10-K: Future FinTech Group Inc. Reports Financial Results for Fiscal Year 2024, Navigating Business Transformation Amidst Legal Challenges

Sentiment:

Annual Results 15 April 2025 4:15 PM

📋All filings for Future Fintech Group INC

Future FinTech Group Inc. details its financial performance for the year ended December 31, 2024, highlighting a shift in business focus and addressing ongoing legal and regulatory hurdles.

Worse than expectedThe company's revenue decreased significantly from $21.7 million in 2023 to $2.16 million in 2024.The company reported a loss from operations of $34.23 million for 2024, compared to $32.82 million for 2023.The company had cash and cash equivalents of $4.84 million as of December 31, 2024, a decrease of $12.57 million from the previous year.

Summary

Future FinTech Group Inc. has transitioned from fruit juice production to financial technology services, including supply chain financing and trading in China.
The company sold its asset management business in Hong Kong (NTAM) in November 2024 for approximately $300,000 due to worsened investment market sentiment.
FTFT SuperComputing Inc. was sold to DDMM Capital LLC, with $1,000,000 of the proceeds directed to settle part of a judgment in favor of FT Global Capital, Inc.
The company sold several other subsidiaries to Alec Orudjiev for $25,000 following a court-ordered auction.
The main business is now supply-chain financing services and trading in China.
The company is facing legal challenges, including an ongoing lawsuit with FT Global Capital, Inc., which has resulted in significant judgments against the company.
The company is processing filings with the CSRC for its offerings since the effective of New Overseas Listing Rules and has not complied the filing requirements yet which would subject the Company to fines and other penalties for violation of New Overseas Listing Rules.
The company's auditor, Fortune CPA Inc., is subject to PCAOB inspections, but uncertainties remain regarding potential future restrictions due to the company's operations in China.
Revenue decreased significantly from $21.7 million in 2023 to $2.16 million in 2024, primarily due to the sale of NTAM and a decrease in supply chain financing and trading revenues.
The company reported a loss from operations of $34.23 million for 2024, compared to $32.82 million for 2023.
The company had cash and cash equivalents of $4.84 million as of December 31, 2024, a decrease of $12.57 million from the previous year.
The company is authorized to issue blank check preferred stock, which may be issued without shareholder approval and which may adversely affect the rights of holders of our Common Stock.
The company has authorized and approved a 1-for-10 reverse stock split of the Companys authorized shares of common stock from 60,000,000 shares to 6,000,000 shares, accompanied by a corresponding decrease in the Companys issued and outstanding shares of common stock (2025 Reverse Stock Split, collectively with 2023 Reverse Stock Split as Reverse Splits).

Sentiment

Score: 3

Explanation: The document presents a challenging financial situation with declining revenue, significant losses, and ongoing legal issues. While the company is attempting to adapt and restructure, the overall outlook is negative.

Positives

The company successfully transitioned its business focus to financial technology services.
The company completed the deregistration and dissolution of the VIE with local authority on March 7, 2024.
The company is actively working to resolve its legal issues with FT Global Capital, Inc.
The company is implementing measures to improve its internal controls over financial reporting.

Negatives

The company experienced a significant decrease in revenue and a substantial loss from operations in 2024.
The company is facing ongoing legal challenges with FT Global Capital, Inc., which has resulted in significant judgments against the company.
The company's internal control over financial reporting was deemed ineffective as of December 31, 2024.
The company is processing filings with the CSRC for its offerings since the effective of New Overseas Listing Rules and has not complied the filing requirements yet which would subject the Company to fines and other penalties for violation of New Overseas Listing Rules.

Risks

Ongoing legal proceedings could have a material adverse effect on the company's business, financial condition, and results of operations.
Changes in China's economic, political, or social conditions or government policies could have a material adverse effect on the company's business and results of operations.
Uncertainties in the interpretation and enforcement of Chinese laws and regulations could negatively impact the company's business operations.
The Chinese government's influence over the company's business operations could result in a material change in operations and limit the company's ability to offer securities to investors.
The Holding Foreign Companies Accountable Act and related regulations could pose regulatory risks and impose restrictions on the company due to its operations in mainland China and Hong Kong.
The company may need additional capital to fund its future operations, and if it is not available when needed, the company may need to reduce its planned development and marketing efforts.
The company's common stock has been in danger of being delisted from the NASDAQ Stock Market (NASDAQ).

Future Outlook

The company intends to keep any future earnings to re-invest in and finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.

Industry Context

The company is operating in the intensely competitive and rapidly evolving financial services industry, including the brokerage and investment banking services industry in Hong Kong.

Comparison to Industry Standards

The online brokerage market is highly competitive and rapidly evolving.
The company's primary competitors include online brokers and other firms providing brokerage services.
Some of the company's competitors may have greater financial resources or a larger customer base than the company does.

Legal Proceedings

FT Global has registered the Courts judgment in the United States District Court for Southern District of New York (NY Court), where FT Global has brought a motion requiring the Company to turn over its stock in its subsidiary companies.
The Company has appealed the turnover order of the NY Court for the auction of securities of the subsidiaries of the Company in Hong Kong and China to the United States Court of Appeals for the Second Circuit and is waiting for the final decision of the Court of Appeals.
FT Global filed a motion (Motion) in the NY Court, amended on February 12, 2025, seeking a turnover order for 39,825,939 (before 1 for 10 reverse split) unissued shares of the Companys common stock for sale to satisfy the judgement.
The LaBelle case is a putative securities class action filed in January 2024 and is pending in the District of New Jersey.
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.

Related Party Transactions

As of December 31, 2024, the amount due to the related parties was consisted of the followings: Ming Yi $8,871 Chief Financial Officer of the Company Accrued expenses, interest free and payment on demand. Shanchun Huang 29,036 Member of the BOD,.,Legal person of FTFT UK Limited Accrued expenses, interest free and payment on demand.
As of December 31, 2024, the amount due from the related parties was consisted of the followings: Hu Li $20,000 Legal person of Future information service (shenZhen) Loan receivables*, interest free and payment on demand.
During 2024, the Company had the following transactions with related parties: JKNDC Limited $6,933,009 JKNDC LImiteds owner is Tsoi Tsz Leung. Consultancy fee Nice Talent Partner Limited 3,000,000 Controlled by NTAMs BOD CHAN Siu Kei Consultancy fee

Stakeholder Impact

Shareholders face potential dilution and a decline in the value of their investment due to the company's financial performance and legal challenges.
Employees may be affected by the company's restructuring and cost-cutting measures.
Customers may experience changes in the company's products and services as it shifts its business focus.

Next Steps

The Company has appealed the turnover order of the NY Court for the auction of securities of the subsidiaries of the Company in Hong Kong and China to the United States Court of Appeals for the Second Circuit and is waiting for the final decision of the Court of Appeals.
The Company has opposed the Motion, which is now fully briefed and awaits decision by the NY Court.

Key Dates

Date	Description
July 31, 2019	Cloud Chain Network and Technology (Tianjin) Co., Limited (CCM Network or CCM Tianjin, formerly known as Chain Cloud Mall Network and Technology (Tianjin) Co., Limited), Cloud Chain E-Commerce (Tianjin) Co., Ltd., formerly known as Chain Cloud Mall E-Commerce (Tianjin) Co., Ltd. (E-Commerce Tianjin), a limited liability company incorporated under the laws of China, and Mr. Zeyao Xue and Mr. Kai Xu, citizens of China and together 100% shareholders of E-Commerce Tianjin, entered into the following agreements, or collectively, the Variable Interest Entity Agreements or VIE Agreements, pursuant to which CCM Network has contractual rights to control and operate the business of E-commerce Tianjin (the VIE).
December 28, 2021	Cybersecurity Review Measures was published by Cyberspace Administration of China or the CAC, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, Ministry of State Security, Ministry of Finance, Ministry of Commerce, Peoples Bank of China, State Administration of Radio and Television, China Securities Regulatory Commission, State Secrecy Administration and State Cryptography Administration, effective on February 15, 2022, which provides that, Critical Information Infrastructure Operators (CIIOs) that purchase internet products and services and Online Platform Operators engaging in data processing activities that affect or may affect national security shall be subject to the cybersecurity review by the Cybersecurity Review Office.
February 17, 2023	The CSRC released New Overseas Listing Rules with five interpretive guidelines, which took effect on March 31, 2023.
March 7, 2024	The Company completed deregistration and dissolution of the VIE with local authority.
April 11, 2024	The Court entered a judgment awarding FT Global $8,875,265.31
April 16, 2024	The Court issued an amended judgment, awarding FT Global $10,598,379.93, which includes $7,895,265.31 in damages, $1,723,114.62 in prejudgment interest, and $980,000.00 in attorneys fees.
August 5, 2024	Mr. Hu Li was appointed as CEO, President and a member of the Board of Directors of the Company.
August 28, 2024	NY Court granted FT Globals motion for turnover of Defendants shares in Defendants wholly-owned subsidiaries as Defendant 1) failed to satisfy the $10.8 million judgment rendered in the Northern District of Georgia and registered in the Southern District of New York, and 2) is in possession of money and property in which it has an interest.
December 6, 2024	The Company agreed to sell all issued and outstanding shares of FTFT SuperComputing Inc. a wholly owned subsidiary of the Company (FTFT SuperComputing) to DDMM Capital LLC (the Buyer) for a purchase price that equals to: (i) the assumption of the obligations of FTFT SuperComputing totaling $973,072.24 and (ii)$1,000,000, which 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 and all matters pertaining to such litigation.
December 9, 2024	The closing of the transactions contemplated by the Agreement took place.
December 18, 2024	The Company sold all of its interest and ownership of Future Fintech Digital Capital Management LLC, FTFT UK Limited, DigiPay FinTech Limited, GlobalKey SharedMall Limited, Future Fintech Labs Inc., and Future Fintech Digital Number One GP, LLC (USA) to Alec Orudjiev, the general counsel of FT Global for $25,000 through the court ordered auction by the United States Marshal for the Southern District of New York.
April 1, 2025	The Company filed with the Florida Secretary of States office Articles of Amendment (the Amendment) to amend its Second Amended and Restated Articles of Incorporation, as amended (Articles of Incorporation). As a result of the Amendment, the Company has authorized and approved a 1-for-10 reverse stock split of the Companys authorized shares of common stock from 60,000,000 shares to 6,000,000 shares, accompanied by a corresponding decrease in the Companys issued and outstanding shares of common stock (2025 Reverse Stock Split, collectively with 2023 Reverse Stock Split as Reverse Splits).

Keywords

Financial Technology, Supply Chain Financing, Trading, Legal Proceedings, China, Hong Kong, Revenue, Net Loss, Risk Factors, Reverse Stock Split, CSRC, PCAOB, Internal Controls

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