Future FinTech Group Inc. 10-K

ITEM 9A – CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act, as of December 31, 2023. 55 The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by a company in reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2023, due to a material weakness in our internal control over financial reporting., we currently training our staff with the appropriate level of knowledge, experience and training in U.S. GAAP and SEC reporting requirements. Management’s Report on Internal Controls Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of our consolidated financial statements in accordance with U.S. GAAP. Our accounting policies and internal controls over financial reporting, established and maintained by management, are under the general oversight of the Board’s audit committee. Our internal control over financial reporting includes those policies and procedures that: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed our internal control over financial reporting as of December 31, 2023. The standard measures adopted by management in making its evaluation are the measures in the Internal-Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s assessment, our CEO and CFO concluded that our internal control over financial reporting as of December 31, 2023 was ineffective. We have taken, and are taking, certain actions to remediate the material weakness related to our lack of U.S. GAAP and SEC reporting experience. We engaged a 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 also engaged an internal control consulting firm in July 2023 to review, test and improve our internal accounting controls and internal control over financial reporting. We have adopted and are implementing policies, procedures and practices recommended in the report of the consultant and have arranged training of internal control for our employees and management on disclosure controls and procedures. We believe the measures described above will remediate the material weakness. The Company continues to make efforts to implementing its existing and newly adopted procedures to improve our disclosure controls and internal controls over financing reporting. Changes to Internal Control over Financial Reporting Other than discussed above, there has been no change to our internal control over financial reporting that occurred during the period covered by this annual report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B – OTHER INFORMATION None ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 56 PART III ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive Officers The following table sets forth as of April 12, 2024, the names, positions and ages of our current executive officers and directors. Our directors serve until the next annual meeting of shareholders or until their successors are elected and qualified. Our officers are elected by the Board and their terms of office are, except to the extent governed by an employment contract, at the discretion of the Board. Name of Current Director and/or Executive Officer Age Position(s) Shanchun Huang (1) 58 Chief Executive Officer (“CEO”), President and Director Ming Yi (2) 43 Chief Financial Officer (“CFO”) Peng Lei (3) 46 Chief Operating Officer (“COO”) Fuyou Li (4)(5) 70 Independent Director and Chairman of the Board of Directors Johnson Lau (4)(6) 50 Independent Director Mingjie Zhao (4)(7) 58 Independent Director Ying Li (8) 35 Vice President and Director (1) Shanchun Huang was appointed as CEO on March 4, 2020 and a member of the Board of Directors of the Company on March 4, 2020. Mr. Huang was also appointed as President on December 4, 2023 to fill the vacancy caused by the death of Mr. Yongke Xue on November 24, 2023. (2) Ming Yi was appointed as CFO of the Company on November 30, 2020. (3) Peng Lei was appointed as the COO of the Company on July 28, 2023. (4) Member of the audit committee and compensation committee. (5) Fuyou Li was appointed a member of the Board of Directors of the Company on May 8, 2015 and as the Chairman of the Board on June 23, 2021. (6) Johnson Lau was appointed a member of the Board of Directors of the Company on December 23, 2014. (7) Mingjie Zhao was appointed a member of the Board of Directors of the Company on July 15, 2020. (8) Ms. Ying Li was appointed as a member of the Board on June 23, 2021. Shanchun Huang, Chief Executive officer, President and Director of the Board Mr. Shanchun Huang has served as the Chief Executive Officer of the Company and a member of the Board since March 4, 2020 and has served as the President of the Company since December 4, 2023. Mr. Huang has served as the Chairman of the Board of Directors of Mars Acquisition Corp., a Cayman Islands exempted company incorporated as a blank check company (Nasdaq:MARX) from April 2021 to February 6, 2024. Mr. Huang served as the president of Wealth Index (Beijing) Fund Management Co., Ltd., which provides private equity fund management service, from March 2011 to March 2020, and as the president of Wealth Index (Beijing) International Investment Consulting Co., Ltd., which provides investment management and consulting services for non-securities related business, from August 2004 to March 2020. From May 2001 to June 2004, Mr. Huang was the vice president of Zhejiang Geely Holding Group Corporation, a global automobile company headquartered in Hangzhou, China. Mr. Huang graduated from Hefei Staff University of Science and Technology in July 1986, majoring in news collection and editing. The Board believes that Mr. Huang’s significant experience in investment and management will be an asset to the Company and the Board . 57 Ming Yi, Chief Financial Officer On November 30, 2020, the Board of the Directors appointed Mr. Ming Yi as the Chief Financial Officer (“CFO”) of the Company. Mr. Yi has served as an independent director of Hudson Capital Inc. (Nasdaq: HUSN) since March 31, 2020. Mr. Yi was the Chief Financial Officer of SSLJ.com Limited from July 2018 to July 2019. From June 2011 to August 2018, Mr. Yi was the Chief Financial Officer and a board member of Wave Sync Corp. (formerly known as China Bio-Energy Corp). From September 2009 to April 2011, he served as a senior manager at Qi He Certified Public Accountants Co. Ltd. Form July 2007 to August 2010, Mr. Yi was a senior auditor at Ernst & Young. Mr. Yi received his Bachelor of Science degree in Accounting from School of Business Administrations of Liaoning University in 2004 and his Master of Science degree in Accounting and Finance from Victory University, Australia in 2006. Mr. Yi is a Certified Public Accountant in Australia . Peng Lei, Chief Operating Officer On July 28, 2023, the Company appointed Mr. Peng Lei as the Chief Operating Officer (“COO”) of the Company. Mr. Peng Lei has served as general manager of Future Commercial Management Co., Ltd., a wholly owned subsidiary of the Company since July 2022. From July 2019 to July 2022, Mr. Lei served as the general manager of Xi’an Dingtaiheng Supply Chain Management Co., Ltd. and Ningbo Tielin Supply Chain Management Co., Ltd. From March 2014 to July 2019, Mr. Lei served as a director and general manager of Changan Parking Investment Management (Shanghai) Co., Ltd. From April 2010 to March 2014, Mr. Lei was the manager of Xi’an Zhonglou Sub-branch of Shanghai Pudong Development Bank. Mr. Lei received his Ph.D. degree and master’s degree in finance from the School of Economics and Finance of Xi’an Jiaotong University in September 2011 and July 2009, respectively. Mr. Lei received his bachelor’s degree in international finance from the School of Management of Xi’an Jiaotong University in July 1999. Fuyou Li , Director and Chairman of the Board Mr. Fuyou Li has served as a member of the Board and a member of the audit and compensation committees of the Board since May 8, 2015. Mr. Li was appointed as the Chairman of the Board on June 23, 2021. Mr. Li graduated from Xi’an Jiaotong University with a doctor’s degree in economics. He has taught international finance as a professor at Xi’an Jiaotong University from 2000 to July 2023. The Board believes his qualifications, professional background and expertise in international finance are important to the Company and the Board. Johnson Lau , Director On December 23, 2014, the Board appointed Johnson Lau as a member of the Board of Directors of the Company. Mr. Lau is also the Chairman of Audit committee of the Board and a member of the Compensation Committee of the Board. Mr. Lau is the Chief Financial Officer of Beauty Express Group Holdings Limited (“Beauty Express”), a private company in Hong Kong since April 2021. Mr. Lau is a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and CPA Australia. Mr. Lau has over 20 years of experience in the accounting profession. Mr. Lau started his career in Deloitte in Hong Kong and Beijing from 1997 to 2004. Prior to joining Beauty Express in 2021, Mr. Lau worked in various public and private companies in the United States, England and Hong Kong as Director of Finance and CFO for over fifteen years. Mr. Lau was the chief financial officer and was subsequently an executive director of Haike Chemical Group Limited, a company listed on the London Stock Exchange (LSE code: HAIK), from December 2006 to March 2009. Mr. Lau subsequently resigned as chief financial officer and was redesignated as a non-executive director of Haike Chemical Group Limited in March 2009 and retired as a non-executive director in January 2010. From April 2009, Mr. Lau was employed by Auto China International Limited, a company listed on the NASDAQ Capital Market and subsequently quoted on the OTC Markets (OTC: AUTCF) as chief financial officer. He was redesignated as the director of finance in July 2009 and subsequently departed in June 2013. From June 2010 to January 2013, Mr. Lau was an independent director of Lizhan Environmental Corporation. Mr. Lau was the chief financial officer of Troops, Inc. (NASDAQ: TROO, formerly known as SGOCO Group Ltd.) from July 2013 to June 2015. Mr. Lau was the chief financial officer of China Golden Classic Group Limited (HKEX: 8281.HK) from July 2015 to July 2018. Mr. Lau was the chief financial officer of Dafy Holdings Limited (HKEX: 1826.HK) from August 2018 to October 2019. Mr. Lau was the chief financial officer of a Hong Kong incorporated private company from November 2019 to February 2021. He was an independent non-executive director of Winshine Science Company Limited (HKEX: 209.HK) from October 2017 to April 2019. Mr. Lau holds a bachelor’s degree in commerce from Monash University, Australia. The Board believes that Mr. Lau’s extensive knowledge and experience in accounting and his public company experience is important to the Company’s internal controls and financial reporting and its status as a US publicly traded company. 58 Mingjie Zhao, Director Mr. Mingjie Zhao was appointed as a member of the Board and Chairman of the Compensation Committee and a member of Audit Committee of the Board on July 15, 2020. Mr. Zhao has served as a director of New York Hua Yang, Inc. since April 2018. From July 2016 to March 2018, Mr. Zhao served as Chief Executive Officer of TD Holdings, Inc. (formerly known as China Commercial Credit Inc. and Nasdaq: GLG). Mr. Zhao was the Chief Operating Officer and a director of New York Hua Yang, Inc. from September 2011 to July 2016. Mr. Zhao obtained his Master of Business Administration degree from University of Bridgeport in Connecticut in May 2003 and his Bachelor of Science degree from China Eastern Normal University in Shanghai, China in July 1985. The Board believes that Mr. Zhao’s experience and extensive knowledge in management and public company is essential to the Compan y. Ying Li, Director and Vice President Ms. Ying Li was appointed as a member of the Board on June 23, 2021 and she has served as a director of Alpha International Securities (HONG KONG) Limited since September 9, 2020 and as a director of Alpha International Financial Holdings Limited since February 5, 2020. The Company acquired FTFT International Securities and Futures Limited in November 2023 and changed its name to FTFT International Securities and Futures Limited. Ms. Li has served as the vice president of the Company and a director of Future FinTech (Hong Kong) Limited, a wholly owned subsidiary of the Company since July 2016. From October 2011 to December 2019, Ms. Li served as the secretary of the Board of the Company. Ms. Li received her bachelor’s degree in English from Xi’an International Studies University in July 2010. The Board believes that Ms. Li’s extensive business and operational knowledge of the Company qualifies her as a member of the Board. All of our directors and officers reside outside of the United States, except for Mr. Mingjie Zhao and Ying Li. Mr. Peng Lei, Mr. Ming Yi and Fuyou Li reside in China, Mr. Shanchuan Huang resides in the U.K. and Mr. Johnson Lau resides in Hong Kong. Board Diversity Matrix Board Diversity Matrix (As of April 12, 2024) Total Number of Directors 5 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 4 0 0 Part II: Demographic Background Asian (other than South Asian) 5 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires that directors, certain officers of the Company and ten percent shareholders file reports of ownership and changes in ownership with the Commission as to the Company’s securities beneficially owned by them. Such persons are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of copies of such forms received by the Company, or on written representations from certain reporting persons, the Company believes that, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent shareholders were complied with during the fiscal year ended December 31, 2023, except for the following: Mr. Shanchun Huang, the CEO of the Company, did not file a Form 4 for the grant of stock award for 200,000 shares on December 23, 2023 until January 2, 2024; Mr. Peng Lei, Chief Operating Officer (“COO”) of the Company, did not file Form 3 for appointed as COO of the Company and Form 4 for the grant of stock award for 40,000 shares on December 23, 2023 until April 5, 2024; and Mr. Zeyao Xue, a 10% more shareholder did not file Form 4 for three transactions that occurred on August 3, 2023 and December 11, 2024, respectively, until April 5, 2024. 59 Code of Ethics We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. Our code of business conduct and ethics is available on our website at www.ftft.com and may be found by first clicking on “Investors,” then “Corporate Governance” and then “Governance Documents.” We intend to disclose any amendments to the code, or any waivers of its requirements, on our website. Committees of the Company’s Board of Directors The Board held 11 regularly scheduled and special meetings during fiscal year 2023. All of the directors attended (in person or by telephone) all of the Board meetings and any committees of the Board on which they served during the fiscal year. Directors are expected to use their best efforts to be present at the shareholders annual meeting. All of our directors attended the December 5, 2023 shareholders annual meeting by tele-conference or in person. Audit Committee On April 25, 2008, the Board formed an audit committee. Messrs. Lau, Li and Zhao currently serve on the audit committee, which is chaired by Mr. Lau. Each member of the audit committee is “independent” as that term is defined in the rules of the SEC and within the meaning of such term as defined under the rules of the NASDAQ Capital Market. The Board has determined that each audit committee member has sufficient knowledge in financial and auditing matters to serve on the audit committee. The audit committee held 3 meetings during fiscal year 2023, and all audit committee members attended each of those meetings. Our Board has determined that Mr. Lau is an “audit committee financial expert,” as defined under the applicable SEC rules. The audit committee has a written charter, which is available on the Company’s website at http://www.ftft.com. Management is responsible for the Company’s internal controls and the financial reporting process. The independent accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing reports thereon. The audit committee’s responsibility is to monitor these processes. The audit committee meets with management, the leader of the internal audit function, and the independent accounting firm to facilitate communication. In addition, the audit committee appoints the Company’s independent accounting firm and pre-approves all audit and non-audit services to be performed by the independent accounting firm. Compensation Committee On April 25, 2008, the Board formed a compensation committee. Messrs. Lau, Li and Zhao currently serve on the compensation committee, which is chaired by Mr. Zhao. Each member of the compensation committee is “independent” as that term is defined in the SEC rules and within the meaning of such term as defined under the rules of the NASDAQ Capital Market, a “nonemployee director” for purposes of Section 16 of the Exchange Act. No interlocking relationship exists between the Board or the compensation committee and the Board or compensation committee of any other company, nor has any interlocking relationship existed during the last fiscal year. The compensation committee held 4 meetings during fiscal year 2023. The compensation committee has a written charter, which is available on the Company’s website at http://www.ftft.com/. Our Board has delegated to the compensation committee the responsibility, among other things, to determine any and all compensation payable to our executive officers, including annual salaries, incentive compensation, long-term incentive compensation and any other compensation, and to administer our equity and incentive compensation plans applicable to our executive officers. Decisions regarding executive compensation made by the compensation committee are considered final and are not generally subject to Board review or ratification. Under the terms of its written charter, the compensation committee has the power and authority to delegate any of its duties and responsibilities to subcommittees as the compensation committee may deem appropriate in its sole discretion. Historically, the compensation committee has not generally delegated any of its duties and responsibilities to subcommittees, but rather has taken such actions as a committee, as a whole. Deliberations and decisions by the compensation committee concerning executive officers are made by the compensation committee, without the presence of the any executive officer of the Company. 60 Other Committees The Board may on occasion establish other committees, as it deems necessary or required. We do not currently have a standing nominating committee, or a committee performing similar functions. The full Board currently serves this function. Our directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the Board. The independent directors of the Board will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment by the Board. Other than the Rule 14a-19 under the Exchange Act, there have been no material changes to the procedures by which security holders may recommend nominees to the Board. Board Leadership Structure Our Board of Directors is currently comprised of five members, including three independent directors who serve as members of our audit committee and compensation committee. Our Board leadership structure consists of a Chairman of the Board. Currently, Mr. Fuyou Li, an independent director, serves as Chairman of the Board. The Board of Directors believes that this leadership structure, with Mr. Li serving as the Chairman and Mr. Shanchun Huang serving as Chief Executive Officer, is appropriate at this time because it enables the Board, as a whole, to engage in oversight of management, promote communication and collaboration between management and the Board, and oversee governance matters, while allowing our Chief Executive Officer to focus on his primary responsibility, the operational leadership and strategic direction of the Company. In addition to chairing the Board, Mr. Li is a member of the Audit and Compensation Committees. Board independence and oversight of the senior management of the Company are enabled by the presence of independent directors who have a wide range of expertise and skills and have oversight over critical functions of the Company, such as the review of business development, evaluation and compensation of executive management, the nomination of directors. Our independent directors collectively provide additional strength and balance to our Board leadership structure. Compensation Committee Interlocks and Insider Participation None of the Company’s executive officers has served as a member of a compensation committee, or other committee serving an equivalent function, of any other entity whose executive officers serve as a director of the Company or member of the Company’s compensation committee. Family Relationships There are no family relationships between any current executive officer or director of the Company. ITEM 11 – EXECUTIVE COMPENSATION Compensation Discussion and Analysis Compensation Objectives We operate in a highly competitive and rapidly changing industry. The key objectives of our executive compensation programs are to: ● attract, motivate and retain executives who drive our success and industry leadership; and provide executive officers, with a salary and/or stock award on the market value of that role, and ● the individual’s demonstrated ability to perform that role. 61 Stock Incentive Plans The Board of Directors of the Company approved and adopted the Future FinTech Group Inc. 2020 Omnibus Equity Plan (the “2020 Equity Plan”) on October 27, 2020, which was approved by the shareholders at the shareholders annual meeting on December 18, 2020. The 2020 Equity Plan has a total of 5,000,000 shares of Common Stock. The Company grant the 1,953,000 shares under 2020 Equity Plan to sixteen officers and employees of the Company on July 12, 2021, including 500,000 shares to Shanchun Huang, Chief Executive Officer of the Company; 300,000 shares to Yongke Xue, President of the Company; 20,000 shares to Ming Yi, Chief Financial Officer of the Company, and 40,000 shares to Yang Liu, Chief Operating Officer of the Company. On July 12, 2022, the Company granted 3,047,000 shares under the 2020 Equity Plan, to six officers and employees of the Company and its subsidiaries, including: 800,000 shares to Shanchun Huang, Chief Executive Officer of the Company, 800,000 shares to Yongke Xue, President of the Company, and 100,000 shares to Ming Yi, Chief Financial Officer of the Company. As of December 31, 2022, no shares of stock available for award under the 2020 Equity Plan. (All the share numbers stated here are before the 1 for 5 reverse stock split effected in February 2023) The Board of Directors of the Company approved and adopted the Future FinTech Group Inc. 2023 Omnibus Equity Plan (the “2023 Equity Plan”) on October 12, 2023, which was approved by the shareholders at the shareholders annual meeting on December 5, 2023. The 2023 Equity Plan has a total of 5,000,000 shares of Common Stock. On December 23, 2023 (the “Grant Date”), the Compensation Committee of the Board of Directors (the “Board”) of the Company granted stock awards of 2,890,000 shares of common stock of the Company, pursuant to the Company’s 2023 Equity Plan, to sixteen officers and employees of the Company and its subsidiaries (the “Grantees”), including: 200,000 shares to Shanchun Huang, Chief Executive Officer and President of the Company, 40,000 shares to Peng Lei, Chief Operating Officer of the Company, and 30,000 shares to Hoo Lee, Corporate Secretary of the Company (collectively, the “Grants”). The Grants vested immediately on the Grant Date and each of the Grantees also entered into an Unrestricted Stock Award Agreement with the Company on December 23, 2023. As of December 31, 2023, there were 2,110,000 shares authorized for issuance under stock incentive plans of the Company. We believe that the future success of the Company depends, in large part, upon the ability of the Company to maintain a competitive position in attracting, retaining and motivating key personnel. What Our Executive Compensation Program is Designed to Reward Our executive compensation program is designed to reward each individually named executive officer’s contribution to the advancement of our overall performance and execution of our goals, ideas and objectives. It is designed to reward and encourage exceptional performance at the individual level in the areas of organization, creativity and responsibility while supporting our core values and ambitions. This in turn aligns the interest of our executive officers with the interests of our shareholders, and thus with our interests. Determining Executive Compensation The Board’s compensation committee reviews and approves the compensation for executive officers annually. The compensation committee considers the overall performance of the past year and the financial and operating plans for the upcoming year in determining the compensation for the executive officers. A named executive officer’s base salary is determined by an assessment of his/her sustained performance against individual job responsibilities, including, where appropriate, the impact of his/her performance on our business results, current salary in relation to the salary range designated for the job, experience and mastery, and potential for advancement. The compensation committee also annually reviews market compensation levels with comparable jobs in the industry to determine whether the total compensation for our officers remains in the targeted median pay range. Role of Executive Officers in Determining Executive Compensation The compensation committee determines the compensation for the CEO, which is based on various factors, such as level of responsibility and contributions to our performance. The CEO recommends the compensation for our executive officers (other than the compensation of the CEO) to the compensation committee. The compensation committee reviews the recommendations made by the CEO and determines the compensation of the CFO and the other executive officers. 62 Employment Agreements We did not have an employment agreement with our Mr. Yongke Xue when he served as our CEO. On June 24, 2021, we entered into an Employment Agreement with Mr. Xue upon his appointment as the president of the Company. The Employment Agreement has a term of one year and Mr. Xue receives compensation in the amount of $1 per year, which was renewed with the same terms in June 2022. Mr. Yongke Xue passed away on November 24, 2023. We entered into an Employment Agreement with our CEO, Mr. Shanchun Huang, on March 7, 2020 with a term of one year, which was renewed until March 7, 2024. Mr. Huang receives compensation in the amount of $1 per year. On December 4, 2023, the Board of Directors of the Company appointed Mr. Shanchun Huang, the Chief Executive Officer of the Company, as the President of the Company to fill the vacancy caused by the death of Mr. Yongke Xue on November 24, 2023. On January 1, 2024, the Company entered into an Employment Agreement (the “Agreement”) with Mr. Shanchun Huang, the Company’s Chief Financial Officer and President, for serving in such positions of the Company. The Agreement has a term for one-year, subject to renewal. Under the terms of the Agreement, Mr. Huang will receive a salary of $15,250 per month before tax and will be eligible for an annual cash bonus in the Board’s sole discretion. On November 16, 2020, the Company entered into an employment agreement with Mr. Yang Liu as COO of the Company and the term of the agreement is for one (1) year, which has been renewed until November 16, 2023. The agreement provides that Mr. Liu receives compensation in the amount of $1 per year. On July 27, 2023, Mr. Yang Liu resigned from his position as the COO of the Company, effective on July 28, 2023. On July 28, 2023, the Board of Directors of the Company appointed Mr. Peng Lei as the COO of the Company. In connection with his appointment as COO, the Company entered into an employment agreement (the “Agreement”) with Mr. Peng Lei on August 1, 2023. The Agreement provides that Mr. Lei will receive compensation in the amount of $50,000 per year before tax and the term of the Agreement is for one (1) year. On December 1, 2020, the Company entered into an employment agreement with Mr. Ming Yi as CFO of the Company and the term of the agreement is for one (1) year, which has been renewed until December 1, 2024. The agreement provides that Mr. Yi receives compensation in the amount of $4,000 per month before tax. Summary Compensation of Named Executive Officers Our executive officers do not receive any compensation from the Company for also serving as directors of the Company. The following table sets forth information concerning cash and non-cash compensation paid by the Company to our named executive officers for the years ended December 31, 2023 and 2022. Name and Principal Position Year Ended Salary ($) Bonus ($) Stock Awards ($) Option Awards Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Yongke Xue (1) 12/31/2023 $ 4,683 - - - - - $ 4,683 12/31/2022 $ 5,352 - 336,000 - - - - $ 341,352 Shanchun Huang (2) 12/31/2023 $ 1 $ - $ 248,000 - - - - $ 248,001 12/31/2022 $ 1 - 336,000 - - - - $ 336,001 Ming Yi (3) 12/31/2023 $ 44,276 $ - $ 44,276 12/31/2022 $ 48,000 - 42,000 - - - - $ 90,000 Kai Xu (4) 12/31/2022 $ 35,682 $ 210,000 223,462 Peng Lei (5) 12/31/2023 $ 51,213 $ 49,600 $ 100,813 12/31/2022 $ 53,582 229,740 $ 283,322 (1) On March 4, 2020, Mr. Yongke Xue resigned as the CEO of the Company and on June 23, 2021, Mr. Xue was appointed as the president of the Company. The compensation committee of the Board granted him a stock award for 160,000 shares of common stock of the Company under 2020 Equity Plan on July 12, 2022. Mr. Yongke Xue passed away on November 24, 2023. 63 (2) On March 4, 2020, Mr. Shanchun Huang was appointed as the CEO of the Company. The compensation committee of the Board granted him a stock award for 200,000 shares of common stock of the Company under 2023 Equity Plan on December 23, 2023 and a stock award for 160,000 shares of common stock of the Company under 2020 Equity Plan on July 12, 2022. (3) On November 30, 2020, the Board of the Directors appointed Mr. Ming Yi as the CFO of the Company. The compensation committee of the Board granted him a stock award for 20,000 shares of common stock of the Company under 2020 Equity Plan on July 12, 2022. (4) On February 28, 2019, the board of directors appointed Mr. Kai Xu as the COO of the Company. Since February 2020, Mr. Xu has no longer served as the COO of the Company, and he continues to serve as deputy general manager in a subsidiary of the Company and the vice president of blockchain division of the Company. The compensation committee of the Board granted him a stock award for 100,000 shares of common stock of the Company under 2020 Equity Plan on July 12, 2022. (5) The compensation committee of the Board granted him a stock award for 109,400 shares of common stock of the Company under 2020 Equity Plan on July 12, 2022. Mr. Peng Lei served as general manager of Future Commercial Management Co., Ltd., a wholly owned subsidiary of the Company since July 2022 and was appointed as COO of the Company on July 28, 2023. On December 23, 2023, the compensation committee of the Board granted him a stock award of 40,000 shares of common stock of the Company under 2023 Equity Plan. * All share granted before January 31, 2023 have been retroactively restated to reflect Reverse Stock Split effected on February 1, 2023. Outstanding Equity Awards at December 31, 2023 No outstanding equity awards held by named executive officers as of December 31, 2023. Compensation of Directors The following table sets forth information concerning cash and non-cash compensation paid by us to our directors during 2023. Name Fees Paid in Cash ($) Stock Awards Option Awards Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Shanchun Huang $ — — — — — — $ — Ying Li $ — — — — — — $ — Fuyou Li (1) $ 18,000 — — — — — $ 18,000 Johnson Lau (2) $ 25,000 — — — — — $ 25,000 Mingjie Zhao (3) $ 25,000 — — — — — $ 25,000 (1) On May 8, 2015, the Board appointed Mr. Fuyou Li as a member of the Board of Directors and a member of both the audit committee and compensation committee. Before June 30, 2021, Mr. Li was entitled for $8,850 per annum as compensation for his service as director of the Company and a member of the audit committee and compensation committee. On June 23, 2021, the Board appointed Mr. Fuyou Li as the Chairman of the Board and his annual compensation increased to $18,000 after June 30, 2021. 64 (2) On December 23, 2014, the Board appointed Johnson Lau as a member of the Board of Directors of the Company and he currently serves as the Chairman of Audit Committee and a member of Compensation Committee of the Board. Mr. Lau is entitled for $25,000 per annum as compensation for his current services as a director of the Company and chair of the audit committee and a member of compensation committee. (3) On July 15, 2020, the Board appointed Mr. Mingjie Zhao as a member of the Board and Chairman of the Compensation Committee and a member of Audit Committee of the Board. Mr. Zhao is entitled for $25,000 per annum as compensation for his current services as a director of the Company and chair of the compensation committee and a member of audit committee. ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Security Ownership of Certain Beneficial Owners and Management The following table provides information concerning beneficial ownership of our capital stock as of April 12, 2024, by: ● each shareholder or group of affiliated shareholders who owns more than 5% of our outstanding capital stock; ● each of our named executive officers; ● each of our directors; and all of our directors and ● executive officers as a group. The following table lists the number of shares and percentage of shares beneficially owned based on 19,985,410 shares of our Common Stock outstanding as of April 12, 2024. Beneficial ownership is determined in accordance with the SEC rules, and generally includes voting power and/or investment power with respect to the securities held. Shares of Common Stock subject to options and warrants currently exercisable or exercisable within 60 days of April 12, 2024 or issuable upon conversion of convertible securities which are currently convertible or convertible within 60 days of April 12, 2024 are deemed outstanding and beneficially owned by the person holding those options, warrants or convertible securities for purposes of computing the number of shares and percentage of shares beneficially owned by that person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated in the footnotes to this table, and subject to applicable community property laws, the persons or entities named have sole voting and investment power with respect to all shares of our Common Stock shown as beneficially owned by them. 65 Unless otherwise indicated in the footnotes, the principal address of each of the shareholders, named executive officers, and directors below is c/o Future FinTech Group, Inc., Americas Tower, 1177 Avenue of The Americas, Suite 5100, New York, NY 10036. Shares Beneficially Owned Name of Beneficial Owner Number Percent Directors and Named Executive Officers Shanchun Huang 460,000 2.3 % Ming Yi 24,000 * % Ying Li - - Mingjie Zhao - - Peng Lei 149,400 * % Fuyou Li - - Johnson Lau - - All current directors and name executive officers as a group (8 persons) 633,400 3.2 % 5% or Greater Shareholders Zeyao Xue (1) 3,652,850 18.3 % All 5% or Greater Shareholders 3,652,850 18.3 % * Less than 1% (1) Including 3,322,757 shares directly owned by Mr. Zeyao Xue and 330,093 shares indirectly and beneficially owned by Mr. Zeyao Xue, which consists of (i) 293,416 shares that are directly owned by Golden Dawn International Limited (“Golden Dawn”), a British Virgin Islands company and (ii) 36,677 shares that are directly owned by China Tianren Organic Food Holding (“China Tianren”). Mr. Zeyao Xue holds all of the issued and outstanding capital stock of Fancylight Limited, which is an indirect 100% owner of Golden Dawn and China Tianren. As such, Mr. Zeyao Xue holds the beneficial ownership of shares owned by Golden Dawn and China Tianren. The address of Zeyao Xue is No.3, Xijuyuan Xiang, Lianhu District, Xi’an City, Shaanxi Province, China. ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE For details of related party transactions, see Note 19 “Related Party Transaction” to our consolidated financial statements. Director Independence We currently have five directors. Three of our current directors, Messrs. Johnson Lau, Fuyou Li and Mingjie Zhao, have been determined by our Board to be “independent directors” as defined under the rules of the NASDAQ Capital Market, constituting a majority of independent directors of the Board as required by the rules of the NASDAQ Capital Market. ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES The following table shows the fees that we paid or accrued for audit and other services for fiscal years 2023 and 2022. All of the services described in the following fee table were approved in conformity with the audit committee’s pre-approval process. Audit Fees 2023 2022 Audit Fees $ 312,000 $ 280,000 Tax Fees — — All Other Fees 78,350 — Total $ 390,350 $ 280,000 66 Audit Fees The amounts set forth opposite “Audit Fees” above reflect the aggregate fees billed or billable by auditors Onestop Assurance PAC (“Onestop Assurance”) and Fortune CPA Inc. (“Fortune CPA”) for the audit of our annual consolidated financial statements, review of quarterly financial information and audit services that are normally provided by the principal accountant in connection with regulatory filings or engagements. Onestop Assurance provided professional services for the audit of our fiscal year 2022 financial statements and $280,000 was paid to Onestop Assurance for audit of our fiscal year 2022 financial statements and $78,350 was paid in 2023 for review annual report and Form S-8. Fortune CPA provided professional services for the audit of our fiscal year 2023 financial statements and $312,000 was paid to Fortune CPA for audit of our fiscal year 2023 financial statements. Tax Fees The Board audit committee’s policy is to pre-approve all audit services and all non-audit services that our independent accountants are permitted to perform for us under applicable federal securities regulations. The audit committee’s policy utilizes an annual review and general pre-approval of certain categories of specified services that may be provided by the independent accountant, up to pre-determined fee levels. Any proposed services not qualifying as a pre-approved specified service, and pre-approved services exceeding the pre-determined fee levels, require further specific pre-approval by the audit committee. The audit committee has delegated to the Chairman of the audit committee the authority to pre-approve audit and non-audit services proposed to be performed by the independent accountants. Our audit committee was established in April 2008. All the services provided by our auditors in fiscal years 2023 were pre-approved by the audit committee. Changes in Registrant’s Certified Accountant On August 2, 2023, the Audit Committee of the Board of Directors of Future FinTech Group, Inc. (the “Company”) dismissed Onestop Assurance PAC (“Onestop Assurance”) as the Company’s independent registered public accounting firm, effective immediately. Onestop Assurance’ audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2022 and December 31, 2021 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the audit reports on the consolidated financial statements of the Company for the fiscal years ended December 31, 2022 and December 31, 2021 contained an uncertainty about the Company’s ability to continue as a going concern. During the Company’s two fiscal years of 2022 and 2021 and in the subsequent interim period through August 1, 2023, there were (i) no disagreements between the Company and Onestop Assurance on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Onestop Assurance, would have caused Onestop Assurance to make reference to the subject matter of the disagreement in their reports on the financial statements for such years, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K. On August 2, 2023, the Audit Committee of the Board of Directors of the Company approved the engagement of Fortune CPA, Inc. (“Fortune CPA”) as the Company’s independent registered public accounting firm, effective immediately. The Audit Committee also approved Fortune CPA to act as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2023. During the Company’s two fiscal years of 2022 and 2021 and through August 1, 2023, neither the Company nor anyone on its behalf consulted Fortune CPA regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the consolidated financial statements of the Company; or (ii) any matter that was either the subject of a disagreement or a reportable event as described above; and there was neither a written report nor was oral advice provided to the Company by Fortune CPA that was an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue. The Company reported its change in auditors in Current Report on Form 8-K , filed on Augst 8, 2023. 67 PART IV ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) (1) FINANCIAL STATEMENTS: The following documents are filed as part of or are included in this Annual Report: 1. Financial statements listed in the Index to Financial Statements, filed as part of this Annual Report beginning on page F-1; and 2. Exhibits (b) EXHIBITS: Exhibit Index Exhibit Number Description 2.1 Share Exchange Agreement, dated as of February 22, 2008 by and among Pacific Industry Holding Group Co., Ltd., “Pacific,” Terrence Leong, SkyPeople Fruit Juice, Inc., the “Registrant,” and the shareholders of Pacific. Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed with the Commission on February 28, 2008. 3.1 Second Amended and Restated Articles of Incorporation, dated June 6, 2017. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Commission on June 9, 2017. 3.2 Certificate of Designations, Preferences and Rights of the Registrant’s Series A Convertible Preferred Stock. Incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Commission on February 28, 2008. 3.3 Certificate of Designations, Preferences, Rights and Limitations of the Registrant’s Series B Convertible Preferred Stock. Incorporated by reference to Exhibit 3.2 to the Form 8-K filed with the Commission on February 28, 2008. 3.4 Amended and Restated Bylaws, dated June 6, 2017. Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed with the Commission on June 9, 2017. 3.5 Articles of Amendment to the Articles of Incorporation of the Registrant filed with the Department of State of Florida on March 10, 2016. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Commission on March 15, 2016. 3.6 Articles of Amendment to the Articles of Incorporation of the Registrant filed with the Department of State of Florida on March 14, 2018. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Commission on March 16, 2018. 3.7 Articles of Amendment to the Articles of Incorporation of the Registrant filed with the Department of State of Florida on March 18, 2021. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Commission on March 23, 2021. 3.8 Articles of Amendment to the Second Amended and Restated Articles of Incorporation of the Registrant filed with Department of State of Florida on January 26, 2023. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the Commission on January 31, 2023. 4.1 Form of Warrant. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the Commission on April 13, 2017. 4.2 Form of Placement Agent Warrant. Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed with the Commission on December 28, 2020. 4.3 Description of Securities of the Registrant registered under Section 12 of the Securities Exchange Act of 1934, as amended.* 68 Exhibit Number Description 10.1 Indemnification Agreement. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on July 14, 2011. 10.2 Exclusive Operation and Use Rights Authorization Letter by Chain Cloud Mall Network and Technology (Tianjin) Co., Ltd., dated July 31, 2019. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on August 6, 2019. 10.3 Exclusive Technology Consulting and Service Agreement by and between Chain Cloud Mall Network and Technology (Tianjin) Co., Ltd. and Chain Cloud Mall E-commerce (Tianjin) Co., Ltd, dated July 31, 2019. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Commission on August 6, 2019. 10.4 Exclusive Purchase Option Agreement by and among Chain Cloud Mall Network and Technology (Tianjin) Co., Ltd., Chain Cloud Mall E-commerce (Tianjin) Co., Ltd. Zeyao Xue and Kai Xu, dated July 31, 2019. Incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the Commission on August 6, 2019. 10.5 Equity Pledge Agreement by and among by and among Chain Cloud Mall Network and Technology (Tianjin) Co., Ltd., Chain Cloud Mall E-commerce (Tianjin) Co., Ltd. and Zeyao Xue, dated July 31, 2019. Incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed with the Commission on August 6, 2019. 10.6 Equity Pledge Agreement by and among by and among Chain Cloud Mall Network and Technology (Tianjin) Co., Ltd., Chain Cloud Mall E-commerce (Tianjin) Co., Ltd. and Kai Xu, dated July 31, 2019. Incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed with the Commission on August 6, 2019. 10.7 Power of Attorney issued by Zeyao Xue, dated July 31, 2019. Incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K filed with the Commission on August 6, 2019. 10.8 Power of Attorney issued by Kai Xu, dated July 31, 2019. Incorporated by reference to Exhibit 10.7 to our Current Report on Form 8-K filed with the Commission on August 6, 2019. 10.9 Consulting Service Agreement by and between Future FinTech Group Inc. and Dragon Investment Holding Limited (Malta) dated January 25, 2020. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on January 29, 2020 10.10 Director Agreement by and between Future FinTech Group Inc. and Mingjie Zhao dated July 15, 2020. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on July 17, 2020. 69 Exhibit Number Description 10.11 Share Purchase Agreement by and between FTFT UK Limited and Rahim Shah dated September 1, 2021. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on September 7, 2021. 10.12 Collateral Deed by and between FTFT UK Limited and Rahim Shah dated September 1, 2021. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Commission on September 7, 2021. 10.13 FTFT North American Ohio Cryptocurrency Mining Farm Cooperation Agreement by and between Future FinTech Group Inc. and APC Service Ltd. dated December 13, 2021. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on December 17, 2021. 10.14 Form of Unrestricted Stock Award Agreement by and between Future FinTech Group Inc. and Grantees dated on July 12, 2022. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on July 15, 2022. 10.15 Share Transfer Agreement by and between Future FinTech (Hong Kong) Limited and Alpha Financial Limited dated February 27, 2023. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on March 1, 2023. 10.16 Employment Agreement by and between the Company and Peng Lei dated August 1, 2023. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on August 2, 2023. 10.17 Form of Unrestricted Stock Award Agreement by and between Future FinTech Group Inc. and Grantees dated on December 23, 2023. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on December 26, 2023. 10.18 Securities Purchase Agreement by and between Future FinTech Group, Inc. and Streeterville Capital, LLC, dated December 27, 2023. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on December 27, 2023. 10.19 Convertible Promissory Note, issued by Future FinTech Group, Inc. to Streeterville Capital, LLC, dated December 27, 2023. Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the Commission on December 27, 2023. 10.20 Form of Securities Purchase Agreement dated January 5, 2024. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on January 8, 2024. 10.21 Amendment to Convertible Promissory Note dated February 11, 2024. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Commission on February 14, 2024. 14.1 Code of Business Conduct and Ethics* 16.1 Letter from Onestop Assurance PAC to SEC, dated August 8, 2023. Incorporated by reference to Exhibit 16.1 to our Current Report on Form 8-K filed with the Commission on August 10, 2023. 19.1 Insider Trading Policy* 21.1 Description of Subsidiaries of the Registrant* 23.1 Consent of Onestop Assurance PAC* 23.2 Consent of Fortune CPA Inc.* 31.1 Rule 13a-14(a) Certification of Principal Executive Officer of Registrant* 31.2 Rule 13a-14(a) Certification of Principal Financial Officer of Registrant* 32.1 Section 1350 Certification of Principal Executive Officer of Registrant.† 32.2 Section 1350 Certification of Principal Financial Officer of Registrant.† 97.1 Clawback Policy* 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 (c) Other Financial Statement Schedules - None. 70 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. April 16, 2024 By: /s/ Shanchun Huang Shanchun Huang Chief Executive Officer (principal executive officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Shanchun Huang and Ming Yi, and each of them, their attorneys-in-fact and agents, each with the power of substitution, for them in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. Signature Name and Title Date /s/ Shanchun Huang Shanchun Huang April 16, 2024 Chief Executive Officer (principal executive officer and Director) /s/ Ming Yi Ming Yi April 16, 2024 Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Fuyou Li Fuyou Li April 16, 2024 Chairman of the Board of Directors and Director /s/ Mingjie Zhao Mingjie Zhao, Director April 16, 2024 /s/ Johnson Lau Johnson Lau, Director April 16, 2024 /s/ Ying Li Ying Li, Director April 16, 2024 71 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Audited Consolidated Financial Statements of Future FinTech Group Inc. Report of Independent Registered Public Accounting Firm (PCAOB ID: 6901) F-2 Consolidated Balance Sheets F-6 Consolidated Statements of Operations F-7 Consolidated Statements of Comprehensive Income (Loss) F-7 Consolidated Statements of Changes in Equity F-8 Consolidated Statements of Cash Flows F-9 Notes to Consolidated Financial Statements F-10 F- 1 333 City Blvd W 3 rd Floor Orange, CA 92868 Phone (714)-820-3316 Fax (714)-333-4992 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Future FinTech Group Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Future FinTech Group Inc. (the “Company”) and its subsidiaries as of December 31, 2023, and the related consolidated statements of operation, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. The Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations. Therefore, the Company has stated substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. F- 2 Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Going Concern As described further in Note 2 to the financial statements, the Company financial statements are prepared assuming that the Company will continue as a going concern. We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s future cash flows and the risk of bias in management’s judgments and assumptions in estimating these cash flows. Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others: We reviewed the Company’s working capital and liquidity ratios, operating expenses, and uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the financial statement issuance date. This testing included inquiries with management, comparison of prior period forecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the Company’s financing arrangements in place as of the report date, market and industry factors and consideration of the Company’s relationships with its financing partners. /s/ Fortune CPA, Inc We have served as the Company’s auditor since 2023. Orange, CA April 16, 2024 PCAOB # 6901 F- 3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the board of directors of Future Fintech Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Future FinTech Group, Inc. (the “Company”) as of December 31, 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows, for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion. Emphasis of Matter The Company has significant transactions with related parties, which are described in Note 19 to the financial statements. Transactions involving related party cannot be presumed to be carried out on an arm’s length basis, as the requisite conditions of competitive, free market dealings may not exist. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F- 4 Legal Proceedings Contingencies As described in Note 26 to the financial statements, management disclosed legal proceedings that involved the Company’s current subsidiaries, disposed subsidiaries, or the Company’s senior management where liability is not probable or the amount of the liability is not estimable, or both, if management believes there is at least a reasonable possibility that the Company has assessed the obligations, or a loss may be incurred when obligations were not discharged. We determined that the legal proceedings contingencies are a critical audit matter as there was significant judgment made by management when assessing the likelihood of a loss being incurred and when estimating the loss or range of loss for each claim, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assessment of the liabilities and disclosures related to legal proceedings contingencies. Our audit of legal proceeding contingencies included, among others: ● reviewing management’s control for assessing legal proceedings; ● obtaining and evaluating the letters of audit inquiry with external legal counsel; ● reviewing public information regarding the Company’s litigation cases; ● evaluating the reasonableness of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable; ● evaluating the sufficiency of the Company’s disclosures related to legal proceedings. Valuation of Goodwill As described in Note 9 to the financial statements, goodwill mainly represented an amount of 13.98 million that arose from acquisition of Nice Talent Asset Management Limited and FTFT Finance UK Limited. 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. In addition, the discounted cash flow model requires the Company to select an appropriate weighted average cost of capital based on current market conditions as of December 31, 2022. A high degree of auditor judgment and an increased extent of effort were required when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts. Our audit procedures related to the forecasts of future revenue and operating margin and the selection of the weighted average cost of capital used by management to estimate the fair value contributed by the reporting unit included the following, among others: ● Reviewing procedures of management’s impairment assessment; ● evaluating the reasonableness of the valuation model, methodology, and significant assumptions used by the Company, specifically the weighted average cost of capital including testing the mathematical accuracy of the Company’s calculation of the weighted average cost of capital; ● examining original transaction related documents; ● evaluating the sufficiency of the Company’s disclosures to goodwill. /s/ Onestop Assurance PAC We have served as the Company’s auditor through 2023. Singapore April 19, 2023 F- 5 FUTURE FINTECH GROUP INC. CONSOLIDATED BALANCE SHEETS December 31, 2023 December 31, 2022* ASSETS CURRENT ASSETS Cash and cash equivalents $ 19,032,278 $ 26,071,338 Restricted cash - 3,589,582 Short - term investments 959,028 988,073 Accounts receivable, net 5,705,877 7,796,672 Advances to suppliers and other current assets 3,837,752 4,670,264 Loan receivables 14,895,086 19,157,538 Other receivables, net 10,048,297 2,635,224 Amount due from related parties 12,151 53,126 Assets related to discontinued operations - 296,654 TOTAL CURRENT ASSETS $ 54,490,469 $ 65,258,471 Property, plant and equipment, net $ 4,579,188 $ 4,209,189 Right of use assets - operation lease 1,282,111 1,055,906 Intangible assets 588,982 518,069 Goodwill - 13,976,084 TOTAL NON-CURRENT ASSETS $ 6,450,281 $ 19,759,248 TOTAL ASSETS $ 60,940,750 $ 85,017,719 LIABILITIES CURRENT LIABILITIES Accounts payable $ 3,320,061 $ 3,603,577 Notes payable - 3,589,582 Accrued expenses and other payables 11,997,481 2,108,777 Advances from customers 306,315 1,236,241 Convertible notes payables 1,100,723 - Lease liability - operation lease 498,736 294,944 Amounts due to related parties 505,046 235,742 Deferred liabilities - 7,387,697 Liability related to discontinued operation - 114,556 TOTAL CURRENT LIABILITIES $ 17,728,362 $ 18,571,116 NON-CURRENT LIABILITIES Lease liability - operation lease $ 797,344 $ 760,962 TOTAL NON-CURRENT LIABILITIES 797,344 760,962 TOTAL LIABILITIES $ 18,525,706 $ 19,332,078 Commitments and contingencies (Note 26) STOCKHOLDERS’ EQUITY Future FinTech Group, Inc, Stockholders’ equity Common stock, $ 0.001 par value; 60,000,000 shares authorized; 17,834,874 shares and 14,645,653 shares issued and outstanding as of December 31, 2023 and December 31, 2022 respectively* $ 17,835 $ 14,646 Additional paid-in capital 233,890,997 222,751,657 Statutory reserve 98,357 98,357 Accumulated deficit ( 185,929,662 ) ( 152,276,434 ) Accumulated other comprehensive loss ( 4,094,276 ) ( 3,623,005 ) Total Future FinTech Group, Inc. stockholders’ equity 43,983,251 66,965,221 Non-controlling interests ( 1,568,207 ) ( 1,279,580 ) Total stockholders’ equity 42,415,044 65,685,641 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 60,940,750 $ 85,017,719 * all shares and per share data have been retroactively restated to reflect reverse stock split effected on February 1, 2023. The accompanying notes are an integral part of these consolidated financial statements. F- 6 FUTURE FINTECH GROUP INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the Years Ended, 2023 2022* Revenue $ 34,865,553 $ 23,881,006 Cost – third party 28,999,057 17,676,109 Cost – related party 978,801 809,451 Gross profit 4,887,695 5,395,446 Operating Expenses General and administrative expenses 11,455,557 14,174,820 Research and development expenses 342,985 2,671,748 Stock-based compensation 3,468,000 1,279,740 Selling expenses 599,051 808,358 (Recovery) Provision of doubtful debts ( 716,913 ) 26,440 Impairment loss 14,160,931 3,248,805 Total operating expenses 29,309,611 22,209,911 Loss from operations ( 24,421,916 ) ( 16,814,465 ) Other (expenses) income Interest income 1,344,885 1,311,354 Interest expenses ( 892 ) - Other (expenses) income, net ( 11,321,906 ) 2,011,044 Total other income, net ( 9,977,913 ) 3,322,398 Loss from Continuing Operations before Income Tax ( 34,399,829 ) ( 13,492,067 ) Income tax provision - ( 456,598 ) Deferred income tax ( 2,552 ) ( 60,504 ) Loss from Continuing Operations ( 34,402,381 ) ( 14,009,169 ) Discontinued Operations (Note 24) Loss from discontinued operations - ( 307,041 ) Gain (Loss) on disposal of discontinued operations 386,482 ( 154 ) Net Loss $ ( 34,015,899 ) $ ( 14,316,364 ) Less: Net Loss attributable to non-controlling interests ( 362,671 ) ( 688,819 ) Net loss attributable to Future Fintech Group Inc. $ ( 33,653,228 ) $ ( 13,627,545 ) Other comprehensive income (loss) Loss from continued operations $ ( 34,402,381 ) $ ( 14,009,169 ) Foreign currency translation – continued operations ( 484,953 ) ( 3,025,143 ) Comprehensive loss - continued operation ( 34,887,334 ) ( 17,034,312 ) Loss from discontinued operations $ 386,482 $ ( 307,195 ) Foreign currency translation - discontinued operation 13,682 - Comprehensive loss - discontinued operation 400,164 ( 307,195 ) Comprehensive Loss $ ( 34,487,170 ) $ ( 17,341,507 ) Less: Net loss attributable to non-controlling interests ( 362,671 ) ( 688,819 ) COMPREHENSIVE LOSS ATTRIBUTABLE TO FUTURE FINTECH GROUP INC. STOCKHOLDERS $ ( 34,124,499 ) ( 16,652,688 ) Earnings (loss) per share: Basic loss per share from continued operation $ ( 2.31 ) $ ( 0.93 ) Basic loss per share from discontinued operation 0.03 ( 0.02 ) $ ( 2.28 ) $ ( 0.95 ) Diluted Earnings (loss) per share: Diluted loss per share $ ( 2.31 ) $ ( 0.93 ) Diluted loss per share from discontinued operation ( 0.03 ) ( 0.02 ) $ ( 2.28 ) $ ( 0.95 ) Weighted average number of shares outstanding Basic 14,746,726 14,323,422 Diluted 14,788,834 14,533,948 * Reclassification- certain reclassifications have been made to the financial statements for the period ended December 31, 2022 to conform to the presentation for the period ended December 31, 2023, with no effect on previously reported net income (loss). The accompanying notes are an integral part of these consolidated financial statements. F- 7 FUTURE FINTECH GROUP INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Accumulative Additional Other Non- Common Stock paid-in Statutory Accumulated comprehensive controlling Shares Amount capital reserve Deficits income interests Total Balance at December 31, 2021 14,036,253 $ 14,036 $ 220,579,277 $ 61,382 $ ( 138,611,914 ) $ ( 597,862 ) $ ( 590,761 ) $ 80,854,158 Net loss from continued operation - - - - ( 13,320,350 ) - ( 688,819 ) ( 14,009,169 ) Net loss from discontinued operations - - - - ( 307,041 ) - - ( 307,041 ) Share-based payments-omnibus equity plan 609,400 610 1,279,130 - - - - 1,279,740 Share-based payments-service - - 893,250 - - - - 893,250 Statutory reserve - - - 36,975 ( 36,975 ) - - - Disposition of Discontinued operation - - - - ( 154 ) - - ( 154 ) Foreign currency translation adjustment - - - - - ( 3,025,143 ) - ( 3,025,143 ) Balance at December 31, 2022 14,645,653 $ 14,646 $ 222,751,657 $ 98,357 $ ( 152,276,434 ) $ ( 3,623,005 ) $ ( 1,279,580 ) $ 65,685,641 Issuance of common stocks-non cash 299,221 299 7,387,398 - - - - 7,387,697 Net loss from continued operation - - - - ( 34,039,710 ) - ( 362,671 ) ( 34,402,381 ) Net loss from discontinued operations - - - - - - - - Contribution by non-controlling interests - - 286,832 - - - 74,044 360,876 Share-based payments-omnibus equity plan 2,890,000 2,890 3,465,110 - - - - 3,468,000 Disposition of Discontinued operation - - - - 386,482 13,682 - 400,164 Foreign currency translation adjustment - - - - - ( 484,953 ) - 386,482 Balance at December 31, 2023 17,834,874 $ 17,835 $ 233,890,997 $ 98,357 $ ( 185,929,662 ) $ ( 4,094,276 ) $ ( 1,568,207 ) $ 42,415,044 All shares and per share data have been retroactively restated to reflect reverse stock split effected on February 1, 2023. The accompanying notes are an integral part of these consolidated financial statements. F- 8 FUTURE FINTECH GROUP INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 34,015,899 ) $ ( 14,316,364 ) Net loss from discontinued operation 386,482 ( 307,195 ) Net loss from continuing operations ( 34,402,381 ) ( 14,009,169 ) Adjustments to reconcile net income to net cash provided by operating activities Depreciation 273,106 185,151 Amortization 57,035 63,552 (Recovery) Provision of doubtful debts ( 716,914 ) 26,440 Impairment of goodwill 14,148,298 2,214,825 Impairment of intangible - 124,317 Impairment of short term investment 12,633 909,663 Share-based payments 3,468,000 2,172,990 Changes in operating assets and liabilities Accounts receivable 5,440,382 285,648 Other receivables ( 8,356,443 ) ( 1,402,815 ) Advances to suppliers and other current assets 840,589 ( 1,742,565 ) Operating lease assets and liabilities 13,969 - Accounts payable ( 4,407,407 ) 3,603,498 Accrued expenses 7,333,163 855,186 Advances from customers ( 929,926 ) 1,233,348 Notes payable - 3,589,582 Proceeds from amounts due from related parties, net - 517,076 Repayment of amounts due to related parties, net - ( 966,603 ) Taxes payable - ( 41,111 ) Net cash used in operating activities – continued operations ( 17,225,896 ) ( 2,380,987 ) Net cash provided by operating activities – discontinued operations 574,573 ( 288,286 ) CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment ( 811,093 ) ( 587,104 ) Disposal of property and equipment 32,490 - Additions to loan receivables ( 9,966,830 ) ( 20,078,917 ) Repayment of loan receivable 14,107,063 6,880,000 Payment for available-for-sale securities - Acquisition of a subsidiary, net of cash 4,679,434 166,676 Disposal of a subsidiary, net of cash ( 5,993 ) - Purchase of intangible assets - ( 570,351 ) Net cash used in investing activities from continued operations 8,035,071 ( 14,189,696 ) Net cash used in investing activities from discontinued operations - ( 218,667 ) CASH FLOWS FROM FINANCING ACTIVITIES Notes payable ( 3,589,582 ) - Proceeds from amounts due from related parties, net 944,035 - Repayment of amounts due to related parties, net ( 639,800 ) - Proceeds from secured convertible promissory note 1,100,723 - Contribution by Non - controlling interests 360,876 - Repayment of loans ( 188,215 ) Payment of dividends to the non-controlling interest ( 63,477 ) Net cash (used in) provided by financing activities ( 1,823,748 ) ( 251,692 ) Effect of change in exchange rate ( 188,642 ) ( 3,207,303 ) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 10,628,642 ) ( 20,536,631 ) Cash and cash equivalents, from the continuing operations beginning of year 29,660,920 50,271,801 Cash and restricted cash at end of year 19,032,278 29,735,170 Less: Cash and cash equivalents from the discontinued operations, end of year - ( 74,250 ) Cash and cash equivalents, from the continuing operations end of year 19,032,278 29,660,920 SUPPLEMENTARY DISCLOSURE OF SIGNIFICANT NON-CASH TRANSACTION Issuance of common stocks (Note 23) $ 7,387,697 $ Deferred liabilities (Note 19) - SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid 510,838 714,126 Interest paid - 11,696 The accompanying notes are an integral part of these consolidated financial statements. F- 9 FUTURE FINTECH GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR YEARS ENDED DECEMBER 31, 2023 AND 2022 1. CORPORATE INFORMATION Future FinTech Group Inc. (the “Company”) 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 financial technology related service businesses. The main business of the Company includes supply chain financing services and trading in China, asset management business in Hong Kong and cross-border money transfer service in UK. The Company also expanded into brokerage and investment banking business in Hong Kong and cryptocurrency mining farm in the U.S. The Company had a contractual arrangements with a VIE E-Commerce Tianjin in China, which has generated minimal revenue and business since 2021 due to the negative impact caused by COVID-19. The Company started the process to close it down in November 2023 and completed deregistration and dissolution of the VIE with local authority on March 7, 2024. In March 2022, FTFT UK Limited 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 Limited 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 14, 2022, the Company established Future Trading (Chengdu) Co., Ltd. Its business is bulk commodities 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 is developing bitcoin and other cryptocurrency mining and related service business in Paraguay. The Company has changed its name from KAZAN S.A to FTFT Paraguay S.A. on July 28, 2022. On September 29, 2022, FTFT UK Limited completed its acquisition of 100 % of the issued and outstanding shares of Khyber Money Exchange Ltd., a company incorporated in England and Wales, from Rahim Shah, a resident of United Kingdom for a total of Euros € 685,000 (“Purchase Price”), pursuant to a Share Purchase Agreement (the “Agreement”) dated September 1, 2021. Khyber Money Exchange Ltd. 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 received approval by the FCA before the formal closing of the transaction. On October 11, 2022, the Company changed the name of Khyber Money Exchange Ltd. to FTFT Finance UK Limited. On February 27, 2023, Future FinTech (Hong Kong) Limited (“Buyer”), a company incorporated in Hong Kong and a wholly owned subsidiary of Future FinTech Group Inc. (the “Company”) entered into a Share Transfer Agreement (the “Agreement”) with Alpha Financial Limited, a company incorporated in Hong Kong (“Seller”) and sole owner and shareholder of Alpha International Securities (Hong Kong) Limited, a company incorporated in Hong Kong (“Alpha HK”) and Alpha Information Service (Shenzhen) Co., Ltd., a company incorporated in China (“Alpha SZ”). Alpha HK holds Type 1 ’Securities Trading’, Type 2 ‘Futures Contract Trading’ and Type 4 ’Securities Consulting’ financial licenses issued by the Hong Kong Securities and Futures Commission. Alpha SZ provides technical support services to Alpha HK. The share transfer transaction was approved by the Securities and Futures Commission of Hong Kong (“SFC”) in August 2023 and the acquisition was closed on November 7, 2023. The names of the two entities were subsequently changed to ‘FTFT International Securities and Futures Limited’ and ‘FTFT Information Services (Shenzhen) Co. Ltd.’, respectively. On October 30, 2023, Future FinTech (Hong Kong) Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Alpha International Securities (HONG KONG) Limited a company incorporated in Hong Kong for $ 1,791,174 (HKD 14,010,421 ), which is in the securities business. The Company has changed its name from Alpha International Securities (HONG KONG) Limited to FTFT International Securities and Futures Limited on November 1, 2023. On October 30, 2023, Future FinTech (Hong Kong) Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Alpha Information Services (Shenzhen) Co., Ltd for $ 210,788 (HKD 1,649,528 ), which provides information services for FTFT International Securities and Futures Limited. The Company has changed its name from Alpha Information Services (Shenzhen) Co., Ltd to Future information service (Shenzhen) Co., Ltd on November 3, 2023. F- 10 The Company’s business and operations are principally conducted by its subsidiaries in the PRC, Hong Kong and UK. On January 26, 2023, the Company filed with the Florida Secretary of State’s office Articles of Amendment (the “Amendment”) to amend its Second Amended and Restated Articles of Incorporation, as amended (“Articles of Incorporation”). As a result of the Amendment, the Company has authorized and approved a 1-for-5 reverse stock split of the Company’s authorized shares of common stock from 300,000,000 shares to 60,000,000 shares, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). The common stock will continue to be $ 0.001 par value. The Company rounds up to the next full share of the Company’s shares of common stock any fractional shares that result from the Reverse Stock Split and no fractional shares is issued in connection with the Reverse Stock Split and no cash or other consideration is paid in connection with any fractional shares that would otherwise have resulted from the Reverse Stock Split. No changes are being made to the number of preferred shares of the Company which remain as 10,000,000 preferred shares as authorized but not issued. The amendment to the Articles of Incorporation of the Company took effect on February 1, 2023. The Reverse Stock Split and Amendment were authorized and approved by the Board of Directors of the Company without shareholders’ approval, pursuant to 607.10025 of the Florida Business Corporation Act of the State of Florida. The reverse stock split would be reflected in our December 31, 2023 and December 31, 2022 statements of changes in stockholders’ equity, and in per share data for all periods presented. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation and principle of consolidation These consolidated financial statements (“financial statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America, or US GAAP. The Company’s functional currency of subsidiaries and VIE in China is the Chinese Renminbi (RMB). Other subsidiaries outside of China use U.S. Dollar (USD), Hong Kong Dollar (HKD), Great Britain Pound (“GBP”), AED (United Arab Emirates Dirham) and Guarani (PYG) as the functional currency; however, the accompanying consolidated financial statements have been translated and presented in USD. According to US GAAP Accounting Standard Codification (“ASC”) 810-10-15-8, for legal entities other than limited partnerships, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The consolidated financial statements include the accounts of the Company and its subsidiaries and the VIE. Our contractual arrangements with the VIE and their respective shareholders allow us to (i) exercise effective control over the VIE, (ii) become the primary beneficiary of the VIE for accounting purposes, and (iii) have an exclusive option to purchase all or part of the equity interests in the VIE when and to the extent permitted by PRC law. F- 11 As a result of our direct ownership in our wholly foreign-owned enterprise (“WFOE”) and the contractual arrangements with the VIE, we are regarded as the primary beneficiary of the VIE for accounting purposes, and we treat it and its subsidiaries as the consolidated affiliated entities under U.S. GAAP. Certain amounts of prior years were reclassified to conform with current year presentation. Discontinued Operations On June 27, 2022, Chain Cloud Mall Logistics Center (Shanxi) Co., Ltd. was dissolved and deregistered. On June 16, 2023, QR (HK) Limited was dissolved and deregistered. On December 5, 2023, FTFT PARAGUAY S.A. was dissolved. 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 asset management service, supply chain financing and trading, and others. Uses of Estimates in the Preparation of Financial Statements The Company’s 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 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 accounts 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 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 and had negative operating cash flows and may continue to incur operating losses and generate negative cash flows as the Company implements its future business plan. The Company’s operating losses amounted $ 34.40 million, and it had negative operating cash flows amounted $ 17.23 million as of December 31, 2023. 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. F- 12 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 financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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. The Company expenses research and development costs as they are incurred. 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 of are reported at the lower of the carrying amount or fair value less cost to sell. 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 and restricted cash and short-term investments 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. F- 13 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. For the year ended December 31, 2023: Income Share Pre-share amount Loss from continued operations attributable to Future Fintech Group, Inc. $ ( 34,039,710 ) 14,746,726 $ ( 2.31 ) Loss from discontinued operations attributable to Future Fintech Group, Inc. $ 386,482 14,746,726 $ 0.03 Basic EPS: Loss to common stockholders from continuing operations $ ( 34,039,710 ) 14,746,726 $ ( 2.31 ) Loss available to common stockholders from discontinued operations $ 386,482 14,746,726 $ 0.03 Dilutive EPS: Warrants before 1-for-5 reverse stock split - 210,526 - Warrants after 1-for-5 reverse stock split - 42,108 - 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 continued operations attributable to Future Fintech Group, Inc. $ ( 34,039,710 ) 14,788,834 $ ( 2.31 ) Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding from discontinued operations $ 386,482 14,788,834 $ 0.03 For the year ended December 31, 2022: Income Share Pre-share amount Loss from continued operations attributable to Future Fintech Group, Inc. $ ( 13,320,350 ) 14,323,422 $ ( 0.93 ) Loss from discontinued operations attributable to Future Fintech Group, Inc. $ ( 307,195 ) 14,323,422 $ ( 0.02 ) Basic EPS: Loss to common stockholders from continued operations $ ( 13,320,350 ) 14,323,422 $ ( 0.93 ) Loss available to common stockholders from discontinued operations $ ( 307,195 ) 14,323,422 $ ( 0.02 ) Dilutive EPS: Warrants - 210,526 - 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 continued operations attributable to Future Fintech Group, Inc. $ ( 13,320,350 ) 14,533,948 $ ( 0.93 ) Diluted loss per share is calculated by taking net loss, divided by the diluted weighted average common shares outstanding from discontinued operations $ ( 307,195 ) 14,533,948 $ ( 0.02 ) F- 14 Cash, cash equivalents and restricted cash 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 , in the HK are only insured by the government up to HKD500, 000 , in the United Kingdom are only insured by the government up to GBP 18,000 , in the United States of America are only insured by the Federal Deposit Insurance Corporation up to USD250, 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. Cash that is restricted as to withdrawal for use or pledged as security is reported separately on the face of the consolidated balance sheets, and is not included in the total cash and cash equivalents in the consolidated statements of cash flows. 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. Allowances for doubtful accounts are maintained for expected credit losses resulting from the Company’s customers’ inability to make required payments. The allowances are based on the Company’s regular assessment of various factors, including the credit-worthiness and financial condition of specific customers, historical experience with bad debts and customer deductions, receivables aging, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. The Company maintains an allowance for credit losses in accordance with ASC Topic 326, Credit Losses (“ASC 326”) and records the allowance for credit losses as an offset to accounts receivable and contract assets, and the estimated credit losses charged to the allowance is classified as “bad debt expense” in the consolidated statements of comprehensive income. 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. The Company has assessed its receivable including credit term and corresponding all its receivables in December 2023. Upon such credit terms, bad debt expense was $( 716,913 ) and $ 26,440 during the years ended December 31, 2023 and 2022, respectively. Accounts receivables of $ 0.97 million and nil have been outstanding for over 90 days as of December 31, 2023 and December 31, 2022, respectively. 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. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers. F- 15 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: Sales of coals, aluminum ingots, sand and steel 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. Revenue was $ 20.44 million and $ 9.94 million during the year ended December 31, 2023 and 2022, respectively. Sales agent services of coals, aluminum ingots, sand and steel For the sale of third-party products where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross revenue amount billed to customers as sales of goods listed above. The Company considers multiple factors when determining whether it obtains control of third-party products, including evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product. The Company recognizes net revenue as agent services for the sales of coals, aluminum ingots, sand and steel when no control obtained throughout the transactions. Revenue was $ 0.33 million and $0.17 million during the year ended December 31, 2023 and 2022, respectively. 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 operations and comprehensive income. 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: Building 30 years Machinery and equipment 5 - 10 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 noncash 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 five - 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. F- 16 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 7.08 :1 and 6.96 :1 at the balance sheet dates of December 31, 2023 and December 31, 2022, 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 7.05 :1 and 6.73 :1 for fiscal year 2023 and fiscal year 2022, respectively. The exchange rate we used to convert HKD to USD was 7.82 :1 and 7.80 :1 at the balance sheet dates of December 31, 2023 and December 31, 2022. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rates we used to convert HKD to USD were 7.83 :1 and 7.83 :1 for fiscal year 2023 and fiscal year 2022. The exchange rate we used to convert GBP to USD was 0.78 :1 and 0.83 :1 at the balance sheet dates of December 31, 2023 and December 31, 2022. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rates we used to convert GBP to USD were 0.80 :1 and 0.81 :1 for fiscal year 2023 and fiscal year 2022. The exchange rate we used to convert AED to USD was 3.66 :1 and 3.67 :1 at the balance sheet dates of December 31, 2023 and December 31, 2022. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rates we used to convert AED to USD were 3.66 :1 and 3.67 :1 for fiscal year 2023 and fiscal year 2022. The exchange rate we used to convert PYG to USD was 7,298.63 :1 and 7,322.90 :1 at the balance sheet dates of December 31, 2023 and December 31, 2022. The average exchange rate for the period has been used to translate revenues and expenses. The average exchange rate we used to convert PYG to USD was 7,282.85 :1 and 6,976.87 :1 for fiscal year 2023 and fiscal year 2022. Translation adjustments are reported separately and accumulated in a separate component of equity (cumulative translation adjustment). Government subsidies Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the local governments. For certain government subsidies, there are no defined rules and regulations to govern the criteria necessary for companies to receive such benefits, and the amount of financial subsidy is determined at the discretion of the relevant government authorities. The government subsidies of operating nature with no further conditions to be met are recorded of operating expenses in “Other income” in the consolidated statements when received. 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. 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. F- 17 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. In addition, the discounted cash flow model requires the Company to select an appropriate weighted average cost of capital based on current market conditions as of December 31, 2023 and December 31, 2022. A high degree of auditor judgment and an increased extent of effort were required when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the forecasts. Based upon the assessment, the Company has concluded that goodwill is nil and $ 13.98 million as of December 31, 2023 and December 31, 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. Fair valued or carried at amortized costs. As of December 31, 2023 and December 31, 2022, the short-term investments amounted to $ 0.96 million and $ 0.99 million, respectively. Due to fluctuations of the quoted shares included in its investment portfolios, the Company recognized an impairment to the investment portfolio of $ 12,633 . 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. F- 18 Statutory reserves Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10 % of after-tax profit until the aggregated appropriations reach 50 % of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10 % of after-tax profits until the aggregated appropriations reach 50 % of the registered capital (as determined under PRC GAAP at each year-end). Variable interest entities On July 31, 2019, CCM Tianjin, 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 conducting 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 the vice president of blockchain division of the Company. 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. F- 19 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 CCM Tianjin, 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. 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. 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. F- 20 3. VARIABLE INTEREST ENTITY The carrying amount of the VIE’s consolidated assets and liabilities are as follows: December 31, December 31, 2023 2022 Cash and cash equivalents $ 16,080 $ 12,684 Other receivables 49 768 Other current assets 7,957 14,371 Total current assets 24,086 27,823 Intangible assets - 88,302 Property and equipment, net 71 98 Total assets 24,157 116,223 Total liabilities ( 243,721 ) ( 248,964 ) Net assets $ ( 219,564 ) $ ( 132,741 ) December 31, December 31, 2023 2022 Current liabilities: Accounts payable $ 18,346 $ 18,657 Accrued expenses and other payables 222,771 6,455 Advances from customers 2,604 2,648 Amount Due to Related Party - 221,204 Total current liabilities 243,721 248,964 Total liabilities $ 243,721 $ 248,964 The summarized operating results of the VIE’s are as follows: December 31, December 31, 2023 2022 Revenue $ 72,128 $ 2,188 Gross profit $ 3,241 $ 2,188 Net loss $ ( 34,163 ) $ ( 276,766 ) 4. ACCOUNTS RECEIVABLE Accounts receivable, net consist of the following: December 31, December 31, 2023 2022 Supply Chain Financing/Trading $ 3,251,822 $ 6,624,654 Asset management service 1,250,613 1,145,518 Others 1,203,442 26,500 Total accounts receivable, net $ 5,705,877 $ 7,796,672 F- 21 The following table sets forth our concentration of accounts receivable, net of specific allowances for doubtful accounts. December 31, December 31, 2023 2022 Debtor A $ 21.11 % $ 46.08 % Debtor B 15.35 % 15.65 % Debtor C 15.25 % 14.26 % Total accounts receivable, net $ 51.71 % $ 75.99 % 5. OTHER RECEIVABLES As of December 31, 2023, the balance of other receivables was $ 10.05 million. As of April 22, 2022 and January 31, 2023, FTFT Super Computing Inc. entered into a “Electricity Sales and Purchase Agreement” with a third-party seller. FTFT Super Computing Inc. provided an initial amount of Adequate Assurance to the seller in the form of a cash deposit in the amount of $ 1.86 million and has receivables from pre purchase electricity $ 0.07 million. On February 3, 2023, Future Fintech Group Inc. entered into a “Consulting Agreement” with a third party for its professional service of potential acquisition projects. Future Fintech Group Inc. provided initial amount of cash deposit to the third party in the amount of $ 2.40 million. On December 6, 2023, Future Fintech (Hong Kong) Limited entered into a “Mobile Software Application Development Agreement” with a third-party. Future Fintech (Hong Kong) Limited shall pay $ 4.00 million. Future Fintech (Hong Kong) Limited provided initial amount of cash deposit to the third party in the amount of $ 2.00 million. Development shall take 250 man-days. On December 6, 2023, Future Fintech (Hong Kong) Limited entered into a “Augmented Reality (AR) Group Development and Service Agreement” with a third-party. Future Fintech (Hong Kong) Limited shall pay $ 5.00 million. Future Fintech (Hong Kong) Limited provided initial amount of cash deposit to the third party in the amount of $ 2.50 million. Development shall take 180 man-days. In addition, other receivables included total $ 1.22 million deposit paid and prepayments to third parties. As of December 31, 2022, the balance of other receivables was $ 2.64 million. On October 1, 2022, FTFT UK Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Khyber Money Exchange Ltd., a company incorporated for £ 786,887 . Buyer deposited £ 400,000 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 $ 0.24 million 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. As of January 9, 2023, the Company has received refund $ 0.24 million. As of April 22, 2022, FTFT Super Computing Inc. entered into a “Electricity Sales and Purchase Agreement” with a third party. FTFT Super Computing Inc. provided an initial amount of Adequate Assurance to such party in the form of a cash deposit in the amount of $ 1.00 million and receivables from resale of electricity $ 0.24 million. In addition, other receivables included total $ 1.16 million deposit paid and prepayments. F- 22 6. LOAN RECEIVABLES As of December 31, 2023, the balance of loan receivables was $ 14.90 million, which was from a third party. On March 10, 2022, FTFT HK entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, FTFT HK loaned an amount of $ 5.00 million to the third party at the annual interest rate of 10 % from March 10, 2022 to September 9, 2024 . To strengthen the liquidity, the Company negotiated with the borrower to early settle part of the loan. As of April 17, 2023, the Company has received repayment $ 2.16 million. On July 14, 2022, Future Private Equity Fund Management (Hainan) Co., Limited entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, Future Private Equity Fund Management (Hainan) Co., Limited loaned an amount of $ 7.28 million (RMB 50 million) to the third party at the annual interest rate of 8 % from July 15, 2022 to July 14, 2024 , guarantee by Junde Chen. To strengthen the liquidity, the Company negotiated with the borrower to early settle part of the loan. As of April 17, 2023, the Company has received repayment $ 5.09 million (RMB 35 million). The amount of $ 2.12 million (RMB 15 million) will be repaid within 12 months. On December 8, 2023, Future Private Equity Fund Management (Hainan) Co., Limited entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, Future Private Equity Fund Management (Hainan) Co., Limited loaned an amount of $ 4.94 million (RMB 35 million) to the third party at the annual interest rate of 5 % from December 8, 2022 to December 8, 2024 . On December 8, 2023, Future Fin Tech (Hong Kong) Limited entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, Future Fin Tech (Hong Kong) Limited loaned an amount of $ 5.00 million to the third party at the annual interest rate of 5 % from December 8, 2022 to December 8, 2024 . As of December 31, 2022, the balance of loan receivables was $ 19.16 million, which was from a third party. 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 $ 0.22 million (RMB 1.5 million) to the third party at the annual interest rate of 5.25 % from September 8, 2021 to September 6, 2023 . As of March 30, 2023, the Company has received repayment $ 0.22 million. On March 10, 2022, FTFT HK entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, FTFT HK loaned an amount of $ 5.00 million to the third party at the annual interest rate of 10 % from March 10, 2022 to September 9, 2024. To strengthen the liquidity, the Company negotiated with the borrower to early settle part of the loan. As of April 17, 2023, the Company has received repayment $ 2.16 million. On May 31, 2022, FTFT HK entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, FTFT HK loaned an amount of $ 6.36 million to the same third party at the annual interest rate of 10 % from May 31, 2022 to May 30,2023. To strengthen the liquidity, the Company negotiated with the borrower to early settle part of the loan. As of April 17, 2023, the Company has received repayment $ 6.36 million. On December 26, 2022, FTFT HK entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, FTFT HK loaned an amount of $ 0.40 million to the same third party at the annual interest rate of 10 % from December 26, 2022 to March 26, 2023. As of April 17, 2023, the Company has received repayment $ 0.40 million. On July 14, 2022, Future Private Equity Fund Management (Hainan) Co., Limited entered into a “Loan Agreement” with a third party. Pursuant to the Loan Agreement, Future Private Equity Fund Management (Hainan) Co., Limited loaned an amount of $ 7.28 million (RMB 50 million) to the third party at the annual interest rate of 8 % from July 15, 2022 to July 14, 2024, guarantee by Junde Chen. To strengthen the liquidity, the Company negotiated with the borrower to early settle part of the loan. As of April 17, 2023, the Company has received repayment $ 5.09 million (RMB 35 million). The amount of $ 2.18 million (RMB 15 million) will be repaid within 12 months. F- 23 7. SHORT - TERM INVESTMENTS As of December 31, 2023 and 2022, the balance of short - term investments was $ 0.96 million and $ 0.99 million. On September 6, 2021, Future Private Equity Fund Management (Hainan) Co., Ltd. invested $ 1.87 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 investments was $ 0.98 and $ 0.99 million on December 31, 2023 and 2022. Due to fluctuations of the quoted shares included in its investment portfolios, the Company recognized an impairment to the investment portfolio of $ 12,633 and $ 0.91 million for the years ended December 31, 2023 and 2022. 8. OTHER CURRENT ASSETS The amount of other current assets consisted of the followings: December 31, December 31, 2023 2022 Prepayments for Supply Chain Financing/Trading $ 2,743,539 $ 3,766,643 Prepaid expenses 29,694 72,544 Others 1,064,519 831,077 Total $ 3,837,752 $ 4,670,264 9. GOODWILL As of December 31, 2023, the balance of goodwill mainly represented an amount of nil that arose from acquisition of Nice Talent Asset Management Limited (“Nice Talent”) in 2021, Khyber Money Exchange Ltd., in 2022, FTFT International Securities and Futures Limited (Hong Kong) and Future information service (Shenzhen) Co., Ltd in 2023. 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 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 pre reverse stock split shares of common stock of the Company on August 4, 2021. 40 % of the Purchase Price ($ 7.39 million) was paid in 299,221 shares of common stock of the Company on October 17, 2023. On October 1, 2022, FTFT UK Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Khyber Money Exchange Ltd., a company incorporated for £ 786,887 ($ 0.95 million). The Company has changed its name from Khyber Money Exchange Ltd. to FTFT Finance UK Limited on October 11, 2022. On October 30, 2023, Future FinTech (Hong Kong) Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Alpha International Securities (Hong Kong) Limited a company incorporated in Hong Kong for $ 1,791,174 (HKD 14,010,421 ). The Company is securities business. The Company has changed its name from Alpha International Securities (Hong Kong) Limited to FTFT International Securities and Futures Limited on November 1, 2023. On October 30, 2023, Future FinTech (Hong Kong) Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Alpha Information Services (Shenzhen) Co., Ltd for $ 210,788 (HKD 1,649,528 ). The Company is provided information services for FTFT International Securities and Futures Limited. The Company has changed its name from Alpha Information Services (Shenzhen) Co., Ltd to Future information service (Shenzhen) Co., Ltd on November 3, 2023. The Company recorded $ 14.15 million of impairment loss in fiscal year 2023 related with goodwill mainly arose from acquisition of Nice Talent Asset Management Limited, Khyber Money Exchange Ltd., Alpha International Securities (Hong Kong) Limited and Alpha Information Services (Shenzhen). Goodwill impairment test a s of December 31, 2023 using compare the carrying amount of the reporting unit (including goodwill) with its fair value. If the carrying amount exceeds the fair value, compare the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss should be recognized. F- 24 10. ACQUISITION Nice Talent 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 shares of common stock of the Company on August 4, 2021. 40 % of the Purchase Price ($ 7.39 million) was paid in 299,221 shares of common stock of the Company on October 17, 2023. 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 - Noncontrolling 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. 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. US$ 1,291,391 in net sales and US$ 114,623 in net gain of Nice Talent were included in the consolidated financial statements for the years ended December 31, 2021. Khyber Money Exchange Ltd. On October 1, 2022, FTFT UK Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Khyber Money Exchange Ltd., a company incorporated for £ 786,887 ($ 0.95 million). The Company has changed its name from Khyber Money Exchange Ltd. to FTFT Finance UK Limited on October 11, 2022. The following table summarizes the allocation of estimated fair values of net assets acquired and liabilities assumed: Other receivables $ 242,087 Property, plant and equipment, net 584 Accrued expenses and other payables ( 89,888 ) Net identifiable assets acquired $ 152,783 Add: goodwill 628,938 Total purchase price for acquisition net of $ 166,676 of cash $ 781,721 The Company has included the operating results of FTFT Finance UK Limited in its consolidated financial statements since the Acquisition Date. Nil in net sales and US$ 20,440 in net loss of FTFT Finance UK Limited were included in the consolidated financial statements for the years ended December 31, 2022. Had the acquisition been completed from beginning of the current year, the revenue and the net loss of the Company would have been US$ 24.03 million and US$ 14.32 million, respectively. F- 25 Alpha International Securities (Hong Kong) Limited On October 30, 2023, Future FinTech (Hong Kong) Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Alpha International Securities (Hong Kong) Limited a company incorporated in Hong Kong for $ 1,791,174 (HKD 14,010,421 ). The Company is securities business. The Company has changed its name from Alpha International Securities (Hong Kong) Limited to FTFT International Securities and Futures Limited on November 1, 2023. Alpha Information Services (Shenzhen) Co., Ltd On October 30, 2023, Future FinTech (Hong Kong) Limited, a wholly owned subsidiary of the Company acquired 100 % equity interest of Alpha Information Services (Shenzhen) Co., Ltd for $ 210,788 (HKD 1,649,528 ). The Company is provided information services for FTFT International Securities and Futures Limited. The Company has changed its name from Alpha Information Services (Shenzhen) Co., Ltd to Future information service (Shenzhen) Co., Ltd on November 3, 2023. The following table summarizes the allocation of estimated fair values of net assets acquired and liabilities assumed: Accounts receivable $ 1,526,360 Other current assets 171,038 Property, plant and equipment, net 1,458 Intangible assets 127,846 Right of use assets 8,875 Lease liability-current ( 8,875 ) Accounts payable ( 4,123,903 ) Accrued expenses and other payables ( 552,484 ) Net identifiable assets acquired $ ( 2,849,685 ) Add: goodwill 172,213 Total purchase price for acquisition net of $ 4,679,434 of cash $ ( 2,677,472 ) The Company has included the operating results of FTFT International Securities and Futures Limited in its consolidated financial statements since the Acquisition Date. US$ 294,437 in net sales and US$ 88,408 in net income of FTFT International Securities and Futures Limited were included in the consolidated financial statements for the years ended December 31, 2023. The Company has included the operating results of Future information service (Shenzhen) Co., Ltd in its consolidated financial statements since the Acquisition Date. US$ 1,390 in net sales and US$ 50,80 in net loss of Future information service (Shenzhen) Co., Ltd were included in the consolidated financial statements for the years ended December 31, 2023. 11. LEASES The Company’s noncancelable operating leases consist of leases for office spaces and computer processing center. The Company is the lessee under the terms of the operating leases. For the year ended December 31, 2023, the operating lease cost was $ 1.29 million. The Company’s operating leases have remaining lease terms of approximately 42 months. As of December 31, 2023, the weighted average remaining lease term and weighted average discount rate were 3.52 years and 4.75 %, respectively. F- 26 Maturities of lease liabilities were as follows: Operating As of December 31, 2023 Lease From January 1, 2024 to December 31, 2024 $ 556,658 From January 1, 2025 to December 31, 2025 254,953 From January 1, 2026 to December 31, 2026 254,953 From January 1, 2027 to December 31, 2027 200,526 From January 1, 2028 to March 31, 2028 133,684 Total $ 1,400,774 Less: amounts representing interest $ 104,694 Present Value of future minimum lease payments 1,296,080 Less: Current obligations 498,736 Long term obligations $ 797,344 The Company leases office space and equipment under various short-term operating leases. As permitted by ASC 842, the Company has elected the practical expedient for short-term leases, whereby lease assets and lease liabilities are not recognized on the balance sheet. Short term leases cost was $ 0.26 million for the year ended December 31, 2023. 12. PROPERTY, PLANT AND EQUIPMENT, NET Property and equipment consist of the following: December 31, December 31, 2023 2022 Office equipment, fixtures and furniture $ 633,936 $ 489,184 Vehicle 730,998 798,955 Building 146,053 37,784 Subtotal 1,510,987 1,325,923 Less: accumulated depreciation and amortization ( 716,828 ) ( 276,851 ) Construction in progress 3,790,623 3,165,805 Impairment ( 5,594 ) ( 5,688 ) Total $ 4,579,188 $ 4,209,189 Depreciation expense included in general and administration expenses for the years ended December 31, 2023 and 2022 was $ 273,106 and $ 185,151 respectively. Depreciation expense included in cost of sales for the year ended December 31, 2023 and 2022 was $ 0 and $ 0 , respectively. F- 27 13. INTANGIBLE ASSETS Intangible assets consist of the following: December 31, December 31, 2023 2022 Trademarks $ 847 $ 862 System and software 2,730,549 2,578,647 Subtotal 2,731,396 2,579,509 Less: accumulated depreciation and amortization ( 311,131 ) ( 199,151 ) Less: impairment ( 1,831,283 ) ( 1,862,289 ) Total 588,982 518,069 Amortization expense included in general and administration expenses for the years ended December 31, 2023 and 2022 was $ 57,035 and $ 63,552 , respectively. Amortization expense included in cost of sales for the years ended December 31, 2023 and 2022 was $ 0 and $ 0 , respectively. The estimated amortization is as follows: As of December 31, Estimated amortization expense From January 1, 2024 to December 31, 2024 $ 57,035 From January 1, 2025 to December 31, 2025 57,035 From January 1, 2026 to December 31, 2026 57,035 From January 1, 2027 to December 31, 2027 57,035 From January 1, 2028 to December 31, 2029 57,035 Thereafter 175,859 Total $ 461,034 The trading rights of license plates 1 and 2 on the Hong Kong Stock Exchange have no expiration date and do not require amortization, amount was $ 127,948 . 14. NOTE PAYABLE As of December 31, 2023, note payable was nil . As of December 31, 2022, note payable consist of the following: Issue date Principal amount US$ Mature date Effective interest rate FUCE Future Supply Chain (Xi’an) Co., Ltd. August 10, 2022 $ 1,435,834 August 10, 2023 0.05 % FUCE Future Supply Chain (Xi’an) Co., Ltd. August 12, 2022 717,916 August 12, 2023 0.05 % FUCE Future Supply Chain (Xi’an) Co., Ltd. July 28, 2022 717,916 July 28, 2023 0.05 % FUCE Future Supply Chain (Xi’an) Co., Ltd. December 19, 2022 717,916 December 19, 2023 0.05 % Total $ 3,589,582 At maturity, the Notes are payable at their principal amount thereon. There occurring with respect to any of the Company’s indebtedness, an event of default resulting in accelerated maturity or a failure to pay principal, interest or premium when due, the overdue interest shall be charged at 0.05 % per day, without the need to notify the applicant and sign another loan contract. As of December 31, 2022, there was no such event of default. F- 28 15. ACCOUNT PAYABLES The amount of account payables were consisted of the followings: December 31, December 31, 2023 2022 Supply Chain Financing/Trading payment $ 728,010 $ 3,584,920 Others 2,592,051 18,657 Total $ 3,320,061 $ 3,603,577 16. ACCRUED EXPENSES AND OTHER PAYABLES The amount of accrued expenses and other payables were consisted of the followings: December 31, December 31, 2023 2022 Legal fee and other professionals $ 832,263 $ 533,048 Wages and employee reimbursement 509,288 763,983 Provision for legal case 8,875,265 - Suppliers 731,521 708,287 Accruals 1,049,144 103,459 Total $ 11,997,481 $ 2,108,777 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. On April 11, 2024, on which date the jury returned a verdict in favor of FT Global and the Court entered a judgment awarding FT Global $ 8,875,265 . 17. CONVERTIBLE NOTES PAYABLE As of December 31, 2023 and 2022, convertible debt consisted of the following: December 31, December 31, 2023 2022 Beginning $ - $ - Addition 1,100,723 - Payment - - Conversion - - Balance $ 1,100,723 $ - 18. DEFERRED LIABILITIES As of December 31, 2023 and 2022, the balance of deferred liabilities mainly represented an amount of nil and $ 7.39 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”). 40 % of the Purchase Price ($ 7.39 million) was paid in 299,221 shares of common stock of the Company on October 17, 2023. F- 29 19. RELATED PARTY TRANSACTION As of December 31, 2023, the amount due to the related parties was consisted of the followings: Name Amount Relationship Note Chao Li $ 73,893 Corporate legal representative Other payables, interest free and payment on demand. Ming Yi 29,513 Chief Financial Officer of the Company Accrued expenses, interest free and payment on demand. Xiaochen Zhao 124 Corporate legal representative Accrued expenses, interest free and payment on demand. Chan Siu Kei 401,516 NTAM’s Director Other payables, interest free and payment on demand. Total $ 505,046 As of December 31, 2023, the amount due from the related parties was consisted of the followings: Name Amount Relationship Note Kai Xu $ 12,151 Deputy General Manager of a subsidiary of the Company Loan receivables*, interest free and payment on demand. Total $ 12,151 During 2023, the Company had the following transactions with related parties: Name Amount Relationship Note JKNDC Limited $ 7,664 A company owned by the minority shareholder of NTAM Other income, net JKNDC Limited 978,801 A company owned by the minority shareholder of NTAM Cost of revenue- Asset management service Nice Talent Partner Limited 459,867 A company owned by the minority shareholder of NTAM Consultancy fee During fiscal year 2023, the Company extended advances amounting to $ 351,004 to five key management personnel, and a total of $ 341,190 had been either repaid or classified as business expenses. During fiscal year 2023, one key management personnel advanced a total of $ 4,330 to the Company. During fiscal year 2023, the Company did not pay a bonus to a key management personnel a total of $ 401,516 . F- 30 As of December 31, 2022, the amount due to the related parties was consisted of the followings: Name Amount Relationship Note Reits (Beijing) Technology Co., Ltd $ 14,538 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. Zhi Yan 221,204 General Manager of a subsidiary of the Company Other payables, interest free and payment on demand. Total $ 235,742 As of December 31, 2022, the amount due from the related parties was consisted of the followings: Name Amount Relationship Note Kai Xu $ 16 Deputy General Manager of a subsidiary of the Company Loan receivables*, interest free and payment on demand. Ming Yi 12,135 Chief Financial Officer of the Company Loan receivables*, interest free and payment on demand. Jing Chen 971 Vice president of the Company Loan receivables*, interest free and payment on demand. Ola Johannes Lind 2,168 Chief Executive Officer of the FTFT Capital Investments L.L.C. and Chief Strategy Officer of the Company Loan receivables*, interest free and payment on demand. Wong Tai Kue 37,836 NTAM’s Director Advance to pay for directors* Amount is interest free and payment on demand. Total $ 53,126 During 2022, the Company had the following transactions with related parties: Name Amount Relationship Note NDC $ 559,786 A company owned by the minority shareholder of NTAM Cost of revenue- Asset management service JKNDC Limited 249,666 A company owned by the minority shareholder of NTAM Cost of revenue- Asset management service Alpha Yield Limited 164,779 A director of the Company is a shareholder of this company Consultancy fee NDC 81 A company owned by the minority shareholder of NTAM Consultancy fee Nice Talent Partner Limited 357,564 A company owned by the minority shareholder of NTAM Consultancy fee During fiscal year 2022, the Company extended advances amounting to $ 160,539 to six key management personnel, and a total of $ 171,863 had been either repaid or classified as business expenses. During fiscal year 2022, five key management personnel advanced a total of $ 132,770 to the Company, and the Company repaid $ 29,830 to them. * The related party transactions have been approved by the Company’s Audit Committee. F- 31 20. INCOME TAX The Company is incorporated in the United States of America and is subject to United States federal taxation. The applicable tax rate is 21 % in 2023 and 2022. No provisions for income taxes have been made, as the Company had no U.S. taxable income for the years ended December 31, 2023 and 2022. For the years ended December 31, 2023 and 2022, the Company had current income tax expenses of nil and $ 456,598 , 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 year ended December 31, 2023, 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 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 to RMB 3 million is 5 %; the tax rate for pre-tax profits between RMB 1 million to RMB 3 million is 10 %. Other Subsidiaries and VIE were subject to an enterprise income tax rate of 25 %. Each of Future Fin-Tech (Hong Kong) 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 below HKD2 million is 8.5 %, exceeding HKD2 million 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. Significant components of the provision for income taxes are as follows: 2023 2022 Current tax $ - $ 456,598 Deferred tax - book-tax difference 2,552 60,504 The provision for income taxes $ 2,552 $ 517,102 Reconciliation of the differences between the statutory EIT rate applicable to profits of the consolidated entities and the income tax expenses of the Company: 2023 2022 Loss before taxation $ ( 34,399,829 ) $ ( 13,492,067 ) Notional tax on profit before CIT and Hong Kong Computed expected tax expense ( 8,599,957 ) ( 3,373,017 ) Others, primarily the difference in tax rates 5,942,131 1,341,365 Deferred tax assets losses not recognized 2,657,826 2,488,250 Total $ - $ 456,598 F- 32 21. IMPAIRMENT LOSS The Company recorded $ 14.16 million of impairment loss in the year ended 2023 relating to the short - term investments $ 12,633 and impairment of goodwill $ 14.15 million. Future Private Equity Fund Management (Hainan) Co., Ltd. invested $ 1.83 million (RMB 13,000,000 ) to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in various types of investment portfolios. The Company may still suffer significant impairment loss or downward adjustments of our investments in the future, due to the potential worsening global economic conditions and the recent disruptions to, and volatility in, the continuing low market price of shares caused the Company to recognize a fair-value loss in 2023. According to the market value, the Company’s balance of the short - term investments was $ 12,633 on December 31, 2023. Goodwill represents the excess of the cost over the net tangible and identified intangible assets of acquired businesses. The Company evaluate goodwill for impairment annually as of the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Based on the impairment analysis performed in the fourth quarter. The Company recorded $ 14.15 million of impairment loss in fiscal year 2023 related with goodwill mainly arose from acquisition of Nice Talent Asset Management Limited, Khyber Money Exchange Ltd., Alpha International Securities (Hong Kong) Limited and Alpha Information Services (Shenzhen). Goodwill impairment test as of December 31, 2023 using compare the carrying amount of the reporting unit (including goodwill) with its fair value. If the carrying amount exceeds the fair value, compare the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss should be recognized. The Company recorded $ 3.25 million of impairment loss in the year ended 2022 relating to the short - term investments $ 0.91 million, impairment of goodwill $ 2.21 million and impairment of intangible assets $ 0.13 million. The Company has intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. The Company test indefinite-lived intangible assets for impairment annually the same measurement date as goodwill, the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Based on annual analysis, impairment of intangible assets $ 0.13 million. Future Private Equity Fund Management (Hainan) Co., Ltd. invested $ 1.83 million (RMB 13,000,000 ) to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in various types of investment portfolios. The Company may still suffer significant impairment loss or downward adjustments of our investments in the future, due to the potential worsening global economic conditions and the recent disruptions to, and volatility in, the continuing low market price of shares caused the Company to recognize a fair-value loss in 2022. According to the market value, the Company’s balance of the short - term investments was $ 0.99 million on December 31, 2022. Goodwill represents the excess of the cost over the net tangible and identified intangible assets of acquired businesses. The Company evaluate goodwill for impairment annually as of the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Based on the impairment analysis performed in the fourth quarter. The Company recorded $ 2.21 million of impairment loss in fiscal year 2022 related with goodwill mainly arose from acquisition of Nice Talent Asset Management Limited and FTFT Finance UK Limited (formerly known as Khyber Money Exchange Ltd.). Goodwill impairment test as of December 31, 2022 using compare the carrying amount of the reporting unit (including goodwill) with its fair value. If the carrying amount exceeds the fair value, compare the implied fair value of the reporting unit’s goodwill with the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment loss should be recognized. F- 33 22. SHARE BASED COMPENSATION On February 1, 2023, the Company has authorized and approved a 1-for-5 reverse stock split of the Company’s authorized shares of common stock from 300,000,000 shares to 60,000,000 shares. 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. The share numbers in this Note 25 are pre-reverse stock split effected on February 1, 2023. Statutory reserve During the years ended December 31, 2023 and 2022, the Company collectively attributed nil and $ 36,975 of retained earnings for their statutory reserves, respectively. 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 $ 25,677,345 (RMB 181,864,932 ) as of December 31, 2023. 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. Payments-omnibus equity plan On July 12, 2022 (the “Grant Date”), the Compensation Committee of the Board of Directors (the “Board”) of the Company granted 3,047,000 shares of common stock of the Company, par value $ 0.001 (the “Shares”), pursuant to the Company’s 2020 Omnibus Equity Plan, to certain officers and employees of the Company and its subsidiaries (the “Grantees”), including: 800,000 shares to Shanchun Huang, Chief Executive Officer of the Company; 800,000 shares to Yongke Xue, President of the Company; 100,000 shares to Ming Yi, Chief Financial Officer of the Company, 547,000 shares to Peng Lei, general manager of a subsidiary of the Company, 300,000 shares to Pang Dong, general manager of a subsidiary the Company, and 500,000 shares to Kai Xu, Deputy General Manager of a subsidiary of the Company and vice president of blockchain division of the Company (collectively, the “Grants”). The Grants vested immediately on the Grant Date and each of the Grantees also entered into an Unrestricted Stock Award Agreement with the Company on July 12, 2022. As the closing price of the Company stock was $ 0.42 on July 12, 2022, the Company recorded an expense of $ 1.28 million in the third quarter of fiscal year 2022. As of the date of this report, the Shares have been issued to the Grantees. The share numbers in this Note 22 are pre-reverse stock split effected on February 1, 2023. On October 12, 2023, the Compensation Committee of the Board of Directors of the Company granted 2,890,000 shares of common stock of the Company, par value $ 0.001 , pursuant to the Company’s 2023 Omnibus Equity Plan, to certain officers and employees of the Company and its subsidiaries (the “Grantees”). As the closing price of the Company stock was $ 1.20 on December 23, 2023, the Company recorded an expense of $ 3.47 million in the third quarter of fiscal year 2023. As of the date of this report, the Shares have been issued to the Grantees. F- 34 23. COMMON STOCK Securities Purchase Agreement On December 24, 2020, the Company entered into a securities purchase agreement with certain purchasers, pursuant to which the Company sold to the purchasers in a registered direct offering, an aggregate of 4,210,530 units, each consisting of one share of our common stock and a warrant to purchase 1 share of our Common Stock, at a purchase price of $ 1.90 per unit, for aggregate gross proceeds to the Company of $ 8,000,007 , before deducting fees to the placement agent and other offering expenses payable by the Company. On December 29, 2020, the Company issued Units consisting of an aggregate of 4,210,530 shares of our Common Stock and warrants to purchase up to an aggregate of 4,210,530 shares of our Common Stock at an exercise price of $ 2.15 per share (the “Investors’ Warrants”). The Investors’ Warrants have a term of five years and are exercisable by the holder at any time after the date of issuance. In connection with the offering, the Company also issued placement agent a warrant to purchase 210,526 shares of our Common Stock (the “Placement Agent Warrant”) on substantially the same terms as the Investors’ Warrants, except that the Placement Agent Warrant has an exercise price of $ 2.375 per share and are not exercisable until June 24, 2021. December 31, 2022 and 2023, outstanding warrant has 210,526 shares of our Common Stock. 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 Asset Management Limited from Joy Rich Enterprises Limited (the “Nice Shares”) 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, at a price of $ 5 per share. 40 % of the Purchase Price ($ 7.39 million) was paid in 299,221 shares of common stock of the Company on October 17, 2023. The share numbers in this Note 22 are pre-reverse stock split effected on February 1, 2023. 24. DISCONTINUED OPERATIONS On June 27, 2022, Chain Cloud Mall Logistics Center (Shanxi) Co., Ltd. was dissolved and deregistered. On June 16, 2023, QR (HK) Limited was dissolved and deregistered. On December 5, 2023, FTFT PARAGUAY S.A. was dissolved. Loss from discontinued operations for fiscal years 2023 and 2022 was as follows: December 31, December 31, 2023 2022 REVENUES $ - $ - COST OF SALES - - GROSS PROFIT - - OPERATING EXPENSES: General and administrative - 299,082 Total - 299,082 OTHER INCOME (EXPENSE) Interest income - - Interest expense - ( 11,696 ) Other income - 3,737 Total - ( 7,959 ) Loss from discontinued operations before income tax - ( 307,041 ) Income tax provision - - Loss from discontinued operation before noncontrolling interest $ - - Gain (loss) on disposal of discontinued operations 386,482 ( 154 ) Less: Net loss attributable to non-controlling interests - - LOSS FROM DISCONTINUED OPERATION $ 386,482 $ ( 307,195 ) The major components of assets and liabilities related to discontinued operations are summarized below: December 31, 2023 December 31, 2022 Cash and cash equivalents $ - $ 74,250 Other receivables - 14,312 Property, plant and equipment, net - 208,092 Total assets related to discontinued operations $ - $ 296,654 Accrued expenses and other payables $ - $ 105,479 Amount Due to Related Party - 9,077 Total liabilities related to discontinued operations $ - $ 114,556 F- 35 25. 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 three segments: supply chain financing service and trading business, asset management service and others. 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. The Company began to provide sand and steel supply chain financing services during the first quarter of 2023. 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. For fiscal year 2023: Asset management service Supply chain financing/ trading Others Total Reportable segment revenue $ 12,882,521 $ 20,769,323 $ 1,213,709 $ 34,865,553 Inter-segment loss - - - - Revenue from external customers $ 12,882,521 20,769,323 1,213,709 34,865,553 Segment gross profit $ 3,656,650 $ 465,020 $ 766,025 $ 4,887,695 For fiscal year 2022: Asset management service Supply chain financing/ trading Others Total Reportable segment revenue $ 13,630,508 $ 10,107,996 $ 142,502 $ 23,881,006 Inter-segment loss - - - - Revenue from external customers $ 13,630,508 10,107,996 142,502 23,881,006 Segment gross profit $ 4,948,314 $ 338,970 $ 108,162 $ 5,395,446 F- 36 Loss from Continuing Operations before Income Tax: For the Years Ended, 2023 2022 Supply chain financing/trading 660,040 ( 494,229 ) Asset management service 4,037,857 2,431,254 Others ( 561,525 ) 1,337,694 Corporate and Unallocated 35,151,152 15,612,794 Total operating expenses and other expense 39,287,524 18,887,513 Loss from Continuing Operations before Income Tax ( 34,399,829 ) ( 13,492,067 ) Segment assets: December 31, 2023 2022 Supply chain financing/trading 12,437,136 26,487,090 Asset management service 3,640,811 3,387,506 Others 23,855,261 14,090,091 Corporate and Unallocated 21,007,542 40,756,378 Assets related to discontinued operation - 296,654 Total assets 60,940,750 85,017,719 Assets subject to attribution to business segments largely include property, plant and equipment, receivable and right of use assets. All other items are reflected in Corporate and Unallocated. F- 37 26. 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 4, 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. On October 12, 2022, the Company filed a motion for summary judgment on all claims asserted by FT Global in this lawsuit. On November 2, 2022, FT Global filed its opposition to the Company’s motion for summary judgment. On November 16, 2022, the Company filed its reply in support of its motion for summary judgment on all claims asserted by FT Global in this lawsuit. On August 31, 2023, the Court entered an Order denying the Company’s motion for summary judgment. On September 20, 2023, the parties filed a joint motion to extend the deadline to file the consolidated pretrial order pending mediation of the case by the parties. On September 21, 2023, the Court granted the parties’ joint motion to extend the deadline to file the consolidated pretrial order to October 27, 2023. On October 16, 2023, the parties mediated the case. On October 24, 2023, the parties filed another joint motion to extend the deadline to file the consolidated pretrial order. On October 27, 2023, the Court granted the parties’ joint motion to extend the deadline to file the consolidated pretrial order to November 17, 2023 and set the case for trial on January 8, 2024. Subsequently, the Court approved an extension of the deadline to file a pretrial order to December 1, 2023. The Court has also rescheduled the trial to commence on April 8, 2024. The trial began on April 8, 2024 and ended on April 11, 2024, on which date the jury returned a verdict in favor of FT Global and the Court entered a judgment awarding FT Global $ 8,875,265.31 . On April 12, 2024, FT Global requested that the Court add $ 1,723,136.44 in prejudgment interest to the judgment amount. The Company will continue to vigorously defend the action against FT Global, including by appealing the judgment to the United States Court of Appeals for the Eleventh Circuit. F- 38 27. 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 was 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 2020 until late March 2020. The quarantines, travel restrictions, and the temporary closure of office buildings have materially negatively impacted our business. The outbreak has had and might continue 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. There were outbreaks in various cities and provinces in China due to Omicron variant, such as Xi’an city, Hong Kong, Shanghai, Beijing and other cities in 2022, which have resulted quarantines, travel restrictions, and temporary closure of office buildings and facilities in these cities. In December 2022, the Chinese government eased its strict zero COVID-19 policy which resulted in a surge of new COVID-19 cases during December 2022 and January 2023, which has disrupted our business operations in China. 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 put a restriction on large gatherings in 2020 and 2021, which made the promotion strategy for our online e-commerce platforms difficult to implement and the Company experienced difficulties to subscribe new members for its online e-commerce platforms. Since 2021, CCM generated minimal revenue and business for the Company. The Company started a process to close it down in November 2023 and completed deregistration and dissolution of the VIE with local authority on March 7, 2024. While the potential economic impact brought by new variants of COVID-19 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. 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. In the event that we do need to raise capital in the future and there is any outbreak due to new variants, outbreak-related instability in the securities markets could adversely affect our ability to raise additional capital. 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. Customer concentration risk For the year ended December 31, 2023, two customers accounted for 53.59 % and 32.74 % of the Company’s total revenues. For the year ended December 31, 2022, two customers accounted for 52.86 % and 12.29 % of the Company’s total revenues. Vendor concentration risk For the year ended December 31, 2023, one vendor accounted for 71.96 % of the Company’s total purchases. For the year ended December 31, 2022, two vendors accounted for 18.85 % and 15.87 % of the Company’s total purchases. 28. SUBSEQUENT EVENTS On March 7, 2024, Chain Cloud Mall Network and Technology (Tianjin) Co., Limited was dissolved and deregistered, amount was $ 616,411 . F-39