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].
X3 Holdings(XTKG) - 2020 Q4 - Annual Report