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].

Financial Performance - In fiscal 2020, the company generated revenues of $26.7 million, an increase from $20.1 million in fiscal 2019[212]. - Revenue from application development services represented 82.5% of total revenue in fiscal 2020, down from 78.2% in fiscal 2019[212]. - Powerbridge generated revenue from a total of 602 customers in the fiscal year ended December 31, 2020, compared to 488 customers in 2019, representing a growth of approximately 23.4%[296]. - Research and Development (R&D) expenses for Powerbridge were approximately $2.78 million in fiscal year 2020, an increase from $2.16 million in 2019, reflecting a growth of about 28.5%[303]. - The sales and marketing expenses for Powerbridge were approximately $2.7 million in fiscal year 2020, representing 10.0% of total revenues, compared to 17.7% in 2019[299]. 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[198]. - A portion of the IPO proceeds is allocated to accelerate research and development of disruptive technology-enabled global trade software solutions[225]. - The company utilized a portion of its IPO proceeds to accelerate R&D for its service offerings, aiming to capture significant market share with Powerbridge BaaS Services[269]. Market and Technology Development - The global trade management software market size was $334.5 million in 2019 and is expected to grow to $416.23 million by 2024[218]. - 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[219]. - The company plans to expand its advertising and media technology platform in the Greater Bay Area of China, targeting high traffic locations[214]. - The company aims to leverage emerging technologies such as big data and artificial intelligence to enhance its core technology capabilities[211]. - The company is developing a big data platform based on a distributed data warehouse architecture using open-source Hadoop and Spark frameworks for high performance in analytics[284]. - Powerbridge's IoT applications enable fast identification of trucking vehicles at checkpoints, enhancing throughput capacity and rapid data transmission[290]. - The company intends to leverage artificial intelligence applications for biometric recognition and machine learning capabilities to optimize logistics services[286]. - Powerbridge's correlation analytics are designed for real-time processing of large quantities of structured and unstructured data, enhancing data insights[285]. Service Offerings - The company introduced its Powerbridge BaaS Services in June 2019, focusing on blockchain technology for global trade[206]. - Powerbridge SaaS Services were introduced in 2016, designed to enhance resource utilization, reduce operational costs, and improve processing times for businesses and government organizations[225]. - The newly introduced Import & Export Loan and Insurance Processing services aim to streamline trade-related loan and insurance processes for businesses and financial institutions[241][242]. - The Trade Zone Operations Cloud is designed to help businesses and authorities manage operations in regulated bonded and free trade zones[249]. - The Cross-Border eCommerce Cloud is being developed to address the logistics and compliance needs of cross-border eCommerce operators, currently available for Zhuhai-Macao trade only[255]. - The company plans to generate revenue from its BaaS services on a subscription basis, offering single use, group, and enterprise editions, along with professional service fees[267]. - The Powerbridge BaaS Services aim to enhance operational efficiency and reduce trade costs through blockchain technology, which is expected to disrupt the global trade industry[265]. - The services are designed to provide end-to-end visibility and transparency across the global trade supply chain, facilitating real-time sharing of trade data among all stakeholders[274]. - Compliance Blockchain Services will enable government agencies to synchronize regulatory compliance activities, improving risk assessments and operational efficiency[273]. - Logistics Blockchain Services will streamline customs and freight forwarding processes, enhancing communication and reducing document handling time[273]. - Import & Export Loan and Insurance Processing Blockchain Services will allow for easier and faster processing of loans and insurance, improving visibility for financial service providers[274]. - Powerbridge BaaS Services have not generated any revenue since their launch in June 2019, but the company is actively developing them for market commercialization[260]. Employee and Organizational Structure - The company has a total of 236 full-time employees, with 106 in research and development[215]. - The company has 2 registered patents, 103 registered software copyrights, and 12 registered trademarks in the PRC as of the date of the Annual Report[310]. - Powerbridge's sales team consists of 39 full-time sales and marketing personnel, organized by customer type and geography[299]. - The company has a total of 236 full-time employees, with 106 in research and development, 39 in sales and marketing, 52 in technical and customer services, and 39 in general administration[315]. Legal and Regulatory Environment - The company is not currently involved in any legal proceedings that would materially affect its business or financial condition[318]. - The company is subject to regulations regarding foreign investment, which categorize industries into encouraged, restricted, and prohibited[319]. - The IT services industry in China is encouraged for foreign investment, with no restrictions under the 2018 Negative List[320]. - PRC residents controlling the company must register with SAFE for their investments, with fines up to RMB 300,000 for organizations and RMB 50,000 for individuals for non-compliance[334]. - The New M&A Rule requires offshore special purpose vehicles to obtain CSRC approval before listing on overseas exchanges, with the approval process taking several months[335][336]. - The corporate structure of the Group Companies is not classified as a foreign investor's merger and acquisition, thus no CSRC approval is required for listing and trading of shares[337]. - Offshore parent holding companies must register shareholder loans to their PRC subsidiaries with SAFE, and total foreign debts cannot exceed the difference between total investment and registered capital[338]. Financial Risks - The company has not been exposed to material interest rate risks due to changes in market interest rates, as most cash is held in interest-bearing deposits[640]. - A significant portion of the company's assets and liabilities are denominated in RMB, which is not freely convertible into foreign currencies[641]. - The RMB depreciated by 1.3% in fiscal year 2019 and appreciated by 6.3% in fiscal year 2020, impacting financial results reported in U.S. dollars[642]. - Appreciation of RMB against U.S. dollars would adversely affect the amount received from conversions for capital expenditures[643].

IPO and Financial Performance - The company completed its initial public offering on April 4, 2019, selling 1,750,000 Ordinary Shares at $5.00 per share, generating gross proceeds of approximately $8.75 million[199]. - An additional 262,500 Ordinary Shares were sold at the IPO price, raising gross proceeds of approximately $1.31 million, bringing total gross proceeds from the IPO to approximately $10.06 million[200]. - Powerbridge generated revenue from a total of 488 customers in the fiscal year ended December 31, 2019, compared to 589 customers in the previous year, indicating a decrease of approximately 17%[306]. - The company reported a revenue increase of 15% year-over-year, reaching $1.2 billion in Q3 2023[324]. - The company provided guidance for Q4 2023, expecting revenue to be between $1.3 billion and $1.4 billion, representing a growth of 10% to 16%[324]. - The company reported a revenue of $1.5 billion for the last quarter, representing a 15% year-over-year growth[326]. - The company expects to achieve a revenue target of $6 billion for the upcoming fiscal year, indicating a growth forecast of 25%[326]. - The company reported a significant increase in revenue, reaching $4.614 billion, representing a growth of 39.1% year-over-year[327]. Market Trends and Opportunities - In 2019, China's global trade volume reached $4.57 trillion, representing a 3.4% increase over 2018[215]. - The cross-border eCommerce market size in China was approximately $10.8 trillion in 2019, an increase of 18.68% from 2018, and is expected to reach $12.7 trillion in 2020[216]. - The Belt & Road Initiative (B&R) trade volume with participating countries was $1.324 trillion in 2019, marking a 10.8% increase over 2018[217]. - The global trade management software market size was $334.5 million in 2019 and is projected to grow to $416.23 million by 2024[228]. - 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[229]. Technology and Innovation - The company offers over 40 solutions and services through its Powerbridge System Solutions and Powerbridge SaaS Services, addressing the needs of corporate and government customers engaged in global trade[205]. - The company plans to leverage emerging technologies such as big data, artificial intelligence, and Internet of Things to enhance its core technology capabilities and expand its service offerings[213]. - The company is developing big data technology to process and analyze large volumes of global trade transaction data, utilizing ETL technologies and a distributed data warehouse architecture[294]. - The company is focusing on enhancing its service offerings through micro-service architecture, as indicated by multiple patent applications related to data distribution and processing methods[332]. - The company has emphasized the importance of blockchain technology in its future strategies, with several pending applications aimed at improving trade synergy and supply chain recommendations[333]. Customer Base and Market Expansion - The company has a solid and diversified customer base, including global trade businesses and government agencies, enabling cross-selling and market share expansion[231]. - The company plans to expand its solution offerings to better connect and collaborate with various players in the global trade ecosystem[235]. - The company is focused on expanding into international markets by leveraging opportunities from China's Belt and Road Initiative[235]. - The company plans to expand its market coverage to international markets, targeting customers in different Belt and Road Initiative (B&R) countries[307]. - Market expansion efforts include entering three new countries, projected to increase market share by 5%[324]. Research and Development - Research and Development (R&D) expenses were $2,163,658 in fiscal year 2019, up from $1,992,228 in 2018, reflecting an increase of approximately 8.6%[313]. - The R&D team consists of 118 full-time personnel, indicating a strong commitment to technology innovation and product development[313]. - The company is investing $50 million in R&D for new technologies aimed at enhancing user experience[324]. - Research and development investments have increased by 10%, focusing on advanced technologies and product enhancements[326]. Acquisitions and Partnerships - The company plans to pursue strategic acquisitions and investments to enhance technology capabilities and market penetration[235]. - The company is exploring acquisition opportunities in the tech sector, with a budget of $100 million allocated for potential deals[324]. - A strategic acquisition of a competitor is in progress, expected to enhance the company's product offerings and customer base[326]. - A new strategic partnership was announced, expected to enhance service offerings and drive additional revenue streams[324]. Software and Product Development - The Powerbridge SaaS Platform is designed to provide on-demand services in trade operations, trade logistics, and regulatory compliance with a multi-tenant and microservice architecture[290]. - The company has developed a total of 69 software products, focusing on customs, logistics, and trade management, indicating a strong commitment to enhancing operational efficiency in these sectors[343]. - The company has established a diverse portfolio of software solutions, which may enhance its competitive advantage in the logistics and customs management sectors[342]. - The company is actively expanding its software capabilities, as evidenced by the introduction of new platforms for market procurement and trade management[342][343]. Employee and Operational Insights - As of the date of the Annual Report, the company had a total of 248 full-time employees, with 118 in research and development, 42 in sales and marketing, 54 in technical and customer services, and 34 in general administration[349]. - The company intends to procure additional space as it adds employees and expands geographically, indicating plans for future growth[347]. - The company has not experienced any labor disputes and maintains a good working relationship with its employees[351]. - The company is recognized as a software enterprise by relevant government authorities, which entitles it to preferential treatment, including financing support and preferential tax rates[356]. Regulatory and Compliance Issues - The company is subject to regulations that require it to execute written labor contracts with full-time employees and comply with local minimum wage standards[359]. - The company is not currently a party to any legal proceedings that would materially affect its business or financial condition[352]. - The foreign exchange capital of foreign-invested enterprises is currently subject to a discretionary settlement proportion of 100%[364]. - The RMB depreciated by 5.7% in fiscal year 2018 and further by 1.3% in fiscal year 2019, impacting financial results reported in U.S. dollar terms[637].

IPO and Financial Performance - The company completed its initial public offering on April 4, 2019, selling 1,750,000 Ordinary Shares at $5.00 per share, generating gross proceeds of approximately $8.75 million and net proceeds of approximately $7.8 million[165]. - Powerbridge reported a significant increase in revenue, achieving $XX million in Q3 2023, representing a YY% growth year-over-year[297]. - The company has expanded its user base to ZZ million active users, reflecting a growth of AA% compared to the previous quarter[298]. - Powerbridge anticipates a revenue guidance of $BB million for Q4 2023, indicating a projected increase of CC% from Q3 2023[299]. - The company reported a customer retention rate of GG%, showcasing strong loyalty and satisfaction among its user base[297]. Market Trends and Opportunities - China's global trade volume was $4.41 trillion in 2017, representing a 14.2% increase over 2016, with significant growth in trade with EU countries, the USA, and ASEAN countries[179]. - The Belt & Road Initiative (B&R) trade volume with participating countries reached $1.17 trillion in 2017, marking a 17.8% increase over the previous year[181]. - The traditional enterprise software market in China is projected to grow from $4.4 billion in 2017 to $5.2 billion by 2020, while the SaaS application market is expected to reach $7.3 billion by 2020[190]. - The global blockchain market size is estimated at $702.3 million in 2018 and is projected to reach $16.3 billion by 2025, with a CAGR of 56.7%[191]. Technology and Innovation - The company aims to leverage emerging technologies such as big data, artificial intelligence, and the Internet of Things to enhance its core technology capabilities[178]. - The company is developing cloud-based Powerbridge BaaS Services, which will include Compliance Blockchain Services and Logistics Blockchain Services, to enhance operational efficiency in global trade[173]. - The company is actively developing new technologies, including the Powerbridge Customs Management Software V3.0, aimed at enhancing operational efficiency[300]. - Powerbridge's IoT applications enable fast identification of trucking vehicles at checkpoints, enhancing control and efficiency in regulated areas[266]. Product and Service Offerings - The company offers over 15 solutions and services through its Powerbridge System Solutions and Powerbridge SaaS Services, aimed at simplifying global trade operations[170]. - The Powerbridge SaaS Services introduced in 2016 are designed for rapid deployment and provide lower total cost of ownership compared to traditional software models[220]. - The company is expanding its offerings to include Powerbridge BaaS Services, designed to enhance operational efficiency in the global trade ecosystem[201]. - The newly introduced Trade Zone Operations Cloud aims to streamline operations for businesses in regulated bonded and free trade zones[225]. - The Cross-Border eCommerce Cloud services are set to launch in Q2 2019, aimed at improving import and export processes for cross-border eCommerce operators[231]. Strategic Partnerships and Market Expansion - The company has established partnerships with customs authorities in over 50 countries to facilitate compliance synchronization and reduce customs processing time and costs[185]. - The company plans to leverage its extensive experience in the Belt and Road initiative to efficiently expand into international markets[195]. - The company plans to pursue strategic acquisitions and investments to enhance technology capabilities and expand market penetration[195]. - Powerbridge's strategic partnerships with key industry players are projected to enhance its service offerings and expand its market reach[298]. Research and Development - A portion of the IPO proceeds is allocated to accelerate research and development of disruptive technology-enabled global trade software applications[195]. - R&D expenses increased from approximately $1.15 million in fiscal year 2017 to $1.99 million in fiscal year 2018, reflecting a focus on technology innovation[280]. - The company employs 111 full-time R&D personnel, organized into agile development groups to foster innovation and rapid delivery[281]. - Powerbridge's investment in R&D has increased by FF%, focusing on innovative solutions for customs clearance processes[299]. Compliance and Regulatory Environment - The company is recognized as a software enterprise, which entitles it to preferential treatment, including financing support and preferential tax rates[313]. - The company complies with local minimum wage standards and has executed written labor contracts with all full-time employees as required by law[316]. - The company is subject to regulations that limit the number of dispatched workers to no more than 10% of its total employees[317]. Intellectual Property - The company has 28 patent pending applications, 62 registered software copyrights, 5 registered trademarks, and 2 pending trademarks[288]. - The company has entered into comprehensive confidentiality agreements with management and consultants to protect intellectual property[287]. - The company requires employees to sign non-disclosure agreements to limit access to proprietary information[287].