UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
Schedule
14A Information
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check the appropriate box:
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☒
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Preliminary Proxy Statement
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☐
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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☐
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Definitive Proxy Statement
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Definitive Additional Materials
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☐
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Soliciting Material Pursuant to Section 240.14a-12
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Future
FinTech Group Inc.
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(Exact name of registrant
as specified in its charter)
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N/A
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(Name of person(s)
filing proxy statement, if other than the registrant)
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Payment
of Filing Fee (check the appropriate box):
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction
applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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Per unit price or
other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4)
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Proposed maximum
aggregate value of transaction:
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☐
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Fee paid previously
with preliminary materials.
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☐
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Check box if any
part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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PRELIMINARY PROXY STATEMENT
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DATED
OCTOBER 11, 2019
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LETTER
FROM THE CHIEF EXECUTIVE OFFICER
Dear
Shareholder:
You
are 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., local
time.
The
Notice 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 complete
the attached proxy card or be present in person to vote at the meeting.
Whether
or not you plan to attend the meeting, please vote as soon as possible. You can vote by returning the proxy card in the enclosed
postage-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 itself
revoke your proxy.
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By Order of the Board of
Directors,
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/s/
Yongke Xue
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Yongke Xue
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Chief Executive Officer
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October
[●], 2019
Xi’an,
China
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FUTURE
FINTECH GROUP INC.
23F,
China Development Bank Tower,
No.
2 Gaoxin 1st Road
Xi’an,
Shaanxi, China 710075
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
be Held Friday, December 6, 2019
NOTICE
IS 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)
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To elect five directors
to hold office until the next Annual Meeting of Shareholders and until their successors are elected and qualified;
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(2)
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To ratify the Audit
Committee’s selection of the independent registered public accounting firm for the fiscal year ending December 31, 2019;
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(3)
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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”);
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(4)
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To adopt and approve
the Future FinTech Group Inc. 2019 Omnibus Equity Plan; and
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(5)
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To transact such
other business as may properly come before the meeting or any adjournment thereof.
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The
Board of Directors of the Company (the “Board of Directors” or the “Board”) and the Company’s management
has 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”).
After
careful consideration, the Board of Directors recommends a vote IN FAVOR OF the nominees for director named in the accompanying
proxy statement, a vote IN FAVOR OF the ratification of the Audit Committee’s selection of the independent registered public
accounting 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.
Shareholders
are 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 the
Annual Meeting, you may withdraw your proxy and vote personally on each matter brought before the meeting. YOUR VOTE IS VERY
IMPORTANT.
By
Order of the Board of Directors
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/s/ Yongke
Xue
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Yongke Xue
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Chief Executive Officer
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October [●], 2019
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Xi’an, China
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YOUR
VOTE IS IMPORTANT
WHETHER
OR 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 or
change 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 is
considered the shareholder of record, in order to vote. As a beneficial owner, you have the right to direct your broker or other
agent on how to vote the shares in your account. Your broker or other agent cannot vote on the Sale Transaction and other discretionary
matters without your instructions.
If
you are a shareholder of record and fail to return your proxy card to us or vote by ballot in person at the Annual Meeting, your
shares will not be counted for purposes of determining whether a quorum is present at the Annual Meeting. If you are a shareholder
of record, voting in person by ballot at the Annual Meeting will revoke any proxy that you previously submitted. If you hold your
shares through a bank, broker or other nominee, you must obtain from the record holder a valid “legal” proxy issued
in your name in order to vote in person at the Annual Meeting.
We
encourage you to read the accompanying proxy statement carefully and in its entirety, as well as the documents we file from time
to time with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December
31, 2018. If you have any questions concerning any of the proposals to be voted upon at the Annual Meeting or the accompanying
proxy 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.
Thank
you for your participation. We look forward to your continued support.
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By
Order of the Board of Directors,
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Future
FinTech Group Inc.
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Date:
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October
[●], 2019
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By:
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/s/
Yongke Xue
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Name:
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Yongke Xue
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Title:
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Chief Executive
Officer
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TABLE
OF CONTENTS
ANNEXES
EXHIBITS
QUESTIONS
AND ANSWERS ABOUT THE PROPOSALS
The
following 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 this
proxy statement because the information in this section does not provide all the information that might be important to you with
respect to the Sale Transaction, the Amendment and the other matters being considered at the Annual Meeting. Additional important
information is also contained in the annexes to and the documents incorporated by reference into this proxy statement.
Q:
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Why am I receiving this proxy statement?
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A:
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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.
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Q:
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When and where
will the Annual Meeting be held?
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A:
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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.
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Q:
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On what matters
will I be voting?
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A:
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Future FinTech’s
shareholders are being asked to consider and vote upon the following proposals:
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(1)
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To elect five directors
to hold office until the next Annual Meeting of Shareholders and until their successors are elected and qualified;
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(2)
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To ratify the Audit
Committee’s selection of the independent registered public accounting firm for the fiscal year ending December 31,
2019;
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(3)
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To approve the sale
of the Company’s subsidiary, HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”) to New Continent International
Co., Ltd. (the “Sale Transaction”);
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(4)
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To adopt and approve
the Future FinTech Group Inc. 2019 Omnibus Equity Plan; and
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(5)
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To transact such
other business as may properly come before the meeting or any adjournment thereof.
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Future
FinTech’s shareholders may also be asked to consider and vote upon a proposal to adjourn the meeting to a later date or
dates 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 Meeting
to consider and vote upon these proposals. This proxy statement contains important information about matters to be acted upon
at the Annual Meeting. Shareholders should read it carefully. The vote of shareholders is important.
In
order to complete the Sale Transaction, Future FinTech shareholders must vote to approve the Sale Transaction, and all other requirements
of the Company to complete the Sale Transaction must be fulfilled.
Q:
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What are the
material terms of the Sale Transaction?
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A:
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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.”
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Q:
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Why is Future
FinTech proposing the Sale Transaction?
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A:
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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.
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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 the
slow-down of market growth and increasing price competition in China, the revenue and net income from the Company’s fruit
juice business has decreased significantly and our fixed assets usage rate has been at a very low level. In the meantime, Chinese
banks have implemented a de-leveraging policy and been aggressively collecting outstanding loans. Furthermore, the Company’s
new construction projects and facilities for fruit juice business could not be completed on schedule due to lack of funding and
environmental control issues. This has resulted in the Company’s fruit juice business having a large amount of liabilities
and 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 the
shareholders’ equity of the Company in its consolidated financial statements to be reduced to negative $86.70 million, failing
to meet the minimum $2.5 million shareholders’ equity requirement for continued listing on the NASDAQ Capital Market. After
considering the continued listing requirements, timeline, and related costs as well as the difficulty of the operation conditions
for fruit juice businesses, our Board reviewed the options and approved the Sale Transaction on September 17, 2019, with the intent
of divesting the fruit juice business so that the Company can meet the shareholders equity requirement to regain compliance with
NASDAQ 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 affected
by the adverse market conditions currently being experienced by the asset-heavy fruit juice manufacturing operations of HeDeTang
HK and its subsidiaries in China. On September 18, 2019, the Company submitted its compliance plan to NASDAQ, indicating it
plans to complete the Sale Transaction subject to shareholder approval, so that the shareholders’ equity of the Company will
be more than $2.5 million, so as to regain compliance with NASDAQ Rules. The Company is still waiting for approval of the plan
by NASDAQ as of the date of this proxy statement.
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Q:
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What effects
will the Sale Transaction have on Future FinTech?
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A:
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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.
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Q:
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Will any of the
proceeds from the Sale Transaction be distributed to me as a stockholder?
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A:
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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.
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Q:
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What will happen
to my shares in Future FinTech if the Sale Transaction is completed?
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A:
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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:
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Are there risks
associated with the Sale Transaction that I should consider in deciding how to vote?
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A:
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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.
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Q.
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What happens
if the Sale Transaction is not approved?
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A.
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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.
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Q:
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How does Future
FinTech’s board of directors recommend that I vote on the proposals to be voted upon at the Annual Meeting?
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A:
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The Future FinTech
board of directors recommends that Future FinTech shareholders vote or give instruction to vote:
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“FOR” the nominees for director
named in this proxy statement;
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“FOR” the ratification of
the Audit Committee’s selection of the independent registered public accounting firm;
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“FOR” the Sale Transaction
proposal; and
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“FOR” the adoption of the
Future FinTech Group Inc. 2019 Omnibus Equity Plan.
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You
should read “The Sale Transaction — Recommendation of Future FinTech’s Board of Directors and Reasons for the
Sale Transaction” beginning on page 25 for a discussion of the factors that our board of directors considered in deciding
to recommend the approval of the sale proposal.
A:
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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.
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Shareholders
of Record
If
your shares of Future FinTech common stock are registered directly in your name with Future FinTech’s transfer agent, Continental
Stock Transfer & Trust Company, you are the shareholder of record of those shares and these proxy materials have been mailed
to you by the Company. You may vote your shares by mail or in person at the Annual Meeting. Your vote authorizes Yongke Xue, Chief
Executive Officer of the Company, and Jing Chen, Chief Financial Officer of the Company, as your proxy, with the power to appoint
his substitute, to represent and vote your shares as you directed.
Beneficial
Owners
If
your shares of Future FinTech common stock are held in a stock brokerage account, by a bank, broker or other nominee, you are
considered 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 direct
your bank, broker, trustee or nominee on how to vote your shares signing and returning a proxy card. Your bank, broker, trustee
or nominee will send you instructions for voting your shares. Please note that you may not vote shares held in street name by
returning a proxy card directly to Future FinTech or by voting in person at the Annual Meeting unless you provide a “legal
proxy,” which you must obtain from your broker, bank or nominee. Further, brokers, banks and nominees who hold shares of
Future FinTech common stock on your behalf may not give a proxy to Future FinTech to vote those shares without specific instructions
from you.
For
a discussion of the rules regarding the voting of shares held by beneficial owners, please see the question below entitled “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?”
Q:
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What vote is
required to approve each proposal?
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A:
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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.
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Q:
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How many votes
do I and others have?
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A:
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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.
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Q:
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How will our
directors and executive officers vote on the proposals at the Annual Meeting?
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A:
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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.
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Q:
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How many shares
must be present to hold the Annual Meeting?
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A:
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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.
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Q:
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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?
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A:
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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.
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Under
applicable regulations, if a broker holds shares on your behalf, and you do not instruct your broker how to vote those shares
on 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 broker
does not have authority to vote your shares with respect to such matter. Unless you provide voting instructions to a broker holding
shares on your behalf, your broker may no longer use discretionary authority to vote your shares on any of the matters to be considered
at the Annual Meeting other than the ratification of our independent registered public accounting firm. Please vote your proxy
so your vote can be counted.
Q:
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What will happen
if I return my proxy card without indicating how to vote?
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A:
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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.
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Q:
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Can I change
my vote after I have returned a proxy or voting instruction card?
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A:
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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:
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●
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you can grant a
new, valid proxy bearing a later date;
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you can send a signed
notice of revocation;
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●
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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
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●
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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.
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If
you choose either of the first two methods, you must submit your notice of revocation or your new proxy to the Corporate Secretary
of Future FinTech, as specified in this proxy statement, no later than the beginning of the Annual Meeting. If your shares are
held in street name by your broker, bank or nominee, you should contact them to change your vote.
Q:
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Do I need identification
to attend the Annual Meeting in person?
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A:
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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.
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Q:
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Are Future FinTech
shareholders entitled to appraisal rights?
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A:
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No. Future FinTech
shareholders do not have appraisal rights in connection with the Sale Transaction under the Florida Business Corporation Act.
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Q:
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What do I do
if I receive more than one set of voting materials?
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A:
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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.
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Q:
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If I am a Future
FinTech shareholder, should I send in my Future FinTech stock certificates with my proxy card?
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A:
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No. Please DO NOT
send your Future FinTech stock certificates with your proxy card.
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Q:
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Will I be subject
to any taxes as a result of the Sale Transaction?
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A:
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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.
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Q:
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When do you expect
the Sale Transaction to be completed?
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A:
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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.
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Q:
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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?
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A:
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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?
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A:
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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.
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The
primary negative consequence of the transaction that Future FinTech’s Board considered was that the transaction could result
in Future FinTech’s common stock being delisted from NASDAQ and moved to the OTC Markets if Future FinTech fails to meet
NASDAQ’s continued listing requirements.
Please
read with particular care the detailed description of the risks described in “Risk Factors” beginning on page
15 of this proxy statement.
FORWARD-LOOKING
STATEMENTS
This
proxy statement, including information incorporated by reference into this proxy statement, includes forward-looking statements
regarding, among other things, Future FinTech’s plans, strategies and prospects, both business and financial. Although Future
FinTech believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are
reasonable, Future FinTech cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking
statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described
under “Risk Factors” from time to time in Future FinTech’s filings with the SEC. Many of the forward-looking
statements 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 differ
materially from the forward-looking statements we make in this presentation are set forth in other reports or documents that we
file from time to time with the SEC, and include, but are not limited to:
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the
number and percentage of our public shareholders voting against the Sale Transaction
and the other proposals described herein;
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the
ability to maintain the listing of Future FinTech’s common stock on NASDAQ following
the consummation of the Sale Transaction;
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changes
adversely affecting the businesses in which Future FinTech is engaged;
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general
economic conditions;
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business
strategies and plans of Future FinTech;
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the
result of future financing efforts; and
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and
the other factors summarized under the section entitled “Risk Factors”.
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You
are 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 behalf
are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the
extent required by applicable laws and regulations, Future FinTech undertakes no obligations to update these forward-looking statements
to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.
Before
a shareholder grants its proxy or instructs how its vote should be cast or vote on the proposals described herein, it should be
aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy
statement may adversely affect Future FinTech.
SUMMARY
This
summary highlights selected information from this proxy statement and does not contain all of the information that is important
to you. To better understand the proposals to be submitted for a vote at the Annual Meeting, including the Sale Transaction, you
should read this entire document carefully, including the 2019 Future FinTech Equity Plan attached as Annex A and the Share
Transfer Agreement incorporated by reference as Exhibit 1 to this proxy statement.
References
to “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 references
in 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 under
the 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 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 company organized under
the laws of the British Virgin Islands, and SkyPeople Foods Holding Limited (“SkyPeople BVI”), a company organized
under the laws of the British Virgin Islands.
SkyPeople BVI holds 100% of the equity
interest of HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”), a company organized under the laws of the Hong Kong Special
Administrative Region of the People’s Republic of China (“Hong Kong”), and HeDeTang HK holds 73.41% of the equity
interest 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 Qiyiwangguo
Modern Organic Agriculture Co., Ltd. (“Shaanxi Qiyiwangguo”); (ii) Huludao Wonder Fruit Co., Ltd. (“Huludao
Wonder”); (iii) Yingkou Trusty Fruits Co., Ltd. (“Yingkou”); (iv) Hedetang Foods Industry (Yidu) Co. Ltd. (“Food
Industry 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). HeDeTang
Holdings (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 (“Hedejiachuan
Yichang”); and (iii) Shaanxi Guo Wei Mei Kiwi Deep Processing Co., Ltd. (“Guo Wei Mei”).
GlobalKey SharedMall Limited (“GlobalKey
SharedMall”), 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 October
23, 2018), a company organized under the laws of Hong Kong. In September 2017, Globalkey Holdings transferred its wholly owned
subsidiary 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 operational
assets or businesses.
The
Annual Meeting
The
Annual Meeting will be held at 10:00 a.m., local time, on Friday, December 6, 2019, at the Company’s principal executive
offices at 23F, China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, 710075.
The
Sale Transaction
You will be asked
to 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 limited
liability 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 Juice
Group 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 “Proposal
3—Sale Transaction of HeDeTang Holdings.”
Our board of directors
adopted 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.
Future
FinTech’s Operations Following the Sale Transaction
Following
the completion of the Sale Transaction, the main business operations of Future FinTech will be focused on our real-name and membership-based
blockchain shared shopping mall platform.
On
January 22, 2019, the Company formally launched GlobalKey SharedMall, also known as Chain Cloud Mall (CCM) v1.0, the real-name
and membership-based blockchain shared shopping mall platform that integrates blockchain and internet technology and distinguishes
itself by utilizing the automatic value distribution system of blockchain and sharing the value of the platform to all the participants
in the system.
On
June 1, 2019, CCM v2.0 was launched. Compared to the 1.0 version, CCM v2.0 has a wider variety of product categories, easier user
interface, more transparent information, more stable operations, a higher security level, and faster logistics. Currently, CCM
v2.0 adopts a “multi-vendor hosted stores + platform self-hosted stores” model, supported by multiple local warehouses
in 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 the
same functions and services that other Chinese leading traditional e-commerce platforms provide.
CCM’s
blockchain-powered QRO plan enables CCM to record every event or transaction on a distributed ledger and make the whole process
traceable. CCM is adopting an unalterable anti-counterfeit code to be issued by manufacturers, which can ensure the authenticity
of products and directly link manufacturers with their targeted customers as a way of precision marketing.
Based
on blockchain technology, CCM is established to transform the relationship between companies and consumers from traditional selling
and buying relationships to a value-sharing relationship. The platform will fairly distribute the benefit of the entire mall to
users who engage in promotion, development, and consumption based on their contributions to the platform. The members of CCM are
not only consumers and entrepreneurs but also participants, promoters and beneficiaries.
The
CCM shared shopping mall platform is designed to be a block-chain based shopping mall for merchants and goods, not the exchange
of digital currencies, and it currently only accepts payment from credit cards, Alipay and Wechat.
We
offer high-quality products at attractive prices and incentivize our members to promote our platform and share our products with
their social contacts. Our platform has attracted a growing base of users, including members and non-members. These users are
actively purchasing products on our platform.
Members
are the key participants on our platform and drivers of our growth. Our members typically pay to gain access to a dedicated app
that provides access to a curated selection of products, exclusive membership benefits, and features, including discounted prices
and point rewards. Members can refer others to become members and are rewarded for doing so. Members can also promote products
on various social platforms and are rewarded if those users purchase our products. We currently generate revenues primarily from
fixed 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 required
to log onto Chain Cloud Mall (CCM) app or web portal in order to download some of their rewards points each day. The member could
download all of his/her rewards points if he/she logs onto the app or web portal for at least 200 days within the membership’s
validity period, which is 365 days. Members must renew their membership before expiration to continue earning points and enjoy
discounts. A non-member user can purchase products from the platform, but does not enjoy the above-mentioned benefits.
Membership
revenue is recognized when a member registers and makes his/her first order on CCM app or web portal.
Membership
benefits are as follows:
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1)
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Receive
a merchandise gift package
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2)
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Exclusive
discounts for merchandise sold on the Chain Cloud Mall (CCM) Web and App
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3)
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Receive
CCM-Points upon a successful new member and product referral
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CCM-Points
can be used as coupons for the member’s future purchases on our app and website.
In
order to promote our membership program, we currently allow our users to join the membership program by purchasing merchandise
of the equivalent value of the membership fee through our CCM app or website, as an alternative to paying the upfront fixed membership
fee.
CCM-Points
can only be used as credit when making purchases on our platform, with one CCM Point representing RMB1.00. CCM-Points cannot be
redeemed for cash. Members may transfer CCM Points to others.
From
December 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 January
1 to June 30, 2019, we received proceeds of RMB 6,587,949, approximately $958,289, from 3,850 members with 3,898 orders. For the
three months ended June 30, 2019, we received RMB 4,493,150, approximately $653,578, in proceeds, from 2,641 members with 2,672
orders.
Pre-Sale
Transaction Structure
Post-Sale
Transaction Structure of Future FinTech
Abandonment
of the Sale Transaction and Expenses Related to the Sale Transaction
In
the event that the Future FinTech’s shareholders do not approve the Sale Transaction, the Sale Transaction shall not be
consummated by the Company and shall be abandoned. We anticipate that the fees and expenses related to the Sale Transaction, including
professional fees, shall be approximately $50,000 in aggregate.
Recommendation
to Shareholders
After
careful consideration, the Board of Directors recommends a vote IN FAVOR OF the nominees for director named in the accompanying
proxy statement, a vote IN FAVOR OF the ratification of the Audit Committee’s selection of the independent registered public
accounting 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.
Interests
of Future FinTech’s Directors and Officers in the Sale Transaction
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 the nominees for director named in this proxy statement, in favor the ratification
of 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 directors
or executive officers other has entered into any agreement obligating any of them to do so.
Besides
the equity ownership of Future FinTech detailed above, the directors and executive officers of the Company do not have interests
different than the other shareholders of Future FinTech.
Appraisal
Rights
Future
FinTech shareholders do not have appraisal rights in connection with the Sale Transaction under the Florida Business Corporation
Act.
Material
United States Federal Income Tax Considerations
The
following discussion is a summary of certain U.S. federal income tax consequences of the Sale Transaction. This discussion is
based on current provisions of the Code, applicable U.S. Department of the Treasury regulations promulgated thereunder, judicial
opinions, and published positions of the Internal Revenue Service, all as in effect as of the date of this document. Such authorities
are subject to change or differing interpretations at any time, possibly with retroactive effect, and any such change or interpretation
could affect the accuracy of the statements in this proxy statement. This discussion does not address any U.S. federal tax considerations
other than those relating to income tax (e.g., estate and gift taxes), nor does it address any state, local, or foreign tax considerations
or any tax reporting requirements.
The
Sale Transaction will not result in any immediate U.S. federal income tax consequences to Future FinTech stockholders.
The
Sale Transaction will generally be taxable to Future FinTech for U.S. federal income tax purposes, and it is expected that Future
FinTech will recognize a net loss for U.S. federal income tax purposes as a result of the Sale Transaction.
THIS
IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE. THE U.S. FEDERAL INCOME TAX TREATMENT OF THESE
TRANSACTIONS IS COMPLEX. ACCORDINGLY, EACH SHAREHOLDER WHO IS A U.S. HOLDER IS STRONGLY URGED TO CONSULT HIS OWN TAX ADVISER WITH
RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME, ESTATE AND OTHER TAX CONSEQUENCES OF THE TRANSACTIONS WITH SPECIFIC
REFERENCE TO SUCH PERSON’S PARTICULAR FACTS AND CIRCUMSTANCES.
Regulatory
Approvals Required for the Sale Transaction
The
Company is unaware of any federal or state regulatory requirements that must be complied with or necessary approvals in connection
with the Sale Transaction, except for filings of the share transfer with the competent authority of Hong Kong and compliance with
regulations of the Securities and Exchange Commission.
Risk
Factors
In
evaluating the proposals to be presented at the Annual Meeting, a shareholder should carefully read this proxy statement and especially
consider the factors discussed in the section entitled “Risk Factors.”
Conditions
to Consummation of the Sale Transaction
The
Company’s ability to consummate the Sale Transaction is conditioned upon, among other things, that the Sale Transaction
is duly approved, adopted and implemented by the Company’s shareholders.
Dissenter’s
Rights
Our
shareholders have no right under the Florida Business Corporations Act, our Second Amended and Restated Articles of Incorporation
or our Amended and Restated Bylaws to dissent from the provision adopted in the Amendment.
RISK
FACTORS
You
should carefully consider the following risk factors, together with the other information contained in this proxy statement, including
the factors discussed in Part I, Item 1A—Risk Factors in Future FinTech’s annual report on Form 10-K for the
year ended December 31, 2018. The risks described below relate to the Sale Transaction, and are in addition to, and should
be read in conjunction with, without limitation, the factors discussed in Part I, Item 1A—Risk Factors in Future FinTech’s
annual report on Form 10-K for the year ended December 31, 2018. If any of the following risks and uncertainties develops
into actual events, these events could have a material adverse effect on Future FinTech’s business, financial conditions
or results of operations. In addition, past financial performance may not be a reliable indicator of future performance, and historical
trends should not be used to anticipate results or trends in future periods.
Risks
Related to the Sale Transaction
The
Sale 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 from
NASDAQ.
Completion
of the Sale Transaction is subject to the completion of certain conditions that make the completion and timing of the transactions
uncertain, including the approval of the Sale Transaction by our shareholders. We cannot guarantee that the closing conditions
set forth in the Share Transfer Agreement or related documents will be satisfied. If the Sale Transaction cannot be completed
in a timely manner, the Company will not be able to meet its compliance plan submitted to NASDAQ and NASDAQ’s continued
listing requirements, which could cause its shares to be delisted from NASDAQ.
Failure
to complete the Sale Transaction may also negatively affect the share price and future business and financial results of Future
FinTech.
In
the event that we are unable to complete the Sale Transaction in a timely manner, Future FinTech’s ongoing business may
also 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:
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Delisting from NASDAQ;
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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
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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.
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If
the Sale Transaction is not completed, the price of Future FinTech’s common stock may decline to the extent that the current
market price reflects a market assumption that the transaction will be completed and that the related benefits will be realized.
Uncertainties
associated with the Sale Transaction may cause employees to leave Future FinTech and may otherwise affect the future business
and operations of Future FinTech.
The
success of Future FinTech after the Sale Transaction will depend in part upon its ability to retain its key employees. Prior to
and following the Sale Transaction, current and prospective employees of Future FinTech may experience uncertainty about their
future roles and choose to pursue other opportunities, which could have an adverse effect on the applicable business. If key employees
depart, the businesses and results of operations of the Company could be adversely affected.
The
results of operations and financial condition of Future FinTech following the transaction may differ materially from the pro forma
information presented in this proxy statement.
The
pro forma financial information included in this proxy statement is derived from the historical audited and unaudited consolidated
financial statements of Future FinTech. The preparation of this pro forma information is based upon available information and
certain assumptions and estimates that we believe are reasonable. However, this pro forma information may be materially different
from what the actual results of operations and financial conditions of Future FinTech would have been had the transaction occurred
during the periods presented or from what the results of operations and financial position of Future FinTech will be after the
completion of the proposed transaction. In particular, the assumptions used in preparing the pro forma financial information may
not be realized, and other factors may affect the financial condition and results of operations of Future FinTech following the
transaction.
Additional
Risks Related to Future FinTech After the Sale Transaction
We
may not be able to effectively control and manage our growth, and a failure to do so could adversely affect our operations and
financial condition.
If
our newly developed blockchain based e-commerce business and markets experience significant growth, we will need to expand our
business to maintain our competitive position. We may face challenges in managing and financing expansion of our business, facilities
and product offerings, including challenges relating to integration of acquired businesses and increased demands on our management
team, employees and facilities. Failure to effectively deal with increased demands on us could interrupt or adversely affect our
operations and cause production and service backlogs, longer product development time frames and administrative inefficiencies.
Other challenges involved with expansion, acquisitions and operation include:
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unanticipated costs;
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the diversion of
management’s attention from other business concerns;
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potential adverse
effects on existing business relationships with suppliers and customers;
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obtaining sufficient
working capital to support expansion;
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expanding our product
offerings and maintaining the high quality of our products and services;
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continuing to fill
customers’ orders on time;
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maintaining adequate
control of our expenses and accounting systems;
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successfully integrating
any future acquisitions; and
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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.
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Even
if we obtain benefits of expansion in the form of increased sales, there may be delay between the time when the expenses associated
with an expansion or acquisition are incurred and the time when we recognize such benefits, which could negatively affect our
earnings.
We
may 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.
As
part of our business strategy, we review acquisition and strategic investment prospects that we believe would complement our current
product 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, products
or technologies in the future. In the event of any future acquisitions, we may expend significant cash, incur substantial debt
and/or issue equity securities and dilute the percentage ownership of current shareholders, all of which could have a material
adverse effect on our operating results and the price of our stock. We cannot guarantee that we will be able to successfully integrate
any businesses, products, technologies or personnel that we may acquire in the future, and our failure to do so could have a material
adverse effect on our business, operating results and financial condition.
Our
business and operations may be subject to disruption from work stoppages, terrorism or natural disasters.
Our
operations 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 facilities
or main offices are located, our facilities or offices or those of critical suppliers could be damaged or destroyed. Such a disruption
could 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.
Our
success depends substantially on the continued retention of certain key personnel and our ability to hire and retain qualified
personnel in the future to support our growth.
If
one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, our
business may be disrupted and our financial condition and results of operations may be materially and adversely affected. While
we 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 or
Jing Chen for any reason could significantly adversely impact our business and results of operations. Competition for senior management
and senior technology personnel in the PRC is intense and the pool of qualified candidates is very limited. Accordingly, we cannot
guarantee that the services of our senior executives and other key personnel will continue to be available to us, or that we will
be able to find a suitable replacement for them if they were to leave.
Our
ecommerce business depends on the continued use of the Internet and the adequacy of the Internet infrastructure.
Our
ecommerce business depends upon the widespread use of the Internet and ecommerce. Factors which could reduce the widespread use
of the Internet for ecommerce include actual or perceived lack of security of information or privacy protection, cyberattacks
or other disruptions or damage to the Internet or to users’ computers, significant increases in the costs of transportation
of goods, and taxation and governmental regulation.
Our
business depends on our Website, network infrastructure and transaction-processing systems.
Our
ecommerce business is completely dependent on our infrastructure. Any system interruption that results in the unavailability of
our Website or reduced performance of our transaction systems could reduce our ability to conduct our business. We use internally
and externally developed systems for our Website and our transaction processing systems. We expect to experience system interruptions
due to software failure. We may also experience temporary capacity constraints due to sharply increased traffic during sales or
other 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 with
our infrastructure upgrades. Any future difficulties with our transaction processing systems or difficulties upgrading, expanding
or integrating aspects of our systems may cause system disruptions, slower response times, and degradation in levels of customer
service, additional expense, impaired quality and speed of order fulfillment or other problems.
If
the location where all of our computer and communications hardware is located is compromised, our business, prospects, financial
condition and results of operations could be harmed. If we suffer an interruption or degradation of services at the location for
any reason, our business could be harmed. Our success, and in particular, our ability to successfully receive and fulfill orders
and provide high-quality customer service, largely depends on the efficient and uninterrupted operation of our computer and communications
systems. 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 implementation
of 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 fulfill
customer orders. The occurrence of any of the foregoing risks could harm our business.
Our
platform requires frequent updates on pricing from our vendors. If these updates are inaccurate or do not occur, there could be
a negative influence on our business.
We
update the prices of products listed on our site frequently from our vendors. If we are unable to obtain, or are not provided
updated pricing information from our vendors, or if we fail to act on information from our vendors, then it could cause us to
remedy the pricing difference to complete the transaction, or source the product from an alternative vendor at their price.
We
are subject to cyber security risks and may incur increasing costs in an effort to minimize those risks and to respond to cyber
incidents.
Our
ecommerce business is entirely dependent on the secure operation of our website and systems as well as the operation of the Internet
generally. Our business involves the storage and transmission of users’ proprietary information, and security breaches could
expose us to a risk of loss or misuse of this information, litigation, and potential liability. A number of large Internet companies
have suffered security breaches, some of which have involved intentional attacks. From time to time we and many other Internet
businesses also may be subject to a denial of service attacks wherein attackers attempt to block customers’ access to our
Website. If we are unable to avert a denial of service attack for any significant period, we could sustain substantial revenue
loss from lost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate or
prevent rapidly evolving types of cyber-attacks.
Cyberattacks
may target us, our customers, our suppliers, banks, payment processors, ecommerce in general or the communication infrastructure
on which we depend. If an actual or perceived attack or breach of our security occurs, customer and/or supplier perception of
the effectiveness of our security measures could be harmed and we could lose customers, suppliers or both. Actual or anticipated
attacks 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 might
be able to misappropriate our or our users’ proprietary information, cause interruption in our operations, damage our computers
or those of our users, or otherwise damage our reputation and business. Any compromise of our security could result in a violation
of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, and a loss of confidence
in our security measures, which could harm our business.
The
relative lack of public company experience of our management team may put us at a competitive disadvantage.
Our
management team lacks significant public company experience, which could impair our ability to comply with legal and regulatory
requirements such as those imposed by the Sarbanes-Oxley Act of 2002, (“Sarbanes-Oxley”). Our senior management does
not have significant experience managing a publicly traded company. Such responsibilities include complying with federal securities
laws and making required disclosures on a timely basis. Our senior management may be unable to implement programs and policies
in an effective and timely manner or that adequately respond to the increased legal, regulatory and reporting requirements associated
with being a publicly traded company. Our failure to comply with all applicable requirements could lead to the imposition of fines
and penalties, distract our management from attending to the management and growth of our business, result in a loss of investor
confidence in our financial reports and have an adverse effect on our business and stock price.
As
a public company, we are obligated to maintain effective internal controls over financial reporting. Our internal controls may
be determined not to be effective, which may adversely affect investor confidence in us and, as a result, decrease the value of
our Common Stock.
The
PRC has not adopted management and financial reporting concepts and practices similar to those in the United States. We may have
difficulty in hiring and retaining a sufficient number of qualified finance and management employees to work in the PRC. As a
result of these factors, we may experience difficulty in establishing and maintaining accounting and financial controls, collecting
financial data, budgeting, managing our funds and preparing financial statements, books of account and corporate records and instituting
business practices that meet investors’ expectations in the United States.
Rules
adopted by the SEC, or the Commission, pursuant to Sarbanes-Oxley Section 404 require annual assessment of our internal controls
over 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 are
relatively new and complex, and they require significant documentation, testing and possible remediation to meet the detailed
standards. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal
control over financial reporting. During the evaluation and testing process, if we identify one or more material weaknesses in
our internal control over financial reporting as we have done previously, we will be unable to assert that our internal controls
are effective. If we continue to be unable to conclude that our internal control over financial reporting is effective, we could
lose investor confidence in the accuracy and completeness of our financial reports, which could harm our business and cause the
price of our stock to decline.
We
may need additional capital to fund our future operations and, if it is not available when needed, we may need to reduce our planned
development and marketing efforts, which may reduce our sales revenue.
We
believe that our existing working capital and cash available from operations will enable us to meet our working capital requirements
for at least the next twelve months. However, if cash from future operations is insufficient, or if cash is used for acquisitions
or other currently unanticipated uses, we may need additional capital. The development and marketing of new products and the expansion
of distribution channels and associated support personnel require a significant commitment of resources. In addition, if the markets
for our products and services develop more slowly than anticipated, or if we fail to establish significant market share and achieve
sufficient net revenues, we may continue to consume significant amounts of capital. As a result, we could be required to raise
additional 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 are
raised through the issuance of debt securities, such securities may provide the holders certain rights, preferences, and privileges
senior to those of common shareholders, and the terms of such debt could impose restrictions on our operations. We cannot guarantee
that additional capital, if required, will be available on acceptable terms, or at all. If we are unable to obtain sufficient
amounts 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.
If
our costs and demands upon management increase disproportionately to the growth of our business and revenue as a result of complying
with the laws and regulations affecting public companies, our operating results could be harmed.
As
a public company, we do and will continue to incur significant legal, accounting, investor relations and other expenses, including
costs associated with public company reporting requirements. We also have incurred and will incur costs associated with current
corporate governance requirements, including requirements under Section 404 and other provisions of Sarbanes-Oxley, as well
as rules implemented by the SEC and the stock exchange on which our common stock is traded. The expenses incurred by public companies
for reporting and corporate governance purposes have increased dramatically over the past several years. These rules and regulations
have 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 operating
results could be harmed.
There
are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in
accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Any changes in estimates, judgments
and assumptions could have a material adverse effect on our business, financial condition and operating results.
The
preparation 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), liabilities
and related reserves, revenue, expenses and income. Estimates, judgments and assumptions are inherently subject to change in the
future, and any such changes could result in corresponding changes to the amounts of assets, liabilities, revenue, expenses and
income. Any such changes could have a material adverse effect on our business, financial condition and operating results.
We
will no longer have any equity participation in HeDeTang or in the fruit juice industry.
After
the Sale Transaction, we will have no ongoing equity participation in the fruit juice industry. We will cease to participate in
HeDeTang’s future earnings or growth, if any, and will not participate in any potential future sale of HeDeTang. It is possible
that New Continent could sell some or all of its equity in HeDeTang following the Sale Transaction at a valuation higher than
that being paid in the Sale Transaction and New Continent could realize significant returns on its equity investment in HeDeTang.
Our
stockholders will not receive any distribution from the Sale Transaction, and may never receive any return of value.
We
currently intend to use the net proceeds from the Sale Transaction to, among other things, address working capital needs and fund
growth initiatives. However, there is no guarantee that the investments in our remaining businesses or possible future investments
in other businesses will generate a positive return to our stockholders.
In
addition, 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 receive
any liquidity from the Sale Transaction and the only return to them will be based on any future appreciation in our stock price
or upon a future sale or liquidation of us. Much depends on our future business, including the success or failure of our ecommerce
business. There are no assurances that we will be successful, and current stockholders may never get a return on their investment.
We
will continue to incur the expenses of complying with public company reporting requirements following the closing of the Sale
Transaction.
After
the 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 to
continue to devote a substantial amount of time to these compliance initiatives.
We
may be exposed to litigation related to the Sale Transaction from the holders of our common stock.
Transactions
such as the Sale Transaction are often subject to lawsuits by stockholders. Particularly because the holders of our common stock
will 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, which
could seriously harm our business.
THE
ANNUAL MEETING
Date,
Time and Place of the Annual Meeting
The
Annual Meeting will be held at 10:00 a.m., local time, on Friday, December 6, 2019, at the Company’s principal executive
offices at 23F, China Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, 710075.
Matters
to be Voted Upon at the Annual Meeting
At
the 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:
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(1)
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To
elect five directors to hold office until the next Annual Meeting of Shareholders and
until their successors are elected and qualified;
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(2)
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To
ratify the Audit Committee’s selection of the independent registered public accounting
firm for the fiscal year ending December 31, 2019;
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(3)
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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”);
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(4)
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To
adopt and approve the Future FinTech Group Inc. 2019 Omnibus Equity Plan; and
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(5)
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To
transact such other business as may properly come before the meeting or any adjournment
thereof.
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Record
Date; Shares Entitled to Vote; Quorum
Shareholders will
be entitled to vote or direct votes to be cast at the Annual Meeting if they owned shares of Future FinTech common stock on the
Record Date. Shareholders will have one vote for each share of Future FinTech common stock owned at the close of business on the
Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your
broker to ensure that votes related to the shares you beneficially own are properly counted. On the Record Date, there were 32,317,083
shares of Future FinTech common stock outstanding.
A
quorum of Future FinTech shareholders is necessary to hold a valid meeting. A quorum will be present at the Annual Meeting if
a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Abstentions and broker
non-votes will count as present for the purposes of establishing a quorum.
Vote
Required; Abstentions and Broker Non-Votes
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 require the affirmative vote of a majority of the shares represented at the meeting and entitled to vote
on that proposal. Abstentions and broker non-votes will have the same effect as a vote “against” each of the proposals.
Shares
Held by Future FinTech’s Directors and Executive Officers
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 each of the proposals, but none of the Company’s directors or
executive officers has entered into any agreement obligating any of them to do so.
Voting
of Proxies
If
your shares are registered in your name with our transfer agent, Continental Stock Transfer & Trust Company, you may cause
your shares to be voted by returning a signed proxy card, or you may vote in person at the Annual Meeting. Based on your proxy
cards, the proxy holders will vote your shares according to your directions.
If
you plan to attend the Annual Meeting and wish to vote in person, you will be given a ballot at the meeting. If your shares are
registered in your name, you are encouraged to vote by proxy even if you plan to attend the Annual Meeting in person. If you attend
the Annual Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.
Voting
instructions are included on your proxy card. All shares represented by properly executed proxies received in time for the Annual
Meeting will be voted at the Annual Meeting in accordance with the instructions of the shareholder. In the event that properly
executed proxies do not contain voting instructions for any given proposal, the Future FinTech common stock represented by such
proxies will be voted in favor of each such proposal.
If
your shares are held in “street name” through a broker, bank or other nominee, you may vote through your broker, bank
or other nominee by completing and returning the voting form provided by your broker, bank or other nominee. If you do not return
your bank’s, broker’s or other nominee’s voting form or do not attend the Annual Meeting and vote in person
with 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.
Revocability
of Proxies
If
you are a shareholder of record, you may change your vote or revoke your proxy at any time before it is voted at the Annual Meeting
by:
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Signing
another proxy card with a later date and returning it to us prior to the Annual Meeting;
or
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Attending
the Annual Meeting and voting in person.
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Please
note that to be effective, your new proxy card, internet or telephonic voting instructions or written notice of revocation must
be received by us prior to the Annual Meeting. If you have submitted a proxy, your appearance at the Annual Meeting, in the absence
of voting in person or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.
If
you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions
regarding 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 of
soliciting additional proxies will allow Future FinTech shareholders who have already sent in their proxies to revoke them at
any time prior to their use at the Annual Meeting as adjourned, recessed or postponed.
Board
of Directors’ Recommendation
After
careful consideration, the Company’s board of directors recommends that you vote or give instruction to vote:
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“FOR” the nominees for director
named in this proxy statement;
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“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;
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“FOR” the adoption of the
Future FinTech Group Inc. 2019 Omnibus Equity Plan.
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Solicitation
of Proxies
The
expense of soliciting proxies in the enclosed form will be borne by Future FinTech. Proxies may also be solicited by some of our
directors, officers and employees, personally or by telephone, facsimile, e-mail or other means of communication. No additional
compensation will be paid for such services.
Anticipated
Date of Completion of the Sale Transaction
Assuming
timely satisfaction of necessary pre-conditions, including the approval by our shareholders of the proposals to approve the Sale
Transaction, we anticipate that the Sale Transaction will be completed 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.
Householding
of Annual Meeting Materials
The
SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy
materials with respect to two or more shareholders sharing the same address by delivering a single set of proxy materials. This
process, which is commonly referred to as “householding,” potentially results in extra convenience for shareholders
and cost savings for companies. The Company has adopted the SEC-approved “householding” procedure.
Upon
written or oral request, the Company will deliver promptly a separate copy of the Notice of Annual Meeting of Shareholders, this
Proxy Statement and the 2018 Annual Report to any shareholder at a shared address to which the Company delivered a single copy
of any of these documents. If, at any time, you no longer wish to participate in “householding” and would prefer to
receive a separate set of proxy materials, you may:
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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
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Notify
your broker, if you hold your common shares under street name.
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If
you 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 contact
their brokerage firm, bank, broker-dealer or other similar organization to request information about householding.
THE
SALE TRANSACTION
Parties
Involved in the Sale Transaction
Future
FinTech Group Inc.
Future
Fintech Group Inc. is a holding company incorporated under the laws of the State of Florida. We have three direct wholly-owned
subsidiaries: DigiPay FinTech Limited (“DigiPay,” formerly known as Belkin Foods Holdings Group Limited, which changed
its 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 company
organized under the laws of the British Virgin Islands; and SkyPeople Foods Holding Limited (“SkyPeople BVI”), a company
organized under the laws of the British Virgin Islands.
The
traditional business of Future FinTech consists of production and sales of fruit juice concentrates, fruit juice beverages and
other fruit-related products in the People’s Republic of China (“PRC” or “China”), and overseas
markets. Due to drastically increased production cost and tightened environmental laws in China, the Company is transforming its
business from fruit juice manufacturing and distribution to a real-name blockchain e-commerce platform that integrates blockchain
and internet technology.
HeDeTang Holdings
(HK) Ltd.
SkyPeople BVI is a
wholly-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% of
the 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).
HeDeJiaChuan
Holding 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 Nutritious
Food; (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.
New
Continent International Co., Ltd.
New Continent International Co.,
Ltd. is a company incorporated in the British Virgin Islands (“New Continent”) in October 2010. Mr. Binke Zhang
is the managing director and sole shareholder of New Continent.
Effects
of the Sale Transaction
Upon
completion of the Sale Transaction, all of the ordinary shares of HeDeTang will be owned by New Continent.
Effect
on Future FinTech if the Sale Transaction is Not Completed
If
the Sale Transaction is not approved by Future FinTech shareholders or if the Sale Transaction is not completed for any other
reason, Future FinTech will retain ownership of HeDeTang. If the Sale Transaction is completed, Future FinTech will meet NASDAQ’s
shareholders equity requirement and will continue to be registered under the Exchange Act and Future FinTech 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 NASDAQ continued listing requirements, NASDAQ delisting, and the risks related to the highly competitive industry
in which Future FinTech operates and adverse economic conditions.
Background
of the Sale Transaction
The
following is a brief discussion of the background of the deliberations that led to our Board of Directors’ approval of the
Sale Transaction.
HeDeTang
HK is a wholly owned subsidiary of SkyPeople BVI. HeDeTang HK’s 73.41% owned subsidiary SkyPeople China and wholly
owned subsidiary HeDeJiaChuan 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.
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 the slow-down of market growth and increasing price competition in
China, the revenue and net income from the Company’s fruit juice business has decreased significantly and our fixed assets
usage rate has been at a very low level. In the meantime, Chinese banks have implemented a de-leveraging policy and been aggressively
collecting outstanding loans. Furthermore, the Company’s new construction projects and facilities for fruit juice business
could not be completed on schedule due to lack of funding and environmental control issues. This has resulted in the Company’s
fruit juice business having a large amount of liabilities and 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 the shareholders’ equity of the Company in its consolidated financial
statements to be reduced to negative $86.70 million, failing to meet the minimum $2.5 million shareholders’ equity requirement
for continued listing on the NASDAQ Capital Market. After considering the continued listing requirements, timeline, and related
costs as well as the difficulty of the operation conditions for fruit juice businesses, our Board reviewed the options and approved
the Sale Transaction on September 17, 2019, with the intent of divesting the fruit juice business so that the Company can meet
the shareholders equity requirement to regain compliance with NASDAQ 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 affected by the adverse market conditions currently
being experienced by the heavy asset and manufacturing operations of HeDeTang HK and its subsidiaries in China. On September
18, 2019, the Company submitted its compliance plan to NASDAQ, indicating it plans to complete the Sale Transaction subject to
shareholder approval, so that the shareholders equity of the Company will be more than $2.5 million, so as to regain compliance
with NASDAQ Rules. On September 17, 2019, the Board approved the Sale Transaction and the submission of the matter to the vote
of the Company’s shareholders at the Company’s Annual Meeting. The Company is still waiting for approval of the plan
by NASDAQ as of the date of this proxy statement.
Recommendation
of Future FinTech’s Board of Directors and Reasons for the Sale Transaction
After
careful consideration, the Company’s Board of Directors has determined that the Sale Transaction is fair to and in the best
interests of the Company and its shareholders and unanimously recommends that you vote or give instruction to vote IN FAVOR of
the Sale Transaction.
Reasons
for the Sale Transaction
In
evaluating 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:
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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.
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Following the completion
of the Sale Transaction, Future FinTech will be able to focus on the strategic development of its ecommerce business.
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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.
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The prospective
risks to Future FinTech relating to the risks and uncertainties of maintaining its growth in the highly competitive market
for juice products.
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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.
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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.
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In
the course of reaching the determinations and decisions and making the recommendation described above, Future FinTech’s
Board of Directors, in consultation with Future FinTech’s senior management and outside legal counsel, considered the risks
and potentially negative factors relating to the Sale Transaction, including the following material factors:
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The
possibility that the share price of Future FinTech may decline so that we may not continue
to meet NASDAQ’s continued listing requirements.
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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 employees
to 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.
|
Future
FinTech’s Board of Directors believed that, overall, the potential benefits of the Sale Transaction to Future FinTech’s
shareholders outweighed the risks and uncertainties of the Sale Transaction.
Following
the completion of the Sale Transaction, the main business operations of Future FinTech will be focused on our real-name and membership-based
blockchain shared shopping mall platform.
On
January 22, 2019, the Company formally launched GlobalKey SharedMall, also known as Chain Cloud Mall (CCM) v1.0, the real-name
and membership-based blockchain shared shopping mall platform that integrates blockchain and internet technology and distinguishes
itself by utilizing the automatic value distribution system of blockchain and sharing the value of the platform to all the participants
in the system.
On
June 1, 2019, CCM v2.0 was launched. Compared to the 1.0 version, CCM v2.0 has a wider variety of product categories, easier user
interface, more transparent information, more stable operations, a higher security level, and faster logistics. Currently, CCM
v2.0 adopts a “multi-vendor hosted stores + platform self-hosted stores” model, supported by multiple local warehouses
in 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 the
same functions and services that other Chinese leading traditional e-commerce platforms provide.
CCM’s
blockchain-powered QRO plan enables CCM to record every event or transaction on a distributed ledger and make the whole process
traceable. CCM is adopting an unalterable anti-counterfeit code to be issued by manufacturers, which can ensure the authenticity
of products and directly link manufacturers with their targeted customers as a way of precision marketing.
Based
on blockchain technology, CCM is established to transform the relationship between companies and consumers from traditional selling
and buying relationships to a value-sharing relationship. The platform will fairly distribute the benefit of the entire mall to
users who engage in promotion, development, and consumption based on their contributions to the platform. The members of CCM are
not only consumers and entrepreneurs but also participants, promoters and beneficiaries.
The
CCM shared shopping mall platform is designed to be a block-chain based shopping mall for merchants and goods, not the exchange
of digital currencies, and it currently only accepts payment from credit cards, Alipay and Wechat.
We
offer high-quality products at attractive prices and incentivize our members to promote our platform and share our products with
their social contacts. Our platform has attracted a growing base of users, including members and non-members. These users are
actively purchasing products on our platform. Since our trial operations of our platform began on December 26, 2018, we had approximately
164 and 4,014 users as of December 31, 2018 and June 30, 2019, respectively.
Members
are the key participants on our platform and drivers of our growth. Our members typically pay to gain access to a dedicated app
that provides access to a curated selection of products, exclusive membership benefits, and features, including discounted prices
and point rewards. Members can refer others to become members and are rewarded for doing so. Members can also promote products
on various social platforms and are rewarded if those users purchase our products. We currently generate revenues primarily from
fixed 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 required
to log onto Chain Cloud Mall (CCM) app or web portal in order to download some of their rewards points each day. The member could
download all of his/her rewards points if he/she logs onto the app or web portal for at least 200 days within the membership’s
validity period, which is 365 days. Members must renew their membership before expiration to continue earning points and enjoy
discounts. A non-member user can purchase products from the platform, but does not enjoy the above-mentioned benefits.
Membership
revenue is recognized when a member registers and makes his/her first order on CCM app or web portal.
Membership
benefits 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-Points
can be used as coupons for the member’s future purchases on our app and website.
In
order to promote our membership program, we currently allow our users to join the membership program by purchasing merchandise
of the equivalent value of the membership fee through our CCM app or website, as an alternative to paying the upfront fixed membership
fee.
CCM-Points
can only be used as credit when making purchases on our platform, with one CCM Point representing RMB1.00. CCM-Points cannot be
redeemed for cash. Members may transfer CCM Points to others.
From
December 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 January
1 to June 30, 2019, we received proceeds of RMB 6,587,949, approximately $958,289, from 3,850 members with 3,898 orders. For the
three months ended June 30, 2019, we received RMB 4,493,150, approximately $653,578, in proceeds, from 2,641 members with 2,672
orders.
Interests
of Future FinTech’s Directors and Officers in the Sale Transaction
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, 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 Sale Transaction,
but none of the Company’s directors or executive officers other has entered into any agreement obligating any of them to
do so.
Besides
the equity ownership of Future FinTech detailed above, the directors and executive officers of the Company do not have interests
different than the other shareholders of Future FinTech.
Completion
and Effective Time of the Sale Transaction
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.
Appraisal
Rights
Future
FinTech shareholders do not have appraisal rights in connection with the Sale Transaction under the Florida Business Corporation
Act.
Accounting
Treatment
The
proposed Sale Transaction is expected to be accounted for as assets held for sale. The results of operations of HeDeTang HK will
be treated as discontinued operations.
United
States Federal Income Tax Consequences of the Sale Transaction
The
following discussion is a summary of certain U.S. federal income tax consequences of the Sale Transaction. This discussion is
based on current provisions of the Code, applicable U.S. Department of the Treasury regulations promulgated thereunder, judicial
opinions, and published positions of the Internal Revenue Service, all as in effect as of the date of this document. Such authorities
are subject to change or differing interpretations at any time, possibly with retroactive effect, and any such change or interpretation
could affect the accuracy of the statements in this proxy statement. This discussion does not address any U.S. federal tax considerations
other than those relating to income tax (e.g., estate and gift taxes), nor does it address any state, local, or foreign tax considerations
or any tax reporting requirements.
The
Sale Transaction will not result in any immediate U.S. federal income tax consequences to Future FinTech stockholders.
The
Sale Transaction will generally be taxable to Future FinTech for U.S. federal income tax purposes, and it is expected that Future
FinTech will recognize a net loss for U.S. federal income tax purposes as a result of the Sale Transaction.
THIS
IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE. THE U.S. FEDERAL INCOME TAX TREATMENT OF THESE
TRANSACTIONS IS COMPLEX. ACCORDINGLY, EACH SHAREHOLDER WHO IS A U.S. HOLDER IS STRONGLY URGED TO CONSULT HIS OWN TAX ADVISER WITH
RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME, ESTATE AND OTHER TAX CONSEQUENCES OF THE TRANSACTIONS WITH SPECIFIC
REFERENCE TO SUCH PERSON’S PARTICULAR FACTS AND CIRCUMSTANCES.
Regulatory
Approvals Required for the Sale Transaction
The
Sale Transaction is not subject to any additional federal or state regulatory requirement or approval, except for filings of the
share transfer with the competent authority of Hong Kong and compliance with regulations of the Securities and Exchange Commission.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FUTURE
FINTECH GROUP INC.
The following unaudited pro forma
condensed consolidated balance sheet and statements of operations are based upon the historical and partial actual
operational data of Future FinTech Group Inc. (the “Company”). The unaudited pro forma condensed consolidated
financial statements have been prepared to illustrate the effect after the sale (the “Sale Transaction”) by the
Company and its subsidiaries of HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”) the Company’s juice
manufacturing 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 Share
Transfer Agreement (the “Agreement”), by and between SkyPeople Foods Holdings Limited, a company incorporated in
the 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 the
issued and outstanding shares of HeDeTang HK, a wholly owned subsidiary of SkyPeople Foods, to the Purchaser for a total of
RMB 600,000, or approximately US $85,714 (the “Purchase Price”), which value is primarily derived from HeDeTang
HK’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 consolidated
balance sheet as of December 2020 reflects the pro forma effect as if the sale of HeDeTang HK had been completed by the end of
year 2018. The unaudited pro forma condensed consolidated statements of operations of the Company for the year 2019 and 2020 include
the Company’s actual and projected statements of operations, and statements are adjusted to reflect the pro forma effect
as if the sale of HeDeTang HK were completed.
The actual consolidated financial statements
referred to above for the Company were included in the actual financial information of its first and second quarterly reports
of 2019 and projected financial results from the third quarter of 2019 until the fourth quarter of 2020, all of which are on the
post-Sale Transaction basis. The projected consolidated financial statements excluded assumption of receipt of any amount of cash
from the Purchaser by the company.
The
unaudited pro forma condensed consolidated balance sheet and statements of operations include pro forma adjustments which reflect
transactions 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 adjustments
are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. The unaudited
pro forma condensed consolidated financial information does not reflect the tax consequences in any jurisdictions attributable
to the Sale Transaction, and it does not reflect future events that may occur after the sale, including potential general and
administrative cost savings. The unaudited pro forma condensed consolidated financial information is provided for informational
purposes only and is not necessarily indicative of the Company’s future operating results. The pro forma adjustments are
subject to change and are based upon currently available information.
FUTURE
FINTECH GROUP INC
CONSOLIDATED
BALANCE 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:
2
|
|
|
|
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
|
|
The
accompanying 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
|
FUTURE
FINTECH GROUP INC
CONSOLIDATED
STATEMENTS 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,646,838
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
Diluted
|
|
|
25,646,838
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
|
|
25,713,961
|
|
|
|
|
|
Notes:
1:
|
Exchange
rate in P&L is the average rate for 6 month ended in year 2019; Growth of Revenue is based on the assumption of increase
of sales orders.
|
2:
|
COGS
is based on the profit margin.
|
3:
|
25%
of income or expenses attribute to NCI
|
4:
|
For
reported EBITDA, there would be no new loans and interests incurred
|
5:
|
No
new issuance of shares after 2nd Quarter of 2019
|
FUTURE
FINTECH GROUP INC
NOTES
TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Description
of Sale Transaction and Basis of Presentation
The unaudited pro forma condensed consolidated
balance sheet and statements of operations are based upon the historical and partial actual operational data of the Company, and
reflect the post-sale by the Company of its subsidiary (HeDeTang Holdings (HK) Ltd.), as if the sale transaction had been completed
by the end of year 2018.
Pro
Forma Adjustment
The
following pro forma adjustments were included in the unaudited pro forma condensed consolidated balance sheet and/or the unaudited
pro forma condensed consolidated statement of operations:
Condensed
Consolidated Balance Sheet
(a)
|
The
increase of anticipated receivables is only from the anticipated increased sales. Anticipated receivables from sales proceeds
are not included because of the immaterial amount of effect.
|
(b)
|
To
eliminate the assets held for sale and liabilities held for sale of disposed subsidiaries.
|
(c)
|
The
new business of the online shared shopping mall platform focuses on e-commerce rather than
fixed assets, thus, no increased PPE is projected.
|
(d)
|
Based on new business model, fixed membership fees allocated within the period are the main revenue streams,
therefore, cash and advances from the members are increased greatly.
|
Condensed
Consolidated Statements of Income
(e)
|
To
reflect elimination of historical external revenues and expenses of disposed subsidiaries.
|
DESCRIPTION
OF FUTURE FINTECH SECURITIES
Given
below is a summary of the material features of Future FinTech’s securities. This summary is not a complete discussion of
the certificate of incorporation and bylaws of Future FinTech that create the rights of its shareholders. You are urged to read
carefully the certificate of incorporation and bylaws, which have been filed as exhibits to SEC reports filed by Future FinTech.
Please see “Where You Can Find More Information” for information on how to obtain copies of those instruments.
General
The
following description of common stock and preferred stock, together with the additional information we include in any applicable
amendments hereto, summarizes the current material terms and provisions of our common stock and preferred stock. For the complete
terms of our common stock and preferred stock, please refer to our Articles of Incorporation, as amended, which may be further
amended from time to time, any certificates of designation for our preferred stock, and our amended and restated bylaws, as amended
from time to time. The Florida Business Corporations Act may also affect the terms of these securities.
On March 10, 2016,
the Company filed with the Florida Secretary of State’s office an amendment to its Articles of Incorporation. As a result
of the Articles of Amendment, the Company authorized and approved an 1-for-8 reverse stock split of the Company’s authorized
shares of common stock (“Common Stock”) from 66,666,666 shares to 8,333,333 shares, accompanied by a corresponding
decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). The common
stock continues have a par value of $0.001. No changes were made to the number of authorized preferred shares of the Company,
which remains as 10,000,000. The amendment to the Articles of Incorporation of the Company took effect on March 16, 2016. On March
13, 2018, the Company held a special meeting of shareholders, and the shareholders approved an amendment to the Second Amended
and Restated Articles of Incorporation of the Company, which increased the amount of authorized shares of common stock, par value
$0.001 per share, of the Company from 8,333,333 to 60,000,000. No changes were made to the number of authorized preferred shares
of the Company, which remains as 10,000,000. As of October 10, 2019, there were 32,317,083 shares of our common stock issued and
outstanding and no shares of our preferred stock issued and outstanding.
Common
Stock
Holders
of shares of our Common Stock are entitled to one vote for each share on all matters to be voted on by the shareholders. Except
if a greater plurality is required by the express requirements of law or our amended and restated articles of incorporation, the
affirmative vote of a majority of the shares of voting stock represented at a meeting of shareholders at which there shall be
a quorum present shall be required to authorize all matters to be voted upon by our shareholders. According to our
charter documents, holders of our Common Stock do not have preemptive rights and are not entitled to cumulative voting rights. There
are no conversion or redemption rights or sinking funds provided for our shareholders. Shares of our Common Stock share
ratably in dividends, if any, as may be declared from time to time by the board of directors in its discretion from funds legally
available for distribution as dividends. In the event of our liquidation, dissolution or winding up, the holders of
our Common Stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. All
of the outstanding shares of our Common Stock are fully paid and non-assessable.
Stock
Transfer Agent
Our
transfer agent is Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, NY 10004, phone
number (212) 509-4000.
PROPOSAL
1 – ELECTION OF BOARD OF DIRECTORS
Directors
Based
on the Company’s nominations process, a majority of the independent members of the Board shall recommend to the Board for
nomination by the Board such candidates as said majority of the independent directors, in the exercise of their judgment, have
found to be well qualified and willing and available to serve. A majority of our independent directors of the Board has recommended
and the Board has nominated the persons listed below for election to the Board at the Annual Meeting, to hold office until the
next Annual Meeting and until their respective successors are elected and qualified. It is not contemplated that any of the nominees
will be unable or unwilling to serve as a director, but, if that should occur, the persons designated as proxies will vote in
accordance with their best judgment. In no event will proxies be voted for a greater number of persons than the number of nominees
named in this Proxy Statement.
All
shares represented by valid proxies, and not revoked before they are exercised, will be voted in the manner specified therein.
If a valid proxy is submitted but no vote is specified, the Proxy will be voted FOR the election of each of the five nominees
for election as directors. Please note that your broker will not be permitted to vote on your behalf on the election of directors
unless you provide specific instructions by completing and returning the voting instruction form. For your vote to be counted,
you will need to communicate your voting decisions to your broker or other nominee before the date of the Annual Meeting or obtain
a legal proxy to vote your shares at the meeting. Although all nominees are expected to serve if elected, if any nominee is unable
to serve, then the persons designated as proxies will vote for the remaining nominees and for such replacements, if any, as may
be nominated by our Board, who currently serves the functions of a nominating committee as the Board does not have a standing
nominating committee. Proxies cannot be voted for a greater number of persons than the number of nominees specified herein (five
persons). Cumulative voting is not permitted.
The
affirmative vote of the holders of shares of Common Stock representing a plurality of the votes cast at the Meeting at which a
quorum is present is required for the election of the directors listed below.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL FIVE NOMINEES LISTED BELOW.
The
following sets forth the information regarding our director nominees as of October 9, 2019, including the names of each of the
five nominees for election as a director, such person’s position, age, the year such person became a director of the Company,
and additional biographical data.
Name
of Current Directors
|
|
Age
|
|
Position(s)
|
Yongke
Xue (1)
|
|
51
|
|
Chairman
of Board of Directors
|
Zhi
Yan (2)
|
|
43
|
|
Director
|
Johnson
Lau (3)(4)
|
|
45
|
|
Independent
Director
|
Fuyou
Li (5)(3)
|
|
65
|
|
Independent
Director
|
Yiliang
Li (6)(3)
|
|
55
|
|
Independent
Director
|
(1)
|
On
September 2, 2016, Mr. Yongke Xue resigned from his position as the Chief Executive Officer of the Company and Chairman of
the Board of the Directors of the Company. Mr. Yongke Xue was appointed Chief Executive Officer on December 24, 2014, and
resigned as Chief Executive Officer of the Company on September 2, 2016. On January 5, 2018, Mr. Yongke Xue was reappointed
as the Company’s Chief Executive Officer, effective on January 31, 2018.
|
(2)
|
Zhi
Yan was appointed as Chief Technology Officer on February 9, 2018 and member of the Board of Directors of the Company on October
10, 2018
|
(3)
|
Member
of the audit committee and compensation committee.
|
(4)
|
Johnson
Lau was appointed a member of the Board of Directors of the Company on December 23, 2014.
|
(5)
|
Fuyou
Li was appointed a member of the Board of Directors of the Company on May 8, 2015.
|
(6)
|
Yiliang
Li was appointed a member of the Board of Directors of the Company on May 6, 2018.
|
Yongke
Xue, Director and Chief Executive Officer
Mr.
Yongke Xue has served as our Chief Executive Officer since January 31, 2018. Mr. Xue also served in that position from February
26, 2008 to February 18, 2013, and from December 24, 2014 to September 2, 2016. Mr. Yongke Xue also serves as the Chairman of
the Board. Mr. Yongke Xue has served as the director of SkyPeople (China) since December 2005. Mr. Xue served as the general manager
of Hede from December 2005 to June 2007. Prior to that, he served as the business director of the investment banking division
of Hualong Securities Co., Ltd. from April 2001 to December 2005. He also acted as the vice general manager of Shaanxi Huaye Foods
Co., Ltd. from July 1998 to March 2001. Mr. Xue graduated from Xi’an Jiaotong University with an MBA in 2000. Mr. Xue graduated
with a Bachelor’s degree in Metal Material & Heat Treatment from National University of Defense Technology in July 1989.
The Board believes that Mr. Xue’s vision, leadership and extensive knowledge of the Company is essential to the development
of its strategic vision.
Zhi
Yan, Director
Mr.
Yan has has served as the Company’s CTO since February 2018, and was appointed as a director on October 10, 2018. Since
September 2017, Mr. Yan has also served as the director of Nova Realm Limited, in which the Company has a 5% equity interest.
From August 2013 to July 2016, Mr. Yan served as a partner of Li’an (Beijing) Science and Technology Ltd., and from March
2010 to August 2013, he established and operated Weiwang Science and Technology Ltd. to develop an interactive reading system
that makes long literary pieces easier to read. Mr. Yan has a degree in Aircraft Design and Fluid Mechanics from Beijing University
of Aeronautics and Astronautics. The Board believes that Mr. Yan’s extensive knowledge of business and technology is essential
to the development of the Company.
Johnson
Lau, Director
On
December 23, 2014, the Board appointed Johnson Lau as a member of the Board of Directors of the Company and also the Chairman
of Audit committee and Compensation Committee.
Mr.
Lau is the Chief Financial Officer of Dafy Holdings Limited, a company listed in Hong Kong Stock Exchange Limited (HKEX: 1826.HK)
since August 2018. Mr. Lau is a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants and CPA
Australia. Mr. Lau has over 20 years of experience in the accounting profession. Mr. Lau started his career in Deloitte in Hong
Kong and Beijing from 1997 to 2004. Prior to joining Dafy Holdings Limited in 2018, Mr. Lau worked in various public companies
in the United States and England as Director of Finance and CFO for over ten years. He holds a bachelor degree in commerce from
Monash University, Australia. The Board believes that Mr. Lau’s extensive knowledge and experience in accounting and his
public company experience is important to the Company’s internal controls and financial reporting and its status as a US
traded public company. During the period between 2004 and 2013, Mr. Lau worked in various public companies listed in the United
States, England and Hong Kong as director of finance and chief financial officer. Mr. Lau was the chief financial officer and
was subsequently an executive director of Haike Chemical Group Limited, a company listed on the London Stock Exchange (LSE code:
HAIK), from December 2006 to March 2009. Mr. Lau subsequently resigned as chief financial officer and was redesignated as a non-executive
director of Haike Chemical Group Limited in March 2009. He retired as a non-executive director in January 2010. From April 2009,
Mr. Lau was employed by Auto China International Limited, a company listed on the NASDAQ Capital Market and subsequently quoted
on the OTC Bulletin Board (NASDAQ/OTC code: AUTCF) as chief financial officer. He was redesignated as the director of finance
in July 2009 and subsequently departed in June 2013. From June 2010 to January 2013, Mr. Lau was an independent director of Lizhan
Environmental Corporation (NASDAQ code: LZEN). Mr. Lau was the chief financial officer of SGOCO Group, Ltd. (NASDAQ code: SGOC),
from July 2013 to June 2015. Mr. Lau was the chief financial officer of China Golden Classic Group Limited (HKEX: 8281.HK) from
July 2015 to July 2018. He was an independent non-executive director of Winshine Science Company Limited (HKEX: 209.HK) from October
2017 to April 2019. The Board believes that Mr. Lau’s qualifications and strong experience stated above is sufficient and
helpful to our Company’s future development.
Fuyou
Li, Director
On
May 8, 2015, the Company’s Board of Directors appointed Mr. Fuyou Li as a member of the Company’s Board of Directors.
The Board of Directors also appointed Mr. Li as a member of both the audit and compensation committees of the Board. Mr. Li graduated
from Xi’an Jiaotong University with a doctor’s degree in economics. He has taught international finance as a professor
at Xi’an Jiaotong University since 2000. In determining that Mr. Li should serve on the Company’s Board of Directors,
the Board considered, among other qualifications, his professional background and expertise in international finance.
Yiliang
Li, Director
Mr.
Li was appointed as a member of the Board on May 6, 2018, and has served as the Chairman of Dagong (Beijing) International Fund
Management Co., Ltd. (“Dagong Beijing”) since October 2015. From January 2013 to October 2015, Mr. Li was the head
of the preparation committee for the establishment of Dagong Beijing, which engages in non-security business investment management
and consultation; stock investment management; enterprise management consultation; and asset management. Mr. Li has also served
as the Chairman of the China Consumer Economy Association since December 2017. Mr. Li received his Bachelor Degree of Engineering
from Shandong University of Technology in 1982 and his Master’s Degree of Political Economics in 1995. The Board believes
that Mr. Li’s experience and extensive knowledge is essential to the development of the Company.
CORPORATE
GOVERNANCE
Pursuant
to the Company’s Bylaws and the Florida Business Corporation Act, the Company’s business and affairs are managed under
the direction of the Board. Directors are kept informed on the Company’s business through discussions with management, including
the Chief Executive Officer and other senior officers, by reviewing materials provided to them and by participating in meetings.
Our
Board meets on a regular basis during the year to review significant developments affecting us and to act on matters requiring
Board approval. It also holds special meetings when an important matter requires Board action between scheduled meetings. Members
of senior management regularly attend Board meetings to report on and discuss their respective areas of responsibility. The Board
held twelve regularly scheduled and special meetings during fiscal year 2018. All of the directors attended (in person or by telephone)
all of the Board meetings and any committees of the Board on which they served during the fiscal year. Directors are expected
to use their best efforts to be present at the shareholders annual meeting. All of our directors attended the December 6, 2018
shareholders annual meeting.
Independent
Directors
The
Company’s Common Stock is listed on the NASDAQ Capital Market. NASDAQ requires that a majority of the Company’s directors
be “independent,” as defined by the NASDAQ’s rules. Generally, a director does not qualify as an independent
director if the director (or, in some cases, a member of the director’s immediate family) has, or in the past three years
had, certain relationships or affiliations with the Company, its external or internal auditors, or other companies that do business
with the Company. The Board of Directors has determined that a majority of the Company’s directors are independent directors
under the NASDAQ rules. The Company’s independent directors are: Johnson Lau, Fuyou Li and Yiliang Li.
Our
Board of Directors, which is elected by our shareholders, is our ultimate decision-making body, except with respect to those matters
reserved to our shareholders. The Board selects the officers who are charged with the conduct of our business, and has responsibility
for establishing broad corporate policies and for our overall performance. The Board is not involved in operating details on a
day-to-day basis. The Board is advised of our business through regular reports and analyses and discussions with our principal
executive officer and other officers.
Code
of Ethics and Governance Program
We
have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those
officers responsible for financial reporting. Our code of business conduct and ethics is available on our website at www.ftft.top
and may be found by first clicking on “Investors,” then “Corporate Governance” and then “Governance
Documents.” We intend to disclose any amendments to the code, or any waivers of its requirements, on our website.
Committees
of the Board and Attendance at Meetings
The
Board held twelve regularly scheduled and special meetings during fiscal year 2018. All of the directors attended (in person or
by telephone) all of the Board meetings and any committees of the Board on which they served during the fiscal year. Directors
are expected to use their best efforts to be present at the shareholders annual meeting. All of our directors attended the December
6, 2018 shareholders annual meeting.
Audit
Committee and Report of the Audit Committee
On
April 25, 2008, the Board formed an audit committee. Messrs. Lau, Li and Li currently serve on the audit committee, which is chaired
by Mr. Lau. Each member of the audit committee is “independent” as that term is defined in the rules of the SEC and
within the meaning of such term as defined under the rules of the NASDAQ Capital Market. The Board has determined that each audit
committee member has sufficient knowledge in financial and auditing matters to serve on the audit committee. The audit committee
held four meetings during fiscal year 2018, and all audit committee members attended each of those meetings. Our Board has determined
that Mr. Lau is an “audit committee financial expert,” as defined under the applicable SEC rules. The audit committee
has a written charter, which is available on the Company’s website at http://www.ftft.top.
Management
is responsible for the Company’s internal controls and the financial reporting process. The independent accounting firm
is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with
the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing reports thereon.
The audit committee’s responsibility is to monitor these processes. The audit committee meets with management, the leader
of the internal audit function, and the independent accounting firm to facilitate communication. In addition, the audit committee
appoints the Company’s independent accounting firm and pre-approves all audit and non-audit services to be performed by
the independent accounting firm.
In
this context, the audit committee has discussed with the Company’s independent accounting firm the overall scope and plans
for the independent audit. The audit committee reviewed and discussed the audited financial statements with management. Management
represented to the audit committee that the Company’s consolidated financial statements were prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”). Discussions about the Company’s audited financial statements
included the independent accounting firm’s judgments about the quality, not just the acceptability, of the accounting principles,
the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The audit committee also
discussed with the independent accounting firm the other matters required to be discussed by PCAOB Auditing Standard No. 16 (Communications
with Audit Committees). The Company’s independent accounting firm provided to the audit committee the written disclosures
and the letter required by the PCAOB, and the committee discussed the independent accounting firm’s independence with management
and the independent accounting firm.
Based
on: (i) the audit committee’s discussion with management and the independent accounting firm; (ii) the audit committee’s
review of the representations of management; and (iii) the report of the independent accounting firm to the audit committee, the
audit committee recommended to the Board that the audited consolidated financial statements be included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC.
Compensation
Committee
On
April 25, 2008, the Board formed a compensation committee. Messrs. Lau, Li and Li currently serve on the compensation committee,
which is chaired by Mr. Lau. Each member of the compensation committee is “independent” as that term is defined in
the SEC rules and within the meaning of such term as defined under the rules of the NASDAQ Capital Market, a “nonemployee
director” for purposes of Section 16 of the Exchange Act and an “outside director” for purposes of Section 162(m)
of the Internal Revenue Code of 1986, as amended. No interlocking relationship exists between the Board or the compensation committee
and the Board or compensation committee of any other company, nor has any interlocking relationship existed during the last fiscal
year. The compensation committee held three meetings during fiscal year 2018, and all compensation committee members attended
those meetings. The compensation committee has a written charter, which is available on the Company’s website at http://www.ftft.top/.
Our
Board has delegated to the compensation committee the responsibility, among other things, to determine any and all compensation
payable to our executive officers, including annual salaries, incentive compensation, long-term incentive compensation and any
other compensation, and to administer our equity and incentive compensation plans applicable to our executive officers. Decisions
regarding executive compensation made by the compensation committee are considered final and are not generally subject to Board
review or ratification. Under the terms of its written charter, the compensation committee has the power and authority to delegate
any of its duties and responsibilities to subcommittees as the compensation committee may deem appropriate in its sole discretion.
Historically, the compensation committee has not generally delegated any of its duties and responsibilities to subcommittees,
but rather has taken such actions as a committee, as a whole. Deliberations and decisions by the compensation committee concerning
executive officers are made by the compensation committee, without the presence of the any executive officer of the Company.
Other
Committees
The
Board may on occasion establish other committees, as it deems necessary or required. We do not currently have a standing nominating
committee, or a committee performing similar functions. The full Board currently serves this function. Our directors believe that
it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed
by the Board. The Board will assess all candidates, whether submitted by management or shareholders, and make recommendations
for election or appointment. There have been no material changes to the procedures by which security holders may recommend nominees
to the Board.
Board
Leadership Structure
Our
Board of Directors is currently comprised of five members, including three independent directors who serve as members of our audit
committee and compensation committee. Our Board leadership structure consists of a Chairman of the Board, who is also our CEO.
Specifically, our Board of Directors is led by Mr. Yongke Xue, who has been serving as the Chairman of the Board since January
2018. Also, in his capacity as our Chief Executive Officer, Mr. Yongke Xue is able to draw on his intimate knowledge of the daily
operations of the Company and its relationships with customers and employees. Calling upon this knowledge, Mr. Yongke Xue is able
to utilize the in-depth focus and perspective gained in running the company to effectively and efficiently serve on our Board.
Board
independence and oversight of the senior management of the Company are enabled by the presence of independent directors who have
a wide range of expertise and skills and have oversight over critical functions of the Company, such as the review of business
development, evaluation and compensation of executive management, the nomination of directors. We do not have a lead independent
director. Our independent directors collectively provide additional strength and balance to our Board leadership structure.
Risk
Management
The
Chief Executive Officer and senior management are primarily responsible for identifying and managing the risks facing the Company
under the oversight and supervision of the Board. The Chief Executive Officer reports to the Board of Directors regarding any
risks identified and steps it is taking to manage those risks. In addition, the Audit Committee assists the Board in fulfilling
its oversight responsibilities with respect to risk in the areas of financial reporting and internal controls. The Compensation
Committee assists the Board in fulfilling its oversight responsibilities with respect to risk in the area of compensation policies
and practices. Other general business risks such as economic, regulatory and permitting are monitored by the full Board.
Communications
with Directors
Shareholders
may communicate with the Board or to one or more individual members of the Board by writing Future FinTech Group Inc., 23F, China
Development Bank Tower, No.2, Gaoxin 1st Road, Xi’an, Shaanxi, China, 710075, Attention: Corporate Secretary.
As appropriate, communications received from shareholders are forwarded directly to the Board, or to any individual member or
members, depending on the facts and circumstances outlined in the communication. The Board has authorized the Secretary, in her
discretion, to exclude communications that are patently unrelated to the duties and responsibilities of the Board, such as spam,
junk mail and mass mailings. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be
excluded, with the provision that any communication that is filtered out by the Secretary pursuant to the policy will be made
available to any non-management director upon request. Individual directors are not permitted to communicate with shareholders
or others outside the Company unless they are deemed authorized persons under the Company’s corporate disclosure policy.
Compensation
Committee Interlocks and Insider Participation
None
of the Company’s executive officers has served as a member of a compensation committee, or other committee serving an equivalent
function, of any other entity whose executive officers serve as a director of the Company or member of the Company’s compensation
committee.
Family
Relationships
Mr. Yongke Xue, our chairman of the board
of directors and chief executive officer, is the brother of Mr. Hongke Xue, a former director of the Company, who resigned in
August 2018. There are no other family relationships between any executive officer or director of the Company as of December 31,
2018.
Executive
Officers
The following table sets forth as of October
10, 2019, the names, positions and ages of our current executive officers. Our officers are elected by the Board of Directors
and their terms of office are, except to the extent governed by an employment contract, at the discretion of the Board of Directors.
Name
|
|
Age
|
|
Principal
Occupation
|
Yongke Xue (1)
|
|
51
|
|
Chairman of the Board & Chief Executive Officer
|
Jing Chen (2)
|
|
53
|
|
Chief Financial Officer
|
Zhi Yan (3)
|
|
43
|
|
Director, Chief Technical Officer
|
Kai Xu (4)
|
|
36
|
|
Chief Operating Officer
|
(1)
|
On September 2,
2016, Mr. Yongke Xue resigned from his position as the Chief Executive Officer of the Company and Chairman of the Board of
the Directors of the Company. Mr. Yongke Xue was appointed Chief Executive Officer on December 24, 2014, and resigned as Chief
Executive Officer of the Company on September 2, 2016. On January 5, 2018, Mr. Yongke Xue was reappointed as the Company’s
Chief Executive Officer, effective on January 31, 2018.
|
(2)
|
Jing Chen was appointed
as Chief Financial Officer on May 21, 2019.
|
(3)
|
Zhi Yan was appointed
as Chief Technology Officer on February 9, 2018 and member of the Board of Directors of the Company on October 10, 2018.
|
(4)
|
Kai Xu was appointed
as the Chief Operating Officer of the Company on February 28, 2019.
|
Yongke
Xue, Chairman of the Board & Chief Executive Officer
Mr.
Yongke Xue’s biography is set forth above under the Section entitled “Board of Directors.”
Jing
Chen, Chief Financial Officer
On
May 21, 2019, the Board of the Directors appointed Ms. Jing(Veronica) Chen as the Chief Financial Officer (“CFO”)
of the Company.
Ms.
Chen, age 53, served as the CFO of AnZhiXinCheng (Beijing) Technology Co., Ltd. from August 2018 to May 2019. Ms. Chen has served
as Independent Director of Hello iPayNow (Beijing) Company Ltd. since April 2019. From August 2017 to July 2018, Ms. Chen served
as CFO of Beijing Logis Technology Development Co., Ltd., a company listed on The National Equities Exchange and Quotations Co.,
Ltd. of China which is a Chinese over-the-counter stock trading system. From June 2016 to July 2017, Ms. Chen served as Group
Chief Financial Officer of Beijing AnWuYou Food Co., Ltd. Ms. Chen served as Chief Financial Officer Beijing DKI Investment Management
Co., Ltd. from August 2012 to May 2016. Ms. Chen received a degree of Doctor of Business Administration from Victoria University,
Neuchatel, Switzerland in March 2008 and an MBA degree from City University of Seattle, Washington, U.S. in April, 2000. Ms. Chen
holds Fellow Membership of CPA Australia (FCPA), Fellow Membership of the Association of International Accountants U.K. (FAIA).
Ms. Chen is a Member of the Chartered Institute of Management Accountants (CIMA), a Senior Member of the International Financial
Management (SIFM) accredited by the Ministry of Human Resources and Social Security of PRC and a Certified Internal Control Professional,
as granted by Internal Control Institute (ICI). In connection with her appointment as CFO, the Company entered into an employment
agreement (the “Agreement”) with Ms. Chen on May 21, 2019.
Zhi
Yan, Director and Chief Technical Officer
Mr.
Zhi Yan’s biography is set forth above under the Section entitled “Board of Directors.”
Kai
Xu, Chief Operating Officer
On
February 28, 2019, the board of directors appointed Mr. Kai Xu as the Chief Operating Officer (“COO”) of the Company.
Kai
Xu, age 36, has served as COO of the Company’s wholly owned subsidiary, Chain Future Digital Tech (Beijing) Ltd since July
2018. From February 2015 to April 2018, Mr. Xu served as COO and partner of Beijing Yongle Shengshi Science Ltd. From November
2009 to February 2015, Mr. Xu worked for Beijing Zhongxun Yonglian Science and Technology Ltd. as the director of operations,
responsibile for online game operation and promotion. Mr. Xu received his bachelor degree in Computer Networks from the Party
School of Beijing Civil Affairs Bureau in 2006.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act, requires that directors, certain officers of the Company and more than ten percent shareholders file
reports of ownership and changes in ownership with the Commission as to the Company’s securities beneficially owned by them.
Such persons are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.
Based
solely on its review of copies of such forms received by the Company, or on written representations from certain reporting persons,
the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent
shareholders were complied with during the fiscal year ended December 31, 2018, except for the following: Yongke Xue and Zeyao
Xue did not file Form 4s for the transactions reported by them in that Amendments No. 7 and No. 6 to Schedule 13D filed by them
on June 4, 2018 and April 26, 2018, respectively, Shuiliang Xiao did not file a Form 3 and Form 4 for the transactions reported
by him in that Schedule 13G filed by Mr. Xiao on May 2, 2018, Mengyao Chen did not file a Form 3 and Form 4 for the transactions
reported by her in that Schedule 13G filed by Ms. Chen on May 2, 2018.
Involvement
in Certain Legal Proceedings
None
of our directors or executive officers has, during the past ten years:
|
Ø
|
been
convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other
minor offences);
|
|
Ø
|
had
any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or
within two years prior to that time;
|
|
Ø
|
been
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement
in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities,
or to be associated with persons engaged in any such activity;
|
|
Ø
|
been
found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity
Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated;
|
|
Ø
|
been
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an
alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial
institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement
or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
Ø
|
been
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined
in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons associated with a member.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Review,
Approval or Ratification of Transactions with Related Parties
On
September 30, 2008, our Board of Directors approved a statement of policies and procedures with respect to related party transactions,
which was amended on July 11, 2011. A copy of the amended and restated statement of policies and procedures is available on the
Company’s website at http://www.ftft.top/.
The
statement of policies and procedures with respect to related party transactions, as amended, requires the audit committee to review
the material facts of all interested transactions, as further described below, unless an exception applies, and either approve
or disapprove of our entry into an interested transaction. If the audit committee’s advance approval of an interested transaction
is not feasible, then such interested transaction shall be considered at the audit committee’s next regularly scheduled
meeting and, if the audit committee determines it to be appropriate, then such interested transaction shall be ratified.
In
determining whether to approve or ratify an interested transaction, the audit committee will take into account, among other factors
it deems appropriate, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated
third party under the same or similar circumstances and the extent of the related party’s interest in the transaction, as
described below. Pursuant to the statement of policies and procedures with respect to related party transactions, no director
shall participate in any discussion or approval of an interested transaction for which he or she is a related party, except that
such director shall provide all material information concerning the interested transaction to the audit committee. If an interested
transaction is ongoing, the audit committee may establish guidelines for our management to follow in our ongoing dealings with
the related party. Thereafter, the audit committee, on at least an annual basis, shall review and assess ongoing relationships
with the related party to see that such related party is in compliance with the audit committee’s guidelines and that the
interested transaction remains appropriate.
For
purposes of the statement of policies and procedures with respect to related party transactions:
|
●
|
an
“interested transaction” is a transaction required to be disclosed pursuant
to Item 404 of Regulation S-K promulgated under the Securities and Exchange Act of 1934,
as amended, and
|
|
●
|
a
“related party” has the meaning ascribed to the term “related person”
under Item 404 of Regulation S-K promulgated under the Securities and Exchange Act of
1934, as amended.
|
Notwithstanding
the foregoing, each of the following interested transactions shall be deemed to be pre-approved by the audit committee, even if
the aggregate amount involved exceeds $50,000:
|
●
|
Employment
of executive officers. Any employment of an executive officer if either (i)
the related compensation is required to be reported in our proxy statement under Item
402 of the Commission’s compensation disclosure requirements generally applicable
to “named executive officers” or (ii) the executive officer is not an immediate
family member of another executive officer or director, the related compensation would
be reported in our proxy statement under Item 402 of the Commission’s compensation
disclosure requirements if the executive officer was a “named executive officer”
and our compensation committee approved or recommended that the board of directors approve
such compensation.
|
|
●
|
Director
compensation. Any compensation paid to a director if the compensation is required
to be reported in our proxy statement under Item 402 of the Commission’s compensation
disclosure requirements.
|
|
●
|
Certain
transactions with other companies. Any transaction with another company at which
a related party’s only relationship is as an employee other than an executive officer,
director or beneficial owner of less than 10% of that company’s shares, if the
aggregate amount involved does not exceed 2% of that company’s total annual revenue.
|
|
●
|
Certain
charitable contributions. Any charitable contribution, grant or endowment by
us to a charitable organization, foundation or university at which a related party’s
only relationship is as an employee other than an executive officer or a director, if
the aggregate amount involved does not exceed the lesser of $50,000 or 2% of the charitable
organization’s total annual receipts.
|
|
●
|
Transactions
where all shareholders receive proportional benefits. Any transaction where
the related party’s interest arises solely from the ownership of our Common Stock
and all holders of our Common Stock received the same benefit on a pro rata basis, such
as dividends.
|
|
●
|
Transactions
involving competitive bids. Any transaction involving a related party where
the rates or charges involved are determined by competitive bids.
|
|
●
|
Regulated
transactions. Any transaction with a related party involving the rendering of
services as a common or contract carrier or public utility, at rates or charges fixed
in conformity with law or governmental authority.
|
|
●
|
Certain
banking-related services. Any transaction with a related party involving services
as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture
or similar services.
|
Related
Party Transactions since January 1, 2018
Sales
The
company’s subsidiary sold fruit beverages to a related entity, Shaanxi Fullmart Convenient Chain Supermarket Co., Ltd. (“Fullmart”)
for approximately $8,810 and $62,000 for the year ended December 31, 2018 and 2017, respectively. The sales to this related party
were consistent with pricing and terms offered to third parties. The remained accounts receivable balances were $0 and $308,304
as of December 31, 2018 and 2017, respectively. Fullmart is a company indirectly owned by our Chairman and CEO, Mr. Yongke Xue.
SECURITY
OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS OF FUTURE FINTECH GROUP INC.
The
following table sets forth information concerning beneficial ownership of our Common Stock as of October 10, 2019 by:
|
●
|
each
shareholder or group of affiliated shareholders who owns more than 5% of our Common Stock;
|
|
●
|
each
of our named executive officers;
|
|
●
|
each
of our directors; and
|
|
●
|
all
of our directors and executive officers as a group.
|
The following table lists the number of
shares and percentage of shares beneficially owned based on 32,317,083 shares of our Common Stock outstanding as of October 10,
2019.
Beneficial
ownership is determined in accordance with the SEC rules, and generally includes voting power and/or investment power with respect
to the securities held. Shares of Common Stock subject to options and warrants currently exercisable or exercisable within 60
days of October 10, 2019 or issuable upon conversion of convertible securities which are currently convertible or convertible
within 60 days of October 10, 2019 are deemed outstanding and beneficially owned by the person holding those options, warrants
or convertible securities for purposes of computing the number of shares and percentage of shares beneficially owned by that person,
but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Except as indicated
in the footnotes to this table, and subject to applicable community property laws, the persons or entities named have sole voting
and investment power with respect to all shares of our Common Stock shown as beneficially owned by them.
Unless
otherwise indicated in the footnotes, the principal address of each of the shareholders, named executive officers, and directors
below is c/o Future FinTech Group Inc., 23F, China Development Bank Tower, No. 2 Gaoxin 1st Road, Xi’an, Shaanxi
Province, PRC 710075.
Shares
Beneficially Owned
|
Name
of Beneficial Owner
|
|
Number
|
|
|
Percent
|
|
Directors, Named Executive Officers and
5% Shareholders
|
|
|
|
|
|
|
Yongke Xue (1)
|
|
|
1,671,955
|
|
|
|
5.17
|
%
|
Yiliang Li
|
|
|
—
|
|
|
|
|
|
Zhi Yan
|
|
|
50,000
|
|
|
|
0.15
|
%
|
Hanjun Zheng
|
|
|
—
|
|
|
|
|
|
Fuyou Li
|
|
|
—
|
|
|
|
—
|
|
Johnson Lau
|
|
|
—
|
|
|
|
—
|
|
All current directors and executive officers
as a group (6 persons)
|
|
|
1,721,955
|
|
|
|
5.33
|
%
|
Zeyao Xue (2)
|
|
|
13,084,114
|
|
|
|
40.49
|
%
|
Sincerity Group Enterprises (5)
|
|
|
5,000,000
|
|
|
|
15.47
|
%
|
Mengyao Chen (3)
|
|
|
3,323,225
|
|
|
|
10.28
|
%
|
Shuiliang Xiao (4)
|
|
|
3,409,466
|
|
|
|
10.55
|
%
|
|
|
|
24,816,805
|
|
|
|
76.79
|
%
|
(1)
|
Consists
of (i) 1,488,570 shares owned directly by Golden Dawn International Limited, a British Virgin Islands company, and (ii) 183,385
shares owned directly by China Tianren Organic Food Holding. Each of SP International, Golden Dawn International Limited and
China Tianren Organic Good Holding are indirect subsidiaries of V.X. Fortune Capital Limited, a British Virgin Islands company.
Yongke Xue is the sole director of V.X. Fortune Capital Limited.
|
(2)
|
Mr.
Zeyao Xue, the son of Yongke Xue, holds all of the issued and outstanding capital stock of Fancylight Limited, which is the
indirect owner of those shares held by SP International, Golden Dawn International Limited and China Tianren Organic Food
Holding. As such, Mr. Zeyao Xue shares beneficial ownership of 1,671,955 of his shares with Mr. Yongke Xue.
|
(3)
|
The
shares were issued to Mengyao Chen, pursuant to a Creditor’s Rights Transfer Agreement between Hedetang Foods (China)
Co., Ltd., a wholly owned subsidiary of the Company and Shaanxi Fu Chen Venture Capital Management Co., Ltd., dated November
2, 2017, which was filed with SEC in a Form 8-K dated November 6, 2017.
|
(4)
|
The
shares were issued to Shuiliang Xiao, pursuant to two Creditor’s Rights Transfer Agreements between Hedetang Foods (China)
Co., Ltd., a wholly owned subsidiary of the Company and Shaanxi Chunlv Ecological Agriculture Co., Ltd. and Hedetang Foods
(China) Co., Ltd, dated November 2, 2017, which was filed with SEC in a Form 8-K dated November 6, 2017.
|
(5)
|
The
shares were issued to Lake Chenliu, pursuant to a Share Transfer and Assets Investment Agreement between Digipay Fintech Limited
(“Digipay”), a limited liability company incorporated in the British Virgin Islands and a wholly-owned subsidiary
of the Company, Lake Chenliu, an individual resident of Costa Rica, and InUnion Chain Ltd. (“InUnion”), a British
Virgin Islands company wholly owned by Mr. Chenliu, dated June 22, 2018, which was filed with SEC in a Form 8-K on the same
date.
|
Equity
Compensation Plan
The
following table sets forth information as of December 31, 2018, with respect to our equity compensation plans previously approved
by shareholders and equity compensation plans not previously approved by shareholders.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table sets forth information as of December 31, 2018, with respect to our equity compensation plans previously approved
by stockholders and equity compensation plans not previously approved by stockholders.
|
|
Equity Compensation Plan
Information
|
|
Plan Category
|
|
Number of securities to be
issued upon exercise of outstanding options, warrants and rights
|
|
|
Weighted average exercise
price of outstanding options, warrants and rights
|
|
|
Number of securities remaining
available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity compensation plans approved by stockholders (1)
|
|
|
62,500
|
|
|
$
|
3.57
|
(2)
|
|
|
-
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
$
|
N/A
|
|
|
|
-
|
|
Total
|
|
|
|
|
|
$
|
N/A
|
|
|
|
|
|
(1)
|
Consists
of equity incentive plans, which was approved by the Company’s shareholders at
its annual meetings on August 18, 2011, November 19, 2015 and March 13, 2018. On
February 28, 2017, the Company issued options to purchase 62,500 shares of the Company’s
common stock with an exercise price equal to the fair market value of the Company’s
Common Stock (as defined under the 2011 Stock Incentive Plan in conformity with Regulation
409A of the Internal Revenue Code of 1986, as amended) at the date of grant to three
of the Company’s employees pursuant to the 2011 Stock Incentive Plan, which was
approved by the Company’s shareholders at the annual shareholders meeting on August
18, 2011. These options vested immediately on the grant date with a fair market value
of $223,375 based on the fair value of $3.57 per share, which was determined by using
the Black Scholes option pricing model. The Company recognized stock-based compensation
expense of $223,375 in the first quarter of fiscal year 2017 under the 2011 Stock Incentive
Plan. As of December 31, 2018, there were no shares available for issuance under all
three stock incentive plans.
On
March 29, 2017, the Company issued 250,000 shares of the Company’s unrestricted common stock to six of the Company’s
employees pursuant to our 2015 Omnibus Equity Plan, which was approved by the Company’s shareholders at the annual
shareholders meeting on November 19, 2015. The Company recorded an expense of $250 in the first quarter of fiscal year
2017 under the 2015 Omnibus Equity Plan, reflecting a par value of $0.001 per share of the Company’s common stock. The
Company’s 2015 Omnibus Equity Plan permits the grant of incentive stock options (“ISOs”), nonqualified
stock options (“NQSOs”), stock appreciation rights (“SARs”), restricted stock, unrestricted stock
and restricted stock units (“RSUs”) to its employees of up to 250,000 shares of Common Stock.
On
March 13, 2018, the Company’s shareholders approved the 2017 Omnibus Equity Plan at the annual shareholders meeting,
which permits the grant of incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”),
stock appreciation rights (“SARs”), restricted stock, unrestricted stock and restricted stock units (“RSUs”)
to its employees of up to 1,300,000 shares of Common Stock. On December 21, 2018, the Company granted 1,300,000 shares
of the Company’s unrestricted common stock to seven of the Company’s employees pursuant to our 2017 Omnibus
Equity Plan, which was approved by the Company’s shareholders at the annual shareholders meeting on December 6,
2018. The Company recorded an expense of $13,000 in the fourth quarter of fiscal year 2018 under the 2017 Omnibus Equity
Plan, reflecting a par value of $0.001 per share of the Company’s common stock.
|
|
|
(2)
|
The
exercise price of options granted and stock appreciation rights under the Plan may be no less than the fair market value of
the Company’s Stock on the date of grant.
|
COMPENSATION
Summary
Compensation of Named Executive Officers
Our
executive officers do not receive any compensation for serving as executive officers of the Company. However, except for our former
CEO, the remaining executive officers are compensated by and through SkyPeople (China). Our former CEO, Yongke Xue, has not received
any compensation from us or any of our subsidiaries for his services in the past three years. The following table sets forth information
concerning cash and non-cash compensation paid by the Company or SkyPeople (China) to our named executive officers for 2018.
Name and Principal Position
|
|
Year
Ended
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Non-Equity Incentive Plan
Compensation
($)
|
|
|
Non-Qualified Deferred Compensation
Earnings
($)
|
|
|
All Other Compensation
($)
|
|
|
Total
($)
|
|
Yongke Xue (1)
|
|
|
12/31/2018
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Hanjun Zheng (2)
|
|
|
12/31/2018
|
|
|
$
|
12,863
|
|
|
|
-
|
|
|
|
300,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
12,863
|
|
|
|
|
12/31/2017
|
|
|
$
|
12,863
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
12,863
|
|
(1)
|
On
January 5, 2018, Mr. Yongke Xue was reappointed as the Company’s Chief Executive Officer and Chairman of the Board,
effective on January 31, 2018.
|
(2)
|
Mr.
Hanjun Zheng was appointed by the Board as Interim Chief Financial Officer on November 27, 2015.On December 21, 2018, the
Board of the Company and the Compensation Committee of the Company approved the grant of an unrestricted stock award to Mr.
Hanjun Zheng, the Company’s interim Chief Financial Officer, pursuant to the Company’s 2017 Omnibus Equity Plan.
Under the terms of an Unrestricted Stock Award Agreement dated December 24, 2018, Mr. Zheng received 300,000 shares of the
Company’s Common Stock, all of which were immediately vested.
|
Outstanding
Equity Awards at December 31, 2018
The
following table presents certain information concerning outstanding equity awards held by each of our named executive officers
at December 31, 2018.
|
|
|
Option
Awards
|
|
Name
|
|
|
Number
of securities underlying unexercised options (#) exercisable
|
|
|
|
Number
of securities underlying unexercised options (#) unexercisable
|
|
|
|
Equity
incentive plan awards: number of securities underlying unexercised unearned options (#)
|
|
|
|
Option
exercise price
($)
|
|
|
|
Option
expiration date
|
|
Yongke
Xue
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Hanjun
Zheng
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
On
February 28, 2017, the Company issued options to purchase 62,500 shares of the Company’s common stock with an exercise price
equal to the fair market value of the Company’s Common Stock (as defined under the 2011 Stock Incentive Plan in conformity
with Regulation 409A of the Internal Revenue Code of 1986, as amended) at the date of grant to three of the Company’s employees
pursuant to the 2011 Stock Incentive Plan, which was approved by the Company’s shareholders at the annual shareholders meeting
on August 18, 2011. These options vested immediately on the grant date with a fair market value of $223,375 based on the fair
value of $3.57 per share, which was determined by using the Black Scholes option pricing model. The Company recognized stock-based
compensation expense of $223,375 in the first quarter of fiscal year 2017 under the 2011 Stock Incentive Plan.
The
Company’s 2015 Omnibus Equity Plan permits the grant of incentive stock options (“ISOs”), nonqualified stock
options (“NQSOs”), stock appreciation rights (“SARs”), restricted stock, unrestricted stock and restricted
stock units (“RSUs”) to its employees of up to 250,000 shares of Common Stock.
On
March 13, 2018, the Company’s shareholders approved the 2017 Omnibus Equity Plan at the annual shareholders meeting, which
permits the grant of incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”), stock appreciation
rights (“SARs”), restricted stock, unrestricted stock and restricted stock units (“RSUs”) to its employees
of up to 1,300,000 shares of Common Stock.
On December 21, 2018, the Company granted
1,300,000 shares of the Company’s unrestricted common stock to seven of the Company’s employees pursuant to our 2017
Omnibus Equity Plan, which was approved by the Company’s shareholders at the annual shareholders meeting on December 6,
2018. The Company recorded an expense of $13,000 in the fourth quarter of fiscal year 2018 under the 2017 Omnibus Equity Plan,
reflecting a par value of $0.001 per share of the Company’s common stock.
Compensation
of Directors
The
following table sets forth information concerning cash and non-cash compensation paid by us to our directors during 2018.
Name
|
|
Fees Paid in Cash
($)
|
|
|
Stock
Awards
|
|
|
Option Awards
|
|
|
Non-Equity Incentive Plan
Compensation
($)
|
|
|
Non-Qualified Deferred Compensation
Earnings
($)
|
|
|
All Other Compensation ($)
|
|
|
Total
($)
|
|
Yongke Xue
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Yiliang Li (1)
|
|
$
|
5,722
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
5,722
|
|
Fuyou Li (2)
|
|
$
|
8,850
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
8,850
|
|
Johnson Lau (3)
|
|
$
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
25,000
|
|
Zhi Yan (4)
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
On
May 6, 2018, the Company’s Board of Directors appointed Mr. Yiliang Li as a member of the Board and a member of the
Compensation Committee and the Audit Committee of the Board, effective immediately. Mr. Li is entitled to US$8,850 per annum
as compensation for his services as a director of the Company.
|
(2)
|
On
May 8, 2015, the Company’s Board of Directors appointed Mr. Fuyou Li as a member of the Board of Directors and a member
of both the audit committee and compensation committee. Mr. Li is entitled for US$8,850 per annum as compensation for his
service as director of the Company.
|
(3)
|
On
December 23, 2014, the Board appointed Johnson Lau as a member of the Board of Directors of the Company and also the Chairman
of audit committee and a member of compensation committee. Mr. Lau is entitled for US$25,000 per annum as compensation for
his services as a director of the Company and chair of compensation committee.
|
(4)
|
Mr.
Yanhas served as the Company’s CTO since February 2018, and was appointed as a director on October 10, 2018. Mr. Yan
receives compensation in the amount of RMB300,000 (approximately $ 42,509.78) per year, payable monthly as his service as
our CTO, not as a director.
|
REQUIREMENTS,
INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS,
NOMINATION OF DIRECTORS AND OTHER BUSINESS OF SHAREHOLDERS
To
be considered for inclusion in our proxy solicitation materials for the 2019 Annual Meeting of Shareholders, a shareholder proposal
must be received by our Corporate Secretary at our principal executive offices no later than June 27, 2020, which is 120 calendar
days before the one-year anniversary of the date on which the Company first mailed this Proxy Statement.
The
independent directors will consider candidates for election as a director recommended by any shareholder of the Company who has
held the Company’s Common Stock for at least one year and who holds a minimum of 1% of the Company’s outstanding shares.
The recommending shareholder must submit the following:
|
●
|
a
detailed resume of the recommended candidate;
|
|
●
|
an
explanation of the reasons why the shareholder believes the recommended candidate is
qualified for service on the Company’s Board;
|
|
●
|
such
other information that would be required by the rules of the SEC to be included in a
proxy statement;
|
|
●
|
the
written consent of the recommended candidate;
|
|
●
|
a
description of any arrangements or undertakings between the shareholder and the recommended
candidate regarding the nomination; and
|
|
●
|
proof
of the recommending shareholder’s stock holdings in the Company.
|
Recommendations
from shareholders which are received after the deadline set forth in the Company’s most recent proxy statement, for a shareholder
proposal to be considered for inclusion in the Company’s proxy statement for the next Annual Meeting, likely will not be
considered timely for consideration by the Board for the following year’s Annual Meeting.
PROPOSAL
2 – RATIFICATION OF THE AUDIT COMMITTEE’S SELECTION OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On
September 22, 2016, the Audit Committee of Board of Directors of the Company approved the engagement of Wang Certified Public
Accountant, P.C. (previously known as Jia Roger Qian Wang, CPA) (“Roger Wang CPA”) as the Company’s independent
registered public accounting firm, effectively immediately.
On
January 9, 2019, the Audit Committee of the Company dismissed Wang Certified Public Accountant P.C. (“Roger Wang CPA”)
as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2018, effective immediately.
Roger
Wang CPA’s audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended December
31, 2017 and December 31, 2016 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles.
During
the fiscal years ended December 31, 2018 and December 31, 2017, and in the subsequent interim period through January 8, 2019,
there were (i) no disagreements between the Company and Roger Wang CPA on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Roger Wang CPA,
would have caused Roger Wang CPA to make reference to the subject matter of the disagreement in their reports on the financial
statements for such years, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation
S-K.
On
January 9, 2019, the Audit Committee approved the engagement of Yu Certified Public Accountant P.C. (“Yu”) as the
Company’s independent registered public accounting firm, effective immediately. The Audit Committee also approved Yu to
act as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.
During
the fiscal years ended December 31, 2018 and December 31, 2017 and through January 8, 2019, neither the Company nor anyone on
its behalf consulted Yu regarding (i) the application of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the consolidated financial statements of the Company; or (ii)
any matter that was either the subject of a disagreement or a reportable event as described above; and there was neither a written
report nor was oral advice provided to the Company by Yu that was an important factor considered by the Company in reaching a
decision as to an accounting, auditing or financial reporting issue.
On
March 21, 2019, the Audit Committee dismissed Yu as the Company’s independent registered public accounting firm for the
fiscal year ended December 31, 2018, effective immediately.
The
Company engaged Yu during the period from January 9, 2019 to March 21, 2019 (the “Engagement Period”). During the
Engagement Period, Yu did not issue any reports on the Company’s consolidated financial statements.
During
the Engagement Period, there were: (1) no disagreements between the Company and Yu on matters of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Yu,
would have caused Yu to make reference to the subject matter of the disagreement in its report on the consolidated financial statements,
and (2) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K. Yu issued no audit
reports on the Company’s consolidated financial statements.
On
March 21, 2019, the Audit Committee approved the engagement of Simon & Edward, LLP (“Simon & Edward”) as the
Company’s independent registered public accounting firm, effective immediately. The Audit Committee also approved Simon
& Edward to act as the Company’s independent registered public accounting firm for the fiscal year ending December 31,
2018.
In
deciding to engage Simon & Edward, the Audit Committee of Board of Directors reviewed auditor independence and existing commercial
relationships with Simon & Edward, and concluded that Simon & Edward has no commercial relationship with the Company that
would impair its independence. During the fiscal years ended December 31, 2018, and December 31, 2017, respectively, and in the
subsequent period through March 20, 2019, neither the Company nor anyone acting on its behalf has consulted with Simon & Edward
regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the
type of audit opinion that might be rendered with respect to the Company’s financial statements; or (ii) any matter that
was the subject of a “disagreement” or “reportable event” as those terms are defined in Item 304(a)(1)
of Regulation S-K; and there was neither a written report nor oral advice provided to the Company by Simon & Edward that was
an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue.
On
April 26, 2019, the Audit Committee of the Board of Directors dismissed Simon & Edward, LLP (“Simon & Edward”)
as the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2018.
The Company engaged Simon & Edward
during the period from March 21, 2019 to April 25, 2019 (the “Engagement Period”). During the Engagement Period, Simon
& Edward did not issue any reports on the Company’s consolidated financial statements.
During
the Engagement Period, there were: (1) no disagreements between the Company and Simon & Edward on matters of accounting principles
or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction
of Simon & Edward, would have caused Simon & Edward to make reference to the subject matter of the disagreement in its
report on the consolidated financial statements, and (2) no “reportable events” as that term is defined in Item 304(a)(1)(v)
of Regulation S-K. Simon & Edward issued no audit reports on the Company’s consolidated financial statements.
On
April 26, 2019, the Audit Committee of Board of Directors of the Company approved the engagement of Wang Certified Public Accountant
P.C. (“Roger Wang CPA”) as the Company’s independent registered public accounting firm, effective immediately.
The Audit Committee also approved Wang to act as the Company’s independent registered public accounting firm for the fiscal
year ended December 31, 2018.
In
deciding to engage Roger Wang CPA, the Audit Committee of Board of Directors reviewed auditor independence and existing commercial
relationships with Roger Wang CPA, and concluded that Roger Wang CPA has no commercial relationship with the Company that would
impair its independence. During the fiscal years ended December 31, 2018, and December 31, 2017, respectively, and in the subsequent
period through April 25, 2019, neither the Company nor anyone acting on its behalf has consulted with Roger Wang CPA regarding:
(i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion
that might be rendered with respect to the Company’s financial statements, and neither a written report nor oral advice
provided to the Company by Roger Wang CPA that was an important factor considered by the Company in reaching a decision as to
any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement”
or “reportable event” as those terms are defined in Item 304(a)(1) of Regulation S-K, other than in its capacity as
the Company’s independent registered public accounting firm during the fiscal years ended December 31, 2018, and December
31, 2017 respectively, and in the interim period of January 1, 2019 through January 8, 2019.
The
Company reported its change in auditor in Current Reports on Form 8-K, filed on January 15, 2019, March 25, 2019 and May 1, 2019.
The
Audit Committee, in accordance with its charter and authority delegated to it by the Board, has appointed Roger Wang CPA to serve
as our independent registered public accounting firm for the fiscal year ending December 31, 2019. The Audit Committee considers
Roger Wang CPA to be well qualified. We are asking the shareholders to ratify the selection of Roger Wang CPA as our independent
registered accounting firm. If the shareholders do not ratify the appointment of Roger Wang CPA, the Audit committee will reconsider
the appointment. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent
registered public accounting firm at any time during the year if it determines that such a change would be in the best interests
of the Company and its shareholders. At the time of mailing this Proxy Statement, the Company does not anticipate that any representatives
of Roger Wang CPA will be present, by phone or in person, at the 2019 Annual Meeting, and accordingly, will not be available to
respond to questions at the meeting. Should a representative of Roger Wang CPA be available and desire to make a statement either
in person or by telephone at our 2019 Annual Meeting, they will have the opportunity to do so.
The
affirmative vote of the holders of a majority of the Company’s common stock present in person or represented by proxy at
the Annual Meeting is necessary for ratification of the selection of Roger Wang CPA as our independent registered public accounting
firm.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF
WANG CERTIFIED PUBLIC ACCOUNTANT, P.C., AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES
The
following table shows the fees that we paid or accrued for audit and other services for fiscal years 2018 and 2017. All of the
services described in the following fee table were approved in conformity with the audit committee’s pre-approval process.
|
|
2018
|
|
|
2017
|
|
Audit Fees
|
|
$
|
280,000
|
|
|
$
|
200,000
|
|
Tax Fees
|
|
|
|
|
|
|
6,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
280,000
|
|
|
$
|
206,000
|
|
Audit
Fees
The
amounts set forth opposite “Audit Fees” above reflect the aggregate fees billed or billable by auditor Simon &
Edward, LLP (“Simon & Edward”), Yu Certified Public Accountant, P.C. (“Yu”) and Wang Certified Public
Accountant, P.C. (“Roger Wang CPA”), for the audit of our annual consolidated financial statements, review of quarterly
financial information, and audit services that are normally provided by the principal accountant in connection with regulatory
filings or engagements.
Simon
& Edward provided professional services for the audit of our fiscal year 2018 financial statements and $45,000 was billable
to Simon & Edward for the audit of consolidated financial statements for fiscal year 2018. Yu Certified Public Accountant,
P.C. (“Yu”) provided professional services for the audit of our fiscal year 2018 financial statements and $60,000
was billable to Yu for the audit of consolidated financial statements for fiscal year 2018. Roger Wang CPA provided professional
services for the audit of our fiscal year 2018 financial statements and quarterly review of 2018 and $175,000 was paid to Roger
Wang CPA for audit of our fiscal year 2018 financial statements and quarterly review.
Roger
Wang CPA provided professional services for the audit of our fiscal year 2017 financial statements and $140,000 was billed for
the audit of consolidated financial statements for fiscal 2017, the quarterly review fees of $60,000 were billed for 2017 quarterly
financial reports.
Tax
Fees
The
amounts set forth opposite “Tax Fees” above reflect the aggregate fees billed for fiscal 2017 for professional services
rendered for tax compliance and return preparation. The compliance and return preparation services consisted of the preparation
of original and amended tax returns and support during the income tax audit or inquiries.
The
Board audit committee’s policy is to pre-approve all audit services and all non-audit services that our independent accountants
are permitted to perform for us under applicable federal securities regulations. The audit committee’s policy utilizes an
annual review and general pre-approval of certain categories of specified services that may be provided by the independent accountant,
up to pre-determined fee levels. Any proposed services not qualifying as a pre-approved specified service, and pre-approved services
exceeding the pre-determined fee levels, require further specific pre-approval by the audit committee. The audit committee has
delegated to the Chairman of the audit committee the authority to pre-approve audit and non-audit services proposed to be performed
by the independent accountants. Our audit committee was established in April 2008. Therefore, all the services provided by our
auditors in fiscal years 2017 were pre-approved by the audit committee
PROPOSAL
3 – SALE TRANSACTION OF HEDETANG HOLDINGS
The
Company is asking you to approve the sale of the Company’s subsidiary, HeDeTang Holdings (HK) Ltd. (“HeDeTang HK”),
to New Continent International Co., Ltd.
The
Sale Transaction
SkyPeople
Foods Holdings Limited, a company incorporated in the British Virgin Islands (“SkyPeople Foods”) and a wholly owned
subsidiary of the Company, has entered into a Share Transfer Agreement (the “Share Transfer Agreement”) with New Continent
International Co., Ltd., a company incorporated in the British Virgin Islands (“New Continent”). Pursuant to
the terms of the Share Transfer Agreement, SkyPeople Foods will sell all of the issued and outstanding shares of HeDeTang HK,
a wholly owned subsidiary of SkyPeople Foods, to the Buyer for a total of RMB 600,000, or approximately US$85,714 (the “Purchase
Price”), which value is primarily derived from HeDeTang HK’s wholly-owned subsidiary HeDeJiaChuan Holdings Co., Ltd.
and 73.41% owned subsidiary SkyPeople Juice Group Co., Ltd. (“SkyPeople China”). The Purchase Price was based upon
the preliminary evaluation of HeDeTang HK and its subsidiaries by Shanxi Delixin Assets Evaluation Co., Ltd. (“Shanxi Delixin”)
If the final evaluation amount of HeDeTang HK and its subsidiaries by Shanxi Delixin is lower than or no more than 10% higher
than the Purchase Price, the Parties agree there will be no change to the Purchase Price. If the final evaluation amount of HeDeTang
HK and its subsidiaries by Shanxi Delixin is more than 10% higher than the Purchase Price, the Parties agree the final evaluation
amount shall be the final purchase price. The closing of the above mentioned share transfer is subject to the approval by the
shareholders of both parties and the approval by the shareholders of the Company.
The
Agreement contains customary representations and warranties and pre- and post-closing covenants of each party and customary closing
conditions. Breaches of the representations and warranties will be subject to customary indemnification provisions.
A
full copy of the Share Transfer Agreement is filed with the Company’s form 8-K filed on September 23, 2019.
Required
Vote
Approval
of the sale proposal requires a quorum to be present and an affirmative vote of a majority of our common stock voted at the Annual
Meeting. Adoption of the sale proposal is not conditioned upon the adoption of any of the other proposals.
FUTURE
FINTECH’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT FUTURE FINTECH’S SHAREHOLDERS VOTE “FOR” THE
APPROVAL OF THE SALE TRANSACTION OF HEDETANG.
PROPOSAL
4 – Future FinTech Group Inc. 2019 Omnibus Equity Plan
Background
Our
shareholders are being asked to consider and vote on this proposal to approve the Future FinTech Group Inc. 2019 Omnibus Equity
Plan (the “Equity Plan”). On March 13, 2018, the Company’s shareholders approved the 2017 Omnibus Equity Plan
(the “2017 Plan”) at the annual shareholders meeting, which permits the grant of incentive stock options (“ISOs”),
nonqualified stock options (“NQSOs”), stock appreciation rights (“SARs”), restricted stock, unrestricted
stock and restricted stock units (“RSUs”) to its employees of up to 1,300,000 shares of Common Stock. On December
21, 2018, the Company granted 1,300,000 shares of the Company’s unrestricted common stock to seven of the Company’s
employees pursuant to our 2017 Plan. As of December 31, 2018, there were no shares of stock available for awards under the 2017
Plan. For several years prior to the adoption of the 2017 Plan, Future FinTech maintained two other equity plans: (i) the SkyPeople
Fruit Juice, Inc. Omnibus Equity Plan, effective on November 19, 2015 (the “2015 Plan”) and (ii) the SkyPeople Fruit
Juice, Inc. Stock Incentive Plan, effective on July 11, 2011 (the “2011 Plan” and together with the 2015 Plan and
2017 Plan, the “Prior Plans”). Up to 2,000,000 and 1,000,000 pre-Reverse Stock Split shares of Common Stock may be
issued pursuant to awards granted under the 2015 Plan and 2011 Plan, respectively. As of December 31, 2018, all shares of Common
Stock available for issuance under the Prior Plans have been granted to employees, officers and directors of the Company.
The
Equity Plan’s purpose is to attract and retain high caliber employees, directors, consultants and independent contractors;
motivate participants to achieve long-range goals; provide competitive incentive compensation opportunities, and align the participant’s
interests with the interests of the shareholders by offering the participants compensation that is based on our common stock.
The
description of the Equity Plan below is a summary and is qualified in its entirety by reference to the provisions of the Equity
Plan, which is attached as Annex A to this proxy statement. The Board of Directors of the
Company approved and adopted the Equity Plan on October 9, 2019, subject to shareholders’ approval.
Recommendation
of Board of Directors
The
Board of Directors has approved and unanimously recommends that the shareholders vote “FOR” the proposal to approve
the FUTURE FINTECH GROUP Inc. 2019 Omnibus Equity Plan.
Description
of the Equity Plan
Administration.
The Equity Plan requires that a committee of non-employee independent outside directors administer the Equity Plan. Currently,
our Compensation Committee, which we refer to in this proposal as the Committee, administers the Equity Plan. Among
other powers and duties, the Committee determines the employees who will be eligible to receive awards and establishes the terms
and conditions of all awards. Unless prohibited by applicable law or the applicable rules of a stock exchange, the Committee may
delegate its authority and administrative duties under the Equity Plan.
Shares
Subject to the Equity Plan. The shares issuable under the Equity Plan are shares of our common stock that are authorized
but unissued or reacquired common stock, including shares repurchased by Future FinTech as treasury shares. The total aggregate
shares of common stock authorized for issuance during the term of the Equity Plan is limited to 3,000,000 shares. The Committee
must equitably adjust awards and the number of shares available under the Equity Plan in the event of a recapitalization, stock
split, stock dividend, extraordinary cash dividend, split-up, spin-off, reclassification, combination or other exchange of shares.
Subject to certain limitations, the shares of common stock allocable to the portion of awards granted under the Equity Plan that
have not been delivered because they have been forfeited or cancelled or because they are a cash settlement award, or that have
not been applied to pay the exercise price or taxes, may again be issued pursuant to new awards under the Equity Plan.
Types of Awards
and Eligibility. There are six types of awards that may be made under the Equity Plan including incentive stock options
(“ISOs”), nonqualified stock options (“NQSOs”), stock appreciation rights (“SARs”), restricted
stock, unrestricted stock and restricted stock units (“RSUs”). Each award is subject to an award agreement approved
by the Committee reflecting the terms and conditions of the award. For purposes of awards determined by reference to the fair
market value of a share of our common stock, fair market value means the closing price of a share of our common stock on the relevant
date, or if there are not sales on such date, on the next preceding day on which there are sales. Current and future U.S. and
non-U.S. employees (including officers) and prospective employees as designated by the Committee may receive awards under the
Equity Plan. As of September 30, 2019, approximately 89 individuals (consisting of 2 executive officers, three directors who are
not executive officers, and approximately 84 employees who are not executive officers) are eligible to receive awards under the
Equity Plan. The closing price of Future FinTech common stock on the NASDAQ Capital Market was $0.71 per share as of October 10,
2019.
(1) Stock
Options. ISOs are options to purchase our common stock that receive tax benefits if they meet the requirements under Section
422 of the Tax Reform Act of 1986, as amended (the “Code”), and NQSOs are options to purchase our common stock that
do not meet those requirements.
Option
Grant: Each option award must be evidenced by an award agreement specifying the option exercise price, the term of the option,
the number of shares of our common stock subject to the option, and such other provisions as the Committee determines, and which
are not inconsistent with the terms and provisions of the Equity Plan (which need not be the same for each award or for each recipient).
The award agreement must also specify whether the option is to be treated as an ISO within the meaning of Code Section 422. Options
not designated as ISOs are considered to be NQSOs. The Committee may, with the consent of affected participants, cancel outstanding
options and grant new options to substitute the canceled option. The cancellation and grant need not be simultaneous.
Exercise
of Options: Options granted under the Equity Plan will be exercisable at such times set forth in an award agreement. The exercise
price of each option granted under the Equity Plan will be at least 100% of the fair market value of a share of our common stock
on the date of grant. The exercise price of each ISO granted under the Equity Plan to any individual who owns more than 10% of
the voting power of our stock will be at least 110% of the fair market value of a share of our common stock on the date of grant.
The fair market value of shares to which ISOs are exercisable for the first time by any individual during any one calendar year
is limited to $100,000, and any ISOs that become exercisable in excess of that amount will be deemed NQSOs.
Payment
of Exercise Price: The exercise price is payable in cash; by tendering shares of our common stock owned by the participant;
by withholding shares that would be acquired on exercise; by broker-assisted cashless exercise; or by any other form of legal
consideration acceptable by the Committee (so long as it does not result in deferral of compensation within the meaning of Code
Section 409A). Options are subject to the conditions, restrictions and contingencies specified by the Committee.
Option
Term: The maximum term of any option is ten years from the date of grant and, with respect to ISOs granted to an individual
who owns 10% of the voting power of our stock, the maximum term is five years from the date of grant.
(2) Stock
Appreciation Rights. Each SAR represents the right to receive a payment in an amount equal to the increase in
the fair market value of a share of our common stock on the date the recipient exercises the award over the fair market value
of a share of our common stock at the date the award is granted (the “base price”). The Committee will determine,
in its sole discretion, the number of SARs granted to any individual under the Equity Plan and any terms and conditions pertaining
to the awards.
SARs
Grant: Each award of SARs will be evidenced by an award agreement that will specify the base price, the term of the SAR, and
such other provisions as the Committee determines, and which are not inconsistent with the terms of the Equity Plan (which need
not be the same for each award for each recipient).
Base
Price of SAR: The base price of each SAR granted under the Equity Plan will be at least equal to the fair market value of
a share of our common stock on the date of grant.
Settlement
of SARs: SARs granted under the Equity Plan will be exercisable (“settled”) at such times set forth in an award
agreement. Following exercise of a SAR, a participant is entitled to receive payment in an amount determined by multiplying: (a)
the excess of the fair market value of a share on the date of exercise over the base price per share; by (b) the number of shares
with respect to which the SAR is exercised. Payment to settle SARs may be in cash, shares of common stock, or a combination of
cash and shares, as determined by the Committee. The Committee may provide a maximum dollar limit on the total payment due under
a SAR.
SAR
Term: The maximum term of any SAR is ten years from the date of grant.
(3) Unrestricted
Stock. The Committee may, in its sole discretion, award unrestricted stock to any participant as a stock bonus
or otherwise pursuant to which such participant may receive shares of stock free of restrictions or limitations.
(4) Restricted
Stock and Restricted Stock Units. An award of restricted stock is a grant of shares of our common stock subject
to restrictions specified by the Committee that generally lapse upon vesting. Each award of restricted stock or RSUs will be evidenced
by an award agreement that specifies the period of restriction for restricted stock or the vesting period for RSUs, the number
of shares of restricted stock or RSUs granted, and such other provisions as the Committee shall determine, and which shall not
be inconsistent with the terms and provisions of the Equity Plan (which need not be the same for each award or for each recipient).
Unless otherwise provided in the award agreement, a recipient of a restricted stock or RSU award has no shareholder rights, such
as voting or cash dividend rights, until vesting of the RSU or restricted stock.
Performance-Based
Compensation. Awards granted under the Equity Plan may, in the Committee’s discretion, be designed to qualify as
performance-based compensation under Code Section 162(m). In order for awards to constitute performance-based compensation under
Code Section 162(m), the material terms of performance measures on which the goals are to be based must be disclosed to and subsequently
approved by the shareholders prior to payment of the compensation. Awards intended to qualify for exemption as performance-based
compensation must be granted by a committee of outside directors as defined in Code Section 162(m). Performance goals under the
Equity Plan are based on performance measures, which may include any of the following: (i) earnings before all or any taxes (“EBT”);
(ii) earnings before all or any of interest expense, taxes, depreciation and amortization (“EBITDA”); (iii) earnings
before all or any of interest expense, taxes, depreciation, amortization and rent (“EBITDAR”); (iv) earnings before
all or any of interest expense and taxes (“EBIT”); (v) net earnings; (vi) net income; (vii) operating income or margin;
(viii) earnings per share; (ix) growth; (x) return on shareholders’ equity; (xi) capital expenditures; (xii) expenses and
expense ratio management; (xiii) return on investment; (xiv) improvements in capital structure; (xv) profitability of an identifiable
business unit or product; (xvi) profit margins; (xvii) stock price; (xviii) market share; (xvix) revenues; (xx) costs; (xxi) cash
flow; (xxii) working capital; (xxiii) return on assets; (xxiv) economic value added; (xxv) industry indices; (xxvi) peer group
performance; (xxvii) regulatory ratings; (xxviii) asset quality; (xxix) gross or net profit; (xxx) net sales; (xxxi) total shareholder
return; (xxxii) sales (net or gross) measured by product line, territory, customers or other category; (xxxiii) earnings from
continuing operations; (xxxiv) net worth; and (xxxv) levels of expense, receivables, cost or liability by category, operating
unit or any other measures approved by the Committee. In addition, the performance goals may be calculated without regard to extraordinary
items and may be based in whole or in part upon the performance of Future FinTech and/or one or more of its affiliates, one or
more of its divisions or units or, in such a case, any combination of the foregoing, on a consolidated or nonconsolidated basis,
and may be applied on an absolute basis or be relative to one or more peer group companies or indices, or any combination thereof.
The performance goals must be established in writing by the Committee no more than 90 days after the commencement of the performance
period, of, if less, the number of days that is equal to 25% of the relevant performance period. The Committee must certify attainment
of these goals before any payout of the performance-based compensation.
Limitations
on Awards. The maximum number of shares (including options, SARs, RSUs, unrestricted stock and restricted
stock) that may be awarded under the Equity Plan to any participant in any one calendar year is limited to 1,000,000 shares of
our common stock. In addition, in any one calendar year, a participant may not receive a cash amount payable under the Equity
Plan greater than $1,000,000 for any awards intended to constitute performance-based compensation under Code Section 162(m).
Vesting
and Forfeiture. The Committee determines the time and conditions under which the award will vest or the period
of time after which the restriction shall lapse as part of making an award. Vesting or the lapse of the period of restriction
may, in the Committee’s discretion, be based solely upon continued employment or service for a specified period of time,
or may be based upon the achievement of specific performance goals (individual, corporation or other basis), or both. Vesting
means the time at which an option, SAR or RSU holder may exercise his or her award at the end of the period of restriction that
applies to restricted stock. Vesting or lapse provisions need not be uniform among awards granted at the same time or to persons
similarly-situated. Vesting and lapse requirements will be set forth in the applicable award agreement. The Committee, in its
discretion, may accelerate vesting of any award at any time. Unless otherwise provided by the Committee, when a participant terminates
employment or service with us, all unexercised or unvested awards are forfeited, and if the termination is without cause, all
outstanding vested options and SARs will continue to be exercisable until the earlier of the expiration term or the date that
is three months after such termination date.
Extension
Exercise Period. The Committee, in its discretion, may extend the period of time for which an option
or SAR is to remain exercisable following a termination of service, but in no event beyond the expiration of the option or SAR.
Prohibition
on Repricing. Except as required or permitted pursuant to a corporate transaction (including, without limitation, any
recapitalization or reorganization), in no event will an option or SAR be amended to reduce the exercise or base price or be canceled
in exchange for cash, other awards or options or SARs with an exercise price or base price less than the exercise price of the
original option or base price of the original SAR without shareholder approval.
Limits
on Transfers of Awards/Beneficiary Designation. All awards are exercisable only by the participant during the participant’s
lifetime, and are transferable only by will or by the laws of descent and distribution; provided, however, that the Committee
may permit a transfer of an award, other than an ISO, to a family member of an individual, subject to such restrictions as the
Committee may provide. Participants may designate a beneficiary or beneficiaries to receive their benefits under the Equity Plan
if they die before receiving any or all of such benefit.
Recapitalization.
Upon a recapitalization, the Committee must adjust the number and kind of shares issuable and maximum limits for each type of
award, adjust the number and kind of shares subject to outstanding awards, adjust the exercise or base price of outstanding options
or SARs, and make any other equitable adjustments.
Reorganization.
Upon a reorganization, the Committee may decide that awards will apply to securities of the resulting corporation (with appropriate
adjustment as determined by the Committee), that some or all options and SARs will be immediately exercisable (to the extent permitted
under federal or state securities laws), that some or all options and SARs will be immediately exercisable and terminate after
at least 30 days’ notice to holders (to the extent permitted under federal or state securities laws), and/or that some or
all awards of restricted stock or RSUs will become immediately fully vested.
Amendment
and Termination. Our Board of Directors may amend, suspend or terminate the Equity Plan, without consent of shareholders
or participants, provided, however, that amendments must be submitted to the shareholders for approval if shareholder approval
is required by applicable law, and any amendment or termination that may adversely affect the rights of participants with outstanding
awards requires the consent of such participants. The Committee may amend any award agreement, provided the amendment is not to
re-price or constructively re-price any award.
Term. The
Equity Plan is effective immediately upon the adoption by our Board of Directors, subject to shareholder approval, and will terminate
on the earliest to occur of (i) the 10th anniversary of the Equity Plan’s effective date, or (ii) the date
on which all shares available for issuance under the Equity Plan shall have been issued as fully-vested shares. Options may be
granted at any time on or after the date the Board of Directors adopt the Equity Plan, however, until the shareholders approve
the Equity Plan, no options or SARs may be exercised, no restricted stock may be issued, and no award may be settled in stock.
If shareholder approval is not obtained within 12 months after the adoption by our Board of Directors, all awards will be null
and void.
U.S.
Federal Income Tax Consequences
The
following summary of the U.S. federal income tax consequences of awards under the Equity Plan is based on current U.S. federal
income tax laws and regulations and is designed to provide a general understanding of the consequences as of the date of this
proxy statement. Laws and regulations may change in the future and affect the income tax consequences of your award under the
Equity Plan. In addition, the impact of the laws and regulations may vary based on your individual circumstances. This summary
does not constitute tax advice and does not address taxation of your award under the laws of any municipality, state or foreign
country. You are urged to consult your own tax advisor as to the specific tax impact of any award to you.
Incentive
Stock Options. An employee participant will generally have no tax consequences when he or she receives the grant of an
ISO. In most cases, an employee participant also will not have income tax consequences when he or she exercises an ISO. An employee
participant may have income tax consequences when exercising an ISO if the aggregate fair market value of the shares of the common
stock subject to the ISO that first become exercisable in any one calendar year exceeds $100,000. If this occurs, the excess shares
(the number of shares the fair market value of which exceeds $100,000 in the year first exercisable) will be treated as though
they are NQSOs instead of ISOs. Additionally, subject to certain exceptions for death or disability, if an employee participant
exercises an ISO more than three months after termination of employment, the exercise of the option will be taxed as the exercise
of a NQSO. Any shares recharacterized as NQSOs will have the tax consequences described below with respect to the exercise of
NQSOs.
An
employee participant recognizes income when selling or exchanging the shares acquired from the exercise of an ISO in the amount
of the difference between the fair market value at the time of the sale or exchange and the exercise price the participant paid
for those shares. This income will be taxed at the applicable capital gains rate if the sale or exchange occurs after the expiration
of the requisite holding periods. Generally, the required holding periods expire two years after the date of grant of the ISO
and one year after the date the common stock is acquired by the exercise of the ISO. Further, the amount by which the fair market
value of a share of the common stock at the time of exercise of the ISO exceeds the exercise price will likely be included in
determining a participant’s alternative minimum taxable income and may cause the participant to incur an alternative minimum
tax liability in the year of exercise.
If
an employee participant disposes of the common stock acquired by exercising an ISO before the holding periods expire, the participant
will recognize compensation income. The amount of income will equal the difference between the option exercise price and the lesser
of (i) the fair market value of the shares on the date of exercise and (ii) the price at which the shares are sold. This amount
will be taxed at ordinary income rates and be subject to employment taxes. If the sale price of the shares is greater than the
fair market value on the date of exercise, the participant will recognize the difference as gain and will be taxed at the applicable
capital gains rate. If the sale price of the shares is less than the exercise price, the participant will recognize a capital
loss equal to the excess of the exercise price over the sale price.
Using
shares acquired by exercising an ISO to pay the exercise price of another option (whether or not it is an ISO) will be considered
a disposition of the shares for federal tax purposes. If this disposition occurs before the expiration of the required holding
periods, the employee option-holder will have the same tax consequences as are described above in the preceding paragraph. If
the option holder transfers any of these shares after holding them for the required holding periods or transfers shares acquired
by exercising an NQSO or on the open market, he or she generally will not recognize any income upon exercise. Whether or not the
transferred shares were acquired by exercising an ISO and regardless of how long the option holder has held those shares, the
basis of the new shares received from the exercise will be calculated in two steps. In the first step, a number of new shares
equal to the number of older shares tendered (in payment of the option’s exercise) is considered exchanged under Code Section
1036 and the related rulings; these new shares receive the same holding period and the same basis the option holder had in the
old tendered shares, if any, plus the amount included in income from the deemed sale of the old shares and the amount of cash
or other non-stock consideration paid for the new shares, if any. In the second step, the number of new shares received by the
option holder in excess of the old tendered shares receives a basis of zero, and the option holder’s holding period with
respect to such shares commences upon exercise.
There
will be no tax consequences to Future FinTech when it grants an ISO or, generally, when an employee participant exercises an ISO.
However, to the extent that an option holder recognizes ordinary income when he or she exercises, as described above, Future FinTech
generally will have a tax deduction in the same amount and at the same time.
Nonqualified
Stock Options. A participant generally has no income tax consequences from the grant of NQSOs. Generally, in the tax year
when the participant exercises the NQSO, he or she recognizes ordinary income in the amount by which the fair market value of
the shares at the time of exercise exceeds the exercise price for the shares, and that amount will be subject to employment taxes.
If
a participant exercises a NQSO by paying the exercise price with previously acquired common stock, he or she will have federal
income tax consequences (relative to the new shares received) in two steps. In the first step, a number of new shares equivalent
to the number of older shares tendered (in payment of the NQSO exercised) is considered to have been exchanged in accordance with
Code Section 1036 and related rulings, and no gain or loss is recognized. In the second step, with respect to the number of new
shares acquired in excess of the number of old shares tendered, the participant recognizes income on those new shares equal to
their fair market value less any non-stock consideration tendered. The new shares equal to the number of the old shares tendered
will have the same basis the participant had in the old shares and the holding period with respect to the tendered older shares
will apply to the new shares. The excess new shares received will have a basis equal to the amount of income recognized on exercise,
increased by any non-stock consideration tendered. The holding period begins on the exercise of the option.
The
gain, if any, realized at the later disposition of the common stock will either be short- or long-term capital gain, depending
on the holding period.
There
will be no tax consequences to Future FinTech when granting a NQSO. Future FinTech generally will have a tax deduction in the
same amount and at the same time as the ordinary income recognized by the participant.
Stock
Appreciation Rights. Neither the participant nor Future FinTech has income tax consequences from the issuance of a SAR.
The participant recognizes taxable income at the time the SAR is exercised in an amount equal to the amount by which the cash
and/or the fair market value of the shares of the common stock received upon that exercise exceeds the base price. The income
recognized on exercise of a SAR will be taxable at ordinary income tax rates and be subject to employment taxes. Future FinTech
generally will be entitled to a tax deduction with respect to the exercise of a SAR in the same amount and at the same time as
the ordinary income recognized by the participant.
Restricted
Stock. A holder of restricted stock will not recognize income at the time of the award, unless he or she specifically
makes an election to do so under Code Section 83(b) within thirty days of such award. Unless the holder has made such an election,
he or she will realize ordinary income and be subject to employment taxes in an amount equal to the fair market value of the shares
on the date the restrictions on the shares lapse, reduced by the amount, if any, he or she paid for such stock. Future FinTech
will generally be entitled to a corresponding deduction in the same amount and at the same time as the holder recognizes ordinary
income. Upon the otherwise taxable disposition of the shares awarded after ordinary income has been recognized, the holder will
realize a capital gain or loss (which will be long-term or short-term depending upon how long the shares are held after the restrictions
lapse).
If
the holder made a timely election under Code Section 83(b), he or she will recognize ordinary income for the taxable year in which
an award of restricted stock is received on an amount equal to the fair market value of the shares of restricted stock awarded
for which the election is being made (even if the shares are subject to forfeiture). That income will be taxable at ordinary income
tax rates and be subject to employment taxes. At the time of disposition of the shares, if such an election was made, the holder
will recognize gain in an amount equal to the difference between the sales price and the fair market value of the shares at the
time of the award. Such gain will be taxable at the applicable capital gains rate. Future FinTech will generally be entitled to
a tax deduction in the same amount and at the same time as the ordinary income recognized by the participant.
Restricted
Stock Units. A holder of RSUs generally will not recognize income at the time of the award. Upon delivery
of the shares due upon settlement of an RSU, a holder will realize ordinary income and be subject to employment taxes in an amount
equal to the fair market value of the shares distributed. Future FinTech will generally be entitled to a corresponding tax deduction
in the same amount and at the same time as the holder recognizes income. When the holder later disposes of his or her shares,
the difference between the amount realized on sale and the amount recognized by the holder upon settlement of the RSU will be
a capital gain or loss (which will be long-term or short-term depending upon how long the shares are held).
Unrestricted
Stock. Generally, the participant will, in the year that the unrestricted stock award is granted, recognize compensation
taxable as ordinary income equal to the fair market value of the shares on the date of the award. Future FinTech normally will
receive a corresponding deduction equal to the amount of compensation the recipient is required to recognize as ordinary taxable
income, and must comply with applicable tax withholding requirements.
Limitation
on Company Deductions. No federal income tax deduction is allowed for Future FinTech for any compensation
paid to a “covered employee” in any taxable year of Future FinTech to the extent that his or her compensation exceeds
$1,000,000. For this purpose, “covered employees” are generally the chief executive officer of Future FinTech and
the three other most highly compensated officers of Future FinTech other than the principal financial officer for the taxable
year, and the term “compensation” generally includes amounts includable in gross income as a result of the exercise
of stock options or SARs, payments pursuant to performance shares or units, or the receipt of restricted or unrestricted stock.
This deduction limitation, however, does not apply to compensation that is (1) commission-based compensation, (2) performance-based
compensation, (3) compensation which would not be includable in an employee’s gross income, and (4) compensation payable
under a written binding contract in existence on February 17, 1993, and not materially modified after that date. Awards under
the Equity Plan that are made to participants who are “covered employees” may be designed by the Committee to meet
the requirements of the performance-based compensation exception under Code Section 162(m). The Committee intends to administer
the Equity Plan in a manner that maximizes Future FinTech’s tax deductions under Code Section 162(m). Shareholder approval
of the Equity Plan is necessary for the performance-based compensation to meet the Code Section 162(m) exemption.
Effect
of Code Section 280G. Code Section 280G limits the deductibility of certain payments that are contingent upon a change
of control if the total amount of such payments equals or exceeds three times the individual’s “base amount”
(i.e., generally, annualized five-year W-2 compensation). If payment or settlement of an award is accelerated upon a change
of control, a portion of such payment attributable to the value of the acceleration is considered a payment that is contingent
upon a change of control. In addition, the affected individual must pay an excise tax (in addition to any income tax) equal to
20% of such amount.
Impact
of Code Section 409A. Code Section 409A provides that all amounts deferred under a nonqualified deferred compensation
plan are includible in a service provider’s gross income to the extent such amounts are not subject to a substantial risk
of forfeiture, unless certain requirements are satisfied. If the requirements are not satisfied, in addition to current income
inclusion, interest at the underpayment rate plus 1% will be imposed on the service provider’s underpayments that would
have occurred had the deferred compensation been includible in gross income for the taxable year in which first deferred or, if
later, the first taxable year in which such deferred compensation is not subject to a substantial risk of forfeiture. The amount
required to be included in income is also subject to an additional 20% tax. While most awards under the Plan are anticipated to
be exempt from the requirements of Code Section 409A, awards not exempt from Code Section 409A are intended to comply with Code
Section 409A.
Other
Information
Subject
to the terms and provisions of the Equity Plan, the individuals that receive awards and the terms and conditions of such awards
are determined at the discretion of the Committee. The Committee has not yet made any determination as to which eligible employees
will receive awards under the Equity Plan in the future, or the value of awards to be made to any eligible individual, and therefore,
it is not possible to determine for any persons or groups the benefits or amounts that will be received in the future under the
Equity Plan.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE
PROPOSAL TO APPROVE THE FUTURE FINTECH GROUP INC. 2019 Omnibus Equity Plan.
ADDITIONAL
MEETING INFORMATION
Proxy
Solicitation
The
cost of soliciting proxies for the Annual Meeting will be borne by the Company. In addition, the Company will reimburse brokerage
firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Directors, officers and regular employees of the Company may, for no additional compensation, also solicit
proxies personally or by telephone, electronic transmission, telegram or special letter.
Annual
Report
The
Company’s Annual Report for fiscal year 2018 is being mailed with this Proxy Statement to shareholders entitled to notice
of the Annual Meeting. The Annual Report includes the consolidated financial statements, unaudited selected consolidated financial
data and management’s discussion and analysis of financial condition and results of operations.
Upon
the written request of any shareholder, the Company will provide, without charge, additional copies of this proxy statement and
the Company’s Annual Report on Form 10-K filed with the Commission for the fiscal year ended December 31, 2018, as well
as copies of any Quarterly Report. This request should be directed to the Corporate Secretary, 23F, China Development Bank Tower,
No. 2, Gaoxin 1st RD, Xi’an, Shaanxi, China, 710075.
OTHER
MATTERS
As
of the date of this proxy statement, the board of directors of Future FinTech knows of no matters that will be presented for consideration
at the Annual Meeting other than as described in this proxy statement. If any other matters properly come before the Annual Meeting
or any adjournments or postponements of the meeting and are voted upon, the enclosed proxy will confer discretionary authority
on the individuals named as proxy to vote the shares represented by the proxy as to any other matters. The individuals named as
proxies intend to vote in accordance with their best judgment as to any other matters.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other documents with the SEC under the Exchange Act. You may
read and copy any reports, statements or other information that we file with the Securities and Exchange Commission at the SEC’s
public reference room at the following location: Station Place, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may
also obtain copies of those documents at prescribed rates by writing to the Public Reference Section of the SEC at that address.
Please call the SEC at (800) SEC-0330 for further information on the public reference room. These SEC filings are also available
to the public from commercial document retrieval services and at www.sec.gov. In addition, shareholders may obtain free copies
of certain documents filed with the SEC by Future FinTech through the “SEC Filings” section of our website.
You
may obtain any of the documents we file with the SEC, without charge, by requesting them in writing or by telephone from us at
the following address:
Future
FinTech Group Inc.
Attn:
Corporate Secretary
23F,
China Development Bank Tower, No.2, Gaoxin 1st Road
Xi’an,
Shaanxi, China, 710075
86-29-81878827
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By
Order of the Board of Directors
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/s/
Yongke Xue
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Yongke
Xue
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Chief
Executive Officer
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October
[●], 2019
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Annex
A
Future
Fintech grOup inc.
2019
Omnibus Equity Plan
ARTICLE
1
GENERAL
PROVISIONS
1.1.
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PURPOSE
OF THE PLAN.
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The
Future FinTech Group Inc. 2019 Omnibus Equity Plan has been established by Future FinTech Group Inc. to (a) attract and retain
high caliber employees, directors, consultants and independent contractors; (b) motivate Participants, by means of appropriate
incentives, to achieve long-range goals; (c) provide incentive compensation opportunities that are competitive with those of other
similarly-situated companies; and (d) further align Participants’ interests with those of the Corporation’s stockholders
through compensation that is based on the Corporation’s common stock; and thereby promote the long-term financial interest
of the Corporation, including the growth in value of the Corporation’s equity and enhancement of long-term stockholder return.
Capitalized
terms shall have the meanings assigned to such terms in Section 9 of the Plan.
1.2.
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TYPES
OF AWARDS AVAILABLE UNDER THE PLAN.
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The
Plan provides for five types of Awards:
Options
- the Option Grant Program under which Eligible Persons may be granted Incentive Stock Options or Non-Statutory Stock
Options to purchase Shares is set forth in Article 2;
Stock
Appreciation Rights - the Stock Appreciation Rights Program under which Eligible Persons may be granted a right to
receive the appreciation in the Fair Market Value of Shares in the form of cash or Stock is set forth in Article 3;
Restricted
Stock - the Restricted Stock Program under which Eligible Persons may be issued Shares, subject to certain conditions
and restrictions, is set forth in Article 4; and
Unrestricted
Stock: the Unrestricted Stock Program under which Eligible Persons may be issued Shares, is set forth in Article 5;
and
Restricted
Stock Units - the Restricted Stock Unit Program under which Eligible Persons may be granted a right to receive Stock
upon the satisfaction of certain conditions and restrictions is set forth in Article 6.
The
provisions of Articles 1, 7 (to the extent applicable), 8 and 9 apply to each type of Award made under the Plan and govern the
interests of all persons under the Plan.
1.3.
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ADMINISTRATION
OF THE PLAN.
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(a)
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General
Administration. The Plan shall be administered and interpreted by the Committee (as designated pursuant to Paragraph (b)).
Subject to the express provisions of the Plan, the Committee shall have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the Award Agreements by which
Awards shall be evidenced (which shall not be inconsistent with the terms of the Plan), and to make all other determinations
necessary or advisable for the administration of the Plan, all of which determinations shall be final, binding and conclusive.
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(b)
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Appointment
of Committee. The Board shall appoint the Committee from among its nonemployee members to serve at the pleasure of the
Board. The Board from time to time may remove members from, or add members to, the Committee and shall fill all vacancies
thereon. The Committee at all times shall be composed of two or more nonemployee directors who shall meet all of the following
requirements:
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(i)
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Disinterested
Administration for Rule 16b-3 Exemption. During the period any director is serving on the Committee, he shall (A) not
be an officer of the Corporation or a parent or subsidiary of the Corporation, or otherwise currently employed by the Corporation
or a parent or subsidiary of the Corporation; (B) not receive compensation, either directly or indirectly, from the Corporation
or a parent or subsidiary of the Corporation for services rendered as a consultant or in any capacity other than as a director,
except for an amount that does not exceed the dollar amount for which disclosure would be required pursuant to Rule 404(a)
of the Securities Exchange Act of 1934; (C) not possess an interest in any other transaction for which disclosure would be
required pursuant to Rule 404(a) of the Securities Exchange Act of 1934; and (D) not be engaged in a business relationship
for which disclosure would be required pursuant to Rule 404(b) of the Securities Exchange Act of 1934. The requirements of
this subsection are intended to comply with Rule 16b-3 under Section 16 of the Securities Exchange Act of 1934, and shall
be interpreted and construed in a manner which assures compliance with said Rule 16b-3. To the extent said Rule 16b-3 is modified
to reduce or increase the restrictions on who may serve on the Committee, the Plan shall be deemed modified in a similar manner;
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(ii)
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Outside
Director Rule for Compliance with Code Section 162(m). No director serving on the Committee may be a current employee
of the Corporation or a former employee of the Corporation (or any corporation affiliated with the Corporation under Code
§1504) receiving compensation for prior services (other than benefits under a tax-qualified retirement plan) during each
taxable year during which the director serves on the Committee. Furthermore, no director serving on the Committee shall be
or have ever been an officer of the Corporation (or any Code §1504 affiliated corporation), or shall receive remuneration
(directly or indirectly) from such a corporation in any capacity other than as a director. The requirements of this subsection
are intended to comply with the “outside director” requirements of Treasury Regulation §1.162-27(e)(3), and
shall be interpreted and construed in a manner which assures compliance with the “outside” director requirement
of Code §162(m)(4)(C)(i). To the extent Code §162(m) or the regulations issued thereunder are modified to reduce
or increase the restrictions on who may serve on the Committee, the Plan shall be deemed modified in a similar manner; and
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(iii)
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Independent
Director Rule for Stock Exchange. During the period any director is serving on the Committee, he shall satisfy all requirements
to qualify as an independent director for purposes of the rules of the exchange on which the Stock is traded.
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(c)
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Organization.
The Committee may select one of its members as its chairman and shall hold its meetings at such times and at such places as
it shall deem advisable. A majority of the Committee shall constitute a quorum. Actions may be taken by a majority of the
Committee at a meeting or by unanimous written consent of all Committee members in lieu of a meeting. The Committee shall
keep minutes of its proceedings and shall report the same to the Board at the meeting next succeeding.
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(d)
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Powers
of Committee. The Committee may make one or more Awards under the Plan to a Participant. The Committee shall decide which
Eligible Persons shall receive an Award and when to grant an Award, the type of Award that it shall grant and the number of
Shares covered by the Award. The Committee shall also decide the terms, conditions, performance criteria, restrictions and
other provisions of the Award. The Committee may grant a single Award or an Award in combination with another Award(s) to
a Participant. The Committee may grant an Award as an alternate to or replacement of an existing Award under the Plan or award
under any other compensation plan or arrangement of the Corporation or a Related Corporation, including a plan of any entity
acquired by the Corporation or a Related Corporation, upon the cancellation of the existing award; provided, that such
grant of an alternate or replacement Award may be made only if the alternate or replacement Award does not constitute a repricing
of the existing award (as limited by Section 1.5(c) of the Plan). In making Award decisions, the Committee may take into account
the nature of services rendered by the individual, the individual’s present and potential contribution to the Corporation’s
success and such other factors as the Committee, in its sole discretion, deems relevant.
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In
accordance with Article 7 of the Plan, the Committee shall decide whether and to what extent Awards under the Plan shall be
structured to conform with Code §162(m) requirements for the Performance-Based Exception. The Committee may take any
action, establish any procedures and impose any restrictions that it finds necessary or appropriate to conform to Code §162(m).
If every member of the Committee does not meet the definition of “outside director” as defined in Code §162(m),
the Committee shall form a subcommittee of those members who do meet that definition, and that subcommittee shall have all
authority and discretion to act as the Committee to make Awards that conform with Code §162(m).
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The
Committee shall interpret the Plan, establish and rescind any rules and regulations relating to the Plan, decide the terms
and provisions of any Award Agreements made under the Plan, and determine how to administer the Plan. The Committee also shall
decide administrative methods for the exercise of Stock Options. Each Committee decision shall be final, conclusive and binding
on all parties.
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(e)
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Delegation
by Committee. Unless prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate
all or some of its responsibilities and powers to any one or more of its members. The Committee also may delegate some or
all of it administrative duties and powers to any Employee, including officers.
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(f)
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Information
to be Furnished to Committee. The records of the Corporation and Related Corporations as to an Eligible Person’s
or Participant’s employment, termination of employment, performance of Services, termination of Services, leave of absence,
reemployment and compensation shall be conclusive on all persons unless determined to be manifestly incorrect. Participants
and other persons entitled to benefits under the Plan must, as a condition to the receipt or settlement of any Award hereunder,
furnish the Committee with such evidence, data or information as the Committee reasonably considers desirable to carry out
the terms of the Plan.
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(g)
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Indemnification.
In addition to such other rights of indemnification that they have as members of the Board or the Committee, the Corporation
shall indemnify the members of the Committee (and any designees of the Committee, as permitted under Paragraph (e)), to the
extent permitted by applicable law, against reasonable expenses (including, without limitation, attorney’s fees) actually
and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal,
to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the
Plan or any Award awarded hereunder, and against all amounts paid by them in settlement thereof (provided such settlement
is approved to the extent required by and in the manner provided by the articles of incorporation or the bylaws of the Corporation
relating to indemnification of the members of the Board) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to such matters as to which it is adjudged in such action, suit or proceeding that
such Committee member or members (or their designees) did not act in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the Corporation.
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The
persons eligible to participate in this Plan (“Eligible Persons”) are as follows:
(a)
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Employees.
Employees (including Employees who are members of the Board and Employees who reside in countries other than the United
States), provided that awards of Incentive Stock Options shall only be made to Employees.
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(b)
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Outside
Directors. Non-Employee members of the Board or the board of directors of any Related Corporation.
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(c)
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Consultants.
Other consultants and independent advisors who provide bona-fide services to the Corporation (or any Related Corporation).
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(d)
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New
Hires. Persons who have been offered employment by the Corporation or a Related Corporation, provided that such
a prospective Employee may not be granted an Incentive Stock Option until he or she becomes an Employee and may not receive
any payment or exercise any right relating to an Award until such person begins employment with the Corporation or the Related
Corporation.
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1.5
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STOCK
SUBJECT TO THE PLAN.
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(a)
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Shares
Available for Issuance.
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(i)
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Reserve.
The Stock issuable under the Plan shall be Shares of authorized but unissued or reacquired Stock, including Shares repurchased
by the Corporation as treasury shares. The maximum number of Shares available for issuance under the Plan shall be 3,000,000
Shares.
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(ii)
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Share
Use. Any Shares granted under the Plan that are forfeited because of the failure to meet an Award contingency or condition
shall again be available for issuance pursuant to new Awards granted under the Plan. To the extent any Shares covered by an
Award are not delivered to a Participant or beneficiary because the Award is forfeited or canceled, or the Shares are not
delivered because the Award is settled in cash, such Shares shall not be deemed to have been delivered for purposes of determining
the maximum number of Shares available for delivery under the Plan. However, should the Exercise Price of an Option under
the Plan be paid with Shares or should Shares otherwise issuable under the Plan be withheld by the Corporation in satisfaction
of the withholding taxes incurred in connection with the exercise or vesting of an Award under the Plan, then such number
of Shares shall be treated for purposes of this Paragraph as having been issued to the holder. Notwithstanding the above,
the total number of Shares underlying a SAR granted under the Plan that is settled in Stock shall not be available for subsequent
issuance under the Plan regardless of the number of Shares used to settle the SAR.
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(iii)
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Individual
Participant Limitations. The maximum aggregate cash amount payable under the Plan for any Awards intended to constitute
performance-based compensation under Code §162(m) to any Participant in any single calendar year shall not exceed $1,000,000.
Subject to adjustment as provided in Paragraph (b) below, the maximum aggregate number of Shares (including Options, SARs,
Restricted Stock, and RSUs) that may be granted to any Participant in any calendar year shall be 1,000,000 Shares.
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(b)
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Adjustment
to Shares and Awards.
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(i)
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Recapitalization.
If the Corporation is involved in a corporate transaction or any other event which affects the Shares (including, without
limitation, any recapitalization, reclassification, reverse or forward stock split, stock dividend, extraordinary cash dividend,
split-up, spin-off, combination or exchange of shares), then the Committee shall adjust Awards to preserve the benefits or
potential benefits of the Awards as follows:
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(1)
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The
Committee shall take action to adjust the number and kind of Shares that are issuable under the Plan and the maximum limits
for each type of grant;
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(2)
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The
Committee shall take action to adjust the number and kind of Shares subject to outstanding Awards;
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(3)
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The
Committee shall take action to adjust the Exercise Price or base price of outstanding Options and Stock Appreciation Rights;
and
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(4)
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The
Committee shall make any other equitable adjustments.
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Only
whole Shares shall be issued in making the above adjustments. Further, the number of Shares available under the Plan or the number
of Shares subject to any outstanding Awards shall be the next lower number of Shares, so that fractions are rounded downward.
Any adjustment to or assumption of ISOs under this Section shall be made in accordance with Code §424. If the Corporation
issues any rights to subscribe for additional Shares pro rata to holders of outstanding Shares of the class or classes of stock
then set aside for the Plan, then each Participant shall be entitled to the same rights on the same basis as holders of outstanding
Shares with respect to such portion of the Participant’s Award as is exercised on or prior to the record date for determining
stockholders entitled to receive or exercise such rights.
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(ii)
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Reorganization.
If the Corporation is part of any reorganization involving merger, consolidation, acquisition of the Common Stock or acquisition
of the assets of the Corporation, the Committee, in its discretion, may decide that:
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(1)
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any
or all outstanding Awards shall pertain to and apply, with appropriate adjustment as determined by the Committee, to the securities
of the resulting corporation to which a holder of the number of Shares subject to each such Award would have been entitled;
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(2)
|
any
or all outstanding Options or SARs shall become immediately fully exercisable (to the extent permitted under federal or state
securities laws) and shall remain exercisable for the remaining term of the Options or SARs under the terms of the Plan;
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(3)
|
any
or all Options or SARs shall become immediately fully exercisable (to the extent permitted under federal or state securities
laws) and shall be terminated after giving at least 30 days’ notice to the Participants to whom such Options or SARs
have been granted; and/or
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(4)
|
any
or all unvested Restricted Stock Units AND Restricted Stock on which restrictions have not yet lapsed shall become immediately
fully vested, nonforfeitable and payable.
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(iii)
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Limits
on Adjustments. Any issuance by the Corporation of stock of any class other than the Stock, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number
or price of Shares subject to any Award, except as specifically provided otherwise in this Plan. The grant of Awards under
the Plan shall not affect in any way the right or authority of the Corporation to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge, consolidate or dissolve, or to liquidate, sell or transfer all
or any part of its business or assets. All adjustments the Committee makes under this Plan shall be conclusive.
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(c)
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No
Repricings. Except in connection with a corporate transaction involving the Corporation (including, without limitation,
any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, or exchange of Shares), the terms of outstanding Awards may not be amended to reduce the Exercise Price
of outstanding Options or the base price of SARs or to cancel outstanding Options or SARS in exchange for cash, other awards
or Options or SARs with an Exercise Price or base price that is less than the Exercise Price of the original Options or base
price of the original SARs without stockholder approval.
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ARTICLE
2
OPTION
GRANT PROGRAM
The
grant of an Option entitles the Participant to purchase the number of Shares designated in the Award Agreement for such Option
at an Exercise Price established by the Committee. Options may be either Incentive Stock Options or Non-Statutory Stock Options,
as determined in the discretion of the Committee. Each Option shall be evidenced by and conditional on an Award Agreement in the
form approved by the Committee, which Award Agreement shall specify whether the Option is an ISO or NSO. No ISO may be granted
to any person more than ten (10) years after the Effective Date of the Plan. Award Agreements need not be identical, but shall
include (through incorporation of provisions hereof, by reference in the Award Agreements, or otherwise) the terms specified below
and be subject to the provisions of the Plan applicable to such Options.
To
the extent that the aggregate Fair Market Value of the Shares (determined as of the respective date or dates of grant), subject
to ISOs granted to any Participant under the Plan and any other option plan of the Corporation or any Related Corporation that
first become exercisable in any calendar year, including any ISOs which become exercisable on an accelerated basis during such
year, exceeds the sum of One Hundred Thousand Dollars ($100,000), such excess Options shall be treated as NSOs.
Each
Option shall vest and become exercisable at such time or times, during such period, and for such number of Shares as shall be
determined by the Committee and set forth in the Award Agreement evidencing the Option; provided that no Option may be
exercisable after the expiration of ten (10) years (or, in the case of an ISO granted to a 10% Stockholder, five (5) years) from
the date of grant. Vesting may be conditioned on the continued performance of Services or the achievement of performance conditions
measured on an individual, corporate or other basis, or any combination thereof.
The
Exercise Price shall be fixed by the Committee, provided that the Exercise Price for any Option shall never be less than one hundred
percent (100%) (or, in the case of a 10% Stockholder receiving an ISO, 110%) of the Fair Market Value per share of Stock on the
Option grant date.
The
Participant may exercise the Option by delivering a written notice of exercise to the Corporation, in the form and manner designated
by the Committee. The notice shall be effective only if accompanied by payment of the Exercise Price in full. The Committee shall
have the discretion to provide that the Exercise Price may be payable, to the extent permitted by applicable law, in one or more
of the forms specified below:
(a)
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Cash/Check.
Cash or check made payable to the Corporation;
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(b)
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Shares
Owned. By delivery to the Corporation of Shares owned by the Participant (by either actual delivery of Shares or by attestation,
with such Shares valued at Fair Market Value as of the day of exercise) with such documentation as the Committee may require
or in such other manner as the Committee may require;
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(c)
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Share
Withholding. By withholding Shares that would otherwise be acquired on exercise having an aggregate Fair Market Value
at the time of exercise equal to the Exercise Price;
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(d)
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Cashless
Exercise. By cashless exercise through delivery of irrevocable instructions to a broker to promptly deliver to the Corporation
the amount of proceeds from a sale of Shares having a Fair Market Value equal to the Exercise Price; and/or
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(e)
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Other
Forms. In any other form of legal consideration that may be acceptable to the Committee, so long as it does not result
in the deferral of recognition of income or a “deferral of compensation” within the meaning of Code §409A.
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The
Corporation shall deliver Shares as soon as practicable after the Corporation’s receipt of the Participant’s properly
completed notice of exercise and payment in full of the Exercise Price as described in Section 2.4. Such Shares shall be subject
to such conditions as the Committee may establish, except that such conditions may not cause the deferral of recognition of income.
2.6
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CANCELLATION
AND REGRANT OF OPTIONS.
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The
Committee shall have the authority to effect, at any time and from time to time, with the consent of the affected Participant,
the cancellation of any or all outstanding Options under the Option Grant Program and to grant in substitution new Options covering
the same or different number of Shares which might have an Exercise Price per Share no less than the Fair Market Value per Share
on the new grant date. The cancellation and grant need not be simultaneous.
ARTICLE
3
STOCK
APPRECIATION RIGHTS PROGRAM
A
Stock Appreciation Right (“SAR”) entitles the Participant to receive, with respect to each Share subject to the SAR,
the appreciation in the Fair Market Value over a base price established by the Committee (as determined below), payable in cash
or Stock, or a combination of both, as determined by the Committee at the time of payment. Each SAR shall be evidenced by an Award
Agreement in the form approved by the Committee. Award Agreements evidencing SARs need not be identical, but shall include (through
incorporation of provisions hereof, by reference in the Award Agreements, or otherwise) the terms specified below and be subject
to the provisions of the Plan applicable to such SARs.
The
SAR shall cover a specified number of Shares and shall vest and become exercisable upon such terms and conditions as the Committee
shall establish; provided that no SAR may be exercisable more than ten (10) years after the date of grant unless otherwise
determined by the Committee and set forth in the Award Agreement. Vesting may be conditioned on the continued performance
of Services or the achievement of performance conditions measured on an individual, corporate or other basis, or any combination
thereof.
The
base price in effect for Shares covered by a SAR shall be determined by the Committee at the time of grant. In no event, however,
may the base price per Share be less than the Fair Market Value per Share on the grant date. The Participant will receive upon
exercise of the SAR an amount equal to the excess of the Fair Market Value of a Share on the surrender date over the base price
of a Share (the “Spread”) multiplied by the number of Shares covered by the SAR Award. Notwithstanding the foregoing,
the Committee, in its sole discretion, may provide at the time it grants a SAR that the Spread covered by such SAR may not exceed
a specified amount.
The
Participant may exercise the SAR by delivering a written notice of exercise to the Corporation, in the form and manner designated
by the Committee.
To
the extent the Committee determines that the Participant will receive cash upon exercise of a SAR, the Corporation shall deliver
the cash amount which becomes due upon exercise of a SAR as soon as administratively practicable after the Corporation’s
receipt of the Participant’s properly completed notice of exercise. To the extent the Committee determines that Shares will
be delivered to the Participant upon exercise of a SAR, the Shares shall be subject to such conditions, restrictions and contingencies
as the Committee may establish, except that such conditions may not cause the deferral of recognition of income.
ARTICLE
4
RESTRICTED
STOCK PROGRAM
A
Restricted Stock Award is a grant of Shares subject to conditions and restrictions as determined by the Committee. Each Restricted
Stock Award shall be evidenced by an Award Agreement in the form approved by the Committee. Award Agreements evidencing Restricted
Stock Awards need not be identical, but shall include (through incorporation of provisions hereof, by reference in the Award Agreements,
or otherwise) the terms specified below and be subject to the provisions of the Plan applicable to such Restricted Stock Awards.
4.2
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LAPSE
OF RESTRICTIONS.
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Each
Restricted Stock Award shall be, for the applicable Period of Restriction determined by the Committee, subject to such conditions,
restrictions and contingencies as the Committee shall determine. Lapse of restrictions may be conditioned on the continued performance
of Services or the achievement of performance conditions measured on an individual, corporate or other basis, or any combination
thereof.
4.4
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SHARE
ESCROW/LEGENDS.
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(a)
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Legend.
Unless the certificate representing shares of the Restricted Stock are deposited with a custodian (as described in subparagraph
(b) below), each certificate shall bear the following legend (in addition to any other legend required by law):
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“The
transferability of this certificate and the shares represented hereby are subject to the restrictions, terms and conditions (including
forfeiture and restrictions against transfer) contained in the Future FinTech Group Inc. 2019 Omnibus Equity Plan and a Restricted
Stock Agreement dated __________, ____, between ________________ and Future FinTech Group Inc. The Plan and the Restricted Stock
Agreement are on file in the office of the Corporate Secretary of Future FinTech Group Inc.”
Such
legend shall be removed or canceled from any certificate evidencing shares of Restricted Stock as of the date that such Shares
become nonforfeitable.
(b)
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Deposit
with Custodian. As an alternative to delivering a stock certificate to the Participant, the Committee may deposit or transfer
such Shares electronically to a custodian designated by the Committee. The Committee shall cause the custodian to issue a
receipt for the Shares to the Participant for any Restricted Stock so deposited. The custodian shall hold the Shares and deliver
the same to the Participant in whose name the Restricted Stock evidenced thereby are registered only after such Shares become
nonforfeitable.
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ARTICLE
5
UNRESTRICTED
STOCK PROGRAM
The
Committee may, in its sole discretion, award Unrestricted Stock to any Participant as a stock bonus or otherwise pursuant to which
such Participant may receive shares of Stock free of restrictions or limitations that would otherwise be applied under Section
4 of this Plan.
ARTICLE
6
RESTRICTED
STOCK UNIT (RSU) PROGRAM
A
Restricted Stock Unit Award entitles the Participant to receive Shares upon the vesting of the Award. Each Restricted Stock Unit
Award shall be evidenced by an Award Agreement in the form approved by the Committee. Subject to the terms of the Plan, Restricted
Stock Units may be granted to Participants in such amounts and upon such terms and at any time and from time to time, as shall
be determined by the Committee. Award Agreements evidencing Restricted Stock Unit Awards need not be identical, but shall include
(through incorporation of provisions hereof, by reference in the Award Agreements, or otherwise) the terms specified below and
be subject to the provisions of the Plan applicable to Restricted Stock Unit Awards.
Each
Restricted Stock Unit shall be subject to such vesting conditions, restrictions and contingencies as the Committee shall determine
and set forth in the Award Agreement evidencing the RSU. Vesting may be conditioned on the continued performance of Services or
the achievement of performance conditions measured on an individual, corporate or other basis, or any combination thereof.
As
soon as practicable following the date each Restricted Stock Unit vests, the Corporation shall deliver to the Participant the
Share underlying such Restricted Stock Unit, subject to such conditions, restrictions and contingencies as the Committee may establish.
ARTICLE
7
PERFORMANCE-BASED
COMPENSATION
7.1
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AWARDS
OF PERFORMANCE-BASED COMPENSATION.
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At
its discretion, the Committee may make Awards to Participants intended to comply with the exemption for Performance-Based Exception
set forth in Code §162(m). In such event, the number of Shares becoming exercisable or transferable or amounts payable with
respect to grants of Options, Stock Appreciation Rights, and/or awards of Restricted Stock, Unrestricted Stock or Restricted Stock
Units may be determined based on the attainment of written performance goals based on the performance measures set forth in Section
7.2 and which have been approved by the Committee for a specified performance period. The performance goals shall state, in terms
of an objective formula or standard, the method of computing the amount of compensation payable to the Participant if the goal
is attained. The performance goals must be established by the Committee in writing no more than ninety (90) days after the commencement
of the performance period or, if less, the number of days that is equal to 25% of the relevant performance period. The outcome
of the performance goal must be substantially uncertain at the time the Committee establishes the performance goal. Performance
goals will be based on the attainment of one or more objectives based on performance measures. To the degree consistent with Code
§162(m), the performance goals may be calculated without regard to extraordinary items.
7.2
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PERFORMANCE
MEASURES.
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Performance
measures may include the following: (i) earnings before all or any taxes (“EBT”); (ii) earnings before all or any
of interest expense, taxes, depreciation and amortization (“EBITDA”); (iii) earnings before all or any of interest
expense, taxes, depreciation, amortization and rent (“EBITDAR”); (iv) earnings before all or any of interest expense
and taxes (“EBIT”); (v) net earnings; (vi) net income; (vii) operating income or margin; (viii) earnings per share;
(ix) growth; (x) return on stockholders’ equity; (xi) capital expenditures; (xii) expenses and expense ratio management;
(xiii) return on investment; (xiv) improvements in capital structure; (xv) profitability of an identifiable business unit or product;
(xvi) profit margins; (xvii) stock price; (xviii) market share; (xvix) revenues; (xx) costs; (xxi) cash flow; (xxii) working capital;
(xxiii) return on assets; (xxiv) economic value added; (xxv) industry indices; (xxvi) peer group performance; (xxvii) regulatory
ratings; (xxviii) asset quality; (xxix) gross or net profit; (xxx) net sales; (xxxi) total stockholder return; (xxxii) sales (net
or gross) measured by product line, territory, customers or other category; (xxxiii) earnings from continuing operations; (xxxiv)
net worth; (xxxv) levels of expense, receivables, cost or liability by category, operating unit or any other delineation, or any
other measures approved by the Committee. Performance Measures may relate to the Corporation and/or one or more of its affiliates,
one or more of its divisions or units or any combination of the foregoing, on a consolidated or nonconsolidated basis, and may
be applied on an absolute basis or be relative to one or more peer group companies or indices, or any combination thereof, all
as the Committee determines. In addition, to the extent consistent with the requirements of Code §162(m), the performance
measures may be calculated without regard to extraordinary items.
7.3
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STOCKHOLDER
APPROVAL.
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For
Awards to constitute performance-based compensation under Code §162(m), the material terms of performance measures on which
the performance goals are to be based must be disclosed to and subsequently approved by the Corporation’s stockholders prior
to payment of the compensation. Stockholder approval of the Plan is necessary for the Awards to meet the Code §162(m) exemption.
7.4
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CODE
SECTION 162(M) COMMITTEE AND CERTIFICATION.
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Awards
intended to qualify for exemption as performance-based compensation shall be granted by a committee of “outside directors”
as defined in Code §162(m). Pursuant to the provisions of Section 1.3(d)) hereof, the Committee may establish a Code §162(m)
subcommittee, if necessary, to make such grants. Any payment of compensation with respect to an Award that is intended to be performance-based
compensation will be, to the extent that such requirement applies under Code §162(m), subject to the written certification
of the Committee that the performance measures were satisfied prior to the payment of the performance-based compensation. This
written certification may include the approved minutes of the Committee meeting in which the certification is made.
ARTICLE
8
RULES
APPLICABLE TO ALL AWARDS
8.1
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TERMINATION
OF SERVICE.
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Unless
otherwise determined by the Committee and included in the Participant’s Award Agreement, in the event that a Participant’s
Service with the Corporation and all Related Corporations is terminated for any reason, all Awards held by the Participant which
are unexercised or have not yet vested as of such date shall expire, terminate, and become unexercisable as of such termination
date, provided, however, that if the Participant’s Service terminates for reasons other than Cause, all outstanding
vested Options and SARs held by the Participant as of his or her termination date shall continue to be exercisable until the earlier
of the expiration of their term or the date that is three months after such termination date.
8.2
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ACCELERATION
OF VESTING.
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The
Committee shall have complete discretion, subject to the terms of the Plan, exercisable either at the time an Award is granted
or at any time while the Award remains outstanding, to accelerate the vesting of or lapse of restrictions on any Award.
8.3
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EXTENSION
OF EXERCISE PERIOD.
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The
Committee shall have complete discretion, subject to the terms of the Plan, exercisable either at the time an Award is granted
or at any time while the Award remains outstanding, to extend the period of time for which the Option or SAR is to remain exercisable
following the Participant’s termination of Service from the limited exercise period otherwise in effect for that Option
or SAR to such greater period of time as the Committee shall deem appropriate, but in no event beyond the expiration of the Option
or SAR term, and/or to permit the Option or SAR to be exercised, during the applicable post-termination exercise period, not only
with respect to the number of vested Shares for which such Option or SAR is exercisable at the time of the Participant’s
termination of Service but also with respect to one or more additional installments in which the Participant would have vested
had the Participant continued in Service. Such an extension may result in recharacterization of an ISO as a Non-Statutory Stock
Option.
All
rights with respect to an Award granted to a Participant under the Plan shall be available during his or her lifetime only to
such Participant, except as designated by the Participant by will or by the laws of descent and distribution; provided,
however, that the Committee shall have the discretion to provide that an Award other than an ISO may, in connection with the Participant’s
estate plan, be assigned in whole or in part during the Participant’s lifetime to a trust established exclusively for one
or more members of the Participant’s immediate family. The terms applicable to the assigned portion shall be the same as
those in effect for the Award immediately prior to such assignment and shall be set forth in such documents issued to the assignee
as the Committee may deem appropriate. Any assignment shall not affect the Participant’s obligations to satisfy applicable
tax withholding as described herein. The Participant may also designate in writing one or more persons as the beneficiary or beneficiaries
of his or her outstanding Awards, and those Awards shall, except to the extent that any lifetime transfer as provided herein,
automatically be transferred to such beneficiary or beneficiaries upon the Participant’s death while holding those Awards.
Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Corporation,
and will be effective only when filed by the Participant in writing with the Corporation during the Participant’s lifetime.
In the absence of any such designation, benefits under an Award remaining unpaid at the Participant’s death shall be paid
to the Participant’s estate. A beneficiary or beneficiaries shall take the transferred Awards subject to all the terms and
conditions of the applicable Award Agreement, including (without limitation) the limited time period during which any Award may
be exercised following the Participant’s death.
Except
as otherwise provided by the Committee in the Award Agreement, the Participant (or his or her beneficiaries) holding an Award
shall have no stockholder rights with respect to the Shares subject to the Award until he or she has received and become a holder
of record of the Shares underlying the Award or, in the case of Restricted Stock, all restrictions have lapsed.
(a)
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Conditions
on Delivery of Stock. The Corporation’s obligation to deliver Shares under the Plan shall, to the extent required
by Federal, state, local or foreign law, be subject to the satisfaction of all applicable Federal, state, local and foreign
income and employment tax withholding requirements (or, in the case of Restricted Stock, the making of arrangements satisfactory
to the Corporation regarding such payment). Whenever under the Plan payments are to be made in cash, such payments may be
net of an amount sufficient to satisfy such withholding requirements.
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(b)
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Tender
of Shares. The Committee may, in its discretion, provide any or all Participants granted Non-Statutory Stock Options,
SARs, Restricted Stock, Unrestricted Stock, or RSUs settled in Stock under the Plan with the right to use Shares in satisfaction
of all or part of the applicable withholding taxes to which such Participants may become subject in connection with the exercise
of their Options or SARs, the vesting of their Restricted Stock, or the settlement of their Restricted Stock Units or other
Awards in Stock. Such right may be provided to any such Participant in either or both of the following formats:
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(i)
|
The
election to have the Corporation withhold, from the Shares otherwise issuable upon the exercise of the NSO or SAR, the vesting
of the Restricted Stock, or the settlement of Restricted Stock Units or other Awards in Stock, a portion of those Shares with
an aggregate Fair Market Value equal to the percentage of the applicable withholding taxes (not to exceed the minimum required
by law) designated by the Participant.
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(ii)
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The
election to deliver to the Corporation, at the time the NSO or SAR is exercised, the Restricted Stock vests, or the Restricted
Stock Units or other Awards are settled in Stock, one or more Shares previously acquired by such Participant (other than in
connection with the Option or SAR exercise, Restricted Stock vesting or Restricted Stock Units or other Awards in Stock settlement
triggering the withholding taxes) with an aggregate Fair Market Value equal to the percentage of the withholding taxes (not
to exceed the minimum required by law) designated by the Participant.
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ARTICLE
9
DEFINITIONS
The
following definitions shall be in effect under the Plan:
9.1
Award Agreement shall mean a written document setting forth the terms and provisions applicable to an Award granted to a Participant
under the Plan, and is a condition to the grant of an Award hereunder.
9.2
Awards shall mean any award or benefit granted to any Participant under the Plan, including, without limitation, the grant
of Options, SARs, Restricted Stock, Unrestricted Stock and Restricted Stock Units.
9.3
Board shall mean the Corporation’s Board of Directors.
9.4
Cause shall mean the commission of any act of fraud, embezzlement or dishonesty by the Participant, any act or omission by
such person constituting a breach or default under any written or oral agreement between such person and the Corporation (or any
Related Corporation), any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation
(or any Related Corporation), or any other intentional act by such person adversely affecting the business or affairs of the Corporation
(or any Related Corporation) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts
or omissions which the Corporation (or any Related Corporation) may consider as grounds for the dismissal or discharge of any
Participant or other person in the Service of the Corporation (or any Related Corporation).
9.5
Change of Control shall mean the first of the following events to occur:
(a)
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The
acquisition by any one person or more than one person acting as a group (within the meaning of Treasury Regulation §1.409A-3(i)(5)(v)(B)),
other than the Corporation, any Related Corporation, or any employee benefit plan (or related trust) sponsored or maintained
by the Corporation or any Related Corporation, (a “Person”) of any of stock of the Corporation that, together
with stock held by such Person, constitutes more than 50% of the total fair market value or total voting power of the stock
of the Corporation. For purposes of this Paragraph (a), the following acquisitions shall not constitute a Change of Control:
(i) the acquisition of additional stock by a Person who is considered to own more than 50% of the total fair market value
or total voting power of the stock of the Corporation, (ii) any acquisition in which the Corporation does not remain outstanding
thereafter and (iii) any acquisition pursuant to a transaction which complies with Paragraph (c) below. An increase in the
percentage of stock owned by any one Person as a result of a transaction in which the Corporation acquires its stock in exchange
for property will be treated as an acquisition of stock for purposes of this Paragraph;
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(b)
|
The
replacement of individuals who, as of the date hereof, constitute a majority of the Board, during any twelve (12) month period
by directors whose appointment or election is not endorsed by a majority of the Board before the date of the appointment or
election, provided that, if the Corporation is not the relevant corporation for which no other corporation is a majority stockholder
for purposes of Treasury Regulation §1.409A-3(i)(5)(iv)(A)(2), this Paragraph (b) shall be applied instead with respect
to the members of the board of the directors of such relevant corporation for which no other corporation is a majority stockholder;
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(c)
|
The
acquisition by any one person or more than one person acting as a group (within the meaning of Treasury Regulation §1.409A-3(i)(5)(vi)(D)),
other than the Corporation, a Related Corporation or any employee benefit plan (or related trust) sponsored or maintained
by the Corporation or any Related Corporation, during the 12-month period ending on the date of the most recent acquisition
by such by such person or persons, of ownership of stock of the Corporation possessing 30% or more of the total voting power
of the stock of the Corporation. For purposes of this Paragraph (c), the following acquisitions shall not constitute a Change
of Control: (i) the acquisition of additional control by a person or more than one person acting as a group who are considered
to effectively control the Corporation within the meaning of Treasury Regulation §1.409A-3(i)(5)(vi) and (ii) any acquisition
pursuant to a transaction which complies with Paragraph (a); or
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(d)
|
The
acquisition by any individual person or more than one person acting as a group (within the meaning of Treasury Regulation
§1.409A-3(i)(5)(vii)(C)), other than a transfer to a related person within the meaning of Treasury Regulation §1.409A-3(i)(5)(vii)(B),
during the 12-month period ending on the date of the most recent acquisition by such person or persons, of assets from the
Corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all
of the assets of the Corporation immediately prior to such acquisition(s). For purposes of this Paragraph (d), “gross
fair market value” means the value of the assets of the Corporation, or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets.
|
The
above definition of “Change of Control” shall be interpreted by the Board, in good faith, to apply in a similar manner
to transactions involving partnerships and partnership interests, and to comply with Code §409A and official guidance issued
thereunder from time to time.
9.6
Code shall mean the Internal Revenue Code of 1986, as amended.
9.7
Committee shall mean the particular entity, whether the Committee or the Board, which is authorized to administer the Plan,
to the extent such entity is carrying out its administrative functions under the Plan.
9.8
Corporation shall mean Future FinTech Group Inc., a Florida corporation, and any corporate successor to all or substantially
all of the assets or voting stock of Future FinTech Group Inc. which shall by appropriate action adopt the Plan.
9.9
Disability shall mean, unless otherwise provided in the Award Agreement or in an employment, change of control or similar
agreement in effect between the Participant and the Corporation or Related Corporation, the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less than 12 months; or, by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Corporation or a Related Corporation.
9.10
Effective Date shall mean the date the Plan is adopted by the Board.
9.11
Eligible Persons shall mean persons eligible to participate in the Plan, as described in Section 1.4.
9.12
Employee shall mean an employee of the Corporation (or any Related Corporation).
9.13
Exercise Price shall mean the per Share exercise price of an Option as determined under Article 2 of the Plan.
9.14
Fair Market Value per Share on the relevant date shall mean, if the Shares are duly listed on a national securities exchange
or on The Nasdaq Stock Market, the closing price of the Stock on the relevant date, or, if there are no sales on such date, on
the next preceding day on which there were sales, or if the Shares are not so listed, the fair market value of the Shares for
the relevant date, as determined by the Committee in good faith and in compliance with Code §409A.
9.15
Incentive Stock Option or ISO shall mean an Option that is intended to qualify as, and that satisfies the requires applicable
to, an “incentive stock option” described in Code § 422(b).
9.16
Non-Statutory Stock Option or NSO shall mean an Option that is not intended to be, or does not qualify as, an Incentive Stock
Option.
9.17
Option shall mean a right to acquire Stock of the Corporation pursuant to a Non-Statutory Stock Option or Incentive Stock
Option granted under Article 2 of the Plan.
9.18
Participant shall mean any Eligible Person who receives an Award under the Plan, and includes those former Eligible Persons
who have certain post-termination rights under the terms of an Award granted under the Plan.
9.19
Performance-Based Exception means the exception for performance-based compensation from the tax deductibility limitations
of Code §162(m).
9.20
Period of Restriction shall mean the period(s) during which the transfer of an Award or the Shares subject to an Award is
limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events
as determined by the Committee, at its discretion) or the Shares are subject to a substantial risk of forfeiture, pursuant to
the terms of this Plan or the applicable Award Agreement.
9.21
Plan shall mean the Future FinTech Group Inc. 2019 Omnibus Equity Plan, as set forth in this document.
9.22
Related Corporation shall mean any affiliate of the Corporation; provided, however, that with respect to any ISO and
for purposes of the definition of 10% Stockholder, “Related Corporation” shall mean any Corporation during any period
in which it is a “parent corporation” (as that term is defined in Code §424(e)) with respect to the Corporation
or a “subsidiary corporation” (as that term is defined in Code §424(f)) with respect to the Corporation.
9.23
Restricted Stock shall mean a grant of Shares granted under Article 4 of the Plan that is subject to such conditions, restrictions
and contingencies as the Committee determines and sets forth in the applicable Award Agreement.
9.24
Restricted Stock Unit or RSUs shall mean a right to receive Shares upon satisfaction of certain vesting requirements pursuant
to Article 6 of the Plan.
9.25
Service shall mean the performance of services for the Corporation (or any Related Corporation) by a person in the capacity
of an Employee, a non-Employee member of the board of directors, or a consultant or independent advisor, except to the extent
otherwise specifically provided in the Award Agreement.
9.26
Shares or Stock shall mean Shares of common stock of the Corporation, par value $0.001 per share.
9.27
Stock Appreciation Rights or SARs shall mean a right to receive the appreciation in the Fair Market Value of Shares, as granted
under Article 3 of the Plan.
9.28
10% Stockholder shall mean the owner of stock (as determined under Code §424(d)) possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Corporation (or any Related Corporation).
ARTICLE
10
MISCELLANEOUS
10.1
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EFFECTIVE
DATE AND TERM OF PLAN.
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(a)
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Effective
Date. The Plan shall become effective immediately upon its adoption by the Board, subject to approval by the stockholders
of the Corporation at the first annual meeting of stockholders held following the adoption by the Board, or any special meeting
of the stockholders duly called. Options may be granted under the Option Grant Program at any time on or after the Effective
Date. However, until the stockholders approve the Plan, no Options or SARs granted under the Plan may be exercised, no Restricted
or Unrestricted Stock shall be issued under the Plan and no Award may be settled in Stock under the Plan. If stockholder approval
is not obtained within twelve (12) months after the Effective Date, then all Awards shall be null and void.
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(b)
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Termination
Date. The Plan shall terminate upon the earliest to occur of (i) the tenth (10th) anniversary of the Plan’s effective
date, or (ii) the date on which all Shares available for issuance under the Plan shall have been issued as fully-vested Shares.
Should the Plan terminate on the tenth (10th) anniversary of the Effective Date, then all Awards outstanding at that time
shall continue to have force and effect in accordance with the provisions of the applicable Award Agreements.
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(a)
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Amendment
and Termination By the Board. Subject to Paragraph (b) below, the Board shall have the power at any time to add to, amend,
modify or repeal any of the provisions of the Plan, to suspend the operation of the entire Plan or any of its provisions for
any period or to terminate the Plan in whole or in part. In the event of any such action, the Committee shall prepare written
procedures which, when approved by the Board, shall govern the administration of the Plan resulting from such addition, amendment,
modification, repeal, suspension or termination. The Committee may amend any Award Agreement that it previously has authorized
under the Plan and the applicable Participant; provided, however, that no Award Agreement may be amended to reprice
or constructively reprice any Award.
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(b)
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Restrictions
on Amendment and Termination. Notwithstanding the provisions of Paragraph (a) above, the following restrictions shall
apply to the Board’s authority under Paragraph (a) above:
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(i)
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Prohibition
Against Adverse Effects on Outstanding Awards. No addition, amendment, modification, repeal, suspension or termination
shall adversely affect, in any way, the rights of the Participants who have outstanding Awards without the consent of such
Participants;
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(ii)
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Stockholder
Approval Required for Certain Modifications. No modification or amendment of the Plan may be made without the prior approval
of the stockholders of the Company if (i) such modification or amendment would cause the applicable portions of the Plan to
fail to qualify as an ISO plan pursuant to Code §422, (ii) such modification or amendment would materially increase the
benefits accruing to participants under the Plan, (iii) such modification or amendment would materially increase the number
of securities which may be issued under the Plan, or (iv) such modification or amendment would materially modify the requirements
as to eligibility for participation in the Plan, or (v) such modification or amendment would modify the material terms of
the Plan within the meaning of Treasury Regulation §1.162-27(e)(4). Clauses (ii), (iii) and (iv) of the preceding sentence
shall be interpreted in accordance with the provisions of paragraph (b)(2) of Rule 16b-3 of the 1934 Act. Stockholder approval
shall be made by a majority of the votes cast at a duly held meeting at which a quorum representing a majority of all outstanding
voting stock is, either in person or by proxy, present and voting, or by the written consent in lieu of a meeting of the holders
of a majority of the outstanding voting stock or such greater number of shares of voting stock as may be required by the Company’s
articles or certificate of incorporation and bylaws and by applicable law; provided, however, that for modifications described
in clauses (ii), (iii) and (iv) above, such stockholder approval, whether by vote or by written consent in lieu of a meeting,
must be solicited substantially in accordance with the rules and regulations in effect under Section 14(a) of the 1934 Act
as required by paragraph (b)(2) of Rule 16b-3 of the 1934 Act.
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10.3
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CONTINUING
SECURITIES LAW COMPLIANCE; LEGENDS.
|
The
granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, and to such approvals by
any governmental agencies or national securities exchanges as may be required. If at any time on or after the Effective Date,
the Committee, in its discretion, shall determine that the requirements of any applicable federal or state securities laws should
fail to be met, no Shares issuable under Awards and no Options or SARs shall be exercisable until the Committee has determined
that these requirements have again been met. The Committee may suspend the right to exercise an Options or SAR at any time when
it determines that allowing the exercise and issuance of Shares would violate any federal or state securities or other laws, and
may provide that any time periods to exercise the Option or SAR are extended during a period of suspension. With respect to “Insiders,”
transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 under the Securities Exchange
Act of 1934. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee. Each Award Agreement and each certificate representing
securities granted pursuant to the Plan (including securities issuable pursuant to the terms of derivative securities) may bear
such restrictive legend(s) as the Corporation deems necessary or advisable under applicable law, including Federal and state securities
laws. If any Award is made to a Participant who is subject to the Corporation’s policy regarding trading of its Stock by
its officers and directors and Shares are scheduled to be delivered under the Plan to the Participant on a day (the “original
distribution date”) that does not occur during a “window period” applicable to the Participant, as determined
by the Corporation in accordance with such policy, then the Corporation can choose not to deliver such Shares on such original
distribution date and instead to deliver such Shares on the first day of the next “window period” applicable to the
Participant pursuant to such policy, but in no event later than the March 15 following the close of the calendar year in which
such Shares were no longer subject to a substantial risk of forfeiture (within the meaning of Code §409A).
10.4
|
LIQUIDATION
OF THE CORPORATION.
|
In
the event of the complete liquidation or dissolution of the Corporation, any outstanding Awards granted under this Plan shall
be deemed automatically canceled without any action on the part of the Corporation and without regard to or limitation by any
other provision of the Plan.
10.5
|
NO
EMPLOYMENT/SERVICE RIGHTS.
|
Nothing
in the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any Related Corporation employing or retaining such person)
or of the Participant, which rights are hereby expressly reserved by each, to terminate the Participant’s Service at any
time for any reason, with or without Cause.
10.6
|
RULES
OF CONSTRUCTION.
|
For
all purposes of this Plan, except as otherwise expressly provided:
(a)
|
all
accounting terms not otherwise defined herein have the meanings ascribed thereto under U.S. generally accepted accounting
principles;
|
|
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(b)
|
all
references in this Plan to designated “Articles,” “Sections” and other subdivisions are to the designated
Articles, Sections and other subdivisions of the body of this Plan except to the extent identified as references to sections
or subsections of the Code;
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(c)
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the
words “herein,” “hereof” and “hereunder” and other words of similar import refer to this
Plan as a whole and not to any particular Article, Section or other subdivision;
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|
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(d)
|
whenever
the words “include,” “includes” or “including” are used in this Plan, they shall be deemed
to be followed by the words “without limitation”;
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|
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(e)
|
whenever
this Plan refers to a number of days, such number shall refer to calendar days unless business days are expressly specified;
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|
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(f)
|
a
reference to any legislation or to any provision of any legislation shall include such legislation, as amended through the
date hereof, and all subsequent amendments or modification thereto or re-enactment thereof, any legislative provision substituted
therefor and all regulations and statutory instruments issued thereunder or pursuant thereto; and
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|
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(g)
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except
where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
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10.7
|
UNFUNDED
STATUS OF PLAN.
|
The
Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet
made to a Participant by the Corporation, nothing set forth herein shall give any such Participant any rights that are greater
than those of a general creditor of the Corporation. In its sole discretion, the Committee may authorize the creation of trusts
or other arrangements to meet the obligations created under the Plan to deliver Stock or a payment in lieu of or with respect
to Awards hereunder, provided, however, that the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.
10.8
|
AWARDS
TO PARTICIPANTS OUTSIDE THE UNITED STATES.
|
The
Committee may modify the terms of any Award under the Plan made to or held by a Participant who is then resident or primarily
employed outside the United States in any manner deemed by the Committee to be necessary or appropriate in order that the Award
shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed,
or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions
applicable as a result of the Participant’s residence or employment abroad, shall be comparable to the value of such an
Award to a Participant who is resident or primarily employed in the United States. Such authorization shall extend to and include
establishing one or more separate sub-plans which include provisions not inconsistent with the Plan that comply with statutory
or regulatory requirements imposed by the foreign country or countries in which the Participant resides.
In
the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.
To
the extent not preempted by United States Federal law, the Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Florida.
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