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SEC Company Response from Future FinTech Group Inc. (FTFT) (CIK 0001066923) (FTFT) — Jun 25, 2018

Future FinTech Group Inc. (FTFT) (CIK 0001066923)
Date: June 25, 2018 · CIK: 0001066923 · Accession: 0001213900-18-008149

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File numbers found in text: 333-224686

Date
June 25, 2018
Author
Branch Chief
Form
CORRESP
Company
Future FinTech Group Inc. (FTFT) (CIK 0001066923)

Letter

VIA EDGAR Division of Corporation Finance Attention: Loan Lauren P. Nguyen, Legal Branch Chief Registration Statement on Form S-3 Filed May 4, 2018 File No. 333-224686

Re: Future FinTech Group Inc.

Dear Ms. Nguyen:

Future FinTech Group Inc. (“FTFT” or the “Company” and sometimes referred to as “we” or “our”) is filing a response to the SEC Comment Letter, dated May 24, 2018 (the “Comment Letter”), in connection with complying with the issues and outstanding disclosure items set forth therein. For convenience of reference, we have included in this response letter the same caption and paragraph numbers, as well as the text of the comments, set forth in the Comment Letter followed by our responses thereto.

The Company, page 2

1. We note you are in the process of transitioning your main business operations and that you anticipate generating revenues from your financing leasing business, the acquisition and disposal of financial assets and the application of blockchain technology for online sales of products. Please revise your disclosure to:

● clearly explain your plan of operations for each of your six enumerated business focuses as described on page 3; and

● discuss the material costs that you expect to incur in order to provide all of the services described in the prospectus.

For example, please describe the current business of your “bulk agricultural products spot trading business and financial technology businesses,” and explain how such financial technology business relates to such bulk agricultural products trading business.

Similarly, please provide a more specific discussion of your “related asset and equity investment management” focus, including a clear description of the services you expect to provide and who you expect your customers to be. Please revise to address the six enumerated business focuses as described on page 3.

Response: We intend to revise our disclosure to include following the detailed descriptions of our six business focuses:

(i) the online sales of fruit juice products and beverages, and consumer and health-related products, through GlobalKey Supply Chain Limited (“GlobalKey Supply Chain”).

Our GlobalKey Supply Chain is actively developing its online sales of fruit juice products and beverages, and consumer and health-related products, and realized sales in the amount of RMB 347,000 (approximately $54,218) in the first quarter of 2018. Such development and sales supplement our off-line sales of fruit juice and consumer products.

This business is currently in operation and we do not expect any significant investment for this business.

(ii) the design, development, testing, deployment and maintenance of a blockchain based Globally Shared Shopping Mall and other related software systems.

Globally Shared Shopping Mall (the “Shared Shopping Mall”) is being designed as a platform for a shared shopping mall experience through the use of blockchain technology and artificial intelligence (“A.I.”) for the marketing, distribution, purchase and sale of products by vendors and consumers around the world. The application of A.I. on the Shared Shopping Mall will include the following functions:

(a) recommendations: provide customer behavior analysis to the online sellers and provide recommendations of products targeted to particular customers, as well as targeted product recommendation to the customers themselves;

(b) A.I. assistance: the Shared Shopping Mall is being designed to understand vocal instructions from customers, reply to questions, respond to customer instructions, and provide guidance as to the products and services offered in the Shared Shopping mall; and

(c) intelligent purchases and logistics: provide compiled and aggregated data based upon big data collection and processing that will allow vendors to anticipate product inventory and supply needs and prioritize logistics and warehousing arrangements.

The Shared Shopping Mall is still under construction and development, and we expect to complete it and begin operations at the end of 2018. After the completion of the platform, the Shared Shopping Mall will use the combination of blockchain technology, A.I. and an open shopping experience described above to become a globally-accessible shared online shopping center. The Shared Shopping Mall will have products sales, shopping and payment by cryptocurrencies to benefit the manufacturers, brand owners and consumers, which will be a part of the experience for the practical use of the blockchain technology and A.I. in a real economy. Payments will be remitted to the Shared Shopping Mall, then remitted to the appropriate vendors in the same form received. The Shared Shopping Mall will be a part of GlobalKey Supply Chain mentioned above. We expect the total investment for this business is approximately up to RMB 15 million (approximately $2,380,000), including the value of shares of our common stock issued as payment for development and related services, as well as cash investment.

(iii) the operation of a supply chain, logistics and trading business for fruit juice products, foods and other consumer and agricultural products through Hedetang Farm Products Trading Market (Mei County) Co., Ltd.

As previously disclosed in our periodic reports, Shaanxi China Agricultural Silk Road Farm Products Trading Center Co., Ltd. and Hedetang Farm Products Trading Market (Mei County) Co., Ltd. operate a bulk agriculture products trading center to provide services to trading parties. There are a number of enterprises operating in the trading center, including 12 express delivery companies, 4 logistic companies, 4 on-line sales companies, 2 packing companies and 3 agriculture companies, which have started paying rent for their spaces in the center. In addition, all government departments that are relevant to the operations of the Mei County National Kiwi Fruit Wholesale Trading Center have moved into our trading center. Currently, Mei County National Kiwi Fruit Wholesale Trading Center is building a data platform for agricultural products in the western part of China, an agricultural business incubator, and an online-to-offline agricultural products trading center. To meet these goals, the Company is upgrading its software to support the data platform, which is expected to be completed in the third quarter of 2018. Upon the completion of the upgrade and when trading of agricultural products starts, the trading center will generate income through rental income from cold storage and shops as well as from logistic services. The total investment for this project is expected to be up to RMB 6 million (approximately $950,000).

(iv) bulk agricultural products spot trading business and financial technology businesses, including software development and information services for the financial leasing and project finance industries through intelligent investment advisory and blockchain technology.

The bulk agricultural products spot trading business will be operated by our indirectly owned subsidiary Hedetang Farm Products Trading Market (Mei County) Co., Ltd. We expect to start the bulk agricultural products spot trading business in the third quarter of 2018 when the upgrade described above is completed. Customers will include fruit growers, brokers and other vendors involved in the industry, and the spot trading business will allow for purchases and sales of fruit, cereals, and other farm products, from which Hedetang Farm Products Trading Market (Mei County) Co., Ltd. will receive a flat management fee.

Zhonglian Hengxin Assets Management Co., Ltd. (“Zhonglian Hengxin”), a 55% indirectly owned subsidiary of the Company, focuses its businesses on project leases and project finances, including services related to the purchase and sale of financial debts. It is in discussions regarding sevem projects. Of those projects, it has signed letters of intent with creditors for three projects and the other four projects are still under due diligence review. The Company also has purchased certain distressed assets and debts and Zhonglian Hengxin’s existing projects are the purchases of distressed assets, then restructure such assets and sell them at a profit. Zhonglian Hengxin also plans to apply blockchain and A.I. technologies in this area in the future to facilitate transactions and create an efficient consulting business. We plan to invest up to RMB 1 million (approximately $158,000) in cash with Zhonglian Hengxin during its first year of business.

(v) blockchain related asset and equity investment management and services

This business will focus on the investment in, and purchase of, early stage blockchain projects that have strong potential as well as business incubation and acceleration services for blockchain companies. We are in the process of searching for and identifying promising candidates and this business is still under development. As described in our press release dated June 1, 2018, the Company also plans to provide business incubation and acceleration services for blockchain companies as well as blockchain related training, capital market and consulting services. We plan to invest between US$10-20 million in this area of business, including shares of our common stock and cash.

(vi) the development and operation of a blockchain platform for cryptocurrency exchange, payment and other services through our 60% owned subsidiary DCON DigiPay Limited (“DCON DigiPay”) incorporated in Japan.

The main business of DCON DigiPay is to develop and operate a global digital payment system, “DCON,” through blockchain technology. DCON is to be built as a transparent digital payment system backed by blockchain technology, which such business will include: payment settlement, capital transfer, assets deposit, loan financing, online insurance, assets transfer, funds and placements and crowdfunding services. DCON will also provide cryptocurrency exchange services. Currently, Bitcoin and mBTC can be exchanged through DCON and we are working to increase the number of cryptocurrencies that may be available for exchange on DCON. Bitcoin has a very high market value with each of them currently trading for thousands of dollars. As a currency, Bitcoin has limited everyday usage for ordinary payments. Currently, mBTC has 1000000:1 exchange rate pegged against Bitcoin and can be used in real life by consumers. Also, DCON and mBTC have an efficient trading system that can process 5,000 transaction per second and transactions can be confirmed in seconds. There is no processing fee or mining cost for using or obtaining mBTC. Currently, the mBTC payment system developed by DCON is online, in operation and has been appointed as the only payment system for the NRC communities, which are discussed further below. The Company will receive revenues from the processing fees when customers use mBTC as a payment method. DCON is in the process of developing other business areas mentioned above. In addition to the shares that we have issued to acquire DCON assets as disclosed in our Current Report on Form 8-K filed on January 25, 2018, we anticipates investing up to RMB 5 million (approximately $790,000) in DCON DigiPay, some of which has already been invested.

2. You disclose your plans to take advantage of possible opportunities presented by the expanding interest in “FinTech,” including blockchain technology, cryptocurrencies and other forms of digital assets. To the extent you are not engaged or you are engaged to only a limited extent in a particular line of business, please include information to eliminate any misleading inference to such line of business.

Response:

We will include such information to clarify whether we are currently engaged in such business as well as to what extent in any particular line of business that we are engaged in relates to blockchain technology, cryptocurrencies and other forms of digital assets in the form of the above disclosures.

3. We note you will use blockchain technology in different business segments, including online sales and internet distribution businesses, agricultural products trading, to facilitate financial payments and transactions, and to create new opportunities. Please revise your disclosure to clarify how you intend to implement blockchain technology and the current status of such technology, including whether your blockchain technology is developed and operational, and your plans and timeframes for such development if such product is not operational yet. Please disclose whether such blockchain is or will be open and public. In addition, please clarify what portion of your business is related to e-commerce as compared to blockchain technology and whether you have generated any revenue from blockchain related technology.

Response:

We will revise our disclosure to clarify how we intend to implement blockchain technology and the current status of the application of such technology in our businesses as indicated in our response to question 1. Currently, only NRC and DCON’s blockchain technologies are developed and operational and others are under development or to begin development in the near future. Our blockchain-based platforms are or will be open and public. The Company has not generated any meaningful revenue from the blockchain-related technology. Our e-commerce business includes online sale of fruit juice, consumer and health products and our Shared Shopping Mall, which is under construction, will use blockchain technology. Currently, DCON charges no transaction fees for using mBTC and a 0.3% exchange fee for currency exchange between Bitcoin and mBTC.

4. You disclose you have entered into a services agreement for the development of your blockchain globally shared shopping mall platform. Please clarify if this is your agreement with Reits (Beijing) Technology Co. Ltd. or identify the counterparty, and disclose the material terms of this agreement. We note that you filed a services agreement as Exhibit 10.1 to your Form 8-K on December 22, 2017 for the development of your blockchain globally shared shopping mall platform.

Response:

Yes, this is the agreement with Reits (Beijing) Technology Co. Ltd. filed on as Exhibit 10.1 to our Current Report on Form 8-K filed on December 22, 2017. We will clarify this disclosure.

5. We note you have signed a license agreement with Shaanxi Entai-Biotechnology Co. Ltd. to serve as the sole global general distributor and operational platform for IB-Live. Please describe the “platform for ‘IB-Live’” and clarify whether you currently use your e-commerce platform to perform under this license agreement.

Response:

The platform for IB-Live includes online and offline sales of IB-Live products. The online sales are made through our GlobalKey Supply Chain Limited WeChat app store and the offline sales are made through our distributors. Both of these modes of sale are subject to the license agreement.

6. Please expand your disclosure to discuss the digital assets held by DCON DigiPay in which you own 60% interest and how these assets will interact with the blockchain platform Nova Realm City. We note you state that DCON DigiPay is the only accepted payment system for Nova Realm City communities. In this regard, revise to more clearly explain what consists of the Nova Realm City communities.

Response:

DigiPay FinTech Limited owns a 60% ownership stake in the assets of DCON, including but not limited to all the business and technology elements related to or attributable to DCON, such as its business plans and white papers, business and business models, architectures, codes, software, applications, technologies, patents, copyrights, trade secrets, customer lists, business points, trading platforms, digital rights, authe

Show Raw Text
CORRESP
1
filename1.htm

June 25, 2018

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549-0405

Attention: Loan Lauren P. Nguyen, Legal
Branch Chief

    Re:
    Future FinTech Group Inc.

        Registration Statement on Form S-3

        Filed May 4, 2018

        File No. 333-224686

Dear Ms. Nguyen:

Future FinTech Group Inc. (“FTFT”
or the “Company” and sometimes referred to as “we” or “our”) is filing a response to the SEC
Comment Letter, dated May 24, 2018 (the “Comment Letter”), in connection with complying with the issues and outstanding
disclosure items set forth therein. For convenience of reference, we have included in this response letter the same caption and
paragraph numbers, as well as the text of the comments, set forth in the Comment Letter followed by our responses thereto.

The Company, page 2

1. We note you are in the process of transitioning
your main business operations and that you anticipate generating revenues from your financing leasing business, the acquisition
and disposal of financial assets and the application of blockchain technology for online sales of products. Please revise your
disclosure to:

 ● clearly
explain your plan of operations for each of your six enumerated business focuses as described on page 3; and

 ● discuss the material
costs that you expect to incur in order to provide all of the services described in the prospectus.

For example,
please describe the current business of your “bulk agricultural products spot trading business and financial technology businesses,”
and explain how such financial technology business relates to such bulk agricultural products trading business.

Similarly, please provide
a more specific discussion of your “related asset and equity investment management” focus, including a clear description
of the services you expect to provide and who you expect your customers to be. Please revise to address the six enumerated business
focuses as described on page 3.

Response:
We intend to revise our disclosure to include following the detailed descriptions of our six business focuses:

(i)
the online sales of fruit juice products and beverages, and consumer and health-related products, through GlobalKey Supply Chain
Limited (“GlobalKey Supply Chain”).

Our
GlobalKey Supply Chain is actively developing its online sales of fruit juice products and beverages, and consumer and health-related
products, and realized sales in the amount of RMB 347,000 (approximately $54,218) in the first quarter of 2018. Such development
and sales supplement our off-line sales of fruit juice and consumer products.

This
business is currently in operation and we do not expect any significant investment for this business.

(ii)
the design, development, testing, deployment and maintenance of a blockchain based Globally Shared Shopping Mall and other related
software systems.

Globally
Shared Shopping Mall (the “Shared Shopping Mall”) is being designed as a platform for a shared shopping mall experience
through the use of blockchain technology and artificial intelligence (“A.I.”) for the marketing, distribution, purchase
and sale of products by vendors and consumers around the world. The application of A.I. on the Shared Shopping Mall will include
the following functions:

(a)
recommendations: provide customer behavior analysis to the online sellers and provide recommendations of products targeted to particular
customers, as well as targeted product recommendation to the customers themselves;

(b)
A.I. assistance: the Shared Shopping Mall is being designed to understand vocal instructions from customers, reply to questions,
respond to customer instructions, and provide guidance as to the products and services offered in the Shared Shopping mall; and

(c)
intelligent purchases and logistics: provide compiled and aggregated data based upon big data collection and processing that will
allow vendors to anticipate product inventory and supply needs and prioritize logistics and warehousing arrangements.

The
Shared Shopping Mall is still under construction and development, and we expect to complete it and begin operations at the end
of 2018. After the completion of the platform, the Shared Shopping Mall will use the combination of blockchain technology, A.I.
and an open shopping experience described above to become a globally-accessible shared online shopping center. The Shared Shopping
Mall will have products sales, shopping and payment by cryptocurrencies to benefit the manufacturers, brand owners and consumers,
which will be a part of the experience for the practical use of the blockchain technology and A.I. in a real economy. Payments
will be remitted to the Shared Shopping Mall, then remitted to the appropriate vendors in the same form received. The Shared Shopping
Mall will be a part of GlobalKey Supply Chain mentioned above. We expect the total investment for this business is approximately
up to RMB 15 million (approximately $2,380,000), including the value of shares of our common stock issued as payment for development
and related services, as well as cash investment.

(iii)
the operation of a supply chain, logistics and trading business for fruit juice products, foods and other consumer and agricultural
products through Hedetang Farm Products Trading Market (Mei County) Co., Ltd.

      1

As
previously disclosed in our periodic reports, Shaanxi China Agricultural Silk Road Farm Products Trading Center Co., Ltd. and Hedetang
Farm Products Trading Market (Mei County) Co., Ltd. operate a bulk agriculture products trading center to provide services to trading
parties. There are a number of enterprises operating in the trading center, including 12 express delivery companies, 4 logistic
companies, 4 on-line sales companies, 2 packing companies and 3 agriculture companies, which have started paying rent for their
spaces in the center. In addition, all government departments that are relevant to the operations of the Mei County National Kiwi
Fruit Wholesale Trading Center have moved into our trading center. Currently, Mei County National Kiwi Fruit Wholesale Trading
Center is building a data platform for agricultural products in the western part of China, an agricultural business incubator,
and an online-to-offline agricultural products trading center. To meet these goals, the Company is upgrading its software to support
the data platform, which is expected to be completed in the third quarter of 2018. Upon the completion of the upgrade and when
trading of agricultural products starts, the trading center will generate income through rental income from cold storage and shops
as well as from logistic services. The total investment for this
project is expected to be up to RMB 6 million (approximately $950,000).

(iv)
bulk agricultural products spot trading business and financial technology businesses, including software development and information
services for the financial leasing and project finance industries through intelligent investment advisory and blockchain technology.

The
bulk agricultural products spot trading business will be operated by our indirectly owned subsidiary Hedetang Farm Products Trading
Market (Mei County) Co., Ltd. We expect to start the bulk agricultural products spot trading business in the third quarter of 2018
when the upgrade described above is completed. Customers will include fruit growers, brokers and other vendors involved in the
industry, and the spot trading business will allow for purchases and sales of fruit, cereals, and other farm products, from which
Hedetang Farm Products Trading Market (Mei County) Co., Ltd. will receive a flat management fee.

Zhonglian
Hengxin Assets Management Co., Ltd. (“Zhonglian Hengxin”), a 55% indirectly owned subsidiary of the Company, focuses
its businesses on project leases and project finances, including services related to the purchase and sale of financial debts.
It is in discussions regarding sevem projects. Of those projects, it has signed letters of intent with creditors for three projects
and the other four projects are still under due diligence review. The Company also has purchased certain distressed assets and
debts and Zhonglian Hengxin’s existing projects are the purchases of distressed assets, then restructure such assets and
sell them at a profit. Zhonglian Hengxin also plans to apply blockchain and A.I. technologies in this area in the future to facilitate
transactions and create an efficient consulting business. We plan to invest up to RMB 1 million (approximately $158,000) in cash
with Zhonglian Hengxin during its first year of business.

(v)
blockchain related asset and equity investment management and services

This
business will focus on the investment in, and purchase of, early stage blockchain projects that have strong potential as well as
business incubation and acceleration services for blockchain companies. We are in the process of searching for and identifying
promising candidates and this business is still under development. As described in our press release dated June 1, 2018, the Company
also plans to provide business incubation and acceleration services for blockchain companies as well as blockchain related training,
capital market and consulting services. We plan to invest between US$10-20 million in this area of business, including shares of
our common stock and cash.

      2

(vi)
the development and operation of a blockchain platform for cryptocurrency exchange, payment and other services through our 60%
owned subsidiary DCON DigiPay Limited (“DCON DigiPay”) incorporated in Japan.

The
main business of DCON DigiPay is to develop and operate a global digital payment system, “DCON,” through blockchain
technology. DCON is to be built as a transparent digital payment system backed by blockchain technology, which such business will
include: payment settlement, capital transfer, assets deposit, loan financing, online insurance, assets transfer, funds and placements
and crowdfunding services. DCON will also provide cryptocurrency exchange services. Currently, Bitcoin and mBTC can be exchanged
through DCON and we are working to increase the number of cryptocurrencies that may be available for exchange on DCON. Bitcoin
has a very high market value with each of them currently trading for thousands of dollars. As a currency, Bitcoin has limited everyday
usage for ordinary payments. Currently, mBTC has 1000000:1 exchange rate pegged against Bitcoin and can be used in real life by
consumers. Also, DCON and mBTC have an efficient trading system that can process 5,000 transaction per second and transactions
can be confirmed in seconds. There is no processing fee or mining cost for using or obtaining mBTC. Currently, the mBTC payment
system developed by DCON is online, in operation and has been appointed as the only payment system for the NRC communities, which
are discussed further below. The Company will receive revenues from the processing fees when customers use mBTC as a payment method.
DCON is in the process of developing other business areas mentioned above. In addition to the shares that we have issued to acquire
DCON assets as disclosed in our Current Report on Form 8-K filed on January 25, 2018, we anticipates investing up to RMB 5 million
(approximately $790,000) in DCON DigiPay, some of which has already been invested.

2. You disclose your
plans to take advantage of possible opportunities presented by the expanding interest in “FinTech,” including blockchain
technology, cryptocurrencies and other forms of digital assets. To the extent you are not engaged or you are engaged to only a
limited extent in a particular line of business, please include information to eliminate any misleading inference to such line
of business.

Response:

We will
include such information to clarify whether we are currently engaged in such business as well as to what extent in any particular
line of business that we are engaged in relates to blockchain technology, cryptocurrencies and other forms of digital assets in
the form of the above disclosures.

3. We note you will
use blockchain technology in different business segments, including online sales and internet distribution businesses, agricultural
products trading, to facilitate financial payments and transactions, and to create new opportunities. Please revise your disclosure
to clarify how you intend to implement blockchain technology and the current status of such technology, including whether your
blockchain technology is developed and operational, and your plans and timeframes for such development if such product is not operational
yet. Please disclose whether such blockchain is or will be open and public. In addition, please clarify what portion of your business
is related to e-commerce as compared to blockchain technology and whether you have generated any revenue from blockchain related
technology.

      3

Response:

We will
revise our disclosure to clarify how we intend to implement blockchain technology and the current status of the application of
such technology in our businesses as indicated in our response to question 1. Currently, only NRC and DCON’s blockchain technologies
are developed and operational and others are under development or to begin development in the near future. Our blockchain-based
platforms are or will be open and public. The Company has not generated any meaningful revenue from the blockchain-related technology.
Our e-commerce business includes online sale of fruit juice, consumer and health products and our Shared Shopping Mall, which is
under construction, will use blockchain technology. Currently, DCON charges no transaction fees for using mBTC and a 0.3% exchange
fee for currency exchange between Bitcoin and mBTC.

4. You disclose you
have entered into a services agreement for the development of your blockchain globally shared shopping mall platform. Please clarify
if this is your agreement with Reits (Beijing) Technology Co. Ltd. or identify the counterparty, and disclose the material terms
of this agreement. We note that you filed a services agreement as Exhibit 10.1 to your Form 8-K on December 22, 2017 for the development
of your blockchain globally shared shopping mall platform.

Response:

Yes,
this is the agreement with Reits (Beijing) Technology Co. Ltd. filed on as Exhibit 10.1 to our Current Report on Form 8-K filed
on December 22, 2017. We will clarify this disclosure.

5. We note you have
signed a license agreement with Shaanxi Entai-Biotechnology Co. Ltd. to serve as the sole global general distributor and operational
platform for IB-Live. Please describe the “platform for ‘IB-Live’” and clarify whether you currently use
your e-commerce platform to perform under this license agreement.

Response:

The platform
for IB-Live includes online and offline sales of IB-Live products. The online sales are made through our GlobalKey Supply Chain
Limited WeChat app store and the offline sales are made through our distributors. Both of these modes of sale are subject to the
license agreement.

6. Please expand
your disclosure to discuss the digital assets held by DCON DigiPay in which you own 60% interest and how these assets will interact
with the blockchain platform Nova Realm City. We note you state that DCON DigiPay is the only accepted payment system for Nova
Realm City communities. In this regard, revise to more clearly explain what consists of the Nova Realm City communities.

Response:

DigiPay
FinTech Limited owns a 60% ownership stake in the assets of DCON, including but not limited to all the business and technology
elements related to or attributable to DCON, such as its business plans and white papers, business and business models, architectures,
codes, software, applications, technologies, patents, copyrights, trade secrets, customer lists, business points, trading platforms,
digital rights, authe