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Item 1. Legal Proceedings

2025-08-19 compared with 2025-05-20 · 41 added, 104 removed, 7 unchanged (95% of the section changed)

2 unchanged sentences

In January 2021, FT Global Capital, Inc.,

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

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

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 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.

On April 11, 2024, the Court entered a judgment awarding FT Global

$8,875,265.31 and on April 16, 2024, the Court issued an amended judgment, awarding FT Global $10,598,379.93, which includes $7,895,265.31

in damages, $1,723,114.62 in prejudgment interest, and $980,000.00 in attorney’s fees.

On May 9, 2024, the Company filed a post-trial

motion to set aside the jury verdict and for a new trial and the Court denied the motion on March 3, 2025.

The Company filed notice of

appeal to appeal the judgement to the United States Court of Appeals for the Eleventh Circuit on April 2, 2025.

The Company will seek

to have the judgment overturned on appeal.

The Company’s opening brief in the appeal is due on June 11, 2025.

FT Global has registered the Court’s judgment

in the United States District Court for Southern District of New York (“NY Court”), where FT Global has brought a motion

requiring the Company to turn over its stock in its subsidiary companies.

On August 28, 2024, NY Court granted FT Global’s

motion for turnover of Defendant’s shares in Defendant’s wholly-owned subsidiaries as Defendant 1) failed to satisfy the

$10.8 million judgment rendered in the Northern District of Georgia and registered in the Southern District of New York, and 2) is in

possession of money and property in which it has an interest.

The NY Court ordered Defendant shall turn over the shares, membership,

or limited partnership interests in all of its subsidiaries, and the corporate seals of its China and Hong Kong-based subsidiaries, to

Marshal for auction or sale until the judgment is satisfied.

Pursuant to the order issued by the United States District Court

for the Southern District of New York on August 28, 2024, the United States Marshal for the Southern District of New York (“U.S.

Marshal”) sold the securities of the subsidiaries of the Company other than those in Hong Kong and China in auction of:

of the membership interests in Future Fintech Digital Capital Management LLC;

(ii) all of the outstanding shares of FTFT UK Limited;

(iii) the corporate seal of DigiPay FinTech Limited;

(iv) the corporate seal of GlobalKey SharedMall Limited;

(iv) all of the outstanding

shares of Future Fintech Labs Inc.;

and (v) all of the outstanding shares of Future Fintech Digital Number One GP, LLC (USA) to Alec

Orudjiev, the general counsel of FT Global for $25,000 on December 18, 2024.

On December 6, 2024, the Company agreed to sell all issued

and outstanding shares of FTFT SuperComputing Inc.

a wholly owned subsidiary of the Company (“FTFT SuperComputing”) to DDMM

Capital LLC (the “Buyer”) for a purchase price that equals to:

(i) the assumption of the obligations of FTFT SuperComputing

totaling $973,072.24 and (ii)$1,000,000, which was paid to an account at Olshan Frome Wolosky LLP to satisfy, in part, the right of payment

held by FT Global Capital, Inc.

arising from the judgment entered in favor of FT Global and against the Company registered in the Southern

District of New York and all matters pertaining to such litigation.

The Company has appealed the turnover order of the NY Court for the

auction of securities of the subsidiaries of the Company in Hong Kong and China to the United States Court of Appeals for the Second

Circuit and is waiting for the final decision of the Court of Appeals.

On February 6, 2025, FT Global filed a motion (“Motion”)

in the NY Court, amended on February 12, 2025, seeking a turnover order for 39,825,939 (before 1 for 10 reverse stock split effected

by the Company on April 1, 2025) unissued shares of the Company’s common stock for sale to satisfy the judgement.

30, 2025, the Company received order from the NY Court to turn over its unissued shares to U.S.

Marshal for auction.

The transfer agent

of the Company has issued 1,951,443 shares of common stock in the name of the United States Marshals Service.

The Company will continue

to vigorously defend the action against FT Global and has filed notice of appeal to appeal the order of the NY Court to the United States

Court of Appeals for the Second Circuit.

Shareholders Lawsuit

(LaBelle and Janzen)

The LaBelle case is a

putative securities class action filed in January 2024 and is pending in the District of New Jersey.

Denise LaBelle (“Plaintiff”)

alleges that the Company and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act by making materially

false or misleading statements in the company’s public filings and disclosures relating to the former Chief Executive Officer of

the Company Mr.

a former placement agent of the Company, filed a lawsuit against the Company in the Superior Court of Fulton County, Georgia, and served

the complaint that same month.

The Company has previously reported developments related to this matter in its filings with the Securities

EC, including without limitation, its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, Form 10-K for the fiscal

year ended December 31, 2022, Form 10-K for the fiscal year ended December 31, 2023, Form 10-K for the fiscal year ended December 31,

2024, Quarterly Report on Form 10-Q for the fiscal quarter ended on March 31, 2025.

On June 17, 2025, the Company entered into a Settlement

and Forbearance Agreement with FT Global to resolve four federal court judgments totaling approximately $4.0 million in cash.

the Company agreed to issue 340,000 shares of its common stock to FT Global and 60,000 shares to its legal counsel, and to issue rights

entitling FT Global to receive up to 1.3 million additional shares of common stock, with 650,000 eligible no earlier than six months after

signing (Series A Right) and 650,000 eligible no earlier than twelve months after signing (Series B Right).

The Company has issued 400,000

shares of common stock in accordance with the foregoing.

Under the agreement, FT Global agreed to suspend enforcement actions in exchange

for a structured cash settlement and the issuance of shares.

The Company’s obligations include instalment

payments over 18 months and the issuance of shares pursuant to a court order under Section 3(a)(10) of the Securities Act.

The agreement

also includes mutual releases and requires the Company to remain current in its SEC filings and maintain its listing on a national securities

Additional details are included in the Company’s Current Report on Form 8-K filed on June 20, 2025.

Lawsuit (LaBelle and Janzen)

The LaBelle case is a putative securities class

action filed in January 2024 and is pending in the District of New Jersey.

Denise LaBelle (“Plaintiff”) alleges that

the Company and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act by making materially false or

misleading statements in the company’s public filings and disclosures relating to the former Chief Executive Officer of the Company

Shanchun Huang and charges filed by the SEC against Mr.

Shanchun Huang with manipulative trading in the stock of the Company

using an offshore account shortly before he became the Company’s CEO in 2020 and failing to disclose his beneficial ownership.

Shanchun Huang with manipulative trading in the stock of the Company using

an offshore account shortly before he became the Company’s CEO in 2020 and failing to disclose his beneficial ownership.

Huang has denied the allegations of trading before he became CEO.

Plaintiff claims that these alleged misstatements caused the

Company’s stock to trade at artificially inflated prices, harming investors when the truth was revealed.

The lead plaintiff

and lead counsel were appointed in September 2024.

The Company was served in September 2024, and the Plaintiff is currently seeking

substituted service on the individual defendants.

Once service is resolved, the Plaintiff is expected to file an amended complaint,

Plaintiff claims that these alleged misstatements caused the Company’s

stock to trade at artificially inflated prices, harming investors when the truth was revealed.

The lead plaintiff and lead counsel were

appointed in September 2024.

The Company was served in September 2024.

On July 28, 2025, the Plaintiff filed an amended complaint,

which the Company and other defendants intend to move to dismiss.

The Janzen action is a consolidated

shareholder derivative case filed by Jeff Janzen on May 31, 2024, also pending in the District of New Jersey, brought nominally on

behalf of Future FinTech.

Plaintiff alleges that certain current and former officers and directors breached fiduciary duties by

allowing or failing to prevent the same alleged misconduct at issue in LaBelle, including mismanagement and misleading public

The derivative case has been stayed by stipulation, pending resolution of the anticipated motion to dismiss in LaBelle,

but plaintiff has reserved the right to participate in mediation and settlement discussions relating to the class action.

The Janzen action is a consolidated shareholder

derivative case filed by Jeff Janzen on May 31, 2024, also pending in the District of New Jersey, brought nominally on behalf of Future

Plaintiff alleges that certain current and former officers and directors breached fiduciary duties by allowing or failing to

prevent the same alleged misconduct at issue in LaBelle, including mismanagement and misleading public disclosures.

The derivative case

has been stayed by stipulation, pending resolution of the anticipated motion to dismiss in LaBelle, but plaintiff has reserved the right

to participate in mediation and settlement discussions relating to the class action.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Legal Proceedings