In the draft initial public offering (IPO) prospectus with the Hong Kong Stock Exchange (HKEX), the crypto mining equipment maker Ebang stated that there is a significant decrease in the revenue and gross profit in third quarter of 2018.
The latest figures of Ebang reveals that for the first and second quarter of 2018 the revenue of the company was $304 million (2.1 billion Yuan), which was eight times as much as for the same period in 2017. The profit for the first six months of the year was also significantly up which was $135 million. The profit was 16 times as much as the same period in 2017.
Recently the company has submitted the new draft IPO application with HKEX with the disclosure of its financial information up until 30th June 2018, after the first application, to sell shares on the exchange, had lapsed. Under the “Material adverse change” section of the new filing, the company stated that the average monthly sale of the Bitcoin mining machines was significantly down in the third quarter of 2018. The company stated:
“We experienced significant decreases in revenue and gross profit for the three months ended September 30, 2018, compared to the preceding three months ended June 30, 2018. ”
Though the company has not disclosed the detailed figures of the third quarter when the overall cryptocurrency market started to take a significant dip. According to some sources, to list the IPO, the company has to disclose the financials of the third quarter to HKEX at the beginning of 2019. The main concern for the HKEX is that the crypto mining firms are not disclosing their detailed financials. Other than Ebang, Bitmain is also in the list of companies which have not disclosed their detailed financials. It is the main factor which HKEX consider while evaluating IPO applications.
According to the current listing requirements of HKEX, the financial period which the new applicants have to report must not have ended more than six months from the date of listing documents. That is why Ebang has disclosed the financials up to 30th June and allowed to disclose the financials of the third quarter in 2019. Till now, it is not clear that how much the company is planning to raise from IPO. Some source believes that Ebang has reduced the amount by more than half since the initial filing. According to a Reuters report, initially, the company was seeking to raise $1 billion when it filed the IPO in May.