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].
X3 Holdings(XTKG) - 2023 Q4 - Annual Report