FUTURE FINTECH GROUP INC. Management’s discussion and analysis of financial condition and results of operations. (Form 10-Q)

by James · August 15, 2022

This quarterly report on Form 10-Q and other reports filed by the Company from
time to time with the SEC (collectively the "Filings") contain or may contain
forward-looking statements and information that are based upon beliefs of, and
information currently available to, Company's management as well as estimates
and assumptions made by Company's management. Readers are cautioned not to place
undue reliance on these forward-looking statements, which are only predictions
and speak only as of the date hereof. When used in the filings, the words "may",
"will", "should", "would", "anticipate", "believe", "estimate", "expect",
"future", "intend", "plan", or the negative of these terms and similar
expressions as they relate to Company or Company's management identify
forward-looking statements. Such statements reflect the current view of Company
with respect to future events and are subject to risks, uncertainties,
assumptions, and other factors (including the statements in the section "results
of operations" below), and any businesses that Company may acquire. Should one
or more of these risks or uncertainties materialize, or should the underlying
assumptions prove incorrect, actual results may differ significantly from those
anticipated, believed, estimated, expected, intended, or planned. Factors that
might cause or contribute to such a discrepancy include, but are not limited to,
those listed under the heading "Risk Factors" and those listed in our Annual
Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K")
and in this Form 10-Q. The following discussion should be read in conjunction
with our Financial Statements and related Notes thereto included elsewhere in
this report and in our 2021 Form 10-K.



Although the Company believes the expectations reflected in the forward-looking
statements are based on reasonable assumptions, the Company cannot guarantee
future results, levels of activity, performance, or achievements. Except as
required by applicable law, including the securities laws of the United States,
the Company does not intend to update any of the forward-looking statements to
conform these statements to actual results. Readers are urged to carefully
review and consider the various disclosures made throughout the entirety of this
report, which attempts to advise interested parties of the risks and factors
that may affect our business, financial condition, results of operations, and
prospects.



Overview of Our Business



Future FinTech is a holding company incorporated under the laws of the State of
Florida. The Company historically engaged in the production and sale of fruit
juice concentrates (including fruit purees and fruit juices), fruit beverages
(including fruit juice beverages and fruit cider beverages) in the PRC. Due to
drastically increased production costs and tightened environmental laws in
China, the Company had transformed its business from fruit juice manufacturing
and distribution to a real-name blockchain based e-commerce platform, supply
chain financing service and trading business and financial technology business.
The main business of the Company includes an online shopping platform, Chain
Cloud Mall ("CCM"), which is based on blockchain technology, supply chain
financing services and trading, assets management, and cryptocurrency market
data services. The Company is also engaged in the development of blockchain
based e-Commerce technology, cryptocurrency mining, cryptocurrency investment
management as well as financial service technology businesses. The Company has
also expanded into financial services and cryptocurrency market data and
information service businesses.



On August 6, 2021, the Company completed acquisition of 90% of the issued and
outstanding shares of Nice Talent Asset Management Limited ("NTAM"), a Hong
Kong-based asset management company, from Joy Rich Enterprises Limited ("Joy
Rich"). NTAM is licensed under the Securities and Futures Commission of Hong
Kong ("SFC") to carry out regulated activities in Type 4: Advising on Securities
and Type 9: Asset Management.



On September 1, 2021, FTFT UK Limited, a company organized under the laws of
United Kingdom and a wholly owned subsidiary of the Company ("FTFT UK") entered
into a Share Purchase Agreement with Rahim Shah, a resident of United Kingdom
("Seller") to acquire 100% of the issued and outstanding shares (the "Sale
Shares") of Khyber Money Exchange Ltd., which is a money transfer company with a
platform for transferring money through one of its agent locations or via its
online portal, mobile platform or over the phone. Khyber Money Exchange Ltd. is
regulated by the UK Financial Conduct Authority (FCA) and the parties are
waiting for the approval by the FCA before formal closing of the transaction.



In December 2021, FTFT Capital Investments, L.L.C., a subsidiary of the Company,
officially launched FTFTX, a cryptocurrency market data platform that provides
investors with real-time cryptocurrency market data and trading information from
a large number of cryptocurrency exchanges. The market data is available for
Bitcoin, ETH, EOS, Litecoin, TRON and other cryptocurrencies at
 and via the FTFTX App on iOS and Android devices. The
FTFTX app is free to download on Google Play and the Apple Store.



In March 2022, FTFT UK received has received approval to operate as an
Electronic Money Directive ("EMD") Agent and has been registered as such with
the Financial Conduct Authority (FCA), a UK regulator. This status grants FTFT
UK the ability to distribute or redeem e-money and provide certain financial
services on behalf of an e-money institution (registration number 903050).



On April 18, 2022, the Company and Future Fintech (Hong Kong) Limited, a wholly
owned subsidiary of the Company jointly acquired 100% equity interest of KAZAN
S.A., a company incorporated in Republic of Paraguay for $288. The Company owns
90% and FTFT HK owns 10% of Kazan S.A., respectively. Kazan S.A. has no
operation before the acquisition. The Company plans to develop bitcoin and other
cryptocurrency mining and related services in Paraguay. The Company has changed
its name from KAZAN S.A to FTFT Paraguay S.A. on July 28, 2022.





                                       29

April 22, 2022, Champion Energy Services, LLC and FTFT Supercomputing Inc.
signed an Electricity Sales and Purchases Agreement. Upon enrollment of FTFT
Supercomputing Inc.'s facilities, Champion Energy Services, LLC shall sell and
deliver, or engage a third party (including Local Utility) to deliver, and FTFT
Supercomputing Inc. shall purchase and receive, 100% of FTFT Supercomputing
Inc.'s electricity requirements for enrolled FTFT Supercomputing Inc.'s
facilities at the Delivery Point(s) solely for use at FTFT Supercomputing Inc's
facilities. FTFT Supercomputing Inc. is developing cryptocurrency mining related
business and services.



In June, Future Fintech Labs Inc. ("FTFT Labs") have teamed up with a
third-party money transfer company to launch a cross-border money transfer app
Tempo to offer US-based immigrants and other users a streamlined, secure and
cost-effective way to send money to friends and family among other parties in
Mexico, India and the United Kingdom. By working with the money transfer company
and other service providers that are registered with FinCEN and have licenses
for money transmission business, FTFT Labs has developed Tempo that can provide
its customers with a multicurrency digital wallet that makes sending money to
Mexico, India or the UK easier and more cost-effective than many other
remittance services who charge high fees per transfer.



We are a holding company incorporated in Florida and we are not a Chinese
operating company. As a holding company with no material operations of our own,
we conduct a substantial majority of our operations through our subsidiaries in
China, Hong Kong, Dubai, U.S. and UK and we operate a blockchain based online
shopping mall through contractual arrangements with a variable interest entity
(VIE) -E-Commerce Tianjin, based in China and this structure involves unique
risks. Our shares of common stock are shares of our Florida holding company, and
we do not have any equity ownership of our VIE, instead we control and receive
the economic benefits of our VIE's business operations through certain
contractual arrangements, which are used to replicate foreign investment in
Chinese-based companies where Chinese law prohibits foreign invested equity
exceeding 50% in value added telecom/e-commerce business. Chinese regulatory
authorities could disallow the VIE structure, which could result in a material
change in our operations and/or value of our shares, including that it could
cause the value of shares to significantly decline or become worthless.



There are legal and operational risks associated with being based in and having
a substantial majority of operations in China and Hong Kong. These risks could
result in a material change in our operations and/or the value of our common
stock or could significantly limit or completely hinder our ability to offer or
continue to offer securities to investors and cause the value of our shares to
significantly decline or be worthless. Recently, the PRC government initiated a
series of regulatory actions and statements to regulate business operations in
China with little advance notice, including cracking down on illegal activities
in the securities market, enhancing supervision over China-based companies
listed overseas, adopting new measures to extend the scope of cybersecurity
reviews, and expanding the efforts in anti-monopoly enforcement. On July 6,
2021, the General Office of the Communist Party of China Central Committee and
the General Office of the State Council jointly issued an announcement to crack
down on illegal activities in the securities market and promote the high-quality
development of the capital market, which, among other things, requires the
relevant governmental authorities to strengthen cross-border oversight of
law-enforcement and judicial cooperation, to enhance supervision over
China-based companies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws. On February 15,
2022, Cybersecurity Review Measures published by Cyberspace Administration of
China or the CAC, National Development and Reform Commission, Ministry of
Industry and Information Technology, Ministry of Public Security, Ministry of
State Security, Ministry of Finance, Ministry of Commerce, People's Bank of
China, State Administration of Radio and Television, China Securities Regulatory
Commission ("CSRC"), State Secrecy Administration and State Cryptography
Administration became effective, which provides that, Critical Information
Infrastructure Operators ("CIIOs") that intend to purchase internet products and
services and Data Processing Operators ("DPOs") engaging in data processing
activities that affect or may affect national security shall be subject to the
cybersecurity review by the Cybersecurity Review Office. On November 14, 2021,
CAC published the Administration Measures for Cyber Data Security (Draft for
Public Comments), or the "Cyber Data Security Measure (Draft)", which requires
cyberspace operators with personal information of more than 1 million users who
want to list abroad to file a cybersecurity review with the Office of
Cybersecurity Review. On December 24, 2021, the CSRC released the Administrative
Provisions of the State Council Regarding the Overseas Issuance and Listing of
Securities by Domestic Enterprises (Draft for Comments) and the Management Rules
Regarding the Overseas Issuance and Listing of Securities by Domestic
Enterprises (Draft for Comments). On April 2, 2022, the CSRC released the
Provisions on Strengthening Confidentiality and Archives Administration of
Overseas Securities Offering and Listing by Domestic Companies (Draft for
Comments), which provides that PRC issuers listing their securities on foreign
stock exchanges need to file a notice to CSRC. In the event that the above
proposed provisions and rules are enacted, the relevant filing procedures of the
CSRC and other governmental authorities may be required in connection with any
offering of our securities. As of the date of this report, the new laws and
guidelines that became effective have not impacted the Company's ability to
conduct its business, accept foreign investments, or list on a U.S. or other
foreign stock exchange; however, new rules and regulations could be adopted and
there are uncertainties in the interpretation and enforcement of existing laws
and guidelines, which could materially and adversely impact our business and
financial outlook and may impact our ability to accept foreign investments or
continue to list on a U.S. or other foreign stock exchange. Our VIE and certain
subsidiaries of the Company are incorporated and operating in mainland China and
they have received all required permissions from Chinese authorities to operate
their current business in China, including Business licenses, Bank Account Open
Permits and Value Added Telecom Business License.



                                       30

Chain Cloud Mall is a unique real-name based blockchain e-commerce shopping
platform that integrates blockchain, internet technology. The CCM shared
shopping mall platform is designed to be a block-chain based shopping mall for
merchants and goods, not the exchange of digital currencies, and it currently
only accepts payment from credit cards, Alipay and WeChat. Currently, Chain
Cloud Mall adopts an "Enterprise Communication as A Service" or eCAAS platform
which is a part of 3.15 China Responsible Brand Program run by the
Anti-Counterfeiting Committee of China Foundation of Consumer Protection (the
"Anti-Counterfeiting Committee"). Anti-Counterfeiting Committee reviews and
accepts the companies to join its 3.15 China Responsible Brand Program. After
acceptance, these companies are authorized to use anti-counterfeiting labels on
their products which have authenticated joint signatures of these companies and
Anti-Counterfeiting Committee that are recorded on the blockchain quality and
safety traceability system controlled by the Anti-Counterfeiting Committee. The
companies will sell such products on our eCAAS platform. The companies can also
use sales agents to sell their products on our eCAAS platform and parties can
negotiate the commission percentages for the products sold. Any new sales agent
must be recommended by existing agents and pay a one-time fee to the eCAAS
platform to be admitted as the authorized agent to provide sales agent services
on the platform.



The Company started its trial operation of NONOGIRL, a cross-border e-commerce
platform, in March 2020 and formally launched it in July 2020. The cross-border
e-commerce platform aimed to build a new s2b2c (supplier to business and
consumer) outsourcing sales platform dominated by social media influencers. It
was aimed at the growing female consumer market, with the ability to broadcast,
short video, and all forms communication through the platform. It could also
create a sales oriented sharing ecosystem with other major social media used by
customers. The Company's promotion strategy previously mainly relied on the
training of members and distributors through meetings and conferences. Due to
the outbreak of COVID-19, the Chinese government put a restriction on large
gatherings. These restrictions made the promotion strategy for our online
e-commerce platforms difficult to be implemented and the Company has experienced
difficulties to subscribe new members for its online e-commerce platforms. Due
to the lack of new subscribers, in June 2021, the Company suspended its
cross-border e-commerce platform (NONOGIRL). Also, since the second quarter of
2021, the Company has transformed its member-based business model of Chain Cloud
Mall to a sale agent based eCAAS platform and began to provide supply chain
financing services and trading of coal for coal mines and power generation
plants as well as aluminum ingots.



The Company currently has ten direct wholly-owned subsidiaries: DigiPay FinTech
Limited ("DigiPay"), a company incorporated under the laws of the British Virgin
Islands, Future FinTech (Hong Kong) Limited, a company incorporated under the
laws of Hong Kong, GlobalKey Shared Mall Limited, a company incorporated under
the laws of Cayman Islands ("GlobalKey Shared Mall"), Tianjin Future Private
Equity Fund Management Partnership, a Limited Partnership under the laws of
China, FTFT UK Limited, a company incorporated under the laws of United Kingdom,
Future Fintech Digital Capital Management, LLC, a company incorporated under the
laws of Connecticut, Future Fintech Digital Number One GP, LLC, a company
incorporated under the laws of Connecticut, Future FinTech Labs Inc., a company
incorporated under the laws of New York and FTFT SuperComputing Inc. a company
incorporated under the laws of Ohio and FTFT Paraguay S.A., a company
incorporated under the law of Republic of Paraguay.



CCM Shopping Mall



Due to the lack of new member subscriptions caused by restrictions on our
promotion strategy for the control of spread of COVID-19, we have transformed
the CCM shopping mall from a member based platform to a sale agent based eCAAS
platform since the second quarter of 2021. The eCAAS platform is entrusted by
the Anti-Counterfeiting Committee to run its Responsible Brand Program.



Anti-Counterfeiting Committee reviews and accepts the companies to join its
Responsible Brand Program. After acceptance, these companies are authorized to
use 315 anti-counterfeiting labels on their products and sell them on our eCAAS
platform. The companies can also use sales agents to sell their products on our
eCAAS platform and parties can negotiate the commission percentages for the
products sold. Any new sales agent must be recommended by existing agents and
pay a one-time fee to the eCAAS platform to be admitted as the authorized agent
to provide sales agent services on the platform.

Coal and Aluminum Ingots Supply Chain Financing Service and Trading

Since the second quarter of 2021, we started coal supply chain financing and trading operations. Since the third quarter of 2021, we started supply chain financing services and trading business for aluminum ingots.




Our supply chain finance business mainly serves the receivables and payables for
industrial customers, obtains the creditor's rights or rights of commodity goods
for large state-owned enterprises through trade execution, provides customers
with working capital, accelerates capital turnover, and then expands the
business scale and improves the business value.



Through our supply chain service ability and customer resources, we can tap into
low-risk assets, flexibly carry out financial services for the actual financial
needs of certain industries, and reduce the overall risk of the business by
using the control of business flow, goods logistics and capital flow in the
process of commodity circulation.



We focus on bulk coal and aluminum ingots and take large state-owned or listed
companies as the core service targets; We use our own funds as the operation
basis, actively use a variety of channels and products of financing, such as
banks, commercial factoring companies, accounts receivable, asset-backed
securities, and other innovative financing methods to obtain sufficient funds.



We sign purchase and sale agreements with suppliers and buyers. The suppliers
are responsible for the supply and transportation of coal to the end users'
designated freight yard or transfer the title of aluminum ingots to us in
certain warehouses. We select the customers and suppliers that have good credit
and reputation.



                                       31





Asset Management Service



NTAM engages assets management and advisory services. NTAM's main revenue is
generated from providing professional advices to customers and management fees
for managing the investment of the clients. NTAM is licensed under the
Securities and Futures Commission of Hong Kong (SFC) for carrying out regulated
activities in "Advising on Securities" and "Asset Management". NTAM offers
diversified asset management portfolio for professional investors. Assets of
NTAM's clients are held in banks, where clients gave the banks their
authorization allowing NTAM to place trading instructions on behalf of the
clients in order to manage the clients' assets.



NTAM mainly engages in following asset management services for its clients:



(1) Equity Investment



NTAM manages clients' investment portfolio in stocks of the companies listed on
the international markets with strong liquidity. At the same time, it selects
companies that have unique or differentiated businesses, realizing above average
profit growth.



(2) Debt investment



When NTAM manages clients' investment portfolio in bonds that are denominated in
major international currencies such as US dollar, euro and sterling, the issuer
of debts shall have good credit rating and asset liability ratio. Through active
management, NTAM focus on bonds with higher yield to maturity among bonds with
the same maturity and credit rating.

(3) Investment in precious metals and currencies




NTAM also manages clients' investment portfolio in major international
currencies and precious metals, including US dollar, euro, British pound,
Japanese yen, Australian dollar and offshore Chinese yuan. Precious metals
include gold, platinum and silver. With research on the fundamentals of market
supply and demand to predict the trend of commodity prices, NTAM endeavors to
improve the rate of return for clients through dual currency investment, options
and structured products.



(4) Derivative Investment

NTAM also manages the customers’ investment portfolio in financial derivatives in various asset classes, such as options and structured products.

(5) External Asset Management Services (EAM)

This business takes customer demand as its service purpose, collaborates with several private banks that offer asset custody services, and innovatively introduces the function of investment banking to provide exclusive private solutions for our customers.




NTAM's main revenue is generated from providing professional advices to clients
and management fees for managing the investment of the clients. As of June 30,
2022, NTAM has approximately US$273 million assets under its management.

Recent developments related to the COVID-19 outbreak

In December 2019, a novel strain of coronavirus was reported and has spread
throughout China and other parts of the world. On March 11, 2020, the World
Health Organization characterized the outbreak as a "pandemic". In early 2020,
Chinese government took emergency measures to combat the spread of the virus,
including quarantines, travel restrictions, and the temporary closure of office
buildings and facilities in China.  In response to the evolving dynamics related
to the COVID-19 outbreak, the Company is following the guidelines of local
authorities as it prioritizes the health and safety of its employees,
contractors, suppliers and business partners. Our offices in China were closed
and the employees worked from home at the end of January 20200 until late March
2020. The quarantines, travel restrictions, and the temporary closure of office
buildings have materially negatively impacted our business. Our suppliers were
negatively affected, and could continue to be negatively affected in their
ability to supply and ship products to our customers in case of any resurgence
of COVID-19. Our customers that have been negatively impacted by the outbreak of
COVID-19 may reduce their budgets to purchase products and services from us,
which may materially adversely impact our revenue. The business operations of
the third parties' stores on our e-commerce platform have been and continue to
be negatively impacted by the outbreak, which in turn adversely affects the
business of our platform as a whole as well as our financial condition and
operating results. The outbreak has had and continues to have disruption to our
supply chain, logistics providers, customers or our marketing activities with
the new variants of COVID-19, which could materially adversely impact our
business and results of operations. Although China has already begun to recover
from the outbreak of COVID-19, there are still outbreak in various cities and
provinces due to new variants, including the recent outbreak of Omicron variant
in Xi'an city, Hong Kong, Shanghai and Beijing in 2022, which have resulted
quarantines, travel restrictions, and temporary closure of office buildings and
facilities in these cities. The Company's promotion strategy of CCM Shopping
Mall previously mainly relied on the training of members and distributors
through meetings and conferences. Chinese government still puts a restriction on
large gatherings. These restrictions made the promotion strategy for our online
e-commerce platforms difficult to implement and the Company has experienced
difficulties to subscribe new members for its online e-commerce platforms. Due
to the lack of new subscribers, in June 2021, the Company suspended its
cross-border e-commerce platform NONOGIRL. Also, since the second quarter of
2021, the Company has transformed its member-based Chain Cloud Mall to a sale
agent based eCAAS platform and began to provide supply chain financing services.



                                       32





The global economy has also been materially negatively affected by the COVID-19
and there is continued severe uncertainty about the duration and intensity of
its impacts. The Chinese and global growth forecast is extremely uncertain,
which would seriously affect our business.



While the potential economic impact brought by, and the duration of COVID-19 and
its new variants may be difficult to assess or predict, a widespread pandemic
could result in significant disruption of global financial markets, reducing our
ability to access capital, which could negatively affect our liquidity. In
addition, a recession or market correction resulting from the spread of COVID-19
and its new variants could materially negatively affect our business and the
value of our common stock.

Further, as we do not have access to a revolving credit facility, there can be
no assurance that we would be able to secure commercial debt financing in the
future in the event that we require additional capital. We currently believe
that our financial resources will be adequate to see us through the outbreak.
However, in the event that we do need to raise capital in the future,
outbreak-related instability in the securities markets could adversely affect
our ability to raise additional capital.



Consequently, our results of operations have been materially and adversely
affected by COVID-19 pandemic. Any potential further impact to our results will
depend on, to a large extent, future developments and new information that may
emerge regarding the duration and severity of the COVID-19, new variants of
COVID-19, the efficacy and distribution of COVID-19 vaccines and the actions
taken by government authorities and other entities to contain the COVID-19 or
treat its impact, almost all of which are beyond our control.



Results of Operations

Comparison of three months ended 30 June 2022 and 2021:



Revenue

The table below shows our consolidated revenues for the three months ended 30 June 2022 and 2021, respectively:



                                               Three months ended
                                                    June 30,                         Change
                                              2022            2021           Amount             %

CCM Shopping Mall Membership                         -              12             (12 )       (100.00 )%
Coal and Aluminum Ingots Supply Chain
Financing/Trading                            3,654,981       1,346,899       2,308,082          171.36 %
Asset management service                     3,696,433               -       3,696,433               -
Others                                          66,863              13          66,850       514230.77 %
Total                                      $ 7,418,277$ 1,346,924$ 6,071,353          450.76 %




CCM Shopping Mall Membership fees decreased from $12 for the three months ended
June 30, 2021 to $0 for the three months ended June 30, 2022 because there was
no new membership enrollment and the Company has transformed its business model
of CCM Shopping Mall from a member-based platform to a sales agent based eCAAS
platform since the second quarter of 2021. Due to COVID-19 related restriction
on large gathering for meetings and conferences which primarily used by us
before the pandemic for marketing and business development of new members, we
were unable to attract new member enrollment and have transformed business

model
for the platform.

Coal and Aluminum Ingots Supply Chain Financing/Trading business increased from
$1.35 million for the three months ended June 30, 2021 to $3.65 million for the
three months ended June 30, 2022. The COVID-19 outbreak in Xi'an and other
cities that we had our supply chain services in first quarter 2022 result in the
coal and aluminum ingot income was nil in first quarter 2022. As the outbreak of
pandemic is mostly under control in China and business are generally back to
normal, the income the coal and aluminum ingot increased in second quarter 2022.



Asset management service increased from $0 for the three months ended June 30,
2021 to $3.70 million for the three months ended June 30, 2022. This is a new
business we acquired during the third quarter 2021.



Other revenues increased from $13 from three months ended June 30, 2021 to
$66,863 for the three months ended June 30, 2022, which were mainly interest
income and subsidiary income of NTAM under Employment Support Scheme 2022 from
Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to
employees during the three months ended June 30, 2022, which we did not have for
the same period of 2021.



                                       33





Cost of revenues



                                               Three months ended
                                                    June 30,                        Change
                                              2022            2021           Amount            %
CCM Shopping Mall Membership                         -               -               -             -
Coal and Aluminum Ingots Supply Chain
Financing/Trading                            3,594,726       1,295,647       2,299,079        177.45 %
Asset management service                     2,448,119               -       2,448,119             -
Others                                              12              12               -             -
Total                                      $ 6,042,857       1,295,659       4,747,198        366.39 %




Cost of revenues for the Coal and Aluminum Ingots Supply Chain Financing/Trading
was $3.59 million and $1.30 million for the three months ended June 30, 2022 and
2021, respectively, representing an increase of 177.45%. The increase in cost of
revenues was in line with an increase in revenue.

Income costs for the asset management service increased from $0 for the three months ended 30 June 2021 to 2.45 million dollars for the three months ended
30 June 2022. This is a new business we acquired during the third quarter of 2021.




Gross Margin



The following table presents the consolidated gross profit of each of our main
products and services and the consolidated gross profit margin, which is gross
profit as a percentage of the related revenues, for the three months ended June
30, 2022 and 2021, respectively:



                                                           Three months ended June 30,
                                                         2022                        2021
                                                  Gross         Gross         Gross        Gross
                                                 profit         margin        profit       margin
CCM Shopping Mall Membership                             -            -            12       100.00 %
Coal Supply and Aluminum Ingots Chain
Financing/Trading                                   60,255         1.65 %      51,252         3.81 %
Asset management service                         1,248,314        33.77 %           -            -
Others                                              66,851        99.98 %           1         7.69 %
Total                                          $ 1,375,420        18.54 %    $ 51,265         3.81 %




Overall gross margin as a percentage of revenue was 18.54% for the three months
ended June 30, 2022, an increase of 14.73% compared to 3.81% for the same period
of last fiscal year, mainly due to more revenues from the asset management
service. This is a new business we acquired during the third quarter 2021. The
others were mainly interest income and subsidiary income of NTAM under
Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic
Fund to provide wage subsidies to employees during the three months ended June
30, 2022, which we did not have for the same period of 2021.



Operating Expenses



The following table presents our consolidated operating expenses and operating
expenses as a percentage of revenue for the three months ended June 30, 2022 and
2021, respectively: (in thousands)



                                          June 30, 2022                 June 30, 2021
                                    Amount      % of revenue      Amount      % of revenue
General and administrative          $ 2,650             35.72 %   $   791             58.72 %

Research and Development expenses       770             10.38 %         -

              -
Selling expenses                        349              4.70 %        10              0.74 %
Impairment Loss                         449              6.05 %         -                 -
Total operating expenses            $ 4,218             56.86 %   $   801             59.47 %

General and administrative expenses increased by $1.86 million, or 235.02%, from
$0.79 million to $2.65 million for the three months ended June 30, 2022,
compared to the same period of last fiscal year. The increase in general and
administrative expenses was mainly due to increased professional service fees
for acquisition projects and certain training and consulting fees for the
acquired and newly established companies during the three months ended June

30,
2022.



The Company recorded $0.77 million of research and development expenses.
Research and development expenses include salaries, contracted services, as well
as the related expenses of our research and product development team. The
research and development expenditures also include research, develop, design,
and enhance our wealth management options and services to our clients, which is
related to the new business we acquired since the third quarter 2021since the
third quarter 2021.



Selling expenses increased by $0.34 million during the three months ended June
30, 2022, the increase in selling expenses was mainly due to increased salary
and advertising fee.



                                       34

The Company recorded $0.45 million of impairment loss in three months ended June
30, 2022 relating to short term investment which mainly due to Future Private
Equity Fund Management (Hainan) Co., Ltd. invested $1.94 million (RMB13,000,000)
to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in
various types of investment portfolios. The impairment loss relating to short
term investment was due to that overall economic environment has worsened in
China with Covid-19 outbreak and related lockdown in various cities in China in
2022, Ukraine war, inflation, looming recession worldwide. According to the
market value, the Company's balance of the short term investment was $1.26
million on June 30, 2022.

Other (expenditure) income, net




Other expenses, net increased by $1.16 million to positive $0.63 million for the
three months ended June 30, 2022 from negative $0.53 million in the same period
of the last fiscal year, primarily due to increased interest income and
subsidiary income of NTAM under Employment Support Scheme 2022 from Hong Kong
government under the Anti-epidemic Fund to provide wage subsidies to employees
during the three months ended June 30, 2022.



Income Tax

Tax provision increased by 0.12 million dollars for the three months ended 30 June 2022. We had no tax provision for the same period in the previous financial year.




Non-controlling Interests



Shaanxi Chunlv Ecological Agriculture Co., Ltd. ("Shaanxi Chunlv") holds 20.0%
interest in Chain Cloud Mall Logistics Center (Shaanxi) Co., Limited, which was
dissolved and deregistered on June 27, 2022. Nature Worldwide Resources Ltd.
holds 40% interest in DCON DigiPay Limited ("DCON Digipay"), Each of Bin Wu and
Lixiong Huang holds 25% and 20% interest in FTFT Capital Investments L.L.C.,
respectively.

Loss from continuing operations




Loss from continuing operations increased by $1.06 million from $1.27 million
for the three months ended June 30, 2021 to $2.33 million for the same period of
2022 mainly due to the increase in operating expenses, as discussed above.

Loss on disposal of discontinued operations




Loss on disposal of discontinued operation was $154 for the three months ended
June 30, 2022, which was related to the dissolution and deregistration of Chain
Cloud Mall Logistics Center (Shanxi) Co., Ltd. on June 27, 2022.

Comparison of six months ended 30 June 2022 and 2021



Revenue

The table below shows our consolidated revenues for the last six months
30 June 2022 and 2021, respectively:



                                                 Six months ended
                                                     June 30,                         Change
                                               2022            2021           Amount             %
CCM Shopping Mall Membership                          -              85             (85 )         (100  )%
Coal and Aluminum Ingots Supply Chain
Financing/Trading                             3,654,982       1,347,785       2,307,197         171.18 %
Asset management service                      7,152,808               -       7,152,808              -
Others                                           76,852           6,553          70,299        1072.78 %
Total                                      $ 10,884,642$ 1,354,423$ 9,530,219         703.64 %




CCM Shopping Mall Membership fees decreased from $85 for the six months ended
June 30, 2021 to $0 for the three months ended June 30, 2022 because there was
no new membership enrollment and the Company has transformed its business model
of CCM Shopping Mall from a member-based platform to a sales agent based eCAAS
platform since the second quarter of 2021. Due to COVID-19 related restriction
on large gathering for meetings and conferences which primarily used by us
before the pandemic for marketing and business development of new members, we
were unable to attract new member enrollment and have transformed business

model
for the platform.



Coal and Aluminum Ingots Supply Chain Financing and Trading business increased
from $1.35 million for the six months ended June 30, 2021 to $3.65 million for
the six months ended June 30, 2022. The COVID-19 outbreak in Xi'an and other
cities that we had our supply chain services in first quarter 2022 result in the
coal and aluminum ingot income was nil in first quarter 2022. outbreak of
pandemic is mostly under control in China and business are generally back to
normal, the income the coal and aluminum ingot increased in second quarter 2022.

Asset management service increased from $0 for the six months ended 30 June 2021 to 7.15 million dollars for the six months ended 30 June 2022. This is a new business we acquired during the third quarter of 2021.

Other revenues increased from $6,553 from six months ended June 30, 2021 to
$76,852 for the six months ended June 30, 2022, which were mainly interest
income and subsidiary income of NTAM under Employment Support Scheme 2022 from
Hong Kong government under the Anti-epidemic Fund to provide wage subsidies to
employees during the six months ended June 30, 2022, which we did not have

for
the same period of 2021.



                                       35





Cost of revenues



                                                Six months ended
                                                    June 30,                        Change
                                              2022            2021           Amount            %
CCM Shopping Mall Membership                         -               -               -             -
Coal and Aluminum Ingots Supply Chain
Financing/Trading                            3,594,726       1,296,533       2,298,193        177.26 %
Asset management service                     4,126,507               -       4,126,507             -
Others                                              12           6,035          (6,023 )      (99.80 )%
Total                                      $ 7,721,245       1,302,568       4,747,198        492.77 %




Cost of revenues for the Coal and Aluminum Ingots Supply Chain Financing/Trading
was $3.59 million and $1.30 million for the six months ended June 30, 2022 and
2021, respectively, representing an increase of 177.26%. The increase in cost of
revenues was in line with an increase in revenue.

Income costs for the asset management service increased from $0 for the three months ended 30 June 2021 to 4.13 million dollars for the six months ended 30 June 2022. This is a new business we acquired during the third quarter of 2021.



Gross Margin



The following table presents the consolidated gross profit of each of our main
products and services and the consolidated gross profit margin, which is gross
profit as a percentage of the related revenues, for the six months ended June
30, 2022 and 2021, respectively:



                                                Six months ended June 30,
                                               2022                       2021
                                         Gross         Gross      Gross      Gross
                                        profit        margin      profit     margin
CCM Shopping Mall Membership                    -           -          85     100.00 %

Coal Supply Chain Financing/Trading        60,256        1.65 %    51,252

    3.80 %
Asset management service                3,026,301       42.31 %         -          - %
Others                                     76,840       99.98 %       518       7.90 %
Total                                 $ 3,163,397       29.06 %   $51,855       3.83 %




Overall gross margin as a percentage of revenue was 29.06% for the six months
ended June 30, 2022, an increase of 25.23% compared to 3.83% for the same period
of last fiscal year, mainly due to more revenues from the asset management
service. This is a new business we acquired during the third quarter 2021. The
others were mainly interest income and subsidiary income of NTAM under
Employment Support Scheme 2022 from Hong Kong government under the Anti-epidemic
Fund to provide wage subsidies to employees during the six months ended June 30,
2022, which we did not have for the same period of 2021



Operating Expenses



The following table presents our consolidated operating expenses and operating
expenses as a percentage of revenue for the six months ended June 30, 2022 and
2021, respectively: (in thousands)



                                          June 30, 2022                 June 30, 2021
                                    Amount      % of revenue      Amount       % of revenue
General and administrative          $ 6,060             55.67 %   $ 2,325             171.71 %
Research and Development expenses     1,203             11.05 %         -
Selling expenses                        720              6.61 %        23               1.70 %
Impairment Loss                         697              6.40 %         -
Bad debt provision                        2              0.02 %       (15 )            (1.11 )%
Total operating expenses            $ 8,682             79.76 %   $ 2,333             172.30 %




                                       36

General and administrative expenses increased by $3.74 million, or 160.65%, from
$2.33 million to $6.06 million for the six months ended June 30, 2022, compared
to the same period of last fiscal year. The increase in general and
administrative expenses was mainly due to increased professional service fees
for acquisition projects and certain training and consulting fees for the
acquired and newly established companies during the six months ended June 30,
2022.



The Company recorded $1.20 million of research and development expenses.
Research and development expenses include salaries, contracted services, as well
as the related expenses of our research and product development team. The
research and development expenditures also include research, develop, design,
and enhance our wealth management options and services to our clients, which is
related to the new business we acquired since the third quarter 2021.



Selling expenses increased by $0.70 million during the six months ended June 30,
2022, the increase in selling expenses was mainly due to increased salary and
advertising fee.



The Company recorded $0.70 million of impairment loss in six months ended June
30, 2022 relating to short term investment which mainly due to Future Private
Equity Fund Management (Hainan) Co., Ltd. invested $1.94 million (RMB13,000,000)
to entrust Shanghai Yuli Enterprise Management Consulting Firm to invest in
various types of investment portfolios. The impairment loss relating to the
short term investment was due to that overall economic environment has worsened
in China with Covid-19 outbreak and related lockdown in various cities in China
in 2022, Ukraine war, inflation, looming recession worldwide. According to the
market value, the Company's balance of the short term investment was $1.26
million on June 30, 2022.

Other (expenditure) income, net

Other expenses, net increased by $0.33 million to $0.80 million for the six
months ended June 30, 2022 from $0.46 million in the same period of the last
fiscal year, primarily due to increased interest income and subsidiary income of
NTAM under Employment Support Scheme 2022 from Hong Kong government under the
Anti-epidemic Fund to provide wage subsidies to employees during six months

ended June 30, 2022.



Income Tax

Tax provision increased by 0.31 million dollars for the six months ended 30 June 2022. We had no tax provision for the same period in the previous financial year.



Non-controlling Interests



Shaanxi Chunlv Ecological Agriculture Co., Ltd. ("Shaanxi Chunlv") holds 20.0%
interest in Chain Cloud Mall Logistics Center (Shaanxi) Co., Limited, which was
dissolved and deregistered on June 27, 2022. Nature Worldwide Resources Ltd.
holds 40% interest in DCON DigiPay Limited ("DCON Digipay"), Each of Bin Wu and
Lixiong Huang holds 25% and 20% interest in FTFT Capital Investments L.L.C.,
respectively.

Loss from continuing operations




Loss from continuing operations increased by $3.43 million from $1.20 million
for the six months ended June 30, 2021 to $4.63 million for the same period of
2022 mainly due to the increase in operating expenses, as discussed above.

Gain on disposal of discontinued operations




Loss on disposal of discontinued operation was $154 for the six months ended
June 30, 2022, which was related to the dissolution and deregistration of Chain
Cloud Mall Logistics Center (Shanxi) Co., Ltd. on June 27, 2022.



Loss per Share

Basic and diluted loss per share from continuing operations were $0.07 and $0.07
for the six months ended June 30, 2022, respectively, as compared to a loss of
$0.03 and $0.03 for the same periods of 2021, respectively. Basic and diluted
income per share attributable to discontinued operations was nil for the six
months ended June 30, 2022 respectively. Basic and diluted earnings per share
attributable to discontinued operations was $0 and $0.01 for the six months
ended June 30, 2021 respectively.



                                       37

Liquidity and capital resources

As of June 30, 2022, we had cash and cash equivalents of $42.03 million, as
compared to $50.27 million as of December 31, 2021. The decrease in cash, cash
equivalents was mainly due the loss in operations and Company did not issue
shares of common stock to raise money for the six months ended June 30, 2022
comparing to the same period of 2021.



Our working capital has mainly been generated from our business operations and
financing activities. Our working capital was $59.48 million, as of June 30,
2022, a decrease of $6.01 million from working capital of $65.49 million, as of
December 31, 2021, mainly due to the Company had loss in its operations and did
not raise any funds during the six months ended June 30, 2022.



Net cash used in operating activities increased by $2.05 million to $5.13
million for the six months ended June 30, 2022 from a cash outflow of $3.08
million for the same period of the last fiscal year. The increase in net cash
used in operating activities was primarily due to an increase in note
receivable, other receivable and advances to suppliers and other current assets
during the six months ended June 30, 2022.



Net cash used in investing activities increased by $5.98 million comparing the
six months ended June 30, 2022 and June 30, 2021, mainly due to additional

loan
to a third party.

Net cash provided in financing activities for the six months ended June 30, 2022
was $4.14 million representing an decrease of $62.75 million, as compared to
cash provided by financing activities of $66.88 million during the six months
ended June 30, 2021. The decrease in cash provided by financing activities was
mainly due to the Company had loss in operations and did not raise any funds
during the six months ended June 30, 2022 comparing to the same period of 2021.

Off-balance sheet events

Per 30 June 2022we had no off-balance sheet arrangements.