Business Transformation - The company has transformed its business from fruit juice manufacturing to financial technology services, including supply chain financing and asset management [196]. - The company completed the acquisition of Khyber Money Exchange Ltd. for €685,000, which is now named FTFT Finance UK Limited [204]. - The company established Future Trading (Chengdu) Co., Ltd. for bulk commodities supply chain financing services and trading [202]. - The company initiated coal supply chain financing services in Q2 2021, aluminum ingots in Q3 2021, and sand and steel in Q1 2023 [210]. - The company attempted to develop cryptocurrency mining operations in Paraguay but dissolved FTFT Paraguay S.A. in December 2023 due to failure to execute the business plan [203]. - The company has eight directly controlled subsidiaries across various jurisdictions, including DigiPay FinTech Limited and FTFT UK Limited [209]. Financial Performance - Revenue for the three months ended September 30, 2024, decreased to approximately $5.18 million from approximately $23.74 million for the same period in 2023, a decline of 78.20% [230]. - Supply Chain Financing/Trading revenue dropped significantly by 97.85%, from $19.99 million in 2023 to $428,875 in 2024, primarily due to decreased demand in the real estate and infrastructure sectors in China [233]. - Asset Management Service revenues increased by 13.38%, rising from $3.27 million in 2023 to $3.71 million in 2024, attributed to hiring more experienced account managers [231]. - Other revenues increased by 118.75%, from $0.47 million in 2023 to $1.04 million in 2024, mainly due to increased debt recovery consulting service fees and U.S. dollar bond service income [232]. - Overall gross profit increased to $1.51 million for the three months ended September 30, 2024, up from $1.41 million in 2023, with an overall gross margin of 29.25%, an increase of 22.42% from 5.95% [235]. - Total revenue for the nine months ended September 30, 2024, decreased to approximately $14.5 million from approximately $30.82 million for the same period of the last year, a decline of 52.95% [244]. - Asset management service revenue increased by $2.18 million from $9.69 million for the nine months ended September 30, 2023, to $11.88 million for the same period of 2024, representing a growth of 22.54% [245]. - Gross profit increased to $5.06 million for the nine months ended September 30, 2024, from $3.86 million for the same period of 2023, with an overall gross margin of 34.89%, up from 12.51% [248]. Expenses and Losses - General and administrative expenses decreased by 12.45%, from $3.79 million in 2023 to $3.32 million in 2024, mainly due to reduced professional service fees and rental costs [236]. - Bad debt provision increased by $3.37 million in 2024 compared to the same period in 2023, due to changes in accounting treatment methods [237]. - Research and development expenses decreased slightly to $655 in 2024, reflecting a reduction in salaries [238]. - The tax provision decreased by $10,735 for the three months ended September 30, 2024, primarily due to decreased revenue [241]. - General and administrative expenses increased by $0.54 million, or 5.62%, to $10.13 million for the nine months ended September 30, 2024, primarily due to increased professional service fees [249]. - Net loss from continuing operations increased by $4.63 million from $6.07 million for the nine months ended September 30, 2023, to $10.70 million for the same period of 2024 [258]. - Basic and diluted loss per share from continuing operations was $0.53 for the nine months ended September 30, 2024, compared to a loss of $0.40 for the same period of 2023 [260]. Cash Flow and Working Capital - Net cash used in operating activities increased by $6.10 million to $13.52 million for the nine months ended September 30, 2024, from $7.43 million for the same period of the last fiscal year [263]. - Working capital decreased by $10.85 million to $28.29 million as of September 30, 2024, from $39.14 million as of September 30, 2023 [262]. - Net cash provided in financing activities increased by $4.23 million to $1.32 million for the nine months ended September 30, 2024, compared to cash used in financing activities of $2.91 million during the same period of 2023 [265]. Regulatory and Compliance Issues - The company is processing filings with the CSRC for its offerings under the New Overseas Listing Rules, which may subject it to fines for non-compliance [199]. - The company has faced legal and operational risks due to regulatory changes in China, which could materially impact its operations and stock value [198]. - The company completed the deregistration and dissolution of its VIE, E-Commerce Tianjin, on March 7, 2024, due to minimal revenue since 2021 [196]. - The company plans to close down its CCM Shopping Mall business, which generated minimal revenue since 2021, completing deregistration by March 7, 2024 [228].
Future FinTech (FTFT) - 2024 Q3 - Quarterly Report