity method investments in accordance to ASC 325-20-35. Impairment charges in connection with its cost method investments were $0 for the year ended December 31, 2018. The carrying amount of the investment was $341,045 at December 31, 2018. During the year ended December 31, 2019, the Company sold its investment back to the shareholders of Guochuang and received RMB2,500,000 (approximately $361,721) as return on investment, the Company recognized the recovered loss of $33,684 (RMB 232,665) as other income for the year ended December 31, 2019. Note 8 - PROPERTY AND EQUIPMENT, NET As of December 31, 2020 and 2019, property and equipment, net consisted of the following: Electronic equipment Office equipment Total property and equipment Less: accumulated depreciation Total property and equipment, net from continuing operations Total property and equipment, net from discontinued operations December 31, 2020 December 31, 2019 $ $ $ 163,891 $ 14,034 177,925 (158,605) 19,320 $ - $ 172,969 15,050 188,019 (139,013) 49,006 26,385 Depreciation expenses for the fiscal years ended December 31, 2020, 2019 and 2018 were $31,957, $48,793 and $53,697, respectively. There was no impairment recorded for these property and equipment for the years ended December 31, 2020, 2019 and 2018. F-19 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 107/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Note 9 – INTANGIBLE ASSETS, NET As of December 31, 2020 and 2019, intangible assets, net consisted of the following: AGM domain names Total intangible assets Less: accumulated amortization Total intangible assets, net from continuing operations Total intangible assets, net from discontinued operations December 31, 2020 December 31, 2019 $ $ 14,800 14,800 (4,687) 10,113 - $ 14,800 14,800 (3,207) 11,593 - For the fiscal years ended December 31, 2020, 2019 and 2018, amortization expenses amounted to $1,480, $1,480 and $328,983, respectively. Note 10 - RELATED PARTY TRANSACTIONS Related parties of the Company consist of the following: Name of Related Party Zhentao Jiang Wenjie Tang Bin Cao Yufeng Mi Bin Liu Guofu Zhang Chengchun Zhang IIG Ltd. Firebull Holdings Limited Nanjing Yunxinhe Software Technology Co., Ltd. Beijing Maiteke Technology Co., Ltd. Northnew Management Limited Nature of Relationship Former Director and principal shareholder Chief Executive Officer (“CEO”), Director, and shareholder Chairman of the Board Chief Technical Officer (“CTO”) and shareholder Former Chief Risk Officer (“CRO”) Former Chief Financial Officer (“CFO”) Former Chief Operational Officer (“COO”) and principal shareholder Company under common control of Zhentao Jiang, dissolved in November 2019 Company under common control of Wenjie Tang and Bin Cao Company formerly controlled by Zhentao Jiang, dissolved in April 2020 Company where Wenjie Tang assumed a key management position Company under common control of Zhentao Jiang prior to June 2020 i) Revenues from related party and accounts receivable from related party The Company had no revenues from related parties during the years ended December 31, 2020 and 2019. The Company provides technical support service to IIG Ltd. and generated related party revenues from IIG Ltd. in the amount of $1,240,708 in the year ended December 31, 2018. F-20 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 108/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm (ii) Acquisition and Dissolution of AGM Global Asset Management Ltd. On May 25, 2018, the Company purchased AGM Global Asset Management Ltd from a third-party entity which was owned by two related parties, Mr. Wenjie Tang and Mr. Yufeng Mi. On August 15, 2019, AGM Global Asset Management Ltd was dissolved and the Company recognized a loss in the amount of $16,537 for the year ended. (iii) Due to (from) related parties The Company mainly finance its operations through proceeds borrowed from related parties. As of December 31, 2020 and 2019, due to related parties consisted the following: Zhentao Jiang Wenjie Tang Guofu Zhang Yufeng Mi Total December 31, 2020 December 31, 2019 $ $ 712,485 $ (116,610) - 1,951 597,826 $ 607,349 - 1,831 - 609,180 The balance of due to related parties represents expenses incurred by related parties in the ordinary course of business and expenses paid by related parties on behalf of the Company. These amounts are interest free, unsecured and repayable on demand. For the years ended December 31, 2020 and 2019, related parties paid operating expenses on behalf of the Company of $0 and $61,864, respectively. From time to time, the Company borrowed $125,212, $6,823 and $8,581,150 from related parties in the years ended December 31, 2020, 2019 and 2018, respectively, and repaid $594,887, $587,120 and $6,837,611 in the years ended December 31, 2020, 2019 and 2018, respectively. Note 11 - SEGMENT INFORMATION The Company disaggregated its revenues into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The Company derives revenue from the sale of the following two items: (1) packaged software products; (2) technical support plans; and (3) software customization services. All of the Company’s long-lived assets are located in China. The Company and its subsidiaries do not have long-lived assets in the United States for the reporting periods. Revenues from products and services, and gross profit are as follows: Segment revenue: Technical support plans Software customization services Total revenue from continuing operations Total revenue from discontinued operations Gross profit F-21 For the Years Ended December 31, 2018 2019 2020 $ $ $ 53,305 $ - 53,305 - $ 83,731 $ 5,112,520 246,269 - 5,112,520 330,000 - 379,630 $ 14,771 $ 286,944 $ 3,459,492 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 109/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Note 12 - INCOME TAX British Virgin Islands (“BVI”) Under the tax laws of BVI, AGM Holdings and AGM Software are not subject to tax on income or capital gain. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the BVI. Hong Kong Under the tax laws of Hong Kong, Anyi Technology, AGM HK and AGMClub are subject to tax at 16.5% on the assessable profits arising in or derived from Hong Kong or 8.25% if the net profit under $2,000,000 for 2019 and beyond, and allowed to offset their future tax taxable income with taxable operating losses with carried forward indefinitely. United Kingdom Under the tax laws of United Kingdom, AGM UK is subject to tax at 19% on the assessable profits arising in or derived from United Kingdom, and allowed to offset their future tax taxable income with taxable operating losses with carried forward in a 2- year period. AGM UK has incurred net loss for the years ended December 31, 2018 and 2019. Australia Under the tax laws of Australia, AGM Australia is subject to tax at 27.5% on the assessable profits arising in or derived from Australia, and taxable operating loss incurred by companies incorporated in Australia are allowed to be carried forward indefinitely. AGM Australia has incurred net loss for the years ended December 31, 2018 and 2019. Cayman Islands Under the tax laws of Cayman Islands, AGM Global and Anyi Network are not subject to tax on income or capital gain. In addition, payments of dividends by such entities to their shareholders are not subject to withholding tax in Cayman Islands. China On March 16, 2007, the National People’s Congress passed the Enterprise Income Tax Law (“the China EIT Law”), which was effective as of January 1, 2008. Companies incorporated in China are allowed to offset future tax taxable income with taxable operating losses carried forward in a 5-year period. The China EIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose “de facto management body” is located in China be treated as a resident enterprise for PRC tax purpose and consequently be subject to China income tax at the rate of 25% for its worldwide income. The Implementing Rules of the China EIT Law merely defines the location of the “de facto management body” as “the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located.” On April 22, 2009, China State Administration of Taxation further issued a notice entitled “Notice regarding Recognizing Offshore-Established Enterprises Controlled by PRC Shareholders as Resident Enterprises Based on Their place of Effective Management.” Under this notice, a foreign company controlled by a PRC company or a group of PRC companies shall be deemed as a PRC resident enterprise, if (i) the senior management and the core management departments in charge of its daily operations mainly function in China; (ii) its financial decisions and human resource decisions are subject to decisions or approvals of persons or institutions in China; (iii) its major assets, accounting books, company sales, minutes and files of board meetings and shareholders’ meetings are located or kept in China; and (iv) more than half of the directors or senior management personnel with voting rights reside in China. Based on a review of surrounding facts and circumstances, the Company believe that there is an uncertain tax position as to whether its operations outside of China will be considered a resident enterprise for PRC tax purposes due to limited guidance and implementation history of the China EIT Law. Should the Company be treated as a resident enterprise for PRC tax purposes, the Company will be subject to PRC tax on worldwide income at a uniform tax rate of 25%. The Company has evaluated this uncertain tax position and recorded a tax liability on the Consolidated Balance Sheet. F-22 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 110/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The China EIT Law also imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection with the establishment or place of such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement. Such withholding income tax was exempted under the previous income tax regulations. British Virgin Islands, where the Company is incorporated, did not have such tax treaty with China. AGM Beijing, AGM Tianjin, AGM Nanjing, Jiangsu AnYiWang, Beijing AnYiWang, Changzhou AnYiWang, Lianyungang AnYiWang, Tongshan Nanquan and Hubei AnYiWang are subject to 25% China statutory tax rate. AGM Beijing and AGM Tianjin incurred net loss for the year ended December 31, 2020, AGM Beijing, AGM Tianjin, AGM Nanjing, Beijing AnYiWang, and Tongshan Nanquan incurred net loss for the year ended December 31, 2019, and AGM Beijing and AGM Tianjin incurred net loss for the year ended December 31, 2018. The provision for income taxes consisted of the following: Current Deferred Less from discontinued operations Total from continuing operations For the Years Ended December 31, 2018 2019 2020 595,421 (123,001) $ - - (58,386) $ - 595,421 (64,615) $ (76,343) $ - - $ (76,343) $ $ $ $ The reconciliations of the statutory income tax rate and the Company’s effective income tax rate are as follows: HK statutory income tax rate Valuation allowance recognized with respect to the loss in the HK company UK statutory income tax rate Valuation allowance recognized with respect to the loss in the UK company Australian statutory income tax rate Valuation allowance recognized with respect to the loss in the Australian company PRC statutory income tax rate Uncertain tax position Changes in valuation allowance for deferred tax asset Total tax rate For the Years Ended December 31, 2018 2019 2020 16.5% (16.5)% - - - - 25.0% 25.0% (25.0)% 25% 16.5% (16.5)% 19.0% (19.0)% 27.5% (27.5)% 25.0% 25.0% (25.0)% 25% 16.5% (16.5)% 19.0% (19.0)% 27.5% (27.5)% 25.0% 25.0% (25.0)% 25% The Management believes that the Company’s cumulative losses arising from recurring business of subsidiaries constituted significant strong evidence that most of the deferred tax assets would not be realizable and this evidence outweighed the expectations that the Company would generate future taxable income. As such, deferred tax assets arise from net operating losses are subject to full valuation allowance for the year ended December 31, 2020. The valuation allowance of $34,922 and $236,963 was recorded as of December 31, 2020 and 2019. F-23 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 111/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The summary of cumulative net operating losses carried forward for the Company’s subsidiaries in different regions is as follows: PRC Region HK Region UK Region Australia Region Less from discontinued operation of PRC Total cumulative net operating loss carry-forward from continuing operation Expiration Beginning in the Year 2021 Indefinitely 2020 Indefinitely For the Years Ended December 31, 2019 2020 2018 424,478 $ 5,940,924 445,060 $ 340,902 338,255 45,090 1,102 - - 53,063 - - - (127,171) $ - $ 490,150 $ 639,562 $ 6,335,990 $ $ $ Components of the Company’s net deferred tax assets are set forth below: December 31, December 31, December 31, 2019 2018 2020 Deferred tax assets: Net operating loss carry-forwards Total of deferred tax assets Less: valuation allowance Net deferred assets Accounting for Uncertainty in Income Taxes $ $ 111,265 $ 111,265 (111,265) - $ 236,963 $ 236,963 (236,963) - $ 1,556,422 1,556,422 (1,556,422) - The Company and certain subsidiaries are established in various foreign countries with significant operations located in China. The Company might not be subject to PRC income tax and did not pay any income tax to PRC however it is uncertain as to whether China tax authority may take different views about the Company’s tax positions which may lead to additional tax liabilities. The tax authority of China Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in China after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether China tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities. ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the company’s tax position and recognized liabilities for uncertain tax positions for the years ended December 31, 2020, 2019 and 2018, and the period from inception (April 27, 2015) to December 31, 2015. This liability is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. F-24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 112/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm The activity of the unrecognized tax benefits related to the Company’s uncertain tax positions is summarized as follows: Gross beginning balance Gross increase to tax positions in the current period Gross increase to tax position in the prior period Gross decrease to tax position in the prior period Lapse of statute limitations Less from discontinued operations Gross ending balance from continuing operations $ For the Year Ended December 31, 2020 1,562,330 $ 76,343 - - - - $ 1,638,673 $ For the Year Ended December 31, 2019 1,483,745 $ 123,001 - - - (44,416) $ 1,562,330 $ For the Year Ended December 31, 2018 2,079,166 (595,421) - - - - 1,483,745 $ $ There were no interests and penalties in relation to the Company uncertain tax positions for the fiscal years ended December 31, 2020, 2019 and 2018. Note 13 - COMMITMENTS AND CONTINGENCIES Risk, Uncertainties, and Contingencies on Discontinued Operation Prior to June 2018, the Company’s subsidiary AGM Group Ltd. (“AGM Belize”) engaged in Forex Trading Brokerage business. The Company received total deposits of $82,922,858 as customers’ investment funds that were kept in various third-party forex trading platform accounts China and Canada. In June 2018, the local government of the People’s Republic of China initiated certain policy change that it would no longer support forex-trading related business in China. The policy required various third-party forex trading platform to shut down its business and restricted customers to access the investment funds deposited. As a result, the Company was not able to retrieve the funds held in these platform accounts to return to its former customers. On September 5, 2018, the Company disposed 90% of AGM Belize for $450,000 to Mr. Zhentao Jiang, a related party who is a director and principal shareholder of the Company. According to the equity transfer agreement, Mr. Zhentao Jiang will assume 90% assets and liabilities of AGM Belize and will be responsible to retrieve the investment funds to return to the Company’s former customers. As of December 31, 2018, Mr. Zhentao Jiang retrieved and returned $2,320,023 in cash to the Company’s former customers directly. Although the Company may not be responsible for losses caused by the discontinued operation of AGM Belize or responsible to retrieve and return the investment funds to these customers. However, the filing of a claim or commencement of any governmental investigation or proceeding against the Company or any of its affiliates, even if not justified, could create negative publicity and have a material adverse impact on the Company’s operation. Should any of the allegations or claims arise, the Company operation could be adversely affected. F-25 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 113/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Lease Commitments On April 15, 2016, the Company entered into a lease agreement with Yu Wang to lease a 187 square-meter office space, located at Room 2112, East Tower, VanPalace, No.1 Jinghua South Street, Chaoyang District, Beijing City, China. The lease starts from April 15, 2016 with a term of one year. According to the agreement, the rent is RMB25,000 (approximately $4,000) per month. On April 15, 2017, April 14, 2018, April 4, 2019 and April 4, 2020, this lease agreement was renewed to extend the term for one-year term with no change in rent charge, respectively. On November 15, 2016, the Company entered into a lease agreement with Gang Liu to lease a 186 square meters office space, located at Room 2111, East Tower, VanPalace, No.1 Jinghua South Street, Chaoyang District, Beijing City, China. The lease starts from December 5, 2016 with a term of six months ended on June 4, 2017. According to the agreement, the rent is RMB27,500 (approximately $4,000) per month. On May 10, 2017, May 10, 2018 and June 1, 2019, the Company renewed this lease agreement to extend the term for one year with no change in rent, respectively. On September 3, 2020, the Company renewed this lease agreement to extend the term for six months and rent is RMB25,000 (approximately 4,000). On November 28, 2017, the Company entered into a lease agreement with International Peaceful Interests Ltd. to lease an office space, located at Room 1904, 19/F Jubilee Center, 18 Fenwick St., 46 Gloucester Road, Wanchai, Hong Kong. The lease term is from December 8, 2017 to December 7, 2019. According to the agreement, the rent is HK$48,136 (approximately $6,000) per month. The lease was terminated in May 2019. In addition, the Company is committed to bearing the expenses of dormitories, which are leased for the Company’s employees. Rent expenses for the years ended December 31, 2020, 2019 and 2018 were $91,043, $173,259 and $447,363, respectively. The Company has future minimum lease obligations as of December 31, 2020 as follows: Year of 2021 Year of 2022 Year of 2023 Year of 2024 Year of 2025 Thereafter Less: lease commitments on terminations Total Note 14 - STOCKHOLDERS’ EQUITY Commitment Amount $ $ 18,116 - - - - - - 18,116 On July 26, 2019, the Company entered into Acquisition Agreement with Anyi Network and the shareholders of Anyi. In connection with the Acquisition Agreement, the Company acquired 100% of the equity of Anyi and pay $400,000 in cash and issue an aggregate of 475,000 duly authorized, fully paid and nonassessable Class A ordinary shares of the Company, valued at $16.00 per share to the shareholders of Anyi. On December 14, 2020, the Company cancelled an aggregate of 475,000 ordinary shares of the Company held by Haiyan Huang, Feng Zhi and Yinglu Gao, who purchased back 100% of the equity of Anyi Network, valued at $16.00 per share. In July 2020, the Company issued an aggregated of 40,235 Class A ordinary shares of the Company to a total of 106 non- affiliate individual investors, valued at 16.00 per share, and the Company received proceeds in a total amount of $667,901. As of December 31, 2020, 21,356,290 shares of class A ordinary share and 7,100,000 shares of class B ordinary shares were issued and outstanding. F-26 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 114/115 2021/8/24 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm Note 15 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS Credit Risk Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and trade accounts receivable. the Company place our cash with high credit quality financial institutions in Singapore, Hongkong and China. As of December 31, 2020 and 2019, we had $148,747 and $281,319 of cash balance held in China banks, respectively. China banks protect consumers against loss if their bank or thrift institution fails, and each of our bank accounts is insured up to RMB500,000 (approximately $75,000). As a result, cash held in China financial institutions of $69,219 and $74,394 are not insured as of December 31, 2020 and 2019. We have not experienced any losses in such accounts through December 31, 2020. Our cash position by geographic area was as follows: Country: Singapore China (Hongkong) China (Mainland) Total cash and cash equivalents December 31, 2020 244,646 271,212 148,747 664,605 December 31, 2019 644,407 37% $ 536,864 41% 22% 281,319 100% $ 1,462,590 44% 37% 19% 100% $ $ Almost all of our sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, we believe that the concentration of credit risk with respect to trade accounts receivable is limited due to generally short payment terms. We also perform ongoing credit evaluations of our customers to help further reduce potential credit risk. Customers For the years ended December 31, 2020 and 2019, customers accounting for 10% or more of the Company’s revenues were as follows: Customers A B For the Years Ended December 31, 2020 2019 100% - 75% 17% As of December 31, 2020 and 2019, the Company had no receivable balance from customers. Note 16 - SUBSEQUENT EVENTS On April 6, 2021, AGM Tianjin and Yushu Kingo entered into a supplement agreement to the equity transfer agreement. Pursuant to the supplement agreement, Yushu Kingo’s shareholders shall return the Advance Payment and pay an additional 10% interest to AGM Tianjin if AGM Tianjin decides not to proceed with the acquisition contemplated by the equity transfer agreement and terminate such agreement on or before October 31, 2021. If Yushu Kingo is unable to make such payment, it will transfer the titles of real properties of Yushu Kingo to AGM Tianjin, valued with a 20% discount to market price. The parties further agreed to conduct a new evaluation of Yushu Kingo’s assets and to enter into supplement agreement based on such evaluation F-27 https://www.sec.gov/Archives/edgar/data/1705402/000121390021022596/f20f2020_agmgrouphold.htm 115/115 

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