Powerbridge(PBTS) - 2023 Q4 - Annual Report

Financial Performance - X3 Holdings reported revenues of $16.8 million,$10.5 million, and $32.1 million for fiscal years 2023, 2022, and 2021, respectively, with a significant revenue contribution from application development services at 58.1$1.5 million, $2.0 million, and$2.8 million, representing 8.8%, 18.7%, and 8.6% of total revenues, respectively[312]. - The company incurred R&D expenses of $4.8 million,$3.5 million, and $2.6 million in fiscal years 2023, 2022, and 2021, respectively, indicating a consistent investment in innovation[316]. - Rent expenses for facilities amounted to$344,775, $162,799, and$307,497 for the years ended December 31, 2023, 2022, and 2021, respectively[324]. Business Strategy and Operations - The company has adopted a diversified business strategy targeting high growth markets in digital technologies, cryptomining, renewable energy, and agriculture technologies[285]. - X3 Holdings aims to enhance its core technology capabilities by utilizing big data, artificial intelligence, and Internet of Things technologies[287]. - The company plans to expand its bitcoin cryptomining operations, leveraging sustainable energy sources and aiming for a sizable mining fleet in the near term[287]. - The company has established a global trade supply chain and compliance platform, with services adopted in multiple countries including China, Indonesia, and the UK[286]. - The company plans to expand into international markets by leveraging partnerships with infrastructure builders involved in the Belt and Road Initiative[314]. Workforce and Innovation - X3 Holdings employs 178 full-time employees, with 76 in research and development, indicating a strong focus on innovation and technology[289]. - The R&D team consists of 76 full-time personnel, primarily based in Zhuhai, organized into agile development groups to enhance innovation and delivery[316]. - The company maintains a total of 178 full-time employees, with 76 in R&D, 17 in sales and marketing, 38 in technical and customer services, and 47 in general administration[326]. - As of the date of the report, the company holds 20 registered patents, 136 registered software copyrights, and 46 registered trademarks in China[323]. Market Position and Competitive Landscape - The competitive landscape includes regional global trade application providers, software vendors, and emerging technology providers, indicating a fragmented market[317]. - The company emphasizes the importance of deep domain knowledge and the enablement of emerging technologies to maintain a competitive edge in the global trade software market[318]. - The company is focused on developing strategic partnerships with government agencies and technology organizations to drive sales and market influence[313]. Regulatory and Economic Environment - X3 Holdings is classified as an "emerging growth company" under the JOBS Act, allowing it to present only two years of audited financial statements and reduced reporting requirements[280]. - 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[625]. - Year-over-year percent changes in the consumer price index for December 2021, 2022, and 2023 were 1.5%, 2.0%, and 0.2%, respectively[627]. - The proportion of discretionary settlement of foreign exchange capital of foreign-invested enterprises is currently 100%[341]. - Wholly foreign-owned investment enterprises in China must allocate at least 10% of their retained profits each year to fund certain reserve funds[344]. - Foreign-invested enterprises in China may purchase or remit foreign exchange for current account transactions without SAFE approval, subject to a cap[342]. - The New M&A Rule requires offshore special purpose vehicles to obtain CSRC approval prior to listing and trading on overseas stock exchanges[348]. - The total amount of foreign debts that can be borrowed by a PRC subsidiary, including shareholder loans, is subject to governmental approval[350]. - Failure to comply with registration procedures under Circular 37 may result in fines of up to RMB 300,000 for organizations and RMB 50,000 for individuals[346]. - The company’s functional currency is RMB, and its financial statements are presented in U.S. dollars, affecting financial results due to exchange rate fluctuations[625]. Employee Benefits and Compliance - The company has not made adequate employee benefit payments and may be required to make up contributions for these plans, along with late fees and fines[337].