Future FinTech Group Inc. (NASDAQ:FTFT), a Florida-based company, is confronting a legal setback following a recent court judgment. On Monday, the company disclosed through an 8-K filing with the Securities and Exchange Commission that it has been ordered to turn over shares in its subsidiaries to satisfy a $10.8 million judgment.
The litigation involves FT Global Capital, Inc., which served as a placement agent for Future FinTech and sued the company in January 2021 for alleged breaches of their July 2020 exclusive placement agent agreement. The case was moved to the United States District Court for the Northern District of Georgia based on jurisdictional diversity.
On April 11, 2024, the Georgia court awarded FT Global $8,875,265.31, and subsequently amended the judgment on April 16 to $10,598,379.93, which included damages, prejudgment interest, and attorney’s fees.
Future FinTech has been actively contesting the judgment and filed a post-trial motion on May 9, 2024, which is pending. The company has expressed its intention to appeal to the United States Court of Appeals for the Eleventh Circuit if necessary.
In a related legal maneuver, FT Global registered the Georgia court's judgment in the Southern District of New York. On August 28, 2024, the New York court granted FT Global's motion for the turnover of Future FinTech's shares in its wholly-owned subsidiaries, along with the corporate seals of its China and Hong Kong-based subsidiaries, for auction or sale until the judgment is fully satisfied.
Future FinTech has stated it will continue its vigorous defense, including plans to appeal the New York court's order to the United States Court of Appeals for the Second Circuit.
The outcome of these legal proceedings could have significant implications for the company's financial standing and operational control over its subsidiaries.
InvestingPro Insights
As Future FinTech Group Inc. (NASDAQ:FTFT) navigates through its legal challenges, the financial metrics from InvestingPro paint a picture of the company's current market position. With a market capitalization of just $6.35 million, Future FinTech is trading at a low Price / Book multiple of 0.17, suggesting that the market values the company at a fraction of its book value. This could be reflective of investor sentiments towards the company's financial health and the recent legal developments.
The company's revenue shows a significant growth of 84.77% over the last twelve months as of Q2 2024, which might indicate some operational progress despite the legal headwinds. However, this growth is juxtaposed against a backdrop of high volatility in the stock price, with a 54.74% decline over the last three months and a 67.91% drop over the last six months. The InvestingPro Tips highlight that the company is quickly burning through cash and has weak gross profit margins of 16.14%, which could be concerns for potential investors.
For those considering FTFT as an investment, it's worth noting that the company has not been profitable over the last twelve months, and the stock has experienced a substantial decline over the last year, with a year-to-date total return of -80.71%. On the positive side, the company's liquid assets exceed its short-term obligations, which may provide some financial flexibility in the near term. For a more comprehensive analysis, there are additional InvestingPro Tips available at: Investing.com/pro/FTFT.
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