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X3 Holdings Co., Ltd.

X3 Holdings Co., Ltd.XTKG财报

Nasdaq

What changed in X3 Holdings Co., Ltd.'s 20-F — 2023 vs 2024

Top changes in X3 Holdings Co., Ltd.'s 2024 20-F

560 paragraphs added · 485 removed · 384 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

129 edited+62 added−30 removed494 unchanged
Negative conditions in the general economy both in the China and abroad, including conditions resulting from changes in gross domestic product growth, the continued sovereign debt crisis, financial and credit market fluctuations, political deadlock, natural catastrophes, pandemics, warfare and terrorist attacks on the United States, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including corporate spending on business intelligence software in general and negatively affect the rate of growth of our business.
Negative conditions in the general economy both in China and abroad, including conditions resulting from changes in gross domestic product growth, the continued sovereign debt crisis, financial and credit market fluctuations, political deadlock, natural catastrophes, pandemics, warfare and terrorist attacks on the United States, Europe, the Asia Pacific region or elsewhere, could cause a decrease in business investments, including corporate spending on business intelligence software in general and negatively affect the rate of growth of our business.
As a result, these sales opportunities would likely lengthen our typical sales cycle and may require us to devote greater research and development, sales, support, and professional services resources to individual customers. This could strain our resources and result in increased costs.
As a result, these sales opportunities would likely to lengthen our typical sales cycle and may require us to devote greater research and development, sales, support, and professional services resources to individual customers. This could strain our resources and result in increased costs.
If we do not maintain our licenses or other qualifications to provide our services, we may not be able to provide services to existing customers or be able to attract new customers and could lose revenues, which could have a material adverse effect on our business and results of operations.
If we do not maintain our licenses or other qualifications to provide our services, we may not be able to provide services to our existing customers or be able to attract new customers and could lose revenues, which could have a material adverse effect on our business and results of operations.
In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, the Ordinary Shares may not be able to remain listed on the NASDAQ Capital Market. We will likely not pay dividends in the foreseeable future.
In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, the Ordinary Shares may not be able to remain listed on the NASDAQ Capital Market. We will likely not to pay dividends in the foreseeable future.
Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax.
Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax.
In particular, our revenues are typically progressively higher in the second, third and fourth quarters of each year compared to the first quarter of each year due to seasonal trends, such as: (i) a general slowdown in business activities and a reduced number of working days during the first quarter of each year as a result of the Chinese New Year holiday period; and (ii) our customers in general tend to spend their technology and software budgets in the second half of the year and in particular the fourth quarter.
In particular, our revenues are typically progressively higher in the second, third and fourth quarters of each year compared to the first quarter of each year due to seasonal trends, such as: (i) a general slowdown in business activities and a reduced number of working days during the first quarter of each year as a result of the Chinese New Year holiday; and (ii) our customers in general tend to spend their technology and software budgets in the second half of the year and in particular the fourth quarter.
These risks include: ● challenges caused by distance, language, cultural and ethical differences and the competitive environment; ● heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements; ● application of multiple and conflicting laws and regulations, including complications due to unexpected changes in foreign laws and regulatory requirements; ● risks associated with trade restrictions and foreign import requirements, including the importation, certification and localization of our solutions required in foreign countries, as well as changes in trade, tariffs, restrictions or requirements; ● new and different sources of competitions; 17 ● potentially different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues; ● management communication and integration problems resulting from cultural differences and geographic dispersion; ● greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods; ● the uncertainty and limitation of protection for intellectual property rights in some countries; ● increased financial accounting and reporting burdens and complexities; ● lack of familiarity with locals laws, customs and practices, and laws and business practices favoring local competitors or partners; ● uncertainties in global economy and foreign markets; and ● political, social and economic instability abroad, terrorist attacks and security concerns in general.
These risks include: ● challenges caused by distance, language, cultural and ethical differences and the competitive environment; ● heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements; ● application of multiple and conflicting laws and regulations, including complications due to unexpected changes in foreign laws and regulatory requirements; ● risks associated with trade restrictions and foreign import requirements, including the importation, certification and localization of our solutions required in foreign countries, as well as changes in trade, tariffs, restrictions or requirements; ● new and different sources of competitions; 18 ● potentially different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues; ● management communication and integration problems resulting from cultural differences and geographic dispersion; ● greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods; ● the uncertainty and limitation of protection for intellectual property rights in some countries; ● increased financial accounting and reporting burdens and complexities; ● lack of familiarity with local laws, customs and practices, and laws and business practices favoring local competitors or partners; ● uncertainties in global economy and foreign markets; and ● political, social and economic instability abroad, terrorist attacks and security concerns in general.
We could also be subject to breaches of security by hackers. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Concerns about security are increased when we transmit information. Electronic transmissions can be subject to attacks, interceptions or losses.
We could also be subject to breaches of security by hackers. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Security concerns are increased when we transmit information. Electronic transmissions can be subject to attacks, interceptions or losses.
Non-compliance could result in penalties or other significant legal liabilities. 32 The PRC Cybersecurity Law, which took effect in June 2017, created China’s first national-level data protection framework for “network operators.” It is relatively new and subject to interpretations by the regulator.
Non-compliance could result in penalties or other significant legal liabilities. The PRC Cybersecurity Law, which took effect in June 2017, created China’s first national-level data protection framework for “network operators.” It is relatively new and subject to interpretations by the regulator.
At present, the PRC tax authorities will neither confirm nor deny that they would enforce Circular 698, in conjunction with other tax collection and tax withholding rules, to make claims against our PRC subsidiary as being indirectly liable for unpaid taxes, if any, arising from Indirect Transfers by shareholders who did not obtain their shares in the IPO of our shares. 34 On February 3, 2015, the PRC State Administration of Taxation issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice 7.
At present, the PRC tax authorities will neither confirm nor deny that they would enforce Circular 698, in conjunction with other tax collection and tax withholding rules, to make claims against our PRC subsidiary as being indirectly liable for unpaid taxes, if any, arising from Indirect Transfers by shareholders who did not obtain their shares in the IPO of our shares. 36 On February 3, 2015, the PRC State Administration of Taxation issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice 7.
The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our Ordinary Shares from being traded on a national securities exchange or in the over the counter trading market in the U.S. 41 On March 18, 2021, the SEC adopted on an interim basis rules disclosure requirements for companies with PCAOB member auditors whom the PCAOB has determined that it cannot inspect their operations within a foreign jurisdiction, or the Covered Issuers.
The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our Ordinary Shares from being traded on a national securities exchange or in the over the counter trading market in the U.S. 43 On March 18, 2021, the SEC adopted on an interim basis rules disclosure requirements for companies with PCAOB member auditors whom the PCAOB has determined that it cannot inspect their operations within a foreign jurisdiction, or the Covered Issuers.
We cannot assure that there are written agreements in place with every associated participant or that such written agreements will prevent the unauthorized use, modification, destruction or disclosure of data or enable us or our customers to obtain reimbursement in the event we should suffer incidents resulting in unauthorized use, modification, destruction or disclosure of data.
We cannot assure you that there are written agreements in place with every associated participant or that such written agreements will prevent the unauthorized use, modification, destruction or disclosure of data or enable us or our customers to obtain reimbursement in the event that should we suffer incidents resulting in the unauthorized use, modification, destruction or disclosure of data.
Such 10% tax rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For example, for shareholders eligible for the benefits of the tax treaty between China and Hong Kong, the tax rate is reduced to 5% for dividends if relevant conditions are met.
Such a 10% tax rate could be reduced by applicable tax treaties or similar arrangements between China and the jurisdiction of our shareholders. For example, for shareholders eligible for the benefits of the tax treaty between China and Hong Kong, the tax rate is reduced to 5% for dividends if relevant conditions are met.
However, if any dispute arises among our executive officers, key personnel and us, such non-competition, non-solicitation and nondisclosure provisions might not provide effective protection to us, especially in China, where most of these executive officers and key employees reside, in light of the uncertainties with respect to the interpretation and enforcement of PRC laws, rules and regulations. 11 Due to intense competition for highly skilled personnel, we may fail to attract and retain enough sufficiently trained personnel to support our operations; as a result, our ability to generate new business may be negatively affected and our revenues could decline.
However, if any dispute arises among our executive officers, key personnel and us, such non-competition, non-solicitation and nondisclosure provisions might not provide effective protection to us, especially in China, where most of these executive officers and key employees reside, in light of the uncertainties with respect to the interpretation and enforcement of PRC laws, rules and regulations. 12 Due to intense competition for highly skilled personnel, we may fail to attract and retain enough sufficiently trained personnel to support our operations; as a result, our ability to generate new business may be negatively affected and our revenues could decline.
PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary, limit our PRC subsidiary ability to distribute profits to us, or otherwise materially and adversely affect us.
PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary, limit our PRC subsidiary's ability to distribute profits to us, or otherwise materially and adversely affect us.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investment and outbound overseas direct investment, including those required under the SAFE Circular 37, will be filed with qualified banks instead of the SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of the SAFE. 35 Mr.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investment and outbound overseas direct investment, including those required under the SAFE Circular 37, will be filed with qualified banks instead of the SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of the SAFE. 37 Mr.
The development of some of the services and technologies may involve significant upfront investments and the failure of these services and technologies may result in our being unable to recover these investments, in part or in full. Further, services or technologies that are developed by our competitors may render our services uncompetitive or obsolete.
The development of some of the services and technologies may involve significant upfront investments and the failure of these services and technologies may result in us being unable to recover these investments, in part or in full. Further, services or technologies that are developed by our competitors may render our services uncompetitive or obsolete.
In addition, independent industry analysts may provide reviews of our services and of competing products and services, which may significantly influence the perception of our services in the marketplace. If these reviews are negative or not as positive as reviews of our competitors’ products and services, then our brand may be harmed.
In addition, independent industry analysts may provide reviews of our services and of competing products and services, which may significantly influence the perception of our services in the marketplace. If these reviews are negative or not as positive as reviews of our competitors’ products and services, then our brand reputation may be harmed.
Our current and future customers may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential customers to which we have devoted significant time and resources, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. 4 Adverse changes in the economic environment, either in China or globally, could reduce our customers’ purchases from us and increase pricing pressure, which could materially and adversely affect our revenues and results of operations.
Our current and future customers may not be willing or able to invest the time and resources necessary to implement our services, and we may fail to close sales with potential customers to which we have devoted significant time and resources, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. 5 Adverse changes in the economic environment, either in China or globally, could reduce our customers’ purchases from us and increase pricing pressure, which could materially and adversely affect our revenues and results of operations.
Finally, we may not have the same level of bargaining power we have enjoyed in the past when it comes to negotiating for the prices of our services, all of which could lead to reduced revenues and profitability. 5 A portion of our income is generated, and will in the future continue to be generated, on a project basis with a fixed price; we may not be able to accurately estimate costs and determine resource requirements in relation to our projects, which would reduce our margins and profitability.
Finally, we may not have the same level of bargaining power we have enjoyed in the past when it comes to negotiating for the prices of our services, all of which could lead to reduced revenues and profitability. 6 A portion of our income is generated, and will in the future continue to be generated, on a project basis with a fixed price; we may not be able to accurately estimate costs and determine resource requirements in relation to our projects, which would reduce our margins and profitability.
We derive a large portion of our revenue from our services to government organizations, and we believe that the success and growth of our business will continue to depend in part on our successful procurement of government contracts.
We derive a large portion of our revenue from our services to governmental organizations, and we believe that the success and growth of our business will continue to depend in part on our successful procurement of government contracts.
A successful infringement claim against us, whether with or without merit, could, among others things, require us to pay substantial damages, develop non-infringing technology, or re-brand our name or enter into royalty or license agreements that may not be available on acceptable terms, if at all, and cease making, licensing or using products that have infringed a third party’s intellectual property rights.
A successful infringement claim against us, whether with or without merit, could, among other things, require us to pay substantial damages, develop non-infringing technology, or re-brand our name or enter into royalty or license agreements that may not be available on acceptable terms, if at all, and cease making, licensing or using products that have infringed a third party’s intellectual property rights.
Any intellectual property claims or litigation in this area, whether we ultimately win or lose, could damage our reputation and have a material adverse effect on our business, results of operations or financial condition. 14 We use third-party licensed software in or with our services, and the inability to maintain these licenses or errors in the software services we provide could result in increased costs or reduced service levels, which would adversely affect our business.
Any intellectual property claims or litigation in this area, whether we ultimately win or lose, could damage our reputation and have a material adverse effect on our business, results of operations and financial condition. 15 We use third-party licensed software in or with our services, and the inability to maintain these licenses or errors in the software services we provide could result in increased costs or reduced service levels, which would adversely affect our business.
Restrictions on the convertibility of the Renminbi for capital account transactions could affect the ability of our PRC subsidiary to make investments overseas or to obtain foreign currency through debt or equity financing, including by means of loans or capital contributions from us. 37 We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.
Restrictions on the convertibility of the Renminbi for capital account transactions could affect the ability of our PRC subsidiary to make investments overseas or to obtain foreign currency through debt or equity financing, including by means of loans or capital contributions from us. 39 We may be classified as a “resident enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.
We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under Circular 7, and we may be required to expend valuable resources to comply with Bulletin 37, or to establish that we should not be taxed under Circular 7 and Bulletin 37. 38 In addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect.
We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under Circular 7, and we may be required to expend valuable resources to comply with Bulletin 37, or to establish that we should not be taxed under Circular 7 and Bulletin 37. 40 In addition to the uncertainty in how the new resident enterprise classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect.
Any violation of the applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, severe criminal or civil sanctions, or suspension or debarment from government contracts, all of which may have an adverse effect on our reputation, business, operating results and prospects. 15 Fluctuation in the value of the Renminbi and other currencies may have a material adverse effect on the value of your investment.
Any violation of the applicable anti-bribery, anti-corruption laws, and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, severe criminal or civil sanctions, or suspension or debarment from government contracts, all of which may have an adverse effect on our reputation, business, operating results and prospects. 16 Fluctuation in the value of the Renminbi and other currencies may have a material adverse effect on the value of your investment.
If our services are unavailable or if our customers are unable to access features of our services within a reasonable amount of time or at all, our business would be negatively affected. 9 We currently provide our SaaS services via designated data centers and we intend to outsource our cloud infrastructure to commercially available cloud infrastructure as a service providers (“ IaaS ”), which can host our services.
If our services are unavailable or if our customers are unable to access features of our services within a reasonable amount of time or at all, our business would be negatively affected. 10 We currently provide our SaaS services via designated data centers and we intend to outsource our cloud infrastructure to commercially available cloud infrastructure as a service providers (“ IaaS ”), which can host our services.
Proper fire suppression systems and measures to prevent water damage should be in place to minimize these risks. 21 Risks like cryptocurrency mining machines storage, overhaul, operation, and maintenance may occur: Equipment failure: Machines that are not properly stored, overhauled, operated, or maintained can lead to equipment failure, which can be dangerous for operators and other individuals nearby.
Proper fire suppression systems and measures to prevent water damage should be in place to minimize these risks. 22 Risks like cryptocurrency mining machines storage, overhaul, operation, and maintenance may occur: Equipment failure : Machines that are not properly stored, overhauled, operated, or maintained can lead to equipment failure, which can be dangerous for operators and other individuals nearby.
We believe that any disclosure controls and procedures, or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 24 These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
We believe that any disclosure controls and procedures, or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 26 These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Any significant failure of our systems could impede our ability to provide services to our customers, have a negative impact on our reputation, cause us to lose customers, reduce our revenues and harm our business. 8 Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation.
Any significant failure of our systems could impede our ability to provide services to our customers, have a negative impact on our reputation, cause us to lose customers, reduce our revenues and harm our business. 9 Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation.
We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations. 40 You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the prospectus supplement based on foreign laws.
We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations. 42 You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the prospectus supplement based on foreign laws.
The market for software application and technology services is highly competitive and we expect competition to persist and intensify. We believe that the principal competitive factors in our markets are domain knowledge and industry expertise, breadth and depth of service offerings, quality of the services offered, reputation and track record, marketing and selling skills, scalability of technology infrastructure and price.
The market for software applications and technology services is highly competitive and we expect competition to persist and intensify. We believe that the principal competitive factors in our markets are domain knowledge and industry expertise, breadth and depth of service offerings, quality of the services offered, reputation and track record, marketing and selling skills, scalability of technology infrastructure and price.
For example, loans by us to our PRC subsidiary in China, each of which is a foreign-invested enterprise, to finance their activities cannot exceed the statutory limits and must be registered with SAFE or its local counterpart. 36 We may also decide to finance our PRC subsidiary through capital contributions.
For example, loans by us to our PRC subsidiary in China, each of which is a foreign-invested enterprise, to finance their activities cannot exceed the statutory limits and must be registered with SAFE or its local counterpart. 38 We may also decide to finance our PRC subsidiary through capital contributions.
If we are unable to collect our receivables from our customers in accordance with the contracts with our customers, our results of operations and cash flows could be adversely affected. 6 We face a number of risks in our strategy to target larger organizations for sales of our services, and if we do not manage these efforts effectively, our business and results of operations could be adversely affected.
If we are unable to collect our receivables from our customers in accordance with the contracts with our customers, our results of operations and cash flows could be adversely affected. 7 We face a number of risks in our strategy to target larger organizations for sales of our services, and if we do not manage these efforts effectively, our business and results of operations could be adversely affected.
For more information regarding the estimates of market opportunity and the forecasts of market growth included in this Annual Report, see “Business—Our Opportunity”. We face intense competition from onshore and offshore software application and technology service providers, and if we are unable to compete effectively, we may lose customers and our revenues may decline.
For more information regarding the estimates of market opportunity and the forecasts of market growth included in this Annual Report, see “Business — Our Opportunity.” We face intense competition from onshore and offshore software application and technology service providers, and if we are unable to compete effectively, we may lose customers and our revenues may decline.
Any of these risks could be difficult to eliminate or manage, and if not addressed, could have a negative effect on our business, results of operations and financial condition. 13 We may be liable to our customers for damages caused by unauthorized disclosure of sensitive and confidential information, whether through our employees or otherwise.
Any of these risks could be difficult to eliminate or manage, and if not addressed, could have a negative effect on our business, results of operations and financial condition. 14 We may be liable to our customers for damages caused by unauthorized disclosure of sensitive and confidential information, whether through our employees or otherwise.
All of the above may adversely affect the operation of the cryptocurrency network which would erode user confidence in cryptocurrency, which would negatively affect demand for our products. 19 We face intense competition and our competitors may employ aggressive pricing strategies, which can lead to a price reduction of our products and material adverse effect on our results of operations.
All of the above may adversely affect the operation of the cryptocurrency network which would erode user confidence in cryptocurrency, which would negatively affect demand for our products. 20 We face intense competition and our competitors may employ aggressive pricing strategies, which can lead to a price reduction of our products and material adverse effect on our results of operations.
Excess inventory levels may lead to increases in inventory holding costs, risks of inventory obsolescence and write-down. 20 The average selling prices of our cryptocurrency mining may decrease from time to time due to technological advancement and we may not be able to pass onto our suppliers such decreases, which may in turn adversely affect our profitability.
Excess inventory levels may lead to increases in inventory holding costs, risks of inventory obsolescence and write-down. 21 The average selling prices of our cryptocurrency mining may decrease from time to time due to technological advancement and we may not be able to pass onto our suppliers such decreases, which may in turn adversely affect our profitability.
If we are not able to continue to attract new customers or to grow revenues from our existing customers, we may not be able to grow our revenues as quickly as we anticipate or at all. 3 We may be unable to effectively manage our expansion for the anticipated growth, which could place significant strain on our management personnel, systems and resources.
If we are not able to continue to attract new customers or to grow revenues from our existing customers, we may not be able to grow our revenues as quickly as we anticipate or at all. 4 We may be unable to effectively manage our expansion for the anticipated growth, which could place significant strain on our management personnel, systems and resources.
History and Development of the Company.” 23 Risks Related to Our Corporate Structure We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, shareholders may have less protection for their shareholder rights than they would under U.S. law.
History and Development of the Company.” 25 Risks Related to Our Corporate Structure We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, shareholders may have less protection for their shareholder rights than they would under U.S. law.
An inactive market may also impair our ability to raise capital by selling ordinary shares and may impair our ability to acquire other companies by using our shares as consideration. 28 Risks Related to Doing Business in China The Chinese government may exert substantial influence over the manner in which we must conduct our business activities .
An inactive market may also impair our ability to raise capital by selling ordinary shares and may impair our ability to acquire other companies by using our shares as consideration. 29 Risks Related to Doing Business in China The Chinese government may exert substantial influence over the manner in which we must conduct our business activities .
If we have overestimated the size of our total addressable market, our future growth rate may be limited. We have estimated the size of our total addressable market based on data published by third parties and internally generated data and assumptions. We have not independently verified any third-party information and cannot be assure of its accuracy or completeness.
If we have overestimated the size of our total addressable market, our future growth rate may be limited. We have estimated the size of our total addressable market based on data published by third parties and internally generated data and assumptions. We have not independently verified any third-party information and cannot be assured of its accuracy or completeness.
Our international operations may subject us to potential adverse tax consequences. We plan to expand our international operations and staff to better support our growth into international markets. Our corporate structure and associated transfer pricing policies contemplate future growth into the international markets, and consider the functions, risks and assets of the various entities involved in the intercompany transactions.
Our international operations may subject us to potential adverse tax consequences. We plan to expand our international operations and team to better support our growth into international markets. Our corporate structure and associated transfer pricing policies contemplate future growth into the international markets, and consider the functions, risks and assets of the various entities involved in the intercompany transactions.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management or members of the board of directors (“ Board ”) than they would as shareholders of a U.S. public company. Judgments obtained against us by our shareholders may not be enforceable.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management or members of the board of directors (“Board”) than they would as shareholders of a U.S. public company. Judgments obtained against us by our shareholders may not be enforceable.
We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. 39 Failure to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.
We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law. 41 Failure to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject us to penalties.
Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality customer support, could adversely affect our reputation, business, results of operations and financial condition. 7 Incorrect or improper implementation or use of our services could result in customer dissatisfaction and negatively affect our business, results of operations, financial condition, and growth prospects.
Any failure to maintain high-quality customer support, or a market perception that we do not maintain high-quality customer support, could adversely affect our reputation, business, results of operations and financial condition. 8 Incorrect or improper implementation or use of our services could result in customer dissatisfaction and negatively affect our business, results of operations, financial condition, and growth prospects.
Our financial statements could fail to reflect adequate reserves to cover such a contingency. 18 As we have participated in retail and distribution of cryptocurrency mining machines, we’ve entered into certain customized servers purchase agreement. The demand of our cryptocurrency mining machines is affected by the market of cryptocurrency.
Our financial statements could fail to reflect adequate reserves to cover such a contingency. 19 As we have participated in retail and distribution of cryptocurrency mining machines, we’ve entered into certain customized servers purchase agreement. The demand of our cryptocurrency mining machines is affected by the market of cryptocurrency.
Since these measures are relatively new, there are still substantial uncertainties with respect to the interpretation and implementation of these measures in practice and how they will affect our business operation. 33 In addition, internet information in mainland China is regulated from a national security standpoint.
Since these measures are relatively new, there are still substantial uncertainties with respect to the interpretation and implementation of these measures in practice and how they will affect our business operation. 35 In addition, internet information in mainland China is regulated from a national security standpoint.
Therefore, our selling cycle is subject to many risks and delays over which we have little or no control, including our customers’ decisions to choose alternatives to our services (such as other providers or in-house resources) and the timing of our customers’ budget cycles and approval processes.
Therefore, our selling cycle is subject to various risks and delays over which we have little or no control, including our customers’ decisions to choose alternatives to our services (such as other providers or in-house resources) and the timing of our customers’ budget cycles and approval processes.
In addition, these inaccuracies or errors may cause us to misallocate capital and other critical business resources, which could harm our business. 10 Even if our total addressable market meets our size estimates and experiences growth, we may not continue to grow our share of the market.
In addition, these inaccuracies or errors may cause us to misallocate capital and other critical business resources, which could harm our business. 11 Even if our total addressable market meets our size estimates and experiences growth, we may not continue to grow our share of the market.
Also, to the extent that our services depends upon the successful operation of third-party software in conjunction with our software, any undetected errors or defects in such third-party software could prevent the deployment or impair the functionality of our services, delay new feature introductions, result in a failure of our services and injure our reputation.
Also, to the extent that our services depend upon the successful operation of third-party software in conjunction with our software, any undetected errors or defects in such third-party software could prevent the deployment or impair the functionality of our services, delay new feature introductions, result in a failure of our services and injure our reputation.
In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny, subject us to lawsuits, result in the imposition of material penalties and fines under applying laws or regulations.
In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny, subject us to lawsuits, result in the imposition of material penalties and fines under the applicable laws or regulations.
The determination of our status as a foreign private issuer is made annually on the last business day of our most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on or after June 30, 2024.
The determination of our status as a foreign private issuer is made annually on the last business day of our most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on or after June 30, 2025.
Thus, we may however, require additional cash resources for our research and development, sales and market and potential strategic alliances and acquisitions. If these cash resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility.
Thus, we may however, require additional cash resources for our research and development, sales and marketing and potential strategic alliances and acquisitions. If these cash resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility.
While we have policies and procedure to address compliance with such laws, we cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
While we have policies and procedures to address compliance with such laws, we cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
Risks Related to Our Business and Industry Risks and uncertainties related to our business and industry include, but are not limited to, the following: ● Economic uncertainties or downturns could materially adversely affect our business. ● The growth and success of our business depends on our ability to develop new services and enhance existing services in order to keep pace with rapid changes in technology. ● If we do not succeed in attracting new customers for our services and growing revenues from existing customers, we may not achieve our revenue growth goals. ● We may be unable to effectively manage our expansion for the anticipated growth, which could place significant strain on our management personnel, systems and resources.
Risk Factors.” 1 Risks Related to Our Business and Industry Risks and uncertainties related to our business and industry include, but are not limited to, the following: ● Economic uncertainties or downturns could materially adversely affect our business. ● The growth and success of our business depends on our ability to develop new services and enhance existing services in order to keep pace with rapid changes in technology. ● If we do not succeed in attracting new customers for our services and growing revenues from existing customers, we may not achieve our revenue growth goals. ● We may be unable to effectively manage our expansion for the anticipated growth, which could place significant strain on our management personnel, systems and resources.
Our services are deployed in a wide variety of increasingly complex technology environments, including on premises, in the cloud or in hybrid environments. We believe our future success will depend on our ability to increase sales of our services for use in such deployments.
Our services are deployed in a wide variety of increasingly complex technology environments, including on premises, in the cloud or in hybrid environments. We believe our future success will depend on our ability to elevate the sales of our services for use in such deployments.
Failure to adhere to regulations that govern our customers’ businesses could result in breaches of contracts with our customers. Failure to adhere to the regulations that govern our business could result in we being unable to effectively perform our services. Our customers’ business operations are subject to certain rules and regulations in China or elsewhere.
Failure to adhere to regulations that govern our customers’ businesses could result in breaches of contracts with our customers. Failure to adhere to the regulations that govern our business could result in us being unable to effectively perform our services. Our customers’ business operations are subject to certain rules and regulations in China or elsewhere.
The transfer to this reserve must be made before distribution of any dividends to shareholders. 25 Our business may be materially and adversely affected if our Chinese subsidiary declare bankruptcy or become subject to a dissolution or liquidation proceeding.
The transfer to this reserve must be made before distribution of any dividends to shareholders. 27 Our business may be materially and adversely affected if our Chinese subsidiary declare bankruptcy or become subject to a dissolution or liquidation proceeding.
Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of a mutual and practical cooperation mechanism.
Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of a mutual and practical cooperation mechanism.
Such uncertainty could cause the market price of the ordinary shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCAA. 42
Such uncertainty could cause the market price of the ordinary shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCAA. 44
The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information. 29 In early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that are listed in the United States.
The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information. 30 In early July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies that are listed in the United States.
If our services are not effectively implemented or used correctly or as intended, or if we fail to adequately train customers on how to efficiently and effectively use our services, our customers may not be able to achieve satisfactory outcomes.
If our services are not effectively implemented or accurately used as intended, or if we fail to adequately train customers on how to efficiently and effectively use our services, our customers may not be able to achieve satisfactory outcomes.
Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion. 16 Although we currently neither holds bank accounts in nor has banking relationship with the SVB, Signature Bank and Silvergate Capital Corp, there are factors that could adversely affect us, including, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.
Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion. 17 Although we currently neither hold bank accounts in nor have a banking relationship with the SVB, Signature Bank and Silvergate Capital Corp, there are factors that could adversely affect us, including, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the U.S. See “Enforceability of Civil Liabilities”. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the U.S. See “Enforceability of Civil Liabilities.” It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China.
Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary and limit our PRC subsidiary’ ability to distribute dividends to us.
Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary and limit our PRC subsidiary's ability to distribute dividends to us.
Before committing to use our services, potential customers require us to expend substantial time and resources educating them on the value of our services and our ability to meet their requirements.
Before committing to use our services, potential customers require us to expend substantial time and resources to educate them on the value of our services and our ability to meet their requirements.
Our corporate affairs are governed by our Sixth Amended and Restated Memorandum and Articles of Association, the Cayman Islands Companies Act (Revised) (the “Companies Act”) and the common law of the Cayman Islands.
Our corporate affairs are governed by our Eighth Amended and Restated Memorandum and Articles of Association, the Cayman Islands Companies Act (Revised) (the “Companies Act”) and the common law of the Cayman Islands.
Certain of our customer contracts require us to comply with security obligations including maintaining system security, ensuring our system is virus-free, maintaining business continuity procedures, and verifying the integrity of employees that work with our customers by conducting background checks.
Certain of our customer contracts require us to comply with security obligations including but not limited to, maintaining system security, ensuring our system is virus-free, maintaining business continuity procedures, and verifying the integrity of employees that work with our customers by conducting background checks.
Risks Related to Our Ordinary Shares Our Ordinary Shares may be delisted from the Nasdaq Capital Market as a result of our failure of meeting the Nasdaq Capital Market continued listing requirements.
Risks Related to Our Ordinary Shares Our Ordinary Shares may be delisted from the Nasdaq Capital Market as a result of our failure to meet the Nasdaq Capital Market continued listing requirements.
Our ability to attract new customers, as well as our ability to grow revenues from existing customers, depends on a number of factors, including our ability to offer high quality services at competitive prices, the strength of our competitors and the capabilities of our sales and marketing teams.
Our ability to attract new customers, as well as our ability to grow revenues from existing customers, depends on various factors, including our ability to offer high quality services at competitive prices, the strength of our competitors and the capabilities of our sales and marketing teams.
If we do not successfully maintain and enhance our brand, then our business may not grow, we may see our pricing power reduced relative to competitors and we may lose customers, all of which would adversely affect our business, results of operations and financial condition. 12 We may be unsuccessful in entering into strategic alliances or identifying and acquiring suitable acquisition candidates, which could impede our growth and negatively affect our revenues and net income.
If we do not successfully maintain and enhance our brand, then our business may not grow, we may see our pricing power reduced when compared to our competitors and we may lose customers, all of which would adversely affect our business, results of operations and financial condition. 13 We may be unsuccessful in entering into strategic alliances or identifying and acquiring suitable acquisition candidates, which could impede our growth and negatively affect our revenues and net income.
If our new enhancements to our services do not achieve sufficient market acceptance, our financial results and competitive position will suffer. We spend substantial amounts of time and money to research and develop new enhancements of our services to incorporate additional features, improve functionality or other enhancements in order to meet our customers’ rapidly evolving demands.
If our new enhancements to our services do not achieve sufficient market acceptance, our financial results and competitive position will suffer. We expend substantial amount of time and money to research and develop new enhancements of our services to incorporate additional features, improve functionality or other enhancements in order to meet our customers’ rapidly evolving demands.
In addition, we are required under various Chinese laws to obtain and maintain permits and licenses to conduct our business.
In addition, we are required under various PRC laws to obtain and maintain permits and licenses to conduct our business.
A portion of our sales and marketing efforts is focusing on larger corporate and government organizations. As a result, we face a number of risks with respect to this strategy. For example, we expect to incur higher costs and longer sales cycles for larger organizations, and we may be less effective at predicting when will we complete these sales.
A portion of our sales and marketing efforts are focusing on larger corporate and governmental organizations. As a result, we face a number of risks with respect to this strategy. For example, we expect to incur higher costs and longer sales cycles for larger organizations, and we may be less effective in predicting when will we complete these sales.
The successful promotion of our brand will depend largely on our continuous marketing efforts and our ability to offer high quality services to our customers. Our brand promotion activities may not be successful or produce increased revenue.
The successful promotion of our brand will depend largely on our continuous marketing efforts and our ability to offer high quality services to our customers. Our brand promotion activities may not be successful or help to elevate the revenue.
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share in respect of matters requiring the votes of shareholders, while holders of Class B ordinary shares are entitled to thirty votes per share, subject to certain exceptions.
Holders of Class A ordinary shares are entitled to one vote per share in respect of matters requiring the votes of shareholders, while holders of Class B ordinary shares are entitled to thirty votes per share, subject to certain exceptions.
Additionally, the amount of Bitcoin awarded for solving each block is designed to decline approximately every four years, with the most recent halving event occurred in May 2020.
Additionally, the amount of Bitcoin awarded for solving each block is designed to decline approximately every four years, with the most recent halving event occurred in April 2024 .
We are a Cayman Islands holding company, and we rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and repay any debt that we may incur.
We are a Cayman Islands holding company conducting our operations in China through our PRC subsidiaries, and therefore we rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and repay any debt that we may incur.
While we believe the strategic plans that we implemented would enable us to better leverage synergies between our existing businesses and the newly expanded business, thus improved our overall business operations, those strategic plans may not be ultimately successful.
While we believe the strategic plans that we implemented would enable us to better leverage synergies between our existing businesses and the newly expanded business, thus improved our overall business operations, those strategic plans may not be ultimately successful. See “Item 4. Information on the Company — C.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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The reorganization involved the incorporation of X3 Holdings (previously known as Powerbridge), a Cayman Islands holding company, and its wholly owned subsidiary, Powerbridge HK, a holding company incorporated on July 27, 2018 under the laws of Hong Kong; and the transfer of all equity ownership of Powerbridge Zhuhai to Powerbridge HK from the former shareholders of Powerbridge Zhuhai through an investment holding company.
The reorganization involved the incorporation of X3 Holdings (previously known as Powerbridge Cayman), a Cayman Islands holding company, and its wholly owned subsidiary, Powerbridge HK, a holding company incorporated on July 27, 2018 under the laws of Hong Kong; and the transfer of all equity ownership of Powerbridge Zhuhai to Powerbridge HK from the former shareholders of Powerbridge Zhuhai through an investment holding company.
We believe the following competitive attributes are necessary for us to compete successfully in our industry: ● Deep domain knowledge, industry experience and product expertise in global trade software applications and system integration to address customer needs. ● Enablement of emerging and disruptive technologies to develop and provide global trade software applications and services. ● Enterprise grade performance level in scalability, reliability and security as well as cost of ownership and ease of deployment. ● Breadth, depth and quality of application features and functionalities that are able to operate in multiple infrastructures such as in cloud, on premises or both. 52 ● Capability of technology platforms in integrating and interoperating with legacy and other enterprise infrastructures and third-party applications. ● Strength of sales and marketing as well as customer support in service responsiveness and level of customer satisfaction. ● Brand awareness and reputation, size of customer base and level of user adoption to new and disruptive technologies and applications. ● Ability to capture market share in China and expand into international markets to operate as a global player in servicing multiple markets and countries.
We believe the following competitive attributes are necessary for us to compete successfully in our industry: ● Deep domain knowledge, industry experience and product expertise in global trade software applications and system integration to address customer needs. ● Enablement of emerging and disruptive technologies to develop and provide global trade software applications and services. ● Enterprise grade performance level in scalability, reliability and security as well as cost of ownership and ease of deployment. ● Breadth, depth and quality of application features and functionalities that are able to operate in multiple infrastructures such as in cloud, on premises or both. 56 ● Capability of technology platforms in integrating and interoperating with legacy and other enterprise infrastructures and third-party applications. ● Strength of sales and marketing as well as customer support in service responsiveness and level of customer satisfaction. ● Brand awareness and reputation, size of customer base and level of user adoption to new and disruptive technologies and applications. ● Ability to capture market share in China and expand into international markets to operate as a global player in servicing multiple markets and countries.
Sustainability Focus: We intend to engage in the development of bitcoin mining operations and facilities powered by renewable energy sources from solar energy, wind power and hydroelectric power across global geographically diversified locations. We continue to emphasize on a broader international footprint and deploy miners at renewable energy powered hosting sites with a long-term goal to become entirely carbon neutral.
Sustainability Focus : We engage in the development of bitcoin mining operations and facilities powered by renewable energy sources from solar energy, wind power and hydroelectric power across global geographically diversified locations. We continue to emphasize on a broader international footprint and deploy miners at renewable energy powered hosting sites with a long-term goal to become entirely carbon neutral.
Cryptomining Business: We develop and operate renewable energy supported and sustainability-focused bitcoin mining operations with high performance mining machines, diversified across hosting sites in Central Asia and other regions. We adopt an asset light model by focusing on investment in mining machines rather than infrastructure for maximized return of investment on revenue generating assets and minimized capital expenditure.
Cryptomining Business : We develop and operate renewable energy supported and sustainability-focused bitcoin mining operations with high performance mining machines, diversified across hosting sites in Central Asia and other regions. We adopt an asset light model by focusing on investment in mining machines rather than infrastructure for maximized return on investment on revenue generating assets and minimized capital expenditure.
We partner with top-tier mining machine providers to ensure stable access and supply of next generation miners. We also collaborate with global partners to intertwine cryptomining with agriculture and renewable energy to slash electricity and operational costs. Already operational in Central Asia, the Company plans to gear up for a sizable bitcoin mining fleet in the near term.
We partner with top-tier mining machine providers to ensure stable access and supply of next generation miners. We also collaborate with global partners to intertwine cryptomining with agriculture and renewable energy to slash electricity and operational costs. Already operating in Central Asia, the Company plans to gear up for a sizable bitcoin mining fleet in the near term.
The proportion of discretionary settlement of foreign exchange capital of foreign-invested enterprises is currently 100%. SAFE can adjust such proportion in due time based on the circumstances of international balance of payments. The dividends paid by the subsidiaries to its shareholder are deemed shareholder income and are taxable in China.
The proportion of discretionary settlement of foreign exchange capital of foreign-invested enterprises is currently 100%. SAFE can adjust such proportion in due time based on the circumstances of international balance of payments. 61 The dividends paid by the subsidiaries to its shareholder are deemed shareholder income and are taxable in China.
Powerbridge Zhuhai is an operating subsidiary that provides global trade software application and technology services to corporate and government customers located in China. On August 7, 2018, the former shareholders transferred their 100% ownership interest in Powerbridge Zhuhai to Powerbridge HK, which is 100% owned by Powerbridge.
Powerbridge Zhuhai is an operating subsidiary that provides global trade software application and technology services to corporate and government customers located in China. On August 7, 2018, the former shareholders transferred their 100% ownership interest in Powerbridge Zhuhai to Powerbridge HK, which is 100% owned by Powerbridge Cayman.
After the reorganization, Powerbridge owns 100% equity interests of Powerbridge HK and Powerbridge Zhuhai. All shareholders have the same ownership interest in Powerbridge as in Powerbridge Zhuhai prior to the reorganization. As of the date of this Annual Report, the Company has offices located in Singapore and China (Zhuhai, Guangzhou, Shenzhen, Changsha, Wuhan, Nanning, Hangzhou).
After the reorganization, Powerbridge Cayman owns 100% equity interests of Powerbridge HK and Powerbridge Zhuhai. All shareholders have the same ownership interest in Powerbridge Cayman as in Powerbridge Zhuhai prior to the reorganization. As of the date of this Annual Report, the Company has offices located in Singapore and China (Zhuhai, Guangzhou, Shenzhen, Changsha, Wuhan, Nanning, Hangzhou).
We also develop cleantech solutions to recover and repurpose excessive heat from the cryptomining facilities as a heating source for collocated farming greenhouses, further reducing carbon emissions. Cryptomining and Agribusiness: We intend to develop sustainability focused cleantech solutions for recovering and repurposing the excessive heat generated from the cryptomining sites for heating use in the collocated farming greenhouses.
We also develop cleantech solutions to recover and repurpose excessive heat from the cryptomining facilities as a heating source for collocated farming greenhouses, further reducing carbon emissions. Cryptomining and Agribusiness : We develop sustainability focused cleantech solutions for recovering and repurposing the excessive heat generated from the cryptomining sites for heating use in the collocated farming greenhouses.
History and Development of the Company.” D. Property, Plants and Equipment Information regarding our property, plants and equipment is described in “Item 4. Information on the Company – B. Business Overview.” Item 4A. UNRESOLVED STAFF COMMENTS Not applicable. 58
History and Development of the Company.” D. Property, Plants and Equipment Information regarding our property, plants and equipment is described in “Item 4. Information on the Company – B. Business Overview.” Item 4A. UNRESOLVED STAFF COMMENTS Not applicable.
As part of our overall strategy, we plan to expand into international markets to provide global trade software solutions and services by “piggybacking” with the infrastructure builders and other Chinese organizations who participate in the B&R’s development of global trade infrastructures in the B&R partnering countries. 51 Research and Development (“R&D”) Our R&D organizations consist of dedicated engineering and technology employees, who are responsible for the design, development, testing and delivery of all aspects of our technologies, solutions and services.
As part of our overall strategy, we plan to expand into international markets to provide global trade software solutions and services by “piggybacking” with the infrastructure builders and other Chinese organizations who participate in the B&R’s development of global trade infrastructures in the B&R partnering countries. 55 Research and Development (“R&D”) Our R&D organizations consist of dedicated engineering and technology employees, who are responsible for the design, development, testing and delivery of all aspects of our technologies, solutions and services.
We partner with leading crypto machine manufacturers for stable access to top-tiered performance mining hardware to drive an efficient scaling of our miner fleet. Cryptomining Operations: We leverage our strong partnerships with diversified hosting facilities operated and supported by sustainable energy sources to minimize electricity and operational cost, and mitigate regulatory and site related risks.
We partner with leading crypto machine manufacturers for stable access to top-tier performance mining hardware to drive an efficient scaling of our miner fleet. Cryptomining Operations : We leverage our strong partnerships with diversified hosting facilities operated and supported by sustainable energy sources to minimize electricity and operational cost, and mitigate regulatory and site related risks.
The Company’s reports, registration statements and other information can be inspected on the SEC’s website at www.sec.gov and such information can also be inspected and copies ordered at the public reference facilities maintained by the SEC at the following location: 100 F Street NE, Washington, D.C. 20549. You may also visit us on the World Wide Web at www.powerbridge.com.
The Company’s reports, registration statements and other information can be inspected on the SEC’s website at www.sec.gov and such information can also be inspected and copies ordered at the public reference facilities maintained by the SEC at the following location: 100 F Street NE, Washington, D.C. 20549. You may also visit us on the World Wide Web at www.x3holdings.com.
(“Chenbao”), pursuant to which the Company agreed to acquire 5% equity interests (the “Acquired Interests”) of the outstanding equity interests of Chenbao. 44 On June 24, 2022, the Company entered into an equity transfer agreement (the “First Boxinrui Acquisition”) with Boxinrui’s shareholders (the “relevant shareholders”) of Boxinrui International Holdings Limited (“Boxinrui”) pursuant to which the Company agrees to purchase 15% equity of Boxinrui at 90% of the appraisal price.
(“Chenbao”), pursuant to which the Company agreed to acquire 5% equity interests (the “Acquired Interests”) of the outstanding equity interests of Chenbao. 46 On June 24, 2022, the Company entered into an equity transfer agreement (the “First Boxinrui Acquisition”) with Boxinrui’s shareholders (the “relevant shareholders”) of Boxinrui International Holdings Limited (“Boxinrui”) pursuant to which the Company agrees to purchase 15% equity of Boxinrui at 90% of the appraisal price.
Our ordinary shares began trading on Nasdaq under the new symbol “XTKG” effective on January 30, 2024. 43 On August 17, 2021, Powerstream Supply Chain Co., Ltd. (“Powerstream”) was incorporated under the laws of the PRC, as a wholly-owned subsidiary of Powerbridge HK and a wholly foreign-owned entity under the PRC laws.
Our ordinary shares began trading on Nasdaq under the new symbol “XTKG” effective on January 30, 2024. 45 On August 17, 2021, Powerstream Supply Chain Co., Ltd. (“Powerstream”) was incorporated under the laws of the PRC, as a wholly-owned subsidiary of Powerbridge HK and a wholly foreign-owned entity under the PRC laws.
On Jan 29, 2024, in the interest of our strategic transformation on global expansion and our commitment to broader technological and business horizons, we have shifted our full operation of global headquarter to Singapore and rebranded from Powerbridge Technologies to X3 Holdings. Accordingly, we have changed our corporate name from Powerbridge Technologies Co., Ltd. to X3 Holdings Co., Ltd.
On January 29, 2024, in the interest of our strategic transformation on global expansion and our commitment to broader technological and business horizons, we have shifted our full operation of global headquarter to Singapore and rebranded from Powerbridge Technologies to X3 Holdings. Accordingly, we have changed our corporate name from Powerbridge Technologies Co., Ltd. to X3 Holdings Co., Ltd.
Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime. 46 B. Business Overview Overview X3 Holdings Co., Ltd., headquartered in Singapore, is a global provider of digital solutions and technology services spanning diverse industries.
Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime. B. Business Overview Overview X3 Holdings headquartered in Singapore, is a global provider of digital solutions and technology services spanning diverse industries.
Our indirect channel partners include value added resellers, system integrators, software and application providers, system hardware providers and other referral partners. As of the date of this Annual Report, our sales teams consisted of 16 full-time sales and marketing personnel.
Our indirect channel partners include value added resellers, system integrators, software and application providers, system hardware providers and other referral partners. As of the date of this Annual Report, our sales teams consisted of 10 full-time sales and marketing personnel.
Our public sector customers are various government agencies, authorities and organizations, including government agencies such as customs, maritime affair, transportation and commerce, and government authorities and organizations such as port authorities, free trade zones, bonded facilities and warehouses, and others government regulated facility operators.
Our public sector customers are various government agencies, authorities and organizations, including government agencies such as customs, maritime affair, transportation and commerce, and government authorities and organizations such as port authorities, free trade zones, bonded facilities and warehouses, and other government regulated facility operators.
(“AIedu”) (also previously known as Shenzhen Wenxing Tianxia Technology Co., Ltd.). AIedu mainly engaged in Artificial Intelligence, Blockchain and NFT technology in the educational industry. Such acquisition is aligned with Powerbridge’s metaverse strategy as Powerbridge intends to utilize AIedu’s business know-how and technology to expand the Company’s operation.
(“AIedu”) (also previously known as Shenzhen Wenxing Tianxia Technology Co., Ltd.). AIedu mainly engaged in Artificial Intelligence, Blockchain and NFT technology in the educational industry. Such acquisition is aligned with the Company’s metaverse strategy as the Company intends to utilize AIedu’s business know-how and technology to expand the Company’s operation.
Cryptomining Operations X3 Holdings engages in developing globally diversified bitcoin cryptomining operations supported by sustainable energy sources. We partner with top-tier mining machine providers to ensure stable access and supply of next generation miners. We also collaborate with global partners to intertwine cryptomining with agriculture and renewable energy to slash electricity and operational costs.
Cryptomining Operations We engage in developing globally diversified bitcoin cryptomining operations supported by sustainable energy sources. We partner with top-tier mining machine providers to ensure stable access and supply of next generation miners. We also collaborate with global partners to intertwine cryptomining with agriculture and renewable energy to slash electricity and operational costs.
For some restricted industries, foreign investors can only conduct investment activities through equity or contractual joint ventures, while in some cases PRC partners are required to hold the majority interests in such joint ventures. In addition, projects in the restricted category are subject to higher-level governmental approvals.
For some restricted industries, foreign investors can only conduct investment activities through equity or contractual joint ventures, while in some cases PRC partners are required to hold the majority interests in such joint ventures. In addition, projects in the restricted category are subject to higher-level governmental approvals. Foreign investors are not allowed to invest in industries in the prohibited category.
Our vision is to be a differentiated and valuable company excelling in high growth industries with a global reach. Digital Technologies With over two decades of technology and industry expertise, X3 Holdings capitalizes on the digital transformation sweeping the global trade industry.
Our vision is to be a differentiated and valuable company excelling in high growth industries with a global reach. Digital Technologies With over two decades of technology and industry expertise, we capitalize on the digital transformation sweeping the global trade industry.
We gain access to efficient logistics channels to minimize shipping costs, leveraging on our over two decades of international trade industry experience and a global network of operations and logistics partners. 49 Cryptomining Operations X3 Holdings engages in developing globally diversified bitcoin cryptomining operations supported by sustainable energy sources.
We gain access to efficient logistics channels to minimize shipping costs, leveraging on our over two decades of international trade industry experience and a global network of operations and logistics partners. 52 Cryptomining Operations We engage in developing globally diversified bitcoin cryptomining operations supported by sustainable energy sources.
Foreign investors are not allowed to invest in industries in the prohibited category. 54 Regulations Relating to PRC Information Technology Service Industry According to the Catalog on Foreign Invested Industries (2017 Revision) issued by the National Development and Reform Commission and the Ministry of Commerce, IT services fall into the category of industries in which foreign investment is encouraged.
Regulations Relating to PRC Information Technology Service Industry According to the Catalog on Foreign Invested Industries (2017 Revision) issued by the National Development and Reform Commission and the Ministry of Commerce, IT services fall into the category of industries in which foreign investment is encouraged.
Stamp Technology mainly engaged in distributed database blockchain, cryptocurrency DAPP development and web 3.0 application in the industry. By acquiring SmartConn, Powerbridge intend to incorporate its blockchain technology and web 3.0 know how application to further elevate Powerbridge’s product development ability.
Stamp Technology mainly engaged in distributed database blockchain, cryptocurrency DAPP development and web 3.0 application in the industry. By acquiring SmartConn, the Company intends to incorporate its blockchain technology and web 3.0 know how application to further elevate the Company’s product development ability.
The Catalogue divides industries for foreign investment into three categories: encouraged, restricted and prohibited. Those industries not set out in the Catalogue shall be classified as industries permitted for foreign investment. The Catalogue serves as the main basis for management and guidance for the MOFCOM to manage and supervise foreign investments to PRC.
Those industries not set out in the Catalogue shall be classified as industries permitted for foreign investment. The Catalogue serves as the main basis for management and guidance for the MOFCOM to manage and supervise foreign investments to PRC.
Item 4. INFORMATION ON THE COMPANY A. History and Development of the Company Corporate History and Background We are a company that was established under the laws of the Cayman Islands on July 27, 2018 as a holding company.
Item 4. INFORMATION ON THE COMPANY A. History and Development of the Company Corporate History and Background We are not an operating company in China, but a holding company that was established under the laws of the Cayman Islands on July 27, 2018.
As of the date of this Annual Report, we had a total of 178 full-time employees, of which 76 are in research and development, 17 are in sales and marketing, 38 are in technical and customer services, and 47 are in general administration. 47 Our Competitive Strengths We believe that the following competitive strengths contribute to our success and differentiate us from our competitors: ● A diversified business with clear and robust growth strategies in high growth markets with multiple revenue and profit models. ● Over two decades of technology expertise and capabilities underpinning business innovation and transformation. ● Consistent value creation for stakeholders facilitated by globally integrated resources and operations to support overall growth. ● A potent entrepreneurial spirit prevalent throughout global operations, shared by our management, employees, and business partners. ● An agile and seasoned management, complemented by a partnership network adept at realizing the company’s global vision. ● A diversified business with clear and robust growth strategies in high growth markets with multiple revenue and profit models. ● Over two decades of technology expertise and capabilities underpinning business innovation and transformation. ● Consistent value creation for stakeholders facilitated by globally integrated resources and operations to support overall growth. ● A potent entrepreneurial spirit prevalent throughout global operations, shared by our management, employees, and business partners. ● An agile and seasoned management, complemented by a partnership network adept at realizing the Company’s global vision.
Our Competitive Strengths We believe that the following competitive strengths contribute to our success and differentiate us from our competitors: ● A diversified business with clear and robust growth strategies in high growth markets with multiple revenue and profit models. ● Over two decades of technology expertise and capabilities underpinning business innovation and transformation. ● Consistent value creation for stakeholders facilitated by globally integrated resources and operations to support overall growth. ● A potent entrepreneurial spirit prevalent throughout global operations, shared by our management, employees, and business partners. ● An agile and seasoned management, complemented by a partnership network adept at realizing the company’s global vision.
As of the date of this Annual Report, we have 20 registered patent, 136 registered software copyrights and 46 registered trademarks in the PRC. In addition, we own 13 URL designations and domain names, including x3holdings.com, powerbridgetech.com, powerstreamdigital.com, metafusiondigital.com, powermetadigital.com, enlightenmetaspace.com, powercrypto.pro, pbts.cloud, pbtyun.com, pbtcloud.com, cs-estone.com, erp-china.com, and powerbridge.com.
As of the date of this Annual Report, we have 20 registered patents, 136 registered software copyrights and 46 registered trademarks in the PRC. In addition, we own 10 URL designations and domain names, including x3holdings.com, powerbridgetech.com, enlightenmetaspace.com, powercrypto.pro, pbts.cloud, pbtyun.com, pbtcloud.com, cs-estone.com, erp-china.com, and powerbridge.com. We do not have applications pending in any jurisdiction other than China.
These provisions include, but are not limited to: ● being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in our SEC filings; ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● reduced disclosure obligations regarding executive compensation in periodic reports, proxy statements and registration statements; and ● exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
These provisions include, but are not limited to: ● being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in our SEC filings; ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● reduced disclosure obligations regarding executive compensation in periodic reports, proxy statements and registration statements; and ● exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. 49 We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act of 1933, as amended.
Rent expenses amounted to $344,775, $162,799 and $307,497 for the years ended December 31, 2023, 2022 and 2021, respectively. 53 Facility Address Space (㎡) Wuhan Office Rm F, 25 th Fl West, No.562, Construction Avenue (Guomao Xindu), Jianghan, Wuhan, Hubei, China 167 Changsha Office Rm 1608, 16 th Fl, Block C3, Wanda Plaza, No. 589 Zhongshan Road, Kaifu, Changsha, Hunan 410015, China 351 Nanning Office Suite 2206-2209, 22 nd Fl, Block 2, 118 Dongge Road Qingxiu, Nanning, Guangxi 530012, China 389 Hangzhou Office Rm 616, Jiang Tai Jing 3 rd Building, Xihu District, Hangzhou 35 Zhuhai Office 8 th and 9 th Fl, C2 Building, Advance Business Park, No.29 Lanwan Road, Tangjia Bay, Xiangzhou District, Zhuhai, China 1820 Guangzhou Office No.69, Nanhu Middle Road, Tonghe, Baiyun District, Guangzhou, China 3150.69 Shenzhen Office C705, Baozhong Excellence Times Square, Haitian Road, Xin’an Street, Bao’an District, Shenzhen, China 164.77 Singapore HQ Office Suite 412, Tower A, Tai Seng Exchange One Tai Seng Avenue, Singapore 536464 210 Employees As of the date of this Annual Report, we had a total of 178 full-time employees, of which 76 are in research and development, 17 are in sales and marketing, 38 are in technical and customer services, and 47 are in general administration.
Facility Address Space (㎡) Wuhan Office Rm F, 25 th Fl West, No.562, Construction Avenue (Guomao Xindu), Jianghan, Wuhan, Hubei, China 167.28 Changsha Office Rm 1006, 1008, 1010 10 th Fl, Block C2, Wanda Plaza, No. 589 Zhongshan Road, Kaifu, Changsha, Hunan 410015, China 185.76 Nanning Office Suite 2209, 22 nd Fl, Block 2, 118 Dongge Road Qingxiu, Nanning, Guangxi 530012, China 260 Hangzhou Office Room 2020, No. 59, Xiaolongtou, Shuangpu, Xihu, Hangzhou, Zhejiang, China 35 Zhuhai Office 8 th and 9 th Fl, C2 Building, Advance Business Park, No.29 Lanwan Road, Tangjia Bay, Xiangzhou District, Zhuhai, China 1820 Guangzhou Office No.69, Nanhu Middle Road, Tonghe, Baiyun District, Guangzhou, China 3150.69 Shenzhen Office C705, Baozhong Excellence Times Square, Haitian Road, Xin’an Street, Bao’an District, Shenzhen, China 164.77 Singapore HQ Office Suite 412, Tower A, Tai Seng Exchange One Tai Seng Avenue, Singapore 536464 210 Employees As of the date of this Annual Report, we had a total of 137 full-time employees, of which 62 are in research and development, 10 are in sales and marketing, 29 are in technical and customer services, and 36 are in general administration.
Our marketing programs target management and technology executives of global trade businesses, government agencies and authorities, and various service providers, including user conferences, sponsored events and product promotions.
We generate customer leads, accelerate sales opportunities and build brand awareness through our marketing programs. Our marketing programs target management and technology executives of global trade businesses, government agencies and authorities, and various service providers, including user conferences, sponsored events and product promotions.
Metafusion is planning to engage in IPs development, metaverse and digital services. On May 4, 2022, POWERCRYPTO Inc. (“POWERCRYPTO”) was incorporated under the laws of United States, as a wholly-owned subsidiary of Powerbridge Cayman.
Metafusion is planning to engage in IPs development, metaverse and digital services. On May 4, 2022, POWERCRYPTO Inc. (“POWERCRYPTO”) was incorporated under the laws of United States, as a wholly-owned subsidiary of Powerbridge Cayman. By the date of this Annual Report, POWERCRYPTO has not commenced its operations and Powerbridge Zhuhai has not injected any capital to the business.
We currently generate most of our revenues from application development services, which represented 58.1%, 36.7% and 63.3% of total revenue in fiscal 2023, 2022 and 2021, respectively. Revenue from consulting and technical support services represented 21.5%, 24.2% and 14.2% of total revenue in fiscal 2023, 2022 and 2021, respectively.
We currently generate most of our revenues from application development services, which represented 46.1%, 58.1% and 36.7% of total revenue for the fiscal year ended December 2024, 2023 and 2022, respectively. Revenue from consulting and technical support services represented 30.7%, 21.5% and 24.2% of total revenue for the fiscal year ended December 31, 2024, 2023 and 2022, respectively.
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports, registration statements and other information with the SEC.
Zhanjiang Huarong primarily engages in cross-border e-commerce and international trade. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports, registration statements and other information with the SEC.
If we use our equity interest to purchase the assets or equity interest of a PRC company owned by PRC residents in the future, such PRC residents will be subject to the registration procedures described in Circular 37. 57 New M&A Regulations and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, CSRC and SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006 and was amended on June 22, 2009.
New M&A Regulations and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, CSRC and SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006 and was amended on June 22, 2009.
We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate any such expansion of our operations. As of the date of this Annual Report, we maintain the following facilities in China.
We intend to procure additional space as we add employees and expand geographically. We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate any such expansion of our operations.
Revenue from subscription services represented4.1%, 7.2% and 2.9% of total revenue in fiscal 2023, 2022 and 2021, respectively. Revenue from trading represented 15.2%, 31.8% and 19.6% of total revenue in fiscal 2023, 2022 and 2021. Revenue from others represented 1.1%, nil and nil of our revenue for the year ended December 31, 2023, 2022 and 2021, respectively.
Revenue from subscription services represented 5.2%, 4.1% and 7.2% of total revenue for the fiscal year ended December 31, 2024, 2023 and 2022, respectively. Revenue from trading represented 17.7%, 15.2%, 31.8% of total revenue for the fiscal year ended December 31, 2024, 2023 and 2022.
By contrast, approval from or registration with appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans. 56 On March 30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange on Reforming the Management Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or SAFE Circular 19.
By contrast, approval from or registration with appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans.
Our Growth Strategy We plan to grow and expand our business by pursuing the following growth strategies: ● Focus on executing business segment strategies to expand and strengthen expertise, capabilities and resources to drive overall growth. ● Continue to pursue a global and diversified business growth strategy to ensure sustained growth, effectively countering market uncertainties. ● Accelerate our research and development of cutting-edge technologies to continue expanding our solutions and service offerings. ● Persist in creating and replicating agile and innovative business models, capitalizing on market opportunities to accelerate revenue and profit growth. ● Expand by organic and inorganic growth wherever strategic opportunities emerge, adopting to a disciplined approach to ensure future earnings growth. 48 We adopt differentiated and tailored growth strategies and priorities in the following business developments: ● Digital Technologies.
Our Growth Strategies We plan to grow and expand our business by pursuing the following growth strategies: ● Focus on executing business segment strategies to expand and strengthen expertise, capabilities and resources to drive overall growth. ● Continue to pursue a global and diversified business growth strategy to ensure sustained growth, effectively countering market uncertainties. ● Accelerate our research and development of cutting-edge technologies to continue expanding our solutions and service offerings. ● Persist in creating and replicating agile and innovative business models, capitalizing on market opportunities to accelerate revenue and profit growth. ● Expand by organic and inorganic growth wherever strategic opportunities emerge, adopting a disciplined approach to ensure future earnings growth. 51 We adopt differentiated and tailored growth strategies and priorities for each business segment: ● Digital Technologies : Harness the power of digital transformation to redefine global trade and increase market penetration with expanded solutions and offerings. ● Cryptomining Operations : Scale up bitcoin cryptomining capacities with sustainable energy sources across globally diversified hosting sites. ● Renewable Energy : Focus on development and operations of large scale integrated renewable energy projects in key markets. ● Agriculture Technologies : Amplify market presence with expanded smart agritech and IoT solutions and services in select markets.
Trade Zone Operations Solutions: We offer digital solutions and services for developing and operating free trade zones, bonded goods facilities, cross border trade zones, and other regulated trade zones and facilities. Our solutions and services are designed for trade zone operations, enterprise trade applications, customs monitoring and clearance, and other financial and logistics services for trade zone authorities and enterprises.
Trade Zone Operations Solutions : We offer digital solutions and services for developing and operating free trade zones, bonded goods facilities, cross border trade zones, and other regulated trade zones and facilities.
By the date of this Annual Report, POWERCRYPTO has not commenced its operations and Powerbridge Zhuhai has not injected any capital to the business On January 6, 2022, the Company entered into an equity transfer agreement (the “First SmartConn Acquisition”) with the shareholder of SmartConn., Limited (“SmartConn”) pursuant to which the Company agrees to purchase 19.99% equity of SmartConn at 90% of the appraisal price.
On January 6, 2022, the Company entered into an equity transfer agreement (the “First SmartConn Acquisition”) with the shareholder of SmartConn., Limited (“SmartConn”) pursuant to which the Company agrees to purchase 19.99% equity of SmartConn at 90% of the appraisal price.
Regulations Related to Labor and Social Security Pursuant to the Labor Law, promulgated by National People’s Congress in January 1995, and the Labor Contract Law, promulgated by Standing Committee of the National People’s Congress in June 2007 and amended in December 2012, employers must execute written labor contracts with full-time employees.
Otherwise, the personal information processors will be ordered to correct or suspend or terminate the provision of services and be subject to confiscation of illegal income, fines or other penalties. 60 Regulations Related to Labor and Social Security Pursuant to the Labor Law, promulgated by National People’s Congress in January 1995, and the Labor Contract Law, promulgated by Standing Committee of the National People’s Congress in June 2007 and amended in December 2012, employers must execute written labor contracts with full-time employees.
Powerbridge Zhuhai was incorporated on October 30, 1997 under the laws of the People’s Republic of China, as a wholly-owned subsidiary of Powerbridge HK and a wholly foreign-owned entity under the PRC laws.
Powerbridge Zhuhai was incorporated on October 30, 1997 under the laws of the People’s Republic of China, as a wholly-owned subsidiary of Powerbridge HK and a wholly foreign-owned entity under the PRC laws. X3 Holdings is currently not engaged in any active business other than acting as a holding company.
However, uncertainties still exist as to how the New M&A Rule will be interpreted and implemented and our opinion stated above is subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the New M&A Rule.
However, uncertainties still exist as to how the New M&A Rule will be interpreted and implemented and our opinion stated above is subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the New M&A Rule. 62 Regulations on Offshore Parent Holding Companies’ Direct Investment in and Loans to Their PRC subsidiary An offshore company may invest equity in a PRC company, which will become the PRC subsidiary of the offshore holding company after investment.
X3 Holdings is currently not engaged in any active business other than acting as a holding company. We conduct our business mainly through Powerbridge Zhuhai, Powerbridge HK and Hongding HK. On April 2, 2019, our ordinary shares commenced trading on Nasdaq under the symbol “PBTS”.
We conduct our business mainly through Powerbridge Zhuhai, Powerbridge HK and Hongding HK. On April 2, 2019, our ordinary shares commenced trading on Nasdaq under the symbol “PBTS”.
Our global trade supply chain and compliance platform services have been adopted in China, Indonesia, the Netherlands, Spain and the United Kingdom, with plans to reach even more countries.
We provide integrated solutions and services to both public and private entities by developing a comprehensive suite of cross-border digital trade platforms and services. Our global trade supply chain and compliance platform services have been adopted in China, Indonesia, the Netherlands, Spain and the United Kingdom, with plans to reach even more countries.
Violation of the Labor Law and the Labor Contract Law may result in the imposition of fines and other administrative and criminal liability in the case of serious violation. 55 On December 28, 2012, the PRC Labor Contract Law was amended with effect on July 1, 2013 to impose more stringent requirements on labor dispatch.
On December 28, 2012, the PRC Labor Contract Law was amended with effect on July 1, 2013 to impose more stringent requirements on labor dispatch.
Our Solutions Our Solutions and Services X3 Holdings is a provider of digital solutions and technology services spanning diverse industries in targeted markets, operating across diversified business segments in digital technologies, cryptomining operations, renewable energy, and agriculture technologies.
Our Solutions and Services We are a provider of digital solutions and technology services spanning diverse industries in targeted markets, operating across diversified business segments in digital technologies, cryptomining operations, renewable energy and agriculture technologies. Digital Technologies With over two decades of technology and industry expertise, we capitalize on the digital transformation sweeping the global trade industry.
Our team is further apportioned into smaller agile development groups to foster continuous innovation and rapid delivery. We believe we have a strong R&D culture that rapidly and consistently delivers high quality products. We plan to continue to invest substantial resources in R&D to drive core technology innovation and bring new solutions and services to market.
The majority of our R&D team is based in our Zhuhai office and to a lesser degree in our branch offices. Our team is further apportioned into smaller agile development groups to foster continuous innovation and rapid delivery. We believe we have a strong R&D culture that rapidly and consistently delivers high quality products.
As of the date of this Annual Report, our team consists of 76 full-time R&D personnel. We incurred expenses of $4.8 million, $3.5 million and $2.6 million in R&D in fiscal year 2023, 2022 and 2021, respectively. The majority of our R&D team is based in our Zhuhai office and to a lesser degree in our branch offices.
As of the date of this Annual Report, our team consists of 62 full-time R&D personnel. We incurred expenses of $4.1 million, $4.8 million and $3.5 million in R&D for the fiscal year ended December 31, 2024, 2023 and 2022, respectively.
Government Regulation Relating to Our Business Regulations Related to Foreign Investment Investment activities in China by foreign investors are principally governed by the Catalogue for the Guidance of Foreign Investment Industries, which was promulgated by MOFCOM and the National Development and Reform Commission, as amended from time to time.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. 58 Government Regulation Relating to Our Business The following sets forth a summary of the major laws and regulations that affect our business activities: Regulations Related to Foreign Investment Investment activities in China by foreign investors are principally governed by the Catalogue for the Guidance of Foreign Investment Industries, which was promulgated by MOFCOM and the National Development and Reform Commission, as amended from time to time.
The Company, through its subsidiaries, is a provider of software application and technology services to corporate and government customers engaged in global trade. For the purpose of the IPO and listing on the NASDAQ Capital Market, a reorganization of the Company’s legal structure was completed on August 27, 2018.
We conduct our operations in China through our PRC subsidiaries, and we are a global provider of technology solutions services across multiple industries. For the purpose of the IPO and listing on the NASDAQ Capital Market, a reorganization of the Company’s legal structure was completed on August 27, 2018.
Therefore, Powerbridge Zhuhai, a wholly foreign-owned enterprise (“WFOE”) of Powerbridge HK, should be regarded as a foreign-invested enterprise and comply with both the Company Law and other applicable foreign investment laws. 45 With respect to the establishment and operation of WFOEs, the MOFCOM, and the National Development and Reform Commission (the “NDRC”), promulgated the Catalogue of Industries for Guiding Foreign Investment (the “Catalogue”), as amended on June 28, 2017, which came into effect on August 28, 2017.
With respect to the establishment and operation of WFOEs, the MOFCOM, and the National Development and Reform Commission (the “NDRC”), promulgated the Catalogue of Industries for Guiding Foreign Investment (the “Catalogue”), as amended on June 28, 2017, which came into effect on August 28, 2017. The Catalogue divides industries for foreign investment into three categories: encouraged, restricted and prohibited.
For the fiscal years ending December 31, 2023, 2022 and 2021, our revenues were $16.8 million, $10.5 million and $32.1 million, respectively.
Revenue from others represented 0.3%, 1.1% and nil of our revenue for the fiscal year ended December 31, 2024, 2023 and 2022, respectively. For the fiscal years ended December 31, 2024, 2023 and 2022, our revenues were $11.6 million, $16.8 million and $10.5 million, respectively.
Such enterprises are also required to establish an information protection system and take various measures to protect customers’ confidential information, including causing their employees and third parties who have access to customers’ confidential information to sign confidentiality agreements and or non-competition agreements.
Such enterprises are also required to establish an information protection system and take various measures to protect customers’ confidential information, including causing their employees and third parties who have access to customers’ confidential information to sign confidentiality agreements and or non-competition agreements. 59 Regulations on Information Security Several Provisions on Regulating the Market Order of Internet Information Services The Ministry of Industry and Information technology (“MIIT”) issued the Several Provisions on Regulating the Market Order of Internet Information Services (the “Several Provisions”) in December 2011, which became effective in March 2012.
International Trading of Products: We engage in international trading of select products by using data from our global trade platforms and market analysis on trade composition, trade logistics, and market trends and development. We collaborate with supply and channel partners to capitalize on international trading opportunities for consumer products and commodity products with high profit and growth opportunities.
We collaborate with supply and channel partners to capitalize on international trading opportunities for consumer products and commodity products with high profit and growth opportunities.
Compliance with Foreign Investment All limited liability companies formed and operating in the PRC are governed by the Company Law of the People’s Republic of China (the “Company Law”), which was amended and promulgated by the Standing Committee of the National People’s Congress on October 26, 2018 and came into effect on the same day.
We are currently not required to obtain approval from Chinese authorities to issue securities to foreign investors, however, if our subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.” Compliance with Foreign Investment All limited liability companies formed and operating in the PRC are governed by the Company Law of the People’s Republic of China (the “Company Law”), which was amended and promulgated by the Standing Committee of the National People’s Congress on October 26, 2018 and came into effect on the same day.
During fiscal years 2023, 2022 and 2021, our sales and marketing expense were approximately $1.5 million, $2.0 million and $2.8 million, respectively, representing 8.8%, 18.7% and 8.6% of our total revenues for fiscal years 2023, 2022 and 2021, respectively. We generate customer leads, accelerate sales opportunities and build brand awareness through our marketing programs.
For the fiscal year ended December 31, 2024, 2023 and 2022, our sales and marketing expense were approximately $1.1 million, $1.5 million and $2.0 million, respectively, representing 9.5%, 8.8% and 18.7% of our total revenues for the fiscal year ended December 31, 2024, 2023 and 2022, respectively.
Our blockchain applications enable supply chain transparency, streamlined customs clearance, expedited import and export process, and increased international trade volume for the regulated trade zones Supply Chain and Compliance Solutions: We provide global trade supply chain and compliance platforms and solutions for multinational manufacturing and international trade enterprises, satisfying regulatory requirements of customs authorities in various countries.
Our solutions and services are designed for trade zone operations, enterprise trade applications, customs monitoring and clearance, and other financial and logistics services for trade zone authorities and enterprises. Our blockchain applications enable supply chain transparency, streamlined customs clearance, expedited import and export process, and increased international trade volume for the regulated trade zones.
On October 27, 2022, the Company entered into an equity transfer agreement with six individual shareholders of DTI Group Limited (“DTI”), pursuant to which the Company agreed to purchase 19% equity interest of DTI Jiangsu Corporation Limited (“DTI Jiangsu”) On March 24, 2023, the Company entered into an equity transfer agreement with a shareholder of DTI which the Company agrees to prepaid Class A ordinary shares to purchase 32% equity of DTI.
On October 27, 2022, the Company entered into an equity transfer agreement with six individual shareholders of DTI Group Limited (“DTI”), pursuant to which the Company agreed to purchase 19% equity interest of DTI Jiangsu Corporation Limited (“DTI Jiangsu”) On May 1, 2024, we acquired 100% equity interest in Hong Kong Hongyi Holdings Limited (“Hongyi”) and its 100% held subsidiary Shenzhen Hongchuangxin Technology Co., Ltd.
Our solutions facilitate streamlined documentation process and integrated data sharing relating to customs, tax, logistics and shipping, and strengthen collaboration among customers’ subsidiaries and operations worldwide. Our solutions expedite the flow of raw materials and finished goods across the entire supply chain, fostering customer’s global market expansion.
Supply Chain and Compliance Solutions : We provide global trade supply chain and compliance platforms and solutions for multinational manufacturing and international trade enterprises, satisfying regulatory requirements of customs authorities in various countries. Our solutions facilitate streamlined documentation process and integrated data sharing relating to customs, tax, logistics and shipping, and strengthen collaboration among customers’ subsidiaries and operations worldwide.
Competition The market for digital solutions is highly competitive and fragmented. We face intensive competition.
We plan to continue to invest substantial resources in R&D to drive core technology innovation and bring new solutions and services to market. Competition The market for digital solutions is highly competitive and fragmented. We face intensive competition.
Facilities We have set up global headquarters in Singapore (“Singapore HQ Office”) and a Guangzhou office as our strategic pursuit of global presence, which is fully operational as of December 31, 2023. We intend to procure additional space as we add employees and expand geographically.
We do not know if these applications will be granted as patents, and if they are granted as patents whether they will provide meaningful protection against their party competitors. 57 Facilities We have set up global headquarters in Singapore (“Singapore HQ Office”) and a Guangzhou office as our strategic pursuit of global presence, which is fully operational as of December 31, 2024.
The following diagram illustrates our corporate structure of our principal subsidiaries as of the date of this Annual Report.
The following diagram illustrates our corporate structure of our principal subsidiaries as of the date of this Annual Report. 47 The Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCAA”) was enacted on December 18, 2020, as amended by the Consolidated Appropriations Act, 2023.
Our corporate and government customers include (i) international trade businesses and manufacturers; (ii) governmental agencies and authorities; and (iii) logistics and other various service providers.
We believe that there is a potent entrepreneurial spirit prevalent throughout our global operations, shared by our management, employees, and business partners, led by our agile and seasoned management team and complemented by a partnership network adept at realizing our global vision. 50 Our corporate and government customers include (i) international trade businesses and manufacturers; (ii) governmental agencies and authorities; and (iii) logistics and other various service providers.
Already operational in Central Asia, the Company plans to gear up for a sizable bitcoin mining fleet in the near term.
Already operational in Central Asia, the Company plans to gear up for a sizable bitcoin mining fleet in the near term. Renewable Energy We align with industry leading players, weaving together policy, technology, capital and regional resources to develop scalable renewable energy projects. This initiative champions renewable energy adoption for new energy vehicle and agriculture machinery development in targeted markets.
Removed
Hongding Shenzhen was incorporated on October 21, 2020 under the laws of the People’s Republic of China, as a wholly-owned subsidiary of Hongding Hong Kong and a wholly foreign-owned entity under the PRC laws. As of the date of this Annual Report, Hongding Hong Kong and Hongding Shenzhen have no business operations.
Added
(“Hongchuangxin”) is engaged in AI education and hardware equipment sales. The fair value of the consideration for this acquisition was approximately $13.9 million. On January 12, 2025, Zhuhai Hongzhi Cultural Technology Co., Ltd. (“Zhuhai Hongzhi”) was incorporated under the laws of PRC, in which Powerbridge Technology Group Co., Ltd. holds a 35% equity interest.
Removed
We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act of 1933, as amended.
Added
Zhuhai Hongzhi aims to develop an AI educational hub integrating AI-powered teaching, academic advancement support, and multifunctional learning spaces. On April 9, 2025, Zhanjiang Huarong Enterprise Management Service Co., Ltd. (“Zhanjiang Huarong”) was incorporated under the laws of the PRC, in with Powerstream Supply Chain Co., Ltd. holds a 36% equity interest.
Removed
We intend to continue leveraging our industry expertise and product knowledge with the best use of emerging and disruptive technologies such as big data, artificial intelligence and Internet of Things to enhance our core technology capabilities and continually increase the scope of our solutions and services to our customers.
Added
The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over- the-counter trading market in the U.S.
Removed
Harness the power of digital transformation to redefine global trade and increase market penetration with expanded solutions and offerings. ● Cryptomining Operations. Scale up bitcoin cryptomining capacities with sustainable energy sources across globally diversified hosting sites.
Added
On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in: (i) mainland China; and (ii) Hong Kong.
Removed
Digital Technologies With over two decades of technology and industry expertise, X3 Holdings capitalizes on the digital transformation sweeping the global trade industry. We provide integrated solutions and services to both public and private entities by developing a comprehensive suite of cross-border digital trade platforms and services.
Added
On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and Ministry of Finance, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with the U.S. law.
Removed
Other Technologies and Applications Our product applications, industry solutions and platform services are designed and built from our multiple proprietary technology infrastructure platforms which are developed based on industry leading infrastructure technologies.
Added
On December 15, 2022, the PCAOB announced that it was able to conduct inspections and investigations completely of PCAOB- registered public accounting firms headquartered in mainland China and Hong Kong in 2022. The PCAOB vacated its previous determinations issued in December 2021 accordingly.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

124 edited+37 added−24 removed94 unchanged
We intend to expand the scope of our offerings to service existing customers and acquire new customers by continually making significant investments in R&D as well as sales marketing activities to increase our subscription revenue and profit. Our ability to drive increased customer adoption and usage of our SaaS services affects our operating results.
We intend to expand the scope of our offerings to service existing customers and acquire new customers by continually making significant investments in R&D as well as sales and marketing activities to increase our subscription revenue and profit. Our ability to drive increased customer adoption and usage of our SaaS services affects our operating results.
Revenue from consulting and Technical Support Services Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to customers.
Revenue from consulting and technical support services Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to customers.
Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation.
Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation.
Selling and marketing expenses primarily consisted of salary and compensation expenses relating to our sales and marketing personnel, and also included entertainment, travel and transportation, and other expenses relating to our sales and marketing activities.
Selling and marketing expenses primarily consisted of salary and compensation expenses relating to our sales and marketing personnel, and also included entertainment, travel and transportation, and other expenses relating to our sales and marketing activities.
General and administrative expenses primarily consisted of salary and compensation expenses relating to our accounting, human resources and executive office personnel, and included rental expenses, depreciation and amortization expenses, office overhead, professional service fees and travel and transportation costs.
General and administrative expenses primarily consisted of salary and compensation expenses relating to our accounting, human resources and executive office personnel, and included rental expenses, depreciation and amortization expenses, office overhead, professional service fees and travel and transportation costs.
The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP.
The non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S.
Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation.
Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation.
To achieve that core principle, the Group applies the following steps: Step 1: Identify the contract (s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation 75 The Company derives its revenues from five sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue. and (5) others revenue.
To achieve that core principle, the Group applies the following steps: Step 1: Identify the contract (s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Company derives its revenues from five sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue. and (5) others revenue.
The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of the Company’s past performance and future prospects and allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making. The non-GAAP financial measures are not defined under U.S.
The Company believes that the non-GAAP financial measures provide useful information about the Company’s results of operations, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. The non-GAAP financial measures are not defined under U.S.
In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Company’s estimates are based upon the professional knowledge and experience of our engineers and project managers to assess the contract’s schedule, performance, technical matters.
In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. Our estimates are based upon the professional knowledge and experience of our engineers and project managers to assess the contract’s schedule, performance, technical matters.
Under the Income Tax Laws of the PRC, companies are generally subject to income tax at a rate of 25%. However, our major operating subsidiary - Powerbridge Zhuhai was recognized as the “high-tech enterprise” status, which reduced its statutory income tax rate to 15%. The rest of our subsidiaries in PRC are subject to income tax rate of 25%.
Under the Income Tax Laws of the PRC, companies are generally subject to income tax at a rate of 25%. However, our major operating subsidiary - Powerbridge Zhuhai was recognized as the “high-tech enterprise” status, which reduced its statutory income tax rate to 15%. The rest of our subsidiaries in PRC are subject to an income tax rate of 25%.
The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance. The following table sets forth unaudited reconciliation of GAAP and non-GAAP results for the periods indicated.
GAAP. 74 The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance. The following table sets forth unaudited reconciliation of GAAP and non-GAAP results for the periods indicated.
Revenue from subscription services Revenue from subscription services is comprised of subscription fees from customers accessing the Company’s software-as-a-service applications. The Company’s monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription services contracts typically include a single performance obligation.
Revenue from subscription services Revenue from subscription services is comprised of subscription fees from customers accessing the Company’s software-as-a-service applications. Our monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription services contracts typically include a single performance obligation.
Revenue allocated to specified PCS is recognized as the related services are rendered. The transaction price allocated to application development service is recognized over time as the Company’s performance creates or enhances the project controlled by the customer and the control is transferred continuously to our customers.
Revenue allocated to specified PCS is recognized as the related services are rendered. The transaction price allocated to application development service is recognized over time as our performance creates or enhances the project controlled by the customer and the control is transferred continuously to our customers.
The unbilled accounts receivable represents the Company’s right to consideration in exchange for the service that the Company has performed to the customer before payment is due and the unbilled account receivable will be reclassified into billed accounts receivable when the Company has the right to invoice. Contract liabilities are presented as deferred revenue on the consolidated balance sheet.
The unbilled accounts receivable represents our right to consideration in exchange for the service that the Company has performed to the customer before payment is due and the unbilled account receivable will be reclassified into billed accounts receivable when the Company has the right to invoice. Contract liabilities are presented as deferred revenue on the consolidated balance sheet.
Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, notes and accounts receivable, due from related parties, prepayments, deposits and other current assets, notes and accounts payable, customer deposits, salaries and benefits payables, due to related party and taxes payable approximates their recorded values due to their short-term maturities.
Unless otherwise disclosed, the fair value of our financial instruments including cash, notes and accounts receivable, due from related parties, prepayments, deposits and other current assets, notes and accounts payable, customer deposits, salaries and benefits payables, due to related party and taxes payable approximates their recorded values due to their short-term maturities.
The fair value of the convertible loans is calculated using the binomial tree model. The convertible loans are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value.
The fair value of the convertible loans is calculated using the binomial tree model. The convertible loans are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect our own assumptions in measuring fair value.
The Company’s monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription arrangements are considered service contracts because customers do not have the right to take possession of the software and can only benefit from the software when provided the right to access the software.
Our monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription arrangements are considered service contracts because customers do not have the right to take possession of the software and can only benefit from the software when provided the right to access the software.
Our business of providing digital solutions and technology services spanning diverse industries. We harness cutting edge technologies to forge agile, innovative business models by integrating pivotal resources in technology applications, financial prowess, and streamlined operations. We target accelerated and transformative growth across digital technologies and cryptomining operations.
Our business of providing digital solutions and technology services spans diverse industries. We harness cutting edge technologies to forge agile, innovative business models by integrating pivotal resources in technology applications, financial prowess, and streamlined operations. We target accelerated and transformative growth across digital technologies and cryptomining operations.
Revenue from application development services The Company’s application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization.
Revenue from application development services Our application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization.
Revenue from trading revenue was approximately $2.5 million and $3.3 million for the year ended December 31, 2023 and 2022, respectively. Others revenue The Company started to earn other revenue, such as membership fee for the years ended December 31,2023, which amounted to approximately $0.2 million and represent 1.1% of our revenue for the year ended December 31, 2023.
Revenue from trading revenue was approximately $2.5 million and $3.3 million for the year ended December 31, 2023 and 2022, respectively. Others revenue We started to earn other revenue, such as membership fee for the years ended December 31,2023, which amounted to approximately $0.2 million and represent 1.1% of our revenue for the year ended December 31, 2023.
Revenue from application development services The Company’s application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization.
Revenue from application development services Our application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization.
B. Liquidity and Capital Resources Substantially all of our operations are conducted in China and all of our revenue, expenses, and cash are denominated in RMB.
Liquidity and Capital Resources Substantially all of our operations are conducted in China and all of our revenue, expenses, and cash are denominated in RMB.
The revenue from consulting and technical support services is recognized over the contract term on a straight-line basis as customers receive and consume benefits of such services. (3) Revenue from subscription services Revenue from subscription services is comprised of subscription fees from customers accessing the Company’s software-as-a-service applications for a subscribed period.
The revenue from consulting and technical support services is recognized over the contract term on a straight-line basis as customers receive and consume benefits of such services. (3) Revenue from subscription services Revenue from subscription services is comprised of subscription fees from customers accessing our software-as-a-service applications for a subscribed period.
For the Years Ended December 31, 2023 2022 Change % Change REVENUES: Application development services $ 9,780,115 $ 3,847,199 $ 5,932,916 154.2 % Consulting and technical support services 3,609,158 2,538,500 1,070,658 42.2 % Subscription services 695,010 758,526 (63,516 ) (8.4 )% Trading revenue 2,549,808 3,338,584 (788,776 ) (23.6 )% Others revenue 190,732 - 190,732 - % Total revenues 16,824,823 10,482,809 6,342,014 60.5 % COST OF REVENUES: Application development services 9,236,901 2,443,460 6,793,441 278.0 % Consulting and technical support services 1,404,193 983,700 420,493 42.7 % Subscription services 102,573 104,499 (1,926 ) (1.8 )% Trading 2,504,352 3,183,729 (679,377 ) (21.3 )% Others 156,608 - 156,608 - % Total cost of revenues 13,404,627 6,715,388 6,689,239 99.6 % GROSS PROFIT 3,420,196 3,767,421 (347,225 ) (9.2 )% OPERATING EXPENSES: Selling and marketing 1,480,732 1,956,811 (476,079 ) (24.3 )% General and administrative 12,130,707 7,732,287 4,398,420 56.9 % Provision for doubtful accounts 539,284 4,733,183 (4,193,899 ) (88.6 )% Research and development 4,814,463 3,459,987 1,354,476 39.1 % Share-based compensation 6,058,117 5,983,907 74,210 1.2 % Impairment for intangible assets 2,272,829 - 2,272,829 - % Impairment for goodwill 29,686,102 - 29,686,102 - % Total operating expenses 56,982,234 23,866,175 33,116,059 138.8 % OPERATING LOSS FROM OPERATIONS (53,562,038 ) (20,098,754 ) (33,463,284 ) 166.5 % OTHER INCOME (EXPENSES) Loss from disposition of a subsidiary - (1,009 ) 1,009 (100 )% Gain from long term investment 70,947 - 70,947 - % Change in fair value of convertible debt (21,166 ) (2,448,936 ) 2,427,770 (99.1 )% Gain from fair value change in equity 2,402,943 - 2,402,943 - % Fair value loss on financial instrument (71,006,115 ) - (71,006,115 ) - % Other (expense) income (169,107 ) 608 (169,715 ) (27,913.7 )% Total other expenses (68,722,498 ) (2,449,337 ) (66,273,161 ) 2,705.8 % LOSS BEFORE INCOME TAXES (122,284,536 ) (22,548,091 ) (99,736,445 ) 442.3 % INCOME TAX BENEFIT (57,341 ) (999,391 ) 942,050 (94.3 )% NET LOSS $ (122,227,195 ) $ (21,548,700 ) $ (100,678,495 ) 467.2 % 60 Revenues We derive revenues from five sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue, and (5) others For the years ended December 31, 2023, our total revenue was approximately $16.8 million as compared to approximately $10.5 million for the year ended December 31, 2022.
For the Years Ended December 31, 2023 2022 Change % Change REVENUES: Application development services $ 9,780,115 $ 3,847,199 $ 5,932,916 154.2 % Consulting and technical support services 3,609,158 2,538,500 1,070,658 42.2 % Subscription services 695,010 758,526 (63,516 ) (8.4 )% Trading revenue 2,549,808 3,338,584 (788,776 ) (23.6 )% Others revenue 190,732 - 190,732 - % Total revenues 16,824,823 10,482,809 6,342,014 60.5 % COST OF REVENUES: Application development services 9,236,901 2,443,460 6,793,441 278.0 % Consulting and technical support services 1,404,193 983,700 420,493 42.7 % Subscription services 102,573 104,499 (1,926 ) (1.8 )% Trading 2,504,352 3,183,729 (679,377 ) (21.3 )% Others 156,608 - 156,608 - % Total cost of revenues 13,404,627 6,715,388 6,689,239 99.6 % GROSS PROFIT 3,420,196 3,767,421 (347,225 ) (9.2 )% OPERATING EXPENSES: Selling and marketing 1,480,732 1,956,811 (476,079 ) (24.3 )% General and administrative 12,130,707 7,732,287 4,398,420 56.9 % Provision for credit losses 539,284 4,733,183 (4,193,899 ) (88.6 )% Research and development 4,814,463 3,459,987 1,354,476 39.1 % Share-based compensation 6,058,117 5,983,907 74,210 1.2 % Impairment for intangible assets 2,272,829 - 2,272,829 - % Impairment for goodwill 29,686,102 - 29,686,102 - % Total operating expenses 56,982,234 23,866,175 33,116,059 138.8 % OPERATING LOSS FROM OPERATIONS (53,562,038 ) (20,098,754 ) (33,463,284 ) 166.5 % OTHER INCOME (EXPENSES) Loss from disposition of a subsidiary - (1,009 ) 1,009 (100 )% Gain from long term investment 70,947 - 70,947 - % Change in fair value of convertible notes (21,166 ) (2,448,936 ) 2,427,770 (99.1 )% Gain from fair value change in equity 2,402,943 - 2,402,943 - % Fair value loss on financial instrument (71,006,115 ) - (71,006,115 ) - % Other (expense) income (169,107 ) 608 (169,715 ) (27,913.7 )% Total other expenses (68,722,498 ) (2,449,337 ) (66,273,161 ) 2,705.8 % LOSS BEFORE INCOME TAXES (122,284,536 ) (22,548,091 ) (99,736,445 ) 442.3 % INCOME TAX BENEFIT (57,341 ) (999,391 ) 942,050 (94.3 )% NET LOSS $ (122,227,195 ) $ (21,548,700 ) $ (100,678,495 ) 467.2 % 70 Revenues We derive revenues from five sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue, and (5) others.
Remittance of dividends by our subsidiary out of China is subject to examination by the banks designated by SAFE. Our subsidiary has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meet the requirements for statutory reserve funds.
Remittance of dividends by our subsidiary out of China is subject to examination by the banks designated by SAFE. Our subsidiary has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meets the requirements for statutory reserve funds.
Gross profit for other revenue was $34,124 for the years ended December 31, 2023. 62 Operating Expenses For the Years Ended December 31, 2023 2022 Change % Change OPERATING EXPENSES: Selling and marketing $ 1,480,732 $ 1,956,811 $ (476,079 ) (24.3 )% General and administrative 12,130,707 7,732,287 4,398,420 56.9 % Provision for doubtful accounts 539,284 4,733,183 (4,193,899 ) (88.6 )% Research and development 4,814,463 3,459,987 1,354,476 39.1 % Share based compensation 6,058,117 5,983,907 74,210 1.2 % Impairment for intangible assets 2,272,829 - 2,272,829 - % Impairment for goodwill 29,686,102 - 29,686,102 - % Total operating expenses $ 56,982,234 $ 23,866,175 $ 33,116,059 138.8 % Our operating expenses consist of selling and marketing, general and administrative, research and development (“R&D”) expenses, provision for doubtful accounts, stock-based compensation, impairment for intangible assets and impairment for goodwill.
Gross profit for other revenue was $34,124 for the years ended December 31, 2023. 72 Operating Expenses For the Years Ended December 31, 2023 2022 Change % Change OPERATING EXPENSES: Selling and marketing $ 1,480,732 $ 1,956,811 $ (476,079 ) (24.3 )% General and administrative 12,130,707 7,732,287 4,398,420 56.9 % Provision for credit losses 539,284 4,733,183 (4,193,899 ) (88.6 )% Research and development 4,814,463 3,459,987 1,354,476 39.1 % Share based compensation 6,058,117 5,983,907 74,210 1.2 % Impairment for intangible assets 2,272,829 - 2,272,829 - % Impairment for goodwill 29,686,102 - 29,686,102 - % Total operating expenses $ 56,982,234 $ 23,866,175 $ 33,116,059 138.8 % Our operating expenses consist of selling and marketing, general and administrative, research and development (“R&D”) expenses, provision for credit losses, stock-based compensation, impairment for intangible assets and impairment for goodwill.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 72 E.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2024 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition. 77 E.
Specified PCS includes specified service term in the contract such as training. The Company’s application development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises.
Specified PCS includes specified service term in the contract such as training. Our application development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises.
Operating Results For the years ended December 31, 2023 and 2022 The following table summarizes the results of our operations for the years ended December 31, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.
Operating Results For the years ended December 31, 2024 and 2023 The following table summarizes the results of our operations for the years ended December 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.
If it is determined that the cash requirements exceed the Company’s amounts of cash on hand, the Company may seek to issue debt or equity securities or obtain a credit facility. The following summarizes the key components of our cash flows for the years ended December 31, 2023, 2023,2022 and 2021.
If it is determined that the cash requirements exceed our amounts of cash on hand, the Company may seek to issue debt or equity securities or obtain a credit facility. The following summarizes the key components of our cash flows for the years ended December 31, 2024, 2023 and 2022.
The Company impaired the goodwill acquired from the acquisition of Boxinrui and Smartconn of approximately $8.6 million and approximately $21.1 million for the year ended December 31, 2023. Other Income (Expense) Change in fair value of convertible debt The Company elected the fair value option to account for its convertible loans.
The Company impaired the goodwill acquired from the acquisition of Boxinrui and Smartconn of approximately $8.6 million and approximately $21.1 million for the year ended December 31, 2023. 73 Other Income (Expense) Change in fair value of convertible notes The Company elected the fair value option to account for its convertible loans.
Thus, the Company considers it should recognize revenue as a principal in the gross amount of consideration to which it is entitled in exchange for the IT equipment delivered. The Company assesses the sale of equipment is separately identifiable from other promises in the contract and it is distinct performance obligation within the context of the contract.
Thus, the Company considers it should recognize revenue as a principal in the gross amount of consideration to which it is entitled in exchange for the IT equipment delivered. We assesse the sale of equipment is separately identifiable from other promises in the contract and it is distinct performance obligation within the context of the contract.
The Company has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated.
We have adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated.
Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added tax (“VAT”).
Under ASC 606, revenue is recognized when control of promised goods or services is transferred to our customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added tax (“VAT”).
The Company assesses that application development service, PCS or specific service and service-type warranty service, if applicable, are distinct performance obligations in the application development service contracts. The Company provides these services on standalone basis and customers are able to benefit from each of the service on its own.
We assess that application development service, PCS or specific service and service-type warranty service, if applicable, are distinct performance obligations in the application development service contracts. The Company provides these services on standalone basis and customers are able to benefit from each of the service on its own.
Cash used in operating activities for the year ended December 31, 2022 mainly consisted of approximately $21.5 million of net loss, adjustment of $15.2 million non-cash items, a decrease of approximately $6.8 million in account payable (including related parties) due to less purchase, offset by an increase of approximately $3.0 million in account receivable due to slowly collection.
Cash used in operating activities for the year ended December 31, 2022 mainly consisted of approximately $21.5 million of net loss, adjustment of $15.2 million non-cash items, a decrease of approximately $6.8 million in account payable (including related parties) due to less purchase, offset by an increase of approximately $3.0 million in account receivable due to slowly collection. 76 Investing Activities Net cash used in investing activities was approximately $1.5 million for the year ended December 31, 2024.
Provision for doubtful accounts decreased by approximately $4.2 million from approximately $4.7 million for the year ended December 31, 2022 to approximately $0.5 million for the year ended December 31, 2023 R&D expenses primarily consisted of compensation and benefit expenses relating to our R&D personnel as well as office overhead and other expenses relating to our R&D activities.
Provision for credit losses decreased by approximately $4.2 million from approximately $4.7 million for the year ended December 31, 2022 to approximately $0.5 million for the year ended December 31, 2023 R&D expenses primarily consisted of compensation and benefit expenses relating to our R&D personnel as well as office overhead and other expenses relating to our R&D activities.
Net cash provided by financing activities for the year ended December 31, 2023 was mainly net proceeds approximately $8.5 million from the market offering, and net proceeds of $1.4 million on bank loan, offset by approximately $1.3 million repayment to convertible note. Net cash provided by financing activities was approximately $13.0 million for the year ended December 31, 2022.
Net cash provided by financing activities was approximately $9.3 million for the year ended December 31, 2023. Net cash provided by financing activities for the year ended December 31, 2023 was mainly net proceeds approximately $8.5 million from the market offering, and net proceeds of $1.4 million on bank loan, offset by approximately $1.3 million repayment to convertible note.
Net cash provided by financing activities for the year ended December 31, 2022 was mainly net proceeds of approximately $8.0 million from issuance of convertible note and approximately $7.0 million from the market offering, offset by net repayment of $1.5 million on bank loan. Net cash provided by financing activities was approximately $12.3 million for fiscal 2021.
Net cash provided by financing activities for the year ended December 31, 2022 was mainly net proceeds of approximately $8.0 million from issuance of convertible note and approximately $7.0 million from the market offering, offset by net repayment of $1.5 million on bank loan.
However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment. For the year ended December 31, 2023, the Company performed the impairment test and determined that the fair value of goodwill acquired from the acquisition of Boxinrui and Smartconn was less than carrying value.
However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment. For the year ended December 31, 2024, the Company performed the impairment test and determined that the fair value of goodwill acquired from the acquisition of Boxinrui and Hongchuagnxin was less than carrying value.
As of December 31, 2023, cash of approximately $2.3 million were fully held by the Company and its subsidiary in mainland PRC. The Cayman holding company is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiary in China.
As of December 31, 2024, cash of approximately $4.2 million were fully held by the Company and its subsidiary in mainland PRC. The Cayman holding company is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiary in China.
Our ability to identify and execute strategic acquisitions and investments will have an effect on our operating results. 59 A.
Our ability to identify and execute strategic acquisitions and investments will have an effect on our operating results. 64 A.
Capital Expenditures The Company made capital expenditures of $1.9 million, $3.9 million and $4.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. In these periods, our capital expenditures were mainly used for purchases of office equipment, furniture and payments for capitalized development cost.
Capital Expenditures The Company made capital expenditures of $1.6 million, $1.9 million and $3.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. In these periods, our capital expenditures were mainly used for purchases of office equipment, furniture and payments for capitalized development cost.
The increase in our operating expenses was primarily due to approximately $29.7 million increase in impairment for goodwill, approximately $4.4 million increase in general and administrative, approximately $2.3 million increase in impairment for intangible assets and approximately $1.4 million increase in research and development, offset by approximately $4.2 million decrease in provision for doubtful accounts.
The increase in our operating expenses was primarily due to approximately $29.7 million increase in impairment for goodwill, approximately $4.4 million increase in general and administrative, approximately $2.3 million increase in impairment for intangible assets and approximately $1.4 million increase in research and development, offset by approximately $4.2 million decrease in provision for credit losses.
Income taxes The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements.
Income taxes We account for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements.
No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2023 and 2022. All of the tax returns of the Company’s subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing. 78
No significant penalties or interest relating to income taxes have been incurred during the years ended December 31, 2024 and 2023. All of the tax returns of our subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing.
We generate revenue from consulting and technical support services, which represent 21.5%, 24.2% and 14.2% of our revenue for the years ended December 31, 2023, 2022 and 2021, respectively. We also earn subscription service revenue from customers accessing our SaaS, which represent 4.1%, 7.2% and 2.9% of our revenue for the years ended December 31, 2023, 2022 and 2021.
We generate revenue from consulting and technical support services, which represent 30.7%, 21.5% and 24.2% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively. We also earn subscription service revenue from customers accessing our SaaS, which represent 5.2%, 4.1% and 7.2% of our revenue for the years ended December 31, 2024, 2023 and 2022.
Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report.
Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report. Overview X3 Holdings Co., Ltd.
All of our customers are located in China. We currently generate most of our revenues from application development services, which represent 58.1%,36.7% and 63.3% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
All of our customers are located in China. We currently generate most of our revenues from application development services, which represent 46.1%,58.1% and 36.7% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
All of the Company’s contracts with customer do not contain cancelable and refund-type provisions. (1) Revenue from application development service The Company’s application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs.
All of our contracts with customer do not contain cancelable and refund-type provisions. (1) Revenue from application development service Our application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization.
The Company uses an input method based on cost incurred as the Company believes that this method most accurately reflects the Company’s progress toward satisfaction of the performance obligation, which usually takes less than one year.
We use an input method based on cost incurred as the Company believes that this method most accurately reflects our progress toward satisfaction of the performance obligation, which usually takes less than one year.
Revenue from application development service is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. For the year ended December 31, 2022, our application development service revenue was approximately $3.8 million as compared to approximately $20.3 million for the year ended December 31, 2021.
Revenue from application development service is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. For the year ended December 31, 2024, our application development service revenue was approximately $5.3 million as compared to approximately $9.8 million for the year ended December 31, 2023.
The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S, dollar terms without giving effect to any underlying change in our business or results of operation.
The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying change in our business or results of operation. The exchange rates in effect are shown below: U.S.
The revenue from subscription services is recognized over the contract term on a straight-line basis or based on the actual usage as customers receive and consume benefits of such services. For the year ended December 31, 2022, our subscription service revenue was approximately $0.8 million as compared to approximately $0.9 million for the year ended December 31, 2021.
The revenue from subscription services is recognized over the contract term on a straight-line basis or based on the actual usage as customers receive and consume benefits of such services. For the year ended December 31, 2024, our subscription service revenue was approximately $0.6 million as compared to approximately $0.7 million for the year ended December 31, 2023.
We expect that our ability to effectively utilize our R&D capabilities significantly affect our results of operations in the future. Stock-based compensation decreased by approximately $0.4 million from approximately $6.3 million for the year ended December 31, 2021 to approximately $6.0 million for the year ended December 31, 2022.
We expect that our ability to effectively utilize our R&D capabilities significantly affect our results of operations in the future. Stock-based compensation increased by approximately $0.1 million from approximately $6.0 million for the year ended December 31, 2022 to approximately $6.1 million for the year ended December 31, 2023.
These services also require significant production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Company is generally required to provide post-contract customer support (“PCS’) for a period from three months to three years (“PCS period”) after the customized application development services are delivered.
Upon delivery of the services, customer acceptance is generally required. In the same contract, the Company is generally required to provide post-contract customer support (“PCS’) for a period from three months to three years (“PCS period”) after the customized application development services are delivered.
Significant estimates used in developing the fair value of the convertible loans include time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion.
Significant estimates used in developing the fair value of the convertible loans include time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion. Refer to Note 9 for additional information.
Under the Income Tax Laws of the PRC, companies are generally subject to income tax at a rate of 25%. However, our major operating subsidiary - Powerbridge Zhuhai was recognized as the “high-tech enterprise” status, which reduced its statutory income tax rate to 15%. The rest of our subsidiaries in PRC are subject to income tax rate of 25%.
However, our major operating subsidiary - Powerbridge Zhuhai was recognized as the “high-tech enterprise” status, which reduced its statutory income tax rate to 15%. The rest of our subsidiaries in PRC are subject to an income tax rate of 25%.
For the year ended December 31, 2023, our subscription service revenue was approximately $0.7 million as compared to approximately $0.8 million for the year ended December 31, 2022. 61 Trading revenue The Company starts to sell products to its customers for the year ended December 31, 2021.
For the year ended December 31, 2023, our subscription service revenue was approximately $0.7 million as compared to approximately $0.8 million for the year ended December 31, 2022. 71 Trading revenue We started to sell products to its customers for the year ended December 31, 2021.
Overview X3 Holdings Co., Ltd., formerly known as Powerbridge Technologies Co., Ltd., is a company that was established under the laws of the Cayman Islands on July 27, 2018 as a holding company. We are a provider of software application and technology solutions and services to corporate and government customers engaged in global trade.
(hereinafter referred to as “we,” “our,” or the “Company”), formerly known as Powerbridge Technologies Co., Ltd., is a company that was established under the laws of the Cayman Islands on July 27, 2018 as a holding company. We are a provider of software application and technology solutions and services to corporate and government customers engaged in global trade.
Significant accounting estimates reflected in the Company’s consolidated financial statements include but not limited to the useful lives of property and equipment and capitalized development cost, impairment of long-lived assets, valuation of accounts receivables, loans to third parties, revenue recognition and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates.
Significant accounting estimates reflected in our consolidated financial statements include but not limited to the useful lives of property and equipment and intangible assets, impairment of long-lived assets, impairment of goodwill, valuation of accounts receivables, revenue recognition and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates.
Stock-based compensation increased by approximately $0.1 million from approximately $6.0 million for the year ended December 31, 2022 to approximately $6.1 million for the year ended December 31, 2023. 63 For the year ended December 31, 2023, due to slow development of Smartconn, the Company evaluated the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition and determined that the fair value of intangible assets of Smartconn was less than carrying value.
For the year ended December 31, 2023, due to slow development of Smartconn, the Company evaluated the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition and determined that the fair value of intangible assets of Smartconn was less than carrying value.
Equity investments without readily determinable fair values After the adoption of this new accounting standard, the Company elected to record equity investments without readily determinable fair values and not accounted for under the equity method at cost, less impairment, adjusted for subsequent observable price changes on a nonrecurring basis, and report changes in the carrying value of the equity investment in current earnings.
Impairment for long term investments approximately $11.2 million approximately for the year ended December 31, 2024. 79 Equity investments without readily determinable fair values After the adoption of this new accounting standard, the Company elected to record equity investments without readily determinable fair values and not accounted for under the equity method at cost, less impairment, adjusted for subsequent observable price changes on a nonrecurring basis, and report changes in the carrying value of the equity investment in current earnings.
Contract liabilities relate to payments received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the completion of performance obligations. As of December 31, 2023 and 2022 the balance of deferred revenue amounted to $2,175,896and $1,376,998, respectively.
Contract liabilities relate to payments received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the completion of performance obligations. As of December 31, 2024 and 2023 the balance of deferred revenue amounted to approximately $1.9 million and $2.2 million, respectively.
The Company’s total revenue increased by approximately $6.3 million, or 60.5%. The overall increase in total revenue was primarily attributable to approximately $5.9 million increase in revenue from application development services and approximately $1.1 million increase in consulting and technical support services.
The overall increase in total revenue was primarily attributable to approximately $5.9 million increase in revenue from application development services and approximately $1.1 million increase in consulting and technical support services.
Product sale contracts typically include a single performance obligation and there are no rights of return. The transaction price is based on the fixed contractual price with the customer.
Product sale contracts typically include a single performance obligation and there are no rights of return. The transaction price is based on the fixed contractual price with the customer. Billings to the customer for the sale of products occur at the time the products are transferred to the customer.
Financing Activities Net cash provided by financing activities was approximately $9.3 million for the year ended December 31, 2023.
Financing Activities Net cash provided by financing activities was approximately $2.2 million for the year ended December 31, 2024.
The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant portion (30% - 50%) of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed.
The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant portion (30% - 50%) of contract amount usually is billed upon the completion of the related projects.
For the Years Ended December 31, 2023 2022 2021 Net cash used in operating activities $ (11,152,805 ) $ (9,656,725 ) $ (9,761,386 ) Net cash used in investing activities (2,430,858 ) (815,220 ) (4,066,435 ) Net cash provided by financing activities 9,289,034 12,984,391 12,289,296 Effect of exchange rate change on cash and restricted cash (370,193 ) (188,372 ) 205,069 Net (decrease) increase in cash, cash equivalent and restricted cash $ (4,664,822 ) $ 2,324,074 $ (1,333,456 ) Operating Activities Net cash used in operating activities was approximately $11.2 million for the year ended December 31, 2023.
For the Years Ended December 31, 2024 2023 2022 Net cash used in operating activities $ (992,440 ) $ (11,152,805 ) $ (9,656,725 ) Net cash used in investing activities (1,510,863 ) (2,430,858 ) (815,220 ) Net cash provided by financing activities 2,177,110 9,289,034 12,984,391 Effect of exchange rate change on cash, cash equivalent and restricted cash (124,747 ) (370,193 ) (188,372 ) Net (decrease) increase in cash, cash equivalent and restricted cash $ (450,940 ) $ (4,664,822 ) $ 2,324,074 Operating Activities Net cash used in operating activities was approximately $1.0 million for the year ended December 31, 2024.
Our cost of revenue from application development services, consulting and technical support services, and trading was approximately $2.4 million, $1.0 million, $0.1 million and $3.2 million for the year ended December 31, 2022, respectively, as compared to approximately $12.8 million, $2.2 million, $0.2 million and $6.2 million for the year ended December 31, 2021.respectively.
Our cost of revenue from application development services, consulting and technical support services, subscription services, trading and others was approximately $3.4 million, $1.4 million, $0.05 million, $2.0 million and $0.1 million for the year ended December 31, 2024, respectively, as compared to approximately $9.2 million, $1.4 million, $0.1 million, $2.5 million and $0.2 million for the year ended December 31, 2023, respectively.
Net cash used in operating activities was approximately $9.8 million for the year ended December 31, 2021.
Net cash used in operating activities was approximately $11.2 million for the year ended December 31, 2023.
Our R&D expenses increased by approximately $0.8 million from approximately $2.6 million for the year ended December 31, 2021 to approximately $3.5 million for the year ended December 31, 2022, representing 33.0% and 8.1% of our total revenues for the years ended December 31, 2022 and 2021, respectively. We expect to continue to invest in R&D.
Our R&D expenses decreased by approximately $0.8 million from approximately $4.8 million for the year ended December 31, 2023 to approximately $4.1 million for the year ended December 31, 2024, representing 35.0% and 28.6% of our total revenues for the years ended December 31, 2024 and 2023, respectively. We expect to continue to invest in R&D.
Gross profit margin for the years ended December 31, 2022 and 2021 was 36.5% and 37.1%, respectively. Gross profit for consulting and technical support services decreased by approximately $0.8 million or 34.0% from approximately $2.4 million for the year ended December 31, 2021 to approximately $1.6 million for the year ended December 31, 2022.
Gross profit for consulting and technical support services decreased by approximately $0.1 million or 2.8% from approximately $2.2 million for the year ended December 31, 2023 to approximately $2.1 million for the year ended December 31, 2024. Gross profit margin for the years ended December 31, 2024 and 2023 was 60.1% and 61.1%, respectively.
Revenues for the years ended December 31, 2022, 2021 and 2020 were presented under ASC 606. There is no adjustment to the opening balance of retained earnings at January 1, 2019 since there was no change to the timing and pattern of revenue recognition upon adoption of ASC 606.
There is no adjustment to the opening balance of retained earnings at January 1, 2019 since there was no change to the timing and pattern of revenue recognition upon adoption of ASC 606.
Contract balance The accounts receivable includes both unbilled accounts receivable and billed accounts receivable. The Company records unbilled accounts receivable for revenue that has been recognized in advance of billing the customer, which is common for application development service contracts.
We record unbilled accounts receivable for revenue that has been recognized in advance of billing the customer, which is common for application development service contracts.
Therefore, the Company impaired the intangible assets acquired from the acquisition of Smartconn of $2,272,829 for the year ended December 31, 2023. For the years ended December 31, 2022 and 2021 the Company recognized $nil impairment for the long-lived assets.
Therefore, the Company impaired the intangible assets acquired from the acquisition of Smartconn of approximately $2.3 million for the year ended December 31, 2023. For the years ended December 31, 2022, there was no impairment was recognized for the long-lived assets.
As a percentage of revenues, general and administrative expenses were 73.8% and 18.7% of our total revenue for the years ended December 31, 2022 and 2021, respectively.
As a percentage of revenues, general and administrative expenses were 61.8% and 72.1% of our total revenue for the years ended December 31, 2024 and 2023, respectively.
We started to generated revenue from trading business, which represent 15.2%, 31.8% and 19.6% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively. Other revenue represented 1.1%, nil and nil of our revenue for the year ended December 31, 2023, 2022 and 2021, respectively.
We started to generated revenue from trading business, which represent 17.7%, 15.2% and 31.8% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Intangible assets, net Our intangible assets mainly include capitalized development costs, purchased software and acquired software from business acquisitions. The Company follows the provisions of Accounting Standards Codification (“ASC”) 985-20, “Costs of Software to be Sold, Leased, or Marketed.” ASC 985-20 provides guidance on capitalization of the costs of software developed or obtained for sold, leased, or marketed.
The Company follows the provisions of Accounting Standards Codification (“ASC”) 985-20, “Costs of Software to be Sold, Leased, or Marketed.” ASC 985-20 provides guidance on capitalization of the costs of software developed or obtained for sold, leased, or marketed.

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Jiang has over twenty years of experiences in the finance and accounting field. Previously, she served as a CFO at Cmark Capital, an investment management firm, Senior Accountant at Aluminum Corporation of China, an aluminum producer and distributor, and Financial Manager at Hiking Group, a publicly listed company. Ms.
Jiang has over twenty years of experiences in the finance and accounting field. Previously, she served as a CFO at Cmark Capital, an investment management firm; senior accountant at Aluminum Corporation of China, an aluminum producer and distributor; and a financial manager at Hiking Group, a publicly listed company. Ms.
Ban Lor’s resignation from his position as the co-CEO and co-Chairman of the Board on July 29, 2022, Mr. Stewart Lor has been serving as our sole CEO and Chairman of the Board. (2) Appointed CFO and Chief Operating Officer, with effect from May 1, 2022.
Ban Lor’s resignation from his position as the co-CEO and co-Chairman of the Board on July 29, 2022, Mr. Stewart Lor has been serving as our sole CEO and Chairman of the Board. (2) Appointed as the CFO and Chief Operating Officer, with effect from May 1, 2022.
Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our Board or committees of our Board or general meetings or separate meetings of any class of shares or of debenture of the Company or otherwise in connection with the discharge of his or her duties as a director.
Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our Board or committees of our Board or general meetings or separate meetings of any class of shares or of debenture of the Company or otherwise in connection with the discharge of his/her duties as a director.
As required under applicable NASDAQ rules, we anticipate that our independent directors will meet on a regular basis as often as necessary to fulfill their responsibilities, including at least annually in executive session without the presence of non-independent directors and management.
As required under the applicable NASDAQ rules, we anticipate that our independent directors will meet on a regular basis as often as necessary to fulfill their responsibilities, including at least annually in executive session without the presence of non-independent directors and management.
A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into.
A director must promptly disclose the interest to all other directors after becoming aware of the fact that he/she is interested in a transaction we have entered into or are to enter into.
Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our Board or committees of our Board or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director.
Each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our Board or committees of our Board or shareholder meetings or otherwise in connection with the discharge of his/her duties as a director.
Audit Committee The Audit Committee is responsible for, among other matters: ● appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm; ● discussing with our independent registered public accounting firm the independence of its members from its management; ● reviewing with our independent registered public accounting firm the scope and results of their audit; ● approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; ● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; ● reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements; 86 ● coordinating the oversight by our Board of our code of business conduct and our disclosure controls and procedures; ● establishing procedures for the confidential and anonymous submission of concerns regarding accounting, internal controls or auditing matters; and ● reviewing and approving related-party transactions.
Audit Committee The Audit Committee is responsible for, among other matters: ● appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm; ● discussing with our independent registered public accounting firm the independence of its members from its management; ● reviewing with our independent registered public accounting firm the scope and results of their audit; ● approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; ● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; ● reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements; ● coordinating the oversight by our Board of our code of business conduct and our disclosure controls and procedures; ● establishing procedures for the confidential and anonymous submission of concerns regarding accounting, internal controls or auditing matters; and ● reviewing and approving related-party transactions.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 80 B.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. B.
In the event of a spin-off transaction, the Board or the Committee may in its discretion make such adjustments and take such other action as it deems appropriate with respect to outstanding Options under the Plan. 83 Eligibility . All persons as the Board or the Committee may select from among the employees, directors, and consultants of the Company.
In the event of a spin-off transaction, the Board or the Committee may in its discretion make such adjustments and take such other action as it deems appropriate with respect to outstanding Options under the Plan. Eligibility . All persons as the Board or the Committee may select from among the employees, directors, and consultants of the Company.
Ms. Xu holds a Master of Science in Applied Mathematics from Dalian University of Technology. 79 Charles Tingru Ou currently serves as the Chief Product Officer of the Company. Mr. Ou, a seasoned technology professional, has extensive experience in digital and information technologies for international trade applications.
Ms. Xu holds a Master of Science in Applied Mathematics from Dalian University of Technology. Charles Tingru Ou currently serves as the Chief Product Officer of the Company. Mr. Ou, a seasoned technology professional, has extensive experience in digital and information technologies for international trade applications.
Each executive officer has agreed to hold, both during and after the termination or expiry or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
Each executive officer has agreed to hold, both during and after the termination or expiry or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to the applicable laws, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
He had served various executive positions at Cmark Holdings Ltd. and Fanz Co., Ltd. from November 2006 to September 2017. He holds a B.S. in Biochemistry from State University of New York at Stony Brook. We believe he is qualified to serve on the Board because of the perspective and experience he brings as our cofounder.
He had served various executive positions at Cmark Holdings Ltd. and Fanz Co., Ltd. from November 2006 to September 2017. He holds a B.S. in Biochemistry from State University of New York at Stony Brook. We believe he is qualified to serve on the Board because of the perspective and experience he brings as our co-founder.
We are, however, permitted to terminate an employee for cause without notice or penalty to our company, where the employee has committed a crime or the employee’s actions or inactions have resulted in a material adverse effect to us. 81 Employment Agreements We have entered into employment agreements with each of our executive officers.
We are, however, permitted to terminate an employee for cause without notice or penalty to our Company, where the employee has committed a crime or the employee’s actions or inactions have resulted in a material adverse effect to us. 84 Employment Agreements We have entered into employment agreements with each of our executive officers.
Yuxia Xu is appointed as Chief Financial Officer and Chief Operating Officer of the Company, with effect from May 1, 2022, and appointed as an executive director of the Company on October 28, 2022. Ms. Xu is a seasoned and proven professional in the fields of capital markets, accounting management, information technology and management consulting.
Yuxia Xu is appointed as the CFO and Chief Operating Officer of the Company, with effect from May 1, 2022, and appointed as an executive director of the Company on October 28, 2022. Ms. Xu is a seasoned and proven professional in the fields of capital markets, accounting management, information technology and management consulting.
Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our Sixth Amended and Restated Memorandum and Articles of Association.
Our directors also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our Eighth Amended and Restated Memorandum and Articles of Association.
Our Sixth Amended and Restated Memorandum and Articles of Association permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty of such directors or officers willful default of fraud.
Our Eighth Amended and Restated Memorandum and Articles of Association permit indemnification of officers and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty of such directors or officers willful default of fraud.
The Class I Directors shall stand elected for a term expiring at the Company’s initial meeting after the adoption of the Sixth Amended and Restated Memorandum and Articles of Association and the Class II Directors shall stand elected for a term expiring at the Company’s third annual general meeting following the initial meeting.
The Class I Directors shall stand elected for a term expiring at the Company’s initial meeting after the adoption of the Eighth Amended and Restated Memorandum and Articles of Association and the Class II Directors shall stand elected for a term expiring at the Company’s third annual general meeting following the initial meeting.
Pursuant to our Sixth Amended and Restated Memorandum and Articles of Association, the number of our board shall not be less than two (2). At any one time, at least majority of the Board shall be independent directors.
Pursuant to our Eighth Amended and Restated Memorandum and Articles of Association, the number of our board shall not be less than two (2). At any one time, at least majority of the Board shall be independent directors.
Qiu obtained his bachelor’s degree from Design Factory International’s College of Communication Art and New Media and his master’s degree from Brand University of Applied Sciences in Germany. He is currently pursuing a PhD degree in Economics at Imperial College London in the United Kingdom.
Qiu obtained his bachelor’s degree from Design Factory International’s College of Communication Art and New Media and his master’s degree from Brand University of Applied Sciences in Germany. He is currently pursuing a Ph.D. degree in Economics at Imperial College London in the United Kingdom.
Our Nominating Committee consists of consists of three members, Phillip Tao Qiu, Ruizhong Jiang and Wei Jiang, with Ruizhong Jiang serving as chair of the Nominating Committee.
Our Nominating Committee consists of consists of three members, Phillip Tao Qiu, Ruizhong Jiang and Wei Jiang, with Ruizhong Jiang serving as the Chairman of the Nominating Committee.
Remuneration and Borrowing The directors may receive such remuneration as our Board may determine from time to time. For the services rendered by the independent director in any capacity the company will a cash fee in the amount of USD$1,500 per month.
Remuneration and Borrowing The directors may receive such remuneration as our Board may determine from time to time. For the services rendered by the independent director in any capacity the Company will a cash fee ranging from USD $1,500 to $5,000 per month.
(2) Chair of the Nominating Committee. (3) Chair of the Compensation Committee. (4) Audit Committee financial expert. Stewart Lor is a co-founder of our Company and served as our co-CEO and co-Chairman of the Board from October 2019 to July 2022. After Mr.
(2) Chair of the Nominating Committee. (3) Chair of the Compensation Committee. (4) Audit Committee financial expert. Stewart Lor is a co-founder of our Company and served as our co-chief executive officer (“CEO”) and co-Chairman of the Board from October 2019 to July 2022. After Mr.
Ban Lor’s resignation from his position as the co-CEO and co-Chairman of the Board on July 29, 2022, Mr. Stewart Lor has been serving as our sole CEO and Chairman of the Board. Mr. Lor has been serving on our Board and as our CFO since August 2018, and as our President since October 2019. Mr.
Ban Lor’s resignation from his position as the co-CEO and co-Chairman of the Board on July 29, 2022, Mr. Stewart Lor has been serving as our sole CEO and Chairman of the Board. Mr. Lor has been serving on our Board and as our chief financial officer (“CFO”) since August 2018, and as our President since October 2019. Mr.
On June 16. 2022, the Board approved to the proposal to modify the Company’s Amended 2018 Stock Option Plan (the “ Second Amendment ”, and collectively with the 2018 Plan and the First Amendment, the “ Amended 2018 Plan ”) by supplementing various clauses in relation to the grant of Restricted Shares and Restricted Shares Units to the employees, directors and consultants.
On June 16, 2022, the Board approved to the proposal to modify the Company’s Amended 2018 Stock Option Plan (the “Second Amendment”, and collectively with the 2018 Plan and the First Amendment, the “Amended 2018 Plan”) by supplementing various clauses in relation to the grant of Restricted Shares and Restricted Shares Units to the employees, directors and consultants.
It shall continue in effect for a term of ten (10) years unless sooner terminated or unless renewed for another period not to exceed ten (10) years pursuant to shareholder approval. 84 On May 26, 2021, the Board approved to issue certain options to its employees, advisors, and consultants of the Company under the Amended Plan to purchase in an aggregate amount of 31,687 Class A ordinary shares to be governed by the terms and conditions set forth in a form of option agreement.
It shall continue in effect for a term of ten (10) years unless sooner terminated or unless renewed for another period not to exceed ten (10) years pursuant to shareholder approval. 86 On May 26, 2021, the Board approved to issue certain options to its employees, advisors, and consultants of the Company under the Amended Plan to purchase in an aggregate amount of 1,584 (post-reverse stock split adjusted to 264) Class A ordinary shares to be governed by the terms and conditions set forth in a form of option agreement.
We have utilized the exemption afforded by Nasdaq Listing Rule 5615(a)(3) to follow home country practice in lieu of certain requirements, including (i) the independence requirements for compensation committee and nomination committee as provided in Nasdaq Listing Rule 5605(d) and (e); (ii) the requirement that a majority of the board must be independent as provided in Nasdaq Listing Rule 5615(b)(1); (iii) the requirement to hold annual general meeting as provided in Nasdaq Listing Rule 5620(a); (iv) the requirement to obtain shareholder approval prior to a plan or other equity compensation arrangement is established or materially amended as provided in Nasdaq Listing Rule 5635(c) and (v) the requirement of shareholder approval for entering into any transaction, other than a public offering, involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares as provided in Nasdaq Listing Rule 5635(d). 85 Under our Sixth Amended and Restated Memorandum and Articles of Association, we shall hold an annual general meeting in each year other than the year in which the Sixth Amended and Restated Memorandum and Articles of Association were adopted and shall specify the meeting as such in the notices calling it.
We have utilized the exemption afforded by Nasdaq Listing Rule 5615(a)(3) to follow home country practice in lieu of certain requirements, including (i) the independence requirements for compensation committee and nomination committee as provided in Nasdaq Listing Rule 5605(d) and (e); (ii) the requirement that a majority of the board of directors must be independent as provided in Nasdaq Listing Rule 5615(b)(1); (iii) the requirement to hold annual general meeting as provided in Nasdaq Listing Rule 5620(a); (iv) the requirement to obtain shareholder approval prior to a plan or other equity compensation arrangement is established or materially amended as provided in Nasdaq Listing Rule 5635(c); and (v) the requirement of shareholder approval for entering into any transaction, other than a public offering, involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares as provided in Nasdaq Listing Rule 5635(d).
The functions and powers of our Board include, among others: ● appointing officers and determining the term of office of the officers; ● giving to any person the right or option of requiring at a future date that an allotment shall be made to him of any share at par or at such premium as may be agreed; ● exercising the borrowing powers of the Company and mortgaging the property of the Company; ● giving to any Directors, officers or employees of the Company an interest in any particular business or transaction or participation in the profits thereof or in the general profits of the Company either in addition to or in substitution for a salary or other remuneration; and ● resolving that the Company be deregistered in the Cayman Islands and continued in a named jurisdiction outside the Cayman Islands subject to the provisions of the Companies Act.
The functions and powers of our Board include, among others: ● appointing officers and determining the term of office of the officers; ● giving to any person the right or option of requiring at a future date that an allotment shall be made to him of any share at par or at such premium as may be agreed; ● exercising the borrowing powers of the Company and mortgaging the property of the Company; ● giving to any Directors, officers or employees of the Company an interest in any particular business or transaction or participation in the profits thereof or in the general profits of the Company either in addition to or in substitution for a salary or other remuneration; and ● resolving that the Company be deregistered in the Cayman Islands and continued in a named jurisdiction outside the Cayman Islands subject to the provisions of the Companies Act. 89 Interested Transactions A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he/she is interested.
Compensation of Directors and Executive Officers Executive Compensation Summary Compensation Table For the fiscal year ended December 31, 2023, we paid an aggregate of approximately US$1,115,972 in cash and benefits to our directors and executive officers.
Compensation of Directors and Executive Officers Executive Compensation Summary Compensation Table For the fiscal year ended December 31, 2024, we paid an aggregate of approximately US$484,614 in cash and benefits to our directors and executive officers.
Name Age Position Stewart Lor 60 CEO, President, and Chairman of the Board Yuxia Xu 50 Chief Financial Officer and Chief Operating Officer Charles Tingru Ou 48 Chief Product Officer Wei Jiang (1)(4) 51 Independent Director Ruizhong Jiang (2) 60 Independent Director Phillip Tao Qiu (3) 41 Independent Director (1) Chair of the Audit Committee.
Name Age Position Stewart Lor 62 Chief Executive Officer, President, and Chairman of the Board Yuxia Xu 52 Chief Financial Officer and Chief Operating Officer Charles Tingru Ou 50 Chief Product Officer Wei Jiang (1)(4) 53 Independent Director Ruizhong Jiang (2) 62 Independent Director Phillip Tao Qiu (3) 43 Independent Director (1) Chair of the Audit Committee.
On July 8, 2022, the Board approved to register all the shares issuable under the Company’s Amended 2018 Stock Option Plan in a registration statement on a Form S-8 (File No. 333-266092), representing 83,211 Class A ordinary shares issuable under our Amended 2018 Plan.
On July 8, 2022, the Board approved to register all the shares issuable under the Company’s Amended 2018 Stock Option Plan in a registration statement on a Form S-8 (File No. 333-266092), representing 4,161 (post-reverse stock split adjusted to 693) Class A ordinary shares issuable under our Amended 2018 Plan.
The following table sets forth all cash compensation paid by us, as well as certain other compensation paid or accrued, in fiscal 2023, 2022 and 2021 to each of the following named executive officers.
The following table sets forth all cash compensation paid by us, as well as certain other compensation paid or accrued, for the fiscal year ended December 31, 2024, 2023 and 2022 to each of the following named executive officers.
The Company has issued certain options to the employees, advisors, and consultants (collectively the “Participants”) of the Company under the Amended Plan to purchase in an aggregate amount of 38,148 Class A ordinary shares the grants have been made under the plan as of the date hereof.
The Company has issued certain options to the employees, advisors, and consultants (collectively the “Participants”) of the Company under the Amended Plan to purchase in an aggregate amount of 1,907 (post-reverse stock split adjusted to 317) Class A ordinary shares the grants have been made under the plan as of the date hereof.
On February 23, 2020, the Board approved to register all the shares issuable under the Company’s 2018 Amended Option Plan in a registration statement on a Form S-8 (File No. 333-253408), representing 38,148 Class A ordinary shares issuable under our Amended 2018 Stock Option Plan (the “ First Amendment” ).
On February 23, 2020, the Board approved to register all the shares issuable under the Company’s 2018 Amended Option Plan in a registration statement on a Form S-8 (File No. 333-253408), representing 1,907 (post-reverse stock split adjusted to 317) Class A ordinary shares issuable under our Amended 2018 Stock Option Plan (the “First Amendment”).
Limitation on Liability and Other Indemnification Matters The Companies Act does not limit the extent to which the Sixth Amended and Restated Memorandum and Articles of Association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.
Jiang holds a Ph.D. degree in Oil and Gas Development Engineering from Southwest Petroleum University and a master’s degree in Oil and Gas Development Engineering from China University of Petroleum. 83 Limitation on Liability and Other Indemnification Matters The Companies Act does not limit the extent to which the Eighth Amended and Restated Memorandum and Articles of Association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime.
Name/principal position Year Salary Equity Compensation All Other Compensation (3) Total Paid Stewart Lor/CEO and Chairman of the Board (1) 2021 200,111 100,822 - 300,933 2022 116,400 - 1,000,000 1,116,400 2023 192,674 - 436,093 628,767 Yuxia Xu/CFO and Chief Operating Officer (2) 2021 - - - - 2022 - - 600,000 600,000 2023 84,735 - 14,130 98,865 Wei Jiang /Independent Director 2021 - - - - 2022 - - - - 2023 - - - - Tao Qiu /Independent Director 2021 - - - - 2022 - - - - 2023 - - 320,000 320,000 Tingru Ou/ Chief Product Officer 2021 - - - - 2022 - - - - 2023 27,440 - 40,900 68,340 (1) After Mr.
Name/principal position Year Salary Equity Compensation All Other Compensation (3) Total Paid Stewart Lor/CEO and Chairman of the Board (1) 2022 116,400 - 1,000,000 1,116,400 2023 192,674 - 436,093 628,767 2024 187,275 - 16,009 203,284 Yuxia Xu/CFO and Chief Operating Officer (2) 2022 - - 600,000 600,000 2023 84,735 - 14,130 98,865 2024 68,791 - 8,894 77,685 Wei Jiang /Independent Director 2022 - - - - 2023 - - - - 2024 60,000 - 32,000 92,000 Ruizhong Jiang /Independent Director 2022 - - - - 2023 - - - - 2024 18,000 - - 18,000 Tao Qiu /Independent Director 2022 - - - - 2023 - - 320,000 320,000 2024 34,465 - 1,801 36,266 Tingru Ou/ Chief Product Officer 2022 - - - - 2023 27,440 - 40,900 68,340 2024 38,629 - 18,750 57,379 (1) After Mr.
In making this determination, our board considered the relationships that each of these non-employee directors has with us and all other facts and circumstances our board deemed relevant in determining their independence.
Based on this review, the Board determined that each of Wei Jiang, Ruizhong Jiang and Phillip Tao Qiu are “independent” within the meaning of the NASDAQ rules. In making this determination, our Board considered the relationships that each of these non-employee directors has with us and all other facts and circumstances our Board deemed relevant in determining their independence.
As such, it is important for us to have our CEO serve on the board as he plays key roles in the risk oversight or the Company. As a smaller reporting company with a small Board, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters.
As such, it is important for us to have our CEO serve on the board as he plays key roles in the risk oversight or the Company.
Our Board has affirmatively determined that each of the members of the Nominating Committee meets the definition of “independent director” for purposes of serving on a Nominating Committee under NASDAQ rules. 87 Duties of Directors Under Cayman Islands law, our directors have a duty to act honestly, in good faith and in our best interests.
Our Board has affirmatively determined that each of the members of the Nominating Committee satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act. Duties of Directors Under Cayman Islands law, our directors have a duty to act honestly, in good faith and in our best interests.
Compensation Committee The Compensation Committee is responsible for, among other matters: ● reviewing and approving, or recommending to the Board to approve the compensation of our CEO and other executive officers and directors; ● reviewing key employee compensation goals, policies, plans and programs; ● administering incentive and equity-based compensation; ● reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and ● appointing and overseeing any compensation consultants or advisors.
In addition, our Board has determined that Wei Jiang qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K and meets the financial sophistication requirements of the NASDAQ rules. 88 Compensation Committee The Compensation Committee is responsible for, among other matters: ● reviewing and approving, or recommending to the Board to approve the compensation of our CEO and other executive officers and directors; ● reviewing key employee compensation goals, policies, plans and programs; ● administering incentive and equity-based compensation; ● reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and ● appointing and overseeing any compensation consultants or advisors.
Accordingly, the number of ordinary shares of the Company issuable upon the exercise of all outstanding options granted under the Amended 2018 Plan is 342,684 Class A ordinary shares. Administration . The Plan will be administered by our Board, or, once constituted, the Compensation Committee of the Board (we refer to body administering the Plan as the “Committee”).
The Plan will be administered by our Board, or, once constituted, the Compensation Committee of the Board (we refer to body administering the Plan as the “Committee”). Number of Ordinary Shares.
On January 20, 2023, the Board approved to register all the shares issuable under the Company’s Amended 2018 Plan in a registration statement on a Form S-8 (File No. 333-269513) representing additional 259,473 Class A ordinary shares of the Company reserved for issuance under the Amended 2018 Plan, which are in addition to the 83,211 Class A ordinary shares registered on the Prior Registration Statement.
The Company has granted certain Restricted Shares and Restricted Shares Units to the Participants of the Company under the Amended Plan to purchase in an aggregate amount of 2,500 (post-reverse stock split adjusted to 416) Class A ordinary shares and the grants have been made under such plan as of the date hereof. 85 On January 20, 2023, the Board approved to register all the shares issuable under the Company’s Amended 2018 Plan in a registration statement on a Form S-8 (File No. 333-269513) representing additional 12,973 (post-reverse stock split adjusted to 2,162) Class A ordinary shares of the Company reserved for issuance under the Amended 2018 Plan, which are in addition to the 83,211 (post-reverse stock split adjusted to 693) Class A ordinary shares registered on the Prior Registration Statement.
Our Compensation Committee consists of three members, Wei Jiang, Ruizhong Jiang and Phillip Tao Qiu, with Phillip Tao Qiu serving as the chair of Compensation Committee. Our Board has affirmatively determined that each of the members of the Compensation Committee meets the definition of “independent director” for purposes of serving on Compensation Committee under NASDAQ rules.
Our Compensation Committee consists of three members, Wei Jiang, Ruizhong Jiang and Phillip Tao Qiu, with Phillip Tao Qiu serving as the Chairman of the Compensation Committee. Our Board has affirmatively determined that each of the members of the Compensation Committee satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act.
Our Board has affirmatively determined that each of the members of the Audit Committee meets the definition of “independent director” for purposes of serving on an Audit Committee under Rule 10A-3 of the Exchange Act and NASDAQ rules.
Our Board has affirmatively determined that each of the members of the Audit Committee satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act, as amended.
Employees As of the date of this Annual Report, we had a total of 178 full-time employees, of which 76 are in research and development, 17 are in sales and marketing, 38 are in technical and customer services, and 47 are in general administration. 88 We have standard employment, comprehensive confidentiality and non-compete agreements with our management and standard confidentiality and non-compete terms with all other employees.
Employees As of the date of this Annual Report, we had a total of 137 full-time employees, of which 62 are in research and development, 10 are in sales and marketing, 29 are in technical and customer services, and 36 are in general administration.
Employee directors are entitled to receive $4,500 payable quarterly for their services.
Employee directors are entitled to receive a monthly payment ranging from $1,500 to $5,000 for their services.
The total number of Ordinary Shares issuable upon the exercise of all outstanding Options granted under the Plan shall not exceed 20% of the total number of outstanding Ordinary Shares. 82 On April 4, 2019, the Board approved several restricted stock options grants to the members of executive management and the Board of the Company pursuant to the terms of the Plan.
Section 3(a) and 6(f) are amended as the following. The total number of Ordinary Shares issuable upon the exercise of all outstanding Options granted under the Plan shall not exceed 20% of the total number of outstanding Ordinary Shares.
Removed
Jiang holds a PhD degree in Oil and Gas Development Engineering from Southwest Petroleum University and a master’s degree in Oil and Gas Development Engineering from China University of Petroleum.
Added
Accordingly, the number of ordinary shares of the Company issuable upon the exercise of all outstanding options granted under the Amended 2018 Plan is 17,134 (post-reverse stock split adjusted to 2,855) Class A ordinary shares. Administration .
Removed
Section 3(a) and 6(f) are amended as the following.
Added
Under our Eighth Amended and Restated Memorandum and Articles of Association, we shall hold an annual general meeting in each year other than the year in which the Eighth Amended and Restated Memorandum and Articles of Association were adopted and shall specify the meeting as such in the notices calling it.
Removed
Specifically, the Company granted an aggregate of 4,377 stock options to key employees and directors under the Plan. Stock options granted to key employees and directors generally have a term of three years, but are subject to earlier termination in connection with termination of continuous service to the Company.
Added
As a smaller reporting company with a small Board, we believe it is appropriate to have the involvement and input of all of our directors in risk oversight matters. 87 Director Independence Our Board has reviewed the independence of our directors, applying the NASDAQ independence standards.
Removed
The following is a summary of the Plan and is qualified by the full text of the Plan.
Added
We have signed standard employment, comprehensive confidentiality and non-compete agreements with our management and standard confidentiality and non-compete terms with all other employees.
Removed
The Company has granted certain Restricted Shares and Restricted Shares Units to the Participants of the Company under the Amended Plan to purchase in an aggregate amount of 50,000 Class A ordinary shares and the grants have been made under such plan as of the date hereof.
Removed
Director Independence Our Board has reviewed the independence of our directors, applying the NASDAQ independence standards. Based on this review, the board determined that each of Wei Jiang, Ruizhong Jiang and Phillip Tao Qiu are “independent” within the meaning of the NASDAQ rules.
Removed
In addition, our Board has determined that Wei Jiang qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K and meets the financial sophistication requirements of the NASDAQ rules.
Removed
Interested Transactions A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

17 edited+5 added−25 removed5 unchanged
Related Party Transactions The following is a description of transactions since the beginning of the Company’s preceding three financial years up to the date hereof, in which the amount involved in the transaction exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as at the year-end for the last two completed fiscal years, and to which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
Related Party Transactions The following is a description of transactions since the beginning of the Company’s preceding three financial years up to the date hereof, in which the amount involved in the transaction exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as of the year-end for the last two completed fiscal years, and to which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
Compensation of Directors and Executive Officers—Employment Agreements.” Share Incentives See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—2018 Stock Option Plan.” C. Interests of Experts and Counsel Not applicable. 93
Compensation of Directors and Executive Officers — Employment Agreements.” Share Incentives See “Item 6. Directors, Senior Management and Employees — B. Compensation of Directors and Executive Officers — 2018 Stock Option Plan.” C. Interests of Experts and Counsel Not applicable.
There are no arrangements, known to us, the operation of which may at a subsequent date result in a change in control of our Company. B.
There are no arrangements, known to us, the operation of which may at a subsequent date result in a change in control of our Company. 91 B.
Reference is made to the Company’s report on Amendment No.4 to the Schedule 13D jointly filed by Stewart Lor and Hogstream with the Securities and Exchange Commission on March 22, 2023 for more details on the transaction; and .(iv.iv) 37,820 Class B shares were sold in the open market from June 8, 2023 to September 7, 2023.
Reference is made to the Company’s report on Amendment No.4 to the Schedule 13D jointly filed by Stewart Lor and Hogstream with the Securities and Exchange Commission on March 22, 2023 for more details on the transaction; and.(iv.iv) 314 Class B shares were sold in the open market from June 8, 2023 to September 7, 2023.
Major Shareholders The following tables set forth certain information with respect to the beneficial ownership of our Ordinary Shares as of the date of this annual report for: ● each stockholder known by us to be the beneficial owner of more than 5% of our outstanding Ordinary Shares; ● each of our directors; ● each of our named executive officers; and ● all of our directors and executive officers as a group.
Major Shareholders The following tables set forth certain information with respect to the beneficial ownership of our Ordinary Shares as of the date of this Annual Report for: ● each stockholder known by us to be the beneficial owner of more than 5% of our outstanding Ordinary Shares; ● each of our directors; ● each of our named executive officers; and ● all of our directors and executive officers as a group. 90 We have determined beneficial ownership in accordance with the rules of the SEC.
The ordinary shares beneficially owned by Mr. Lor were re-designated as Class B ordinary shares according to the resolutions passed at the annual general meeting of the Company held on September 5, 2023. (2) Includes (i) 24,229 Class A ordinary shares was acquired by Mr.
The ordinary shares beneficially owned by Mr. Lor were re-designated as Class B ordinary shares according to the resolutions passed at the annual general meeting of the Company held on September 5, 2023.
(ii) Argo Advisory entered into a share purchase agreement dated April 14, 2022 with Hogstream pursuant to which Argo Advisory agreed to transfer 41,667 Class B Ordinary Shares to Hogstream at a unit price calculated pursuant to the previous day’s closing price per share after a discount of 20%, for a total consideration of USD$2,536,000.
Box 905, Quastsky Building, Road Town, Tortola, British Virgin Islands; (ii) Argo Advisory entered into a share purchase agreement dated April 14, 2022 with Hogstream pursuant to which Argo Advisory agreed to transfer 347 Class B Ordinary Shares to Hogstream at a unit price calculated pursuant to the previous day’s closing price per share after a discount of 20%, for a total consideration of USD$2,536,000.
(iii) On December 8, 2022, two shareholders entered into separate security purchase agreements with Hogstream, pursuant to which each of the two shareholders agreed to sell 38,546 Class B Ordinary Shares to Hogstream at a price of $20.88 per share for an aggregate total consideration of $1,614,876.
Argo Advisory subsequently transferred the above-mentioned 347 Class B Ordinary Shares to Hogstream on April 20, 2022; (iii) On December 8, 2022, two shareholders entered into separate security purchase agreements with Hogstream, pursuant to which each of the two shareholders agreed to sell 321 Class B Ordinary Shares to Hogstream at a price of $2,515.38 per share for an aggregate total consideration of $1,614,876.
Lor maintains sole voting control over the shares held by Hogstream, the principal office address of which is at Sertus Incorporation (BVI) Limited, Sertus Chambers, P.O. Box 905, Quastsky Building, Road Town, Tortola, British Virgin Islands.
Lor maintains sole voting control over the shares held by Hogstream, the principal office address of which is at Sertus Incorporation (BVI) Limited, Sertus Chambers, P.O.
(4) Includes 3,104 Ordinary Shares underlying share options held by Yuxia Xu that is exercisable within 60 days after the date of this Annual Report. 90 As of the date of this Annual Report, there were 76 holders of record entered in our share register.
(3) Calculated based on post-reverse stock split basis, includes 206 Ordinary Shares underlying share options held by Yuxia Xu that is exercisable within 60 days after the date of this Annual Report. As of the date of this Annual Report, there were 72 holders of record entered in our share register.
(3) Includes 3,450 Ordinary Shares underlying share options held by Wei Jiang that is exercisable within 60 days after the date of this Annual Report.
(2) Calculated based on post-reverse stock split basis, includes 227 Ordinary Shares underlying share options held by Wei Jiang that is exercisable within 60 days after the date of this Annual Report.
(1) 1,549 * 243,902 100 % 2.74 % 5% or greater beneficial owners as a group 1,549 * 243,902 100 % 2.74 % * Less than 1%. (1) Includes (i) 40,197 Class B Ordinary Shares held by Hogstream International Ltd., a British Virgin Islands company wholly-owned by Stewart Lor (“Hogstream”). Mr.
(1) 11 * 2,032 100 % 2.60 % 5% or greater beneficial owners as a group 11 * 2,032 100 % 2.60 % * Less than 1%. (1) Calculated based on post-reverse stock split basis, which includes (i) 334 Class B Ordinary Shares held by Hogstream International Ltd., a British Virgin Islands company wholly-owned by Stewart Lor (“Hogstream”). Mr.
(iv) An aggregate of 86,495 Class A Ordinary Shares held by Hogstream, of which (iv.i) 2,108 Class B Ordinary Shares were acquired in the open market in December 2022; and (iv.ii) 58,194 Class B Ordinary Shares were acquired pursuant to the security purchase agreement dated March 10, 2023, entered between Hogstream and an existing shareholder of the Issuer; (iv.iii) 64,013 Class B Ordinary Shares were acquired pursuant to the security purchase agreement dated March 10, 2023, entered between Hogstream and an existing shareholder of the Issuer.
Upon the closing of the transactions on December 16, 2022, the two shareholders transferred an aggregate 642 Class B Ordinary Shares to Hogstream; (iv) An aggregate of 719 Class B Ordinary Shares held by Hogstream, of which (iv.i) 17 Class B Ordinary Shares were acquired in the open market in December 2022; and (iv.ii) 484 Class B Ordinary Shares were acquired pursuant to the security purchase agreement dated March 10, 2023, entered between Hogstream and an existing shareholder of the Issuer; (iv.iii) 533 Class B Ordinary Shares were acquired pursuant to the security purchase agreement dated March 10, 2023, entered between Hogstream and an existing shareholder of the Issuer.
As of December 31, 2023 2022 Hong Yu (1) $ - $ 118,114 Shanghai Yue See cultural development Co., LTD (1) 39,985 - Zhongchuan Dadi (Beijing) Technology Co., LTD (1) 223 - Subtotal $ 40,208 $ 118,114 (1) The above balances represent unpaid loan and expenses to these related parties. 91 Related party transactions For the years ended 2023 2022 2021 Guangzhou Guangrui (1) Service fees $ - $ - $ 725,362 Guangzhou Jiatu Culture Media Co., Ltd.
Due to related party (1) . As of December 31, 2024 2023 Shanghai Yue See cultural development Co., Ltd. $ - $ 39,985 Zhongchuan Dadi (Beijing) Technology Co., Ltd. 218 223 Subtotal $ 218 $ 40,208 (1) The above balances represent unpaid loan and expenses to these related parties.
(2) Service fees $ - $ 62,667 $ - Stewart Lor Interest income $ 50,663 $ 117,569 $ - Yuxia Xu Interest income $ 16,778 $ 22,802 $ - Shanghai Stamp Technology Co., Ltd.
Related party transactions For the years ended 2024 2023 2022 Guangzhou Jiatu Culture Media Co., Ltd. (1) Service fees $ - $ - $ 62,667 Stewart Lor Interest income $ 16,094 $ 50,663 $ 117,569 Yuxia Xu Interest income $ - $ 16,778 $ 22,802 Shanghai Stamp Technology Co., Ltd.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is Suite 412, Tower A, Tai Seng Exchange, One Tai Seng Avenue, Singapore 536464. 89 Beneficial Ownership Name of Beneficial Owner Class A Ordinary Shares Class A Percentage Class B Ordinary Shares Class B Percentage of Total Voting Power Stewart Lor (1) 1,549 * 243,902 100 % 2.74 % Ruizhong Jiang (2) * * * * * Wei Jiang (3) * * * * * Yuxia Xu (4) * * * * * Charles Tingru Ou * * * * * Phillip Tao Qiu * * * * * All directors and executive officers as a group 1,618 * 243,902 100 % 2.74 % HOGSTREAM INTERNATIONAL LTD.
Beneficial Ownership Name of Beneficial Owner Class A Ordinary Shares Class A Percentage Class B Ordinary Shares Class B Percentage of Total Voting Power Stewart Lor (1) 11 * 2,032 100 % 2.60 % Ruizhong Jiang * * * * * Wei Jiang (2) * * * * * Yuxia Xu (3) * * * * * Charles Tingru Ou * * * * * Phillip Tao Qiu * * * * * All directors and executive officers as a group 11 * 2,032 100 % 2.60 % HOGSTREAM INTERNATIONAL LTD.
None of the stockholders listed in the table are a broker-dealer or an affiliate of a broker dealer. Applicable percentage ownership is based on 259,464,169 Class A ordinary shares and 243,902 Class B ordinary shares outstanding as of December 31, 2023.
None of the stockholders listed in the table are a broker-dealer or an affiliate of a broker dealer. Applicable percentage ownership is based on 13,755,975 (post-reverse stock split adjusted to 2,292,652) Class A ordinary shares and 12,195 (post-reverse stock split adjusted to 2,032) Class B ordinary shares outstanding as of the date of this Annual Report.
Removed
We have determined beneficial ownership in accordance with the rules of the SEC.
Added
Unless otherwise indicated, the address of each beneficial owner listed in the table below is Suite 412, Tower A, Tai Seng Exchange, One Tai Seng Avenue, Singapore 536464.
Removed
Argo Advisory subsequently transferred the above-mentioned 41,667 Class B Ordinary Shares to Hogstream on April 20, 2022.
Added
Due from related party (1) . As of December 31, 2024 2023 Ban Lor $ 13,700 $ 17,155 Stewart Lor 348,714 452,598 Yuxia Xu 60,700 207,236 Phillip Tao Qiu 470,931 600,000 Xiaoyan Liu 3,370 87,990 Subtotal $ 897,415 $ 1,364,979 (1) From time to time, the Company advances funds to senior management, mainly for oversea business purpose.
Removed
Upon the closing of the transactions on December 16, 2022, the two shareholders transferred an aggregate 77,092 Class B Ordinary Shares to Hogstream.
Added
Interest income $ - $ - $ 1,771 Shanghai Yue See cultural development Co., LTD Service revenue $ - $ 4,195 $ - Short term bank loan Outstanding balance of short-term bank loans consisted of the following: December 31, 2024 December 31, 2023 Loans from Bank of Communication (1) $ 2,465,990 $ 2,816,942 Loan from SPD Bank (2) 1,411,094 1,126,776 Short term bank loans $ 3,877,084 $ 3,943,718 Notes: (1) Fixed interest rates ranging from 3.90% to 4.20%, maturity dates from January 16, 2024 to April 10, 2025 and guaranteed by the representative of Zhuhai Powerbridge, the Group’s CEO and CEO’s spouse and a third party.
Removed
Su pursuant to the security purchase agreement dated December 16, 2022, entered between Mr.Su, other Boxinrui’s shareholders and Powerbridge Cayman; (ii) 104,501 Class A ordinary shares was acquired by Mr. Su pursuant to the security purchase agreement dated March 28, 2023, entered between Mr.Su, other Boxinrui’s shareholders and Powerbridge Cayman.
Added
The Group pledged buildings with the aggregated carrying value of $2.1 million and $2.3 million as of December 31, 2024 and 2023 to secure the loans. (2) Fixed interest rates ranging from 3.5% to 4.1%, maturity on from June 28, 2024 to December 16, 2025 and guaranteed by the Group’s CEO.
Removed
Due from related party . As of December 31, 2023 2022 Shanghai Stamp Technology Co., Ltd.
Added
The Group pledged fixed asset with the aggregated carrying value of $1.6 million and $1.7 million as of December 31, 2024 and 2023 to secure the loan, the Group’s CEO pledged personal property to secure some of these loans. 92 Employment Agreements See “Item 6. Directors, Senior Management and Employees — B.
Removed
(1) $ - $ 172,811 Ban Lor (2) 17,155 37,638 Stewart Lor (2) 452,598 1,566,478 Yuxia Xu (2) 207,236 363,666 Phillip Tao Qiu (2) 600,000 - Xiaoyan Liu (2) 87,990 - Subtotal $ 1,364,979 $ 2,140,593 (1) In connection with the acquisition of Smartconn, the balance was effectively settled.
Removed
(2) From time to time, the Company advances funds to senior management for business purpose. Due to related party .
Removed
Interest income $ - $ 1,771 $ - Shanghai Yue See cultural development Co., LTD Service revenue $ 4,195 $ - $ - (1) As the disposal of Shantou Hongrui in February 2022, Guangzhou Guangrui was no longer considered as a related party.
Removed
Short term bank loan Loan from Bank of Communication On January 27, 2022, Powerbridge Zhuhai entered into a loan agreement with Bank of Communication to obtain a loan of $1,449,864 (RMB10.0 million) for a term of one year and at a fixed annual interest rate of 4.70%.
Removed
The bank loan was guaranteed by the representative of Zhuhai Powerbridge and pledged approximately $2.4 million fixed assets as the collateral to secure the loan. The loan was fully repaid upon maturity.
Removed
On December 14, 2022, Powerbridge Zhuhai entered into facility agreement with Bank of Communication, pursuant to which a total facility of up to $724,932 (RMB5.0 million) was made available to the Company. The loan facility is available for the Company to withdraw from December 12, 2022 to December 12, 2025.
Removed
The bank loan was guaranteed by the Company’s CEO and CEO’s spouse. On December 16, 2022, drew down $724,932 (RMB5.0 million) for a term of one year and at a fixed annual interest rate of 4.10%. On December 5, 2023, the loan was fully repaid subsequently.
Removed
On December 14, 2023, Powerbridge Zhuhai drew down $454,751 (RMB3,228,684) for a term of one year and at a fixed annual interest rate of 3.90%. On December 25, 2023, Powerbridge Zhuhai drew down $249,485 (RMB1,771,316) for a term of one year and at a fixed annual interest rate of 3.90%.
Removed
On January 18, 2023, Powerbridge Zhuhai entered into facility agreement with Bank of Communication, pursuant to which a total facility of up to $1,408,471 (RMB10.0 million) was made available to the Company. The loan facility is available for the Company to withdraw from January18, 2023 to December 12, 2025.
Removed
The bank loan was guaranteed by the representative of Zhuhai Powerbridge and pledged approximately $2.3 million fixed assets as the collateral to secure the loan. On January 19, 2023, Powerbridge Zhuhai drew down $1,408,471 (RMB10.0 million) for a term of one year and at a fixed annual interest rate of 4.20%.
Removed
On January 17, 2024, the loan was fully repaid subsequently.
Removed
On January 17, 2024, Powerbridge Zhuhai drew down $1,408,471 (RMB10.0 million) for a term of one year and at a fixed annual interest rate of 3.9%. 92 On January 11, 2023, Powerbridge Zhuhai entered into facility agreement with Bank of Communication, pursuant to which a total facility of up to $704,235 (RMB5.0 million) was made available to the Company.
Removed
The loan facility is available for the Company to withdraw from January 11, 2023 to December 12,2025. The bank loan was guaranteed by the Company’s CEO and a third party. On January 16, 2023, Powerbridge Zhuhai drew down $505,323 (RMB3,587,746) for a term of one year and at a fixed annual interest rate of 4.20%.
Removed
On January 16, 2024, the loan was fully repaid subsequently. On March 14, 2023, Powerbridge Zhuhai drew down $198,912 (RMB1,412,254) for a term of one year and at a fixed annual interest rate of 4.20%.
Removed
On January 31, 2024, Powerbridge Zhuhai drew down $492,965 (RMB3,500,000) for a term of one year and at a fixed annual interest rate of 3.9%, subsequently Loan from Bank of China On July 15, 2022, Powerbridge Zhuhai entered into a loan agreement with Bank of China to obtain a loan of $724,932 for a term of one year and at a fixed annual interest rate of 4.50%.
Removed
The bank loan was guaranteed by the representative of Zhuhai Powerbridge and pledged approximately $1.8 million fixed assets as the collateral to secure the loan. On December 30, 2022, the Company fully repaid the loan in advance.
Removed
On June 10, 2022, Powerbridge Zhuhai entered into a loan agreement with Bank of China to obtain a loan of $724,932 for a term of one year and at a fixed annual interest rate of 4.50%.
Removed
The bank loan was guaranteed by the representative of Zhuhai Powerbridge and pledged approximately $1.8 million fixed assets as the collateral to secure the loan. On December 30, 2022, the Company partially repaid $289,973 in advance. the remaining balance was fully repaid on April 3, 2023.
Removed
Loan from SPD Bank On June 20, 2023, Powerbridge Zhuhai entered into a facility agreement with Shanghai Pudong Development Bank obtain a total facility of up to $1,126,776 (RMB8.0 million) The loan facility is available for the Company to withdraw from June 20, 2023 to May, 24, 2024.
Removed
The bank loan was guaranteed by the Company’s CEO and pledged approximately $1.7 million fixed assets as the collateral to secure the loan. On June 28, 2023, Powerbridge Zhuhai drew down $1,126,776 (RMB8.0 million) for a term of one year and at a fixed annual interest rate of 4.1%. Employment Agreements See “Item 6. Directors, Senior Management and Employees— B.

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