Future FinTech Group Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number: 001-34502 Future FinTech Group Inc. (Exact name of registrant as specified in its charter) Florida 98-0222013 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) Americas Tower , 1177 Avenue of The Americas Suite 5100 , New York , NY (Address of principal executive offices including zip code) 888-622-1218 (Registrant’s telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share FTFT Nasdaq Stock Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No. Class Outstanding at August 12, 2022 Common Stock, $0.001 par value per share 73,114,147 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION 1 Item 1. Financial Statements 1 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 3. Quantitative and Qualitative Disclosures about Market Risk 38 Item 4. Controls and Procedures 38 PART II. OTHER INFORMATION 39 Item 1. Legal Proceedings 39 Item 1A. Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults upon Senior Securities 40 Item 4. Mine Safety Disclosure 40 Item 5. Other Information 40 Item 6. Exhibits 40 SIGNATURES 41 i PART I. FINANCIAL INFORMATION Item 1. Financial Statements FUTURE FINTECH GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) June 30 , 2022 December 31, 2021 (Audited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 42,031,220 $ 50,273,517 Short term Investment 1,263,550 2,191,294 Accounts receivable, net 1,380,169 9,101,816 Notes receivable 1,174,122 - Advances to suppliers and other current assets 5,822,537 2,927,699 Loan receivables 11,586,500 6,000,000 Other receivables, net 3,173,546 1,965,159 Amount due from related parties 20,431 261,413 Assets related to discontinued operations - 157 TOTAL CURRENT ASSETS $ 66,452,075 $ 72,721,055 Property, plant and equipment, net $ 2,955,161 $ 3,163,052 Right of use assets 15,665 113,163 Intangible assets 618,593 76,140 Goodwill 15,693,022 15,583,675 TOTAL NON-CURRENT ASSETS $ 19,282,441 $ 18,936,030 TOTAL ASSETS $ 85,734,516 $ 91,657,085 LIABILITIES CURRENT LIABILITIES Accounts payable $ 28,540 $ 79 Accrued expenses and other payables 1,302,246 1,298,598 Advances from customers 1,647,979 2,893 Dividend payables - 63,477 Lease liability-current 15,665 113,163 Amounts due to related parties 238,676 992,702 Deferred liabilities 3,740,260 3,740,260 Liabilities related to discontinued operations - 1,019,496 TOTAL CURRENT LIABILITIES $ 6,973,366 $ 7,230,668 NON-CURRENT LIABILITIES Long term debt 178,800 188,215 Deferred liabilities $ 3,557,808 $ 3,384,044 TOTAL NON-CURRENT LIABILITIES 3,736,608 3,572,259 TOTAL LIABILITIES $ 10,709,974 $ 10,802,927 Commitments and contingencies (Note 24) STOCKHOLDER’S EQUITY Future FinTech Group, Inc, Stockholders’ equity Common stock, $ 0.001 par value; 300,000,000 shares authorized; 70,067,147 shares and 70,067,147 shares issued and outstanding as of June 30, 2022 and December 31, 2021 respectively $ 70,067 $ 70,067 Additional paid-in capital 221,416,496 220,523,246 Statutory reserve 61,382 61,382 Accumulated deficits ( 143,245,468 ) ( 138,611,914 ) Accumulated other comprehensive loss ( 2,285,669 ) ( 597,862 ) Total Future FinTech Group, Inc. stockholders’ equity 76,016,808 81,444,919 Non-controlling interests ( 992,266 ) ( 590,761 ) Total stockholders’ equity 75,024,542 80,854,158 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 85,734,516 $ 91,657,085 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 FUTURE FINTECH GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021* 2022 2021* Revenue $ 7,418,277 $ 1,346,924 $ 10,884,642 $ 1,354,423 Cost of revenue 6,042,857 1,295,659 7,721,245 1,302,568 Gross profit 1,375,420 51,265 3,163,397 51,855 Operating Expenses General and administrative expenses 2,649,979 790,768 6,060,389 2,324,645 Research and dvelopment expenses 770,105 - 1,203,160 - Selling expenses 349,209 10,090 719,678 23,035 Impairment Loss 448,611 - 697,123 - (Recovery) Provision of doubtful debts ( 29 ) ( 30 ) 1,973 ( 15,254 ) Total operating expenses 4,217,875 800,828 8,682,323 2,332,426 Loss from operations ( 2,842,455 ) ( 749,563 ) ( 5,518,926 ) ( 2,280,571 ) Other (expenses) income Interest income 242,713 5,458 415,943 9,569 Interest expenses ( 2,942 ) - ( 6,018 ) ( 3,913 ) Other income (expenses), net 389,938 ( 532,300 ) 385,837 457,208 Total other income (expenses), net 629,709 ( 526,842 ) 795,762 462,864 Loss from Continuing Operations before Income Tax ( 2,212,746 ) ( 1,276,405 ) ( 4,723,164 ) ( 1,817,707 ) Income tax provision ( 123,788 ) - ( 311,741 ) - Loss from Continuing Operations ( 2,336,534 ) ( 1,276,405 ) ( 5,034,905 ) ( 1,817,707 ) Discontinued Operations (Note 22) (Loss) Gain on disposal of discontinued operations ( 154 ) 508,407 ( 154 ) 156,493 Income from discontinued operations - 364,520 - 460,427 NET LOSS ( 2,336,688 ) ( 403,478 ) ( 5,035,059 ) ( 1,200,787 ) Less: Net Loss attributable to non-controlling interests ( 226,296 ) - ( 401,505 ) - Net loss from continued operations attributable to Future Fintech Group, Inc. $ ( 2,110,392 ) $ ( 403,478 ) $ ( 4,633,554 ) $ ( 1,200,787 ) Other comprehensive income (loss) Loss from continued operations ( 2,336,534 ) ( 1,276,405 ) ( 5,034,905 ) ( 1,817,707 ) Foreign currency translation – continued operations ( 1,505,190 ) 18,220 ( 1,687,807 ) 30,908 Comprehensive loss - continued operation ( 3,841,724 ) ( 1,258,185 ) ( 6,722,712 ) ( 1,786,799 ) Net income (loss) from discontinued operations ( 154 ) 872,927 ( 154 ) 616,920 Foreign currency translation – discontinued operations - ( 62,507 ) - 1,049 Comprehensive income (loss) - discontinued operation ( 154 ) 810,420 ( 154 ) 617,969 Comprehensive Loss ( 3,841,878 ) ( 447,765 ) ( 6,722,866 ) ( 1,168,830 ) Less: Net loss attributable to non-controlling interests ( 226,296 ) - ( 401,505 ) - COMPREHENSIVE LOSS ATTRIBUTABLE TO FUTURE FINTECH GROUP INC. STOCKHOLDERS ( 3,615,582 ) ( 447,765 ) ( 6,321,361 ) ( 1,168,830 ) Earnings (Loss) per share: Basic loss per share from continued operation $ ( 0.03 ) $ ( 0.02 ) $ ( 0.07 ) $ ( 0.03 ) Basic earnings per share from discontinued operation - 0.01 - 0.01 $ ( 0.03 ) ( 0.01 ) $ ( 0.07 ) $ ( 0.02 ) Diluted Earnings (Loss) per share: Diluted loss per share from continued operation $ ( 0.03 ) ( 0.02 ) $ ( 0.07 ) $ ( 0.03 ) Diluted earnings per share from discontinued operation - 0.01 - 0.01 $ ( 0.03 ) ( 0.01 ) $ ( 0.07 ) $ ( 0.02 ) Weighted average number of shares outstanding Basic 70,067,147 53,798,156 70,067,147 54,324,447 Diluted 70,624,938 54,355,947 70,624,938 54,882,238 * Reclassification - certain reclassifications have been made to the financial statements for the period ended June 30, 2021 to conform to the presentation for the period ended June 30, 2022, with no effect on previously reported net income (loss). The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Future Fintech Group, Inc. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Three Months ended June 30, 2021 Common Stock Additional paid-in Accumulated Accumulative other comprehensive Non- controlling Shares Amount capital deficits loss interests Total Balance at March 31, 2021 59,583,486 $ 59,583 $ 169,891,428 $ ( 125,181,610 ) $ ( 321,769 ) $ ( 47,459 ) $ 44,400,173 Issuance of common stocks - cash 5,737,706 5,738 32,374,754 - - - 32,380,492 Net loss from continued operations - - - ( 1,276,405 ) - - ( 1,276,405 ) Net income from discontinued operations - - - 364,520 - - 364,520 Foreign currency translation adjustment - - - - 18,220 - 18,220 Disposal of discontinued operation - - - 508,407 ( 62,508 ) - 445,899 Balance at June 30, 2021 65,321,192 $ 65,321 $ 202,266,182 $ ( 125,585,088 ) $ ( 366,057 ) $ ( 47,459 ) $ 76,332,899 Three Months ended June 30, 2022 Accumulative Additional other Non- Common Stock paid-in Statutory Accumulated comprehensive controlling Shares Amount capital reserve deficits loss interests Total Balance at March 31, 2022 70,067,147 $ 70,067 $ 221,416,496 61,382 $ ( 141,135,076 ) $ ( 780,479 ) $ ( 765,970 ) $ 78,866,420 Net loss - - - - ( 2,110,238 ) - ( 226,296 ) ( 2,336,534 ) Foreign currency translation adjustment - - - - - ( 1,505,190 ) - ( 1,505,190 ) Disposition of discontinued operation - - - - ( 154 ) - - ( 154 ) Balance at June 30, 2022 70,067,147 $ 70,067 $ 221,416,496 61,382 $ ( 143,245,468 ) $ ( 2,285,669 ) $ ( 992,266 ) $ 75,024,542 3 Six Months ended June 30, 2021 Common Stock Additional paid-in Accumulated Accumulative other comprehensive Non- controlling Shares Amount capital deficits loss interests Total Balance at December 31, 2020 50,053,606 $ 50,053 $ 133,510,862 $ ( 124,384,301 ) $ ( 398,014 ) $ ( 47,459 ) $ 8,731,141 Issuance of common stocks - cash 15,267,586 15,268 67,862,070 - - - 67,877,338 Net loss from continued operations - - - ( 1,817,707 ) - - ( 1,817,707 ) Net income from discontinued operations - - - 460,427 - - 460,427 Share-based payments-service - - 893,250 - - - 893,250 Foreign currency translation adjustment - - - - 30,908 - 30,908 Disposal of discontinued operation - - - 156,493 1,049 - 157,542 Balance at June 30, 2021 65,321,192 $ 65,321 $ 202,266,182 $ ( 125,585,088 ) $ ( 366,057 ) $ ( 47,459 ) $ 76,332,899 Six Months ended June 30, 2022 Accumulative Additional other Non- Common Stock paid-in Statutory Accumulated comprehensive controlling Shares Amount capital reserve deficits loss interests Total Balance at December 31, 2021 70,067,147 $ 70,067 $ 220,523,246 61,382 $ ( 138,611,914 ) $ ( 597,862 ) $ ( 590,761 ) $ 80,854,158 Net loss - - - - ( 4,633,400 ) - ( 401,505 ) ( 5,034,905 ) Share-based payments-service - - 893,250 - - - - 893,250 Foreign currency translation adjustment - - - - - ( 1,687,807 ) - ( 1,687,807 ) Disposition of discontinued operation - - - - ( 154 ) - - ( 154 ) Balance at June 30, 2022 70,067,147 $ 70,067 $ 221,416,496 61,382 $ ( 143,245,468 ) $ ( 2,285,669 ) $ ( 992,266 ) $ 75,024,542 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 FUTURE FINTECH GROUP INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Six Months Ended June 30, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 5,035,059 ) $ ( 1,200,787 ) Net (loss) income from discontinued operation ( 154 ) 616,920 Net loss from continuing operations ( 5,034,905 ) ( 1,817,707 ) Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation 90,182 1,411 Amortization 28,233 2,500 Provision (Recovery) of doubtful debts 1,973 ( 15,254 ) Share-based payments 893,250 893,250 Impairment of short term investment 697,123 - Interest expenses related to convertible note - ( 96,691 ) Changes in operating assets and liabilities Accounts receivable 2,519,226 ( 851,560 ) Notes receivable ( 1,174,122 ) - Other receivable ( 1,198,592 ) ( 182,587 ) Advances to suppliers and other current assets ( 2,894,838 ) 12,226 Accounts payable 28,461 818,903 Proceeds from amounts due from related parties, net 122,329 127,438 Repayment of amounts due to related parties, net ( 242,828 ) ( 1,180,054 ) Accrued expenses ( 569,006 ) ( 789,516 ) Taxes payable ( 41,133 ) - Advances from customers 1,645,086 209 Net Cash Used in Operating Activities – Continued Operations ( 5,129,561 ) ( 3,077,432 ) Net Cash Used in Operating Activities – Discontinued Operations 3 ( 1,247,917 ) CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 52,019 ) ( 7,308 ) Payment for loan receivable ( 11,363,000 ) - Repayment of loan receivable 6,000,000 - Purchase of intangible assets ( 570,351 ) - Net Cash Used in Investing Activities from Continued Operations ( 5,985,370 ) ( 7,308 ) Net Cash Used in Investing Activities from Discontinuing Operations - - CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of common stock, net of issuance costs - 67,877,338 Repayment of convertible payable - ( 1,163,146 ) Payment of dividends to the non-controlling interest ( 63,477 ) - Proceeds from loan payable 4,199,879 170,429 Net cash provided by financing activities 4,136,402 66,884,621 Effect of change in exchange rate ( 1,263,771 ) 39,062 NET INCREASE IN CASH AND CASH EQUIVALENTS ( 8,242,297 ) 62,591,026 Cash and cash equivalents, beginning of period 50,273,517 9,425,312 Cash and cash equivalents, end of period 42,031,220 72,016,338 Less: Cash and cash equivalents from the discontinued operations, end of period - ( 85,056 ) Cash and cash equivalents, from the continuing operations, end of period $ 42,031,220 $ 71,931,282 SUPPLEMENTARY DISCLOSURE OF SIGNIFICANT NON-CASH TRANSACTION Deferred liabilities $ 173,764 $ - SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid 41,133 - Interest paid 6,018 3,913 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 FUTURE FINTECH GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CORPORATE INFORMATION Future FinTech Group Inc. (the “Company”) is a holding company incorporated under the laws of the State of Florida. The main business of the Company includes an online shopping platform, Chain Cloud Mall, which is based on blockchain technology, supply chain financing services and trading, assets management, and cryptocurrency market data services. The Company is also engaged in the development of blockchain based e-Commerce technology, cryptocurrency mining, cryptocurrency investment management as well as financial service technology businesses. Prior to 2019, the Company engaged in the production and sales of fruit juice concentrates, fruit juice beverages and other fruit-related products in the People’s Republic of China (“PRC”, or “China”), and overseas markets. Due to the drastically increased production cost and tightened environmental law in China, the Company has transformed its business from fruit juice manufacturing and distribution to a real-name blockchain e-commerce platform that integrates blockchain and internet technology, supply chain financing services and trading, assets management and cryptocurrency market data service. On May 11, 2021, the Company established Future Supply (Chengdu) Co., Ltd. Its business is coal and aluminum ingots supply chain financing services and trading. On May 12, 2021, the Company established Future Big Data (Chengdu) Co., Ltd. in Chengdu, China. Its business includes big data technology and industrial internet data services. On June 8, 2021, the Company established Tianjin Future Private Equity Fund Management Partnership (Limited Partnership) in Tianjin, China. Its main business is external equity investment. June 14, 2021, the Company established Future FinTech Labs Inc. in New York to serve as its global R&D and technical support center. On June 24, 2021, the Company established FTFT Capital Investments L.L.C. in Dubai, United Arab Emirates. Its business is to provide financial technology and services, including a cryptocurrency market data platform that provides investors with real-time cryptocurrency market data and trading information. On July 2, 2021, the Company established Future Fintech Digital Number One US, LP. which is an investment fund. On July 6, 2021, the Company established Future Fintech Digital Capital Management, LLC, in the State of Connecticut, which provides investment advisory services and investment fund management. On July 6, 2021, the Company established Future Fintech Digital Number One GP, LLC., which is an off-shore investment fund. On August 2, 2021, the Company incorporated FTFT UK Limited in United Kingdom which serve as its operating base to develop fintech business in Europe. On August 6, 2021, the Company acquired 90 % equity interest of Nice Talent Asset Management Limited which mainly provides assets and wealth management services. On August 11, 2021, the Company established Future Private Equity Fund Management (Hainan) Co., Ltd. Its business is investment fund management. On November 22, 2021, the Company established FTFT Digital Number One, Ltd., an investment fund. On November 22, 2021, the Company established Future Fintech Digital Number One Offshore, LLC., an investment fund. On December 15, 2021, the Company established FTFT Supercomputing Inc. Its business is bitcoin and other cryptocurrency mining and related services. On April 14, 2022, the Company established Future Trading (Chengdu) Co., Ltd. Its business is coal and aluminum ingots supply chain financing services and trading. On April 18, 2022, the Company and Future Fintech (Hong Kong) Limited, a wholly owned subsidiary of the Company jointly acquired 100 % equity interest of KAZAN S.A., a company incorporated in Republic of Paraguay for $ 288 . The Company owns 90 % and FTFT HK owns 10 % of Kazan S.A., respectively. Kazan S.A. has no operation before the acquisition. The Company plans to develop bitcoin and other cryptocurrency mining and related services in Paraguay. The Company has changed its name from KAZAN S.A to FTFT Paraguay S.A. on July 28, 2022. The Company’s business and operations are principally conducted by its subsidiaries and its blockchain based e-commerce platform business is conducted through its Variable Interest Entity (“VIE”) - Cloud Chain E-Commerce (Tianjin) Co., Ltd., formerly known as Chain Cloud Mall E-Commerce (Tianjin) Co., Ltd. (“E-Commerce Tianjin”) in the PRC. 6 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of June 30, 2022 and the results of operations and cash flows for the periods ended June 30, 2022 and 2021. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three to six months ended June 30, 2022 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending December 31, 2022. The balance sheet of December 31, 2021 has been derived from the audited financial statements at that date. Our contractual arrangements with our VIE and their respective shareholders allow us to (i) exercise effective control over our VIE, (ii) receive substantially all of the economic benefits of our VIE, and (iii) have an exclusive option to purchase all or part of the equity interests in our VIE when and to the extent permitted by PRC law. As a result of our direct ownership in our wholly foreign-owned enterprise (“WFOE”) and the contractual arrangements with our VIE, we are regarded as the primary beneficiary of our VIE, and we treat it and its subsidiaries as our consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of our VIE in our condensed consolidated financial statements in accordance with U.S. GAAP Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2021 as included in our Annual Report on Form 10-K. Discontinued Operations On March 18, 2021, Chain Future Digital Tech (Beijing) Co., Ltd. was deregistered. On April 9, 2021, FT Commercial Management (Beijing) Co., Ltd. was dissolved and deregistered. On August 2, 2021, the Company sold Guangchengji (Guangdong) Industrial Co., Ltd. to an unrelated third party. On September 2, 2021, Future Supply Chain Co., Ltd. discontinued its operations, and on November 4, 2021, it was transferred to Shaanxi Fu Chen Venture Capital Management Co. Ltd. On June 27, 2022, Chain Cloud Mall Logistics Center (Shanxi) Co., Ltd. was dissolved and deregistered. Based on the disposal plan and in accordance with ASC 205-20, the Company presented the operating results from these operations as a discontinued operation. Segment Information Reclassification The Company classified business segment into CCM Shopping Mall Membership, asset management service, coal and aluminum ingots supply chain financing service and trading and others. 7 Uses of Estimates in the Preparation of Financial Statements The Company’s condensed consolidated financial statements have been prepared in accordance with US GAAP and this requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting period. The significant areas requiring the use of management estimates include, but not limited to, the allowance for doubtful receivable, estimated useful life and residual value of property, plant and equipment, impairment of long-lived assets, provision for staff benefit, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to our condensed consolidated financial statements. Going Concern The Company’s financial statements are prepared assuming that the Company will continue as a going concern. The Company incurred operating losses amounted $ 5.03 million and had negative operating cash flows amounted $ 5.13 million as of June 30, 2022 and may continue to incur operating losses and generate negative cash flows as the Company implements its future business plan. These factors raise substantial doubts about the Company’s ability to continue as a going concern. The Company has raised funds through issuance of convertible notes and common stock. The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its new business strategy and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. Research and development Research and development expenses include salaries, contracted services, as well as the related expenses for our research and product development team, and expenditures relating to our efforts to develop, design, and enhance our service to our clients. All the expenses are related to the planning and implementation phases of development, and costs that are associated with maintenance of the existing websites or software for internal use, apps for users. Impairment of Long-Lived Assets In accordance with the ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets , long-lived assets, such as property, plant and equipment and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, or it is reasonably possible that these assets could become impaired as a result of technological or other industrial changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset to future undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed are reported at the lower of the carrying amount or fair value less cost to sell. 8 Fair Value of Financial Instruments The Company has adopted FASB ASC Topic on Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable input, which may be used to measure fair value and include the following: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Input other than Level 1 that is observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other input that is observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable input that is supported by little or no market activity and that is significant to the fair value of the assets or liabilities. Our cash and cash equivalents are classified within level 1 of the fair value hierarchy because they are value using quoted market price. Earnings (Loss) Per Share Under ASC 260-10, Earnings Per Share , basic EPS excludes dilution for Common Stock equivalents and is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of Common Stock outstanding for the period. Diluted EPS is calculated by using the treasury stock method, assuming conversion of all potentially dilutive securities, such as stock options and warrants. Under this method, (i) exercise of options and warrants is assumed at the beginning of the period and shares of Common Stock are assumed to be issued, (ii) the proceeds from exercise are assumed to be used to purchase Common Stock at the average market price during the period, and (iii) the incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) are included in the denominator of the diluted EPS computation. The numerators and denominators used in the computations of basic and diluted EPS are presented in the following table. Three Months ended June 30, 2022: Income Share Pre-share amount Loss from continuing operations $ ( 2,110,238 ) 70,067,147 $ ( 0.03 ) Loss from discontinuing operations $ ( 154 ) 70,067,147 $ - Basic EPS: Loss available to common stockholders from continuing operations $ ( 2,110,238 ) 70,067,147 $ ( 0.03 ) Loss available to common stockholders from discontinuing operations $ ( 154 ) 70,067,147 $ - Dilutive EPS: Warrants - 557,791 - Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. Diluted net loss per share equals basic net loss per share because the effect of securities convertible into common shares is anti-dilutive from continuing operations $ ( 2,110,238 ) 70,624,938 $ ( 0.03 ) Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. $ ( 154 ) 70,624,938 $ - 9 Three Months ended June 30, 2021: Income Share Pre-share amount Loss from continuing operations $ ( 1,276,405 ) 53,798,156 $ ( 0.02 ) Income from discontinuing operations $ 872,927 53,798,156 $ 0.01 Basic EPS: Loss available to common stockholders from continuing operations $ ( 1,276,405 ) 53,798,156 $ ( 0.02 ) Income available to common stockholders from discontinuing operations $ 872,927 53,798,156 $ 0.01 Dilutive EPS: Warrants - 557,791 - Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. Diluted net loss per share equals basic net loss per share because the effect of securities convertible into common shares is anti-dilutive from continuing operations $ ( 1,276,405 ) 54,355,947 $ ( 0.02 ) Diluted Earnings per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. $ 872,927 54,355,947 $ 0.01 For the six months ended June 30, 2022: Income Share Pre-share amount Loss from continuing operations $ ( 5,034,905 ) 70,067,147 $ ( 0.07 ) Loss from discontinuing operations $ ( 154 ) $ - Basic EPS: Loss available to common stockholders from continuing operations $ ( 5,034,905 ) 70,067,147 $ ( 0.07 ) Loss available to common stockholders from discontinuing operations $ ( 154 ) 70,067,147 $ - Dilutive EPS: Warrants - 557,791 - Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. Diluted net loss per share equals basic net loss per share because the effect of securities convertible into common shares is anti-dilutive from continuing operations $ ( 5,034,905 ) 70,624,938 $ ( 0.07 ) Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. $ ( 154 ) 70,624,938 $ - 10 For the six months ended June 30, 2021: Income Share Pre-share amount Loss from continuing operations $ ( 1,817,707 ) 54,324,447 $ ( 0.03 ) Income from discontinuing operations $ 616,920 54,324,447 $ 0.01 Basic EPS: Loss available to common stockholders from continuing operations $ ( 1,817,707 ) 54,324,447 $ ( 0.03 ) Income available to common stockholders from discontinuing operations $ 616,920 54,324,447 $ 0.01 Dilutive EPS: Warrants 557,791 - Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. Diluted net loss per share equals basic net loss per share because the effect of securities convertible into common shares is anti-dilutive from continuing operations $ ( 1,817,707 ) 54,882,238 $ ( 0.03 ) Diluted Earnings per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding. $ 616,920 54,882,238 $ 0.01 Cash and Cash Equivalents Cash and cash equivalents included cash on hand and demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal and use and with an original maturity of three months or less. Deposits in banks in the PRC are only insured by the government up to RMB 500,000 , and are consequently exposed to risk of loss. The Company believes the probability of a bank failure, causing loss to the Company, is remote. Receivable and Allowances Accounts receivable are recognized and carried at the original invoice amounts less an allowance for any uncollectible amount. We have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable credit losses in our existing accounts receivable. We perform ongoing credit evaluations of our customers and maintain an allowance for potential bad debts if required. Other receivables, and loan receivables are recognized and carried at the initial amount when occurred less an allowance for any uncollectible amount. We have a policy of reserving for uncollectible accounts based on our best estimate of the amount of probable impairment losses in our existing receivable. We determine whether an allowance for doubtful accounts is required by evaluating specific accounts where information indicates the customers may have an inability to meet financial obligations. In these cases, we use assumptions and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be collected. These specific allowances are re-evaluated and adjusted as additional information is received. The amounts calculated are analyzed to determine the total amount of the allowance. We may also record a general allowance as necessary. Direct write-offs are taken in the period when we have exhausted our efforts to collect overdue and unpaid receivable or otherwise evaluate other circumstances that indicate that we should abandon such efforts. 11 The Company has assessed its accounts receivable including credit term and corresponding all its accounts receivables in June 2022. Upon such credit terms, bad debt expense was $ 1,973 and $( 15,254 ) during the six months ended June 30, 2022 and 2021, respectively. There is no accounts receivable balance overdue for over 90 days as of June 30, 2022 and December 31, 2021. Revenue Recognition We apply the five steps defined under ASC 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We assess its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. Revenue arrangements with multiple performance obligations are divided into separate distinct goods or services. We allocate the transaction price to each performance obligation based on the relative standalone selling price of the goods or services provided. Revenue is recognized upon the transfer of control of promised goods or services to a customer. We do not make any significant judgment in evaluating when control is transferred. Revenue is recorded net of value-added tax. Revenue recognitions are as follows: Online sales and Membership fee: The Company recognizes the sale of goods 15 days after the products are shipped (after the 15 days return policy). The revenue from the membership fee is amortized over the lifetime of the membership, which is one year. For the merchandise gift package, revenue is recognized when the receipt of the gift package is confirmed by the members. Other revenues include revenues earned on net basis from sales of certain products on our platform. During the second quarter of 2021, the Company has transformed its member based business model to sales agent based business model for its online shopping mall. Sales of coals and aluminum ingots The Company recognize revenue when the receipt of merchandise is confirmed by the customers, which is the point that the title of the goods is transferred to the customer. Asset Management Service The Company recognizes service revenue when a service is rendered, the Company issues bills to its customers and recognizes revenue according to the bills. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Depreciation is computed using the straight-line method over the useful lives of the assets. Major renewals and betterments are capitalized and depreciated; maintenance and repairs that do not extend the life of the respective assets are expensed as incurred. Upon disposal of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of income and comprehensive income. 12 Depreciation related to property, plant and equipment used in production is reported in cost of sales, and includes amortized amounts related to capital leases. We estimated that the residual value of the Company’s property and equipment ranges from 3 % to 5 %. Property, plant and equipment are depreciated over their estimated useful lives as follows: Machinery and equipment 5 - 10 years Building 20 years Furniture and office equipment 3 - 5 years Motor vehicles 5 years Intangible Assets Acquired intangible assets are recognized based on their cost to the Company, which generally includes the transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of non-cash assets given as consideration differs from the assets’ carrying amounts on the Company’s book. These assets are amortized over their useful lives if the assets are deemed to have a finite life and they are reviewed for impairment by testing for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The fair value of an intangible asset is the amount that would be determined if the entity used the assumptions that market participants would use if they were pricing the intangible asset. The useful life of the Company’s intangible assets is ten years, which is determined by using the time period that an intangible is estimated to contribute directly or indirectly to a Company’s future cash flows. Foreign Currency and Other Comprehensive Income (Loss) The financial statements of the Company’s foreign subsidiaries are measured using the local currency as the functional currency; however, the reporting currency of the Company is the USD. Assets and liabilities of the Company’s foreign subsidiaries have been translated into USD using the exchange rate at the balance sheet dates, while equity accounts are translated using historical exchange rate. The exchange rate we used to convert RMB to USD was 6.71 and 6.38 at the balance sheet dates of June 30, 2022 and December 31, 2021, respectively. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rates we used to convert RMB to USD were 6.48 and 6.47 for six months ended June 30, 2022 and 2021, respectively. The exchange rate we used to convert HKD to USD was 7.85 at the balance sheet dates of June 30, 2022. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rate we used to convert HKD to USD was 7.83 for six months ended June 30, 2022. The exchange rate we used to convert GBP to USD was 0.82 at the balance sheet dates of June 30, 2022. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rate we used to convert GBP to USD was 0.77 for six months ended June 30, 2022. The exchange rate we used to convert AED to USD was 3.67 at the balance sheet dates of June 30, 2022. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rate we used to convert AED to USD was 3.67 for six months ended June 30, 2022. Translation adjustments are reported separately and accumulated in a separate component of equity (cumulative translation adjustment). Income Taxes We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-25 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. 13 Goodwill The Company tests goodwill for impairment for its reporting units on an annual basis, or when events occur or circumstances indicate the fair value of a reporting unit is below its carrying value. If the fair value of a reporting unit is less than its carrying value, an impairment loss is recorded to the extent that implied fair value of the goodwill within the reporting unit is less than its carrying value. The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of the reporting unit to its carrying value. The Company uses the discounted cash flow model to estimate fair value, which requires management to make significant estimates and assumptions related to forecasts of future revenue and operating margin. The Company did not note any events occurred or circumstances indicated the fair value of a reporting unit was below its carrying value as of June 30, 2022. Short-term investments Short-term investments consist primarily of investments in fixed deposits with original maturities between three months and one year and certain investments in wealth management products and other investments that the Company has the intention to redeem within one year. As of June 30, 2022 and December 31, 2021, the short-term investments amounted to $ 1.26 million and $ 2.19 million, respectively. Lease We adopted ASU No. 2016-02, Leases (Topic 842), or ASC 842, from January 1, 2020. We determine if an arrangement is a lease or contains a lease at lease inception. For operating leases, we recognize a right-of-use (“ROU”) asset and a lease liability based on the present value of the lease payments over the lease term on the consolidated balance sheets at commencement date. As most of our leases do not provide an implicit rate, we estimate our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any lease payments made, net of lease incentives. Lease expense is recorded on a straight-line basis over the lease term. Our leases often include options to extend and lease terms include such extended terms when we are reasonably certain to exercise those options. Lease terms also include periods covered by options to terminate the leases when we are reasonably certain not to exercise those options. Share-based compensation The Company awards share options and other equity-based instruments to its employees, directors and consultants (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date. The Company recognizes the compensation cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. Variable interest entities On July 31, 2019, Chain Cloud Mall Network and Technology (Tianjin) Co., Limited (“CCM Tianjin”), Chain Cloud Mall E-commerce (Tianjin) Co., Ltd. (“E-commerce Tianjin”), and Mr. Zeyao Xue and Mr. Kai Xu, citizens of China and shareholders of E-commerce Tianjin, entered into the following agreements, or collectively, the “Variable Interest Entity Agreements” or “VIE Agreements,” pursuant to which CCM Tianjin has contractual rights to control and operate the business of E-commerce Tianjin (the “VIE”). Therefore, pursuant to ASC 810, E-Commerce Tianjin is included in the Company’s consolidated financial statements since then. Pursuant to Chinese law and regulations, a foreign owned enterprise cannot apply for and hold a license for operation of certain e-commerce businesses, the category of business which the Company is expanding in China. CCM Tianjin is an indirectly wholly foreign owned enterprise of the Company. In order to comply with Chinese law and regulations, CCM Tianjin agreed to provide E-commerce Tianjin an Exclusive Operation and Use Rights Authorization to operate and use the Chain Cloud Mall System owned by CCM Tianjin. E-commerce Tianjin was incorporated by Mr. Zeyao Xue and Mr. Kai Xu solely for the purpose of holding the operation license of the Chain Cloud Mall System. Mr. Zeyao Xue is a major shareholder of the Company and the son of Mr. Yongke Xue, the President of the Company. Mr. Kai Xu was the Chief Operating Officer of the Company and currently is the Deputy General Manager of FT Commercial Group Ltd., a wholly owned subsidiary of the Company and vice president of blockchain division of the Company. 14 The VIE Agreements are as follows: 1) Exclusive Technology Consulting and Service Agreement by and between CCM Tianjin and E-commerce Tianjin. Pursuant to the Exclusive Technology Consulting and Service Agreement, CCM Tianjin agreed to act as the exclusive consultant of E-commerce Tianjin and provide technology consulting and services to E-commerce Tianjin. In exchange, E-commerce Tianjin agreed to pay CCM Tianjin a technology consulting and service fee, the amount of which is to be equivalent to the amount of net profit before tax of E-commerce Tianjin, payable on a quarterly basis after making up losses of previous years (if necessary) and deducting necessary costs, expenses and taxes related to the business operations of E-commerce Tianjin. Without the prior written consent of CCM Tianjin, E-commerce Tianjin may not accept the same or similar technology consulting and services provided by any third party during the term of the agreement. All the benefits and interests generated from the agreement, including but not limited to intellectual property rights, know-how and trade secrets, will be CCM Tianjin’s sole and exclusive property. This agreement has a term of 10 years and may be extended unilaterally by CCM Tianjin with CCM Tianjin’s written confirmation prior to the expiration date. E-commerce Tianjin cannot terminate the agreement early unless CCM Tianjin commits fraud, gross negligence or illegal acts, or becomes bankrupt or winds up. 2) Exclusive Purchase Option Agreement by and among CCM Tianjin, E-commerce Tianjin, Mr. Zeyao Xue and Mr. Kai Xu. Pursuant to the Exclusive Purchase Option Agreement, Mr. Zeyao Xue and Mr. Kai Xu granted to CCM Tianjin and any party designated by CCM Tianjin the exclusive right to purchase, at any time during the term of this agreement, all or part of the equity interests in E-commerce Tianjin, or the “Equity Interests,” at a purchase price equal to the registered capital paid by Mr. Zeyao Xue and Mr. Kai Xu for the Equity Interests, or, in the event that applicable law requires an appraisal of the Equity Interests, the lowest price permitted under applicable law. Pursuant to powers of attorney executed by Mr. Zeyao Xue and Mr. Kai Xu, they irrevocably authorized any person appointed by CCM Tianjin to exercise all shareholder rights, including but not limited to voting on their behalf on all matters requiring approval of E-commerce Tianjin’s shareholder, disposing of all or part of the shareholder’s equity interest in E-commerce Tianjin, and electing, appointing or removing directors and executive officers. The person designated by CCM Tianjin is entitled to dispose of dividends and profits on the equity interest without reliance on any oral or written instructions of Mr. Zeyao Xue and Mr. Kai Xu. The powers of attorney will remain in force for so long as Mr. Zeyao Xue and Mr. Kai Xu remain the shareholders of E-commerce Tianjin. Mr. Zeyao Xue and Mr. Kai Xu have waived all the rights which have been authorized to CCM Tianjin’s designated person under the powers of attorney. 3) Equity Pledge Agreements by and among CCM Tianjin, E-commerce Tianjin, Mr. Zeyao Xue and Mr. Kai Xu. Pursuant to the Equity Pledge Agreements, Mr. Zeyao Xue and Mr. Kai Xu pledged all of the Equity Interests to CCM Tianjin to secure the full and complete performance of the obligations and liabilities on the part of E-commerce Tianjin and them under this and the above contractual arrangements. If E-commerce Tianjin, Mr. Zeyao Xue, or Mr. Kai Xu breaches their contractual obligations under these agreements, then CCM Tianjin, as pledgee, will have the right to dispose of the pledged equity interests. Mr. Zeyao Xue and Mr. Kai Xu agree that, during the term of the Equity Pledge Agreements, they will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests, and they also agree that CCM Tianjin’s rights relating to the equity pledge should not be interfered with or impaired by the legal actions of the shareholders of E-commerce Tianjin, their successors or designees. During the term of the equity pledge, CCM Tianjin has the right to receive all of the dividends and profits distributed on the pledged equity. The Equity Pledge Agreements will terminate on the second anniversary of the date when E-commerce Tianjin, Mr. Zeyao Xue and Mr. Kai Xu have completed all their obligations under the contractual agreements described above. 4) Exclusive Operation and Use Rights Authorization letter which authorizes Chain Cloud Mall E-commerce (Tianjin) Co., Ltd, to exclusively operate and use the Chain Cloud Mall System and the authorization period is the same as the term of the Exclusive Technology Consulting and Service Agreement entered into by and between Chain Cloud Mall Network and Technology (Tianjin) Co., Ltd. and Cloud Chain Mall E-commerce (Tianjin) Co., Ltd. dated July 31, 2019. 5) GlobalKey Shared Mall Shopping Platform Software and System Transfer Agreement by and between Future Supply Chain Co., Ltd. and Chain Cloud Mall Network and Technology (Tianjian) Co., Ltd., pursuant to which the GlobalKey Shared Mall Shopping Platform Software and System was transferred from Future Supply China Co., Ltd. to CCM Tianjin and that both parties were wholly owned subsidiaries of the Company and transfer price is $ 0 . 6) Spousal Consent Letters. The spouse of Mr. Kai Xu (Mr. Zeyao Xue is not married), the shareholder of E-Commerce Tianjin has signed a spousal consent letter agreeing that the equity interests in E-Commerce Tianjin held by and registered under the name of such shareholder will be disposed pursuant to the contractual agreements with CCM Tianjin. The spouse of such shareholder agreed not to assert any rights over the equity interest in E-Commerce Tianjin held by such shareholder. 15 New Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”) “Financial Instruments - Credit Losses” (“ASC 326”): Measurement of Credit Losses on Financial Instruments” which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. In November 2019, the FASB issued ASU 2019-10 “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)” (“ASC 2019-10”), which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for public entities which meet the definition of a smaller reporting company. The Company will adopt ASU 2016-13 effective January 1, 2023. Management is currently evaluating the effect of the adoption of ASU 2016-13 on the consolidated financial statements. The effect will largely depend on the composition and credit quality of our investment portfolio and the economic conditions at the time of adoption. In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendments in this update require disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about (1) the types of transactions, (2) the accounting for the transactions, and (3) the effect of the transactions on an entity’s financial statements. The amendments are effective for all entities within their scope, which excludes not-for-profit entities and employee benefit plans, for financial statements issued for annual periods beginning after December 15, 2021. Early application of the amendment is permitted. The Company adopted ASU No. 2021-10 effective January 1, 2022. The adoption of this standard did not have a material impact on the Company consolidated financial statements. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying consolidated financial statements. 3. VARIABLE INTEREST ENTITY The carrying amount of the VIE’s consolidated assets and liabilities are as follows: June 30, December 31, 2022 2021 (Unaudited) (Audited) Current assets $ 94,310 $ 46,721 Property and equipment, net 220 469 Intangible assets 36,506 36,231 Total assets 131,036 83,421 Total liabilities ( 256,900 ) ( 270,413 ) Net assets $ ( 125,864 ) $ ( 186,992 ) June 30, December 31, 2022 2021 (Unaudited) (Audited) Current liabilities: Accounts payable $ 19,361 $ 79 Accrued expenses and other payables 5,241 1,112 Advances from customers 2,748 2,893 Amount due to related party 229,550 266,329 Total current liabilities 256,900 270,413 Total liabilities $ 256,900 $ 270,413 The summarized operating results of the VIE’s are as follows: Three Months Ended June 30, Six Months Ended June 30, 2022 2021* 2022 2021* Revenue $ 652 $ 24 $ 652 $ 6,638 Gross profit 639 13 640 603 Net loss ( 51,194 ) ( 44,817 ) ( 94,752 ) ( 20,949 ) 16 4. ACCOUNTS RECEIVABLE Accounts receivable, net consist of the following: June 30, December 31, 2022 2021 (Unaudited) (Audited) Coal and Aluminum Ingots Supply Chain Financing/Trading $ - $ 7,938,152 Asset management service 1,380,169 1,163,664 Total accounts receivable 1,380,169 9,101,816 The following table sets forth our concentration of accounts receivable, net of specific allowances for doubtful accounts. June 30, December 31, 2022 2021 Debtor A 79.06 % 87.22 % Debtor B 13.15 % 10.60 % Debtor C 4.09 % 1.14 % Total accounts receivable, net 96.30 % 98.96 % 5. NOTE RECEIVABLES As of June 30, 2022, the balance of note receivables was $ 1.17 million, which was from third party. The Company accepted $1.17 million (RMB7.88 million) bank acceptance drafts from third party interest free of accounts receivable. The acceptance draft was issued on April 28, 2022 and has a maturity date of April 28, 2023 . 6. OTHER RECEIVABLES As of June 30, 2022, the balance of other receivables was $ 3.17 million. On September 1, 2021, FTFT UK Limited, a company organized under the laws of United Kingdom and a wholly owned subsidiary of the Company entered into a Share Purchase Agreement (the “Agreement”) with Rahim Shah, a resident of United Kingdom (“Seller”). Under this agreement, FTFT UK Limited (the “Buyer”) agreed to acquire 100 % of the issued and outstanding shares (the “Sale Shares”) of Khyber Money Exchange Ltd. (“Khyber”), a company incorporated in England and Wales from the Seller for a total of Euros € 685,000 (“Purchase Price”). Buyer deposited Euros € 685,000 ($ 0.72 million) for the Purchase Price and £ 400,000 ($ 0.48 million) for cash balance expected to be left in the bank account of Khyber upon the closing (subject to refund to the Buyer upon the actual amount in Khyber’s account at closing) to Buyer’s solicitors to be held by Buyer’s solicitors in their client account upon the final closing of the acquisition. April 22, 2022, Champion Energy Services, LLC and FTFT Supercomputing Inc. signed an Electricity Sales and Purchases Agreement. Upon enrollment of FTFT Supercomputing Inc.’s facilities, Champion Energy Services, LLC shall sell and deliver, or engage a third party (including Local Utility) to deliver, and FTFT Supercomputing Inc. shall purchase and receive, 100 % of FTFT Supercomputing Inc.’s electricity requirements for enrolled FTFT Supercomputing Inc.’s facilities at the Delivery Point(s) solely for use at FTFT Supercomputing Inc’s facilities. FTFT Supercomputing Inc shall provide an initial amount of Adequate Assurance to Champion Energy Services, LLC in the form of a cash deposit amounted $ 1.00 million. In addition, other receivables included deposit paid and prepayments amounting to $ 0.97 million. 7. LOAN RECEIVABLES As of June 30, 2022, the balance of loan receivables was $ 11.59 million, which was from third parties. On September 8, 2021, FUCE Future Supply Chain (Xi’an) Co., Ltd., a wholly owned subsidiary of the Company, entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, FUCE Future Supply Chain (Xi’an) Co., Ltd. loaned an amount of US$0.22 million (RMB1.5million) to the third party at the annual interest rate of 5% from September 8, 2021 to September 7, 2022. On March 10, 2022, Future FinTech (Hong Kong) Limited (“FTFT HK”), a wholly owned subsidiary of the Company, entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, FTFT HK loaned an amount of US$5 million to the third party at the annual interest rate of 10% from March 10, 2022 to September 9, 2022. On May 30, 2022, FTFT HK entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, FTFT HK loaned an amount of US$ 6.36 million to the third party at the annual interest rate of 10% from May 31, 2022 to May 30,2023. 17 8. SHORT TERM INVESTMENT As of June 30, 2022, the balance of short term investment was $ 1.26 million. On September 6, 2021, Future Private Equity Fund Management (Hainan) Co., Ltd. invested $ 1.94 million (RMB 13,000,000 ) to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in various types of investment portfolios. According to the market value, the Company’s balance of the short term investment was $ 1.26 million on June 30, 2022. 9. ADVANCES TO SUPPLIERS AND OTHER CURRENT ASSETS The amount of advances to suppliers and other current assets consisted of the followings: June 30, December 31, 2022 2021 (Unaudited) (Audited) Prepayments for Coal and Aluminum Ingots Supply Chain Financing/Trading $ 5,315,262 $ 2,243,295 Prepaid expenses 237,428 439,404 Others 269,847 245,000 Total 5,822,537 2,927,699 10. GOODWILL As of June 30, 2022, the balance of goodwill mainly represented an amount of $ 15.69 million that arose from acquisition of Nice Talent Asset Management Limited (“Nice Talent”) in 2021. On August 6, 2021, the Company through its wholly owned subsidiary Future FinTech (Hong Kong) Limited., completed its acquisition of 90 % of the issued and outstanding shares of Nice Talent from Joy Rich Enterprises Limited (“Joy Rich”) for HK$ 144,000,000 (the “Purchase Price”) which shall be paid in the shares of common stock of the Company (the “Company Shares”). 60 % of the Purchase Price ($ 11.22 million) paid in 2,244,156 shares of common stock of the Company on August 4, 2021. 40 % of the Purchase Price ($ 7.21 million) shall be paid in shares of common stock of the Company upon the completion of the audited reports for Nice Talent with 20 % for each of the years ended on December 31, 2021 and December 31, 2022, respectively. Nice Talent has met the performance requirements for the year ended on December 31, 2021, however, the 20 % of the Purchase Price has not been paid in the shares of common stock of the Company to Joy Rich as of the date of this report. 11. ACQUISITION On August 6, 2021 (“Acquisition Date”), the Company through its wholly owned subsidiary Future FinTech (Hong Kong) Limited., completed its acquisition of 90 % of the issued and outstanding shares of Nice Talent from Joy Rich Enterprises Limited for HK$ 144,000,000 (the “Purchase Price”) which shall be paid in the shares of common stock of the Company (the “Company Shares”). 60 % of the Purchase Price ($ 11.22 million) was paid in 2,244,156 shares of common stock of the Company on August 4, 2021. 40 % of the Purchase Price ($ 7.21 million) shall be paid in shares of common stock of the Company upon the completion of the audited reports for Nice Talent with 20 % for each of the years ended on December 31, 2021 and December 31, 2022, respectively. Nice Talent has met the performance requirements for the year ended on December 31, 2021, however, the 20 % of the Purchase Price has not been paid in the shares of common stock of the Company to Joy Rich as of the date of this report. The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained an independent appraisal firm to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in these financial statements represent management’s best estimate of fair values as of the Acquisition Date. As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Non-controlling Interest, management conducted a review to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20’s measurement procedures for recognition of the fair value of net assets acquired. 18 The following table summarizes the allocation of estimated fair values of net assets acquired and liabilities assumed: Accounts receivable $ 1,407,902 Other receivables 27,701 Other current assets 7,039 Property, plant and equipment, net 53,577 Amount Due from Related Party 38,323 Accrued expenses and other payables ( 498,515 ) Net identifiable assets acquired $ 1,036,027 Less: non-controlling interests 131,165 Add: goodwill 17,164,598 Total purchase price for acquisition net of $ 275,624 of cash $ 18,069,460 The Company has included the operating results of Nice Talent in its consolidated financial statements since the Acquisition Date. 12. LEASES The Company’s non-cancellable operating leases consist of leases for office space. The Company is the lessee under the terms of the operating leases. For the six months ended June 30, 2022, the operating lease cost was $ 0.02 million. The Company’s operating lease has remaining lease term of approximately one month . As of June 30, 2022, the weighted average remaining lease term and weighted average discount rate were 0.08 years and 6 %, respectively. Maturities of lease liabilities were as follows: Operating As of June 30, Lease From July 1, 2022 to July 31, 2022 $ 15,665 Total $ 15,665 Less: amounts representing interest $ - Present Value of future minimum lease payments 15,665 Less: Current obligations ( 15,665 ) Long term obligations $ - 13. PROPERTY AND EQUIPMENT Property and equipment consist of the following: June 30, December 31, 2022 2021 (Unaudited) (Audited) Office equipment, fixtures and furniture $ 218,425 $ 173,551 Vehicle 551,124 595,569 Leasehold Improvement 37,540 37,779 Subtotal 807,089 806,899 Less: accumulated depreciation and amortization ( 184,582 ) ( 99,323 ) Construction in progress 2,338,557 2,461,690 Impairment ( 5,903 ) ( 6,214 ) Total 2,955,161 3,163,052 Depreciation expense included in general and administration expenses for the six months ended June 30, 2022 and 2021 was $ 90,182 and $ 1,411 , respectively. Depreciation expense included in cost of sales for the six months ended June 30, 2022 and 2021 was $ 0 and $ 0 , respectively. 19 14. INTANGIBLE ASSETS Intangible assets consist of the following: June 30, December 31, 2022 2021 (Unaudited) (Audited) Trademarks $ 894 $ 941 System and software 2,594,759 2,126,791 Subtotal 2,595,653 2,127,732 Less: accumulated depreciation and amortization ( 169,191 ) ( 148,533 ) Less: impairment ( 1,807,869 ) ( 1,903,059 ) Total 618,593 76,140 Amortization expense included in general and administration expenses for the six months ended June 30, 2022 and 2021 was $ 28,233 and $ 2,500 , respectively. Amortization expense included in cost of sales for the six months ended June 30, 2022 and 2021 was $ 0 and $ 0 , respectively. 15. LONG TERM DEBT As of June 30, 2022, loan payables were $ 0.18 million, which consisted of the loan payable of $ 0.18 million to Shaanxi Entai Bio-Technology Co., Ltd. The loan from Shaanxi Entai Bio-Technology Co., Ltd of $ 0.18 million was interest free and has no assets pledged for this loan from August 1, 2019 to August 1, 2024. As of December 31, 2021, loan payables were $ 0.19 million, which consisted of the loan payable of $ 0.19 million to Shaanxi Entai Bio-Technology Co., Ltd. The loan from Shaanxi Entai Bio-Technology Co., Ltd of $ 0.19 million was interest free and has no assets pledged for this loan from August 1, 2019 to August 1, 2024. 1 6. ACCRUED EXPENSES AND OTHER PAYABLES The amount of accrued expenses and other payables consisted of the followings: June 30, December 31, 2021 2020 (Unaudited) (Audited) Legal fee and other professionals $ 39,504 $ 280,647 Wages and employee reimbursement 169,210 272,093 Suppliers 380,274 155,043 Accruals 713,258 590,815 Total $ 1,302,246 $ 1,298,598 17. CONVERTIBLE NOTES PAYABLE As of June 30, 2022 and December 31, 2021, convertible debt consisted of the following: June 30, December 31, 2022 2021 (Unaudited) (Audited) Beginning $ - $ 1,163,146 Addition - - Payment - ( 1,163,146 ) Conversion - - Balance $ - $ - 20 18. DEFERRED LIABILITIES As of June 30, 2022, the balance of deferred liabilities mainly represented an amount of $ 7.30 million that arose from the payment for the remaining 40 % of the Purchase Price of the acquisition of Nice Talent Asset Management Limited (“Nice Talent”). 20% of the Purchase Price (current $3.74 million, non-current $3.56 million) shall be paid in shares of common stock of the Company upon the completion of the audited reports for Nice Talent for each of the years ended on December 31, 2021 and December 31, 2022, respectively. Nice Talent has met the performance requirements for the year ended on December 31, 2021, however, the 20% of the Purchase Price has not been paid in the shares of common stock of the Company as of the date of this report. As of December 31, 2021, the balance of deferred liabilities mainly represented an amount of $ 7.12 million that arose from the payment for the remaining 40 % of the Purchase Price of the acquisition of Nice Talent Asset Management Limited (“Nice Talent”). 20 % of the Purchase Price (current $ 3.74 million, non-current $ 3.38 million) shall be paid in shares of common stock of the Company upon the completion of the audited reports for Nice Talent for each of the years ended on December 31, 2021 and December 31, 2022, respectively. 19. RELATED PARTY TRANSACTION As of June 30, 2022, the amounts due to the related parties consisted of the followings: Name Amount (US$) Relationship Note Zhi Yan 223,590 General Manager of a subsidiary of the Company Accrued expenses, interest free and payment on demand. Reits (Beijing) Technology Co., Ltd 15,086 Zhi Yan is the legal representative of this company Acquisition of intangibles upon the full completion of the online platform pursuant to an agreement originally entered between parties before Zhi Yan was the general manager of our subsidiary. The amount is interest free and payment on demand. Total $ 238,676 As of June 30, 2022, the amounts due from the related parties consisted of the followings: Name Amount (US$) Relationship Note Kai Xu 2,953 Deputy General Manager of a subsidiary of the Company and VP of the blockchain division of the Company Prepaid expenses, interest free and payment on demand. Ming Yi 13,522 Chief Financial Officer of the Company Prepaid expenses, interest free and payment on demand. OLA 3,956 Chief Executive Officer of a subsidiary of the Company and Chief Strategy Officer of the Company Prepaid expenses, interest free and payment on demand. Total $ 20,431 21 As of December 31, 2021, the amounts due to the related parties consisted of the followings: Name Amount (US$) Relationship Note Zhi Yan $ 286,045 General Manager of a subsidiary of the Company Accrued expenses, interest free and payment on demand. Jing Chen 37,604 Vice president of the Company Accrued expenses, interest free and payment on demand. Shaanxi Fu Chen Venture Capital Management Co. Ltd. (“Shaanxi Fu Chen”) 72,046 Two outside shareholders of the Company are shareholders of Shaanxi Fu Chen Other payables, interest free and payment on demand. Future Supply Chain Co., Ltd. 280,571 Shaanxi Fu Chen holds 100% interest of this company Other payables, interest free and payment on demand. Reits (Beijing) Technology Co., Ltd 15,881 Zhi Yan is the legal representative of this company Acquisition of intangibles upon the full completion of the online platform pursuant to an agreement originally entered between parties before Zhi Yan became a related party. The amount is interest free and payment on demand. Shaanxi Chunlv Ecological Agriculture Co. Ltd. 257,876 Shaanxi Fu Chen holds 80% interest of this company Other payables, interest free and payment on demand. Ming Yi 8,942 Chief Financial Officer of the Company Accrued expenses, interest free and payment on demand. OLA 4,933 Chief Executive Officer of a subsidiary of the Company and Chief Strategy Officer of the Company Other payables, interest free and payment on demand. Kai Xu 25,509 Deputy General Manager of a subsidiary of the Company and VP of the blockchain division of the Company Accrued expenses, interest free and payment on demand. Shaanxi Fuju Mining Co., Ltd 3,295 Shaanxi Fu Chen holds 80% interest of this company Other payables, interest free and payment on demand. Total $ 992,702 As of December 31, 2021, the amounts due from the related parties consisted of the followings: Name Amount (US$) Relationship Note Shaanxi Fu Chen Venture Capital Management Co. Ltd. (“Shaanxi Fu Chen”) 235,268 Two outside shareholders of the Company are shareholders of Shaanxi Fu Chen Loan receivables*, interest free and payment on demand. Bin Wu 26,145 A shareholder of a Company’s subsidiary Advance to pay for the incorporation costs of the establishment of the subsidiary in Dubai* Amount is interest free and payment on demand. Total $ 261,413 * The related party transactions have been approved by the Company’s Audit Committee. 22 19. INCOME TAX The Company is incorporated in the United States of America and is subject to United States federal United States federal taxation. The applicable tax rate is 21 % in 2022 and 2021. No provisions for income taxes have been made, as the Company had no U.S. taxable income for the six months ended June 30, 2022 and 2021. For the six months ended June 30, 2022 and 2021, the Company had current income tax expenses of $ 311,741 and nil , respectively. The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the years ended March 31, 2022, the Company had no unrecognized tax benefits. Due to uncertainties surrounding future utilization, the Company estimates there will not be sufficient future income to realize the deferred tax assets for certain subsidiaries and a VIE. The amount of unrecognized deferred tax liabilities for temporary differences related to the dividend from foreign subsidiaries is not determined because such determination is not practical. The Company has not provided deferred taxes on undistributed earnings attributable to its PRC subsidiaries as they are to be permanently reinvested. The Company has not provided deferred taxes on undistributed earnings attributable to its PRC and Hong Kong subsidiaries as they are to be permanently reinvested. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of ASC Topic 740, Income Taxes. Since the Company intends to reinvest its earnings to further expand its businesses in mainland China, its PRC subsidiaries do not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, the Company has not recorded any deferred taxes in relation to US tax on the cumulative amount of undistributed retained earnings since January 1, 2008. Effective on January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules imposed a unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign-invested enterprises in the PRC, unless they qualify under certain limited exceptions. The tax rate for pre-tax profits below RMB 1 million is 2.5%; the tax rate for pre-tax profits between RMB1 million to RMB 3 million is 10%. E-Commerce Tianjin, Future Supply (Chengdu) Co., Ltd. and Future Big Data (Chengdu) Co., Ltd. were subject to an enterprise income tax rate of 2.5% and 10%. Other subsidiaries and VIE were subject to an enterprise income tax rate of 25%. Future Fin Tech (HongKong) Limited, QR (HK) Limited and Nice Talent Asset Management Limited is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5 % in Hong Kong. FTFT UK LIMITED is incorporated in United Kingdom and is subject to United Kingdom Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant United Kingdom tax laws. The applicable tax rate is 19 % in United Kingdom. FTFT CAPITAL INVESTMENTS L.L.C is incorporated in Dubai, United Arab Emirates. The applicable tax rate is nil in Dubai, United Arab Emirates. Digipay Fintech Limited is incorporated in British Virgin Island. The applicable tax rate is nil in British Virgin Island. Reconciliation of the differences between the statutory EIT rate applicable to profits of the consolidated entities and the income tax expenses of the Company: 2022 2021 Loss before taxation $ ( 4,723,164 ) $ ( 1,817,707 ) Notional tax on profit before CIT and Hong Kong Computed expected tax expense ( 1,180,791 ) ( 454,427 ) Others, primarily the difference in tax rates 306,902 53,939 Deferred tax assets losses not recognized 1,185,630 400,488 Total $ 311,741 $ - 23 20. IMPAIRMENT LOSS The Company recorded $ 0.70 million of impairment loss in six months ended 2022 relating to the short term investment mainly due to Future Private Equity Fund Management (Hainan) Co., Ltd. invested $ 1.94 million (RMB 13,000,000 ) to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in various types of investment portfolios. Overall economic environment has worsened in China with Covid-19 outbreak and related lockdown in various cities in China in 2022, Ukraine war, inflation, looming recession worldwide. According to the market value, the Company’s balance of the short term investment was $ 1.26 million on June 30, 2022. 21. SHARE BASED COMPENSATION Consulting Service Agreement On January 25, 2020, the Company entered into a Consulting Service Agreement (the “Agreement”) with Dragon Investment Holding Limited (Malta) (the “Consultant”), a company incorporated in Malta, pursuant to which Consultant will: (i) help the Company to locate new merger projects globally, develop new merger strategy and provide the Company with at least five (5) merger and acquisition targets that have synergy with the Company’s business and development plans and could clearly contribute to the Company’s strategic goals each year; (ii) help the Company to map out new growth strategies in addition to its current business; (iii) work with the Company to explore new lines of business and associated growth strategies; and (iv) conduct market research and evaluating variable projects and providing feasibility studies per Company’s request from time to time. The term of the Agreement is three years. In consideration of the services to be provided by the Consultant to the Company, the Company agrees to pay the Consultant a three-year consulting fee totaling $ 3.0 million. The Company shall issue a total of 3,750,000 restricted shares of the Company Common Stock (the “Consultant Shares”) at a price of $ 0.794 per share (the closing price of the Agreement date), as the payment for the above mentioned consultant fee to the Consultant. On February 23, 2020, the Company issued the Consultant Shares pursuant to the Agreement, of which 1,500,000 shares were released to the Consultant immediately, 1,125,000 and 1,125,000 shares, respectively, will be held by the Company and released to the Consultant on January 25, 2021 and January 25, 2022 if this Agreement has not been terminated and there has been no breach of the Agreement by the Consultant at such time. If the second and/or third release of the shares mentioned above does not occur, such shares shall be returned to the Company as treasury shares. The shares contemplated in the Agreement were issued pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended. For the year ended December 31, 2020, the Company recorded stock related compensation of $ 1.19 million, based on the stock closing price of $ 0.794 on the Agreement date, for the 1,500,000 shares which were released to the Consultant immediately upon issuance. On January 25, 2021, the Company recorded stock related compensation of $ 0.89 million, based on the stock closing price of $ 0.794 on the date of the Agreement, for the 1,125,000 shares which were released to the Consultant on January 25, 2021. On January 25, 2022, the Company released the final 1,125,000 shares to the Consultant and the Company has recognized stock related compensation of $ 0.89 million for the 1,125,000 shares. Restricted net assets PRC laws and regulations permit payments of dividends by the Company’s subsidiaries incorporated in the PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. In addition, the Company’s subsidiaries incorporated in the PRC are required to annually appropriate 10 % of their net income to the statutory reserve prior to payment of any dividends, unless the reserve has reached 50 % of their respective registered capital. Furthermore, registered share capital and capital reserve accounts are also restricted from distribution. As a result of the restrictions described above and elsewhere under PRC laws and regulations, the Company’s subsidiaries incorporated in the PRC are restricted in their ability to transfer a portion of their net assets to the Company in the form of dividends. The restriction amounted to $ 25.95 million (RMB 168,239,218 ) as of June 30, 2022. Except for the above or disclosed elsewhere, there is no other restriction on the use of proceeds generated by the Company’s subsidiaries to satisfy any obligations of the Company. 22. DISCONTINUED OPERATIONS On March 18, 2021, Chain Future Digital Tech (Beijing) Co., Ltd. was deregistered. On April 9, 2021, FT Commercial Management (Beijing) Co., Ltd. was dissolved and deregistered. On August 2, 2021, the Company sold Guangchengji (Guangdong) Industrial Co., Ltd. to an unrelated third party. On September 2, 2021, Future Supply Chain Co., Ltd. discontinued its operations, and on November 4, 2021, it was transferred to Shaanxi Fu Chen Venture Capital Management Co. Ltd. On June 27, 2022, Chain Cloud Mall Logistics Center (Shanxi) Co., Ltd. was dissolved and deregistered. 24 Loss from discontinued operations for June 30, 2022 and 2021 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 REVENUES $ - 594,658 - 593,772 COST OF SALES - 574,568 - 573,682 GROSS PROFIT - 20,090 - 20,090 OPERATING EXPENSES: General and administrative - ( 197,073 ) - ( 130,461 ) Bad debt provision - ( 6 ) - ( 3,075 ) Total - ( 197,079 ) - ( 133,536 ) OTHER INCOME (EXPENSE) Interest income - 147,953 - 281,308 Other income(expenses) net - ( 602 ) - 25,493 Total - 147,351 - 306,801 Income from discontinued operations before income tax - 364,520 - 460,427 Income tax provision - Income from discontinued operation before non-controlling interest - 364,520 - 460,427 (Loss) Income on disposal of discontinued operations ( 154 ) 508,407 ( 154 ) 156,493 (LOSS) INCOME FROM DISCONTINUED OPERATION ( 154 ) 872,927 ( 154 ) 616,920 The major components of assets and liabilities related to discontinued operations are summarized below: June 30, 2022 December 31, 2021 Cash $ - $ - Property, plant and equipment, net - - Other current assets - - Amount due from related parties - 157 Total assets related to discontinued operations $ - 157 Accrued expenses $ - $ - Amount due to related parties - - Total liabilities related to discontinued operations $ - $ - 23. SEGMENT REPORTING In its operation of the business, management, including our chief operating decision maker, who is our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis consistent with GAAP. The Company operates in four segments starting in fiscal 2021: “shared shopping mall membership fee coal and aluminum ingots supply chain financing service and trading business and asset management service and others”. Due the COVID-19 pandemic and restriction on large gatherings in China, which have made the promotion strategy for its online e-commerce platforms difficult to implement and the Company has experienced difficulties to subscribe new members for its online e-commerce platforms. Due to lack of new members, difficulties in retaining old customers and significant decrease of revenue in e-commerce business, the Company began to provide supply chain financing services during the second quarter of 2021 and the Company acquired Nice Talent and started to provide asset management services since August 2021. 25 Some of our operation might not individually meet the quantitative thresholds for determining reportable segments and we determine the reportable segments based on the discrete financial information provided to the chief operating decision maker. The chief operating decision maker evaluates the results of each segment in assessing performance and allocating resources among the segments. Since there is an overlap of services and products between different subsidiaries of the Company, the Company does not allocate operating expenses and assets based on the product segments. Therefore, operating expenses and asset information by segment are not presented. Segment profit represents the gross profit of each reportable segment. Three months ended June 30, 2022 Asset management service Coals and Aluminum Ingots supply chain financing/ trading Others Total Reportable segment revenue $ 3,696,433 $ 3,654,981 $ 66,863 $ 7,418,277 Inter-segment loss - - - - Revenue from external customers $ 3,696,433 3,654,981 66,863 7,418,277 Segment gross profit $ 1,248,314 $ 60,255 $ 66,851 $ 1,375,420 Three months ended June 30, 2021 CCM Shopping Mall Membership Coals and Aluminum Ingots supply chain financing/ trading Others Total Reportable segment revenue $ 12 $ 1,346,899 $ 13 $ 1,346,924 Inter-segment loss - - - - Revenue from external customers $ 12 1,346,899 13 1,346,924 Segment gross profit $ 12 $ 51,252 $ 1 $ 51,265 Six months ended June 30, 2022: Asset management service Coal and Aluminum Ingots supply chain financing/ trading Others Total Reportable segment revenue $ 7,152,808 $ 3,654,982 $ 76,852 $ 10,884,642 Inter-segment loss - - - - Revenue from external customers $ 7,152,808 3,654,982 76,852 10,884,642 Segment gross profit $ 3,026,301 $ 60,256 $ 76,840 $ 3,163,397 Six months June 30, 2021: CCM Shopping Mall Membership Coal and Aluminum Ingots supply chain financing/ trading Others Total Reportable segment revenue $ 85 $ 1,347,785 $ 6,553 $ 1,354,423 Inter-segment loss - - - - Revenue from external customers $ 85 1,347,785 6,553 1,354,423 Segment gross profit $ 85 $ 51,252 $ 518 $ 51,855 26 24. COMMITMENTS AND CONTINGENCIES Legal case with FT Global Litigation In January 2021, FT Global Capital, Inc. (“FT Global”), a former placement agent of the Company filed a lawsuit against the Company in the Superior Court of Fulton County, Georgia. FT Global served the complaint upon the Company in January 2021. In the complaint, FT Global alleges claims, most of which attempt to hold the Company liable under legal theories that relate back to an alleged breach of an exclusive placement agent agreement between FT Global and the Company in July 2020 which had a term of three months. FT Global claims that the Company failed to compensate FT Global for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired exclusive placement agent agreement. Allegedly, the exclusive placement agent agreement required the Company to pay FT Global for capital received during the term of the agreement and for the 12-month period following the termination of the agreement involving any investors that FT Global introduced and/or wall-crossed to the Company. However, the Company believes the securities purchase transactions at issue did not involve the one investor which FT Global introduced or wall-crossed to the Company during the term of the agreement. FT Global claims approximately $ 7,000,000 in damages and attorneys’ fees. The Company timely removed the case to the United States District Court for the Northern District of Georgia (the (“Court”) on February 9, 2021 based on diversity of jurisdiction. On March 9, 2021, the Company filed a motion to dismiss based on FT Global’s failure to state a claim which is pending before the Court. On March 23, 2021, FT Global filed its response to the Company’s motion to dismiss. FT Global argues that the Court should deny the Company’s motion to dismiss. However, if the Court is inclined to grant the Company’s motion to dismiss, FT Global requested that the Court permit it to file an amended complaint. On April 8, 2021, the parties filed a Joint Preliminary Report and Discovery Plan. On April 12, 2021, the Court approved the Joint Preliminary Report and Discovery Plan and issued a Scheduling Order placing this case on a six-month discovery tract. On April 30, 2021, the Company served FT Global with its Initial Disclosures. On May 6, 2021, FT Global served the Company with its Initial Disclosures. On May 17, 2021, FT Global served the Company with its First Amended Initial Disclosures. On November 10, 2021, the Court entered an Order granting the Company’s motion to dismiss FT Global’s fraud claim and breach of contract claim as to the disclosure of its confidential and proprietary information. The Court denied the Company’s motion to dismiss FT Global’s i) breach of contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement agent agreement; ii) claim for breach of the covenant of good faith and fair dealing; and iii) claim for attorney’s fees, and the Court concluded that additional information can be obtained through discovery. The Company timely filed an answer and defenses to FT Global’s complaint on November 24, 2021. On January 3, 2022, the Company propounded discovery requests upon FT Global, including interrogatories and requests for production of documents. On March 23, 2022, the Company propounded requests for admission upon FT Global. On March 24, 2022, FT Global propounded discovery requests upon the Company, including requests for production of documents and requests for admission. On April 1, 2022, FT Global served its response to the Company’s requests for production of documents. On May 13, 2022, FT Global served its responses to the Company’s interrogatories and requests for admissions. On May 13, 2022, FT Global produced documents in response to the Company’s requests for production of documents. On June 3, 2022, the Company produced documents in response to FT Global’s requests for production of documents. On August 3, 2022, the Company took the deposition of FT Global. On August 5, 2022, FT Global took the deposition of the Company. On August 3, 2022, the Court granted the parties’ Consent Motion to Extend Discovery Period extending the discovery period from August 5, 2022 to September 14, 2022 and the deadline to file dispositive motions to October 12, 2022. The Company will continue to vigorously defend the action against FT Global. 25. RISKS AND UNCERTAINTIES Impact of COVID 19 In December 2019, a novel strain of coronavirus was reported and has spread throughout China and other parts of the world. On March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”. In early 2020, Chinese government took emergency measures to combat the spread of the virus, including quarantines, travel restrictions, and the temporary closure of office buildings and facilities in China. In response to the evolving dynamics related to the COVID-19 outbreak, the Company is following the guidelines of local authorities as it prioritizes the health and safety of its employees, contractors, suppliers and business partners. Our offices in China were closed and employees worked from home at the end of January 2020 until late March 2020. The quarantines, travel restrictions, and the temporary closure of office buildings have negatively impacted our business. Our suppliers were negatively affected, and could continue to be negatively affected in their ability to supply and ship products to our customers in case of any resurgence of COVID-19. Our customers that have been negatively impacted by the outbreak of COVID-19 may reduce their budgets to purchase products and services from us, which may materially adversely impact our revenue. The business operations of the third parties’ stores on our e-commerce platform have been and continue to be negatively impacted by the outbreak, which in turn adversely affects the business of our platform as a whole as well as our financial condition and operating results. The outbreak has had and continues to have disruption to our supply chain, logistics providers, customers or our marketing activities with the new variants of COVID-19, which could materially adversely impact our business and results of operations. Although China has already begun to recover from the outbreak of COVID-19, there are still outbreak in various cities and provinces due to new variants, including the recent outbreak of Omicron variant in Xi’an city, Hong Kong, Shanghai and Beijing in 2022 which have resulted quarantines, travel restrictions, and temporary closure of office buildings and facilities in these cities. The Company’s promotion strategy of CCM Shopping Mall previously mainly relied on the training of members and distributors through meetings and conferences. Chinese government still puts a restriction on large gatherings. These restrictions made the promotion strategy for our online e-commerce platforms difficult to implement and the Company has experienced difficulties to subscribe new members for its online e-commerce platforms. Due to the lack of new subscribers, in June 2021, the Company suspended its cross-border e-commerce platform NONOGIRL. Also, since the second quarter of 2021, the Company has transformed its member-based Chain Cloud Mall to a sale agent based eCAAS platform and began to provide supply chain financing services. 27 The global economy has also been materially negatively affected by the COVID-19 and there is continued severe uncertainty about the duration and intensity of its impacts. The Chinese and global growth forecast is extremely uncertain, which would seriously affect customer spending on our business. While the potential economic impact brought by, and the duration of COVID-19 and its new variants may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 and its new variants could materially negatively affect our business and the value of our common stock. Further, as we do not have access to a revolving credit facility, there can be no assurance that we would be able to secure commercial debt financing in the future in the event that we require additional capital. We currently believe that our financial resources will be adequate to see us through the outbreak. However, in the event that we do need to raise capital in the future, outbreak-related instability in the securities markets could adversely affect our ability to raise additional capital. Consequently, our results of operations have been materially and adversely affected by COVID-19 pandemic. Any potential further impact to our results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19, new variants of COVID-19, the efficacy and distribution of COVID-19 vaccines and the actions taken by government authorities and other entities to contain the COVID-19 or treat its impact, almost all of which are beyond our control. PRC Regulations There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances. We are considered foreign persons or foreign funded enterprises under PRC laws and, as a result, we are required to comply with PRC laws and regulations related to foreign persons and foreign funded enterprises. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business. 26. SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date of the issuance of the condensed consolidated financial statements and no subsequent event is identified. 28 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the SEC (collectively the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “may”, “will”, “should”, “would”, “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan”, or the negative of these terms and similar expressions as they relate to Company or Company’s management identify forward-looking statements. Such statements reflect the current view of Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors (including the statements in the section “results of operations” below), and any businesses that Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed under the heading “Risk Factors” and those listed in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) and in this Form 10-Q. The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report and in our 2021 Form 10-K. Although the Company believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this report, which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects. Overview of Our Business Future FinTech is a holding company incorporated under the laws of the State of Florida. The Company historically engaged in the production and sale of fruit juice concentrates (including fruit purees and fruit juices), fruit beverages (including fruit juice beverages and fruit cider beverages) in the PRC. Due to drastically increased production costs and tightened environmental laws in China, the Company had transformed its business from fruit juice manufacturing and distribution to a real-name blockchain based e-commerce platform, supply chain financing service and trading business and financial technology business. The main business of the Company includes an online shopping platform, Chain Cloud Mall (“CCM”), which is based on blockchain technology, supply chain financing services and trading, assets management, and cryptocurrency market data services. The Company is also engaged in the development of blockchain based e-Commerce technology, cryptocurrency mining, cryptocurrency investment management as well as financial service technology businesses. The Company has also expanded into financial services and cryptocurrency market data and information service businesses. On August 6, 2021, the Company completed acquisition of 90% of the issued and outstanding shares of Nice Talent Asset Management Limited (“NTAM”), a Hong Kong-based asset management company, from Joy Rich Enterprises Limited (“Joy Rich”). NTAM is licensed under the Securities and Futures Commission of Hong Kong (“SFC”) to carry out regulated activities in Type 4: Advising on Securities and Type 9: Asset Management. On September 1, 2021, FTFT UK Limited, a company organized under the laws of United Kingdom and a wholly owned subsidiary of the Company (“FTFT UK”) entered into a Share Purchase Agreement with Rahim Shah, a resident of United Kingdom (“Seller”) to acquire 100% of the issued and outstanding shares (the “Sale Shares”) of Khyber Money Exchange Ltd., which is a money transfer company with a platform for transferring money through one of its agent locations or via its online portal, mobile platform or over the phone. Khyber Money Exchange Ltd. is regulated by the UK Financial Conduct Authority (FCA) and the parties are waiting for the approval by the FCA before formal closing of the transaction. In December 2021, FTFT Capital Investments, L.L.C., a subsidiary of the Company, officially launched FTFTX, a cryptocurrency market data platform that provides investors with real-time cryptocurrency market data and trading information from a large number of cryptocurrency exchanges. The market data is available for Bitcoin, ETH, EOS, Litecoin, TRON and other cryptocurrencies at https://www.ftftx.com and via the FTFTX App on iOS and Android devices. The FTFTX app is free to download on Google Play and the Apple Store. In March 2022, FTFT UK received has received approval to operate as an Electronic Money Directive (“EMD”) Agent and has been registered as such with the Financial Conduct Authority (FCA), a UK regulator. This status grants FTFT UK the ability to distribute or redeem e-money and provide certain financial services on behalf of an e-money institution (registration number 903050). On April 18, 2022, the Company and Future Fintech (Hong Kong) Limited, a wholly owned subsidiary of the Company jointly acquired 100% equity interest of KAZAN S.A., a company incorporated in Republic of Paraguay for $288. The Company owns 90% and FTFT HK owns 10% of Kazan S.A., respectively. Kazan S.A. has no operation before the acquisition. The Company plans to develop bitcoin and other cryptocurrency mining and related services in Paraguay. The Company has changed its name from KAZAN S.A to FTFT Paraguay S.A. on July 28, 2022. 29 April 22, 2022, Champion Energy Services, LLC and FTFT Supercomputing Inc. signed an Electricity Sales and Purchases Agreement. Upon enrollment of FTFT Supercomputing Inc.’s facilities, Champion Energy Services, LLC shall sell and deliver, or engage a third party (including Local Utility) to deliver, and FTFT Supercomputing Inc. shall purchase and receive, 100% of FTFT Supercomputing Inc.’s electricity requirements for enrolled FTFT Supercomputing Inc.’s facilities at the Delivery Point(s) solely for use at FTFT Supercomputing Inc’s facilities. FTFT Supercomputing Inc. is developing cryptocurrency mining related business and services. In June, Future Fintech Labs Inc. (“FTFT Labs") have teamed up with a third-party money transfer company to launch a cross-border money transfer app Tempo to offer US-based immigrants and other users a streamlined, secure and cost-effective way to send money to friends and family among other parties in Mexico, India and the United Kingdom. By working with the money transfer company and other service providers that are registered with FinCEN and have licenses for money transmission business, FTFT Labs has developed Tempo that can provide its customers with a multicurrency digital wallet that makes sending money to Mexico, India or the UK easier and more cost-effective than many other remittance services who charge high fees per transfer. We are a holding company incorporated in Florida and we are not a Chinese operating company. As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our subsidiaries in China, Hong Kong, Dubai, U.S. and UK and we operate a blockchain based online shopping mall through contractual arrangements with a variable interest entity (VIE) –E-Commerce Tianjin, based in China and this structure involves unique risks. Our shares of common stock are shares of our Florida holding company, and we do not have any equity ownership of our VIE, instead we control and receive the economic benefits of our VIE’s business operations through certain contractual arrangements, which are used to replicate foreign investment in Chinese-based companies where Chinese law prohibits foreign invested equity exceeding 50% in value added telecom/e-commerce business. Chinese regulatory authorities could disallow the VIE structure, which could result in a material change in our operations and/or value of our shares, including that it could cause the value of shares to significantly decline or become worthless. There are legal and operational risks associated with being based in and having a substantial majority of operations in China and Hong Kong. These risks could result in a material change in our operations and/or the value of our common stock or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our shares to significantly decline or be worthless. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On February 15, 2022, Cybersecurity Review Measures 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, People’s Bank of China, State Administration of Radio and Television, China Securities Regulatory Commission (“CSRC”), State Secrecy Administration and State Cryptography Administration became effective, which provides that, Critical Information Infrastructure Operators (“CIIOs”) that intend to purchase internet products and services and Data Processing Operators (“DPOs”) engaging in data processing activities that affect or may affect national security shall be subject to the cybersecurity review by the Cybersecurity Review Office. On November 14, 2021, CAC published the Administration Measures for Cyber Data Security (Draft for Public Comments), or the “Cyber Data Security Measure (Draft)”, which requires cyberspace operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review. On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) and the Management Rules Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments). On April 2, 2022, the CSRC released the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), which provides that PRC issuers listing their securities on foreign stock exchanges need to file a notice to CSRC. In the event that the above proposed provisions and rules are enacted, the relevant filing procedures of the CSRC and other governmental authorities may be required in connection with any offering of our securities. As of the date of this report, the new laws and guidelines that became effective have not impacted the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other foreign stock exchange; however, new rules and regulations could be adopted and there are uncertainties in the interpretation and enforcement of existing laws and guidelines, which could materially and adversely impact our business and financial outlook and may impact our ability to accept foreign investments or continue to list on a U.S. or other foreign stock exchange. Our VIE and certain subsidiaries of the Company are incorporated and operating in mainland China and they have received all required permissions from Chinese authorities to operate their current business in China, including Business licenses, Bank Account Open Permits and Value Added Telecom Business License. 30 Chain Cloud Mall is a unique real-name based blockchain e-commerce shopping platform that integrates blockchain, internet technology. The CCM shared shopping mall platform is designed to be a block-chain based shopping mall for merchants and goods, not the exchange of digital currencies, and it currently only accepts payment from credit cards, Alipay and WeChat. Currently, Chain Cloud Mall adopts an “Enterprise Communication as A Service” or eCAAS platform which is a part of 3.15 China Responsible Brand Program run by the Anti-Counterfeiting Committee of China Foundation of Consumer Protection (the “Anti-Counterfeiting Committee”). Anti-Counterfeiting Committee reviews and accepts the companies to join its 3.15 China Responsible Brand Program. After acceptance, these companies are authorized to use anti-counterfeiting labels on their products which have authenticated joint signatures of these companies and Anti-Counterfeiting Committee that are recorded on the blockchain quality and safety traceability system controlled by the Anti-Counterfeiting Committee. The companies will sell such products on our eCAAS platform. The companies can also use sales agents to sell their products on our eCAAS platform and parties can negotiate the commission percentages for the products sold. Any new sales agent must be recommended by existing agents and pay a one-time fee to the eCAAS platform to be admitted as the authorized agent to provide sales agent services on the platform. The Company started its trial operation of NONOGIRL, a cross-border e-commerce platform, in March 2020 and formally launched it in July 2020. The cross-border e-commerce platform aimed to build a new s2b2c (supplier to business and consumer) outsourcing sales platform dominated by social media influencers. It was aimed at the growing female consumer market, with the ability to broadcast, short video, and all forms communication through the platform. It could also create a sales oriented sharing ecosystem with other major social media used by customers. The Company’s promotion strategy previously mainly relied on the training of members and distributors through meetings and conferences. Due to the outbreak of COVID-19, the Chinese government put a restriction on large gatherings. These restrictions made the promotion strategy for our online e-commerce platforms difficult to be implemented and the Company has experienced difficulties to subscribe new members for its online e-commerce platforms. Due to the lack of new subscribers, in June 2021, the Company suspended its cross-border e-commerce platform (NONOGIRL). Also, since the second quarter of 2021, the Company has transformed its member-based business model of Chain Cloud Mall to a sale agent based eCAAS platform and began to provide supply chain financing services and trading of coal for coal mines and power generation plants as well as aluminum ingots. The Company currently has ten direct wholly-owned subsidiaries: DigiPay FinTech Limited (“DigiPay”), a company incorporated under the laws of the British Virgin Islands, Future FinTech (Hong Kong) Limited, a company incorporated under the laws of Hong Kong, GlobalKey Shared Mall Limited, a company incorporated under the laws of Cayman Islands (“GlobalKey Shared Mall”), Tianjin Future Private Equity Fund Management Partnership, a Limited Partnership under the laws of China, FTFT UK Limited, a company incorporated under the laws of United Kingdom, Future Fintech Digital Capital Management, LLC, a company incorporated under the laws of Connecticut, Future Fintech Digital Number One GP, LLC, a company incorporated under the laws of Connecticut, Future FinTech Labs Inc., a company incorporated under the laws of New York and FTFT SuperComputing Inc. a company incorporated under the laws of Ohio and FTFT Paraguay S.A., a company incorporated under the law of Republic of Paraguay. CCM Shopping Mall Due to the lack of new member subscriptions caused by restrictions on our promotion strategy for the control of spread of COVID-19, we have transformed the CCM shopping mall from a member based platform to a sale agent based eCAAS platform since the second quarter of 2021. The eCAAS platform is entrusted by the Anti-Counterfeiting Committee to run its Responsible Brand Program. Anti-Counterfeiting Committee reviews and accepts the companies to join its Responsible Brand Program. After acceptance, these companies are authorized to use 315 anti-counterfeiting labels on their products and sell them on our eCAAS platform. The companies can also use sales agents to sell their products on our eCAAS platform and parties can negotiate the commission percentages for the products sold. Any new sales agent must be recommended by existing agents and pay a one-time fee to the eCAAS platform to be admitted as the authorized agent to provide sales agent services on the platform. Coal and Aluminum Ingots Supply Chain Financing Service and Trading Since the second quarter of 2021, we started coal supply chain financing service and trading business. Since the third quarter of 2021, we started aluminum ingots supply chain financing service and trading business. Our supply chain finance business mainly serves the receivables and payables for industrial customers, obtains the creditor’s rights or rights of commodity goods for large state-owned enterprises through trade execution, provides customers with working capital, accelerates capital turnover, and then expands the business scale and improves the business value. Through our supply chain service ability and customer resources, we can tap into low-risk assets, flexibly carry out financial services for the actual financial needs of certain industries, and reduce the overall risk of the business by using the control of business flow, goods logistics and capital flow in the process of commodity circulation. We focus on bulk coal and aluminum ingots and take large state-owned or listed companies as the core service targets; We use our own funds as the operation basis, actively use a variety of channels and products of financing, such as banks, commercial factoring companies, accounts receivable, asset-backed securities, and other innovative financing methods to obtain sufficient funds. We sign purchase and sale agreements with suppliers and buyers. The suppliers are responsible for the supply and transportation of coal to the end users’ designated freight yard or transfer the title of aluminum ingots to us in certain warehouses. We select the customers and suppliers that have good credit and reputation. 31 Asset Management Service NTAM engages assets management and advisory services. NTAM’s main revenue is generated from providing professional advices to customers and management fees for managing the investment of the clients. NTAM is licensed under the Securities and Futures Commission of Hong Kong (SFC) for carrying out regulated activities in “Advising on Securities” and “Asset Management”. NTAM offers diversified asset management portfolio for professional investors. Assets of NTAM’s clients are held in banks, where clients gave the banks their authorization allowing NTAM to place trading instructions on behalf of the clients in order to manage the clients’ assets. NTAM mainly engages in following asset management services for its clients: (1) Equity Investment NTAM manages clients’ investment portfolio in stocks of the companies listed on the international markets with strong liquidity. At the same time, it selects companies that have unique or differentiated businesses, realizing above average profit growth. (2) Debt investment When NTAM manages clients’ investment portfolio in bonds that are denominated in major international currencies such as US dollar, euro and sterling, the issuer of debts shall have good credit rating and asset liability ratio. Through active management, NTAM focus on bonds with higher yield to maturity among bonds with the same maturity and credit rating. (3) Precious metals and currencies investment NTAM also manages clients’ investment portfolio in major international currencies and precious metals, including US dollar, euro, British pound, Japanese yen, Australian dollar and offshore Chinese yuan. Precious metals include gold, platinum and silver. With research on the fundamentals of market supply and demand to predict the trend of commodity prices, NTAM endeavors to improve the rate of return for clients through dual currency investment, options and structured products. (4) Derivative Investment NTAM also manages clients’ investment portfolio in financial derivatives in different asset classes, such as options and structured products. (5) External Asset Management Services (EAM) This business takes customer demand as the service purpose, cooperates with several private banks which provide asset custody services, and innovatively introduces the function of investment bank to provide exclusive private solutions for our clients. NTAM’s main revenue is generated from providing professional advices to clients and management fees for managing the investment of the clients. As of June 30, 2022, NTAM has approximately US$273 million assets under its management. Recent Developments Related to the COVID-19 Outbreak In December 2019, a novel strain of coronavirus was reported and has spread throughout China and other parts of the world. On March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”. In early 2020, Chinese government took emergency measures to combat the spread of the virus, including quarantines, travel restrictions, and the temporary closure of office buildings and facilities in China. In response to the evolving dynamics related to the COVID-19 outbreak, the Company is following the guidelines of local authorities as it prioritizes the health and safety of its employees, contractors, suppliers and business partners. Our offices in China were closed and the employees worked from home at the end of January 20200 until late March 2020. The quarantines, travel restrictions, and the temporary closure of office buildings have materially negatively impacted our business. Our suppliers were negatively affected, and could continue to be negatively affected in their ability to supply and ship products to our customers in case of any resurgence of COVID-19. Our customers that have been negatively impacted by the outbreak of COVID-19 may reduce their budgets to purchase products and services from us, which may materially adversely impact our revenue. The business operations of the third parties’ stores on our e-commerce platform have been and continue to be negatively impacted by the outbreak, which in turn adversely affects the business of our platform as a whole as well as our financial condition and operating results. The outbreak has had and continues to have disruption to our supply chain, logistics providers, customers or our marketing activities with the new variants of COVID-19, which could materially adversely impact our business and results of operations. Although China has already begun to recover from the outbreak of COVID-19, there are still outbreak in various cities and provinces due to new variants, including the recent outbreak of Omicron variant in Xi’an city, Hong Kong, Shanghai and Beijing in 2022, which have resulted quarantines, travel restrictions, and temporary closure of office buildings and facilities in these cities. The Company’s promotion strategy of CCM Shopping Mall previously mainly relied on the training of members and distributors through meetings and conferences. Chinese government still puts a restriction on large gatherings. These restrictions made the promotion strategy for our online e-commerce platforms difficult to implement and the Company has experienced difficulties to subscribe new members for its online e-commerce platforms. Due to the lack of new subscribers, in June 2021, the Company suspended its cross-border e-commerce platform NONOGIRL. Also, since the second quarter of 2021, the Company has transformed its member-based Chain Cloud Mall to a sale agent based eCAAS platform and began to provide supply chain financing services. 32 The global economy has also been materially negatively affected by the COVID-19 and there is continued severe uncertainty about the duration and intensity of its impacts. The Chinese and global growth forecast is extremely uncertain, which would seriously affect our business. While the potential economic impact brought by, and the duration of COVID-19 and its new variants may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 and its new variants could materially negatively affect our business and the value of our common stock. Further, as we do not have access to a revolving credit facility, there can be no assurance that we would be able to secure commercial debt financing in the future in the event that we require additional capital. We currently believe that our financial resources will be adequate to see us through the outbreak. However, in the event that we do need to raise capital in the future, outbreak-related instability in the securities markets could adversely affect our ability to raise additional capital. Consequently, our results of operations have been materially and adversely affected by COVID-19 pandemic. Any potential further impact to our results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19, new variants of COVID-19, the efficacy and distribution of COVID-19 vaccines and the actions taken by government authorities and other entities to contain the COVID-19 or treat its impact, almost all of which are beyond our control. Results of Operations Comparison of Three Months ended June 30, 2022 and 2021: Revenue The following table presents our consolidated revenues for the three months ended June 30, 2022 and 2021, respectively: Three months ended June 30, Change 2022 2021 Amount % CCM Shopping Mall Membership - 12 (12 ) (100.00 )% Coal and Aluminum Ingots Supply Chain Financing/Trading 3,654,981 1,346,899 2,308,082 171.36 % Asset management service 3,696,433 - 3,696,433 - Others 66,863 13 66,850 514230.77 % Total $ 7,418,277 $ 1,346,924 $ 6,071,353 450.76 % CCM Shopping Mall Membership fees decreased from $12 for the three months ended June 30, 2021 to $0 for the three months ended June 30, 2022 because there was no new membership enrollment and the Company has transformed its business model of CCM Shopping Mall from a member-based platform to a sales agent based eCAAS platform since the second quarter of 2021. Due to COVID-19 related restriction on large gathering for meetings and conferences which primarily used by us before the pandemic for marketing and business development of new members, we were unable to attract new member enrollment and have transformed business model for the platform. Coal and Aluminum Ingots Supply Chain Financing/Trading business increased from $1.35 million for the three months ended June 30, 2021 to $3.65 million for the three months ended June 30, 2022. The COVID-19 outbreak in Xi’an and other cities that we had our supply chain services in first quarter 2022 result in the coal and aluminum ingot income was nil in first quarter 2022. As the outbreak of pandemic is mostly under control in China and business are generally back to normal, the income the coal and aluminum ingot increased in second quarter 2022. Asset management service increased from $0 for the three months ended June 30, 2021 to $3.70 million for the three months ended June 30, 2022. This is a new business we acquired during the third quarter 2021. Other revenues increased from $13 from three months ended June 30, 2021 to $66,863 for the three months ended June 30, 2022, which were mainly interest income and subsidiary income of NTAM under Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to employees during the three months ended June 30, 2022, which we did not have for the same period of 2021. 33 Cost of revenues Three months ended June 30, Change 2022 2021 Amount % CCM Shopping Mall Membership - - - - Coal and Aluminum Ingots Supply Chain Financing/Trading 3,594,726 1,295,647 2,299,079 177.45 % Asset management service 2,448,119 - 2,448,119 - Others 12 12 - - Total $ 6,042,857 1,295,659 4,747,198 366.39 % Cost of revenues for the Coal and Aluminum Ingots Supply Chain Financing/Trading was $3.59 million and $1.30 million for the three months ended June 30, 2022 and 2021, respectively, representing an increase of 177.45%. The increase in cost of revenues was in line with an increase in revenue. Cost of revenues for the asset management service increased from $0 for the three months ended June 30, 2021 to $2.45 million for the three months ended June 30, 2022. This is a new business we acquired during the third quarter 2021. Gross Margin The following table presents the consolidated gross profit of each of our main products and services and the consolidated gross profit margin, which is gross profit as a percentage of the related revenues, for the three months ended June 30, 2022 and 2021, respectively: Three months ended June 30, 2022 2021 Gross profit Gross margin Gross profit Gross margin CCM Shopping Mall Membership - - 12 100.00 % Coal Supply and Aluminum Ingots Chain Financing/Trading 60,255 1.65 % 51,252 3.81 % Asset management service 1,248,314 33.77 % - - Others 66,851 99.98 % 1 7.69 % Total $ 1,375,420 18.54 % $ 51,265 3.81 % Overall gross margin as a percentage of revenue was 18.54% for the three months ended June 30, 2022, an increase of 14.73% compared to 3.81% for the same period of last fiscal year, mainly due to more revenues from the asset management service. This is a new business we acquired during the third quarter 2021. The others were mainly interest income and subsidiary income of NTAM under Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to employees during the three months ended June 30, 2022, which we did not have for the same period of 2021. Operating Expenses The following table presents our consolidated operating expenses and operating expenses as a percentage of revenue for the three months ended June 30, 2022 and 2021, respectively: (in thousands) June 30, 2022 June 30, 2021 Amount % of revenue Amount % of revenue General and administrative $ 2,650 35.72 % $ 791 58.72 % Research and Development expenses 770 10.38 % - - Selling expenses 349 4.70 % 10 0.74 % Impairment Loss 449 6.05 % - - Total operating expenses $ 4,218 56.86 % $ 801 59.47 % General and administrative expenses increased by $1.86 million, or 235.02%, from $0.79 million to $2.65 million for the three months ended June 30, 2022, compared to the same period of last fiscal year. The increase in general and administrative expenses was mainly due to increased professional service fees for acquisition projects and certain training and consulting fees for the acquired and newly established companies during the three months ended June 30, 2022. The Company recorded $0.77 million of research and development expenses. Research and development expenses include salaries, contracted services, as well as the related expenses of our research and product development team. The research and development expenditures also include research, develop, design, and enhance our wealth management options and services to our clients, which is related to the new business we acquired since the third quarter 2021since the third quarter 2021. Selling expenses increased by $0.34 million during the three months ended June 30, 2022, the increase in selling expenses was mainly due to increased salary and advertising fee. 34 The Company recorded $0.45 million of impairment loss in three months ended June 30, 2022 relating to short term investment which mainly due to Future Private Equity Fund Management (Hainan) Co., Ltd. invested $1.94 million (RMB13,000,000) to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in various types of investment portfolios. The impairment loss relating to short term investment was due to that overall economic environment has worsened in China with Covid-19 outbreak and related lockdown in various cities in China in 2022, Ukraine war, inflation, looming recession worldwide. According to the market value, the Company’s balance of the short term investment was $1.26 million on June 30, 2022. Other (Expense) Income, Net Other expenses, net increased by $1.16 million to positive $0.63 million for the three months ended June 30, 2022 from negative $0.53 million in the same period of the last fiscal year, primarily due to increased interest income and subsidiary income of NTAM under Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to employees during the three months ended June 30, 2022. Income Tax Tax provision increased by $0.12 million for the three months ended June 30, 2022. We did not have tax provision for the same period of the last fiscal year. Non-controlling Interests Shaanxi Chunlv Ecological Agriculture Co., Ltd. (“Shaanxi Chunlv”) holds 20.0% interest in Chain Cloud Mall Logistics Center (Shaanxi) Co., Limited, which was dissolved and deregistered on June 27, 2022. Nature Worldwide Resources Ltd. holds 40% interest in DCON DigiPay Limited (“DCON Digipay”), Each of Bin Wu and Lixiong Huang holds 25% and 20% interest in FTFT Capital Investments L.L.C., respectively. Loss from Continuing Operations Loss from continuing operations increased by $1.06 million from $1.27 million for the three months ended June 30, 2021 to $2.33 million for the same period of 2022 mainly due to the increase in operating expenses, as discussed above. Loss on disposal of discontinued operations Loss on disposal of discontinued operation was $154 for the three months ended June 30, 2022, which was related to the dissolution and deregistration of Chain Cloud Mall Logistics Center (Shanxi) Co., Ltd. on June 27, 2022. Comparison of Six Months Ended June 30, 2022 and 2021 Revenue The following table presents our consolidated revenues for the six months ended June 30, 2022 and 2021, respectively: Six months ended June 30, Change 2022 2021 Amount % CCM Shopping Mall Membership - 85 (85 ) (100 )% Coal and Aluminum Ingots Supply Chain Financing/Trading 3,654,982 1,347,785 2,307,197 171.18 % Asset management service 7,152,808 - 7,152,808 - Others 76,852 6,553 70,299 1072.78 % Total $ 10,884,642 $ 1,354,423 $ 9,530,219 703.64 % CCM Shopping Mall Membership fees decreased from $85 for the six months ended June 30, 2021 to $0 for the three months ended June 30, 2022 because there was no new membership enrollment and the Company has transformed its business model of CCM Shopping Mall from a member-based platform to a sales agent based eCAAS platform since the second quarter of 2021. Due to COVID-19 related restriction on large gathering for meetings and conferences which primarily used by us before the pandemic for marketing and business development of new members, we were unable to attract new member enrollment and have transformed business model for the platform. Coal and Aluminum Ingots Supply Chain Financing and Trading business increased from $1.35 million for the six months ended June 30, 2021 to $3.65 million for the six months ended June 30, 2022. The COVID-19 outbreak in Xi’an and other cities that we had our supply chain services in first quarter 2022 result in the coal and aluminum ingot income was nil in first quarter 2022. outbreak of pandemic is mostly under control in China and business are generally back to normal, the income the coal and aluminum ingot increased in second quarter 2022. Asset management service increased from $0 for the six months ended June 30, 2021 to $7.15 million for the six months ended June 30, 2022. This is a new business we acquired during the third quarter 2021. Other revenues increased from $6,553 from six months ended June 30, 2021 to $76,852 for the six months ended June 30, 2022, which were mainly interest income and subsidiary income of NTAM under Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to employees during the six months ended June 30, 2022, which we did not have for the same period of 2021. 35 Cost of revenues Six months ended June 30, Change 2022 2021 Amount % CCM Shopping Mall Membership - - - - Coal and Aluminum Ingots Supply Chain Financing/Trading 3,594,726 1,296,533 2,298,193 177.26 % Asset management service 4,126,507 - 4,126,507 - Others 12 6,035 (6,023 ) (99.80 )% Total $ 7,721,245 1,302,568 4,747,198 492.77 % Cost of revenues for the Coal and Aluminum Ingots Supply Chain Financing/Trading was $3.59 million and $1.30 million for the six months ended June 30, 2022 and 2021, respectively, representing an increase of 177.26%. The increase in cost of revenues was in line with an increase in revenue. Cost of revenues for the asset management service increased from $0 for the three months ended June 30, 2021 to $4.13 million for the six months ended June 30, 2022. This is a new business we acquired during the third quarter 2021. Gross Margin The following table presents the consolidated gross profit of each of our main products and services and the consolidated gross profit margin, which is gross profit as a percentage of the related revenues, for the six months ended June 30, 2022 and 2021, respectively: Six months ended June 30, 2022 2021 Gross profit Gross margin Gross profit Gross margin CCM Shopping Mall Membership - - 85 100.00 % Coal Supply Chain Financing/Trading 60,256 1.65 % 51,252 3.80 % Asset management service 3,026,301 42.31 % - - % Others 76,840 99.98 % 518 7.90 % Total $ 3,163,397 29.06 % $51,855 3.83 % Overall gross margin as a percentage of revenue was 29.06% for the six months ended June 30, 2022, an increase of 25.23% compared to 3.83% for the same period of last fiscal year, mainly due to more revenues from the asset management service. This is a new business we acquired during the third quarter 2021. The others were mainly interest income and subsidiary income of NTAM under Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to employees during the six months ended June 30, 2022, which we did not have for the same period of 2021 Operating Expenses The following table presents our consolidated operating expenses and operating expenses as a percentage of revenue for the six months ended June 30, 2022 and 2021, respectively: (in thousands) June 30, 2022 June 30, 2021 Amount % of revenue Amount % of revenue General and administrative $ 6,060 55.67 % $ 2,325 171.71 % Research and Development expenses 1,203 11.05 % - Selling expenses 720 6.61 % 23 1.70 % Impairment Loss 697 6.40 % - Bad debt provision 2 0.02 % (15 ) (1.11 )% Total operating expenses $ 8,682 79.76 % $ 2,333 172.30 % 36 General and administrative expenses increased by $3.74 million, or 160.65%, from $2.33 million to $6.06 million for the six months ended June 30, 2022, compared to the same period of last fiscal year. The increase in general and administrative expenses was mainly due to increased professional service fees for acquisition projects and certain training and consulting fees for the acquired and newly established companies during the six months ended June 30, 2022. The Company recorded $1.20 million of research and development expenses. Research and development expenses include salaries, contracted services, as well as the related expenses of our research and product development team. The research and development expenditures also include research, develop, design, and enhance our wealth management options and services to our clients, which is related to the new business we acquired since the third quarter 2021. Selling expenses increased by $0.70 million during the six months ended June 30, 2022, the increase in selling expenses was mainly due to increased salary and advertising fee. The Company recorded $0.70 million of impairment loss in six months ended June 30, 2022 relating to short term investment which mainly due to Future Private Equity Fund Management (Hainan) Co., Ltd. invested $1.94 million (RMB13,000,000) to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in various types of investment portfolios. The impairment loss relating to the short term investment was due to that overall economic environment has worsened in China with Covid-19 outbreak and related lockdown in various cities in China in 2022, Ukraine war, inflation, looming recession worldwide. According to the market value, the Company’s balance of the short term investment was $1.26 million on June 30, 2022. Other (Expense) Income, Net Other expenses, net increased by $0.33 million to $0.80 million for the six months ended June 30, 2022 from $0.46 million in the same period of the last fiscal year, primarily due to increased interest income and subsidiary income of NTAM under Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to employees during six months ended June 30, 2022. Income Tax Tax provision increased by $0.31 million for the six months ended June 30, 2022. We did not have tax provision for the same period of the last fiscal year. Non-controlling Interests Shaanxi Chunlv Ecological Agriculture Co., Ltd. (“Shaanxi Chunlv”) holds 20.0% interest in Chain Cloud Mall Logistics Center (Shaanxi) Co., Limited, which was dissolved and deregistered on June 27, 2022. Nature Worldwide Resources Ltd. holds 40% interest in DCON DigiPay Limited (“DCON Digipay”), Each of Bin Wu and Lixiong Huang holds 25% and 20% interest in FTFT Capital Investments L.L.C., respectively. Loss from Continuing Operations Loss from continuing operations increased by $3.43 million from $1.20 million for the six months ended June 30, 2021 to $4.63 million for the same period of 2022 mainly due to the increase in operating expenses, as discussed above. Gain on disposal of discontinued operations Loss on disposal of discontinued operation was $154 for the six months ended June 30, 2022, which was related to the dissolution and deregistration of Chain Cloud Mall Logistics Center (Shanxi) Co., Ltd. on June 27, 2022. Loss per Share Basic and diluted loss per share from continuing operations were $0.07 and $0.07 for the six months ended June 30, 2022, respectively, as compared to a loss of $0.03 and $0.03 for the same periods of 2021, respectively. Basic and diluted income per share attributable to discontinued operations was nil for the six months ended June 30, 2022 respectively. Basic and diluted earnings per share attributable to discontinued operations was $0 and $0.01 for the six months ended June 30, 2021 respectively. 37 Liquidity and Capital Resources As of June 30, 2022, we had cash and cash equivalents of $42.03 million, as compared to $50.27 million as of December 31, 2021. The decrease in cash, cash equivalents was mainly due the loss in operations and Company did not issue shares of common stock to raise money for the six months ended June 30, 2022 comparing to the same period of 2021. Our working capital has mainly been generated from our business operations and financing activities. Our working capital was $59.48 million, as of June 30, 2022, a decrease of $6.01 million from working capital of $65.49 million, as of December 31, 2021, mainly due to the Company had loss in its operations and did not raise any funds during the six months ended June 30, 2022. Net cash used in operating activities increased by $2.05 million to $5.13 million for the six months ended June 30, 2022 from a cash outflow of $3.08 million for the same period of the last fiscal year. The increase in net cash used in operating activities was primarily due to an increase in note receivable, other receivable and advances to suppliers and other current assets during the six months ended June 30, 2022. Net cash used in investing activities increased by $5.98 million comparing the six months ended June 30, 2022 and June 30, 2021, mainly due to additional loan to a third party. Net cash provided in financing activities for the six months ended June 30, 2022 was $4.14 million representing an decrease of $62.75 million, as compared to cash provided by financing activities of $66.88 million during the six months ended June 30, 2021. The decrease in cash provided by financing activities was mainly due to the Company had loss in operations and did not raise any funds during the six months ended June 30, 2022 comparing to the same period of 2021. Off-balance sheet arrangements As of June 30, 2022, we did not have any off-balance sheet arrangements. Item 3. Quantitative and Qualitative Disclosures about Market Risk Not applicable. Item 4. Controls and Procedures Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, our principal executive officer and principal interim financial officer, respectively, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective due to a material weakness in our internal control over financial reporting. Specifically, we currently lack sufficient accounting personnel with the appropriate level of knowledge, experience and training in U.S. GAAP and SEC reporting requirements. We have taken, and are taking, certain actions to remediate the material weakness related to our lack of U.S. GAAP experience. We have engaged an outside consultant with U.S. GAAP knowledge and experience to supplement our current internal accounting personnel and assist us in the preparation of our financial statements to ensure that our financial statements are prepared in accordance with U.S. GAAP. We believe the measures described above will remediate the material weakness from the quarter identified above. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine that additional measures. Changes to Internal Control over Financial Reporting Other than discussed above, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 38 PART II. OTHER INFORMATION Item 1. Legal Proceedings Legal case with FT Global Litigation In January 2021, FT Global Capital, Inc. (“FT Global”), a former placement agent of the Company filed a lawsuit against the Company in the Superior Court of Fulton County, Georgia. FT Global served the complaint upon the Company in January 2021. In the complaint, FT Global alleges claims, most of which attempt to hold the Company liable under legal theories that relate back to an alleged breach of an exclusive placement agent agreement between FT Global and the Company in July 2020 which had a term of three months. FT Global claims that the Company failed to compensate FT Global for securities purchase transactions between December 2020 and April 2021, pursuant to the terms of the expired exclusive placement agent agreement. Allegedly, the exclusive placement agent agreement required the Company to pay FT Global for capital received during the term of the agreement and for the 12-month period following the termination of the agreement involving any investors that FT Global introduced and/or wall-crossed to the Company. However, the Company believes the securities purchase transactions at issue did not involve the one investor which FT Global introduced or wall-crossed to the Company during the term of the agreement. FT Global claims approximately $7,000,000 in damages and attorneys’ fees. The Company timely removed the case to the United States District Court for the Northern District of Georgia (the (“Court) on February 9, 2021 based on diversity of jurisdiction. On March 9, 2021, the Company filed a motion to dismiss based on FT Global’s failure to state a claim which is pending before the Court. On March 23, 2021, FT Global filed its response to the Company’s motion to dismiss. FT Global argues that the Court should deny the Company’s motion to dismiss. However, if the Court is inclined to grant the Company’s motion to dismiss, FT Global requested that the Court permit it to file an amended complaint. On April 8, 2021, the parties filed a Joint Preliminary Report and Discovery Plan. On April 12, 2021, the Court approved the Joint Preliminary Report and Discovery Plan and issued a Scheduling Order placing this case on a six-month discovery tract. On April 30, 2021, the Company served FT Global with its Initial Disclosures. On May 6, 2021, FT Global served the Company with its Initial Disclosures. On May 17, 2021, FT Global served the Company with its First Amended Initial Disclosures. On November 10, 2021, the Court entered an Order granting the Company’s motion to dismiss FT Global’s fraud claim and breach of contract claim as to the disclosure of its confidential and proprietary information. The Court denied the Company’s motion to dismiss FT Global’s i) breach of contract claim for failure to pay FT Global pursuant to the terms of the exclusive placement agent agreement; ii) claim for breach of the covenant of good faith and fair dealing; and iii) claim for attorney’s fees, and the court concluded that additional information can be obtained through discovery. The Company timely filed an answer and defenses to FT Global’s complaint on November 24, 2021. On January 3, 2022 the Company propounded discovery requests upon FT Global, including interrogatories and requests for production of documents. On March 23, 2022, the Company propounded requests for admission upon FT Global. On March 24, 2022, FT Global propounded discovery requests upon the Company, including requests for production of documents and requests for admission. On April 1, 2022, FT Global served its response to the Company’s requests for production of documents. On May 13, 2022, FT Global served its responses to the Company’s interrogatories and requests for admissions. On May 13, 2022, FT Global produced documents in response to the Company’s requests for production of documents. On June 3, 2022, the Company produced documents in response to FT Global’s requests for production of documents. On August 3, 2022, the Company took the deposition of FT Global. On August 5, 2022, FT Global took the deposition of the Company. On August 3, 2022, the Court granted the parties’ Consent Motion to Extend Discovery Period extending the discovery period from August 5, 2022 to September 14, 2022 and the deadline to file dispositive motions to October 12, 2022. The Company will continue to vigorously defend the action against FT Global. 39 Item 1A. Risk Factors Not applicable. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults upon Senior Securities None. Item 4. Mine Safety Disclosure Not applicable. Item 5. Other Information None. Item 6. Exhibits Exhibit No. Description 10.1 Loan Agreement by and between Future FinTech (Hong Kong) Limited and Wintus China Limited on March 10, 2022.* 10.2 Loan Agreement by and between Future FinTech (Hong Kong) Limited and Wintus China Limited on May 30, 2022.* 31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule15d-14(a) of the Securities Exchange Act of 1934, as amended* 31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended* 32.1 Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ 32.2 Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ 101.INS Inline XBRL Instance Document* 101.SCH Inline XBRL Taxonomy Extension Schema Document* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document* 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * filed herewith + Furnished herewith 40 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FUTURE FINTECH GROUP INC. By: /s/ Shanchun Huang Shanchun Huang Chief Executive Officer (Principal Executive Officer) August 15, 2022 By: /s/ Ming Yi Ming Yi Chief Financial Officer (Principal Financial and Accounting Officer) August 15, 2022 41