Future FinTech Group Inc.

FOR YEARS ENDED DECEMBER 31, 2025 AND 2024

1. CORPORATE INFORMATION

Future FinTech Group Inc. (the “Company”) is a holding company incorporated under the laws of the State of Florida. The Company has historically been engaged in the production and sale of fruit juice concentrates (including fruit purees and fruit juices), fruit beverages (including fruit juice beverages and fruit cider beverages) in the PRC. Due to drastically increased production costs and tightened environmental laws in China, the Company has transformed its business from fruit juice manufacturing and distribution to financial technology related service businesses. The main business of the Company includes supply chain financing services and trading in China. The Company also expanded into brokerage and investment banking business in Hong Kong. The Company had a contractual arrangement with a VIE E-Commerce Tianjin in China, which has generated minimal revenue and business since 2021 due to the negative impact caused by COVID-19. The Company started the process to close it down in November 2023 and completed deregistration and dissolution of the VIE with local authorities on March 7, 2024.

On March 27, 2025, the Company filed with the Florida Secretary of State’s office Articles of Amendment (the “Amendment I”) to amend its Second Amended and Restated Articles of Incorporation, as amended (“Articles of Incorporation”). As a result of the Amendment I, the Company has authorized and approved a 1-for-10 reverse stock split of the Company’s authorized shares of common stock from 60,000,000 shares to 6,000,000 shares, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split I”). The common stock will continue to be $0.001 par value. The Company rounded up the fractional shares that resulted from the Reverse Stock Split I and no fractional shares were issued in connection with the Reverse Stock Split I and no cash or other consideration will be paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split I. No changes are being 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 at 1:00 pm E.T. on April 1, 2025.

On September 2, 2025, the Company held a special meeting of stockholders (the “Special Meeting”). At the Special Meeting, the shareholders approved the Third Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock from 6,000,000 to 600,000,000.

On January 8, 2026, the Company filed with the Florida Secretary of State’s office Articles of Amendment (the “Amendment II”) to amend its Second Amended and Restated Articles of Incorporation, as amended (“Articles of Incorporation”). As a result of the Amendment II, the Company has authorized and approved a 1-for-4 reverse stock split of the Company’s authorized shares of common stock from 600,000,000 shares to 150,000,000 shares, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split II”). The common stock will continue to be $0.001 par value. The Company rounded up the fractional shares that resulted from the Reverse Stock Split II and no fractional shares were issued in connection with the Reverse Stock Split II and no cash or other consideration will be paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split II. No changes are being 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 at 1:00 pm E.T. on January 8, 2026.

Both of the reverse stock splits described above would be reflected in the Company’s December 31, 2025 and 2024 statements of changes in stockholders’ equity, and in per share data for all periods presented.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities Exchange Commission (the “SEC”). The accompanying consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany balances and transactions are eliminated upon consolidation.

The Company’s functional currency of subsidiaries in China is the Chinese Renminbi (“RMB”). Other subsidiaries outside of China use U.S. Dollar (“USD”), Hong Kong Dollar (“HKD”), Great Britain Pound (“GBP”) and AED (“United Arab Emirates Dirham”) as the functional currency; however, the accompanying consolidated financial statements have been translated and presented in USD.

According to US GAAP Accounting Standard Codification (“ASC”) 810-10-15-8, for legal entities other than limited partnerships, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree.

Discontinued Operations

On December 6, 2024, FTFT Super Computing Inc. was disposed of for a consideration of US$1.97 million, of which (i) the assumption of the obligations of FTFT Super Computing totaling $973,072.24 and (ii) $1,000,000 was paid to an account at Olshan Frome Wolosky LLP to satisfy, in part, the right of payment held by FT Global Capital, Inc. arising from the judgment entered in favor of FT Global and against the Company registered in the Southern District of New York. The gain on disposal was $3.42 million.

On February 3, 2025, FTFT UK LIMITED, FTFT Finance UK Limited, Future Fintech Digital Number One US, LP, Future Fintech Digital Number One Offshore, LLC (Cayman), Future Fintech Digital Number One GP, LLC (USA), FTFT Digital Number One, Ltd. (Cayman), Future FinTech Labs Inc, Future Fintech Digital Capital, FTFT CAPITAL INVESTMENTS, DigiPay FinTech Limited, DCON DigiPay Limited-JPN and Global Key Shared Mall Ltd were disposed of for a consideration of US$25,000 after a court auction sale. The gain on disposal was $28.26 million.

Based on the disposal plan and in accordance with ASC 205-20, the Company presented the operating results from these operations as a discontinued operation.

Segment Information Reclassification

The Company classified its business segments into Trading Commission and Consulting services, Fast-Moving Consumer Goods (“FMCG”), and Supply Chain Financing and Trading.

Uses of Estimates in the Preparation of Financial Statements

The Company’s consolidated financial statements have been prepared in accordance with U.S. GAAP and this requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. The significant areas requiring the use of management estimates include, but are not limited to, the expected credit losses for receivables, estimated useful life and residual value of property and equipment, impairment of long-lived assets, provision for staff benefits, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to the Company’s consolidated financial statements.

Going Concern

The Company’s financial statements are prepared assuming that the Company will continue as a going concern.

The Company incurred operating losses and had negative operating cash flows and may continue to incur operating losses and generate negative cash flows as the Company implements its future business plan. The Company’s operating losses from continuing operations amounted to $30.95 million, and it had negative operating cash flows from continuing operations of $31.77 million for the year ended December 31, 2025. These factors raise substantial doubts about the Company’s ability to continue as a going concern. The Company has raised funds through issuance of convertible notes and common stock.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

Impairment of Long-Lived Assets

In accordance with ASC 360-10,Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property and equipment and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, or it is reasonably possible that these assets could become impaired as a result of technological or other industrial changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset to future undiscounted cash flows to be generated by the assets.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell.

Fair Value of Financial Instruments

The Company has adopted FASB ASC Topic on Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable input, which may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Input other than Level 1 that is observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other input that is observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable input that is supported by little or no market activity and that is significant to the fair value of the assets or liabilities.

The Company’s cash and cash equivalents and restricted cash and short-term investments are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices.

Earnings Per Share

Under ASC 260-10,Earnings Per Share, basic EPS excludes dilution for Common Stock equivalents and is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of Common Stock outstanding for the period.

Diluted EPS is calculated by using the treasury stock method, assuming conversion of all potentially dilutive securities, such as stock options and warrants. Under this method, (i) exercise of options and warrants is assumed at the beginning of the period and shares of Common Stock are assumed to be issued, (ii) the proceeds from exercise are assumed to be used to purchase Common Stock at the average market price during the period, and (iii) the incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted EPS computation. The numerators and denominators used in the computations of basic and diluted EPS are presented in the following table.

For the year ended December 31, 2025:

For the year ended December 31, 2024:

Cash and Cash Equivalents

Cash and cash equivalents included cash on hand and demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less.

Deposits in banks in the PRC are only insured by the government up to RMB 500,000, in the HK are only insured by the government up to HKD 800,000, in the United States of America are only insured by the Federal Deposit Insurance Corporation up to USD 250,000, and are consequently exposed to risk of loss.

The Company believes the probability of a bank failure, causing loss to the Company, is remote.

Cash that is restricted as to withdrawal for use or pledged as security is reported separately on the face of the consolidated balance sheets, and is not included in the total cash and cash equivalents in the consolidated statements of cash flows.

Receivable and Credit Losses

Accounts receivable are recognized and carried at the original invoice amounts less an allowance for any uncollectible amount. The Company has a policy of reserving for uncollectible accounts based on the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company performs ongoing credit evaluations of the Company’s customers and maintains an allowance for potential bad debts if required.

Other receivables, and loan receivables are recognized and carried at the initial amount when occurred less an allowance for credit losses. The Company has a policy of reserving for uncollectible accounts based on the Company’s best estimate of the amount of probable impairment losses in the Company’s existing receivables.

Allowances for credit losses are maintained for expected credit losses resulting from the Company’s customers’ inability to make required payments. The allowances are based on the Company’s regular assessment of various factors, including the credit-worthiness and financial condition of specific customers, historical experience with bad debts and customer deductions, receivables aging, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. The Company maintains an allowance for credit losses in accordance with ASC Topic 326, Credit Losses (“ASC 326”) and records the allowance for credit losses as an offset to accounts receivable and contract assets, and the estimated credit losses charged to the allowance is classified as “Allowance for credit losses/doubtful accounts” in the consolidated statements of comprehensive loss. The Company determines whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations. In these cases, the Company uses assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. The Company may also record a general allowance as necessary.

Direct write-offs are taken in the period when the Company has exhausted the Company’s efforts to collect overdue and unpaid receivables or otherwise evaluate other circumstances that indicate that the Company should abandon such efforts.

The Company has assessed its accounts receivable including credit terms and corresponding all its accounts receivable as of December 31, 2025. Allowance for credit losses on accounts receivable amounted to $650,202 and $2,785 as of December 31, 2025 and 2024, respectively. Accounts receivable of $1.07 million and $1.15 million have been outstanding for over 90 days as of December 31, 2025 and 2024, respectively. Allowance for credit losses on other receivables amounted to $522,406 and $9,519,301 as of December 31, 2025 and 2024, respectively. Allowance for credit losses on advances to suppliers amounted to $2,577,629 and $3,537,434 as of December 31, 2025 and 2024, respectively.

Revenue Recognition

The Company applies the five steps defined under ASC 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. Revenue arrangements with multiple performance obligations are divided into separate distinct goods or services. The Company allocates the transaction price to each performance obligation based on the relative standalone selling price of the goods or services provided. Revenue is recognized upon the transfer of control of promised goods or services to a customer. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers.

The Company does not make any significant judgment in evaluating when control is transferred. Revenue is recorded net of value-added tax.

Revenue recognition is as follows:

Sales of fast-moving consumer goods

The Company operates an e-commerce platform specializing in fast-moving consumer goods. For sales transacted through the Company’s online stores in mainland China, the standard return policy permits customers to return eligible products within seven days of purchase. Historically, customer returns were immaterial. Revenue from sales of fast-moving consumer goods was $3,259,845 and $25,537 during the years ended December 31, 2025 and 2024, respectively.

Provision of trading commission and consulting services

The Company provides stock trading services and charges commission and service fees. The Company recognizes revenue when such services are rendered to customers. Additionally, the Company generates revenue from financial advisory services, which primarily consist of fees from private equity placements and initial public offerings for its customers. These services are customized with no alternative use. For projects where the Company has an enforceable right to payment for performance completed to date, revenue is recognized over time when contract obligations have been performed. For such arrangements, the Company uses the input method to recognize revenue, based on the ratio of actual costs incurred to the total estimated costs for the contract. For consulting projects where the Company does not have an enforceable right to payment for performance completed to date, revenue is recognized at the point in time the projects are completed and accepted by customers. Revenue from provision of trading commission and consulting services was $568,611 and $1,131,165 during the years ended December 31, 2025 and 2024, respectively.

Revenue from supply chain financing/trading

The Company recognizes revenue when the receipt of merchandise is confirmed by the customers, which is the point that the title of the goods is transferred to the customer. Revenue from supply chain financing/trading was $1,349 and $957,708 during the years ended December 31, 2025 and 2024, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are expensed as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations and comprehensive loss.

The Company estimated that the residual value of the Company’s property and equipment ranges from 3% to 5%. Property and equipment are depreciated over their estimated useful lives as follows:

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and comprehensive income in other income or expenses.

Intangible Assets

Acquired intangible assets are recognized based on their cost to the Company, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of noncash assets given as consideration differs from the assets’ carrying amounts on the Company’s book. These assets are amortized over their useful lives if the assets are deemed to have a finite life and they are reviewed for impairment by testing for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The fair value of an intangible asset is the amount that would be determined if the entity used the assumptions that market participants would use if they were pricing the intangible asset. The useful life of the Company’s intangible assets is 5-10 years, which is determined by using the time period that an intangible is estimated to contribute directly or indirectly to a Company’s future cash flows.

Foreign Currency and Other Comprehensive Income (Loss)

The financial statements of the Company’s foreign subsidiaries are measured using the local currency as the functional currency; however, the reporting currency of the Company is the USD. Assets and liabilities of the Company’s foreign subsidiaries have been translated into USD using the exchange rate at the balance sheet dates, while equity accounts are translated using the historical exchange rate.

The exchange rate the Company used to convert RMB to USD was 7.03:1 and 7.19:1 at the balance sheet dates of December 31, 2025 and 2024, respectively. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rates the Company used to convert RMB to USD were 7.14:1 and 7.12:1 for the years ended December 31, 2025 and 2024, respectively.

The exchange rate the Company used to convert HKD to USD was 7.78:1 and 7.76:1 at the balance sheet dates of December 31, 2025 and 2024. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rates the Company used to convert HKD to USD were 7.80:1 and 7.80:1 for the years ended December 31, 2025 and 2024, respectively.

Translation adjustments are reported separately and accumulated in a separate component of equity (cumulative translation adjustment).

Government subsidies

Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. For certain government subsidies, there are no defined rules and regulations to govern the criteria necessary for companies to receive such benefits, and the amount of financial subsidy is determined at the discretion of the relevant government authorities. The government subsidies of operating nature with no further conditions to be met are recorded as operating expenses in “Other income” in the consolidated statements of operations and comprehensive loss when received.

The amendments in this update require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity’s financial statements.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-25 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented.

Short-term investments

Short-term investments consist primarily of investments in fixed deposits with original maturities between three months and one year and certain investments in wealth management products and other investments that the Company has the intention to redeem within one year. Fair valued or carried at amortized costs. As of December 31, 2025 and 2024, the short-term investments amounted to $1,423 and $1,391, respectively.

Long-term investments

Long-term investments consist primarily of investments in debt investments with original maturities between three years and more. Fair valued or carried at amortized costs. As of December 31, 2025 and 2024, the long-term investments amounted to $711,359 and $1,530,243, respectively. During the year ended December 31, 2025, the Company has collected repayment of $818,884 (RMB 6.0 million) of the December 31, 2024 debt investment balance. The Company did not recognize an impairment for its long-term investment as all the debt investments are deemed collectible.

Lease

The Company follows ASU No. 2016-02, Leases (Topic 842), or ASC 842. The Company determines if an arrangement is a lease or contains a lease at lease inception. For operating leases, the Company recognizes a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of the Company’s leases do not provide an implicit rate, the Company estimates the incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any lease payments made, net of lease incentives. Lease expense is recorded on a straight-line basis over the lease term. The Company’s leases often include options to extend and lease terms include such extended terms when the Company is reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when the Company is reasonably certain not to exercise those options.

Share-based compensation

The Company awards share options and other equity-based instruments to its employees, directors and consultants (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date. The Company recognizes the compensation cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date.

New Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. This ASU requires entities to 1. disclose amounts of (a) purchase of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and, (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities, 2. include certain amounts that are already required to be disclosed under current Generally Accepted Accounting Principles in the same disclosures as other disaggregation requirements, 3. disclose a qualitative description of the amounts remaining in relevant expense captions that are not necessarily disaggregated quantitatively, and 4. disclose the total amount of selling expenses, in annual reporting periods, an entity’s definition of selling expense. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Additionally, in January 2025, the FASB issued ASU No. 2025-01 to clarify the effective date of ASU 2024-03. The standard provides guidance to expand disclosures related to the disaggregation of income statement expenses. The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2027 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In November 2024, the FASB issued ASU No. 2024-04, “Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments”. The amendments provide guidance on accounting for induced conversions of convertible debt instruments. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for entities that have adopted the amendments in ASU 2020-06. Early adoption is permitted. The Company adopted this guidance effectively January 1, 2026 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In May 2025, the FASB issued ASU No. 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Accounting Acquirer in a Business Combination Involving a Variable Interest Entity”. This ASU clarifies that when a business that is a VIE is acquired primarily with equity interests, the determination of the accounting acquirer should follow ASC 805 rather than defaulting to the primary beneficiary under ASC 810. The standard is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company plans to adopt this guidance effective January 1, 2027 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In May 2025, the FASB issued ASU No. 2025-04, “Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606)”: Clarifications to Share-Based Consideration Payable to a Customer. This ASU clarifies how entities account for share-based consideration payable to a customer. The ASU requires customer awards with vesting conditions tied to purchases to be treated as performance conditions, eliminates the forfeiture policy election, and states that the variable consideration constraint under ASC 606 does not apply to these awards. The standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2027 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. This ASU provides a practical expedient for all entities related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606. The standard is effective for annual periods beginning after December 15, 2025. Early adoption of ASU 2025-05 is permitted and should be applied prospectively. The Company adopted this guidance effectively January 1, 2026 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The purpose of this update is to improve the clarity and organization of interim reporting guidance and to enhance the disclosure requirements applicable to interim financial statements. ASU 2025-11 does not change the fundamental principles of interim reporting but clarifies the scope and presentation of required disclosures. A public business entity shall apply for interim reporting periods within annual reporting periods beginning after December 15, 2027. An entity other than a public business entity shall apply for interim reporting periods within annual reporting periods beginning after December 15, 2028. The Company plans to adopt this guidance effective January 1, 2028 and the Company is currently evaluating the impact of adopting this ASU on its financial statements.

The Company does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying consolidated financial statements.

3. ACCOUNTS RECEIVABLE, NET

Accounts receivable, net, consist of the following:

The following table sets forth the Company’s concentration of accounts receivable, net of specific allowances for credit losses.

4. OTHER RECEIVABLES, NET

Other receivables, net, consist of the following:

5. INVESTMENT FUNDS

As of December 31, 2025, the balance of investment funds was $30.41 million. The amount pertains of funds held in escrow with a third party for future business acquisitions. As of the date of this report, the acquisition transaction has not closed.

6. ADVANCES TO SUPPLIERS AND OTHER CURRENT ASSETS, NET

The amount of advances to suppliers and other current assets, net consisted of the following:

7. LOAN RECEIVABLES

As of December 31, 2025, the balance of loan receivables was $nil.

As of December 31, 2024, the balance of loan receivables was $139,113. On August 29, 2024, Future Supply Chain (Xi’an) Co., Ltd entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, Future Supply Chain (Xi’an) Co., Ltd loaned an amount of $139,113 (RMB 1 million) to the third party at the annual interest rate of 12% from August 29, 2024 to November 30, 2025. As of December 31, 2024, the balance of loan receivables was $139,113. The loan was repaid on January 24, 2025.

8. LEASES

The Company’s non-cancellable operating leases consist of leases for office space. The Company is the lessee under the terms of the operating leases. For the year ended December 31, 2025, the operating lease cost was $0.22 million.

The Company’s operating leases have remaining lease terms of approximately 17 months. As of December 31, 2025, the weighted average remaining lease term and weighted average discount rate were 1.40 years and 4.90%, respectively.

Maturities of lease liabilities were as follows:

The Company leases office space and equipment under various short-term operating leases. As permitted by ASC 842, the Company has elected the practical expedient for short-term leases, whereby lease assets and lease liabilities are not recognized on the balance sheet. Short-term leases cost wasnil for the year ended December 31, 2025.

9. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following:

Depreciation expense included in general and administration expenses for the years ended December 31, 2025 and 2024 was $95,630 and $116,018, respectively.

10. INTANGIBLE ASSETS, NET

Intangible assets, net consist of the following:

Amortization expense included in general and administration expenses for the years ended December 31, 2025 and 2024 was $57,035 and $57,035, respectively.

The estimated future amortization is as follows:

Type 1 and Type 2 licenses by Hong Kong Securities and Futures Commission have no expiration date and do not require amortization, the amount was $128,503 and $128,824.

11. ACCOUNT PAYABLES

The amount of account payables consisted of the following:

12. ACCRUED EXPENSES AND OTHER PAYABLES

The amount of accrued expenses and other payables consisted of the following:

In January 2021, FT Global Capital, Inc. (“FT Global”), a former placement agent of the Company filed a lawsuit against the Company in the Superior Court of Fulton County, Georgia. FT Global served the complaint upon the Company in January 2021. In the complaint, FT Global alleges claims, most of which attempt to hold the Company liable under legal theories that relate back to an alleged breach of an exclusive placement agent agreement between FT Global and the Company in July 2020 which had a term of three months. FT Global claims that the Company failed to compensate FT Global for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired exclusive placement agent agreement. On April 11, 2024, on which date the jury returned a verdict in favor of FT Global and the Court entered a judgment awarding FT Global $10,598,380. On June 17, 2025, the Company entered into a settlement and forbearance agreement with FT Global, pursuant to which the company is required to pay FT Global an aggregate amount of $4.0 million over an 18-month period. For the fiscal year ended December 31, 2024 and 2025, the Company paid $1.97 million and $1.85 million, respectively, towards accrued expenses and other payables.

13. CONVERTIBLE NOTES PAYABLE

The amount of convertible notes payable consisted of the following:

Convertible notes payable I

On December 27, 2023, the Company issued a convertible promissory note with a principal amount of $1.10 million. Floor Price was $9.088 per share of Common Stock. The Note was unsecured. On the date thereof, the Company shall reserve 125,000 shares of Common Stock from its authorized and unissued Common Stock to provide for all issuances of Common Stock under the Note (the “Share Reserve”). The lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares were 59,386 shares, amount $625,000, at a price of $10.524 per share in 2024. Lender redemption conversion shares were 15,301 shares, amount $140,658, at a price of $9.193 per share and 49,385 shares, amount of $448,759, at a price of $9.087 per share in January and September 2025, respectively. As of December 31, 2025, the balance of this convertible notes payable was $nil.

Convertible notes payable II

On July 28, 2025 (“Beginning Date”), the Company entered into a Convertible Notes Agreement (“Agreement”) with an institutional investor (the “Investor”), pursuant to which the Investor desires to purchase from the Company one or more pre-paid purchases (each a “Pre-Paid Purchase” and together the “Pre-Paid Purchases”) in the aggregate purchase amount of up to $10,000,000 for the purchase of the Company’s common stock. The Agreement will end on the earlier of (i) the date that is two years from the Beginning Date, (ii) the date Company has sold $10,000,000.00 in Pre-Paid Purchases hereunder; and (iii) termination of this Agreement (the “Commitment period”). On September 15, 2025, the Company issued 15,000 of the Company’s Common Stock to the Investor as a commitment fee (the “Commitment Shares”). All Pre-Paid Purchases will have an 8% original issue discount (“OID”), and will bear an interest rate of 8% per annum.

On July 28, 2025, the Company received its first funding of $800,000 as the Initial Pre-Paid Purchase, which is calculated from an original amount of $884,000, minus a $64,000 OID and minus $20,000 that covers the Investor’s legal, accounting, and other related costs under the purchase agreement.

On September 22, 2025, the Company received its second funding of $1,000,000 from the Investor, which is calculated from an original amount of $1,080,000, minus a $80,000 OID.

Concurrently, on September 22, 2025, the Company issued 361,250 Common Stock (the “Pre-Delivery Shares”) according to the agreement with the Investor at par value $0.001 per share. The Investor is not permitted to sell, assign, transfer, pledge, encumber, hypothecate or otherwise dispose of (“transfer”) such Pre-Delivery Shares. However, during the period beginning on any day in which Investor delivers a Purchase Notice to Company and ending on the date of delivery of the Purchase Shares by Company covered by such Purchase Notice, Investor may transfer a number of Pre-Delivery Shares up to the number of Purchase Shares covered by the applicable Purchase Notice. The Purchase Price will be 82% multiplied by the lowest daily volume-weighted average price during the ten trading days immediately preceding a conversion. Following the end of the Commitment Period and the repayment of all outstanding Pre-Paid Purchases, Investor will deliver to Company a number of shares of common stock equal to the number of Pre-Delivery Shares issued within 20 trading days, and the Company will pay Investor $0.001 for each share.

The Company assessed the convertible note payable II under ASC 815, identifying there are embedded conversion features and concluded that the conversion feature satisfied the requirement of “fixed-to-fixed” criterion and is considered indexed to the Company’s own stock. Therefore, the conversion feature is eligible for a scope exception from derivative accounting in accordance with ASC 815-10-15-74 and the Company would not bifurcate the conversion feature, and accounts for the convertible note payable II as a liability in its entirety.

The Company recognized the issuance costs and the discount of the convertible note payable II of $304,400 as a direct deduction from the face amount of the Convertible Loan II in accordance with ASC 835-30-45-1A. The debt issuance cost was amortized as amortization of debt issuance costs using the effective interest method, over the Commitment period of the convertible note payable II.

As of December 31, 2025, the Company has received an aggregate of $1,800,000 from the Investor out of the total $10,000,000 committed amount, the balance of convertible notes payable II was $1,734,044, with a carrying value of $1,964,000, net of deferred financing costs of $229,956 was recorded in the consolidated balance sheets. The amortization of debt issuance costs was $20,475 for the year ended December 31, 2025.

As of December 31, 2025, the Company issued a total of 376,250 Common Stock to the Investor, including 15,000 Common Stock as Commitment Shares and 361,250 Common Stock as the Pre-Delivery Shares.

14. RELATED PARTY TRANSACTION

As of December 31, 2025, the amounts due to related parties were consisted of the following:

As of December 31, 2024, the amount due from related parties was consisted of the following:

As of December 31, 2024, the amount due to related parties was consisted of the following:

15. INCOME TAX

The Company is incorporated in the United States of America and is subject to United States federal taxation. The applicable tax rate is 21% in 2025 and 2024. No provisions for income taxes have been made, as the Company had no U.S. taxable income for the years ended December 31, 2025 and 2024. For the years ended December 31, 2025 and 2024, the Company had current income tax expenses ofnil, respectively.

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the year ended December 31, 2025, the Company hadno unrecognized tax benefits. Due to uncertainties surrounding future utilization, the Company estimates there will not be sufficient future income to realize the deferred tax assets for certain subsidiaries.

The amount of unrecognized deferred tax liabilities for temporary differences related to the dividend from foreign subsidiaries is not determined because such determination is not practical.

The Company has not provided deferred taxes on undistributed earnings attributable to its PRC subsidiaries as they are to be permanently reinvested.

The Company has not provided deferred taxes on undistributed earnings attributable to its PRC and Hong Kong subsidiaries as they are to be permanently reinvested.

The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of ASC Topic 740,Income Taxes. Since the Company intends to reinvest its earnings to further expand its businesses in mainland China, its PRC subsidiaries do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, the Company has not recorded any deferred taxes in relation to US tax on the cumulative amount of undistributed retained earnings since January 1, 2008.

Effective on January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules imposed a unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign-invested enterprises in the PRC, unless they qualify under certain limited exceptions. The tax rate for pre-tax profits below RMB 1 million is 2.5%; the tax rate for pre-tax profits between RMB 1 million to RMB 3 million is 10%. E-Commerce Tianjin, Future Supply (Chengdu) Co., Ltd. and Future Big Data (Chengdu) Co., Ltd. were subject to an enterprise income tax rate of 2.5% and 10%. Other subsidiaries and VIE were subject to an enterprise income tax rate of 25%.

Future FinTech (Hong Kong) Limited is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5% in Hong Kong.

Reconciliation of the differences between the statutory EIT rate applicable to profits of the consolidated entities and the income tax expenses of the Company:

16. SHARE BASED COMPENSATION

On March 10, 2025, the Compensation Committee of the Board of Directors of the Company granted 125,000 shares of common stock of the Company, par value $0.001, pursuant to the Company’s 2024 Omnibus Equity Plan, to certain officers and employees of the Company and its subsidiaries (the “Grantees”). As the closing price of the Company stock was $8.68 on March 10, 2025, the Company recorded an expense of $1.09 million in the first quarter of fiscal year 2025. As of March 10, 2025, the Shares have been issued to the Grantees.

On October 4, 2024, the Compensation Committee of the Board of Directors of the Company granted 52,750 shares of common stock of the Company, par value $0.001, pursuant to the Company’s 2023 Omnibus Equity Plan, to certain officers and employees of the Company and its subsidiaries (the “Grantees”). As the closing price of the Company stock was $12.72 on October 9, 2023, the Company recorded an expense of $0.67 million in the third quarter of fiscal year 2024. As of October 9, 2024, the Shares have been issued to the Grantees.

17. COMMON STOCK

Securities Purchase Agreement

On December 24, 2020, the Company entered into a securities purchase agreement with certain purchasers, pursuant to which the Company sold to the purchasers in a registered direct offering, an aggregate of 421,053 units, each consisting of one share of the Company’s common stock and a warrant to purchase 1 share of the Company’s Common Stock, at a purchase price of $19 per unit, for aggregate gross proceeds to the Company of $8,000,007, before deducting fees to the placement agent and other offering expenses payable by the Company. On December 29, 2020, the Company issued Units consisting of an aggregate of 421,053 shares of the Company’s Common Stock and warrants to purchase up to an aggregate of 421,053 shares of the Company’s Common Stock at an exercise price of $21.5 per share (the “Investors’ Warrants”). The Investors’ Warrants have a term offive years and are exercisable by the holder at any time after the date of issuance. In connection with the offering, the Company also issued placement agent a warrant to purchase 42,108 shares of the Company’s Common Stock (the “Placement Agent Warrant”) on substantially the same terms as the Investors’ Warrants, except that the Placement Agent Warrant has an exercise price of $23.75 per share and is not exercisable until June 24, 2021. As of December 31, 2024, outstanding warrants have 42,108 shares of the Company’s Common Stock. Warrants after 1-for-10 reverse stock split in 2025 and 1-for-4 reverse stock split in 2026 were 1,053 shares with an exercise price of $95 per share. All outstanding warrants have expired as of December 31, 2025.

On January 5, 2024, the Company entered into a securities purchase agreement with certain purchasers, pursuant to which the Company sold to the purchasers in a private placement, an aggregate of 53,764 shares of its common stock, par value $0.001 per share at a purchase price of $48 per share, for aggregate net proceeds to the Company of $2,580,644. On January 18, 2024, the Company issued 53,764 shares of common stock pursuant to this Agreement.

Common stocks issued in connection with the convertible notes

On December 27, 2023, the Company entered into a Securities Purchase Agreement with Streeterville Capital, LLC, a Utah limited liability company (the “Lender”), pursuant to which the Company sold and issued to the Lender a Convertible Promissory Note (the “Note”) in the principal amount of $1,100,000.

On July 3, 2024, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 3,416, amount $50,000, at a price of $14.637 per share.

On July 18, 2024, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 5,428, amount $75,000, at a price of $13.817 per share.

On August 26, 2024, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 10,208, amount $100,000, at a price of $9.796 per share.

On October 24, 2024, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 9,766, amount $100,000, at a price of $10.24 per share.

On November 11, 2024, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 9,766, amount $100,000, at a price of $10.24 per share.

On November 14, 2024, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 9,846, amount $100,000, at a price of $10.156 per share.

On December 18, 2024, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 10,955 amount $100,000, at a price of $9.128 per share.

On January 7, 2025, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 10,721, amount $100,000, at a price of $9.327 per share.

On January 24, 2025, that Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares 4,581, amount $40,658, at a price of $8.875 per share.

On September 10 and 11, 2025, that Lender elected to redeem the entire balance of the Note through the issuance of 49,835 redemption conversion shares, at a price of $9.005 per share, for a total redemption amount of $448,759.

18. STATUTORY RESERVES AND RESTRICTED NET ASSETS

PRC laws and regulations permit payments of dividends by the Company’s subsidiaries incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company’s subsidiaries incorporated in the PRC are required to annually appropriate 10% of their net income to the statutory reserve prior to payment of any dividends, unless the reserve has reached 50% of their respective registered capital. Furthermore, registered share capital and capital reserve accounts are also restricted from distribution. As a result of the restrictions described above and elsewhere under PRC laws and regulations, the Company’s subsidiaries incorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company in the form of dividends. The restriction amounted to $25.36 million (RMB 176.10 million) as of December 31, 2025. Except for the above or disclosed elsewhere, there is no other restriction on the use of proceeds generated by the Company’s subsidiaries to satisfy any obligations of the Company.

19. DISCONTINUED OPERATIONS

On December 6, 2024, FTFT Super Computing Inc. was disposed of for a consideration of US$1.97 million, of which (i) the assumption of the obligations of FTFT Super Computing totaling $973,072.24 and (ii) $1,000,000 was paid to an account at Olshan Frome Wolosky LLP to satisfy, in part, the right of payment held by FT Global Capital, Inc. arising from the judgment entered in favor of FT Global and against the Company registered in the Southern District of New York. The gain on disposal was $3.42 million.

On February 3, 2025, FTFT UK LIMITED, FTFT Finance UK Limited, Future Fintech Digital Number One US, LP, Future Fintech Digital Number One Offshore, LLC (Cayman), Future Fintech Digital Number One GP, LLC (USA), FTFT Digital Number One, Ltd. (Cayman), Future FinTech Labs Inc, Future Fintech Digital Capital, FTFT CAPITAL INVESTMENTS, DigiPay FinTech Limited, DCON DigiPay Limited-JPN and Global Key Shared Mall Ltd were disposed of for a consideration of US$25,000 after a court auction sale. The gain on disposal was $28.26 million.

Income from discontinued operations for the years ended December 31, 2025 and 2024 was as follows:

The major components of assets and liabilities related to discontinued operations are summarized below:

20. SEGMENT REPORTING

In its operation of the business, management, including the Company’s chief operating decision maker, who is the Company’s Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis consistent with GAAP. The Company operates inthree segments starting in fiscal 2021: “supply chain financing service and trading business” and “others”. As described in Note 17. DISCONTINUED OPERATIONS, certain subsidiaries were sold, dissolved or deregistered, resulting in material changes to the Company’s business operations. Consequently, the Company has reorganized its operations into the following three reportable segments: (1) Fast-Moving Consumer Goods (FMCG), (2) Trading Commission and Consulting services and (3) supply chain financing service and trading business.

The Company began to provide supply chain financing services during the second quarter of 2021. The Company began to provide sand and steel supply chain financing services during the first quarter of 2023. The Company began to provide brokerage services in October 2023. During the last quarter of fiscal year 2024, the Company commenced operations in the Fast-Moving Consumer Goods (FMCG) sector.

Some of the Company’s operations might not individually meet the quantitative thresholds for determining reportable segments and the Company determines the reportable segments based on the discrete financial information provided to the chief operating decision maker. The chief operating decision maker evaluates the results of each segment in assessing performance and allocating resources among the segments. Since there is an overlap of services and products between different subsidiaries of the Company, the Company does not allocate operating expenses and assets based on the product segments. Therefore, operating expenses and asset information by segment are not presented. Segment profit represents the gross profit of each reportable segment.

For the year ended December 31, 2025

For the year ended December 31, 2024

Loss before Income Tax:

Segment assets as of December 31, 2025 and 2024:

21. DEBT RESTRUCTURING

During the year ended December 31, 2025, the Company entered into troubled debt restructurings with FT Global (“the Creditor”) due to financial difficulties. On June 17, 2025, the Company entered into a settlement and forbearance agreement (“the Agreement”) with FT Global. Pursuant to the Agreement, the company was required to pay an aggregate settlement amount of $4.0 million and issue a total of 425,000 shares of common stock, among which, (i) $0.5 million was paid no later than June 20, 2025, (ii) $1.0 million, $1.3 million and $1.2 million shall be paid within six months, twelve months and eighteen months after signing of the Agreement, respectively, (iii)15,000 shares and 85,000 shares of common stock were issued on June 30, 2025 and July 2, 2025, respectively, and (iv)162,500 shares and 162,500 shares of common stock shall be issued no earlier than six months and twelve months following the agreement’s effective date, respectively. As of December 31, 2025, a total of 110,000 shares of common stock had been issued and an aggregate amount of $1.85 million had been repaid to the Creditor.

The Company derecognized the amount previously due to FT Global, and recognized the present value of total settlement amount including the above-mentioned cash payments and common stocks in paid-in capital and other payables on the consolidated balance sheets. Upon the debt restructurings, the Company recognized a gain of $3.07 million which was recorded as gain on debt restructuring on the consolidated statement of operations and comprehensive loss.

22. COMMITMENTS AND CONTINGENCIES

Shareholders Lawsuit (LaBelle and Janzen)

The LaBelle case is a putative securities class action filed in January 2024 and is pending in the District of New Jersey. Denise LaBelle (“Plaintiff”) alleges that the Company and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act by making materially false or misleading statements in the company’s public filings and disclosures relating to the former Chief Executive Officer of the Company, Mr. Shanchun Huang and charges filed by the SEC against Mr. Shanchun Huang with manipulative trading in the stock of the Company using an offshore account shortly before he became the Company’s CEO in 2020 and failing to disclose his beneficial ownership. Mr. Huang has denied the allegations of trading before he became CEO. Plaintiff claims that these alleged misstatements caused the Company’s stock to trade at artificially inflated prices, harming investors when the truth was revealed. The lead plaintiff and lead counsel were appointed in September 2024. The Company was served in September 2024, and the Plaintiff is currently seeking substituted service on the individual defendants. Once the service is resolved, the Plaintiff is expected to file an amended complaint, which the Company and other defendants intend to move to dismiss.

The Janzen action is a consolidated shareholder derivative case filed by Jeff Janzen on May 31, 2024, also pending in the District of New Jersey, brought nominally on behalf of Future FinTech. Plaintiff alleges that certain current and former officers and directors breached fiduciary duties by allowing or failing to prevent the same alleged misconduct at issue in LaBelle, including mismanagement and misleading public disclosures. The derivative case has been stayed by stipulation, pending resolution of the anticipated motion to dismiss in LaBelle, but plaintiff has reserved the right to participate in mediation and settlement discussions relating to the class action.

23. RISKS AND UNCERTAINTIES

PRC Regulations

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing the Company’s business and the enforcement and performance of the Company’s arrangements with customers in certain circumstances. The Company is considered foreign persons or foreign funded enterprises under PRC laws and, as a result, the Company is required to comply with PRC laws and regulations related to foreign persons and foreign funded enterprises. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. The Company cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on the Company’s business.

Customer concentration risk

For the year ended December 31, 2025, two customers accounted for 16.42% and 10.59% of the Company’s total revenue, respectively. For the year ended December 31, 2024, two customers accounted for 36.60% and 13.85% of the Company’s total revenues, respectively.

Vendor concentration risk

For the year ended December 31, 2025, two vendors accounted for 60.70% and 33.52% of the Company’s total purchases, respectively. For the year ended December 31, 2024, one vendor accounted for 88.87% of the Company’s total purchases.

24. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date of the issuance of the consolidated financial statements and did not identify any subsequent events except those disclosed above that would have required adjustment or disclosure in the financial statements.