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].
X3 Holdings(XTKG) - 2021 Q4 - Annual Report