Future FinTech (US:FTFT)2022-11-21 21:05Business Transformation and Acquisitions - The company transformed its business from fruit juice manufacturing to a blockchain-based e-commerce platform and financial technology services due to increased production costs and tightened environmental laws in China [164]. - On August 6, 2021, the company acquired 90% of Nice Talent Asset Management Limited, a Hong Kong-based asset management company, enhancing its asset management capabilities [165]. - On September 29, 2022, the company completed the acquisition of Khyber Money Exchange Ltd. for €685,000, expanding its money transfer services in the UK [166]. - In December 2021, the company launched FTFTX, a cryptocurrency market data platform providing real-time data for various cryptocurrencies [167]. - The company launched the FTFT Orbit e-wallet app in October 2022, integrating functions similar to Alipay and WeChat Pay [169]. - The company started coal supply chain financing and trading services in Q2 2021, followed by aluminum ingots in Q3 2021, targeting large state-owned enterprises [178]. - The Chain Cloud Mall platform transitioned from a member-based model to a sales agent-based eCAAS platform in Q2 2021 due to COVID-19 restrictions [177]. - The company has developed a cross-border money transfer app, Tempo, to facilitate cost-effective remittances for US-based immigrants [168]. - The company has completed the first phase of its cryptocurrency mining farm in Ohio, operational since October 2022 [170]. - The company operates through ten direct wholly-owned subsidiaries across various jurisdictions, enhancing its operational footprint [176]. Financial Performance - Revenue for the three months ended September 30, 2022, was $11.96 million, a 1.82% increase from $11.75 million in the same period of 2021 [192]. - Revenue from coal and aluminum ingots supply chain financing/trading decreased by 18.71% to $7.84 million compared to $9.64 million in the prior year [193]. - Asset management service revenue increased by 96.00% to $4.12 million from $2.10 million year-over-year [194]. - Total cost of revenues decreased by 2.75% to $10.47 million for the three months ended September 30, 2022, from $10.76 million in the same period of 2021 [195]. - Gross margin improved to 12.49% for the three months ended September 30, 2022, up from 8.37% in the same period of 2021 [198]. - General and administrative expenses rose by 58.65% to $3.56 million, primarily due to increased professional service fees [200]. - Stock compensation expense decreased by 76.68% to $1.28 million from $5.49 million in the prior year [201]. - The company recorded $0.79 million in research and development expenses for the nine months ended September 30, 2022, which was not present in the same period of 2021 [202]. - An impairment loss of $0.23 million was recorded for the three months ended September 30, 2022, due to adverse economic conditions [205]. - As of September 30, 2022, NTAM managed approximately $195 million in assets [184]. - Total revenue for the nine months ended September 30, 2022, was $22.84 million, an increase of 82.69% compared to $12.50 million for the same period in 2021 [210]. - Revenue from asset management services surged by 436.44% to $11.27 million for the nine months ended September 30, 2022, compared to $2.10 million in the same period of 2021 [211]. - Gross margin improved to 20.38% for the nine months ended September 30, 2022, up from 3.51% in the same period of the previous year, primarily due to higher revenues from asset management services [218]. - Operating expenses increased by 45.56% to $14.82 million for the nine months ended September 30, 2022, compared to $10.18 million for the same period in 2021 [221]. - Loss from continuing operations decreased to $8.67 million for the nine months ended September 30, 2022, down from $9.05 million in the same period of 2021 [229]. - Cash and cash equivalents decreased to $32.96 million as of September 30, 2022, from $50.27 million as of December 31, 2021, primarily due to operational losses [233]. - Net cash used in operating activities increased to $0.59 million for the nine months ended September 30, 2022, from a cash outflow of $19.81 million in the same period of the previous year [234]. - Tax provision increased by $0.51 million for the nine months ended September 30, 2022, with no tax provision recorded for the same period in the previous year [227]. - Other income, net rose to $2.00 million for the nine months ended September 30, 2022, up from $0.69 million in the same period of the last fiscal year, mainly due to foreign exchange gains [226]. - Basic and diluted loss per share from continuing operations improved to $0.12 for the nine months ended September 30, 2022, compared to a loss of $0.14 for the same period in 2021 [231]. - Net cash provided by financing activities for the nine months ended September 30, 2022, was $0.25 million, a decrease of $68.52 million compared to $69.43 million during the same period in 2021 [235]. - The decrease in cash provided by financing activities was primarily due to operational losses and the absence of fund-raising activities in 2022 [235]. - As of September 30, 2022, the company did not have any off-balance sheet arrangements [236]. Legal Matters - FT Global Capital, Inc. filed a lawsuit against the company claiming approximately $7 million in damages related to an alleged breach of an exclusive placement agent agreement [239]. - The lawsuit alleges that the company failed to compensate FT Global for securities purchase transactions between December 2020 and April 2021 [239]. - The company believes the transactions in question did not involve any investors introduced by FT Global during the term of the agreement [239]. - The company filed a motion to dismiss the lawsuit, which is currently pending in court [240]. - The company will continue to vigorously defend against the action brought by FT Global [240]. - The Company filed a motion to dismiss FT Global's claims, which included fraud and breach of contract, with the Court granting the dismissal of the fraud claim [240]. - The Court denied the Company's motion to dismiss FT Global's claims regarding breach of contract for failure to pay and breach of the covenant of good faith [240]. - The Company filed a motion for summary judgment on all claims asserted by FT Global on October 12, 2022 [240]. - FT Global filed its opposition to the Company's motion for summary judgment on November 2, 2022 [240]. - The Company continues to vigorously defend against the action brought by FT Global [240].