Financial Performance - The company reported revenues of $11.6 million, $16.8 million, and $10.5 million for the fiscal years ended December 31, 2024, 2023, and 2022, respectively[306]. - Revenue from application development services represented 46.1%, 58.1%, and 36.7% of total revenue for the fiscal years ended December 31, 2024, 2023, and 2022, respectively[306]. - For the fiscal year ended December 31, 2024, sales and marketing expenses were approximately $1.1 million, representing 9.5% of total revenues[339]. - Research and development expenses for the fiscal year ended December 31, 2024, were $4.1 million, compared to $4.8 million in 2023 and $3.5 million in 2022[344]. - Rent expenses for the fiscal years ended December 31, 2024, 2023, and 2022 were $460,284, $344,775, and $162,799, respectively[355]. Business Strategy and Operations - The company plans to expand its bitcoin cryptomining operations with a sizable fleet in the near term, leveraging sustainable energy sources[301]. - The company aims to develop scalable renewable energy projects, focusing on new energy vehicles and agriculture machinery in targeted markets[322]. - The company collaborates with global partners to enhance agricultural efficiency using big data, AI, blockchain, and IoT technologies[327]. - The company operates in diverse industries, including digital technologies, cryptomining, renewable energy, and agriculture technologies[299]. - The company has adopted an asset-light model for its cryptomining operations, focusing on investment in mining machines rather than infrastructure[318]. - The company emphasizes a diversified business strategy to ensure sustained growth and effectively counter market uncertainties[308]. - The company plans to expand into international markets by leveraging partnerships with infrastructure builders in Belt and Road Initiative countries[342]. Human Resources - The company has a total of 137 full-time employees, with 62 in research and development[307]. - The company maintains a total of 137 full-time employees across various departments, including R&D, sales and marketing, technical services, and administration[357]. - The company has 62 full-time R&D personnel, indicating a strong commitment to innovation and technology development[357]. - The company’s sales team consists of 10 full-time sales and marketing personnel, supported by sales engineers and service consultants[339]. Intellectual Property - The company has 20 registered patents, 136 registered software copyrights, and 46 registered trademarks in the PRC, highlighting its focus on intellectual property protection[351]. Regulatory Compliance - The company must comply with regulations protecting customer confidential information in the IT and technological BPO services sector[366]. - Internet information service providers are prohibited from collecting users' personal information without consent[368]. - The Cyber Security Law mandates compliance with national security and privacy protection standards for all network users[371]. - The Data Security Law establishes a classification and grading protection system for important data, with penalties for violations[372]. - The Personal Information Protection Law outlines responsibilities for handling sensitive personal information and imposes penalties for non-compliance[374]. - Employers in China are required to execute written labor contracts and comply with local minimum wage standards[375]. - Companies must contribute to mandatory employee benefit plans, with penalties for non-compliance[377]. - Wholly foreign-owned enterprises can only pay dividends from retained profits and must allocate a portion to reserve funds[383]. - New M&A regulations require approval from the CSRC for offshore special purpose vehicles before overseas listings[386]. Financial Risks and Currency - The RMB depreciated by 8.2% in fiscal year 2022, 2.9% in fiscal year 2023, and 2.8% in fiscal year 2024, impacting financial results reported in U.S. dollar terms[687]. - A majority of the company's expense transactions and significant assets and liabilities are denominated in RMB, which is not freely convertible into foreign currencies[686]. - The company’s functional currency is RMB, while financial statements are presented in U.S. dollars, leading to potential exchange rate impacts[687]. - The company has not been exposed to material risks due to changes in market interest rates, as it has not used derivative financial instruments to manage interest rate risk exposure[685]. - The company has not been materially affected by inflation in the past, but future higher rates of inflation in China may pose risks[689]. - Remittances in currencies other than RMB must be processed through the PBOC or other regulatory bodies, requiring supporting documentation[686]. - Shareholder loans from offshore parent holding companies to PRC subsidiaries are regarded as foreign debts and must be registered with SAFE[390]. - The increase of registered capital for foreign-invested enterprises in China requires prior approval from the original approval authority[390]. - The total amount of foreign debts that can be borrowed by PRC subsidiaries, including shareholder loans, is subject to governmental approval[390]. - Year-over-year percent changes in the consumer price index for December 2022, 2023, and 2024 were 2.0%, 0.2%, and 0.2%, respectively, indicating low inflation impact on operations[689].

Core Points - X3 Holdings Co., Ltd. has regained compliance with the Nasdaq Listing Rule 5550(a)(2) regarding the Minimum Bid Price Requirement, as confirmed by a Compliance Notice dated April 11, 2025 [1][3] - The Company had previously received a notification on April 10, 2024, indicating a failure to maintain a minimum bid price of US$1.00 per share for 30 consecutive business days [2] - Following the notification, X3 Holdings was granted a total of 360 calendar days to regain compliance, with the deadline set for April 7, 2025 [2] - The Company successfully evidenced a closing bid price of at least US$1.00 per share for 10 consecutive business days from March 17, 2025, to April 11, 2025 [3] Company Overview - X3 Holdings Co., Ltd. is a global provider of digital solutions and technology services across various industries, including digital technologies, cryptomining operations, renewable energy, and agriculture technologies [4] - The Company is headquartered in Singapore and operates through subsidiaries globally [4]

Financial Performance - As of June 30, 2024, the Group incurred a net loss of approximately $11.2 million and had negative operating cash flow of approximately $1.1 million[23]. - For the six months ended June 30, 2024, total revenues decreased to $4,994,044 from $6,584,729 in the same period of 2023, representing a decline of approximately 24.1%[151]. - Application development services revenue fell to $884,538, down 59.5% from $2,179,167 in the prior year[151]. - Consulting and technical support services revenue increased to $2,383,000, up 61.1% from $1,477,740 in the same period of 2023[151]. - Trading revenue decreased significantly to $1,375,319, down 47.3% from $2,605,970 in the previous year[151]. Cash and Liquidity - The Group had cash and cash equivalents of approximately $1.5 million as of June 30, 2024[24]. - The Group believes its cash on hand and financing cash flows will be sufficient to fund operations for at least the next 12 months, but may require additional cash resources for investments or acquisitions[27]. - As of June 30, 2024, the Group's total cash, cash equivalents, and restricted cash amounted to $2,650,752, a decrease from $4,056,150 as of December 31, 2023[71]. - The total outstanding balance of short-term bank loans decreased to $2,752,092 as of June 30, 2024, from $3,943,718 as of December 31, 2023, representing a reduction of about 30.2%[94]. Revenue Recognition - The Group's revenue sources include application development services, consulting and technical support services, subscription services, trading revenue, and others, with other revenues accounting for 2.7% of total revenue for the six months ended June 30, 2024[58]. - Revenue from consulting and technical support services is recognized over the contract term on a straight-line basis, with contracts typically lasting 12 to 24 months[55]. - Revenue from subscription services is recognized over the contract term, based on actual usage or on a straight-line basis, as customers access the Group's software-as-a-service applications[56]. - The Group started its trading business in 2021, recognizing revenue at the point of product transfer to the customer, which generally occurs upon shipment or delivery[57]. Accounts Receivable and Allowance for Credit Losses - The Group's accounts receivable are recorded net of allowance for credit losses, which are estimated based on historical data and credit risk characteristics[38]. - The Group's accounts receivable, net, was $18,785,714 as of June 30, 2024, down from $21,487,053 as of December 31, 2023[85]. - The allowance for credit losses increased to $10,613,695 as of June 30, 2024, from $7,133,370 as of December 31, 2023, reflecting a provision for credit losses of $3,773,492 during the six months ended June 30, 2024[87]. Acquisitions and Investments - The Group acquired 100% equity interest in Hongchuangxin for a total consideration of $13,854,016 on May 1, 2024, aiming to expand its business scope[81]. - The intangible assets acquired through the Hongchuangxin acquisition are primarily attributable to franchise rights, amortized over 10 years[83]. Taxation - Powerbridge Zhuhai has been approved as a High and New Technology Enterprise (HNTE), reducing its statutory income tax rate to 15% from the standard 25%[109]. - The impact of the preferred tax treatment decreased income taxes by $209,134 for the six months ended June 30, 2024, compared to $223,556 for the same period in 2023[110]. - The Group's effective tax rate for the six months ended June 30, 2024, was 1.0%, significantly lower than the 0.1% effective tax rate for the same period in 2023[111]. - As of June 30, 2024, the Group has approximately $13.8 million in net operating loss (NOL) carryforwards with expirations by 2029[111]. Share Capital and Equity - The authorized share capital of the Company was increased from $200 million to $2 billion, allowing for a total of 5 billion ordinary shares[118]. - The Company had 275,155,450 Class A ordinary shares issued and outstanding as of June 30, 2024, an increase from 259,464,169 shares as of December 31, 2023[120]. - The Company issued 1,260,504 restricted Class A ordinary shares valued at $1,500,000 as compensation for consulting services on December 8, 2023[123]. - The Company raised net proceeds of $4,115,706 from the issuance of 153,646 Class A ordinary shares under a securities purchase agreement with White Lion Capital LLC[133]. - The Company issued 1,544,613 Class A ordinary shares and raised net proceeds of $10,375,969 under a securities purchase agreement with YA II PN, LTD[134]. Operational Efficiency and Challenges - The Group's liquidity is affected by operational efficiency, revenue contract values, and timing of accounts receivable collections[23]. - The Group's subsidiaries in PRC had accumulated deficits, resulting in statutory reserve balances of $nil as of June 30, 2024[148]. - The Group recorded a disputed amount of $1,389,806 (RMB10,100,000) in accounts payable due to a lawsuit filed by a supplier[150]. - The Group has fully paid the disputed amount and related interest by July 10, 2024[150]. Other Financial Metrics - The Group recognized a gain of $1,048,271 from the change in fair value of convertible notes for the six months ended June 30, 2024, compared to a loss of $530,501 for the same period in 2023[102]. - The Group's effective interest rates for the first and second tranches of the YA 2024 Notes were 17.6% and 24.3%, respectively, with total effective interest expense amounting to $104,850 for the six months ended June 30, 2024[106]. - The total future minimum lease payments as of June 30, 2024, amounted to $510,330, with a present value of lease liabilities of $491,987[97].

Group 1 - X3 Holdings Co., Ltd. will implement a share consolidation at a ratio of 1-for-20, effective November 22, 2024 [1][2] - Following the consolidation, every twenty shares will be consolidated into one ordinary share, with no fractional shares issued [2] - The company's ordinary shares will continue trading on The Nasdaq Capital Market under the symbol "XTKG" with a new CUSIP number [1][2] Group 2 - X3 Holdings is a global provider of digital solutions and technology services, operating in diverse sectors including digital technologies, cryptomining, renewable energy, and agriculture technologies [3] - The company is headquartered in Singapore and has subsidiaries and operations worldwide [3]

Core Viewpoint - X3 Holdings is acquiring Xpic Games, marking a strategic entry into the high-growth game service industry, reflecting the company's commitment to expanding in the entertainment sector [1][3]. Company Overview - X3 Holdings Co., Ltd. is a global provider of digital solutions and technology services across various industries, including digital technologies, cryptomining, renewable energy, and agriculture technologies [6]. Acquisition Details - The acquisition of Xpic Games is expected to enhance X3 Holdings' capabilities in digital game entertainment, leveraging Xpic Games' proprietary AI-integrated development platform for efficient game creation [3][4]. - Xpic Games has a strong track record in producing popular titles for mobile and PC platforms, with expertise in game design, development, publishing, and services [2][4]. Market Context - The acquisition is timely due to the rising global interest in digital gaming, driven by the popularity of recent titles like Black Myth: Wukong [5]. - Xpic Games has established strategic partnerships with leading publishing and distribution channels, providing access to diverse gamer communities and demonstrating an ability to adapt to market trends [4]. Financial Projections - The CEO of X3 Holdings projected that the acquisition will drive substantial growth, with net profits expected to exceed $5 million within the next two years [6].

Financial Performance - Total revenue for fiscal year 2023 was $16.8 million, an increase from $10.5 million in 2022 and a decrease from $32.1 million in 2021[278]. - Revenue from application development services represented 58.1% of total revenue in fiscal 2023, compared to 36.7% in 2022 and 63.3% in 2021[278]. - Revenue from subscription services represented 4.1% of total revenue in fiscal 2023, compared to 7.2% in 2022 and 2.9% in 2021[278]. - Sales and marketing expenses were approximately $1.5 million in fiscal year 2023, representing 8.8% of total revenues[303]. Research and Development - Research and development expenses were $4.8 million in fiscal year 2023, up from $3.5 million in 2022 and $2.6 million in 2021[307]. - The company plans to continue investing substantial resources in R&D to drive core technology innovation and bring new solutions and services to market[308]. - The company aims to leverage big data, artificial intelligence, and Internet of Things technologies to enhance its core capabilities[277]. Business Strategy and Operations - The company has adopted a diversified business model with multiple revenue streams, including application development, consulting, and trading[278]. - The company plans to expand its bitcoin cryptomining operations with a sizable fleet in the near term, leveraging sustainable energy sources[290]. - The company is focused on expanding its market presence in Asia, the Middle East, Africa, and Europe through innovative business models[274]. Workforce and Employment - The company employs 178 full-time employees, with 76 in research and development, 17 in sales and marketing, and 38 in technical and customer services[279]. - The company has not experienced any labor disputes and maintains a good working relationship with its employees[321]. Intellectual Property - As of the date of the Annual Report, the company holds 20 registered patents, 136 registered software copyrights, and 46 registered trademarks in the PRC[314]. - The company has entered into customary invention assignment agreements and non-disclosure agreements to protect its intellectual property and proprietary information[313]. - The company has 13 registered URL designations and domain names, enhancing its online presence[314]. Legal and Regulatory Environment - The company is not currently a party to any legal proceedings that would materially affect its business or financial condition[322]. - The foreign exchange capital of foreign-invested enterprises in China is currently subject to a discretionary settlement proportion of 100%[334]. - Wholly foreign-owned investment enterprises in China must pay dividends only from retained profits and allocate at least 10% of retained profits to reserve funds annually[337]. - The New M&A Rule requires offshore special purpose vehicles to obtain CSRC approval before listing on overseas stock exchanges[340]. - Shareholder loans from offshore parent holding companies to PRC subsidiaries are considered foreign debts and must be registered with SAFE[343]. - The increase of registered capital for foreign-invested enterprises requires prior approval from the original approval authority[343]. - The Company’s functional currency is RMB, and its financial statements are presented in U.S. dollars[656]. - The Company is not required to obtain CSRC approval for listing and trading of its shares under the New M&A Rule[342]. Market Conditions - The company faces intense competition from various sources, including regional global trade application providers and emerging technology providers such as blockchain and AI[309]. - The RMB appreciated by 2.3% in fiscal year 2021, depreciated by 8.2% in fiscal year 2022, and further depreciated by 2.9% in fiscal year 2023[655]. - Year-over-year changes in China's consumer price index were 1.5% in December 2021, 2.0% in December 2022, and 0.2% in December 2023[657]. - Failure to comply with foreign exchange registration procedures may result in fines of up to RMB 300,000 for organizations and RMB 50,000 for individuals[339].

Financial Performance - As of June 30, 2023, the company reported a working capital of approximately $1.8 million and incurred a net loss of approximately $57.6 million with negative operating cash flow of approximately $7.0 million[24]. - The company had cash on hand of approximately $6.1 million as of June 30, 2023, down from $9.4 million as of December 31, 2022[25][42]. - Total revenues for the six months ended June 30, 2023, were $6,584,729, a decrease of 6.2% from $7,017,827 in the same period of 2022[195]. - Application development services revenue increased to $2,179,167, up 20.6% from $1,806,690 in 2022[195]. - Trading revenue decreased significantly to $2,605,970, down 25.0% from $3,466,954 in 2022[195]. - Subscription services revenue decreased to $294,528, down 31.2% from $428,087 in 2022[195]. - Consulting and technical support services revenue increased to $1,477,740, up 12.3% from $1,316,096 in 2022[195]. Financing Activities - The company entered into a securities purchase agreement with White Lion Capital LLC to purchase up to $15 million of ordinary shares, resulting in net proceeds of approximately $0.1 million from the issuance of 37,500 shares after June 30, 2023[26]. - A separate agreement with YA II PN, LTD. allows for the purchase of up to $30 million of ordinary shares, with net proceeds of approximately $2.9 million from the issuance of 1,300,173 shares after June 30, 2023[27]. - The company issued 5,000,000 ordinary shares during the six months ended June 30, 2023, resulting in net proceeds of $491,180 from a private placement with White Lion Capital LLC[174]. - The company issued 41,406,784 ordinary shares during the six months ended June 30, 2023, generating net proceeds of $3,945,066 from YA II PN, LTD[175]. - The company issued 11,836,592 ordinary shares during the six months ended June 30, 2023, with net proceeds of $499,063 from TBS Capital LP[176]. - The company issued 276,448,625 ordinary shares to acquire a 65% equity interest in Boxinrui, with a fair value of $24,078,675[186]. - The company issued 55,506,750 ordinary shares for a 19% equity interest in DTI, with a fair value of $9,058,701[188]. Assets and Liabilities - The company recorded put option liabilities from acquisitions totaling approximately $45.1 million as of June 30, 2023, with significant losses on changes in fair value[39]. - The fair value of the convertible loans was approximately $6.6 million as of June 30, 2023, reflecting a loss on change in fair value of $530,501 during the period[41]. - As of June 30, 2023, total accounts receivable was $22,272,752, with a net amount of $15,069,001 after accounting for an allowance for doubtful accounts of $7,203,751[104]. - The company reported a provision for doubtful accounts of $483,137 for the six months ended June 30, 2023, increasing the allowance to $7,203,751[106]. - As of June 30, 2023, loans to third parties amounted to $2,174,034, representing unsecured loans for working capital needs at an interest rate of 4%-5% per annum[110]. - The company has a prepayment of $15,906,187 for a potential acquisition of 32% equity in DTI Group Limited, which is expected to enhance its business scope[107]. - The company has lease liabilities and right-of-use assets recorded on its balance sheet as per Topic 842[75]. Investments and Acquisitions - The company completed the acquisition of Smartconn on January 5, 2023, increasing its ownership from 19.99% to 50.99% for a total consideration of $12,640,062, which was paid in newly issued shares[98]. - The fair value of identifiable assets acquired from Smartconn included cash of $49,496, intangible assets of $19,226,106, and total net assets of $19,019,168, resulting in goodwill of $21,105,559[100]. - The company acquired 65% equity interest in Boxinrui on March 28, 2023, for a consideration of $24,078,675, bringing total ownership to 100%[101]. - The fair value of identifiable assets acquired from Boxinrui included cash of $10,258, intangible assets of $17,984,093, and total net assets of $18,828,576, resulting in goodwill of $23,612,151[103]. - The Company has not incurred a material loss on any contracts to date, with provisions for estimated losses made when probable[66]. Shareholder Equity and Capital Structure - The authorized share capital was increased to $16,666,700, divided into 10,000,000,000 shares, following a shareholder meeting on December 5, 2022[153]. - On May 30, 2023, the Company approved a share consolidation of thirty ordinary shares into one share, increasing the authorized share capital to $50,000,000[154]. - The Company approved a share consolidation of every eight ordinary shares into one share with a par value of US$0.40[155]. - The authorized share capital increased from US$200,000,000 to US$2,000,000,000, allowing for 5,000,000,000 shares[156]. - The Company re-designated 18,000,000 shares as Class B ordinary shares and 4,482,000,000 shares as Class A ordinary shares[156]. Expenses and Costs - The Company recorded a consulting fee expense of $1,396,470 for the six months ended June 30, 2023, compared to $429,284 for the same period in 2022[165]. - The fair value of restricted share units (RSUs) issued for consulting services was assessed at $13,080,000[167]. - The Company had unrecognized share-based compensation expense related to RSUs amounting to $8,901,667 as of June 30, 2023[167]. - The Company recorded modification expenses totaling $2,139,555 due to amendments in the exercise price of stock options[171]. - Total share-based compensation expenses for share options were $nil for the six months ended June 30, 2023, compared to $2,630,758 for the same period in 2022[173]. Currency and Economic Factors - The RMB depreciated by 8.2% in fiscal year 2022 and further by 5.1% during the six months ended June 30, 2023[91]. - The preferential tax treatment in the PRC reduced income taxes by $223,556 for the six months ended June 30, 2023[146]. - The Company has approximately $9.7 million in net operating loss carryforwards expiring by 2027[148]. Subsidiaries and Business Expansion - The company established a new subsidiary, Agro Digital Fintech Co., Ltd., in China with a 51% equity interest to explore digital finance business[198]. - A new subsidiary, X3 HOLDINGS PTE. LTD., was established in Singapore with 100% equity interest to explore overseas business[198].

Financial Performance - For the fiscal year ending December 31, 2022, the company's total revenue was $10.5 million, a decrease from $32.1 million in 2021 and $26.7 million in 2020[290]. - Revenue from application development services represented 36.7% of total revenue in fiscal 2022, down from 82.5% in fiscal 2020[290]. - The company incurred R&D expenses of approximately $3.46 million, $2.61 million, and $2.78 million in fiscal years 2022, 2021, and 2020, respectively[377]. - The sales and marketing expenses were approximately $2.0 million, $2.8 million, and $2.7 million for fiscal years 2022, 2021, and 2020, representing 18.7%, 8.6%, and 10.0% of total revenues for those years[373]. IPO and Funding - The company raised approximately $10.06 million in gross proceeds from its IPO, including $1.31 million from the over-allotment option[276]. - Powerbridge has utilized a portion of its IPO proceeds to accelerate R&D for its BaaS Services, aiming to drive product adoption and capture significant market share[343]. Market Trends - The global trade management software market is projected to grow from $334.5 million in 2019 to $416.23 million by 2024[295]. - The blockchain technology market size surpassed $488 million in 2018 and is expected to grow at a CAGR of over 69% from 2019 to 2025[296]. Employee and Organizational Structure - The company has a total of 177 full-time employees, with 90 in research and development[291]. - The company has a total of 177 full-time employees, with 90 in R&D, 17 in sales and marketing, 38 in technical and customer services, and 32 in general administration[389]. Strategic Initiatives - The company plans to leverage disruptive technologies to enhance its core technology capabilities and expand its solutions and services[289]. - The company intends to pursue strategic acquisitions and investments to enhance technology capabilities and increase market penetration[300]. - The company aims to expand into international markets by leveraging opportunities from China's Belt & Road Initiative[299]. - The company plans to expand its market coverage to international markets, targeting customers in different Belt and Road countries[371]. - The company aims to leverage strategic partnerships with government agencies and technology organizations to drive sales and market presence[375]. Product and Service Development - Powerbridge SaaS Services were introduced in 2016 and are designed to provide significant operational benefits to customers[282]. - Powerbridge BaaS Services aim to enhance workflow performance, reduce document handling, and optimize information exchange, providing significant improvements in productivity and efficiency[340]. - The Powerbridge BaaS Services include Compliance Blockchain Services and Supply Chain Blockchain Services, designed to improve operational efficiency and reduce trade costs[333]. - The Powerbridge BaaS Platform is being developed using the open-source Hyperledger Fabric framework, ensuring high scalability and performance[355]. - The company is developing its Inward Processed Manufacturing Cloud services to streamline logistics and compliance operations for inward processed manufacturing companies[327]. - Powerbridge's Trade Zone Operations Cloud is designed to help businesses and authorities manage operations in regulated bonded and free trade zones effectively[324]. Technology and Innovation - The company is leveraging big data technologies to process and analyze large volumes of global trade transaction data, enhancing compliance and logistics services[357]. - Artificial intelligence applications are being developed to support biometric recognition and optimize logistics processes in global trade[359]. - The company plans to enhance machine learning capabilities to improve efficiency in matching trade logistics services among businesses[361]. Compliance and Regulatory Environment - The company does not engage in information systems integration business and is not required to obtain qualification certificates from the Ministry of Industry and Information Technology[397]. - The company must comply with local minimum wage standards and may face fines for violations of the Labor Law and Labor Contract Law[399]. - Dispatched workers are entitled to equal pay as full-time employees for equal work, and the number of dispatched workers cannot exceed 10% of the total number of employees[400]. - Employers are required to participate in employee benefit plans, including social insurance funds, and may face penalties for non-compliance[401]. - PRC residents must register with SAFE for overseas investments, and failure to comply may result in fines up to RMB 300,000 for organizations[410]. Currency and Economic Factors - The company's functional currency is RMB, while financial statements are presented in U.S. dollars, affecting reported financial results[731]. - The RMB appreciated by 6.3% in fiscal year 2020 and further appreciated by 2.3% in fiscal year 2021, but depreciated by 8.2% in fiscal year 2022[732]. - The appreciation of RMB against the U.S. dollar negatively impacts the amount received from currency conversion for capital expenditures and working capital[733]. - The appreciation of the U.S. dollar against RMB negatively affects the dollar amount available for dividends, strategic acquisitions, or investments[733]. - Inflation in China has shown year-over-year changes in the consumer price index of 2.6% in 2020, 1.5% in 2021, and 2.0% in 2022[734]. - The company has not been materially affected by inflation historically, but future higher inflation rates in China may impact operations[734].

Acquisition Details - Powerbridge Technologies acquired an additional 65% equity interest in Boxinrui for approximately US$25.8 million, bringing its total ownership to 100%[6]. - Prior to the acquisition, Powerbridge held a 35% equity interest in Boxinrui from previous acquisitions of 15% and 20%[5]. Company Overview - Boxinrui wholly owns Anxin Jieda, which holds a 90% equity interest in AIedu, an AI education company with over 400,000 users and 20,000 reading materials[7][8]. - AIedu serves over 4,000 nurseries and kindergartens, providing innovative early childhood education through AI technology[8]. Strategic Alignment - The acquisition of Boxinrui aligns with Powerbridge's metaverse strategy, utilizing AIedu's technology to expand its operations in the metaverse[7].

Financial Performance - For fiscal year 2021, the company's total revenue was $32.1 million, an increase from $26.7 million in fiscal year 2020 [230]. - Revenue from application development services represented 63.3% of total revenue in fiscal year 2021, down from 82.5% in fiscal year 2020 [230]. - Approximately $0.7 million in revenue was generated from Powerbridge BaaS Services in fiscal 2021, which began offering blockchain-as-a-service in June 2019 [274]. - In fiscal year 2021, the company generated revenue from a total of 429 customers, a decrease from 602 customers in fiscal year 2020 [311]. - The company incurred R&D expenses of $2,611,742 in fiscal year 2021, down from $2,780,944 in fiscal year 2020 [319]. - The sales and marketing expenses for fiscal years 2021, 2020, and 2019 were approximately $2.8 million, $2.7 million, and $3.6 million, representing 8.6%, 10.0%, and 17.7% of total revenues respectively [315]. Market Trends - The global trade management software market size was $334.5 million in 2019 and is expected to grow to $416.23 million by 2024 [236]. - The blockchain technology market size surpassed $488 million in 2018 and is predicted to grow at a CAGR of over 69% from 2019 to 2025 [237]. Employee and Organizational Structure - The company has a total of 198 full-time employees, with 95 in research and development, 23 in sales and marketing, 47 in technical and customer services, and 33 in general administration [231]. - The company has 95 full-time R&D personnel dedicated to technology innovation and product development [319]. - The company’s sales team consists of 23 full-time sales and marketing personnel organized by customer type and geography [314]. Product and Service Development - The company introduced its Powerbridge SaaS Services in 2016 and continues to expand these services to enhance operational efficiency for customers [222]. - The company began offering Powerbridge BaaS Services in June 2019, targeting limited government customers and generating initial revenue [224]. - Powerbridge SaaS Services were introduced in 2016, focusing on enhancing resource utilization, reducing operational costs, and improving logistics efficiency for businesses and government organizations [244]. - The company aims to leverage emerging technologies such as big data, artificial intelligence, and the Internet of Things to enhance its core technology capabilities [229]. - The company plans to expand its solution offerings to better connect and collaborate with customers in the global trade ecosystem [244]. - The Trade Zone Operations Cloud is designed to streamline operations for businesses in regulated bonded and free trade zones [265]. - The Inward Processed Manufacturing Cloud is being developed to optimize logistics and compliance operations for inward processed manufacturing companies [268]. - The company is expanding its services using artificial intelligence and IoT technologies to enhance government capabilities in trade compliance and logistics management [267]. - Powerbridge BaaS Services are designed to enhance workflow performance and reduce document handling costs for corporate and government organizations involved in global trade [281]. - The Powerbridge BaaS Platform is being developed using the open-source Hyperledger Fabric framework, focusing on scalability and performance for trade transactions [297]. - The company is implementing a data separation model to securely manage sensitive data while minimizing storage on blockchain networks [298]. Strategic Plans and Initiatives - The company aims to increase revenue by leveraging existing customer relationships and identifying new use cases for its solutions [244]. - Strategic acquisitions and investments will be pursued to enhance technology capabilities and increase market penetration [244]. - The company intends to expand into international markets by leveraging opportunities from China's Belt and Road Initiative [244]. - The company plans to generate revenue through subscription models, including single use, group, and enterprise editions, as well as professional service fees [282]. - The company plans to expand its market coverage to international markets, targeting customers in different Belt and Road Initiative (B&R) countries [313]. Compliance and Legal Environment - The company is not currently involved in any legal proceedings that would materially affect its business or financial condition [334]. - The IT services industry in China is encouraged for foreign investment, with no restrictions according to the 2018 Negative List [336]. - Companies recognized as software enterprises in China are entitled to preferential treatment, including financing support and preferential tax rates [337]. - Wholly foreign-owned investment enterprises in China may only pay dividends out of retained profits and must allocate at least 10% of retained profits to reserve funds [349]. - The foreign exchange capital of foreign-invested enterprises is subject to discretionary foreign exchange settlement, currently at 100% [346]. - The New M&A Rule requires offshore special purpose vehicles for overseas listings to obtain approval from the CSRC [352]. - The corporate structure of the Group Companies does not require CSRC approval for listing and trading of its shares, but uncertainties remain regarding the New M&A Rule [354]. Economic Factors - The RMB depreciated by 1.3% in fiscal year 2019, appreciated by 6.3% in fiscal year 2020, and further appreciated by 2.3% in fiscal year 2021 [646]. - Year-over-year percent changes in the consumer price index for December 2020 and 2021 increased by 2.6% and 1.5%, respectively [648]. - A majority of the Company's expense transactions are denominated in RMB, and a significant portion of assets and liabilities are also in RMB [645]. - The Company has not been exposed to material risks due to changes in market interest rates [644]. - The Company’s functional currency is RMB, while financial statements are presented in U.S. dollars [646]. - Appreciation of RMB against U.S. dollar would adversely affect the amount received from conversion for capital expenditures [647]. - Inflation in China has not materially affected the Company's results of operations since inception [648]. - Certain foreign exchange transactions in China must be conducted through authorized financial institutions at rates set by the People's Bank of China [645]. Social Responsibility and Employee Relations - The company participates in various social security plans in China, including pension insurance, medical insurance, and unemployment insurance, contributing specified percentages of salaries [331]. - The company has not experienced any labor disputes and maintains a good working relationship with its employees [332].