What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-15 compared with 2025-11-14 · 315 added, 260 removed, 72 unchanged (89% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This quarterly report on Form 10-Q and other

7 unchanged sentences

“future”, “intend”, “plan”, or the negative of these terms and similar expressions as they relate

to the Company or its management identify forward-looking statements.

Such statements reflect the current view of the Company with respect

to future events and are subject to risks, uncertainties, assumptions, and other factors (including the statements in the section “results

of operations” below), and any businesses that the Company may acquire.

Should one or more of these risks or uncertainties materialize,

or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated,

expected, intended, or planned.

Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed

under the heading “Risk Factors” and those listed in our Annual Report on Form 10-K for the year ended December 31, 2024 (the

“2024 Form 10-K”) and in this Form 10-Q.

The following discussion should be read in conjunction with our Financial Statements

and related Notes thereto included elsewhere in this report and in our 2024 Form 10-K.

Although the Company believes that the expectations

to Company or Company’s management identify forward-looking statements.

Such statements reflect the current view of Company with

respect to future events and are subject to risks, uncertainties, assumptions, and other factors (including the statements in the section

“results of operations” below), and any businesses that Company may acquire.

Should one or more of these risks or uncertainties

materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed,

estimated, expected, intended, or planned.

Factors that might cause or contribute to such a discrepancy include, but are not limited to,

those listed under the heading “Risk Factors” and those listed in our Annual Report on Form 10-K for the year ended December

31, 2025 (the “2025 Form 10-K”) and in this Form 10-Q.

The following discussion should be read in conjunction with our Financial

Statements and related Notes thereto included elsewhere in this report and in our 2025 Form 10-K.

Although the Company believes the expectations

reflected in the forward-looking statements are based on reasonable assumptions, the Company cannot guarantee future results, levels of

12 unchanged sentences

We are not a Chinese operating company, although we have had significant operations in China and

Historically, our business was focused on fruit

juice manufacturing and distribution in China.

Due to rising production costs and stricter environmental laws, we shifted our operations

toward supply chain financing and trading in China, asset management in Hong Kong, cross-border money transfer services in the United

Kingdom, brokerage and investment banking in Hong Kong, and cryptocurrency mining in the United States.

Most of these activities have

since been reduced or exited.

Recent strategic changes include:

Exit from Variable Interest Entity (“VIE”) operations in China – Our VIE, E-Commerce Tianjin, generated minimal revenue since 2021 and was deregistered on March 7, 2024.

Disposal of Hong Kong asset management operations – In November 2024, we sold our remaining 42.86% interest in Nice Talent Asset Management Limited for approximately $300,000 and ceased asset management activities in Hong Kong.

Sale of cryptocurrency mining operations – On December 9, 2024, we sold FTFT Super Computing Inc., including the assumption of approximately $973,000 in liabilities and $1.0 million applied toward a litigation judgment.

Disposition of multiple subsidiaries – On December 18, 2024, we sold Future Fintech Digital Capital Management LLC, FTFT UK Limited, DigiPay FinTech Limited, Global Key Shared Mall Ltd., Future Fintech Labs Inc., and Future Fintech Digital Number One GP, LLC through a court-ordered auction for $25,000.

Closure of Paraguay cryptocurrency venture – FTFT Paraguay S.A., acquired in 2022, was dissolved in December 2023 after we were unable to develop planned operations.

As of September 30, 2025, our principal business

operations consist of:

This discussion should be read together with the more detailed business description included in our Annual Report

on Form 10-K for the fiscal year ended December 31, 2025.

As described in our 2025 Form 10-K, our business has changed materially

over recent years.

Historically, we were engaged in the production and sale of fruit juice concentrates and fruit beverages in the PRC.

We later transitioned to financial technology-related businesses, including supply chain financing and trading in China, asset management

in Hong Kong, cross-border money transfer services in the United Kingdom, brokerage and investment banking services in Hong Kong, and

cryptocurrency mining in the United States.

We have since exited or disposed of several of these historical businesses, including our

former VIE operations, asset management business, cryptocurrency mining operations, and certain other subsidiaries.

Those historical dispositions

are described in our 2025 Form 10-K and are reflected in our discontinued operations and segment disclosures where applicable.

As of March 31, 2026, our principal business operations

sale of fast-moving consumer goods;

commission-based trading and consulting services;

and supply chain financing

and supply chain financing and trading.

We currently have one directly controlled subsidiary,

Future FinTech (Hong Kong) Limited.

Future FinTech (Hong Kong) Limited, which has 9 wholly owned subsidiaries in Hong Kong and China.

Fast-Moving Consumer Goods (“FMCG”)

Since the third quarter of 2024, we entered into

FMCG business to tap into the fast-growing online retail market.

We operate an online store on a reputable e-commerce platform and focus

on sales of non-alcoholic beverages and dairy beverages.

The business model relies on selling large quantities of goods to generate revenue,

as the profit margin on each individual item is usually slim.

Supply Chain Financing Service and Trading in China

Since the second quarter of 2021, we have engaged

in the coal supply chain financing service and trading business.

Since the third quarter of 2021, we have engaged in aluminum ingots supply

chain financing service and trading business.

Since the first quarter of 2023, we have engaged in sand and steel supply chain financing

service and trading business.

Our supply chain finance business mainly serves

the receivables and payables of industrial customers, obtains the creditor’s rights or commodity goods rights of large state-owned

enterprises through trade execution, provides customers with working capital, accelerates capital turnover, and then expands the business

scale and improves the industrial value.

Through our supply chain service ability and customer

resources, we can tap into low-risk assets, flexibly carry out financial services around the actual financial needs of certain industries,

and reduce the overall risk of the business by using the control of business flow, goods logistics and capital flow in the process of

commodity circulation.

We focus on bulk commodity goods such as coal,

aluminum ingots, sand and steel and take large state-owned or listed companies as the core service targets;

we use our own funds as the

operation basis, actively uses a variety of channels and products for financing, such as banks, commercial factoring companies, accounts

receivable, asset-backed securities, and other innovative financing methods to obtain sufficient funds.

We sign purchase and sale agreements with suppliers

The suppliers are responsible for the supply and transportation of goods to the end users’ designated freight yard or

transfer the title to us in certain warehouses.

We also provide trading service as we don’t take control over the ownership of the

goods but receive agent service fee for the transaction.

For the sale of goods where we obtain control of the goods before transferring

it to the customer, we recognize revenue based on the gross revenue amount billed to customers as sales of goods.

We consider multiple

factors when determining whether we obtain control of the goods, including evaluating if we can establish the price of the goods, retain

inventory risk for tangible goods or have the responsibility for ensuring acceptability of the goods.

We recognize net revenue as agent

services for the sales of coals, aluminum ingots, and steel when no control is obtained throughout the transactions.

We select the customers

and suppliers that have good credit and reputation.

Since the second quarter of 2021, we have

engaged in the coal supply chain financing service and trading business in China.

During fiscal year 2025, we significantly scaled down this business

segment due to reduced activity in the domestic bulk commodity trading market in China and management’s reassessment of credit exposure

and capital allocation priorities.

During the three months ended March 31, 2026, we generated no revenue from this segment.

to evaluate market conditions and our strategic focus, and there can be no assurance that we will resume this business at historical levels

or that future market conditions will support meaningful growth in this segment.

Trading Commission and Consulting services

FTFT International Securities and Futures Limited,

3 unchanged sentences

Consulting” financial licenses issued by the Hong Kong Securities and Futures Commission.

Results of Operations

Comparison of Three Months Ended September

30, 2025 and 2024:

The following table sets forth the breakdown of

our revenues for the three months ended September 30, 2025 and 2024, respectively:

Three months ended September 30,

Fast-Moving Consumer Goods (“FMCG”)

Trading Commission and Consulting service

Supply Chain Financing/Trading

Total revenue

For the three months ended September 30, 2025

and 2024, revenue from sales of FMCG was $1,196,141 and $342, respectively, representing an increase of $1,195,799, or 349,648.83%.

increase was primarily attributable to the Company’s strategic expansion into the FMCG sector in September 2024, which significantly

contributed to our revenue growth during the three months ended September 30, 2025.

For the three months ended September 30, 2025 and 2024, revenue from

trading commission and consulting service was $128,492 and $598,245, respectively, representing a decrease of $469,753, or 78.52%.

decrease was mainly because a major project, which boosted revenue from consulting service during the three months ended September 30,

2024, did not recur in the same period this year.

For the three months ended September 30, 2025

and 2024, revenue from supply chain financing/trading was nil and $428,533, respectively, representing a decrease of $428,533, or 100.00%.

The decrease was due to our management’s decision to temporarily suspend these operations resulting from lower coal prices and reduced

market demand in China during the three months ended September 30, 2025.

The following table sets forth the breakdown of

the gross profit for the three months ended September 30, 2025 and 2024, respectively:

Three months ended September 30,

Fast-Moving Consumer Goods (“FMCG”)

Trading Commission and Consulting service

Supply Chain Financing/Trading

Total gross profit

Overall gross profit decreased by $500,520, or

80.36%, to $122,337 for the three months ended September 30, 2025 from $622,857 for the same period last year.

The decrease was primarily

due to the decrease in gross profit from trading commission and consulting service which was in line with the decrease in revenue for

this business segment during the three months ended September 30, 2025.

Although revenue from FMCG segment increased significantly for

the three months ended September 30, 2025, gross profit from this business segment did not increase simultaneously due to its low gross

Overall gross margin as a percentage of revenue was 9.24% for the three months ended September 30, 2025, representing a decrease

of 51.41 percentage points from 60.64% for the same period last year, mainly due to the decrease in gross margin for debt recovery consulting

service fee, and our gross margin was further eroded by that of the FMCG segment, which accounted for a majority portion of total revenue

during the three months ended September 30, 2025.

We also provide business and financial consulting services, including

listing-readiness and preparatory consulting services.

As described in our 2025 Form 10-K, this business line remains in an early stage

of development and is conducted primarily through Future FinTech (Hong Kong) Limited and, in certain limited circumstances, Future Information

Service (Shenzhen) Co., Ltd.

During the three months ended March 31, 2026, revenue from trading commission and consulting services increased

compared to the same period in 2025, primarily due to revenue recognized from a new consulting services project during the period.

we nor our subsidiaries engage in underwriting, securities brokerage, placement agent services, investor solicitation, or similar activities

in the United States or in any other jurisdiction where we do not hold the required license or registration.

Proposed Acquisition of TansGen SC Tech

As disclosed in our 2025 Form 10-K, in September 2025, our Board of

Directors approved a proposal to pursue a potential acquisition of TansGen SC Tech Limited as part of our ongoing strategic transition

and expansion initiatives.

As of March 31, 2026, no definitive acquisition agreement had been executed, and the Company continued to conduct

financial, legal and operational due diligence and valuation procedures.

The execution of any definitive agreement remains subject to

completion of due diligence, negotiation of final terms, regulatory approvals, if applicable, and other customary conditions.

be no assurance that a definitive agreement will be executed, that the proposed acquisition will be completed, or that, if completed,

the transaction will achieve the anticipated strategic or financial benefits.

Critical Accounting Policies and Estimates

Discontinued Operations

On February 3, 2025, FTFT UK LIMITED, FTFT Finance

UK Limited, Future Fintech Digital Number One US, LP, Future Fintech Digital Number One Offshore, LLC (Cayman), Future Fintech Digital

Number One GP, LLC (USA), FTFT Digital Number One, Ltd.

(Cayman), Future FinTech Labs Inc, Future Fintech Digital Capital, FTFT CAPITAL

INVESTMENTS, DigiPay FinTech Limited, DCON DigiPay Limited-JPN and Global Key Shared Mall Ltd were disposed of for a consideration of

US$25,000 after a court auction sale.

The gain on disposal was $28.26 million.

On December 16, 2025, Future Commercial Management

(Hainan) Co., Ltd.

was disposed of for a consideration of $1.4 million (RMB 10.0 million).

The gain on disposal was $52,749.

Segment Information Reclassification

We classified our business segments into Trading

Commission and Consulting Services, Fast-Moving Consumer Goods (FMCG), and Supply Chain Financing and Trading.

Uses of Estimates in the Preparation of Financial Statements

Our unaudited condensed consolidated financial

statements have been prepared in accordance with US GAAP and this requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed

consolidated financial statements and reported amounts of revenue and expenses during the reporting period.

The significant areas requiring

the use of management estimates include, but are not limited to, the expected credit losses for receivables, estimated useful life and

residual value of property and equipment, impairment of long-lived assets, provision for staff benefits, 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 unaudited condensed consolidated financial statements.

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.

The Company’s cash and cash equivalents

and restricted cash and short-term investments are classified within level 1 of the fair value hierarchy because they are valued using

quoted market prices.

Revenue Recognition

The Company applies the five steps defined under

(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 our 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

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.

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 United States dollar (“USD”).

Assets and liabilities of the Company’s foreign subsidiaries have been translated

into USD using the exchange rate at the balance sheet date, while equity accounts are translated using historical exchange rate.

exchange rate for the period has been used to translate revenues and expenses.

Translation adjustments are reported separately and accumulated

in a separate component of equity (cumulative translation adjustment).

Other comprehensive income (loss) for the three

months ended March 31, 2026 and 2025 represented foreign currency translation adjustments and were included in the unaudited condensed

consolidated statements of operation and comprehensive loss.

There is no guarantee the RMB amounts could have

been, or could be, converted into USD at rates used in translation.

Income taxes are provided on an asset and liability

approach for financial accounting and reporting of income taxes.

Any tax paid by subsidiaries during the year is recorded.

is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose

and is calculated using tax rates that have been enacted at the balance sheet date.

Deferred income tax liabilities or assets are recorded

to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and the financial reporting

amounts at each period end.

A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred

tax asset will not be realized.

ASC 740 provides guidance for recognizing and

measuring uncertain tax positions, and it prescribes a threshold condition that a tax position must meet for any of the benefits of the

uncertain tax position to be recognized in the financial statements.

ASC 740 also provides accounting guidance on derecognizing, classification

and disclosure of these uncertain tax positions.

Impairment of Long-Lived Assets

In accordance with ASC 360-10, Accounting for

the Impairment or Disposal of Long-Lived Assets , long-lived assets, such as property 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

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.

Recent Accounting Pronouncements

We have reviewed all the recently issued, but

not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the accompanying

unaudited condensed consolidated financial statements.

Summary of Significant Accounting Policies, to our unaudited condensed

consolidated financial statements for a description of applicable recent accounting pronouncements.

Results of Operations for the Three Months

Ended March 31, 2026 and 2025

The following table summarizes our operating results

for the three months ended March 31, 2026 and 2025, respectively, and sets forth the dollar and percentage increase or (decrease) between

For the Three Months Ended

Cost of revenue

OPERATING EXPENSES

The following table sets forth the breakdown of

our operating expenses and operating expenses as a percentage of revenue for the three months ended September 30, 2025 and 2024, respectively:

Three months ended September 30,

General and administrative expenses

Stock-based compensation

Selling expenses

Allowance for credit losses/doubtful accounts

Allowance for (net recovery of) credit losses/doubtful accounts

(27,999,779 )

Total operating expenses

For the three months ended September 30, 2025,

our general and administrative expenses were $1,324,770, representing a decrease of $255,798, or 16.18%, as compared to the same period

The decrease was primarily attributable to reduced salary, employee benefit and bonus expenses as a result of the implementation

of cost-control measures, as well as a decrease in commission expenses caused by decreased consulting service revenue.

The decrease was

partially offset by an increase in business entertainment expenses driven by our new business expansion.

For the three months ended September 30, 2025,

our selling expenses were $240,805, representing an increase of $137,011, or 132.00%, as compared to the same period last year.

was primarily attributable to increased business entertainment expenses, traveling costs and sales team performance incentives, resulting

from our initiatives to expand into new business segments and acquire new customers.

For the three months ended September 30, 2025,

our allowance for credit losses/doubtful accounts was $654,222, representing a decrease of $2,732,408, or 80.68%, as compared to the same

period last year.

The decrease was primarily due to the management’s efforts to collection of long overdue receivables from our

customers, resulting in a smaller allowance for credit losses during the three months ended September 30, 2025.

(29,309,470 )

LOSS FROM OPERATIONS

(30,636,543 )

OTHER INCOME (EXPENSES)

Interest income

Interest expenses

Amortization of debt issuance costs

Other income, net

For the three months ended September 30, 2025,

our net other income was $132,148, representing a decrease of $99,225, or 42.89%, as compared to the same period last year.

was primarily due to reduced interest income during the three months ended September 30, 2025, resulting from a decreased loan receivable

Total other income, net

Loss from Continuing Operations before Income Tax

(30,538,015 )

Net loss from continuing operations

For the three months ended September 30, 2025,

our net loss from continuing operations was $1,965,312, representing a decrease of $2,251,450, or 53.39%, as compared to the same period

The decrease was primarily due to the decrease in operating expenses, as discussed above.

Comparison of Nine Months Ended September

30, 2025 and 2024:

(30,538,015 )

Net income from discontinued operations

(27,830,733 )

COMPREHENSIVE LOSS ATTRIBUTABLE TO FUTURE FINTECH GROUP, INC.

$ (4,946,351 )

The following table sets forth the breakdown of

our revenues for the nine months ended September 30, 2025 and 2024, respectively:

Nine months ended September 30,

our revenues for the three months ended March 31, 2026 and 2025, respectively:

For the Three Months Ended March 31,

Fast-Moving Consumer Goods (“FMCG”)

Trading Commission and Consulting services

Supply Chain Financing/Trading

Trading Commission and Consulting service

Total revenue

For the nine months ended September 30, 2025 and

2024, revenue from sales of FMCG was $2,060,276 and $342, respectively, representing an increase of $2,059,934, or 602,319.88%.

was primarily attributable to the Company’s strategic expansion into the FMCG sector in September 2024, which significantly contributed

to revenue growth during the nine months ended September 30,2025.

For the nine months ended September 30, 2025 and

2024, revenue from supply chain financing/trading was $1,341 and $934,971, respectively, representing a decrease of $933,630, or 99.86%.

The decrease was due to our management’s decision to temporarily suspend these operations resulting from lower coal prices and reduced

market demand in China during the nine months ended September 30, 2025.

For the nine months ended September 30, 2025 and

2024, revenue from trading commission and consulting service was $421,275 and $1,039,985, respectively, representing a decrease of $618,710,

The decrease was mainly because a major project, which boosted revenue from consulting service during the nine months ended

September 30, 2024, did not recur in the same period this year.

Revenue from sales of FMCG decreased by $364,349,

or 76.47%, from $476,451 for the three months ended March 31, 2025 to $112,102 for the three months ended March 31, 2026.

was primarily due to intensified competition from other FMCG sellers on the e-commerce platform.

Meanwhile, we reduced investment in marketing

activities as a result of the implementation of cost-control measures, which also adversely affected sales conversion.

Revenue from trading commission and consulting

services increased by $36,171, or 56.22%, from $64,339 for the three months ended March 31, 2025 to $100,510 for the three months ended

March 31, 2026.

The increase was mainly due to a new consulting services project with related revenue amortized over the service term

in the three months ended March 31, 2026, and no similar project occurred during the three months ended March 31, 2025.

Revenue from supply chain financing/trading decreased

by $1,341, or 100.00%, from $1,341 for the three months ended March 31, 2025 to $ nil for the three months ended March 31, 2026.

was due to our management’s decision to temporarily suspend these operations resulting from lower coal prices and reduced market

demand in China during the three months ended March 31, 2026.

The following table sets forth the breakdown of

the gross profit for the nine months ended September 30, 2025 and 2024, respectively:

Nine months ended September 30,

the gross profit for the three months ended March 31, 2026 and 2025, respectively:

For the Three Months Ended March 31,

Fast-Moving Consumer Goods (“FMCG”)

Trading Commission and Consulting services

Supply Chain Financing/Trading

Trading Commission and Consulting service

Overall gross profit decreased by $768,045, or

66.45%, to $387,727 for the nine months ended September 30, 2025 from $1,155,772 for the same period last year.

The decrease was primarily

due to the decrease in gross profit from trading commission and consulting service, and supply chain financing/trading which were in line

with the decrease in revenue for these two business segments during the nine months ended September 30, 2025.

Although revenue from FMCG

segment increased significantly for the nine months ended September 30, 2025, gross profit from this business segment did not increase

simultaneously due to its low gross margin.

Overall gross margin as a percentage of revenue was 15.62% for the nine months ended September

30, 2025, representing a decrease of 42.90 percentage points from 58.51% for the same period last year, mainly due to the decrease in

gross margin for debt recovery consulting service fee, and our gross margin was further eroded by that of the FMCG segment, which accounted

for a majority portion of total revenue during the nine months ended September 30, 2025.

Total gross profit

Overall gross profit increased slightly by $2,177,

or 3.07%, to $73,203 for the three months ended March 31, 2026 from $71,026 for the three months ended March 31, 2025.

The increase was

primarily due to the increase in gross profit from trading commission and consulting services which was in line with the increase in revenue

for this business segment for the three months ended March 31, 2026.

Although revenue from the FMCG segment decreased significantly for

the three months ended March 31, 2026, gross profit from this business segment did not decrease simultaneously due to its low gross margin.

Overall gross margin as a percentage of revenue was 34.43% for the three months ended March 31, 2026, representing an increase of 21.33

percentage points from 13.10% for the three months ended March 31, 2025, mainly due to the increase in proportion of consulting services

revenue with higher gross margin for the three months ended March 31, 2026.

Operating Expenses

The following table sets forth the breakdown of

our operating expenses and operating expenses as a percentage of revenue for the nine months ended September 30, 2025 and 2024, respectively:

Nine months ended September 30,

our operating expenses and operating expenses as a percentage of revenue for the three months ended March 31, 2026 and 2025, respectively:

For the Three Months Ended March 31,

General and administrative expense

1 unchanged sentence

Selling expenses

Allowance for credit losses/doubtful accounts

Allowance for (net recovery of) credit losses/doubtful accounts

(27,999,779 )

Total operating expenses

For the nine months ended September 30, 2025,

our general and administrative expenses were $3,757,862, representing a decrease of $437,304, or 10.42%, as compared to the same period

The decrease was primarily attributable to reduced salary, employee benefit and bonus expenses as a result of the implementation

of cost-control measures, as well as a decrease in commission caused by decreased consulting service revenue during the nine months ended

September 30, 2025.

For the nine months ended September 30, 2025,

our stock compensation expense was $1,085,000, representing an increase of $1,085,000, as compared to the same period last year.

10, 2025, the Compensation Committee of the Board of Directors of the Company granted 500,000 shares of common stock, pursuant to the

Company’s 2024 Omnibus Equity Plan, to certain officers and employees of the Company and its subsidiaries.

As the closing price

of the Company stock was $2.17 on March 10, 2025, the Company recorded an expense of $1.09 million in the first quarter of fiscal year

For the nine months ended September 30, 2025,

our selling expenses were $681,483, representing an increase of $159,483, or 30.55%, as compared to the same period last year.

was primarily attributable to increased business entertainment expenses, resulting from our initiatives to expand into new business segments

and acquire new customers.

For the nine months ended September 30, 2025,

our allowance for credit losses/doubtful accounts was $29,416,788, representing an increase of $25,587,064, or 668.12%, as compared to

the same period last year.

The increase was primarily due to a provision for bad debts on related party receivables in connection with

the disposal of a subsidiary during the nine months ended September 30, 2025.

$ (29,309,470 )

General and administrative expenses decreased

by $168,241, or 10.72%, from $1,570,100 for the three months ended March 31, 2025 to $1,401,859 for the three months ended March 31, 2026.

The decrease was primarily attributable to reduced commission expenses that recognized in the three months ended March 31, 2025, but did

not recur in the same period this year.

The decrease was partially offset by an increase in travelling and business entertainment expenses

driven by our new business expansion.

Stock compensation expense decreased by $1,085,000

or 100.00%, from $1,085,000 for the three months ended March 31, 2025 to $ nil for the three months ended March 31, 2026.

2025, the Compensation Committee of the Board of Directors of the Company granted 125,000 shares of common stock, pursuant to the Company’s

2024 Omnibus Equity Plan, to certain officers and employees of the Company and its subsidiaries.

As the closing price of the Company stock

was $8.68 on March 10, 2025, the Company recorded an expense of $1.09 million in the three months ended March 31, 2025.

Selling expenses decreased by $56,450, or 29.46%,

from $191,630 for the three months ended March 31, 2025 to $135,180 for the three months ended March 31, 2026.

The decrease was primarily

attributable to reduced business entertainment expenses and other relevant selling expenses as a result of the implementation of cost-control

Allowance for (net recovery of) credit losses/doubtful

accounts decreased by $27,999,779, or 100.50%, from an allowance for credit losses/doubtful accounts of $27,860,839 for the three months

ended March 31, 2025 to a recovery of credit losses/doubtful accounts of $138,940 for the three months ended March 31, 2026.

was due to the provision for bad debts on related party receivables in connection with the disposal of a subsidiary during the three months

ended March 31, 2025.

Our management will continue monitoring and putting effort into the collection of receivables to lower the level

of the allowance.

Other Income (Expense), Net

For the nine months ended September 30, 2025,

our net other income was $3,494,470, representing an increase of $4,470,763, as compared to the same period last year.

The increase was

primarily due to the gain on debt restructuring during the nine months ended September 30, 2025.

On June 17, 2025, we entered into a settlement

and forbearance agreement (“the Agreement”) with FT Global.

Pursuant to the Agreement, we were required to pay an aggregate

settlement amount of $2.0 million and issue a total of 1,700,000 shares of common stock.

Upon the debt restructurings, we recognized a

gain of $3.07 million which was recorded as gain on debt restructuring on the unaudited condensed consolidated statement of operations

and comprehensive loss.

The increase in net other income was also attributable to the absence of litigation-related compensation paid

to FT Global during the nine months ended September 30, 2024, and no such cost was incurred during same period this year.

Net other income decreased by $48,760, or

49.49%, from net other income of $98,528 for the three months ended March 31, 2025 to $49,768 for the three months ended March 31,

The decrease was primarily attributable to lower investment income resulting from a decreased weighted average debt investment

balance during this period, as well as higher interest expenses caused by the convertible notes payables issued in July 2025 and September 2025.

decrease was partially offset by an increase interest income recognized effective December 2025 for the three months ended March 31,

2026, and no such income was incurred during the three months ended March 31, 2025.

Net Loss from Continuing Operations

For the nine months ended September 30, 2025,

our net loss from continuing operations was $31,058,936, representing an increase of $22,691,525, or 271.19%, as compared to the same

period last year.

The increase was primarily due to the increase in operating expenses, as discussed above.

Gain on disposal of discontinued operations

Gain on disposal of discontinued operation was

$28.24 million for the nine months ended September 30, 2025, which was related to the transfer of FTFT UK LIMITED, FTFT Finance UK Limited,

Future Fintech Digital Number One US, LP, Future Fintech Digital Number One Offshore, LLC(Cayman), Future Fintech Digital Number One GP,

LLC (USA), FTFT Digital Number One, Ltd.(Cayman), Future FinTech Labs Inc, Future Fintech Digital Capital, FTFT CAPITAL INVESTMENTS, DigiPay

FinTech Limited, DCON DigiPay Limited-JPN and Global Key Shared Mall Ltd.

Net loss from continuing operations decreased

by $29,262,887, or 95.82%, from $30,538,015 for the three months ended March 31, 2025 to $1,275,128 for the three months ended March 31,

The decrease was primarily due to the decrease in allowance for credit losses/doubtful accounts as discussed above.

Net Income from Discontinued Operations

Net income from discontinued operations before

non-controlling interests was $27.83 million for the three months ended March 31, 2025, which was related to the transfer of FTFT UK LIMITED,

FTFT Finance UK Limited, Future Fintech Digital Number One US, LP, Future Fintech Digital Number One Offshore, LLC (Cayman), Future Fintech

Digital Number One GP, LLC (USA), FTFT Digital Number One, Ltd.

(Cayman), Future FinTech Labs Inc, Future Fintech Digital Capital, FTFT

CAPITAL INVESTMENTS, DigiPay FinTech Limited, DCON DigiPay Limited-JPN, and Global Key Shared Mall Ltd..

Earnings (Loss) per Share

For the nine months ended September 30, 2025,

basic and diluted loss per share from continuing operations were both $8.03, as compared to loss per share of $4.20 (both basic and diluted)

for the same period last year.

For the nine months ended September 30, 2025, basic and diluted earnings per share from discontinued operations

was $6.82 and $6.81, respectively, as compared to loss per share of $0.80 (both basic and diluted) for the same period last year.

For the three months ended March 31, 2026, basic

and diluted loss per share from continuing operations were both $0.25, as compared to loss per share of $49.92 (both basic and diluted)

for the three months ended March 31, 2025.

For the three months ended March 31, 2026, basic and diluted earnings per share from discontinued

operations were both $ nil, as compared to basic and diluted earnings per share of $42.44 and $42.37 for the three months ended March

31, 2025, respectively.

Liquidity and Capital Resources

2 unchanged sentences

Our current cash primarily consists of cash on hand and cash in bank.

September 30, 2025, we had cash and cash equivalents of $6.89 million, representing an increase of $2.13 million from $4.77 million as

of December 31, 2024.

March 31, 2026, we had cash and restricted cash of $3.68 million, representing a decrease of $1.40 million from $5.08 million as of December

Working Capital

1 unchanged sentence

from our operating cash flows, advances from our customers and convertible notes.

Our working capital was $40.54 million as of September

30, 2025, an increase of $32.94 million from working capital of $7.60 million as of December 31, 2024, mainly due to the increase in current

assets, such as cash and cash equivalent and investment funds, and decrease in current liabilities, such as accrued expenses and other

The following table sets forth a summary of our

cash flows for the periods indicated:

Nine months ended

September 30,

Our working capital decreased slightly by $0.30 million,

from $42.55 million as of December 31, 2025 to $42.25 million as of March 31, 2026.

The following is a summary of cash provided by

or used in each of the indicated types of activities during the three months ended March 31, 2026 and 2025, respectively.

For the Three Months Ended

Net cash used in operating activities from continuing operations

2 unchanged sentences

Net cash provided by operating activities from discontinued operations

Net cash used in investing activities from continuing operations

(29,035,242 )

Net cash provided by financing activities from continuing operations

Effect of exchange rate change on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

(11,088,681 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Net cash provided by investing activities from continuing operations

Net cash used in financing activities from continuing operations

Effect of exchange rate change on cash and restricted cash

Net decrease in cash and restricted cash

Cash and restricted cash, at beginning of period

Cash and restricted cash, at end of period

Operating Activities

Net cash used in operating activities from continuing operations amounted

to $28.71 million for the nine months ended September 30, 2025, primarily due to i) a net loss from continuing operations of $31.06 million

adjusted for non-cash activities including allowance for credit losses/doubtful accounts of $29.42 million, gain on debt restructuring

of $3.07 million and share-based payments of $1.09 million, and ii) net changes in our operating assets and liabilities, which mainly

include a) an increase in other receivables of $27.60 million, b) a decrease in accrued expenses and other payables of $1.52 million,

which was partially offset by a) an increase in accounts payable of $1.36 million, b) an increase in advances from customers of $0.98

million, c) an increase in other non-current liabilities of $1.09 million, d) a decrease in accounts receivable of $0.59 million.

Net cash used in operating activities from continuing

operations amounted to $15.92 million for the nine months ended September 30, 2024, primarily due to i) a net loss from continuing operations

of $8.37 million adjusted for non-cash activities including allowance for credit losses/doubtful accounts of $3.83 million, and ii) net

changes in our operating assets and liabilities, which mainly include a) an increase in advances to suppliers and other current assets

of $8.11 million, b) an increase in other receivables of $5.25 million, c) a decrease in accounts payable of $1.54 million, which was

partially offset by a decrease in accounts receivable of $2.74 million.

operations amounted to $1.53 million for the three months ended March 31, 2026, primarily due to i) a net loss from continuing operations

of $1.28 million adjusted for non-cash activities including net recovery of credit losses/doubtful accounts of $0.14 million, and ii)

net changes in our operating assets and liabilities, which mainly include a) a decrease in other receivables of $0.50 million, and b)

a decrease in accounts payable of $0.82 million.

Net cash used in operating activities from continuing

operations amounted to $19.57 million for the three months ended March 31, 2025, primarily due to i) a net loss from continuing operations

of $30.54 million adjusted for non-cash activities including allowance for credit losses/doubtful accounts of $31.45 million, and share-based

payments of $1.09 million, and ii) net changes in our operating assets and liabilities, which mainly include a) an increase in other receivables

of $27.71 million, b) an increase in accrued expenses and other payables of $9.09 million, c) an increase in advances to suppliers and

other current assets of $3.61 million.

Investing Activities

Net cash used in investing activities from continuing

operations amounted to $29.04 million for the nine months ended September 30, 2025, primarily due to prepayment for a business acquisition

of $29.87 million, which was partially offset by repayment from debt investment of $0.70 million.

Net cash used in investing activities from continuing

operations amounted to $1.03 million for the nine months ended September 30, 2024, primarily due to payment for debt investments of $1.80

million, which was partially offset by repayment from short term investment of $0.95 million.

Net cash provided by investing activities from

continuing operations amounted to $1,439 for the three months ended March 31, 2026, primarily due to redemption of short-term investments

of $15,829, which was partially offset by payment for short-term investments of $14,390.

Net cash provided by investing activities from

continuing operations amounted to $0.38 million for the three months ended March 31, 2025, primarily due to collection from debt investments

of $0.24 million and repayment of loan receivables of $0.14 million.

Financing Activities

Net cash provided by financing activities from continuing operations

amounted to $31.83 million for the nine months ended September 30, 2025, primarily consisting of i) proceeds from the issuance of common

stock, net of issuance costs of $30.00 million, ii) proceeds from convertible notes payables of $1.80 million.

Net cash provided by financing activities from

continuing operations amounted to $2.41 million for the nine months ended September 30, 2024, primarily consisting of proceeds from the

issuance of common stock, net of issuance costs of $2.58 million, which was partially offset by repayment of amounts due to related parties

of $0.10 million.

Net cash used in financing activities from continuing

operations amounted to $117,721 for the three months ended March 31, 2026, primarily due to repayment of amounts due to related parties.

Net cash used in financing activities from continuing

operations amounted to $6,093 for the three months ended March 31, 2025, primarily consisting of payment made for amounts due from related

parties of $2,508 and repayment of amounts due to related parties of $3,585.

Contractual Obligations

The Company has no long-term fixed contractual obligations or commitments

other than leases that are disclosed in Note 8 in the notes to our consolidated financial statements.

Off-balance sheet arrangements

As of September 30, 2025, we did not have any

The Company has no long-term fixed contractual

obligations or commitments other than leases that are disclosed in Note 7 in the notes to our unaudited condensed consolidated financial

Off-balance sheet arrangements

Quantitative and Qualitative Disclosures about Market

As of March 31, 2026 and 2025, we did not have any off-balance sheet

arrangements.

Quantitative and Qualitative Disclosures about Market Risk

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 2. Management’s Discussion and Analysis