Infobird(IFBD) - 2020 Q4 - Annual Report

Revenue Performance - Total revenues decreased by approximately $3.7 million, or 20.4%, to approximately $14.5 million for the year ended December 31, 2020, primarily due to the impact of the COVID-19 pandemic and the expiration of contracts with major customers [447]. - Standard cloud-based services revenue decreased by approximately $0.6 million, or 30.6%, to approximately $1.4 million, representing approximately 9.6% of total revenues for 2020 [447]. - Customized cloud-based services revenue decreased by approximately $7.9 million, or 61.1%, to approximately $5.0 million, representing approximately 34.4% of total revenues for 2020 [448]. - Software development revenue increased to approximately $5.4 million for the year ended December 31, 2020, representing approximately 37.1% of total revenue [451]. - Total revenues decreased by approximately $0.5 million, or 2.9%, to approximately $18.2 million for the year ended December 31, 2019, from approximately $18.8 million for the year ended December 31, 2018 [471]. Net Income and Expenses - Net income for the year ended December 31, 2020, was approximately $4.1 million, a decrease of 20.4% compared to $5.1 million in 2019 [446]. - Operating expenses increased by approximately $1.2 million, or 29.0%, to approximately $5.4 million for the year ended December 31, 2020, from approximately $4.2 million for the year ended December 31, 2019 [461]. - Net income decreased by approximately $1.0 million, or 20.4%, to approximately $4.1 million for the year ended December 31, 2020, from approximately $5.1 million for the year ended December 31, 2019 [470]. - Research and development expenses increased by approximately $0.4 million, or 26.8%, to approximately $1.9 million for the year ended December 31, 2020 [446]. - Research and development expenses for the years ended December 31, 2020, 2019, and 2018 were approximately $1.9 million, $1.5 million, and $3.0 million, respectively [548]. Cost of Revenues and Gross Profit - Total cost of revenues decreased by approximately $3.3 million, or 40.9%, to approximately $4.7 million for the year ended December 31, 2020 [455]. - Gross profit decreased by approximately $446,295, or 4.3%, to $9.8 million, with a gross margin of 67.5% for the year ended December 31, 2020 [459]. - Overall gross margin increased to approximately 67.5% for the year ended December 31, 2020, compared to 56.2% for the year ended December 31, 2019, representing an 11.3% increase [460]. - Gross profit decreased by approximately $0.4 million, or 4.3%, to approximately $9.8 million for the year ended December 31, 2020, from approximately $10.3 million for the year ended December 31, 2019 [460]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was approximately $1.5 million for the year ended December 31, 2020, primarily attributable to net income of approximately $4.1 million [502]. - Net cash used in investing activities was approximately $3.2 million for the year ended December 31, 2020, primarily due to salary and benefits payments on capitalized software [506]. - Capital expenditures for the years ended December 31, 2020, 2019, and 2018 were approximately $3.2 million, $2.1 million, and $0.6 million, respectively [509]. - As of December 31, 2020, the working capital deficit was approximately $0.2 million, with cash amounting to $1.7 million [495]. Research and Development - As of December 31, 2020, the company had a research and development team of 122 personnel, accounting for approximately 40.0% of total employees [548]. - The company has invested significantly in research and development to maintain technological advantages and plans to continue extensive investments [548]. - The company’s self-developed cloud-based no-code development platform significantly shortens the time required to develop new products compared to traditional methods [550]. - The company’s key technologies include cloud-native architecture, AI and machine learning capabilities, and patented VoIP technologies, enhancing its competitive edge in the market [549]. Contracts and Obligations - The company signed a cloud computing development agreement with the Guiyang government, acquiring 40-year land use rights for approximately $4.7 million (RMB 32,532,746) and received a cash grant of approximately $4.5 million (RMB 31,068,626) [539]. - Minimum lease payments under operating leases for the next five years total $529,549, with $431,467 due in the twelve months ending December 31, 2021 [513]. - The total contractual obligations as of December 31, 2020, amounted to approximately $3.6 million, including short-term loans and operating lease obligations [559]. Revenue Recognition - Revenue from customized cloud-based services is recognized over time based on monthly utilization records, reflecting simultaneous consumption and delivery of services [523]. - Revenue from standard cloud-based services is recognized ratably over the contractual period, typically one year, with full payments collected in advance [524]. - Revenue from BPO services is recognized over time using the time elapsed output method, with contract performance periods generally lasting one year [525]. Tax and Interest - Interest expense decreased to approximately $0.2 million for the year ended December 31, 2020, from approximately $0.4 million for the year ended December 31, 2019 [466]. - Income tax expense decreased to approximately $0.3 million for the year ended December 31, 2020, compared to approximately $0.7 million for the year ended December 31, 2019 [468]. - Other income increased to approximately $185,000 for the year ended December 31, 2020, from approximately $146,000 for the year ended December 31, 2019, mainly due to increased government subsidies [467].