Financial Performance - The company reported a revenue range of US$59,000,000 to US$99,999,999, with a profit margin improvement of 5% to 9% compared to 2021[249]. - In 2022, the total revenue increased to $79.87 million, a 47.80% increase from $54.04 million in 2021, primarily due to a full year of airline ticket operations[404]. - The revenue from the technology segment generated $782,302 in 2022, compared to zero in previous years, attributed to the acceptance of the self-developed B2B technology solution[405]. - The revenue from the cross-border merchandise segment decreased to $83, a decline of $2,222,699 or 99.9% from $2,222,782 in 2021, due to a strategic shift and ongoing COVID-19 lockdowns in China[405]. - The gross profit margin slightly increased from 1.6% in 2021 to 1.8% in 2022, mainly due to lower purchase prices from suppliers[409]. - The cost of sales rose from $53.19 million in 2021 to $78.41 million in 2022, driven by increased costs associated with the growing tourism segment[408]. - The total loss for the year 2022 was $73,492,431, representing a 78% increase from the previous year's loss of $37,215,483[402]. - The company reported a loss of $73.5 million in 2022, compared to a loss of $37.2 million in 2021, representing an increase in loss of $36.3 million or 97%[414]. Corporate Actions - The company completed a stock purchase agreement on October 19, 2022, selling 20,000 shares of common stock of Hongri International for a total consideration of $10,000,000[251]. - The company completed a share repurchase program, acquiring 152,000 shares of common stock for a total purchase price of $1,780,000[247]. - The company entered into a share exchange agreement with Flower Crown Holding, acquiring all issued and outstanding ordinary shares in exchange for 25,913 shares of common stock[234]. - The company divested its menswear business segment by selling Hongri International and its subsidiaries, focusing on the tourism sector and related technology solutions[253][260]. - The company disposed of its menswear business for $10 million on October 19, 2022, marking a strategic exit from that segment[393]. - The company acquired Flower Crown in December 2020, which contributed to new revenue segments including tourism and technology solutions for tourism operations[399]. Strategic Initiatives - The company adopted the 2022 JX Luxventure Equity Incentive Plan, allowing for the issuance of up to 1,000,000 shares of common stock[240]. - The new 2022 Equity Incentive Plan allows for the issuance of up to 4,000,000 shares of Common Stock, with 2,000,000 shares registered on November 4, 2022, and the remaining 2,000,000 shares registered on December 12, 2022[255]. - The company has established strategic partnerships and agreements for cross-border merchandise and tourism services, including a target annual sales amount of $20,000,000 for pet food products[272][276]. - The company has agreements with 37 airline operators in China, providing bundled luxury travel experience packages to business clients[276]. - The company aims to enhance customer satisfaction through high-quality support and technology advancements in its service offerings[264][263]. - The company has focused on technology solutions to facilitate tourism cross-border commerce, contributing to significant growth since 2020[262][260]. - The company offers a comprehensive software solution for tourism cross-border operations management, enhancing operational efficiency and client relationships[280]. Regulatory Environment - The establishment and management of companies in China are governed by the Foreign Investment Law, which came into effect on January 1, 2020, replacing previous laws[311]. - The Foreign Investment Law provides national treatment to foreign investments outside the negative list, which was updated and became effective on January 1, 2022[314]. - The Overseas Listing Trial Measures, effective March 31, 2023, require PRC domestic companies to fulfill filing procedures with the CSRC for overseas listings[320]. - The company is subject to regulations that prohibit overseas listings under certain circumstances, including national security concerns and criminal investigations[323]. - The company is subject to various environmental regulations and has not incurred material costs for compliance in the fiscal years 2020, 2021, and 2022[381]. - The company has no pending actions alleging violations of applicable PRC environmental laws, indicating material compliance with regulations[381]. Human Resources - The company currently has 170 employees, including 55 full-time and 115 part-time, with competitive compensation packages[296]. - Employers in China are required to contribute to social insurance plans, including pension and medical insurance, based on specified percentages of employee salaries[350]. - The company must comply with regulations on labor contracts, including providing severance payments upon termination of employment[347]. - The standard working time system in China is eight hours a day and forty hours a week, with flexibility allowed under certain conditions[348]. Challenges and Risks - The COVID-19 pandemic severely impacted the company's operations, particularly during 2021 and 2022, with significant lockdowns affecting sales and cross-border operations[309]. - The company faces intense competition in the tourism and cross-border merchandise sectors from larger suppliers and alternative retail channels[273][274]. - The company has limited business liability and interruption insurance coverage in China, making it vulnerable to uninsured losses[308]. - The company has been unable to acquire business interruption insurance on commercially reasonable terms in China[308]. - The company assumes all risks associated with non-refundable purchases, ensuring a seamless customer experience for business clients[279]. Financial Position - As of December 31, 2022, the company had cash and cash equivalents of $520,916 and a net working capital deficit of $463,812[417]. - The accumulated deficit as of December 31, 2022, was $66,080,395, with a net loss of $62,121,310 for the year[417]. - Net cash used in operating activities was $5.0 million in 2022, compared to $7.78 million in 2021, with the cash outflow mainly due to a net loss of $73.5 million[423]. - Net cash used in investing activities was $12.3 million in 2022, compared to $3.3 million in 2021, primarily due to cash decrease from the disposal of discontinued operations[425]. - Net cash generated from financing activities was $2.22 million in 2022, down from $6.96 million in 2021, with proceeds from related parties accounting for the 2022 figure[426]. - The company guaranteed a loan to a third party with maximum liability exposure of $652,293 as of December 31, 2022[428]. - The company is in an early-stage growth phase and is exploring various funding alternatives to support its operations and growth strategy[418]. Technology and Innovation - The company has adopted advanced technologies such as AI-based analysis and state-of-the-art warehouse management software to optimize supply chain efficiency[290]. - The revenue model includes a free first year of use, transitioning to a licensing payment model, promoting long-term customer commitment[284]. - The software includes a Sourcing Solution for accurate market trend forecasting and competitive pricing, and a Business Solution for small to medium-sized business partners[280]. - The company emphasizes the need for continuous research and development to keep pace with rapid technological changes and evolving customer demands[430].
JX Luxventure(JXJT) - 2022 Q4 - Annual Report