5. DISCONTINUED OPERATIONS

In December 2025, the Company’s Board of Directors approved a strategic decision to discontinue its distributed storage and computing services business, which consisted entirely of Filecoin (“FIL”) mining operations. The Company determined that continuing the Filecoin mining business was no longer aligned with its long-term strategic direction and capital allocation priorities. This decision represents a strategic shift that is expected to have a major effect on the Company’s operations and financial results.

The Filecoin mining operations were conducted through the Company’s wholly owned U.S. subsidiary, Mercurity Fintech Technology Holding Inc. (“MFH Tech”). Following the Board’s approval, the Company ceased making new investments in mining activities and initiated an orderly wind-down of the business.

On December 12, 2025, the Company entered into a comprehensive agreement pursuant to which substantially all mining equipment previously used in the Filecoin mining operations was sold to a third party. Under the terms of the agreement, the Company leased back the equipment through April 30, 2026 solely to allow existing mining nodes to naturally expire. Upon the expiration of the mining nodes, the Company expects to fully exit the Filecoin mining business and settle all remaining obligations related to such activities.

Accordingly, the results of operations of the Filecoin mining business have been classified as discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements—Discontinued Operations, and are presented separately from continuing operations in the consolidated statements of operations and cash flows for all periods presented. Assets and liabilities directly associated with the discontinued operations are presented separately in the consolidated balance sheets. Prior period financial information has been reclassified to conform to the current period presentation.

CHAINCE DIGITAL HOLDINGS INC.

(FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(In U.S. dollars, except for number of shares and per share data)

The following table summarizes the assets and liabilities associated with the Company’s discontinued operations:

SUMMARIZES THE ASSETS AND LIABILITIES DISCONTINUED OPERATIONS

As of December 31, 2025, prepaid expenses and other current assets associated with the Company’s discontinued operations primarily consisted of: (a) a collateral deposit of $1.5 million paid to Huangtong International Co., Ltd. in connection with the borrowing of Filecoins used to support the Company’s Filecoin mining operations, which is expected to be settled together with the related assets and liabilities upon completion of the wind-down of the Filecoin mining business by the end of May 2026; (b) $100,000 of prepaid custody and operational service fees related to the Filecoin mining business, which are expected to be recognized as costs of discontinued operations prior to the full termination of the mining activities; (c) $158 of Filecoin joint mining sharing costs overpaid to HDP Capital Management Limited; and (d) $1,068 of temporary Filecoin transfer balances between the Company and the technology service provider, Origin Storage Pte Ltd.

A substantial portion of these Filecoins were pledged or locked as collateral within the Filecoin network to support mining activities. As of March 31, 2026, the Company expects that the majority of the pledged Filecoins will be released upon the expiration of the related mining nodes by the end of May 2026. Accordingly, these digital assets were classified as current assets of discontinued operations, as they are expected to be available for sale or used to settle outstanding obligations within the next twelve months.

As of December 31, 2025, accrued expenses and other current liabilities associated with the Company’s discontinued operations primarily consisted of: (a) $37,486 of accounts payable related to the Company’s Filecoin mining activities; (b) $231,799 representing the outstanding principal balance of Filecoins borrowed from Huangtong International Co., Ltd. to satisfy collateral requirements for the Company’s mining operations; and (c) $188,700 representing Filecoins provided by HDP Capital Management Limited as collateral in connection with the Company’s joint Filecoin mining arrangements with HDP.

CHAINCE DIGITAL HOLDINGS INC.

(FORMERLY KNOWN AS MERCURITY FINTECH HOLDING INC.)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(In U.S. dollars, except for number of shares and per share data)

The following table summarizes the results of the Company’s discontinued operations for the periods presented:

The following table summarizes the cash flows attributable to discontinued operations: