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PRE 14A Form - Other preliminary proxy statements - Future FinTech Group Inc. (0001066923) (Filer)

PRE 14A1pre14a1019_futurefintech.htmPRELIMINARY PROXY STATEMENT

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

SCHEDULE14A

(RULE14a-101)

 

Schedule14A Information

ProxyStatement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

 

Filedby the Registrant   ☒

 

Filedby a Party other than the Registrant   ☐

 

Check the appropriate box:
   
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-12

 

Future FinTech Group Inc.
(Exact name of registrant as specified in its charter)

 

N/A
(Name of person(s) filing proxy statement, if other than the registrant)

 

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PRELIMINARY PROXY STATEMENT DATED OCTOBER 11, 2019

 

 

LETTERFROM THE CHIEF EXECUTIVE OFFICER

 

DearShareholder:

 

Youare cordially invited to attend the 2019 Annual Meeting of Shareholders of Future FinTech Group Inc., a Florida corporation (the“Company” or “Future FinTech”), which will be held at our principal executive offices, located at 23F,China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, on Friday, December 6, 2019 at 10:00 A.M., localtime.

 

TheNotice of Annual Meeting of Shareholders and Proxy Statement describes the formal business to be transacted at the annual meeting.Our directors and officers will be present to respond to appropriate questions from shareholders. A shareholder must completethe attached proxy card or be present in person to vote at the meeting.

 

Whetheror not you plan to attend the meeting, please vote as soon as possible. You can vote by returning the proxy card in the enclosedpostage-prepaid envelope. This will ensure that your shares will be represented and voted at the meeting, even if you do not attend.If you attend the meeting, you may revoke your proxy and personally cast your vote. Attendance at the meeting does not of itselfrevoke your proxy.

 

  By Order of the Board of Directors,
   
  /s/ Yongke Xue
  Yongke Xue
  Chief Executive Officer
 

October [●], 2019

Xi’an, China

 

 

 

 

FUTUREFINTECH GROUP INC.

 

23F,China Development Bank Tower,

No.2 Gaoxin 1st Road

Xi’an,Shaanxi, China 710075

 

NOTICEOF ANNUAL MEETING OF SHAREHOLDERS

 

Tobe Held Friday, December 6, 2019

 

NOTICEIS HEREBY GIVEN that the Annual Meeting of Shareholders of Future FinTech Group Inc., a Florida corporation (the “Company”or “Future FinTech”), will be held at our principal executive offices, located at 23F, China Development Bank Tower,No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, on Friday, December 6, 2019 at 10:00 A.M., local time, for the following purposes,as set forth in the attached Proxy Statement:

 

(1) To elect five directors to hold office until the next Annual Meeting of Shareholders and until their successors are elected and qualified;

 

(2) To ratify the Audit Committee’s selection of the independent registered public accounting firm for the fiscal year ending December 31, 2019;

 

(3) To approve the sale of the Company’s subsidiary, HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”), to New Continent International Co., Ltd., a company incorporated in the British Virgin Islands (the “Sale Transaction”);
   
(4) To adopt and approve the Future FinTech Group Inc. 2019 Omnibus Equity Plan; and
   
(5) To transact such other business as may properly come before the meeting or any adjournment thereof.

 

TheBoard of Directors of the Company (the “Board of Directors” or the “Board”) and the Company’s managementhas fixed the close of business on October 10, 2019 as the record date for determining the shareholders entitled to notice of,and to vote at, the Annual Meeting and any adjournment and postponements thereof (the “Record Date”).

 

Aftercareful consideration, the Board of Directors recommends a vote IN FAVOR OF the nominees for director named in the accompanyingproxy statement, a vote IN FAVOR OF the ratification of the Audit Committee’s selection of the independent registered publicaccounting firm, a vote IN FAVOR OF the Sale Transaction, and a vote IN FAVOR OF the adoption of the Future FinTech Group Inc.2019 Omnibus Equity Plan.

 

Shareholdersare cordially invited to attend the Annual Meeting in person. Whether you plan to attend the Annual Meeting or not, please complete,sign and date the enclosed Proxy Card and return it without delay in the enclosed postage-prepaid envelope. If you do attend theAnnual Meeting, you may withdraw your proxy and vote personally on each matter brought before the meeting. YOUR VOTE IS VERYIMPORTANT.

 

ByOrder of the Board of Directors

 

  /s/ Yongke Xue
  Yongke Xue
  Chief Executive Officer
  October [●], 2019
  Xi’an, China

 

 

 

 

YOURVOTE IS IMPORTANT

 

WHETHEROR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE BY MARKING,SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy orchange your vote at any time before the Annual Meeting. If your shares are held in the name of a bank, broker or other nominee,please follow the instructions on the voting instruction card furnished to you by such bank, broker or other nominee, which isconsidered the shareholder of record, in order to vote. As a beneficial owner, you have the right to direct your broker or otheragent on how to vote the shares in your account. Your broker or other agent cannot vote on the Sale Transaction and other discretionarymatters without your instructions.

 

Ifyou are a shareholder of record and fail to return your proxy card to us or vote by ballot in person at the Annual Meeting, yourshares will not be counted for purposes of determining whether a quorum is present at the Annual Meeting. If you are a shareholderof record, voting in person by ballot at the Annual Meeting will revoke any proxy that you previously submitted. If you hold yourshares through a bank, broker or other nominee, you must obtain from the record holder a valid “legal” proxy issuedin your name in order to vote in person at the Annual Meeting.

 

Weencourage you to read the accompanying proxy statement carefully and in its entirety, as well as the documents we file from timeto time with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December31, 2018. If you have any questions concerning any of the proposals to be voted upon at the Annual Meeting or the accompanyingproxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of common stock,please contact the Company’s Corporate Secretary at 23F, China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an,Shaanxi, China, 710075, or call 86-29-8187-8827.

 

Thankyou for your participation. We look forward to your continued support.

 

    By Order of the Board of Directors,
       
    Future FinTech Group Inc.
       
Date: October [●], 2019 By: /s/ Yongke Xue
    Name:   Yongke Xue
    Title: Chief Executive Officer

 

 

 

 

TABLEOF CONTENTS

 

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS 1
FORWARD-LOOKING STATEMENTS 8
SUMMARY 9
RISK FACTORS 15
THE ANNUAL MEETING 21
THE SALE TRANSACTION 23
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION 29
DESCRIPTION OF FUTURE FINTECH SECURITIES 32
PROPOSAL 1 – ELECTION OF BOARD OF DIRECTORS 33
Corporate Governance 35
Certain Relationships and Related Transactions 41
Security Ownership of Directors, Officers and Certain Beneficial Owners of Future FinTech Group Inc. 42
Compensation 45
Requirements, Including Deadlines, for Submission of Proxy Proposals, Nomination of Directors and Other Business of Shareholders 46
PROPOSAL 2 – RATIFICATION OF THE AUDIT COMMITTEE’S SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 47
Independent Registered Public Accounting Firm Fees 49
PROPOSAL 3 – SALE TRANSACTION OF HEDETANG HOLDINGS 50
PROPOSAL 4 – APPROVAL OF THE COMPANY’S 2019 OMNIBUS EQUITY PLAN 51
OTHER MATTERS 58
WHERE YOU CAN FIND MORE INFORMATION 58

 

ANNEXES

 

Annex A Future FinTech Group Inc. 2019 Omnibus Equity Plan

 

EXHIBITS

 

Exhibit 1 Share Transfer Agreement by and between SkyPeople Foods Holdings Limited and New Continent International Co., Ltd. dated September 18, 2019, incorporated by reference to Exhibit 10.1 of the Form 8-K filed on September 23, 2019.

 

i

 

 

QUESTIONSAND ANSWERS ABOUT THE PROPOSALS

 

Thefollowing are answers to some questions that you, as a shareholder of Future FinTech, may have regarding the Sale Transaction,the Amendment and the other matters being considered at the Annual Meeting. We urge you to read carefully the remainder of thisproxy statement because the information in this section does not provide all the information that might be important to you withrespect to the Sale Transaction, the Amendment and the other matters being considered at the Annual Meeting. Additional importantinformation is also contained in the annexes to and the documents incorporated by reference into this proxy statement.

 

Q: Why am I receiving this proxy statement?

 

A: The board of directors of Future FinTech is soliciting your proxy to vote at the Annual Meeting because you owned shares of Future FinTech common stock at the close of business on October 10, 2019, the “Record Date” for the Annual Meeting, and are therefore entitled to vote at the Annual Meeting. This proxy statement, along with a proxy card or a voting instruction card, is being mailed to shareholders on or about October 25, 2019. Future FinTech has made these materials available to you on the Internet, and Future FinTech has delivered printed proxy materials to you or sent them to you by e-mail. This proxy statement summarizes the information that you need to know in order to cast your vote at the Annual Meeting. You do not need to attend the Annual Meeting in person to vote your shares of Future FinTech common stock.

 

Q: When and where will the Annual Meeting be held?

 

A: The Annual Meeting will be held at 10:00 a.m., local time, on Friday, December 6, 2019, at the Company’s offices at 23F, China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, 710075.

 

1

 

 

Q: On what matters will I be voting?

 

A: Future FinTech’s shareholders are being asked to consider and vote upon the following proposals:

 

  (1) To elect five directors to hold office until the next Annual Meeting of Shareholders and until their successors are elected and qualified;

 

  (2) To ratify the Audit Committee’s selection of the independent registered public accounting firm for the fiscal year ending December 31, 2019;  

 

  (3) To approve the sale of the Company’s subsidiary, HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”) to New Continent International Co., Ltd. (the “Sale Transaction”);

  

  (4) To adopt and approve the Future FinTech Group Inc. 2019 Omnibus Equity Plan; and    

 

  (5) To transact such other business as may properly come before the meeting or any adjournment thereof.

 

FutureFinTech’s shareholders may also be asked to consider and vote upon a proposal to adjourn the meeting to a later date ordates to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Annual Meeting,Future FinTech would not have been authorized to consummate the Sale Transaction. Future FinTech will hold the Annual Meetingto consider and vote upon these proposals. This proxy statement contains important information about matters to be acted uponat the Annual Meeting. Shareholders should read it carefully. The vote of shareholders is important.

 

Inorder to complete the Sale Transaction, Future FinTech shareholders must vote to approve the Sale Transaction, and all other requirementsof the Company to complete the Sale Transaction must be fulfilled.

 

Q: What are the material terms of the Sale Transaction?

 

A: Pursuant to the terms of the Sale Transaction Agreements, New Continent will acquire all outstanding shares of HeDeTang HK, a subsidiary of the Company, and with it all of the Company’s fruit juice processing business. The cash consideration that New Continent will pay or cause to be paid in connection with the Sale Transaction is RMB 600,000, or approximately US$85,714, subject to certain adjustments. See the section of this proxy statement entitled “Proposal 3—Sale Transaction of HeDeTang Holdings.”

 

Q: Why is Future FinTech proposing the Sale Transaction?

 

A:

HeDeTang HK is a wholly owned subsidiary of SkyPeople Foods Holdings Limited (BVI) (“SkyPeople BVI”). HeDeTang HK’s 73.41% owned subsidiary SkyPeople Juice Group Co., Ltd., (“SkyPeople China”) and wholly owned subsidiary HeDeJiaChuan Holdings Co., Ltd. (“HeDeJiaChuan”, referred to collectively with SkyPeople China and HeDeTang HK as “HeDeTang HK and its subsidiaries”) own and operate the fruit juice manufacturing and distribution business of the Company. On August 29, 2017, the Board approved a spin-off of the Company’s wholly-owned subsidiaries, SkyPeople BVI and FullMart, through a pro rata distribution of the ordinary shares of each of SkyPeople BVI and FullMart to holders of the Company’s common stock (the “Spin-Off”). On March 13, 2018, the Company held a Special Meeting of Shareholders, and the Spin-Off was approved by the shareholders of the Company, subject to the completion of certain conditions including, among others, the issuance of additional shares of ordinary stock of each of SkyPeople BVI and FullMart to Future FinTech and the filing and effectiveness of Form 10 registration statements for each of SkyPeople BVI and FullMart. Due to the time and cost of preparing the audited financial statements for SkyPeople BVI and FullMart for Form 10 registration statements and the change of the auditor of the Company in early 2019, the Spin-Off was not completed as of September 2019.

 

2

 

 

 

On September 4, 2019, the Company received written notice from the NASDAQ Stock Market (“NASDAQ”) stating that the Company did not meet the requirement of maintaining a minimum of $2,500,000 in stockholders’ equity for continued listing on the NASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(b)(1), and that additionally the Company did not meet the alternative of market value of listed securities of $35 million under NASDAQ Listing Rule 5550(b)(2) or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years under NASDAQ Listing Rule 5550(b)(3), and that accordingly the Company was no longer in compliance with the NASDAQ Listing Rules. The NASDAQ notification letter provided the Company until September 18, 2019 to submit a plan to regain compliance. If the plan is accepted, NASDAQ can grant the Company an extension up to 180 calendar days from the date of the NASDAQ letter to demonstrate compliance.

 

Since 2015, due to the cost increase for raw materials, labor and environmental compliance as well as theslow-down of market growth and increasing price competition in China, the revenue and net income from the Company’s fruitjuice business has decreased significantly and our fixed assets usage rate has been at a very low level. In the meantime, Chinesebanks have implemented a de-leveraging policy and been aggressively collecting outstanding loans. Furthermore, the Company’snew construction projects and facilities for fruit juice business could not be completed on schedule due to lack of funding andenvironmental control issues. This has resulted in the Company’s fruit juice business having a large amount of liabilitiesand bad assets, i.e. the business of HeDeTang Holding (HK) Ltd. (“HeDeTang HK”) and its operating subsidiaries in China.For fiscal year 2018, the Company had asset impairment of $148 million for HeDeTang HK and its subsidiaries, which has caused theshareholders’ equity of the Company in its consolidated financial statements to be reduced to negative $86.70 million, failingto meet the minimum $2.5 million shareholders’ equity requirement for continued listing on the NASDAQ Capital Market. Afterconsidering the continued listing requirements, timeline, and related costs as well as the difficulty of the operation conditionsfor fruit juice businesses, our Board reviewed the options and approved the Sale Transaction on September 17, 2019, with the intentof divesting the fruit juice business so that the Company can meet the shareholders equity requirement to regain compliance withNASDAQ and the Company’s management can better focus on the Company’s new business lines and growth strategies.  Additionally,our Board believes that the Sale Transaction will allow Future FinTech’s results of operations to not be as negatively affectedby the adverse market conditions currently being experienced by the asset-heavy fruit juice manufacturing operations of HeDeTangHK and its subsidiaries in China. On September 18, 2019, the Company submitted its compliance plan to NASDAQ, indicating itplans to complete the Sale Transaction subject to shareholder approval, so that the shareholders’ equity of the Company willbe more than $2.5 million, so as to regain compliance with NASDAQ Rules. The Company is still waiting for approval of the planby NASDAQ as of the date of this proxy statement.

 

Q: What effects will the Sale Transaction have on Future FinTech?

 

A: If the Sale Transaction is completed, Future FinTech will no longer own HeDeTang and will no longer operate its fruit juice business.  Future FinTech will receive the proceeds of the Sale Transaction and will continue to operate its e-commerce business.

 

Q: Will any of the proceeds from the Sale Transaction be distributed to me as a stockholder?

 

A: No. Stockholders will not receive any direct proceeds of the Sale Transaction. All of the proceeds from the Sale Transaction will be paid to the Company.

 

Q: What will happen to my shares in Future FinTech if the Sale Transaction is completed?

 

A: Nothing. The completion of the Sale Transaction will not affect your shares of Future FinTech common stock. You will continue to hold those shares you held immediately prior to the Sale Transaction. 

 

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Q: Are there risks associated with the Sale Transaction that I should consider in deciding how to vote?

 

A: Yes. There are a number of risks related to the Sale Transaction, that are discussed in this proxy statement. Please read with particular care the detailed description of the risks described in “Risk Factors” beginning on page 15 of this proxy statement.

 

Q. What happens if the Sale Transaction is not approved?

 

A. If the Sale Transaction is not approved, the Sale Transaction will not be consummated and the subsidiary subject to the rejected Sale Transaction will remain a wholly-owned subsidiary of Future FinTech. Due to the large liability of HeDeTang HK and its subsidiaries, the Company will not be able to meet its compliance plan and the continued listing requirements of NASDAQ, and will face delisting by NASDAQ.

 

Q: How does Future FinTech’s board of directors recommend that I vote on the proposals to be voted upon at the Annual Meeting?

 

A: The Future FinTech board of directors recommends that Future FinTech shareholders vote or give instruction to vote:

 

  FOR” the nominees for director named in this proxy statement;

 

  FOR” the ratification of the Audit Committee’s selection of the independent registered public accounting firm;

 

  FOR” the Sale Transaction proposal; and

 

  FOR” the adoption of the Future FinTech Group Inc. 2019 Omnibus Equity Plan.

 

Youshould read “The Sale Transaction — Recommendation of Future FinTech’s Board of Directors and Reasons for theSale Transaction” beginning on page 25 for a discussion of the factors that our board of directors considered in decidingto recommend the approval of the sale proposal.

 

Q: How do I vote?

 

A: After you have carefully read this proxy statement and have decided how you wish to vote your shares of Future FinTech common stock, please vote your shares promptly.

 

Shareholdersof Record

 

Ifyour shares of Future FinTech common stock are registered directly in your name with Future FinTech’s transfer agent, ContinentalStock Transfer & Trust Company, you are the shareholder of record of those shares and these proxy materials have been mailedto you by the Company. You may vote your shares by mail or in person at the Annual Meeting. Your vote authorizes Yongke Xue, ChiefExecutive Officer of the Company, and Jing Chen, Chief Financial Officer of the Company, as your proxy, with the power to appointhis substitute, to represent and vote your shares as you directed.

 

BeneficialOwners

 

Ifyour shares of Future FinTech common stock are held in a stock brokerage account, by a bank, broker or other nominee, you areconsidered the beneficial owner of shares held in street name and these proxy materials are being forwarded to you by your bank,broker or nominee that is considered the holder of record of those shares. As the beneficial owner, you have the right to directyour bank, broker, trustee or nominee on how to vote your shares signing and returning a proxy card. Your bank, broker, trusteeor nominee will send you instructions for voting your shares. Please note that you may not vote shares held in street name byreturning a proxy card directly to Future FinTech or by voting in person at the Annual Meeting unless you provide a “legalproxy,” which you must obtain from your broker, bank or nominee. Further, brokers, banks and nominees who hold shares ofFuture FinTech common stock on your behalf may not give a proxy to Future FinTech to vote those shares without specific instructionsfrom you.

 

4

 

 

Fora discussion of the rules regarding the voting of shares held by beneficial owners, please see the question below entitled “IfI am a beneficial owner of shares of Future FinTech common stock, what happens if I don’t provide voting instructions? Whatis discretionary voting?”

 

Q: What vote is required to approve each proposal?

 

A: The nominees for election as directors at the Annual Meeting will be elected by a plurality of the votes cast at the meeting. This means that the director nominee with the most votes for a particular slot is elected for that slot. Votes withheld from one or more director nominees will have no effect on the election of any director from whom votes are withheld. The approval of each of the other proposals requires the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on that proposal.

 

Q: How many votes do I and others have?

 

A: You are entitled to one vote for each share of Future FinTech common stock that you held as of the Record Date. As of the close of business on the Record Date, there were 32,317,083 outstanding shares of Future FinTech common stock.

 

Q: How will our directors and executive officers vote on the proposals at the Annual Meeting?

 

A: As of the Record Date, the directors and executive officers of Future FinTech as a group owned and were entitled to vote 13,084,114 shares of the common stock of the Company including shares owned by the son of our Chairman and Chief Executive Officer, representing approximately 40.49% of the outstanding shares of Future FinTech common stock on that date. Future FinTech expects that its directors and executive officers will vote their shares in favor of the each of the proposals to be presented at the Annual Meeting, but none of the Company’s directors or executive officers has entered into any agreement obligating any of them to do so.

 

Q: How many shares must be present to hold the Annual Meeting?

 

A: A majority of the shares of our common stock issued and outstanding and entitled to vote must be represented in person or by proxy at the meeting to establish a quorum. Both abstentions and broker non-votes (discussed further below) are counted as present for determining the presence of a quorum. Broker non-votes, however, are not counted as shares present and entitled to be voted with respect to the matter on which the broker has not voted. Thus, broker non-votes will not affect the outcome of any of the matters to be voted on at the Annual Meeting. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (1) the broker has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power to vote such shares.

 

Q: If I am a beneficial owner of shares of Future FinTech common stock, what happens if I don’t provide voting instructions? What is discretionary voting?

 

A: If you are a beneficial owner and do not provide the shareholder of record with voting instructions, your shares may constitute “broker non-votes.” A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power and has not received instructions from the beneficial owner.

 

Underapplicable regulations, if a broker holds shares on your behalf, and you do not instruct your broker how to vote those shareson a matter considered “routine,” the broker may generally vote your shares for you. A “broker non-vote”occurs when a broker has not received voting instructions from you on a “non-routine” matter, in which case the brokerdoes not have authority to vote your shares with respect to such matter. Unless you provide voting instructions to a broker holdingshares on your behalf, your broker may no longer use discretionary authority to vote your shares on any of the matters to be consideredat the Annual Meeting other than the ratification of our independent registered public accounting firm. Please vote your proxyso your vote can be counted.

 

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Q: What will happen if I return my proxy card without indicating how to vote?

 

A: If you sign and return your proxy card without indicating how to vote on any particular proposal, the Future FinTech common stock represented by your proxy will be voted in favor of each such proposal. Proxy cards that are returned without a signature will not be counted as present at the Annual Meeting and cannot be voted.

  

Q: Can I change my vote after I have returned a proxy or voting instruction card?

 

A: Yes. You can change your vote at any time before your proxy is voted at the Annual Meeting. You can do this in one of four ways:

 

  you can grant a new, valid proxy bearing a later date;
     
  you can send a signed notice of revocation;
     
  if you are a holder of record, you can attend the Annual Meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given; or
     
  if your shares of Future FinTech common stock are held in an account with a broker, bank or other nominee, you must follow the instructions on the voting instruction card you received in order to change or revoke your instructions.

 

Ifyou choose either of the first two methods, you must submit your notice of revocation or your new proxy to the Corporate Secretaryof Future FinTech, as specified in this proxy statement, no later than the beginning of the Annual Meeting. If your shares areheld in street name by your broker, bank or nominee, you should contact them to change your vote.

 

Q: Do I need identification to attend the Annual Meeting in person?

 

A: Yes. Please bring proper identification, together with proof that you are a record owner of shares of Future FinTech common stock. If your shares are held in street name, please bring acceptable proof of ownership, such as a letter from your broker or an account statement stating or showing that you beneficially owned shares of Future FinTech common stock on the record date. Acceptable proof of ownership is either (a) a letter from your broker stating that you beneficially owned Future FinTech stock on the Record Date or (b) an account statement showing that you beneficially owned Future FinTech stock on the Record Date.

 

Q: Are Future FinTech shareholders entitled to appraisal rights?

 

A: No. Future FinTech shareholders do not have appraisal rights in connection with the Sale Transaction under the Florida Business Corporation Act.

  

Q: What do I do if I receive more than one set of voting materials?

 

A: You may receive more than one set of voting materials for the Annual Meeting, including multiple copies of this proxy statement, proxy cards and/or voting instruction forms. This can occur if you hold your shares of common stock in more than one brokerage account, if you hold shares directly as a record holder and also in street name, or otherwise through a nominee, and in certain other circumstances. If you receive more than one set of voting materials, each should be voted and/or returned separately in order to ensure that all of your shares of common stock are voted.

 

6

 

 

Q: If I am a Future FinTech shareholder, should I send in my Future FinTech stock certificates with my proxy card?

 

A: No. Please DO NOT send your Future FinTech stock certificates with your proxy card.

 

Q: Will I be subject to any taxes as a result of the Sale Transaction?

 

A: No. The Sale Transaction will not generally be taxable to the stockholders of the Company. The tax consequences to you will depend on your own situation. Please consult your tax advisors as to the specific tax consequences to you of the Sale Transaction, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws in light of your particular circumstances.

 

Q: When do you expect the Sale Transaction to be completed?

 

A: We are working to complete the Sale Transaction as quickly as possible, and we expect to complete all transactions in the first quarter of 2020. However, Future FinTech cannot assure you when or if the Sale Transaction will occur. The Sale Transaction is subject to shareholder approval and other conditions, and it is possible that factors outside the control of Future FinTech could result in the Sale Transaction being completed at a later time, or not at all. There may be a substantial amount of time between the Annual Meeting and the completion of the Sale Transaction.

 

Q: Whom should I call with questions about the Annual Meeting, the Sale Transaction or any of the other proposals to be presented at the Annual Meeting?

 

A: Future FinTech shareholders should call the Corporate Secretary at 86-29-8187-8827 with any questions.

 

Q: What material negative factors did the Board of Future FinTech consider in connection with the Sale Transaction?

 

A: The Board of Future FinTech views the Sale Transaction as the best option currently available to the Company to meet the continued listing requirements of NASDAQ in a timely manner and allow the Company’s results of operations to not be as negatively affected by the adverse market conditions currently being experienced by the asset-heavy manufacturing operation and large liabilities of its fruit juice business. Upon deliberation, the Board determined that the potential positive value of the successful completion of the Sale Transaction distinctly outweighs any negative factor. If the Sale Transaction is completed, Future FinTech will remain an independent public company, it will meet NASDAQ’s shareholders equity requirement, and it will continue to file periodic reports with the SEC. In addition, if the Sale Transaction is not completed, Future FinTech expects that management will operate the business in a manner similar to that in which it is being operated today and that Future FinTech’s shareholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, non-compliance with the NASDAQ continued listing requirements, NASDAQ delisting, and the risks related to the highly competitive industry in which Future FinTech operates, and the adverse economic conditions it faces.

 

Theprimary negative consequence of the transaction that Future FinTech’s Board considered was that the transaction could resultin Future FinTech’s common stock being delisted from NASDAQ and moved to the OTC Markets if Future FinTech fails to meetNASDAQ’s continued listing requirements.

 

Pleaseread with particular care the detailed description of the risks described in “Risk Factors” beginning on page15 of this proxy statement.

 

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FORWARD-LOOKINGSTATEMENTS

 

Thisproxy statement, including information incorporated by reference into this proxy statement, includes forward-looking statementsregarding, among other things, Future FinTech’s plans, strategies and prospects, both business and financial. Although FutureFinTech believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements arereasonable, Future FinTech cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-lookingstatements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors describedunder “Risk Factors” from time to time in Future FinTech’s filings with the SEC. Many of the forward-lookingstatements contained in this presentation may be identified by the use of forward-looking words such as “believe”,“expect”, “anticipate”, “should”, “planned”, “will”, “may”,“intend”, “estimated”, “aim”, “on track”, “target”, “opportunity”,“tentative”, “positioning”, “designed”, “create”, “predict”, “project”,“seek”, “would”, “could”, “continue”, “ongoing”, “upside”,“increases” and “potential”, among others. Important factors that could cause actual results to differmaterially from the forward-looking statements we make in this presentation are set forth in other reports or documents that wefile from time to time with the SEC, and include, but are not limited to:

 

the number and percentage of our public shareholders voting against the Sale Transaction and the other proposals described herein;

 

the ability to maintain the listing of Future FinTech’s common stock on NASDAQ following the consummation of the Sale Transaction;

 

changes adversely affecting the businesses in which Future FinTech is engaged;

 

management of growth;

 

general economic conditions;

 

business strategies and plans of Future FinTech;

 

the result of future financing efforts; and

 

and the other factors summarized under the section entitled “Risk Factors”.

 

Youare cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement.All forward-looking statements included herein attributable to Future FinTech or any person acting on any party’s behalfare expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to theextent required by applicable laws and regulations, Future FinTech undertakes no obligations to update these forward-looking statementsto reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

 

Beforea shareholder grants its proxy or instructs how its vote should be cast or vote on the proposals described herein, it should beaware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxystatement may adversely affect Future FinTech.

 

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SUMMARY

 

Thissummary highlights selected information from this proxy statement and does not contain all of the information that is importantto you. To better understand the proposals to be submitted for a vote at the Annual Meeting, including the Sale Transaction, youshould read this entire document carefully, including the 2019 Future FinTech Equity Plan attached as Annex A and the ShareTransfer Agreement incorporated by reference as Exhibit 1 to this proxy statement.

 

Referencesto “Future FinTech” are references to Future FinTech Group Inc. References to “HeDeTang HK” or “HeDeTang”are references to HeDeTang Holdings (HK) Ltd. References to “we” or “our” and other first person referencesin this proxy statement refer to Future FinTech or HeDeTang, as the case may be, before completion of the Sale Transaction.

 

The Company

 

Future FinTech Group Inc.

 

We are a holding company incorporated underthe laws of the State of Florida. We have three direct wholly-owned subsidiaries: We have three direct wholly-owned subsidiaries:DigiPay FinTech Limited (“DigiPay,” formerly known as Belkin Foods Holdings Group Limited, which changed its name onJanuary 4, 2018), a company incorporated under the laws of the British Virgin Islands, Digital Online Marketing Limited (“DigitalOnline”) (formerly known as FullMart Holding Limited, which changed its name on January 5, 2018), a company organized underthe laws of the British Virgin Islands, and SkyPeople Foods Holding Limited (“SkyPeople BVI”), a company organizedunder the laws of the British Virgin Islands.

 

SkyPeople BVI holds 100% of the equityinterest of HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”), a company organized under the laws of the Hong Kong SpecialAdministrative Region of the People’s Republic of China (“Hong Kong”), and HeDeTang HK holds 73.41% of the equityinterest of SkyPeople Juice Group Co., Ltd., (“SkyPeople (China)”), a company incorporated under the laws of the PRC.SkyPeople (China) has eleven subsidiaries, all limited liability companies organized under the laws of the PRC: (i) Shaanxi QiyiwangguoModern Organic Agriculture Co., Ltd. (“Shaanxi Qiyiwangguo”); (ii) Huludao Wonder Fruit Co., Ltd. (“HuludaoWonder”); (iii) Yingkou Trusty Fruits Co., Ltd. (“Yingkou”); (iv) Hedetang Foods Industry (Yidu) Co. Ltd. (“FoodIndustry Yidu”); (v) Shaanxi Heying Trading Co. Ltd (“Shaanxi Heying”); (vi) Hedetang Agricultural Plantation(Yidu) Co. Ltd. (“Agricultural Plantation Yidu”); (vii) Xi’an Hedetang Nutritious Food Research Institute Co.,Ltd. (“Hedetang Reseach”); (viii) Xi’an Cornucopia International Co., Ltd. (“Xi’an Cornucopia”);(ix) Xi’an Hedetang E-commerce Co. Ltd. (“Hedetang E-commerce”), which was dissolved on January 17, 2019; (x)Hedetang Foods Industry (Zhouzhi) Co. Ltd (“Foods Industry Zhouzhi”); and (xi) Hedetang Foods Industry (Jingyang)Co. Ltd. (“Foods Industry (Jingyang”). Shenzhen TianShunDa Equity Investment Fund Management Co., Ltd. (the “TSD”),a limited liability corporation registered in China, holds another 26.36% of the equity interest of SkyPeople (China). HeDeTangHoldings (HK) also holds 100% of the equity interest of HeDeJiaChuan Holding Group Co. Ltd. (“HeDeJiaChuan Holding”),a company incorporated under the laws of the PRC. HeDeJiaChuan Foods Xi’an has three subsidiaries: (i) SkyPeople (Suizhong)Fruit and Vegetable Products Co., Ltd (“SkyPeople Suizhong”); (ii) HedeJiachuan Foods (Yichang) Co. Ltd (“HedejiachuanYichang”); and (iii) Shaanxi Guo Wei Mei Kiwi Deep Processing Co., Ltd. (“Guo Wei Mei”).

 

GlobalKey SharedMall Limited (“GlobalKeySharedMall”), a company incorporated under the laws of the Cayman Islands, holds 100% of the equity interest of QR (HK)Limited (“QRHK”, which changed its name from Globalkey Holdings Limited (“Globalkey Holdings”) on October23, 2018), a company organized under the laws of Hong Kong. In September 2017, Globalkey Holdings transferred its wholly ownedsubsidiary Hedejiachuan Holding Group Co., Ltd., along with its two other subsidiaries, a 99.5% owned subsidiary and a 96.67%owned subsidiary, to HeDeTang Holdings (HK) Ltd. The transferee is a subsidiary of Skypeople BVI. As a result of these transactions,all of Digital Online’s operations were transferred to a subsidiary of SkyPeople BVI, and Digital Online has no operationalassets or businesses.

 

TheAnnual Meeting

 

TheAnnual Meeting will be held at 10:00 a.m., local time, on Friday, December 6, 2019, at the Company’s principal executiveoffices at 23F, China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, 710075.

 

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TheSale Transaction

 

You will be askedto consider and vote upon the Sale Proposal to approve the Sale Transaction contemplated by that certain Share Transfer Agreement,dated as of September 18, 2019, entered into by and between SkyPeople Foods Holdings Limited and New Continent International Co.,Ltd., which, as it may be further amended from time to time, is referred to herein as the “Share Transfer Agreement”.The Share Transfer Agreement provides that New Continent will purchase of all of the outstanding shares of common stock or limitedliability company membership interests (collectively the “Shares”), as applicable, of HeDeTang Holdings (HK) Ltd.,a company incorporated in Hong Kong (“HeDeTang”). HeDeTang owns 73.41% of the equity interests of SkyPeople JuiceGroup Co., Ltd., (“SkyPeople China”) and 100% of the equity interests of HeDeJiaChuan Holdings Co., Ltd. (“HeDeJiaChuan”).The cash consideration that New Continent will pay or cause to be paid in connection with the Sale Transaction is RMB 600,000,or approximately US$85,714, subject to certain adjustments. See the section of this proxy statement entitled “Proposal3—Sale Transaction of HeDeTang Holdings.”

 

Our board of directorsadopted resolutions approving the Share Transfer Agreement on September 17, 2019 .

 

Upon completion of the Sale Transaction,New Continent will hold all of the ordinary shares of HeDeTang HK.

 

FutureFinTech’s Operations Following the Sale Transaction

 

Followingthe completion of the Sale Transaction, the main business operations of Future FinTech will be focused on our real-name and membership-basedblockchain shared shopping mall platform.

 

OnJanuary 22, 2019, the Company formally launched GlobalKey SharedMall, also known as Chain Cloud Mall (CCM) v1.0, the real-nameand membership-based blockchain shared shopping mall platform that integrates blockchain and internet technology and distinguishesitself by utilizing the automatic value distribution system of blockchain and sharing the value of the platform to all the participantsin the system.

 

OnJune 1, 2019, CCM v2.0 was launched. Compared to the 1.0 version, CCM v2.0 has a wider variety of product categories, easier userinterface, more transparent information, more stable operations, a higher security level, and faster logistics. Currently, CCMv2.0 adopts a “multi-vendor hosted stores + platform self-hosted stores” model, supported by multiple local warehousesin different regions. The platform supports various marketing methods, including point rewards programs, coupons, live webcasts,game interaction, and social media sharing. Besides the blockchain-powered features, CCM v2.0 is also fully equipped with thesame functions and services that other Chinese leading traditional e-commerce platforms provide.

 

CCM’sblockchain-powered QRO plan enables CCM to record every event or transaction on a distributed ledger and make the whole processtraceable. CCM is adopting an unalterable anti-counterfeit code to be issued by manufacturers, which can ensure the authenticityof products and directly link manufacturers with their targeted customers as a way of precision marketing.

 

Basedon blockchain technology, CCM is established to transform the relationship between companies and consumers from traditional sellingand buying relationships to a value-sharing relationship. The platform will fairly distribute the benefit of the entire mall tousers who engage in promotion, development, and consumption based on their contributions to the platform. The members of CCM arenot only consumers and entrepreneurs but also participants, promoters and beneficiaries.

 

TheCCM shared shopping mall platform is designed to be a block-chain based shopping mall for merchants and goods, not the exchangeof digital currencies, and it currently only accepts payment from credit cards, Alipay and Wechat.

 

Weoffer high-quality products at attractive prices and incentivize our members to promote our platform and share our products withtheir social contacts. Our platform has attracted a growing base of users, including members and non-members. These users areactively purchasing products on our platform.

 

Membersare the key participants on our platform and drivers of our growth. Our members typically pay to gain access to a dedicated appthat provides access to a curated selection of products, exclusive membership benefits, and features, including discounted pricesand point rewards. Members can refer others to become members and are rewarded for doing so. Members can also promote productson various social platforms and are rewarded if those users purchase our products. We currently generate revenues primarily fromfixed membership fees and selling products on our platform to users, including both members and non-members.

 

Currently,there are two kinds of membership programs, Diamond Elite and Silver Elite, with different membership fees. The members are requiredto log onto Chain Cloud Mall (CCM) app or web portal in order to download some of their rewards points each day. The member coulddownload all of his/her rewards points if he/she logs onto the app or web portal for at least 200 days within the membership’svalidity period, which is 365 days. Members must renew their membership before expiration to continue earning points and enjoydiscounts. A non-member user can purchase products from the platform, but does not enjoy the above-mentioned benefits.

 

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Membershiprevenue is recognized when a member registers and makes his/her first order on CCM app or web portal.

 

Membershipbenefits are as follows:

 

1)Receive a merchandise gift package

 

2)Exclusive discounts for merchandise sold on the Chain Cloud Mall (CCM) Web and App

 

3)Receive CCM-Points upon a successful new member and product referral

 

CCM-Pointscan be used as coupons for the member’s future purchases on our app and website.

 

Inorder to promote our membership program, we currently allow our users to join the membership program by purchasing merchandiseof the equivalent value of the membership fee through our CCM app or website, as an alternative to paying the upfront fixed membershipfee.

 

CCM-Pointscan only be used as credit when making purchases on our platform, with one CCM Point representing RMB1.00. CCM-Points cannot beredeemed for cash. Members may transfer CCM Points to others.

 

FromDecember 2018, the trial period of our e-commerce platform launch, until August 31, 2019, we received proceeds of RMB 8,854,890,or approximately $1,238,701 from fixed membership fees and merchandise sales, with 5,977 members and 6,086 orders. From January1 to June 30, 2019, we received proceeds of RMB 6,587,949, approximately $958,289, from 3,850 members with 3,898 orders. For thethree months ended June 30, 2019, we received RMB 4,493,150, approximately $653,578, in proceeds, from 2,641 members with 2,672orders.

 

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Pre-SaleTransaction Structure

 

 

12

 

 

Post-SaleTransaction Structure of Future FinTech

 

 

 

Abandonmentof the Sale Transaction and Expenses Related to the Sale Transaction

 

Inthe event that the Future FinTech’s shareholders do not approve the Sale Transaction, the Sale Transaction shall not beconsummated by the Company and shall be abandoned. We anticipate that the fees and expenses related to the Sale Transaction, includingprofessional fees, shall be approximately $50,000 in aggregate.

 

Recommendationto Shareholders

 

Aftercareful consideration, the Board of Directors recommends a vote IN FAVOR OF the nominees for director named in the accompanyingproxy statement, a vote IN FAVOR OF the ratification of the Audit Committee’s selection of the independent registered publicaccounting firm, a vote IN FAVOR OF the Sale Transaction, and a vote IN FAVOR OF the adoption of the Future FinTech Group Inc.2019 Omnibus Equity Plan.

 

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Interestsof Future FinTech’s Directors and Officers in the Sale Transaction

 

Asof the Record Date, the directors and executive officers of Future FinTech as a group owned and were entitled to vote 13,084,114shares of the common stock of the Company including shares owned by the son of our Chairman and Chief Executive Officer, representingapproximately 40.49% of the outstanding shares of Future FinTech common stock on that date. Future FinTech expects that its directorsand executive officers will vote their shares in favor the nominees for director named in this proxy statement, in favor the ratificationof the Audit Committee’s selection of the independent registered public accounting firm, in favor the Sale Transaction,and in favor of the adoption of the Future FinTech Group Inc. 2019 Omnibus Equity Plan, but none of the Company’s directorsor executive officers other has entered into any agreement obligating any of them to do so.

 

Besidesthe equity ownership of Future FinTech detailed above, the directors and executive officers of the Company do not have interestsdifferent than the other shareholders of Future FinTech.

 

AppraisalRights

 

FutureFinTech shareholders do not have appraisal rights in connection with the Sale Transaction under the Florida Business CorporationAct.

 

MaterialUnited States Federal Income Tax Considerations

 

Thefollowing discussion is a summary of certain U.S. federal income tax consequences of the Sale Transaction. This discussion isbased on current provisions of the Code, applicable U.S. Department of the Treasury regulations promulgated thereunder, judicialopinions, and published positions of the Internal Revenue Service, all as in effect as of the date of this document. Such authoritiesare subject to change or differing interpretations at any time, possibly with retroactive effect, and any such change or interpretationcould affect the accuracy of the statements in this proxy statement. This discussion does not address any U.S. federal tax considerationsother than those relating to income tax (e.g., estate and gift taxes), nor does it address any state, local, or foreign tax considerationsor any tax reporting requirements.

 

TheSale Transaction will not result in any immediate U.S. federal income tax consequences to Future FinTech stockholders.

 

TheSale Transaction will generally be taxable to Future FinTech for U.S. federal income tax purposes, and it is expected that FutureFinTech will recognize a net loss for U.S. federal income tax purposes as a result of the Sale Transaction.

 

THISIS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE. THE U.S. FEDERAL INCOME TAX TREATMENT OF THESETRANSACTIONS IS COMPLEX. ACCORDINGLY, EACH SHAREHOLDER WHO IS A U.S. HOLDER IS STRONGLY URGED TO CONSULT HIS OWN TAX ADVISER WITHRESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME, ESTATE AND OTHER TAX CONSEQUENCES OF THE TRANSACTIONS WITH SPECIFICREFERENCE TO SUCH PERSON’S PARTICULAR FACTS AND CIRCUMSTANCES.

 

RegulatoryApprovals Required for the Sale Transaction

 

TheCompany is unaware of any federal or state regulatory requirements that must be complied with or necessary approvals in connectionwith the Sale Transaction, except for filings of the share transfer with the competent authority of Hong Kong and compliance withregulations of the Securities and Exchange Commission.

 

RiskFactors

 

Inevaluating the proposals to be presented at the Annual Meeting, a shareholder should carefully read this proxy statement and especiallyconsider the factors discussed in the section entitled “Risk Factors.”

 

Conditionsto Consummation of the Sale Transaction

 

TheCompany’s ability to consummate the Sale Transaction is conditioned upon, among other things, that the Sale Transactionis duly approved, adopted and implemented by the Company’s shareholders.

 

Dissenter’sRights

 

Ourshareholders have no right under the Florida Business Corporations Act, our Second Amended and Restated Articles of Incorporationor our Amended and Restated Bylaws to dissent from the provision adopted in the Amendment.

 

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RISKFACTORS

 

Youshould carefully consider the following risk factors, together with the other information contained in this proxy statement, includingthe factors discussed in Part I, Item 1A—Risk Factors in Future FinTech’s annual report on Form 10-K for theyear ended December 31, 2018. The risks described below relate to the Sale Transaction, and are in addition to, and shouldbe read in conjunction with, without limitation, the factors discussed in Part I, Item 1A—Risk Factors in Future FinTech’sannual report on Form 10-K for the year ended December 31, 2018. If any of the following risks and uncertainties developsinto actual events, these events could have a material adverse effect on Future FinTech’s business, financial conditionsor results of operations. In addition, past financial performance may not be a reliable indicator of future performance, and historicaltrends should not be used to anticipate results or trends in future periods.

 

RisksRelated to the Sale Transaction

 

TheSale Transaction is subject to conditions, including certain conditions that may not be satisfied or completed on a timely basis,which could cause the Company to fail to meet NASDAQ’s continued listing requirements and have its shares delisted fromNASDAQ.

 

Completionof the Sale Transaction is subject to the completion of certain conditions that make the completion and timing of the transactionsuncertain, including the approval of the Sale Transaction by our shareholders. We cannot guarantee that the closing conditionsset forth in the Share Transfer Agreement or related documents will be satisfied. If the Sale Transaction cannot be completedin a timely manner, the Company will not be able to meet its compliance plan submitted to NASDAQ and NASDAQ’s continuedlisting requirements, which could cause its shares to be delisted from NASDAQ.

 

Failureto complete the Sale Transaction may also negatively affect the share price and future business and financial results of FutureFinTech.

 

Inthe event that we are unable to complete the Sale Transaction in a timely manner, Future FinTech’s ongoing business mayalso be adversely affected. If the Sale Transaction is not completed at all, Future FinTech will be subject to a number of risks,including the following:

 

  Delisting from NASDAQ;
     
  being required to pay costs and expenses relating to the Sale Transaction, such as legal and accounting fees, whether or not the transactions are completed; and
     
  loss of time and resources committed by each of the management of Future FinTech to matters relating to the Sale Transaction that could have been devoted to pursuing other beneficial opportunities.

 

Ifthe Sale Transaction is not completed, the price of Future FinTech’s common stock may decline to the extent that the currentmarket price reflects a market assumption that the transaction will be completed and that the related benefits will be realized.

 

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Uncertaintiesassociated with the Sale Transaction may cause employees to leave Future FinTech and may otherwise affect the future businessand operations of Future FinTech.

 

Thesuccess of Future FinTech after the Sale Transaction will depend in part upon its ability to retain its key employees. Prior toand following the Sale Transaction, current and prospective employees of Future FinTech may experience uncertainty about theirfuture roles and choose to pursue other opportunities, which could have an adverse effect on the applicable business. If key employeesdepart, the businesses and results of operations of the Company could be adversely affected.

 

Theresults of operations and financial condition of Future FinTech following the transaction may differ materially from the pro formainformation presented in this proxy statement.

 

Thepro forma financial information included in this proxy statement is derived from the historical audited and unaudited consolidatedfinancial statements of Future FinTech. The preparation of this pro forma information is based upon available information andcertain assumptions and estimates that we believe are reasonable. However, this pro forma information may be materially differentfrom what the actual results of operations and financial conditions of Future FinTech would have been had the transaction occurredduring the periods presented or from what the results of operations and financial position of Future FinTech will be after thecompletion of the proposed transaction. In particular, the assumptions used in preparing the pro forma financial information maynot be realized, and other factors may affect the financial condition and results of operations of Future FinTech following thetransaction.

 

AdditionalRisks Related to Future FinTech After the Sale Transaction

 

Wemay not be able to effectively control and manage our growth, and a failure to do so could adversely affect our operations andfinancial condition.

 

Ifour newly developed blockchain based e-commerce business and markets experience significant growth, we will need to expand ourbusiness to maintain our competitive position. We may face challenges in managing and financing expansion of our business, facilitiesand product offerings, including challenges relating to integration of acquired businesses and increased demands on our managementteam, employees and facilities. Failure to effectively deal with increased demands on us could interrupt or adversely affect ouroperations and cause production and service backlogs, longer product development time frames and administrative inefficiencies.Other challenges involved with expansion, acquisitions and operation include:

 

  unanticipated costs;
     
  the diversion of management’s attention from other business concerns;
     
  potential adverse effects on existing business relationships with suppliers and customers;
     
  obtaining sufficient working capital to support expansion;
     
  expanding our product offerings and maintaining the high quality of our products and services;

 

  continuing to fill customers’ orders on time;
     
  maintaining adequate control of our expenses and accounting systems;
     
  successfully integrating any future acquisitions; and
     
  anticipating and adapting to changing conditions in the block chain and/or ecommerce online shopping industries and financial technology, whether from changes in government regulations, mergers and acquisitions involving our competitors, technological developments or other economic, competitive or market dynamics.

 

Evenif we obtain benefits of expansion in the form of increased sales, there may be delay between the time when the expenses associatedwith an expansion or acquisition are incurred and the time when we recognize such benefits, which could negatively affect ourearnings.

 

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Wemay engage in future acquisitions involving significant expenditures of cash, the incurrence of debt or the issuance of stock,all of which could have a materially adverse effect on our operating results.

 

Aspart of our business strategy, we review acquisition and strategic investment prospects that we believe would complement our currentproduct offerings, augment our market coverage, enhance our technological capabilities or otherwise offer growth opportunities.From time to time, we review investments in new businesses and we expect to make investments in, and to acquire, businesses, productsor technologies in the future. In the event of any future acquisitions, we may expend significant cash, incur substantial debtand/or issue equity securities and dilute the percentage ownership of current shareholders, all of which could have a materialadverse effect on our operating results and the price of our stock. We cannot guarantee that we will be able to successfully integrateany businesses, products, technologies or personnel that we may acquire in the future, and our failure to do so could have a materialadverse effect on our business, operating results and financial condition.

 

Ourbusiness and operations may be subject to disruption from work stoppages, terrorism or natural disasters.

 

Ouroperations may be subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, pandemics,fire, earthquake, flooding or other natural disasters. If a major incident were to occur in either of the regions where our facilitiesor main offices are located, our facilities or offices or those of critical suppliers could be damaged or destroyed. Such a disruptioncould result in a reduction in available raw materials, the temporary or permanent loss of critical data, suspension of operations,delays in shipment of products and disruption of business generally, which would adversely affect our revenue and results of operations.

 

Oursuccess depends substantially on the continued retention of certain key personnel and our ability to hire and retain qualifiedpersonnel in the future to support our growth.

 

Ifone or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, ourbusiness may be disrupted and our financial condition and results of operations may be materially and adversely affected. Whilewe depend on the abilities and participation of our current management team generally, we rely particularly upon Mr. Yongke Xue,our chief executive officer (“CEO”); Mr. Zhi Yan, a member of the Company’s Board of Directors (the “Board”);and Mr. Jing Chen, our chief financial officer (“CFO”). The loss of the services of Messrs. Yongke Xue, Zhi Yan orJing Chen for any reason could significantly adversely impact our business and results of operations. Competition for senior managementand senior technology personnel in the PRC is intense and the pool of qualified candidates is very limited. Accordingly, we cannotguarantee that the services of our senior executives and other key personnel will continue to be available to us, or that we willbe able to find a suitable replacement for them if they were to leave.

 

Ourecommerce business depends on the continued use of the Internet and the adequacy of the Internet infrastructure.

 

Ourecommerce business depends upon the widespread use of the Internet and ecommerce. Factors which could reduce the widespread useof the Internet for ecommerce include actual or perceived lack of security of information or privacy protection, cyberattacksor other disruptions or damage to the Internet or to users’ computers, significant increases in the costs of transportationof goods, and taxation and governmental regulation.

 

Ourbusiness depends on our Website, network infrastructure and transaction-processing systems.

 

Ourecommerce business is completely dependent on our infrastructure. Any system interruption that results in the unavailability ofour Website or reduced performance of our transaction systems could reduce our ability to conduct our business. We use internallyand externally developed systems for our Website and our transaction processing systems. We expect to experience system interruptionsdue to software failure. We may also experience temporary capacity constraints due to sharply increased traffic during sales orother promotions and during the holiday shopping season. Capacity constraints can cause system disruptions, slower response times,delayed page presentation, degradation in levels of customer service and other problems. We may also experience difficulties withour infrastructure upgrades. Any future difficulties with our transaction processing systems or difficulties upgrading, expandingor integrating aspects of our systems may cause system disruptions, slower response times, and degradation in levels of customerservice, additional expense, impaired quality and speed of order fulfillment or other problems.

 

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Ifthe location where all of our computer and communications hardware is located is compromised, our business, prospects, financialcondition and results of operations could be harmed. If we suffer an interruption or degradation of services at the location forany reason, our business could be harmed. Our success, and in particular, our ability to successfully receive and fulfill ordersand provide high-quality customer service, largely depends on the efficient and uninterrupted operation of our computer and communicationssystems. These limitations could have an adverse effect on our conversion rate and sales. Our disaster recovery plan may be inadequate,and we do not carry business interruption insurance to compensate us for the losses that could occur. Despite our implementationof network security measures, our servers are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions,the occurrence of any of which could lead to interruptions, delays, loss of critical data or the inability to accept and fulfillcustomer orders. The occurrence of any of the foregoing risks could harm our business.

 

Ourplatform requires frequent updates on pricing from our vendors. If these updates are inaccurate or do not occur, there could bea negative influence on our business.

 

Weupdate the prices of products listed on our site frequently from our vendors. If we are unable to obtain, or are not providedupdated pricing information from our vendors, or if we fail to act on information from our vendors, then it could cause us toremedy the pricing difference to complete the transaction, or source the product from an alternative vendor at their price.

 

Weare subject to cyber security risks and may incur increasing costs in an effort to minimize those risks and to respond to cyberincidents.

 

Ourecommerce business is entirely dependent on the secure operation of our website and systems as well as the operation of the Internetgenerally. Our business involves the storage and transmission of users’ proprietary information, and security breaches couldexpose us to a risk of loss or misuse of this information, litigation, and potential liability. A number of large Internet companieshave suffered security breaches, some of which have involved intentional attacks. From time to time we and many other Internetbusinesses also may be subject to a denial of service attacks wherein attackers attempt to block customers’ access to ourWebsite. If we are unable to avert a denial of service attack for any significant period, we could sustain substantial revenueloss from lost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate orprevent rapidly evolving types of cyber-attacks.

 

Cyberattacksmay target us, our customers, our suppliers, banks, payment processors, ecommerce in general or the communication infrastructureon which we depend. If an actual or perceived attack or breach of our security occurs, customer and/or supplier perception ofthe effectiveness of our security measures could be harmed and we could lose customers, suppliers or both. Actual or anticipatedattacks and risks may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies,train employees, and engage third party experts and consultants. A person who is able to circumvent our security measures mightbe able to misappropriate our or our users’ proprietary information, cause interruption in our operations, damage our computersor those of our users, or otherwise damage our reputation and business. Any compromise of our security could result in a violationof applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, and a loss of confidencein our security measures, which could harm our business.

 

Therelative lack of public company experience of our management team may put us at a competitive disadvantage.

 

Ourmanagement team lacks significant public company experience, which could impair our ability to comply with legal and regulatoryrequirements such as those imposed by the Sarbanes-Oxley Act of 2002, (“Sarbanes-Oxley”). Our senior management doesnot have significant experience managing a publicly traded company. Such responsibilities include complying with federal securitieslaws and making required disclosures on a timely basis. Our senior management may be unable to implement programs and policiesin an effective and timely manner or that adequately respond to the increased legal, regulatory and reporting requirements associatedwith being a publicly traded company. Our failure to comply with all applicable requirements could lead to the imposition of finesand penalties, distract our management from attending to the management and growth of our business, result in a loss of investorconfidence in our financial reports and have an adverse effect on our business and stock price.

 

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Asa public company, we are obligated to maintain effective internal controls over financial reporting. Our internal controls maybe determined not to be effective, which may adversely affect investor confidence in us and, as a result, decrease the value ofour Common Stock.

 

ThePRC has not adopted management and financial reporting concepts and practices similar to those in the United States. We may havedifficulty in hiring and retaining a sufficient number of qualified finance and management employees to work in the PRC. As aresult of these factors, we may experience difficulty in establishing and maintaining accounting and financial controls, collectingfinancial data, budgeting, managing our funds and preparing financial statements, books of account and corporate records and institutingbusiness practices that meet investors’ expectations in the United States.

 

Rulesadopted by the SEC, or the Commission, pursuant to Sarbanes-Oxley Section 404 require annual assessment of our internal controlsover financial reporting. This requirement first applied to our annual report on Form 10-K for the fiscal year ended December 31,2008. The standards that must be met for management to assess the internal controls over financial reporting as effective arerelatively new and complex, and they require significant documentation, testing and possible remediation to meet the detailedstandards. This assessment will need to include disclosure of any material weaknesses identified by our management in our internalcontrol over financial reporting. During the evaluation and testing process, if we identify one or more material weaknesses inour internal control over financial reporting as we have done previously, we will be unable to assert that our internal controlsare effective. If we continue to be unable to conclude that our internal control over financial reporting is effective, we couldlose investor confidence in the accuracy and completeness of our financial reports, which could harm our business and cause theprice of our stock to decline.

 

Wemay need additional capital to fund our future operations and, if it is not available when needed, we may need to reduce our planneddevelopment and marketing efforts, which may reduce our sales revenue.

 

Webelieve that our existing working capital and cash available from operations will enable us to meet our working capital requirementsfor at least the next twelve months. However, if cash from future operations is insufficient, or if cash is used for acquisitionsor other currently unanticipated uses, we may need additional capital. The development and marketing of new products and the expansionof distribution channels and associated support personnel require a significant commitment of resources. In addition, if the marketsfor our products and services develop more slowly than anticipated, or if we fail to establish significant market share and achievesufficient net revenues, we may continue to consume significant amounts of capital. As a result, we could be required to raiseadditional capital. To the extent that we raise additional capital through the sale of equity or convertible debt securities,the issuance of such securities could result in dilution of the shares held by existing shareholders. If additional funds areraised through the issuance of debt securities, such securities may provide the holders certain rights, preferences, and privilegessenior to those of common shareholders, and the terms of such debt could impose restrictions on our operations. We cannot guaranteethat additional capital, if required, will be available on acceptable terms, or at all. If we are unable to obtain sufficientamounts of additional capital, we may be required to reduce the scope of our planned product development and marketing efforts,which could harm our business, financial condition and operating results.

 

Ifour costs and demands upon management increase disproportionately to the growth of our business and revenue as a result of complyingwith the laws and regulations affecting public companies, our operating results could be harmed.

 

Asa public company, we do and will continue to incur significant legal, accounting, investor relations and other expenses, includingcosts associated with public company reporting requirements. We also have incurred and will incur costs associated with currentcorporate governance requirements, including requirements under Section 404 and other provisions of Sarbanes-Oxley, as wellas rules implemented by the SEC and the stock exchange on which our common stock is traded. The expenses incurred by public companiesfor reporting and corporate governance purposes have increased dramatically over the past several years. These rules and regulationshave increased our legal and financial compliance costs substantially and make some activities more time consuming and costly.If our costs and demands upon management increase disproportionately to the growth of our business and revenue, our operatingresults could be harmed.

 

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Thereare inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements inaccordance with generally accepted accounting principles in the United States, or U.S. GAAP. Any changes in estimates, judgmentsand assumptions could have a material adverse effect on our business, financial condition and operating results.

 

Thepreparation of financial statements in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”)involves making estimates, judgments and assumptions that affect reported amounts of assets (including intangible assets), liabilitiesand related reserves, revenue, expenses and income. Estimates, judgments and assumptions are inherently subject to change in thefuture, and any such changes could result in corresponding changes to the amounts of assets, liabilities, revenue, expenses andincome. Any such changes could have a material adverse effect on our business, financial condition and operating results.

 

Wewill no longer have any equity participation in HeDeTang or in the fruit juice industry.

 

Afterthe Sale Transaction, we will have no ongoing equity participation in the fruit juice industry. We will cease to participate inHeDeTang’s future earnings or growth, if any, and will not participate in any potential future sale of HeDeTang. It is possiblethat New Continent could sell some or all of its equity in HeDeTang following the Sale Transaction at a valuation higher thanthat being paid in the Sale Transaction and New Continent could realize significant returns on its equity investment in HeDeTang.

 

Ourstockholders will not receive any distribution from the Sale Transaction, and may never receive any return of value.

 

Wecurrently intend to use the net proceeds from the Sale Transaction to, among other things, address working capital needs and fundgrowth initiatives. However, there is no guarantee that the investments in our remaining businesses or possible future investmentsin other businesses will generate a positive return to our stockholders.

 

Inaddition, we have not declared any cash dividends and do not intend to declare or pay any cash dividends in the foreseeable future.Stockholders also do not have appraisal rights in connection with the Sale Transaction. Stockholders will not directly receiveany liquidity from the Sale Transaction and the only return to them will be based on any future appreciation in our stock priceor upon a future sale or liquidation of us. Much depends on our future business, including the success or failure of our ecommercebusiness. There are no assurances that we will be successful, and current stockholders may never get a return on their investment.

 

Wewill continue to incur the expenses of complying with public company reporting requirements following the closing of the SaleTransaction.

 

Afterthe Sale Transaction, we will continue to be required to comply with the applicable reporting requirements of the Exchange Act,the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as well as rules adopted,and to be adopted, by the SEC and NASDAQ, (if we can meet the continued listing requirements) and will incur significant legal,accounting and other expenses in connection with that compliance. In addition, our management and other personnel will need tocontinue to devote a substantial amount of time to these compliance initiatives.

 

Wemay be exposed to litigation related to the Sale Transaction from the holders of our common stock.

 

Transactionssuch as the Sale Transaction are often subject to lawsuits by stockholders. Particularly because the holders of our common stockwill not receive any consideration from the Sale Transaction, it is possible that they may sue the Company or the Board of Directors.Such lawsuits could result in substantial costs and divert our management’s attention from other business concerns, whichcould seriously harm our business.

 

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THEANNUAL MEETING

 

Date,Time and Place of the Annual Meeting

 

TheAnnual Meeting will be held at 10:00 a.m., local time, on Friday, December 6, 2019, at the Company’s principal executiveoffices at 23F, China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, 710075.

 

Mattersto be Voted Upon at the Annual Meeting

 

Atthe Annual Meeting, Future FinTech is asking its shareholders as of the record date of October 10, 2019 (the “Record Date”)to consider and vote upon proposals:

 

(1)To elect five directors to hold office until the next Annual Meeting of Shareholders and until their successors are elected and qualified;

 

(2)To ratify the Audit Committee’s selection of the independent registered public accounting firm for the fiscal year ending December 31, 2019;

 

(3)To approve the sale of the Company’s subsidiary, HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”), to New Continent International Co., Ltd., a company incorporated in the British Virgin Islands (the “Sale Transaction”);

 

(4)To adopt and approve the Future FinTech Group Inc. 2019 Omnibus Equity Plan; and

 

(5)To transact such other business as may properly come before the meeting or any adjournment thereof.

 

RecordDate; Shares Entitled to Vote; Quorum

 

Shareholders willbe entitled to vote or direct votes to be cast at the Annual Meeting if they owned shares of Future FinTech common stock on theRecord Date. Shareholders will have one vote for each share of Future FinTech common stock owned at the close of business on theRecord Date. If your shares are held in “street name” or are in a margin or similar account, you should contact yourbroker to ensure that votes related to the shares you beneficially own are properly counted. On the Record Date, there were 32,317,083shares of Future FinTech common stock outstanding.

 

Aquorum of Future FinTech shareholders is necessary to hold a valid meeting. A quorum will be present at the Annual Meeting ifa majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Abstentions and brokernon-votes will count as present for the purposes of establishing a quorum.

 

VoteRequired; Abstentions and Broker Non-Votes

 

Thenominees for election as directors at the Annual Meeting will be elected by a plurality of the votes cast at the meeting. Thismeans that the director nominee with the most votes for a particular slot is elected for that slot. Votes withheld from one ormore director nominees will have no effect on the election of any director from whom votes are withheld. The approval of eachof the other proposals require the affirmative vote of a majority of the shares represented at the meeting and entitled to voteon that proposal. Abstentions and broker non-votes will have the same effect as a vote “against” each of the proposals.

 

SharesHeld by Future FinTech’s Directors and Executive Officers

 

Asof the Record Date, the directors and executive officers of Future FinTech as a group owned and were entitled to vote 13,084,114shares of the common stock of the Company including shares owned by the son of our Chairman and Chief Executive Officer, representingapproximately 40.49% of the outstanding shares of Future FinTech common stock on that date. Future FinTech expects that its directorsand executive officers will vote their shares in favor of each of the proposals, but none of the Company’s directors orexecutive officers has entered into any agreement obligating any of them to do so.

 

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Votingof Proxies

 

Ifyour shares are registered in your name with our transfer agent, Continental Stock Transfer & Trust Company, you may causeyour shares to be voted by returning a signed proxy card, or you may vote in person at the Annual Meeting. Based on your proxycards, the proxy holders will vote your shares according to your directions.

 

Ifyou plan to attend the Annual Meeting and wish to vote in person, you will be given a ballot at the meeting. If your shares areregistered in your name, you are encouraged to vote by proxy even if you plan to attend the Annual Meeting in person. If you attendthe Annual Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.

 

Votinginstructions are included on your proxy card. All shares represented by properly executed proxies received in time for the AnnualMeeting will be voted at the Annual Meeting in accordance with the instructions of the shareholder. In the event that properlyexecuted proxies do not contain voting instructions for any given proposal, the Future FinTech common stock represented by suchproxies will be voted in favor of each such proposal.

 

Ifyour shares are held in “street name” through a broker, bank or other nominee, you may vote through your broker, bankor other nominee by completing and returning the voting form provided by your broker, bank or other nominee. If you do not returnyour bank’s, broker’s or other nominee’s voting form or do not attend the Annual Meeting and vote in personwith a proxy from your broker, bank or other nominee, it will have the same effect as if you voted “AGAINST”the proposals presented for a vote.

 

Revocabilityof Proxies

 

Ifyou are a shareholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Annual Meetingby:

 

Signing another proxy card with a later date and returning it to us prior to the Annual Meeting; or

 

Attending the Annual Meeting and voting in person.

 

Pleasenote that to be effective, your new proxy card, internet or telephonic voting instructions or written notice of revocation mustbe received by us prior to the Annual Meeting. If you have submitted a proxy, your appearance at the Annual Meeting, in the absenceof voting in person or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

 

Ifyou hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructionsregarding how to change your vote. You may also vote in person at the Annual Meeting if you obtain a valid “legal”proxy from your bank, broker or other nominee. Any adjournment, recess or postponement of the Annual Meeting for the purpose ofsoliciting additional proxies will allow Future FinTech shareholders who have already sent in their proxies to revoke them atany time prior to their use at the Annual Meeting as adjourned, recessed or postponed.

 

Boardof Directors’ Recommendation

 

Aftercareful consideration, the Company’s board of directors recommends that you vote or give instruction to vote:

 

  FOR” the nominees for director named in this proxy statement;

 

  FOR” the ratification of the Audit Committee’s selection of the independent registered public accounting firm;

 

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  FOR” the HeDeTang Sale Transaction proposal;

 

  FOR” the adoption of the Future FinTech Group Inc. 2019 Omnibus Equity Plan.

 

Solicitationof Proxies

 

Theexpense of soliciting proxies in the enclosed form will be borne by Future FinTech. Proxies may also be solicited by some of ourdirectors, officers and employees, personally or by telephone, facsimile, e-mail or other means of communication. No additionalcompensation will be paid for such services.

 

AnticipatedDate of Completion of the Sale Transaction

 

Assumingtimely satisfaction of necessary pre-conditions, including the approval by our shareholders of the proposals to approve the SaleTransaction, we anticipate that the Sale Transaction will be completed in the first quarter of 2020. However, Future FinTech cannotassure you when or if the Sale Transaction will occur. The Sale Transaction is subject to shareholder approval and other conditions,and it is possible that factors outside the control of Future FinTech could result in the Sale Transaction being completed ata later time, or not at all. There may be a substantial amount of time between the Annual Meeting and the completion of the SaleTransaction.

 

Householdingof Annual Meeting Materials

 

TheSEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxymaterials with respect to two or more shareholders sharing the same address by delivering a single set of proxy materials. Thisprocess, which is commonly referred to as “householding,” potentially results in extra convenience for shareholdersand cost savings for companies. The Company has adopted the SEC-approved “householding” procedure.

 

Uponwritten or oral request, the Company will deliver promptly a separate copy of the Notice of Annual Meeting of Shareholders, thisProxy Statement and the 2018 Annual Report to any shareholder at a shared address to which the Company delivered a single copyof any of these documents. If, at any time, you no longer wish to participate in “householding” and would prefer toreceive a separate set of proxy materials, you may:

 

Send a written request to the Company’s Corporate Secretary at 23F, China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, 710075, or call 86-29-81878827 if you are a shareholder of record; or

 

Notify your broker, if you hold your common shares under street name.

 

Ifyou are receiving more than one copy of the proxy materials at a single address and would like to participate in householding,please contact the Company using the mailing address and phone number above. Shareholders who hold shares in street name may contacttheir brokerage firm, bank, broker-dealer or other similar organization to request information about householding.

 

THESALE TRANSACTION

 

PartiesInvolved in the Sale Transaction

 

FutureFinTech Group Inc.

 

FutureFintech Group Inc. is a holding company incorporated under the laws of the State of Florida. We have three direct wholly-ownedsubsidiaries: DigiPay FinTech Limited (“DigiPay,” formerly known as Belkin Foods Holdings Group Limited, which changedits name on January 4, 2018), a company incorporated under the laws of the British Virgin Islands; Digital Online Marketing Limited(“Digital Online”) (formerly known as FullMart Holding Limited, which changed its name on January 5, 2018), a companyorganized under the laws of the British Virgin Islands; and SkyPeople Foods Holding Limited (“SkyPeople BVI”), a companyorganized under the laws of the British Virgin Islands.

 

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Thetraditional business of Future FinTech consists of production and sales of fruit juice concentrates, fruit juice beverages andother fruit-related products in the People’s Republic of China (“PRC” or “China”), and overseasmarkets. Due to drastically increased production cost and tightened environmental laws in China, the Company is transforming itsbusiness from fruit juice manufacturing and distribution to a real-name blockchain e-commerce platform that integrates blockchainand internet technology.

 

HeDeTang Holdings(HK) Ltd.

 

SkyPeople BVI is awholly-owned subsidiary of Future FinTech organized under the laws of the British Virgin Islands on December 28, 2011.SkyPeople BVI holds 100% of the equity interest of HeDeTang Holdings (HK) Ltd. HeDeTang Holdings (HK) Ltd. holds 73.42% ofthe equity interest of SkyPeople (China) and 100% of the equity interest of HeDeJiaChuan Holding Group Co., Ltd. SkyPeople(China) has eight subsidiaries, all limited liability companies organized under the laws of the PRC: (i) Shaanxi Qiyiwangguo;(ii) Huludao Wonder; (iii) Yingkou; (iv) Food Industry Yidu; (v) Shaanxi Heying; (vi) Agricultural Plantation Yidu; (vii)Foods Industry Zhouzhi; and (viii) Foods industry JingYang. TSD holds another 26.36% of the equity interest of SkyPeople(China).

 

HeDeJiaChuanHolding Group Co., Ltd has seven subsidiaries, all limited liability companies organized under the laws of the PRC: (i)Shenzhen HeDeTang Industrial Co. Ltd.; (ii) Xi’an Corucopia International Co.; (iii) Xi’an HeDeTang NutritiousFood; (iv) DeDeJiaChuan Foods (Xi’an) Co. Ltd; (v) SkyPeople (SuiZhong) Fruit and Vegetable Products Co. Ltd.; (vi)HeDeJiaChuan Foods (YiChang) Co., Ltd. and (vii) Shaanxi Guo Wei Mei Kiwi Deep Processing Co., Ltd.

 

NewContinent International Co., Ltd.

 

New Continent International Co.,Ltd. is a company incorporated in the British Virgin Islands (“New Continent”) in October 2010. Mr. Binke Zhangis the managing director and sole shareholder of New Continent.

 

Effectsof the Sale Transaction

 

Uponcompletion of the Sale Transaction, all of the ordinary shares of HeDeTang will be owned by New Continent.

 

Effecton Future FinTech if the Sale Transaction is Not Completed

 

Ifthe Sale Transaction is not approved by Future FinTech shareholders or if the Sale Transaction is not completed for any otherreason, Future FinTech will retain ownership of HeDeTang. If the Sale Transaction is completed, Future FinTech will meet NASDAQ’sshareholders equity requirement and will continue to be registered under the Exchange Act and Future FinTech will continue tofile periodic reports with the SEC. In addition, if the Sale Transaction is not completed, Future FinTech expects that managementwill operate the business in a manner similar to that in which it is being operated today and that Future FinTech’s shareholderswill continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation,non-compliance with NASDAQ continued listing requirements, NASDAQ delisting, and the risks related to the highly competitive industryin which Future FinTech operates and adverse economic conditions.

 

Backgroundof the Sale Transaction

 

Thefollowing is a brief discussion of the background of the deliberations that led to our Board of Directors’ approval of theSale Transaction.

 

HeDeTangHK is a wholly owned subsidiary of SkyPeople BVI. HeDeTang HK’s 73.41% owned subsidiary SkyPeople China and whollyowned subsidiary HeDeJiaChuan own and operate the fruit juice manufacturing and distribution business of the Company. On August29, 2017, the Board approved a spin-off of the Company’s wholly-owned subsidiaries, SkyPeople BVI and FullMart, througha pro rata distribution of the ordinary shares of each of SkyPeople BVI and FullMart to holders of the Company’s commonstock (the “Spin-Off”). On March 13, 2018, the Company held a Special Meeting of Shareholders, and the Spin-Off wasapproved by the shareholders of the Company, subject to the completion of certain conditions, including, among others, the issuanceof additional shares of ordinary stock of each of SkyPeople BVI and FullMart to Future FinTech and the filing and effectivenessof Form 10 registration statements for each of SkyPeople BVI and FullMart. Due to the time and cost of preparing the audited financialstatements for SkyPeople BVI and FullMart for Form 10 registration statements and the change of the auditor of the Company inearly 2019, the Spin-Off was not completed as of September 2019.

 

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OnSeptember 4, 2019, the Company received written notice from the NASDAQ Stock Market (“NASDAQ”) stating that the Companydid not meet the requirement of maintaining a minimum of $2,500,000 in stockholders’ equity for continued listing on theNASDAQ Capital Market, as set forth in NASDAQ Listing Rule 5550(b)(1), and that additionally the Company did not meet the alternativeof market value of listed securities of $35 million under NASDAQ Listing Rule 5550(b)(2) or net income from continuing operationsof $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years underNASDAQ Listing Rule 5550(b)(3), and that accordingly the Company was no longer in compliance with the NASDAQ Listing Rules. TheNASDAQ notification letter provided the Company until September 18, 2019 to submit a plan to regain compliance. If the plan isaccepted, NASDAQ can grant the Company an extension up to 180 calendar days from the date of the NASDAQ letter to demonstratecompliance.

 

Since 2015, due to the cost increase forraw materials, labor and environmental compliance as well as the slow-down of market growth and increasing price competition inChina, the revenue and net income from the Company’s fruit juice business has decreased significantly and our fixed assetsusage rate has been at a very low level. In the meantime, Chinese banks have implemented a de-leveraging policy and been aggressivelycollecting outstanding loans. Furthermore, the Company’s new construction projects and facilities for fruit juice businesscould not be completed on schedule due to lack of funding and environmental control issues. This has resulted in the Company’sfruit juice business having a large amount of liabilities and bad assets, i.e. the business of HeDeTang Holding (HK) Ltd. (“HeDeTangHK”) and its operating subsidiaries in China. For fiscal year 2018, the Company had asset impairment of $148 million forHeDeTang HK and its subsidiaries, which has caused the shareholders’ equity of the Company in its consolidated financialstatements to be reduced to negative $86.70 million, failing to meet the minimum $2.5 million shareholders’ equity requirementfor continued listing on the NASDAQ Capital Market. After considering the continued listing requirements, timeline, and relatedcosts as well as the difficulty of the operation conditions for fruit juice businesses, our Board reviewed the options and approvedthe Sale Transaction on September 17, 2019, with the intent of divesting the fruit juice business so that the Company can meetthe shareholders equity requirement to regain compliance with NASDAQ and the Company’s management can better focus on theCompany’s new business lines and growth strategies.  Additionally, our Board believes that the Sale Transactionwill allow Future FinTech’s results of operations to not be as negatively affected by the adverse market conditions currentlybeing experienced by the heavy asset and manufacturing operations of HeDeTang HK and its subsidiaries in China. On September18, 2019, the Company submitted its compliance plan to NASDAQ, indicating it plans to complete the Sale Transaction subject toshareholder approval, so that the shareholders equity of the Company will be more than $2.5 million, so as to regain compliancewith NASDAQ Rules. On September 17, 2019, the Board approved the Sale Transaction and the submission of the matter to the voteof the Company’s shareholders at the Company’s Annual Meeting. The Company is still waiting for approval of the planby NASDAQ as of the date of this proxy statement.

 

Recommendationof Future FinTech’s Board of Directors and Reasons for the Sale Transaction

 

Aftercareful consideration, the Company’s Board of Directors has determined that the Sale Transaction is fair to and in the bestinterests of the Company and its shareholders and unanimously recommends that you vote or give instruction to vote IN FAVOR ofthe Sale Transaction.

 

Reasonsfor the Sale Transaction

 

Inevaluating the Sale Transaction and recommending that Future FinTech’s shareholders vote in favor of approval the Sale Transaction,Future FinTech’s Board of Directors, in consultation with Future FinTech’s senior management and outside legal counsel,considered numerous positive factors relating to the Sale Transaction, including the following material factors:

 

The Sale Transaction allows the Company to meet the $2.5 million shareholders equity requirement to regain compliance with NASDAQ rules.

 

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  Challenging market conditions affecting the business of HeDeTang, including, for example, increased costs of raw materials, low price for fruit juice products, heavy competition from online sellers and distributors, required upgrades of environmental protection devises for existing manufacturing facilities to meet heightened environmental standards, government-mandated interruptions in production due to pollution regulation and increased regulatory requirements for construction projects, have adversely affected the financial results of Future FinTech and slowed of its operations that are not dependent on the development and exploitation of heavy assets.
     
  Following the completion of the Sale Transaction, Future FinTech will be able to focus on the strategic development of its ecommerce business.
     
  Future FinTech will have a better ability to attract capital focused on the ecommerce industry, operational needs and growth strategies after the completion of the Sale Transaction.

 

  The prospective risks to Future FinTech relating to the risks and uncertainties of maintaining its growth in the highly competitive market for juice products.

  

The Company’s Board of Directors concluded that the other strategic alternatives available to Future FinTech, such as continuing to operate its business as it currently does and pursuing its strategic plan and the possibility of growing its business through acquisitions and internal growth, were less attractive than the Sale Transaction under the circumstances.

 

The fact that resolutions approving the Sale Transaction were unanimously approved by Future FinTech’s Board of Directors, which is comprised of a majority of independent directors.

 

Inthe course of reaching the determinations and decisions and making the recommendation described above, Future FinTech’sBoard of Directors, in consultation with Future FinTech’s senior management and outside legal counsel, considered the risksand potentially negative factors relating to the Sale Transaction, including the following material factors:

 

The possibility that the share price of Future FinTech may decline so that we may not continue to meet NASDAQ’s continued listing requirements.

 

The possibility that the consummation of the Sale Transaction may be delayed or not occur at all, and the adverse impact of non-compliance with NASDAQ rules, the risk of NASDAQ delisting procedures, as well as the impact that such events would have on Future FinTech and its business as management continues to devote time and attention to effect the consummation or other options to regain compliance with NASDAQ rules.

 

The possible disruption to Future FinTech’s business that may result from announcement of the Sale Transaction and the resulting distraction of management’s attention from the day-to-day operations of its business.

 

The potential negative effect of the pendency of the Sale Transaction on Future FinTech’s business, including uncertainty about the effect of the proposed Sale Transaction on the Company’s employees, customers and other parties, which may impair its ability to attract, retain and motivate key personnel, and could cause customers, suppliers and others to seek to change existing business relationships with Future FinTech.

 

  The possibility that Future FinTech’s shareholders could commence litigation in connection with the Sale Transaction.
     
  The possibility that Future FinTech will not be able to attract and maintain sufficiently skilled employeesto develop and exploit the new line of e-commerce business, software and related technology.
     
  The cost to Future FinTech of preparing for and consummating the Sale Transaction.

 

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FutureFinTech’s Board of Directors believed that, overall, the potential benefits of the Sale Transaction to Future FinTech’sshareholders outweighed the risks and uncertainties of the Sale Transaction.

 

Followingthe completion of the Sale Transaction, the main business operations of Future FinTech will be focused on our real-name and membership-basedblockchain shared shopping mall platform.

 

OnJanuary 22, 2019, the Company formally launched GlobalKey SharedMall, also known as Chain Cloud Mall (CCM) v1.0, the real-nameand membership-based blockchain shared shopping mall platform that integrates blockchain and internet technology and distinguishesitself by utilizing the automatic value distribution system of blockchain and sharing the value of the platform to all the participantsin the system.

 

OnJune 1, 2019, CCM v2.0 was launched. Compared to the 1.0 version, CCM v2.0 has a wider variety of product categories, easier userinterface, more transparent information, more stable operations, a higher security level, and faster logistics. Currently, CCMv2.0 adopts a “multi-vendor hosted stores + platform self-hosted stores” model, supported by multiple local warehousesin different regions. The platform supports various marketing methods, including point rewards programs, coupons, live webcasts,game interaction, and social media sharing. Besides the blockchain-powered features, CCM v2.0 is also fully equipped with thesame functions and services that other Chinese leading traditional e-commerce platforms provide.

 

CCM’sblockchain-powered QRO plan enables CCM to record every event or transaction on a distributed ledger and make the whole processtraceable. CCM is adopting an unalterable anti-counterfeit code to be issued by manufacturers, which can ensure the authenticityof products and directly link manufacturers with their targeted customers as a way of precision marketing.

 

Basedon blockchain technology, CCM is established to transform the relationship between companies and consumers from traditional sellingand buying relationships to a value-sharing relationship. The platform will fairly distribute the benefit of the entire mall tousers who engage in promotion, development, and consumption based on their contributions to the platform. The members of CCM arenot only consumers and entrepreneurs but also participants, promoters and beneficiaries.

 

TheCCM shared shopping mall platform is designed to be a block-chain based shopping mall for merchants and goods, not the exchangeof digital currencies, and it currently only accepts payment from credit cards, Alipay and Wechat.

 

Weoffer high-quality products at attractive prices and incentivize our members to promote our platform and share our products withtheir social contacts. Our platform has attracted a growing base of users, including members and non-members. These users areactively purchasing products on our platform. Since our trial operations of our platform began on December 26, 2018, we had approximately164 and 4,014 users as of December 31, 2018 and June 30, 2019, respectively.

 

Membersare the key participants on our platform and drivers of our growth. Our members typically pay to gain access to a dedicated appthat provides access to a curated selection of products, exclusive membership benefits, and features, including discounted pricesand point rewards. Members can refer others to become members and are rewarded for doing so. Members can also promote productson various social platforms and are rewarded if those users purchase our products. We currently generate revenues primarily fromfixed membership fees and selling products on our platform to users, including both members and non-members.

 

Currently,there are two kinds of membership programs, Diamond Elite and Silver Elite, with different membership fees. The members are requiredto log onto Chain Cloud Mall (CCM) app or web portal in order to download some of their rewards points each day. The member coulddownload all of his/her rewards points if he/she logs onto the app or web portal for at least 200 days within the membership’svalidity period, which is 365 days. Members must renew their membership before expiration to continue earning points and enjoydiscounts. A non-member user can purchase products from the platform, but does not enjoy the above-mentioned benefits.

 

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Membershiprevenue is recognized when a member registers and makes his/her first order on CCM app or web portal.

 

Membershipbenefits are as follows:

 

1)Receive a merchandise gift package

 

2)Exclusive discounts for merchandise sold on the Chain Cloud Mall (CCM) Web and App

 

3)Receive CCM-Points upon a successful new member and product referral

 

CCM-Pointscan be used as coupons for the member’s future purchases on our app and website.

 

Inorder to promote our membership program, we currently allow our users to join the membership program by purchasing merchandiseof the equivalent value of the membership fee through our CCM app or website, as an alternative to paying the upfront fixed membershipfee. 

 

CCM-Pointscan only be used as credit when making purchases on our platform, with one CCM Point representing RMB1.00. CCM-Points cannot beredeemed for cash. Members may transfer CCM Points to others.

 

FromDecember 2018, the trial period of our e-commerce platform launch, until August 31, 2019, we received proceeds of RMB 8,854,890,or approximately $1,238,701 from fixed membership fees and merchandise sales, with 5,977 members and 6,086 orders. From January1 to June 30, 2019, we received proceeds of RMB 6,587,949, approximately $958,289, from 3,850 members with 3,898 orders. For thethree months ended June 30, 2019, we received RMB 4,493,150, approximately $653,578, in proceeds, from 2,641 members with 2,672orders.

 

Interestsof Future FinTech’s Directors and Officers in the Sale Transaction

 

As of the RecordDate, the directors and executive officers of Future FinTech as a group owned and were entitled to vote 13,084,114 shares of thecommon stock of the Company, representing approximately 40.49% of the outstanding shares of Future FinTech common stock on thatdate. Future FinTech expects that its directors and executive officers will vote their shares in favor of the Sale Transaction,but none of the Company’s directors or executive officers other has entered into any agreement obligating any of them todo so.

 

Besidesthe equity ownership of Future FinTech detailed above, the directors and executive officers of the Company do not have interestsdifferent than the other shareholders of Future FinTech.

 

Completionand Effective Time of the Sale Transaction

 

Weare working to complete the Sale Transaction as quickly as possible, and we expect to complete all transactions in the first quarterof 2020. However, Future FinTech cannot assure you when or if the Sale Transaction will occur. The Sale Transaction is subjectto shareholder approval and other conditions, and it is possible that factors outside the control of Future FinTech could resultin the Sale Transaction being completed at a later time, or not at all. There may be a substantial amount of time between theAnnual Meeting and the completion of the Sale Transaction.

 

AppraisalRights

 

FutureFinTech shareholders do not have appraisal rights in connection with the Sale Transaction under the Florida Business CorporationAct.

 

AccountingTreatment

 

Theproposed Sale Transaction is expected to be accounted for as assets held for sale. The results of operations of HeDeTang HK willbe treated as discontinued operations.

 

28

 

 

UnitedStates Federal Income Tax Consequences of the Sale Transaction

 

Thefollowing discussion is a summary of certain U.S. federal income tax consequences of the Sale Transaction. This discussion isbased on current provisions of the Code, applicable U.S. Department of the Treasury regulations promulgated thereunder, judicialopinions, and published positions of the Internal Revenue Service, all as in effect as of the date of this document. Such authoritiesare subject to change or differing interpretations at any time, possibly with retroactive effect, and any such change or interpretationcould affect the accuracy of the statements in this proxy statement. This discussion does not address any U.S. federal tax considerationsother than those relating to income tax (e.g., estate and gift taxes), nor does it address any state, local, or foreign tax considerationsor any tax reporting requirements.

 

TheSale Transaction will not result in any immediate U.S. federal income tax consequences to Future FinTech stockholders.

 

TheSale Transaction will generally be taxable to Future FinTech for U.S. federal income tax purposes, and it is expected that FutureFinTech will recognize a net loss for U.S. federal income tax purposes as a result of the Sale Transaction.

 

THISIS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE. THE U.S. FEDERAL INCOME TAX TREATMENT OF THESETRANSACTIONS IS COMPLEX. ACCORDINGLY, EACH SHAREHOLDER WHO IS A U.S. HOLDER IS STRONGLY URGED TO CONSULT HIS OWN TAX ADVISER WITHRESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME, ESTATE AND OTHER TAX CONSEQUENCES OF THE TRANSACTIONS WITH SPECIFICREFERENCE TO SUCH PERSON’S PARTICULAR FACTS AND CIRCUMSTANCES.

   

RegulatoryApprovals Required for the Sale Transaction

 

TheSale Transaction is not subject to any additional federal or state regulatory requirement or approval, except for filings of theshare transfer with the competent authority of Hong Kong and compliance with regulations of the Securities and Exchange Commission.

  

UNAUDITEDPRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FUTUREFINTECH GROUP INC.

 

The following unaudited pro formacondensed consolidated balance sheet and statements of operations are based upon the historical and partial actualoperational data of Future FinTech Group Inc. (the “Company”). The unaudited pro forma condensed consolidatedfinancial statements have been prepared to illustrate the effect after the sale (the “Sale Transaction”) by theCompany and its subsidiaries of HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”) the Company’s juicemanufacturing business unit, to New Continent International Co., Ltd., a company incorporated in the British Virgin Islands(the “Purchaser”). The HeDeTang HK Sale Transaction was entered on September 18, 2019 pursuant to a ShareTransfer Agreement (the “Agreement”), by and between SkyPeople Foods Holdings Limited, a company incorporated inthe British Virgin Islands (“SkyPeople Foods”) and a wholly owned subsidiary of Future FinTech Group Inc. (the“Company”), and the Purchaser. Pursuant to the terms of the Agreement, SkyPeople Foods will sell all of theissued and outstanding shares of HeDeTang HK, a wholly owned subsidiary of SkyPeople Foods, to the Purchaser for a total ofRMB 600,000, or approximately US $85,714 (the “Purchase Price”), which value is primarily derived from HeDeTangHK’s wholly-owned subsidiary HeDeJiaChuan Holdings Co., Ltd. and 73.41% owned subsidiary SkyPeople Juice Group Co.,Ltd. (“SkyPeople China”). 

 

The unaudited pro forma condensed consolidatedbalance sheet as of December 2020 reflects the pro forma effect as if the sale of HeDeTang HK had been completed by the end ofyear 2018. The unaudited pro forma condensed consolidated statements of operations of the Company for the year 2019 and 2020 includethe Company’s actual and projected statements of operations, and statements are adjusted to reflect the pro forma effectas if the sale of HeDeTang HK were completed.

 

The actual consolidated financial statementsreferred to above for the Company were included in the actual financial information of its first and second quarterly reportsof 2019 and projected financial results from the third quarter of 2019 until the fourth quarter of 2020, all of which are on thepost-Sale Transaction basis. The projected consolidated financial statements excluded assumption of receipt of any amount of cashfrom the Purchaser by the company.

 

Theunaudited pro forma condensed consolidated balance sheet and statements of operations include pro forma adjustments which reflecttransactions and events that (a) are directly attributable to the post Sale Transaction, (b) are factually supportable and (c)with respect to the statements of operations, have a continuing impact on consolidated results of the Company. The pro forma adjustmentsare described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. The unauditedpro forma condensed consolidated financial information does not reflect the tax consequences in any jurisdictions attributableto the Sale Transaction, and it does not reflect future events that may occur after the sale, including potential general andadministrative cost savings. The unaudited pro forma condensed consolidated financial information is provided for informationalpurposes only and is not necessarily indicative of the Company’s future operating results. The pro forma adjustments aresubject to change and are based upon currently available information.

 

29

 

 

FUTUREFINTECH GROUP INC

CONSOLIDATEDBALANCE SHEETS AFTER SHARES TRANSFER OF FUTURE FINTECH GROUP INC.

 

Currency: USD   Assumption     March 31,
2019
    June 30,
2019
    September 30,
2019
    December 31,
2019
    March 31,
2020
    June 30,
2020
   

September 30,

2020

    December 31,
2020
 
          Actual     Budget     Budget     Budget     Budget     Budget     Budget     Budget  
ASSETS                                                        
                                                                         
CURRENT ASSETS                                                                        
Cash and cash equivalents             342,201       1,164,257.84       1,499,890.41       2,286,327.43       5,402,394.37       17,943,342.14       37,097,924.40       62,298,631.88  
Accounts receivable, net of allowance     Notes: 1       70,301,404       71,707,431.73       73,141,580.36       74,604,411.97       76,096,500.21       77,618,430.21       79,170,798.82       80,754,214.80  
Other receivables             111,964       279,144       349,633       579,466       1,281,232       4,155,155       7,880,488       11,985,237  
Inventories             20,072       51,949       63,489       104,955       229,314       738,055       1,392,303       2,105,348  
Advances to suppliers and other current assets             121,128       301,992       378,251       626,896       1,386,102       4,495,256       8,525,509       12,966,234  
TOTAL CURRENT ASSETS           $ 70,896,769       73,504,774       75,432,844       78,202,057       84,395,543       104,950,239       134,067,023       170,109,666  
                                                                         
Property, plant and equipment, net      Notes: 2        630       556       482       407       333       258       184       110  
Intangible assets      Notes:       14,145,260       13,666,111       13,186,963       12,707,814       12,228,665       11,749,516       11,270,368       10,791,219  
Long-term investments             15,000,000       15,000,000       15,000,000       15,000,000       15,000,000       15,000,000       15,000,000       15,000,000  
Other Assets                                                                        
TOTAL ASSETS             100,042,660       102,171,442       103,620,288       105,910,278       111,624,541       131,700,014       160,337,575       195,900,994  
                                                                         
LIABILITIES                                                                        
                                                                         
CURRENT LIABILITIES                                                                        
Accounts payable             2,129,292       2,459,048       2,862,057       3,528,281       4,983,896       9,668,835       18,506,733       31,870,816  
Accrued expenses             89,623,967       82,454,049.89       76,682,266.40       73,614,975.74       71,406,526.47       66,408,069.62       62,423,585.44       58,053,934.46  
Income tax payable             -400                                                          
Advances from customers             681,555       1,699,222       2,128,308       3,527,363       7,799,197       25,293,517       47,970,592       72,957,274  
Short-term bank loans             -                                                          
TOTAL CURRENT LIABILITIES             92,434,414       86,612,320       81,672,632       80,670,619       84,189,620       101,370,422       128,900,911       162,882,024  
                                                                         
NON-CURRENT LIABILITIES                                                                        
Long-term loan             388,719       388,719       388,719       388,719       388,719       388,719       388,719       388,719  
Obligations under capital leases                                                                        
TOTAL NON-CURRENT LIABILITIES             388,719       388,719       388,719       388,719       388,719       388,719       388,719       388,719  
TOTAL LIABILITIES             92,823,133       87,001,039       82,061,350       81,059,338       84,578,338       101,759,141       129,289,629       163,270,743  
                                                                         
STOCKHOLDERS’ EQUITY                                                                        
                                                                         
FUTURE FINTECH GROUP INC., Stockholders’ equity Common stock, $0.001 par value; 60,000,000 shares authorized and 31,017,083 shares issued and outstanding  
 
 
 
 
 
 
 
 
 
 
 
 
31,017
 
 
 
 
 
 
 
31,017
 
 
 
 
 
 
 
31,017
 
 
 
 
 
 
 
31,017
 
 
 
 
 
 
 
31,017
 
 
 
 
 
 
 
31,017
 
 
 
 
 
 
 
31,017
 
 
 
 
 
 
 
31,017
 
 
Additional paid-in capital             61,018,508       61,018,508       61,018,508       61,018,508       61,018,508       61,018,508       61,018,508       61,018,508  
Retained earnings             -35,580,705       -36,375,075       -37,172,685       -37,904,193       -38,614,314       -39,026,507       -38,984,930       -38,353,764  
Accumulated other comprehensive income             -15,367,372       -6,423,533       962,014       5,168,402       8,251,315       11,661,227       12,712,864       13,506,212  
Total FUTURE FINTECH GROUP INC. stockholders’ equity             10,101,448       18,250,917       24,838,854       28,313,733       30,686,526       33,684,245       34,777,459       36,201,973  
Non-controlling interests             -2,881,921       -3,080,514       -3,279,916       -3,462,793       -3,640,323       -3,743,372       -3,729,513       -3,571,721  
TOTAL STOCKHOLDERS’ EQUITY             7,219,527       15,170,403       21,558,938       24,850,940       27,046,203       29,940,873       31,047,946       32,630,252  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY           $ 100,042,660       102,171,442       103,620,288       105,910,278       111,624,541       131,700,014       160,337,575       195,900,994  

 

Theaccompanying notes are an integral part of these consolidated financial statements.

Notes:

 

1: The main stream of revenue is from membership and sales of goods, which is mostly advances from customers.
2: There would be no more PPE or Intangible assets                                      

 

30

 

 

FUTUREFINTECH GROUP INC

 

CONSOLIDATEDSTATEMENTS OF INCOME AND COMPREHENSIVE INCOME AFTER SHARES TRANSFER OF FUTURE FINTECH GROUP INC.

 

Currency: USD       Assumption     1st QTR 2019 Actual     % To Revenue     2nd QTR 2019 Actual     % To Revenue     3rd QTR 2019 Budget     % To Revenue     4th QTR 2019  Budget     % To Revenue     Total Actual & Budget 2019     % To Revenue     1st QTR 2020 Budget     % To Revenue     2nd QTR 2020 Budget     % To Revenue     3rd QTR 2020 Budget     % To Revenue     4th QTR 2020 Budget     % To Revenue     Total  Budget 2020     % To Revenue  
Revenue          Notes: 1        174,491       100.00 %     435,032       100.00 %     544,886       100.00 %     903,070       100.00 %     2,056,560       100.00 %     1,996,738       100.00 %     6,475,606       100.00 %     12,281,354       100.00 %     18,678,405       100.00 %     39,432,103          
Cost of goods sold          Notes: 2        127,410       73.02 %     329,756       75.80 %     403,008       73.96 %     666,224       73.77 %     1,525,728       74.19 %     1,455,615       72.90 %     4,684,939       72.35 %     8,837,898       71.96 %     13,364,083       71.55 %     28,342,535       71.88 %
Gross profit               47,081       26.98 %     105,276       24.20 %     141,878       26.04 %     236,846       26.23 %     530,832       25.81 %     541,123       27.10 %     1,790,667       27.65 %     3,443,457       28.04 %     5,314,322       28.45 %     11,089,568       28.12 %
                                                                                                                                                                         
Gross Profit Margin               26.98 %             24.20 %             26.04 %             26.23 %             25.81 %             27.10 %             27.65 %             28.04 %             28.45 %             28.12 %        
Growth of Revenue %  Year to Year                                                                                                 1044.32 %             1388.54 %             2153.93 %             1968.32 %             1817.38 %        
                                                                                                                                                                         
Operating Expenses                                                                                                                                                                          
    General and administrative expenses             964,354       552.67 %     719,014       165.28 %     809,839       148.63 %     766,339       84.86 %     3,117,505       151.59 %     835,956       41.87 %     967,723       14.94 %     1,120,261       9.12 %     1,296,842       6.94 %     4,220,781       10.70 %
    Selling expenses                 45,120       25.86 %     167,908       38.60 %     103,917       19.07 %     172,227       19.07 %     477,155       23.20 %     380,804       19.07 %     1,195,218       18.46 %     2,221,550       18.09 %     3,332,820       17.84 %     7,130,392       18.08 %
    R & D expenses                 24,469       14.02 %     3,789       0.87 %     12,542       2.30 %     14,519       1.61 %     34,459       1.68 %     16,808       0.84 %     19,457       0.30 %     22,524       0.18 %     26,074       0.14 %     84,862       0.22 %
    Impairment loss                 7,612       4.36 %                     3,751       0.69 %     4,342       0.48 %     15,232       0.74 %     5,027       0.25 %     5,819       0.09 %     6,736       0.05 %     7,798       0.04 %     25,380       0.06 %
Total operating expenses               1,041,556       596.91 %     890,711       204.75 %     930,049       170.69 %     957,427       106.02 %     3,644,350       177.21 %     1,238,594       62.03 %     2,188,217       33.79 %     3,371,070       27.45 %     4,663,534       24.97 %     11,461,415       29.07 %
                                                                                                                                                                         
Loss from operations               (994,475 )     -569.93 %     (785,435 )     -180.55 %     (788,171 )     -144.65 %     (720,582 )     -79.79 %     (3,113,518 )     -151.39 %     (697,471 )     -34.93 %     (397,551 )     -6.14 %     72,386       0.59 %     650,789       3.48 %     (371,847 )     -0.94 %
                                                                                                                                                                         
Other (expenses) income                                                                                                                                                                          
    Finance income( expenses)                 20       0.01 %     1,083       0.25 %     1,069       0.20 %     1,238       0.14 %     4,343       0.21 %     1,433       0.07 %     1,659       0.03 %     1,920       0.02 %     2,223       0.01 %     7,236       0.02 %
   other income(expenses)                 1,792       1.03 %     7,852       1.80 %     8,369       1.54 %     9,689       1.07 %     33,987       1.65 %     11,216       0.56 %     12,984       0.20 %     15,030       0.12 %     17,399       0.09 %     56,629       0.14 %
Total other (expenses)/income               1,812       1.04 %     8,935       2.05 %     9,439       1.73 %     10,927       1.21 %     38,330       1.86 %     12,649       0.63 %     14,643       0.23 %     16,951       0.14 %     19,623       0.11 %     63,865       0.16 %
                                                                                                                                                                         
Income from Continuing Operations before Income Tax             (996,287 )     -570.97 %     (794,370 )     -182.60 %     (797,610 )     -146.38 %     (731,508 )     -81.00 %     (3,151,848 )     -153.26 %     (710,120 )     -35.56 %     (412,193 )     -6.37 %     55,436       0.45 %     631,166       3.38 %     (435,712 )     -1.10 %
    Income tax provision                                                                                                                                 13,859       0.11 %     157,792       0.84 %     (108,928 )     -0.28 %
Income from Continuing Operations before Minority Interest             (996,287 )     -570.97 %     (794,370 )     -182.60 %     (797,610 )     -146.38 %     (731,508 )     -81.00 %     (3,151,848 )     -153.26 %     (710,120 )     -35.56 %     (412,193 )     -6.37 %     41,577       0.34 %     473,375       2.53 %     (326,784 )     -0.83 %
Less: Net income attributable to non-controlling interests          Notes: 3        (200,704 )     -115.02 %     (198,593 )     -45.65 %     (199,402 )     -36.60 %     (182,877 )     -20.25 %     (787,962 )     -38.31 %     (177,530 )     -8.89 %     (103,048 )     -1.59 %     13,859       0.11 %     157,792       0.84 %   ¥ -108,927.98       -0.28 %
NET INCOME ATTRIBUTABLE TO SKYPEOPLE FRUIT JUICE, INC.                (791,960 )     -453.87 %     (595,778 )     -136.95 %     (598,207 )     -109.79 %     (548,631 )     -60.75 %     (2,363,886 )     -114.94 %     (532,590 )     -26.67 %     (309,145 )     -4.77 %     27,718       0.23 %     315,583       1.69 %     (217,856 )     -0.55 %
                                                                                                                                                                         
       Notes: 4                                                                                                                                                                   
Reported EBITDA               (31,212 )             (116,555 )             (36,390 )             (69,408 )             2,110,321               (29,007 )             273,816               702,568               1,096,807               2,215,834          
                                                                                                                                                                         
Operation Analysis                                                                                                                                                                          
Number of Orders                 991.00               3,141.00               3,636.00               5,532.00               13,300.00               8,997.00               18,557.00               34,332.00               56,236.00               118,122.00          
Number of non-repetitive buyers                 494.00               57.00               2,286.00               3,479.00               6,316.00               5,662.00               11,682.00               21,615.00               35,407.00               74,366.00          
                                                                                                                                                                         
    Basic earnings per share from continued operation      Notes: 5        (0.03 )             (0.03 )             (0.03 )             (0.03 )             (0.12 )             (0.03 )             (0.02 )             0.00               0.02               (0.02 )        
   Diluted earnings per share from continued operation             (0.03 )             (0.03 )             (0.03 )             (0.03 )             (0.12 )             (0.03 )             (0.02 )             0.00               0.02               (0.02 )        
Weighted average number of shares outstanding