UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number: 001-34502 Future FinTech Group Inc. (Exact name of registrant as specified in its charter) 98-0222013 (I.R.S.Employer Identification Flo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number: 001-34502 Future FinTech Group Inc. (Exact name of registrant as specified in its charter) | --- | --- | |-------|------------------| | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _________ to _________ Commission File Number 001-34502 Future FinTech Group Inc. (Exact name of registrant as specified in its charter) Florida 98-0222013 (State or other ju ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company presents unaudited condensed consolidated financial statements showing a net loss of $5.04 million for the six months ended June 30, 2022 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $66,452,075 | $72,721,055 | | **Total Assets** | $85,734,516 | $91,657,085 | | **Total Current Liabilities** | $6,973,366 | $7,230,668 | | **Total Liabilities** | $10,709,974 | $10,802,927 | | **Total Stockholders' Equity** | $75,024,542 | $80,854,158 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $7,418,277 | $1,346,924 | $10,884,642 | $1,354,423 | | **Gross Profit** | $1,375,420 | $51,265 | $3,163,397 | $51,855 | | **Loss from Operations** | ($2,842,455) | ($749,563) | ($5,518,926) | ($2,280,571) | | **Net Loss** | ($2,336,688) | ($403,478) | ($5,035,059) | ($1,200,787) | | **Basic Loss Per Share** | ($0.03) | ($0.01) | ($0.07) | ($0.02) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | ($5,129,561) | ($3,077,432) | | **Net Cash Used in Investing Activities** | ($5,985,370) | ($7,308) | | **Net Cash Provided by Financing Activities** | $4,136,402 | $66,884,621 | | **Net (Decrease) Increase in Cash** | ($8,242,297) | $62,591,026 | | **Cash and Cash Equivalents, End of Period** | $42,031,220 | $72,016,338 | [Corporate Information and Business Transformation](index=12&type=section&id=1.%20Corporate%20Information) The company has transitioned from fruit juice production to a diversified fintech business with a global presence - The Company has transformed its business from fruit juice manufacturing to a real-name blockchain e-commerce platform, supply chain financing services, asset management, and cryptocurrency market data services[20](index=20&type=chunk) - **A significant number of new subsidiaries** were established in 2021 and 2022 to support expansion into new business areas and geographies, including FTFT Capital Investments in Dubai, FTFT UK Limited in the UK, FTFT Supercomputing Inc. for crypto mining, and FTFT Paraguay S.A. for crypto mining in Paraguay[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - The company's blockchain e-commerce business is conducted through a **Variable Interest Entity (VIE)**, Cloud Chain E-Commerce (Tianjin) Co., Ltd., in the PRC[24](index=24&type=chunk) [Significant Accounting Policies](index=14&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Key policies include VIE consolidation, segment reclassification, and a going concern warning due to operating losses - The company consolidates its **Variable Interest Entity (VIE)** in China, E-Commerce Tianjin, as it is considered the primary beneficiary through contractual arrangements[27](index=27&type=chunk)[67](index=67&type=chunk) - Several subsidiaries were disposed of or deregistered in 2021 and 2022, with their operating results presented as **discontinued operations**[28](index=28&type=chunk)[126](index=126&type=chunk) - The company incurred **operating losses of $5.03 million** and had **negative operating cash flows of $5.13 million** as of June 30, 2022, which raises substantial doubts about its ability to continue as a **going concern**[31](index=31&type=chunk) [Acquisition of Nice Talent Asset Management](index=29&type=section&id=11.%20ACQUISITION) The company acquired a 90% stake in Hong Kong-based Nice Talent Asset Management for approximately $18.07 million - The company acquired 90% of Nice Talent Asset Management Limited for **HK$144,000,000 (approximately $18.07 million)** on August 6, 2021[95](index=95&type=chunk)[99](index=99&type=chunk) - The acquisition generated **goodwill of $17.16 million**, with the purchase price paid in company common stock and 40% contingent on future performance[94](index=94&type=chunk)[99](index=99&type=chunk) [Segment Reporting](index=37&type=section&id=23.%20SEGMENT%20REPORTING) The company's strategic shift is reflected in asset management becoming the largest segment by revenue and gross profit Segment Revenue and Gross Profit (Six Months Ended June 30, 2022) | Segment | Revenue | Gross Profit | | :--- | :--- | :--- | | Asset management service | $7,152,808 | $3,026,301 | | Coal and Aluminum Ingots supply chain financing/trading | $3,654,982 | $60,256 | | Others | $76,852 | $76,840 | | **Total** | **$10,884,642** | **$3,163,397** | Segment Revenue and Gross Profit (Six Months Ended June 30, 2021) | Segment | Revenue | Gross Profit | | :--- | :--- | :--- | | Coal and Aluminum Ingots supply chain financing/trading | $1,347,785 | $51,252 | | CCM Shopping Mall Membership | $85 | $85 | | Others | $6,553 | $518 | | **Total** | **$1,354,423** | **$51,855** | - The company's shift in business focus is evident, with new segments like **asset management and supply chain financing** becoming the primary revenue drivers, while the former e-commerce membership model has ceased generating revenue[129](index=129&type=chunk)[130](index=130&type=chunk) [Commitments and Contingencies](index=40&type=section&id=24.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is vigorously defending a lawsuit from its former placement agent claiming approximately $7 million in damages - FT Global Capital, Inc. filed a lawsuit in January 2021, claiming approximately **$7,000,000 in damages** and fees related to an alleged breach of a placement agent agreement from July 2020[136](index=136&type=chunk) - The court has dismissed some of FT Global's claims but allowed others to proceed, and the company will continue to **vigorously defend the action**[137](index=137&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew significantly due to new business segments, but rising expenses led to an increased operating loss Revenue Comparison (Six Months Ended June 30) | Segment | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Asset management service | $7,152,808 | $0 | +$7,152,808 | N/A | | Coal and Aluminum Ingots Supply Chain Financing/Trading | $3,654,982 | $1,347,785 | +$2,307,197 | +171.18% | | CCM Shopping Mall Membership | $0 | $85 | ($85) | (100.00)% | | **Total Revenue** | **$10,884,642** | **$1,354,423** | **+$9,530,219** | **+703.64%** | - The **significant revenue growth** was primarily driven by the new asset management business and the expansion of the supply chain financing/trading business[197](index=197&type=chunk)[198](index=198&type=chunk) - Operating expenses for the six months ended June 30, 2022, **increased to $8.68 million from $2.33 million** in the prior year, mainly due to higher professional service, consulting, and R&D fees[205](index=205&type=chunk)[206](index=206&type=chunk) - The company's liquidity decreased, with **cash and cash equivalents falling to $42.03 million**, and net cash used in operating activities increasing to $5.13 million[214](index=214&type=chunk)[215](index=215&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable for the reporting period - Not applicable[217](index=217&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to a material weakness in internal financial reporting controls - Management identified a **material weakness** in internal control over financial reporting[218](index=218&type=chunk) - The weakness stems from a **lack of sufficient accounting personnel** with appropriate knowledge and experience in U.S. GAAP and SEC reporting[218](index=218&type=chunk) - To remediate the issue, the company has **engaged an outside consultant** to supplement its internal accounting team[219](index=219&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending an ongoing lawsuit from a former placement agent claiming approximately $7 million in damages - A lawsuit was filed by former placement agent FT Global Capital, Inc. in January 2021, claiming approximately **$7,000,000 in damages** and attorneys' fees[220](index=220&type=chunk) - The lawsuit relates to an alleged breach of an exclusive placement agent agreement from July 2020, which the company disputes[220](index=220&type=chunk) - The case is ongoing, and the company states it will **continue to vigorously defend the action**[221](index=221&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) This section is not applicable for the reporting period - Not applicable[223](index=223&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities to report for the period - None[223](index=223&type=chunk) [Defaults upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - None[223](index=223&type=chunk) [Mine Safety Disclosure](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This section is not applicable - Not applicable[223](index=223&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - None[223](index=223&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists key exhibits filed with the Form 10-Q, including loan agreements and officer certifications - Filed exhibits include two loan agreements, officer certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act, and various Inline XBRL documents[224](index=224&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financials reflect a major business transformation, with asset and revenue growth offset by higher net losses [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Comparison (Unaudited) | Balance Sheet Items | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $76,572,733 | $15,596,440 | | Cash and cash equivalents | $52,968,840 | $9,425,312 | | Goodwill | $16,727,897 | $0 | | **Total Assets** | **$94,122,813** | **$15,931,712** | | **Total Liabilities** | **$10,443,408** | **$7,200,571** | | **Total Stockholders' Equity** | **$83,679,405** | **$8,731,141** | - Total assets increased significantly, primarily due to a substantial rise in cash and cash equivalents from **$9.4 million to $53.0 million**, and the addition of **$16.7 million in goodwill** from an acquisition[7](index=7&type=chunk) - Stockholders' equity saw a major increase from **$8.7 million to $83.7 million**, largely driven by capital raised from the issuance of common stock[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Statement of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $11,745,027 | $43,450 | $12,503,894 | $355,700 | | **Gross Profit** | $983,084 | $30,056 | $439,383 | $332,249 | | **Loss from Operations** | ($6,860,427) | ($691,816) | ($9,736,553) | ($2,772,630) | | **Net Loss from Continuing Operations** | ($6,634,386) | ($2,395,965) | ($9,047,648) | ($5,650,104) | | **Net Income (Loss)** | ($10,494,177) | ($2,438,927) | ($11,694,964) | $113,613,952 | | **Basic EPS** | ($0.16) | ($0.07) | ($0.18) | $3.07 | - Revenue for Q3 2021 surged to **$11.7 million** compared to just $43,450 in Q3 2020, driven by new business lines, though operating expenses also rose sharply[10](index=10&type=chunk) - A significant loss from discontinued operations of **$3.86 million** was recorded in Q3 2021, contributing to the total net loss of $10.5 million for the quarter[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (For the Nine Months Ended Sep 30) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($19,812,246) | $561,417 | | Net Cash Used in Investing Activities | ($6,706,933) | ($1,863,550) | | Net Cash Provided by Financing Activities | $68,267,293 | $10,092,349 | | **Net Increase in Cash** | **$43,544,044** | **$430,832** | - The company's operations consumed **$19.8 million** in cash during the first nine months of 2021, a significant shift from providing cash in the same period of 2020[19](index=19&type=chunk) - Financing activities were the primary source of cash, providing **$68.3 million**, mainly from the issuance of common stock, which funded operations and investments[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company has transformed its business from fruit juice manufacturing to a blockchain e-commerce platform and financial technology services[22](index=22&type=chunk) - Multiple new subsidiaries were established in 2021 in China, New York, Dubai, and the UK to expand into supply chain and fintech services[23](index=23&type=chunk)[24](index=24&type=chunk) - The company operates its blockchain e-commerce business in the PRC through a Variable Interest Entity (VIE) structure[24](index=24&type=chunk)[27](index=27&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the business shift to fintech, highlighting massive revenue growth alongside lower margins and higher losses [Overview of Our Business](index=39&type=section&id=Overview%20of%20Our%20Business) - The company has transformed from a fruit juice producer to a holding company focused on a blockchain-based e-commerce platform and fintech services[159](index=159&type=chunk) - Expansion into financial services is a key strategy, evidenced by the acquisition of NTAM and a pending acquisition of Khyber Money Exchange Ltd[159](index=159&type=chunk) - The company acknowledges significant risks associated with its VIE structure in China and recent PRC government regulatory actions[160](index=160&type=chunk)[161](index=161&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Q3 Revenue Breakdown (2021 vs 2020) | Revenue Source | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Coal and Aluminum Ingots Supply Chain | $9,643,977 | $0 | | Asset management service | $2,101,050 | $0 | | CCM Shopping Mall Membership | $0 | $29,779 | | **Total** | **$11,745,027** | **$43,450** | - The overall gross margin for Q3 2021 decreased drastically to **8.37%** from 69.17% in Q3 2020 due to the shift to lower-margin commodity trading[181](index=181&type=chunk) - General and administrative expenses for Q3 2021 increased by **248.66% YoY** to $2.24 million, driven by new business development and a new stock compensation expense of **$5.49 million**[184](index=184&type=chunk)[185](index=185&type=chunk) - Loss from continuing operations for the nine months ended Sep 30, 2021, increased to **$9.05 million** from $5.65 million in the prior year[206](index=206&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2021, the company had cash and cash equivalents of **$52.97 million**, a significant increase from $9.43 million at the end of 2020[209](index=209&type=chunk) - The increase in cash was primarily due to net cash of **$68.27 million** provided by financing activities, mainly from the issuance of common stock[211](index=211&type=chunk) - Working capital improved to a positive **$73.14 million** as of September 30, 2021, up from $5.83 million a year prior[209](index=209&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that this section is not applicable - The company did not provide quantitative and qualitative disclosures about market risk, stating it is not applicable[212](index=212&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management identified a material weakness in internal controls due to insufficient accounting expertise and has engaged an outside consultant - Management concluded that disclosure controls and procedures were **not effective** as of September 30, 2021[213](index=213&type=chunk) - The ineffectiveness was attributed to a **material weakness**: a lack of sufficient accounting personnel with knowledge in U.S. GAAP and SEC reporting[213](index=213&type=chunk) - As a remediation measure, the company has engaged an outside consultant to supplement its internal accounting team[214](index=214&type=chunk) [PART II. OTHER INFORMATION](index=50&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a lawsuit from a former placement agent claiming approximately $7 million in damages - The company is being sued by its former placement agent, FT Global Capital, Inc., for an alleged breach of an exclusive placement agent agreement[216](index=216&type=chunk) - FT Global claims approximately **$7,000,000 in damages** and attorneys' fees related to securities transactions conducted after the agreement had expired[216](index=216&type=chunk) - A U.S. District Court has dismissed the fraud claim but allowed the breach of contract claim to proceed with discovery[217](index=217&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) The company states that this section is not applicable - No new risk factors are reported in this section for the quarter[218](index=218&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of securities occurred during the third quarter that were not previously disclosed - The Company did not make any sales of unregistered securities during the three months ended September 30, 2021 that were not previously disclosed[218](index=218&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including agreements, certifications, and Inline XBRL data files - Key exhibits filed with the report include a Loan Agreement, CEO and CFO certifications, and Inline XBRL documents[219](index=219&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2021, reflecting the company's business transformation Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $47.87 million | $15.52 million | | **Total Assets** | $48.36 million | $15.93 million | | **Total Current Liabilities** | $3.06 million | $5.18 million | | **Total Liabilities** | $3.96 million | $7.20 million | | **Total Stockholders' Equity** | $44.40 million | $8.73 million | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Revenue** | $6,613 | $199,951 | | **Gross Profit** | $590 | $199,438 | | **Loss from Operations** | ($1.61 million) | ($5.86 million) | | **Loss from Continuing Operations** | ($0.99 million) | ($6.70 million) | | **Net (Loss) / Income** | ($0.80 million) | $116.89 million | | **Basic Loss Per Share (Continuing)** | ($0.02) | ($0.20) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | ($0.74 million) | ($2.26 million) | | **Net Cash Used in Investing Activities** | ($9,263) | $0 | | **Net Cash Provided by Financing Activities** | $33.26 million | $0.74 million | - The company has transformed its business from fruit juice manufacturing to a real-name blockchain e-commerce platform, integrating blockchain and internet technology[19](index=19&type=chunk) - In April 2021, the company raised approximately **$35 million** through a registered direct offering, acquired a **60% equity interest** in Sichuan Ticode Supply Chain Management Co., Ltd., and changed its independent registered public accounting firm[112](index=112&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's business transformation, noting Q1 2021's revenue decline and improved liquidity [Business Overview](index=30&type=section&id=Overview%20of%20Our%20Business) The company operates as a holding company, focusing on blockchain-based e-commerce and expanding into financial services - The company's main business includes the Chain Cloud Mall (CCM), a blockchain-based online shopping platform, and the NONOGIRL cross-border e-commerce platform[119](index=119&type=chunk) - CCM uses blockchain for product anti-counterfeiting and a points system to incentivize member referrals and purchases, aiming to transform the traditional buyer-seller relationship into a value-sharing one[121](index=121&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q1 2021 revenue fell **96.7%** due to lower membership fees, but loss from continuing operations narrowed significantly Revenue Comparison (Q1 2021 vs Q1 2020) | Revenue Segment | Q1 2021 | Q1 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | CCM Shopping Mall Membership | $73 | $198,885 | ($198,812) | (99.46)% | | Sales of goods | $6,540 | $1,066 | $5,474 | 301.20% | | **Total** | **$6,613** | **$199,951** | **($193,338)** | **(96.69)%** | - The decrease in revenue was primarily due to a decline in new member subscriptions for the CCM Shopping Mall, as COVID-19 restrictions hampered the company's primary marketing strategy of holding in-person meetings and conferences[133](index=133&type=chunk)[134](index=134&type=chunk) - Overall gross margin fell from **99.7% to 8.9%** in Q1 2021, mainly because of lower high-margin membership fee revenue[137](index=137&type=chunk) - General and administrative expenses decreased by **13.4%** to **$1.60 million** in Q1 2021, mainly due to lower share issuance-related expenses[139](index=139&type=chunk) - Loss from continuing operations decreased by **$5.71 million** to **$0.99 million** for Q1 2021, primarily due to a significant reduction in operating expenses[145](index=145&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly improved as of March 31, 2021, with cash increasing to **$42.12 million** from financing activities Liquidity Metrics | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $42.12 million | $9.79 million | | Working Capital | $44.81 million | $10.34 million (Dec 31, 2020) | - Net cash provided by financing activities was **$33.26 million** for Q1 2021, a significant increase from **$0.74 million** in Q1 2020, mainly due to proceeds from common stock issuances[149](index=149&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that this section is not applicable - Not applicable[150](index=150&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of March 31, 2021, due to a material weakness in internal control - Management identified a material weakness in internal control over financial reporting, concluding that disclosure controls and procedures were not effective as of March 31, 2021[151](index=151&type=chunk) - The specific weakness identified was a lack of sufficient accounting personnel with the appropriate level of knowledge and training in U.S. GAAP and SEC reporting[151](index=151&type=chunk) - The company has engaged an outside consultant to supplement its internal accounting team and assist in preparing financial statements in accordance with U.S. GAAP to remediate the weakness[152](index=152&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a lawsuit by former placement agent FT Global Capital, Inc., seeking approximately **$7 million** in damages - In January 2021, former placement agent FT Global Capital, Inc. filed a lawsuit against the Company[154](index=154&type=chunk) - The lawsuit alleges a breach of an exclusive placement agent agreement and claims approximately **$7 million** in damages and attorneys' fees[154](index=154&type=chunk) - The Company believes the transactions at issue did not involve investors introduced by FT Global and will continue to vigorously defend the action[154](index=154&type=chunk)[155](index=155&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) The company states that this section is not applicable - Not applicable[157](index=157&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the quarter not previously disclosed - The Company did not make any sales of unregistered securities during the three months ended March 31, 2021 that were not previously disclosed[157](index=157&type=chunk) [Defaults upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[157](index=157&type=chunk) [Mine Safety Disclosure](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) The company states that this section is not applicable - Not applicable[157](index=157&type=chunk) [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) The company reports no other information - None[157](index=157&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from key officers and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to SEC rules and the Sarbanes-Oxley Act of 2002[158](index=158&type=chunk) - XBRL Instance Document, Schema, Calculation, Definition, Label, and Presentation Linkbase documents are also filed as exhibits[158](index=158&type=chunk)