Business Transition and Acquisitions - The company has transitioned from fruit juice manufacturing to financial technology services, including supply chain financing and cryptocurrency mining[159]. - The company completed the acquisition of Khyber Money Exchange Ltd. for €685,000, which is now named FTFT Finance UK Limited[166]. - The company acquired Alpha International Securities (Hong Kong) Limited, enhancing its financial services capabilities in Hong Kong[167]. - FTFT International Securities and Futures Limited was acquired in November 2023, expanding the company's brokerage and investment banking services in Hong Kong[179]. - FTFT Finance, acquired in September 2022, is a pioneer in UK money remittance services, providing competitive rates and no fees for remittances to Pakistan[180]. Financial Performance - Total revenue for the three months ended June 30, 2024, was $4,202,888, an increase of 12.94% compared to $3,721,250 in the same period of 2023[184]. - Total revenue for the six months ended June 30, 2024, was $9,325,855, an increase of 31.62% from $7,085,700 in the same period of 2023[198]. - Asset management service revenue increased by $536,988, or 16.50%, from $3,255,065 in 2023 to $3,792,053 in 2024[184]. - Asset management service revenue increased by $1,746,794, or 27.22%, from $6,418,129 in 2023 to $8,164,923 in 2024[198]. - Gross profit for the three months ended June 30, 2024, was $1,594,124, up from $1,242,475 in 2023, with an overall gross margin of 37.93%, an increase of 4.54%[188]. - Gross profit for the six months ended June 30, 2024, rose to $3,545,396, up from $2,444,091 in 2023, with a gross margin of 38.02%, an increase of 3.52%[202]. - Net loss from continuing operations increased by $260,000, from $1,540,000 in 2023 to $1,800,000 in 2024, primarily due to increased operating expenses[196]. - Net loss from continuing operations increased by $2,090,000 to $5,770,000 for the six months ended June 30, 2024, compared to $3,680,000 in 2023[211]. Operational Changes and Challenges - The company underwent a 1-for-5 reverse stock split, reducing authorized shares from 300 million to 60 million[168]. - The company dissolved its VIE E-Commerce Tianjin due to minimal revenue generation since 2021, completing the process in March 2024[159][169]. - The company has shifted its business model for its Chain Cloud Mall platform to an "Enterprise Communication as A Service" model, but it has still generated minimal revenue[169]. - The company is in the process of complying with new overseas listing rules, which may subject it to fines for non-compliance[162]. - The company faced significant operational risks due to regulatory changes in China, which could impact its ability to conduct business and accept foreign investments[161][162]. - The company plans to close down its CCM Shopping Mall business, which generated minimal revenue since 2021, completing the deregistration by March 7, 2024[182]. Cash Flow and Expenses - Cash and restricted cash decreased to $9,820,000 as of June 30, 2024, down from $19,020,000 as of December 31, 2023[214]. - Net cash used in operating activities increased by $4,980,000 to $11,940,000 for the six months ended June 30, 2024, from $6,960,000 in 2023[215]. - Net cash provided in financing activities was $2,340,000 for the six months ended June 30, 2024, an increase of $2,360,000 compared to cash used in financing activities of $10,000 in 2023[216]. - General and administrative expenses rose by $970,000, or 39.87%, to $3,387,000 for the three months ended June 30, 2024, compared to $2,422,000 in 2023[190]. - Operating expenses increased to $7,788,000 for the six months ended June 30, 2024, compared to $5,200,000 in 2023, representing an increase of 49.77%[204]. - Research and development expenses decreased to $2,000 for the six months ended June 30, 2024, from $322,000 in 2023, reflecting a significant reduction in spending[206]. Legal Matters - The court awarded FT Global a judgment of $10,598,379.93, which includes $7,895,265.31 in damages, $1,723,114.62 in prejudgment interest, and $980,000.00 in attorney's fees[224]. - The company filed a post-trial motion challenging the judgment, which remains pending before the court[224]. - FT Global has registered the judgment in the Southern District of New York, seeking to compel the company to turn over its stock in subsidiary companies[225]. - A derivative lawsuit was filed against certain officers and directors of Future FinTech, alleging breaches of fiduciary duties and violations of federal securities laws[225]. - The lawsuit includes allegations of stock price manipulation and failures in disclosure practices[225]. - The court has scheduled the trial for January 8, 2024, with a pretrial order deadline extended to December 1, 2023[224]. - The company continues to defend against FT Global's claims and may appeal the judgment to the United States Court of Appeals for the Eleventh Circuit if necessary[224]. - The court denied the company's motion for summary judgment on all claims asserted by FT Global[224]. - The discovery period for the case has been extended multiple times, with the latest extension granted until September 14, 2022[224]. - The company served FT Global with its Initial Disclosures on April 30, 2021, and has engaged in extensive discovery activities since then[224].
Future FinTech (FTFT) - 2024 Q2 - Quarterly Report