Financial Performance - The Group's revenue from continuing operations in 2018 was HK$61,250,000, an increase of 72.8% from HK$35,434,000 in 2017[21] - Gross profit for 2018 was HK$8,319,000, a decrease of 11.7% compared to HK$9,422,000 in 2017[21] - The Group's revenue for the Year was approximately HK$61.3 million, an increase from HK$35.4 million in 2017, while gross profit was HK$8.3 million, down from HK$9.4 million in 2017[81] - The loss attributable to shareholders for the Year was approximately HK$288.6 million, an improvement from HK$306.0 million in 2017, primarily due to reduced administrative expenses[81] - Administrative expenses decreased to approximately HK$365.4 million from HK$435.8 million in 2017, with research and development expenses dropping to HK$21.9 million from HK$62.7 million[81] - The Group incurred a loss of HK$289,829,000 and an operating cash outflow of HK$301,132,000 for the year, indicating material uncertainty regarding its ability to continue as a going concern[153] - As of December 31, 2018, the total equity of the Group amounted to approximately HK$1,239.0 million, a decrease from HK$1,604.8 million as of December 31, 2017[180] - The Group's gearing ratio as of December 31, 2018, was approximately 4.94%, up from 3.85% as of December 31, 2017[180] - Net current assets of the Group were approximately HK$552.0 million as of December 31, 2018, down from HK$857.0 million as of December 31, 2017[180] - Cash and cash equivalents amounted to HK$45.8 million as of December 31, 2018, compared to HK$311.8 million as of December 31, 2017[180] Strategic Initiatives - The Group aims to complete the development of sample cars and mass production models in 2019, following positive market feedback from the Geneva and Beijing Auto Shows[29] - The Group plans to induct strategic investments to support the mass production of clean energy automobiles while controlling operational costs[30] - The Group's focus for 2019 includes completing development work and achieving important milestones in production[30] - The Group plans to actively introduce strategic investors to provide strong financial support for the mass production of clean energy vehicles amid an uncertain macroeconomic environment[31] - The Group's strategy includes the development of innovative ideas for autonomous driving and connectivity features in its vehicles[97] - The introduction of new concept cars, including the K350 luxury SUV and H500 luxury sedan, is part of the Group's strategy to build its brand and expand its product portfolio[98] - The company is focused on electrification, integrating eDrive and graphene super lithium battery technology to enhance vehicle range and reduce energy consumption[104] - The company is committed to developing powertrains, battery series, and micro-turbine range extender technologies, positioning itself to manufacture complete NEVs[122] - The company plans to continue heavy investment in research and development to advance NEV technology and explore business opportunities with partners[124] Market Environment - The Chinese government's new industrial policy supports range extender electric vehicles, positioning the Group favorably in the market[23] - The Board remains optimistic about the clean energy automobile market in China despite macroeconomic uncertainties and competition[22] - The Group acknowledges the challenges posed by trade disputes and government policy changes affecting the automotive industry in China[22] - The PRC government aims for new energy vehicles (NEVs) to constitute at least 20% of auto sales by the end of the next two decades, with tax rebates extended until the end of 2020[120] - The Chinese government aims to increase the proportion of new energy vehicles (NEVs) in total vehicle sales to at least 20% over the next 20 years, with tax incentives extended until the end of 2020[122] Leadership and Governance - The Company has a strong leadership team with diverse expertise in engineering, finance, law, and supply chain management, enhancing its strategic decision-making capabilities[51] - The Company is focused on expanding its market presence and enhancing its technological capabilities through the leadership of experienced professionals in various fields[51] - The Company’s independent non-executive directors have extensive experience in finance and law, enhancing governance[64][65][68][69] - The Company is focused on maintaining compliance with regulatory standards as part of its governance framework[75] - The Company aims to leverage its directors' expertise in accounting and finance for better financial oversight[64][68][69] - The Company is committed to transparency in its financial reporting to build shareholder trust[77] - The Company’s board includes members with over 14 years of experience in mergers and acquisitions, enhancing its strategic capabilities[69] Legal and Compliance Issues - The company has faced a lawsuit initiated by XALT, with the U.S. District Court ordering arbitration in Hong Kong, but no steps have been taken by XALT to initiate this arbitration[126] - The company disputes the claims in the lawsuit and believes it has strong defenses against all claims[127] - The independent auditor issued a qualified opinion regarding a prepayment to a supplier, which has been ongoing since 2017[128] - The Company plans to initiate arbitration proceedings at the Hong Kong International Arbitration Centre (HKIAC) to expedite the resolution of the dispute with XALT, potentially submitting a Notice of Arbitration in the second half of 2019[144] - The ongoing dispute with XALT has made it difficult for the Company to obtain necessary audit confirmations, impacting the financial reporting process[138] - The Board considers it premature to evaluate the recoverability of the Prepayment or the fair presentation of the consolidated financial statements due to ongoing legal disputes[136] Human Resources - The Group had a total of approximately 228 employees as of December 31, 2018, down from 294 employees as of December 31, 2017[183] - The Group's compensation policy links salary and bonuses to performance, with potential stock options to attract and retain employees[185] Research and Development - The Group has developed a high voltage 28Ah lithium-ion battery cell using graphene coating, which improves conductivity and allows for faster charging compared to other lithium-ion cells[90] - The Group's battery technology maintains 80% efficiency at lower temperature extremes, offering a wider temperature range than other lithium batteries[90] - The company is engaged in a 7-year research project with the University of California on graphene materials for automobile applications, expected to complete in 2020[110] - The company has applied for a patent for nanoporous graphene nanowires, which has been approved by the USPTO[111] Financial Management - The Group's cash management policy is conservative and balanced, primarily placing cash in deposits denominated in Hong Kong dollars, US dollars, or Renminbi[180] - The Group had no significant exposure to foreign exchange fluctuations and did not take any financial instruments for hedging purposes[182] - The Group's revenue and expenses are primarily denominated in RMB, HKD, and/or USD, with no significant foreign exchange risk, thus no financial instruments were used for hedging purposes[184]