Future FinTech (FTFT) - 2024 Q1 - Quarterly Report

Subsidiary and Acquisition Activities - The company completed the deregistration and dissolution of its VIE, E-Commerce Tianjin, on March 7, 2024, due to minimal revenue generation since 2021[148][158] - FTFT UK Limited acquired 100% of Khyber Money Exchange Ltd. for €685,000 on September 29, 2022, and renamed it FTFT Finance UK Limited[155] - Future FinTech (Hong Kong) Limited acquired 100% equity interest in Alpha International Securities (Hong Kong) Limited and Alpha Information Service (Shenzhen) Co., Ltd., approved by the SFC in August 2023[156] - The company established Future Trading (Chengdu) Co., Ltd. on April 14, 2022, focusing on bulk commodities supply chain financing services and trading[153] - The company acquired KAZAN S.A. in Paraguay for $288 on April 18, 2022, but dissolved it in December 2023 due to unsuccessful cryptocurrency mining business development[154] - The company operates nine directly controlled subsidiaries across various jurisdictions, including DigiPay FinTech Limited and FTFT UK Limited[160] Regulatory and Operational Approvals - FTFT UK Limited received approval to operate as an Electronic Money Directive (EMD) Agent in March 2022, registered with the UK Financial Conduct Authority[153] Financial Performance and Metrics - Supply chain financing/trading revenue increased by$0.33 million, a 298.71% growth from $0.11 million in Q1 2023 to$0.44 million in Q1 2024[174] - Asset management service revenue grew by $1.21 million, a 38.25$3.16 million in Q1 2023 to $4.37 million in Q1 2024[174] - Total revenue for Q1 2024 reached$5.12 million, a 52.27% increase from $3.36 million in Q1 2023[174] - Gross profit margin for asset management service improved to 38.3$0.78 million in Q1 2024 compared to Q1 2023[180] - Research and development expenses decreased by $0.21 million in Q1 2024 compared to Q1 2023[181] - Net loss from continuing operations increased by$1.83 million to $3.97 million for the three months ended March 31, 2024[185] - Gain on disposal of discontinued operations was$0.65 million for the three months ended March 31, 2024[186] - Basic and diluted loss per share from continuing operations were $0.20 for the three months ended March 31, 2024[187] Cash Flow and Working Capital - Cash and restricted cash decreased to$14.89 million as of March 31, 2024 from $19.03 million as of December 31, 2023[188] - Working capital decreased to$36.78 million as of March 31, 2024 from $36.76 million as of March 31, 2023[188] - Net cash used in operating activities decreased by$2.12 million to $8.15 million for the three months ended March 31, 2024[188] - Net cash used in investing activities increased by$0.61 million to $0.80 million for the three months ended March 31, 2024[189] - Net cash provided by financing activities increased by$2.61 million to $2.55 million for the three months ended March 31, 2024[189] Legal and Regulatory Risks - The company faces legal and operational risks in China and Hong Kong, including regulatory changes and cybersecurity reviews, which could impact its business and stock value[150][151] - The company's disclosure controls and procedures were not effective as of March 31, 2024 due to a material weakness in internal control over financial reporting[192] Strategic Shifts and Corporate Actions - The company transitioned from fruit juice manufacturing to financial technology services due to increased production costs and environmental regulations in China[148] - The company implemented a 1-for-5 reverse stock split on February 1, 2023, reducing authorized shares from 300,000,000 to 60,000,000[157] Asset Management - NTAM managed approximately$359 million in assets as of March 31, 2024[167] Legal Awards - The company was awarded $10,598,379.93 in a legal case with FT Global Litigation, including$7,895,265.31 in damages[196]