Future FinTech Group Inc

Previous wording

On January 26, 2023, the Company filed with the Florida Secretary of State’s office Articles of Amendment (the “Amendment”) to amend its Second Amended and Restated Articles of Incorporation, as amended (“Articles of Incorporation”). As a result of the Amendment, the Company has authorized and approved a 1-for-5 reverse stock split of the Company’s authorized shares of common stock from 300,000,000 shares to 60,000,000 shares, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). The common stock continues to be $0.001 par value. The Company rounded up to the next full share of the Company’s shares of common stock any fractional shares that result from the Reverse Stock Split and no fractional shares were issued in connection with the Reverse Stock Split and no cash or other consideration were paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split. No changes have been made to the number of preferred shares of the Company which remain as 10,000,000 preferred shares as authorized but not issued. The amendment to the Articles of Incorporation of the Company took effect on February 1, 2023. The Reverse Stock Split and Amendment were authorized and approved by the Board of Directors of the Company without shareholders’ approval, pursuant to 607.10025 of the Florida Business Corporation Act of the State of Florida.

Current wording

On January 26, 2023, the Company filed with the Florida Secretary of State’s office Articles of Amendment (the “Amendment”) to amend its Second Amended and Restated Articles of Incorporation, as amended (“Articles of Incorporation”). As a result of the Amendment, the Company has authorized and approved a 1-for-5 reverse stock split of the Company’s authorized shares of common stock from 300,000,000 shares to 60,000,000 shares, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). The common stock continues to be $0.001 par value. The Company rounded up to the next full share of the Company’s shares of common stock any fractional shares that result from the Reverse Stock Split and no fractional shares were issued in connection with the Reverse Stock Split and no cash or other consideration was paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split. No changes have been made to the number of preferred shares of the Company which remain as 10,000,000 preferred shares as authorized but not issued. The amendment to the Articles of Incorporation of the Company took effect on February 1, 2023. The Reverse Stock Split and Amendment were authorized and approved by the Board of Directors of the Company without shareholders’ approval, pursuant to 607.10025 of the Florida Business Corporation Act of the State of Florida.

Previous wording

The Company currently has nine directly controlled subsidiaries: DigiPay FinTech Limited (“DigiPay”), a company incorporated under the laws of the British Virgin Islands, Future FinTech (Hong Kong) Limited, a company incorporated under the laws of Hong Kong, GlobalKey Shared Mall Limited, a company incorporated under the laws of Cayman Islands (“GlobalKey Shared Mall”), Tianjin Future Private Equity Fund Management Partnership, a Limited Partnership under the laws of China, FTFT UK Limited, a company incorporated under the laws of United Kingdom, Future Fintech Digital Capital Management, LLC, a company incorporated under the laws of Connecticut, Future Fintech Digital Number One GP, LLC, a company incorporated under the laws of Connecticut, Future FinTech Labs Inc., a company incorporated under the laws of New York, and FTFT SuperComputing Inc. a company incorporated under the laws of Ohio.

Current wording

The Company currently has eight directly controlled subsidiaries: DigiPay FinTech Limited (“DigiPay”), a company incorporated under the laws of the British Virgin Islands, Future FinTech (Hong Kong) Limited, a company incorporated under the laws of Hong Kong, Tianjin Future Private Equity Fund Management Partnership, a Limited Partnership under the laws of China, FTFT UK Limited, a company incorporated under the laws of United Kingdom, Future Fintech Digital Capital Management, LLC, a company incorporated under the laws of Connecticut, Future Fintech Digital Number One GP, LLC, a company incorporated under the laws of Connecticut, Future FinTech Labs Inc., a company incorporated under the laws of New York, and FTFT SuperComputing Inc. a company incorporated under the laws of Ohio.

Previous wording

NTAM’s main revenue is generated from providing professional advice to clients and management fees for managing the investment of the clients. As of March 31, 2024, NTAM has approximately US$359 million assets under its management.

Current wording

NTAM’s main revenue is generated from providing professional advice to clients and management fees for managing the investment of the clients. As of June 30, 2024, NTAM has approximately US$348 million assets under its management.

Previous wording

Remittance service is a highly saturated market in the United Kingdom and there are many companies that offer remittance services. FTFT Finance has an edge over companies like wise in different ways, for example, FTFT Finance offers competitive rates for its services and does not charge customer fees for remittance to Pakistan as it receives its rebate from local banks. This approach provides gives us an advantage over our competitors.

Current wording

Remittance service is a highly saturated market in the United Kingdom and there are many companies that offer remittance services. FTFT Finance has an edge over companies like wise in many different ways, for example, FTFT Finance offers competitive rates for its services and does not charge customer fees for remittance to Pakistan as it receives its rebate from local banks. This approach provides gives us an advantage over our competitors.

Previous wording

In December 2019, a novel strain of coronavirus was reported and has spread throughout China and other parts of the world. On March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”. In early 2020, Chinese government took emergency measures to combat the spread of the virus, including quarantines, travel restrictions, and the temporary closure of office buildings and facilities in China. In response to the evolving dynamics related to the COVID-19 outbreak, the Company was following the guidelines of local authorities as it prioritizes the health and safety of its employees, contractors, suppliers and business partners. Our offices in China were closed and the employees worked from home at the end of January 2020 until late March 2020. The quarantines, travel restrictions, and the temporary closure of office buildings have materially negatively impacted our business. The outbreak has had and might continue to have disruption to our supply chain, logistics providers, customers or our marketing activities with the new variants of COVID-19, which could materially adversely impact our business and results of operations. There were outbreaks in various cities and provinces in China due to Omicron variant, such as Xi’an city, Hong Kong, Shanghai, Beijing and other cities in 2022, which have resulted quarantines, travel restrictions, and temporary closure of office buildings and facilities in these cities. In December 2022, the Chinese government eased its strict zero COVID-19 policy which resulted in a surge of new COVID-19 cases during December 2022 and January 2023, which has disrupted our business operations in China. The Company’s promotion strategy of CCM Shopping Mall previously mainly relied on the training of members and distributors through meetings and conferences. Chinese government put a restriction on large gatherings in 2020 and 2021, which made the promotion strategy for our online e-commerce platforms difficult to implement and the Company experienced difficulties to subscribe new members for its online e-commerce platforms. Since 2021, CCM generated minimal revenue and business for the Company. The Company started a process to close it down in November 2023 and completed deregistration and dissolution of the VIE with local authority on March 7, 2024.

Current wording

In December 2019, a novel strain of coronavirus was reported and has spread throughout China and other parts of the world. On March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”. In early 2020, Chinese government took emergency measures to combat the spread of the virus, including quarantines, travel restrictions, and the temporary closure of office buildings and facilities in China. In response to the evolving dynamics related to the COVID-19 outbreak, the Company was following the guidelines of local authorities as it prioritizes the health and safety of its employees, contractors, suppliers and business partners. Our offices in China were closed and the employees worked from home at the end of January 2020 until late March 2020. The quarantines, travel restrictions, and the temporary closure of office buildings materially negatively impacted our business. Any new variant and outbreak of COVID-19 might disrupt our supply chain, logistics providers, customers or our marketing activities, which could materially adversely impact our business and results of operations. There were outbreaks in various cities and provinces in China due to Omicron variant, such as Xi’an city, Hong Kong, Shanghai, Beijing and other cities in 2022, which have resulted quarantines, travel restrictions, and temporary closure of office buildings and facilities in these cities. In December 2022, the Chinese government eased its strict zero COVID-19 policy which resulted in a surge of new COVID-19 cases during December 2022 and January 2023, which has disrupted our business operations in China. The Company’s promotion strategy of CCM Shopping Mall previously mainly relied on the training of members and distributors through meetings and conferences. Chinese government put a restriction on large gatherings in 2020 and 2021, which made the promotion strategy for our online e-commerce platforms difficult to implement and the Company experienced difficulties to subscribe new members for its online e-commerce platforms. Since 2021, CCM generated minimal revenue and business for the Company. The Company started a process to close it down in November 2023 and completed deregistration and dissolution of the VIE with local authority on March 7, 2024.

Previous wording

The increase in revenue for the three months ended March 31, 2024 was primarily due to more revenue from asset management service, as the Company hired more seasoned account managers to boost the assets under management (“AUM”) and thus improved the revenue.

Current wording

The increase in revenue for the three months ended June 30, 2024 was primarily due to more revenue from asset management service, as the Company hired more seasoned account managers to boost the services and the revenues.

Previous wording

Other revenues increased from $0.09 million for the three months ended March 31, 2023 to $0.31 million for the same period of 2024, mainly due to the increased debt recovery consulting service fee as well as U.S. dollar bond service income of approximately $0.24 million, as we did not have such income in first quarter 2023.

Current wording

Other revenues increased from $0.10 million for the three months ended June 30, 2023 to $0.35 million for the same period of 2024, mainly due to the increased debt recovery consulting service fee as well as U.S. dollar bond service income of approximately $0.20 million, as we did not have such income in the second quarter 2023.

Previous wording

The following table presents the consolidated gross profit of each of our main products and services and the consolidated gross profit margin, which is gross profit as a percentage of the related revenues, for the three months ended March 31, 2024 and 2023, respectively:

Current wording

The following table presents the consolidated gross profit of each of our main products and services and the consolidated gross profit margin, which is gross profit as a percentage of the related revenue, for the three months ended June 30, 2024 and 2023, respectively:

Previous wording

General and administrative expenses increased by $0.05 million, or 1.4%, to $3.42 million for the three months ended March 31, 2024 from $3.37 million for the same period of last fiscal year. The increase in general and administrative expenses was mainly due to increased business trip expenses during the three months ended March 31, 2024.

Current wording

General and administrative expenses increased by $0.97 million, or 39.87%, to $3.39 million for the three months ended June 30, 2024, from $2.42 million for the same period of last fiscal year. The increase in general and administrative expenses was mainly due to increased professional service fees for lawyers for litigation with FT Global and internal control training fees.

Previous wording

Bad debt provision increased by $0.78 million during the three months ended March 31, 2024, compared to the same period of last fiscal year. The increase was due to different bad debt provision methods in 2024.

Current wording

Bad debt provision decreased by $0.95 million during the three months ended June 30, 2024, compared to the same period of last fiscal year. The decrease was due to bad debt recovery recognized in previous years and a different bad debt provision accounting treatment method used in 2024.

Previous wording

The Company recorded $0.01 million of research and development expenses. Research and development expenses include salaries, contracted services, as well as the related expenses of our research and product development team, and expenditures relating to our efforts to develop, design new products and services, and enhance our existing products and services to our clients. Research and development expenses decreased by $0.21 million during the three months ended March 31, 2024, compared to the same period of last fiscal year. The decrease in research and development expenses was mainly due to decreased salaries.

Current wording

The Company recorded $0.002 million of research and development expenses. Research and development expenses include salaries, contracted services, as well as the related expenses of our research and product development team, and expenditures relating to our efforts to develop, design new products and services, and enhance our existing products and services to our clients. Research and development expenses decreased by $0.11 million during the three months ended June 30, 2024, compared to the same period of last fiscal year. The decrease in research and development expenses was mainly due to decreased salaries.

Previous wording

Tax provision decreased by $0.03 million for the three months ended March 31, 2024, primarily due to decreased revenue.

Current wording

Tax provision decreased by $0.04 million for the three months ended June 30, 2024, primarily due to decreased revenue.

Previous wording

Net loss from continue operation increased by $1.83 million from $2.14 million for the three months ended March 31, 2023 to $3.97 million for the same period of 2024 mainly due to the increase in operating expenses, as discussed above.

Current wording

Net loss from continue operation increased by $0.26 million from $1.54 million for the three months ended June 30, 2023 to $1.80 million for the same period of 2024 mainly due to the increase in operating expenses, as discussed above.

Previous wording

Overall gross profit increased to $1.95 million for three months ended March 31, 2024 from $1.20 million for the same period of 2023. The increase is mainly due to the increase of gross profits from asset management service business and others which is in line with the increase of revenues for these two business segments during the first quarter of 2024. Overall gross margin as a percentage of revenue was 38.1% for the three months ended March 31, 2024, an increase of 2.4% from 35.7% for the same period of last fiscal year, mainly due to increase in profit margin for our asset management business as it has more large clients which was offset by the decrease in profit margin for our supply chain financing/trading business as its revenue mostly came from sales of goods with ownership during three months ended March 31, 2024, which has much lower profit margin than the revenue from agent service fees that we mostly generated from the same period of 2023.

Current wording

Overall gross profit increased to $3.55 million for six months ended June 30, 2024 from $2.44 million for the same period of 2023. The increase is mainly due to the increase of gross profits from asset management service business others which is in line with the increase of revenues for these two business segments during six months ended June 30, 2024. Overall gross margin as a percentage of revenue was 38.02% for the six months ended June 30, 2024, an increase of 3.52% from 34.49% for the same period of last fiscal year, increase in profit margin for our asset management business as it has more large clients which was offset by the decrease in profit margin for our supply chain financing/trading business as its revenue mostly came from sales of goods with ownership during six months ended June 30, 2024, which has much lower profit margin than the revenue from agent service fees that we mostly generated from the same period of 2023.

Previous wording

Selling expenses increased by $0.14 million during the three months ended March 31, 2024, compared to the same period of last fiscal year. The increase in selling expenses was mainly due to increased employee bonuses.

Current wording

Selling expenses increased by $0.17 million during the three months ended June 30, 2024, compared to the same period of last fiscal year. The increase in selling expenses was mainly due to increased employee bonuses.

Previous wording

Gain on disposal of discontinued operation was $0.65 million for the three months ended March 31, 2024, which was related to the dissolution and deregistration of Chain Cloud Mall Network and Technology (Tianjin) Co., Limited.

Current wording

Gain on disposal of discontinued operation was $0.65 million for the six months ended June 30, 2024, which was related to the dissolution and deregistration of Chain Cloud Mall Network and Technology (Tianjin) Co., Limited.

Previous wording

Basic and diluted loss per share from continuing operations were $0.20 and $0.20 for the three months ended March 31, 2024, respectively, as compared to a loss of $0.14 and $0.14 for the same periods of 2023, respectively. Basic and diluted income per share attributable to discontinued operations was $0.03 and $0.03 for the three months ended March 31, 2024, respectively. Basic and diluted earnings per share attributable to discontinued operations was $0.01 and $0.01 for the three months ended March 31, 2023, respectively.

Current wording

Basic and diluted loss per share from continuing operations were $0.29 and $0.29 for the six months ended June 30, 2024, respectively, as compared to a loss of $0.24 and $0.24 for the same periods of 2023, respectively. Basic and diluted income per share attributable to discontinued operations was $0.03 and $0.03 for the six months ended June 30, 2024, respectively. Basic and diluted earnings per share attributable to discontinued operations was $0.01 and $0.01 for the six months ended June 30, 2023, respectively.

Previous wording

As of March 31, 2024, we had cash and restricted cash of $14.89 million, as compared to $19.03 million as of December 31, 2023. The decrease in cash, cash equivalents and restricted cash was mainly due to increased other receivables from the first quarter of 2024.

Current wording

As of June 30, 2024, we had cash and restricted cash of $9.82 million, as compared to $19.02 million as of December 31, 2023. The decrease in cash, cash equivalents and restricted cash was mainly due to increased other current asset from the six months ended June 30, 2024.

Previous wording

Our working capital has historically been generated from our operating cash flows, advances from our customers and loans from bank facilities. Our working capital was $36.78 million as of March 31, 2024, a decrease of $0.69 million from working capital of $36.76 million as of March 31, 2023, mainly due to the decrease in current assets and an increase in current liabilities.

Current wording

Our working capital has historically been generated from our operating cash flows, advances from our customers and loans from bank facilities. Our working capital was $33.48 million as of June 30, 2024, a decrease of $7.61 million from working capital of $41.79 million as of June 30, 2023, mainly due to the decrease in current assets and an increase in current liabilities.

Previous wording

Net cash used in operating activities decreased by $2.12 million to $8.15 million for the three months ended March 31, 2024 from $10.33 million for the same period of the last fiscal year. The decrease in net cash used by operating activities was primarily due to decrease in other receivable.

Current wording

Net cash used in operating activities increased by $4.98 million to $11.94 million for the six months ended June 30, 2024 from $6.96 million for the same period of the last fiscal year. The increase in net cash used by operating activities was primarily due to increase in accounts receivable and advances to suppliers and other current assets.

Previous wording

Net cash provided in financing activities for the three months ended March 31, 2024 was $2.55 million representing an increase of $2.61 million, as compared to cash used in financing activities of $0.06 million during the three months ended March 31, 2023. The increase in cash provided by financing activities was mainly due to proceeds from the issuance of common stock from a private placement, net of issuance costs.

Current wording

Net cash provided in financing activities for the six months ended June 30, 2024 was $2.34 million representing an increase of $2.36 million, as compared to cash used in financing activities of $0.01 million during the six months ended June 30, 2023. The increase in cash provided by financing activities was mainly due to proceeds from the issuance of common stock from a private placement, net of issuance costs.