SCHEDULE: NIP Group Shareholder Amends Acquisition Terms

A major shareholder of NIP Group Inc. has updated its Schedule 13D filing, detailing an amendment to an asset-purchase agreement involving new shares and convertible notes for mining infrastructure.

Summary

• Prosperity Oak Holdings Limited and CHIU Chang-Wei (who controls Prosperity Oak) beneficially own 57,965,652 Class A Ordinary Shares of NIP Group Inc., representing 15.9% of the Class A shares and 5.2% of the total voting power.
• NIP Group Inc. is acquiring mining infrastructure and computational capacity with a combined hash rate of approximately 8.19 EH/s from Prosperity Oak and other parties.
• The original asset-purchase agreement from November 3, 2025, was amended on January 9, 2026, to allow for separate closings for computational capacity and mining infrastructure.
• Upon initial closing on January 9, 2026, NIP Group Inc. issued 167,917,734 Class A ordinary shares as consideration for Cloud Mining Services.
• For the subsequent closing related to Purchased Assets, NIP Group Inc. will issue unlisted interest-free convertible notes, convertible into up to 146,598,028 Class A ordinary shares at an initial conversion price of US$0.2082617 per share.
• The total outstanding Class A Ordinary Shares increased to 365,280,890 after the initial closing.
• The 'Long Stop Date' for the transaction has been extended to March 31, 2026.
• A specific transaction in Kazakhstan involves Mining Ninjas Kazakh Limited purchasing assets from Armada Technologies Kazakhstan Limited for KZT1,715,959,858 (exclusive of 12% value-added tax), with the claim for this payment (KZ Payable) eventually assigned to NIP Group Inc. in exchange for a convertible note (KZ Note) to Prosperity Oak.

Sentiment

Score: 6

Explanation: The filing indicates progress on a significant strategic acquisition, which is generally positive for growth. However, the substantial share dilution and the complexity of the transaction, including unfinalized convertible note terms and a potential unwind condition for the Kazakhstan deal, introduce elements of caution.

Positives

• NIP Group Inc. is progressing with the acquisition of significant mining infrastructure and computational capacity, totaling approximately 8.19 EH/s, which can enhance its operational scale.
• The amendment allows for more flexible closing arrangements, potentially facilitating the completion of the acquisition.

Negatives

• Significant dilution for existing shareholders due to the issuance of 167,917,734 Class A ordinary shares and the potential issuance of up to 146,598,028 additional Class A ordinary shares upon conversion of notes.
• The convertible notes for the subsequent closing are not yet substantially finalized, introducing some uncertainty regarding their final terms.

Risks

• The issuance of the KZ Note by NIP Group Inc. is a condition precedent for the Conditional KZ Assignment to become effective; if the KZ Note is not issued within 45 days, the assignment will not become effective, and the Kazakhstan transaction may be unwound.
• The terms and conditions of the unlisted interest-free convertible notes are subject to finalization, which could impact their value or conversion mechanics.
• The company covenants not to take actions that would impair the economic benefits of the noteholders or reduce the conversion price below prescribed levels, which could limit future financial flexibility.
• The company may need to seek further shareholder approval to authorize additional Class A Ordinary Shares if the current authorized but unissued shares are insufficient to cover the full conversion of notes, potentially delaying full conversion.

Future Outlook

NIP Group Inc. anticipates a subsequent closing for the acquisition of mining infrastructure, which will involve the issuance of unlisted interest-free convertible notes. These notes are convertible into Class A ordinary shares, potentially increasing the total outstanding shares. The company also needs to ensure the issuance of the KZ Note within 45 days to finalize the Kazakhstan transaction.

Industry Context

The acquisition of 8.19 EH/s in computational capacity and mining infrastructure indicates NIP Group Inc.'s continued expansion in the cryptocurrency mining sector. This move aligns with the broader industry trend of companies scaling their operations to capitalize on digital asset mining opportunities, often through strategic acquisitions and partnerships to enhance their competitive position.

Corporate Governance

Related Party Transactions

• Prosperity Oak Holdings Limited, a reporting person and controlled by CHIU Chang-Wei, is one of the 'Second Tranche Selling Parties' involved in the asset-purchase agreement with NIP Group Inc.
• The Kazakhstan transaction involves the assignment of a claim (KZ Payable) from Armada Technologies Kazakhstan Limited to Prosperity Oak Holdings Limited, and then from Prosperity Oak Holdings Limited to NIP Group Inc. in exchange for a convertible note, highlighting a multi-step related party dealing.

Stakeholder Impact

• Shareholders: Experience significant dilution from the issuance of new Class A ordinary shares and potential future dilution from convertible notes, which could impact per-share earnings and ownership percentages.
• Company: Gains substantial mining infrastructure and computational capacity (8.19 EH/s), potentially enhancing its operational scale, revenue generation capabilities, and market position in cryptocurrency mining.
• Noteholders (Prosperity Oak and other sellers): Will receive unlisted interest-free convertible notes, providing a future equity stake in the company and aligning their interests with long-term company performance.

Next Steps

• Subsequent closing of the transaction for the remaining mining infrastructure.
• Issuance of unlisted interest-free convertible notes.
• Potential conversion of convertible notes into Class A ordinary shares.
• Issuance of the KZ Note within 45 days to finalize the Conditional KZ Assignment for the Kazakhstan transaction.
• NIP Group Inc. may need to seek shareholder approval for additional Class A Ordinary Shares if required for note conversion.

Key Dates

Keywords

NIP Group Inc., Schedule 13D, beneficial ownership, Class A Ordinary Shares, mining infrastructure, computational capacity, hash rate, convertible notes, asset acquisition, dilution, corporate governance, related party transaction, cryptocurrency mining