UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November
Commission File Number:
(Translation of Registrant’s name into English)
Suite 412, Tower A, Tai Seng Exchange
One Tai Seng Avenue
Singapore 536464
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
CONTENTS
Financial Results for the Six Months Ended June 30, 2024
The financial results as at and for the six months ended June 30, 2024 of X3 Holdings Co., Ltd. (the “Company”) is attached as Exhibit 99.1 hereto and is incorporated by reference into the registration statements filed with the Securities and Exchange Commission (the “SEC”) by the Company on Form F-3 (Registration No.333-253395). The management’s discussion and analysis of financial condition and results of operations of the Company as at and for the six months ended June 30, 2024 is attached as Exhibit 99.2 hereto.
1
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | X3 Holdings Co., Ltd. Unaudited Condensed Consolidated Financial Statements as at and for the six months ended June 30, 2024, together with the notes thereto | |
| 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations of X3 Holdings Co., Ltd. as at and for the six months ended June 30, 2024 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
2
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 27, 2024
| X3 HOLDINGS CO., LTD. | ||
| By: | /s/ Stewart Lor | |
| Stewart Lor | ||
| Chief Executive Officer | ||
3
Exhibit 99.1
X3 HOLDINGS CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
F-1
X3 HOLDINGS CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Notes receivable | ||||||||
| Due from related parties, net | ||||||||
| Loan receivable, net | ||||||||
| Prepayments, deposits and other current assets, net | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Prepayments, deposits and other assets | ||||||||
| Long term investments | ||||||||
| Goodwill | ||||||||
| Right-of-use assets-operating lease | ||||||||
| Deferred tax assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Bank loans | $ | $ | ||||||
| Accounts payable | ||||||||
| Convertible notes | ||||||||
| Deferred revenue | ||||||||
| Loan from third parties | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Due to related party | ||||||||
| Taxes payable | ||||||||
| Operating lease liabilities -current | ||||||||
| Total Current Liabilities | ||||||||
| Operating lease liabilities -non-current | ||||||||
| Deferred tax liabilities | ||||||||
| Total Liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY: | ||||||||
| Class A Common shares, $ | ||||||||
| Class B Common shares, $ | ||||||||
| Additional Paid-in Capital | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total X3 Holdings Co., Ltd.’s Shareholders’ Equity | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
X3 HOLDINGS CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| REVENUES: | ||||||||
| Application development services | $ | $ | ||||||
| Consulting and technical support services | ||||||||
| Subscription services | ||||||||
| Trading revenue | ||||||||
| Others revenue | ||||||||
| Total revenues | ||||||||
| COST OF REVENUES | ||||||||
| Cost of application development services | ||||||||
| Cost of consulting and technical support services | ||||||||
| Cost of subscription services | ||||||||
| Cost of trading revenue | ||||||||
| Cost of others revenue | ||||||||
| Total cost of revenues | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Provision for credit losses | ||||||||
| Research and development | ||||||||
| Share based compensation | ||||||||
| Total operating expenses | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Loss from deregistering of a subsidiary | ( | ) | ||||||
| Gain from equity investment | ||||||||
| Gain from fair value change in equity investment | ||||||||
| Change in fair value of convertible debt | ( | ) | ||||||
| Fair value loss on financial instruments | ( | ) | ||||||
| Other expense | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| INCOME TAX BENEFIT | ( | ) | ( | ) | ||||
| NET LOSS | ( | ) | ( | ) | ||||
| Less: loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| NET LOSS ATTRIBUTABLE TO X3 HOLDINGS CO., LTD | ( | ) | ( | ) | ||||
| OTHER COMPREHENSIVE LOSS | ||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| COMPREHENSIVE LOSS | ( | ) | ( | ) | ||||
| Less: comprehensive loss attributable to non-controlling interest | ( | ) | ( | ) | ||||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO X3 HOLDINGS CO., LTD | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES* | ||||||||
| Basic and diluted | ||||||||
| LOSS PER SHARE | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
X3 HOLDINGS CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Ordinary shares * | Additional Paid-in | Subscription | Accumulated | Non- controlling | Accumulated Other Comprehensive | Total | ||||||||||||||||||||||||||||||||||
| Class A | Amount | Class B | Amount | Capital | Receivable | Deficit | Interest | Loss | Equity | |||||||||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Issuance of shares for private placement | ||||||||||||||||||||||||||||||||||||||||
| Stock dividend | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Deregister a subsidiary | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss for the year | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Conversion of convertible notes | ||||||||||||||||||||||||||||||||||||||||
| Issuance shares for investments | ||||||||||||||||||||||||||||||||||||||||
| Issuance shares as prepayment for potential acquisition | ||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for private placement | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares for services | ||||||||||||||||||||||||||||||||||||||||
| Split shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Capital contribution by non-controlling shareholder | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Non-controlling interests recognized from step acquisitions | - | - | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
X3 HOLDINGS CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss from operations to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Provision for credit losses | ||||||||
| Share based compensation | ||||||||
| Loss from disposal of property and equipment | ||||||||
| Deferred tax benefit | ( | ) | ( | ) | ||||
| Change in fair value of convertible debt | ( | ) | ||||||
| Gain from fair value change in equity investment | ( | ) | ||||||
| Fair value loss on financial instruments | ||||||||
| Settlement loss on disposition of assets | ||||||||
| Gain from long term investment | ( | ) | ||||||
| Loss from deregistering of a subsidiary | ||||||||
| Accrued interest of convertible debt | ||||||||
| Right of use assets amortization | ||||||||
| Changes in assets and liabilities: | ||||||||
| Notes receivable | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepayments, deposits and other assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable-related party | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Taxes payable | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Customer deposits | ||||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Loans to third parties | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Purchases of intangible assets | ( | ) | ( | ) | ||||
| Proceeds from disposal of property and equipment | ||||||||
| Loans to related parties | ( | ) | ||||||
| Cash received from acquisition | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from bank loans | ||||||||
| Repayments of bank loans | ( | ) | ( | ) | ||||
| Proceeds from private placement and market offering | ||||||||
| Split shares | ( | ) | ||||||
| Proceeds from issuance of convertible notes | ||||||||
| Loan from (repayment to) third party | ||||||||
| Proceeds from (payments to) related parties | ( | ) | ||||||
| NET CASH PROVIDE BY FINANCING ACTIVITIES | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES | ( | ) | ( | ) | ||||
| NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ( | ) | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning of period | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH - end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash (refunded) paid for income taxes | $ | ( | ) | $ | ||||
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | ||||||||
| Right of use assets obtained in exchange of lease liabilities | $ | $ | ||||||
| Conversion of convertible notes | $ | $ | ||||||
| Issuance shares as prepayment for potential acquisition | $ | $ | ||||||
| Issuance shares for acquisitions | $ | $ | ||||||
| Non-controlling interests recognized from step acquisitions | $ | $ | ||||||
| Prepayments, deposits and other assets transferred from loan receivable | $ | $ | ||||||
| Prepayments, deposits and other assets as consideration for acquisition | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of business and organization
X3 Holdings Co., Ltd. (“X3” or the “Company”), formerly known as Powerbridge Technologies Co., Ltd. is a company that was established under the laws of the Cayman Islands on July 27, 2018 as a holding company. The Group, through its subsidiaries (collectively the “Group”), is a provider of software application and technology services to corporate and government customers engaged in global trade. Mr. Stewart Lor, the Group’s Chairman of the Board and Chief Executive Officer (“CEO”) is the ultimate Controlling Shareholders of the Group.
Effective January 30, 2024, the Group has undergone a transformation, changing its corporate name from Powerbridge Technologies Co., Ltd. to X3 Holdings Co., Ltd. The Nasdaq stock symbol has also transitioned from PBTS to XTKG. This change reflects the Group’s evolving global expansion strategy and its commitment to broader technological and business horizons.
| Major subsidiaries | Percentage of Ownership | Date of Incorporation | Place of Incorporation | Major Operation | ||||
| Powerbridge Holding Limited (“Powerbridge HK”) | ||||||||
| Boxinrui International Holdings Limited (“Boxinrui”) | ||||||||
| Hongding Technology Co., Ltd (“Hongding”) | ||||||||
| Hong Kong Hongyi Holdings Limited(“Hongyi”) | ||||||||
| Powercrypto Holding Pte. Ltd. (“Powercrypto”) | ||||||||
| Powercrypto Inc (1) | ||||||||
| X3 HOLDINGS PTE. LTD. (“X3 HOLDINGS”) | ||||||||
| Powerbridge High Technologies Holding Co., Ltd | ||||||||
| Powerbridge Technology Group Co., Ltd. (“Powerbridge Zhuhai”) | ||||||||
| Powerstream Supply Chain Co., Ltd. (“Powerstream”) | ||||||||
| Powermeta Digital Co., Ltd. (“Powermeta”) | ||||||||
| Powerbridge Digital Trade (HK) Co., Limited | ||||||||
| SmartConn Co.Limited(“SmartConn”) | ||||||||
| Hong Kong Anxin Jieda Co., Limited (“Anxin Jieda”) | ||||||||
| Shenzhen Honghao Internet Technology Co., Ltd (“Honghao”) (1) | ||||||||
| Hongxi Data Technology Co., Ltd. | ||||||||
| Zhuhai Hongyang Supply Chain Co., Ltd. (“Zhuhai Hongyang”) | ||||||||
| Ningbo Zhijing Tongfu Technology Co., Ltd. (“Ningbo Zhijing”) | ||||||||
| Hunan Powerverse Digital Co., Ltd. (2) | ||||||||
| Metafusion Digital Co., Ltd (“Metafusion”) | ||||||||
| Shanghai Stamp Technolog Co., Ltd. | ||||||||
| Ascendent Insight Education Co., Ltd. (“Ascendent”) | ||||||||
| Xingtai Ningyao Technology Co., Ltd. | ||||||||
| Guangdong Hongqiao Digital Technology Co., Ltd. | ||||||||
| Shenzhen Hongchuangxin Technology Co., Ltd. |
| (1) | |
| (2) |
F-6
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”).
In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in the Group’s annual financial statements for the year ended December 31, 2023 filed with the SEC on April 30, 2024.
Principles of consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Group and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Subsidiaries are those entities in which the Group, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
Non-controlling interest represents the portion of the net assets of a subsidiary attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company.
Liquidity
As of June 30, 2024, the Group
incurred a net loss of approximately $
In assessing its liquidity,
the Group monitors and analyzes its cash on hand, its ability to generate sufficient revenue sources in the future and its operating and
capital expenditure commitments. As of June 30, 2024, the Group had cash and cash equivalents of approximately $
On November 24, 2023, the
Group entered into purchase agreements with twelve investors. The investors agreed to purchase an aggregate of $
On May 16, 2024, we entered
into a standby equity purchase agreement (the “SEPA”) with YA II PN, LTD. (“YA”), pursuant to which YA purchases
convertible promissory notes (the “Notes”) in the principal amount of $
The Group believes that its cash on hand and financing cash flows will be sufficient to fund its operations over at least the next 12 months from the date of this report. However, the Group may need additional cash resources in the future if the Group experiences changed business conditions or other developments, and may also need additional cash resources in the future if the Group wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Group’s amounts of cash on hand, the Group may seek to issue debt or equity securities or obtain a credit facility.
F-7
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Use of estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Group’s unaudited condensed consolidated financial statements include but not limited to the useful lives of property and equipment and capitalized development cost, impairment of long-lived assets, valuation of accounts receivables, valuation of convertible notes, loans to third parties, revenue recognition and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates.
Fair value measurement
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. | |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Group’s financial instruments including cash and cash equivalents, restricted cash, notes and accounts receivable, due from related parties, deposits and other current assets, short-term bank loans, accounts payable, deferred revenue, accrued expenses and other current liabilities due to related party, current operating lease liabilities and taxes payable approximates their recorded values due to their short-term maturities. The fair value of the long-term prepayment, deposits and other assets approximate their carrying amounts because the deposits were paid in cash.
Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis
| As of June 30, 2024 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Significant unobservable inputs Level 3 | Total | |||||||||||||
| Financial liabilities: | ||||||||||||||||
| Convertible notes - Streeterville Note | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
F-8
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
| As of December 31, 2023 | ||||||||||||||||
| Fair Value Measurement at the Reporting Date using | ||||||||||||||||
| Quoted price in active markets for identical assets Level 1 |
Significant other observable inputs Level 2 |
Significant unobservable inputs Level 3 |
Total | |||||||||||||
| Financial liabilities: | ||||||||||||||||
| Convertible notes - Streeterville Note | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Streeterville Note
The Group elected the fair value option to account for Streeterville Note (Refer to Note 10 for additional information). The Group engaged an independent valuation firm to perform the valuation. The fair value of the Streeterville Note was calculated using the binomial tree model. The Streeterville Note was classified as level 3 instruments as the valuation was determined based on unobservable inputs which was supported by little or no market activity and reflect the Group’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of the Streeterville Note included time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion.
As the inputs used in developing the fair value for level 3 instruments are unobservable, and require significant management estimate, a change in these inputs could result in a significant change in the fair value measurement.
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Opening balance | $ | $ | ||||||
| Loss on change in fair value of convertible notes | ( | ) | ||||||
| Accrued interest | ||||||||
| Cash repaid | ( | ) | ( | ) | ||||
| Conversion of convertible notes | ( | ) | ||||||
| Total | $ | $ | ||||||
F-9
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Accounts receivable, net
Accounts receivable represents the amounts that the Group has an unconditional right to consideration and is recorded net of allowance for credit losses.
In 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Group has adopted this ASC Topic 326 and several associated ASUs on January 1, 2023 using a modified retrospective approach. The adoption has no material impact to the Group’s consolidated financial statements. The Group estimated allowance for credit losses to reserve for potentially uncollectible receivable amounts periodically, considering factors in assessing the collectability of its accounts receivable, such as historical distribution of the age of the amounts due, payment history, creditworthiness, forward-looking factor, historical collections data of the customers, to assess the credit risk characteristics. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable are considered impaired and written-off when it is probable that all contractual payments due will not be collected after all collection efforts have been exhausted.
Impairment for long-lived assets other than goodwill
Long-lived assets, including property, equipment, furniture and fixtures and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, the Group would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash flow amount. For the six months ended June 30, 2024 and 2023 the Group did not recognize any impairment on the long-lived assets.
Business combinations
The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of the cost of the acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings.
The determination and allocation of fair values to the identifiable net assets acquired, liabilities assumed and noncontrolling interest is based on various assumptions and valuation methodologies requiring considerable judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the acquiree’s current business model and industry comparisons. Although the Group believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.
F-10
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Goodwill
Goodwill is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. Goodwill is not subject to amortization, but rather is evaluated for impairment at least annually. The Group evaluates its goodwill for impairment during the fourth quarter of its fiscal year or more frequently if indicators of potential impairment exist, in accordance with ASC 350, Intangibles - Goodwill and Other. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit (generally defined as the businesses for which financial information is available and reviewed regularly by management) with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment.
In the course of evaluating the potential impairment of goodwill, the Group may perform either a qualitative or a quantitative assessment. The Group’s qualitative assessment of potential impairment may result in the determination that a quantitative impairment analysis is not necessary. Under this elective process, the Group assesses qualitative factors to determine whether the existence of events or circumstances leads the Group to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events and circumstances, the Group determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing a quantitative analysis is not required. However, if the Group concludes otherwise, then the Group performs a quantitative impairment analysis.
If the Group either chooses not to perform a qualitative assessment, or the Group chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then the Group performs a quantitative evaluation. In the case of a quantitative assessment, the Group estimates the fair value of the reporting unit with which the goodwill that is subject to the quantitative analysis is associated and compares it to the carrying value. If the estimated fair value of a reporting unit is less than its carrying value, the excess is recorded as a goodwill impairment, which is limited to the total amount of goodwill allocated to that reporting unit.
For the six months ended June 30, 2024, the Group performed a qualitative assessment for the reporting unit. Based on the requirements of ASC 350-20, the Group evaluated all relevant qualitative and quantitative factors, weighed all factors in their entirety and concluded that it was not more-likely-than-not that the fair value of the reporting unit was less than its carrying amount. Therefore, no goodwill impairment was recognized for the six months ended June 30, 2024 and 2023.
F-11
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Revenue recognition
The Group adopted ASC Topic 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added tax (“VAT”). To achieve that core principle, the Group applies the following steps:
Step 1: Identify the contract (s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The Group derives its revenues from four sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue and (5) others revenue. All of the Group’s contracts with customer do not contain cancelable and refund-type provisions.
(1) Revenue from application development service
The Group’s application development service contracts are primarily on a fixed-price basis, which require the Group to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Group is generally required to provide post-contract customer support (“PCS’) for a period from three months to three years (“PCS period”) after the customized application development services are delivered. The type of services for PCS clause is generally not specified in the contracts or as stand-ready services on when-and-if-available basis. The unspecified PCS is stand-ready service on when-and-if-available basis. It grants the customers on line and telephone access to technical support personnel during the term of the service. Specified PCS includes specified service term in the contract such as training.
The Group’s application
development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises.
The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant
portion (
The Group sometimes provides a warranty for its application development service contracts. The warranty period is typically 12-36 months upon the completion of the application development service. In accordance with ASC 606-10-25-19, the Group believes the warranty provision in the contracts generally represents service-type warranty, which is a distinct performance obligation and the Group also provides the similar service on standalone basis and customers can benefit from the related service-type warranty service. For the service warranty component, the customer simultaneously receives and consumes the benefits provided by the Group performance over the warranty term, therefore, the service warranty is satisfied over time. The revenue allocated to the service warranty is recognized over the warranty period.
F-12
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
The Group assesses that application development service, PCS or specific service and service-type warranty, if applicable, are distinct performance obligations in the application development service contracts. The Group provides these services on standalone basis and customers are able to benefit from each of the service on its own. In addition, the timing of delivery of these performance obligations can be separately identifiable in the contracts. The transaction price is allocated to these identified performance obligations based on the relative standalone selling prices. The transaction price allocated to PCS or unspecific service and service-type warranty, if applicable, on a straight-line method over the contractual period. Revenue allocated to specified PCS is recognized as the related services are rendered. The transaction price allocated to application development service is recognized over time as the Group’s performance creates or enhances the project controlled by the customer and the control is transferred continuously to our customers. The Group uses an input method based on cost incurred as the Group believes that this method most accurately reflects the Group’s progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the transaction price allocated to application development service is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.
Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Group to make estimates of revenues and costs to complete the construction. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Group’s estimates are based upon the professional knowledge and experience of our engineers and project managers to assess the contract’s schedule, performance, technical matters. The Group has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Group recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for application development services include but not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Group has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Group entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values.
In certain application development service arrangements, the Group sells and delivers IT equipment on standalone basis prior to the delivery of the services. In these cases, the Group controls the IT equipment before they are transferred to the customer. The Group has the right to direct the suppliers and control the goods or assets transferred to its customers. Thus, the Group considers it should recognize revenue as a principal in the gross amount of consideration to which it is entitled in exchange for the IT equipment delivered. The Group assesses the sale of equipment is separately identifiable from other promises in the contract and it is distinct performance obligation within the context of the contract. Accordingly, the revenue from the related IT equipment based on its relative standalone selling price is recognized upon customer acceptance after delivery.
F-13
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
(2) Revenue from consulting and technical support services
Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Group to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to customers. Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation. The revenue from consulting and technical support services is recognized over the contract term on a straight-line basis as customers receive and consume benefits of such services.
(3) Revenue from subscription services
Revenue from subscription services is comprised of subscription fees from customers accessing the Group’s software-as-a-service applications for a subscribed period. The Group’s monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription arrangements are considered service contracts because customers do not have the right to take possession of the software and can only benefit from the software when provided the right to access the software. Accordingly, the subscription services contracts typically include a single performance obligation. The revenue from subscription services is recognized over the contract term on a straight-line basis or based on the actual usage as customers receive and consume benefits of such services.
(4) Trading revenue
The Group started trading business for the year ended December 31, 2021 and recognized revenue at a point in time when control of such products transfers to the customer, which generally occurs upon shipment or delivery depending on the terms of the contracts with the customer. Product sale contracts typically include a single performance obligation and there are no rights of return. The transaction price is based on the fixed contractual price with the customer. Billings to the customer for the sale of products occur at the time the products are transferred to the customer.
(5) Others revenue
In April 2023, the Group
started regional authorization membership program to engage independent merchant to assist in developing specified geographical regions.
The program grants non-exclusive geographical territory business development to the authorized distributors within that defined territory.
The Group’s services under regional cooperation agreements include marketing support to advertise as well as utilization of the
Group’s trademark and copyrights for business promotion purpose. The term of cooperation agreements is typically one to two years.
The Group charges a fixed amount authorization fee which is non-refundable and to be paid upon execution of an authorization agreement.
For all the Group’s cooperation agreements, the amount of fee is fixed or determinable and no right of return provision indicated
in the agreement. Since the Group provides no financing to authorized distributors and offers no guarantees on their behalf, the services
provided by the Group are considered to represent a single performance obligation. The agreement price is fully allocated to the single
performance obligation. The total authorization fees are recognized ratably on a straight-line basis over the term of the cooperation
agreements. Other revenues accounted for
Revenue includes reimbursements
of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. The Group reports revenues net of
value added tax (“VAT”). The Group’s subsidiaries in PRC are subject to a
Practical Expedient and Exemptions
The Group does not disclose the value of unsatisfied performance obligations within one year by applying the right to invoice practical expedient provided by ASC 606-10-55-18.
F-14
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Contract balance
The accounts receivable includes
both unbilled accounts receivable and billed accounts receivable. The Group records unbilled accounts receivable for revenue that has
been recognized in advance of billing the customer, which is common for application development service contracts. The unbilled accounts
receivable represents the Group’s right to consideration in exchange for the service that the Group has performed to the customer
before payment is due and the unbilled account receivable will be reclassified into billed accounts receivable when the Group has the
right to invoice. Contract liabilities are presented as deferred revenue on the consolidated balance sheet. Contract liabilities relate
to payments received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue
upon the completion of performance obligations. As of June 30, 2024 and December 31, 2023 the balance of deferred revenue amounted to
$
Operating leases
The Group adopted Topic 842 on January 1, 2022 using the modified retrospective transition approach. The Group has lease contracts for factory and office space under operating leases. The Group determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at lease commencement. The Group measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Group estimates its incremental borrowing rate based on an analysis of weighted average interest rate of its own bank loans. The Group measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing lease expense when the lessor makes the underlying asset available to the Group.
For leases with lease term less than one year (short-term leases), the Group records operating lease expense in its consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred.
Income taxes
The Group accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the six months ended June 30, 2024 and 2023. All of the tax returns of the Group’s subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing.
F-15
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Loss per Share
Earnings (loss) per ordinary share is calculated in accordance with ASC 260, Earnings per Share. Basic earnings (loss) per ordinary share is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (loss) per share is computed using the weighted average number of ordinary shares and potential ordinary shares outstanding during the period. Potential ordinary shares include ordinary shares issuable upon the exercise of outstanding share options by using the treasury stock method and ordinary shares issuable upon the conversion of convertible instruments using the if-converted method. Potential ordinary shares are not included in the denominator of the diluted net (loss)/earnings per share calculation when inclusion of such shares would be anti-dilutive. For the six months ended June 30, 2024 and 2023, since the Group had a loss, basic and dilutive loss per share is the same.
Share-Based compensation
The Group accounts for share-based awards to employees and nonemployees directors and consultants in accordance with the provisions of ASC 718, Compensation—Stock Compensation, and under the recently issued guidance following FASB’s pronouncement, ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Under ASC 718, and applicable updates adopted, for employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite service period for the entire award. For the non-employee stock-based awards, the fair value of the awards to non-employees are measured every reporting period based on the value of the Group’s common stock.
Commitments and Contingencies
In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.
Segment reporting
The Group’s chief operating decision maker (“CODM”) has been identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. The Group’s long-lived assets are substantially all located in the PRC and all of the Group’s revenues are derived from the PRC. Therefore, no geographical segments are presented.
F-16
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Concentrations of Risks
| (a) | Concentration of credit risk |
Assets that potentially subject
the Group to significant concentration of credit risk primarily consist of cash, restricted cash, accounts receivable and other current
assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of June 30, 2024
and December 31, 2023, the aggregate amount of cash, cash equivalents and restricted cash of $
| (b) | Foreign currency risk |
A majority of the Group’s expense transactions are denominated in RMB and a significant portion of the Group and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Group in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
The Group’s functional
currency is the RMB, and the Group’s financial statements are presented in U.S. dollars. The RMB deprecation by
| (c) | Significant customers |
For the six months ended June
30, 2024, three customers accounted for
| (d) | Significant suppliers |
For the six months ended June
30, 2024, five suppliers accounted for
F-17
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 — Summary of significant accounting policies (continued)
Recently issued accounting pronouncements
The Group considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (“the JOBS Act”), the Group meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures. The Group is currently assessing the potential impact of the rule on our disclosures.
In November 2023, FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures when adopted, where applicable. The Group is currently assessing the potential impact of the rule on our disclosures.
In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Group is currently evaluating the potential impact of adopting this guidance on Financial Statements.
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Group is currently evaluating the potential impact of adopting this guidance on Financial Statements.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the condensed consolidated financial position, statements of operations and cash flows.
F-18
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3 — Acquisition
Hongchuangxin Acquisition
On May 1, 2024, the Group
acquired
| Amount | ||||
| Total consideration for acquisition | $ | |||
| Assets acquired and liabilities assumed: | ||||
| Cash acquired | ||||
| Accounts receivable | ||||
| Loan receivable | ||||
| Prepayments, deposits and other current assets | ||||
| Intangible assets, net | ||||
| Accounts payable | ( | ) | ||
| Deferred revenue | ( | ) | ||
| Other current liabilities | ( | ) | ||
| Deferred tax liabilities | ( | ) | ||
| Total net assets acquired | ||||
| Goodwill | $ | |||
The intangible assets are
mainly attributable to franchise right acquired through the acquisition, which are amortized over
F-19
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 4 — Accounts receivable, net
| June 30, 2024 | December 31, 2023 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
Unbilled accounts receivable
included in accounts receivable above amounted to $
As of November 19, 2024, approximately
$
| Six Months Ended June 30, 2024 | Year Ended December 31, 2023 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for credit losses | ||||||||
| Written-off | ( | ) | ( | ) | ||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
F-20
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 5 — Prepayments, deposits and other assets, net
| June 30, 2024 |
December 31, 2023 |
|||||||
| Security deposits (1) | $ | $ | ||||||
| Advances to suppliers | ||||||||
| Advances to employees | ||||||||
| Prepaid expense | ||||||||
| Prepayment for potential acquisition (2) | ||||||||
| Antique art pieces (3) | ||||||||
| Deferred financing cost | ||||||||
| Others | ||||||||
| Less: Long term portion | ( |
) | ( |
) | ||||
| Allowance for credit losses | ( |
) | ||||||
| Prepayments, deposits and other assets – current portion | $ | $ | ||||||
| (1) | |
| (2) | |
| (3) |
| Six Months Ended June 30, 2024 |
Year Ended December 31, 2023 |
|||||||
| Beginning balance | $ | $ | ||||||
| Written-off | ( |
) | ( |
) | ||||
| Foreign currency translation adjustments | ( |
) | ( |
) | ||||
| Ending balance | $ | $ | ||||||
F-21
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6 — Intangible assets, net
| June 30, 2024 |
December 31, 2023 |
|||||||
| Capitalized development costs (1) | $ | $ | ||||||
| Purchased software | ||||||||
| Software from business combinations | ||||||||
| Franchise right | ||||||||
| Subtotal | ||||||||
| Less: accumulated amortization | ( |
) | ( |
) | ||||
| Impairment of capitalized development cost and software acquired | ( |
) | ( |
) | ||||
| Intangible assets, net | $ | $ | ||||||
| (1) |
Note 7 — Related party balances and transactions
| Name of Related Party | Relationship to the Group | |
| Stewart Lor | ||
| Ban Lor | ||
| Yuxia Xu | ||
| Phillip Tao Qiu | ||
| Xiaoyan Liu | ||
| Zhongchuan Dadi (Beijing) Technology Co., LTD | ||
| Shanghai Yue See cultural development Co., LTD |
| June 30, 2024 | December 31, 2023 | |||||||
| Ban Lor | $ | $ | ||||||
| Stewart Lor | ||||||||
| Yuxia Xu | ||||||||
| Phillip Tao Qiu | ||||||||
| Xiaoyan Liu | ||||||||
| Subtotal | $ | $ | ||||||
| (*) |
| June 30, 2024 |
December 31, 2023 |
|||||||
| Shanghai Yue See cultural development Co., LTD | $ | $ | ||||||
| Zhongchuan Dadi (Beijing) Technology Co., LTD | ||||||||
| Subtotal | $ | $ | ||||||
| (*) |
F-22
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 7 — Related party balances and transactions (continued)
| For the six months ended June 30, | ||||||||||
| 2024 | 2023 | |||||||||
| Stewart Lor | Interest income | $ | $ | |||||||
| Yuxia Xu | Interest income | $ | $ | |||||||
| Shanghai Yue See cultural development Co., LTD | Service revenue | $ | $ | |||||||
Note 8 — Bank loans
| June 30, 2024 | December 31, 2023 | |||||||
| Loans from Bank of Communication Fixed interest rates ranging from | $ | $ | ||||||
| Loan from SPD Bank Fixed interest rate of | ||||||||
| Total | $ | $ | ||||||
| For the six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Beginning balance | $ | $ | ||||||
| Additions | ||||||||
| Repayments | ( | ) | ( | ) | ||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
For the six months ended June
30, 2024 and 2023, interest expense was $
F-23
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 9 — Lease
The Group has several operating leases for offices. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Total lease expense for the
six months ended June 30, 2024 and 2023 amounted to $
Cash paid for amounts included in the measurement
of lease liabilities amounted to $
| June 30, 2024 | December 31, 2023 | |||||||
| Right-of-use assets, net | $ | $ | ||||||
| Operating lease liabilities - current | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Remaining lease term and discount rate: | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
| Twelve months ending June 30, | Amount | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
F-24
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 10 — Convertible Notes
| June 30, 2024 | December 31, 2023 | |||||||
| Streeterville note | $ | $ | ||||||
| YA notes | ||||||||
| $ | $ | |||||||
Streeterville note
On September 1, 2022, the
Group entered into a securities purchase agreement with Streeterville Capital, LLC (“Streeterville”), pursuant to which the
Group issued the Investor an unsecured promissory note on September 1, 2022 in the original principal amount of $
The Group elected the fair value option to account for the Streeterville note on instrument-by-instrument basis and engaged an independent valuation firm to perform the valuation. The fair value of the Streeterville note is calculated using the binomial tree model. The convertible notes are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Group’s own assumptions in measuring fair value. Significant inputs used in developing the fair value of the convertible notes include time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion.
For the year ended December
31, 2022, Streeterville delivered conversion notice in an aggregate of principle of $
For the six months ended June
30, 2024, the Group fully repaid the remaining principal and interest in aggerate of $
YA 2024 Notes
On May 16, 2024, the Group
entered into entered into a standby equity purchase agreement with YA II PN, LTD (“YA”) Pursuant to the Purchase Agreement,
YA purchases convertible notes in the principal amount of $
F-25
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 10 — Convertible Notes (continued)
On May 16, 2024, The Group
closed the first tranche of the YA 2024 Notes for the principal amount of $
On June 17, 2024, The Group
closed the second tranche of the YA 2024 Notes for the principal amount of $
The Group adopted ASU No.
2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) by using a modified
retrospective transition method. In accordance with ASU 2020-06, since the YA 2024 Notes were not issued at a substantial premium, all
of the proceeds received from the issuance are recorded as a liability on the unaudited condensed consolidated balance sheet in accordance
with ASC 470-20. That is, no portion of the proceeds from issuing are attributed to the conversion option at inception. The difference
between the principal amount and net proceeds from the issuance is considered debt discount and is amortized at their respective effective
interest rates to accrete the carrying value to its face value on the respective put dates. During six months ended June 30, 2024, the
effective interest rates of the first and second tranche of the YA 2024 Notes were
Note 11 — Taxes
Income tax
Cayman Islands
X3 was incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of Cayman Islands. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Hong Kong
Powerbridge HK is established in Hong Kong. Under the Hong Kong tax laws, Powerbridge HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.
PRC
Powerbridge Zhuhai is governed
by the Enterprise Income Tax (“EIT”) laws of PRC. Under EIT laws of PRC, domestic enterprises and Foreign Investment Enterprises
(the “FIE”) are usually subject to a unified
The
impact of the preferred tax treatment noted above decreased income taxes by $
F-26
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 11 — Taxes (continued)
| For the six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Current | $ | ( |
) | $ | ||||
| Deferred | ( |
) | ( |
) | ||||
| Total income tax benefit | $ | ( |
) | $ | ( |
) | ||
| For the six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| PRC statutory rates | % | % | ||||||
| Preferential tax rates | ( | )% | ( | )% | ||||
| R&D credits | % | % | ||||||
| Change in valuation allowance and others | ( | )% | ( | )% | ||||
| Effective tax rate | % | % | ||||||
Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.
| June 30, 2024 | December 31, 2023 | |||||||
| Deferred tax assets: | ||||||||
| Provision for credit losses | $ | $ | ||||||
| Depreciation and amortization | ||||||||
| Net operating loss carryforward | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Intangible assets arising from acquisitions | $ | $ | ||||||
As of June 30, 2024, the Group
has approximately $
F-27
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 11 — Taxes (continued)
Value added tax
Enterprises who sell goods
in the PRC are subject to a value added tax in accordance with PRC laws. VAT standard rates are
Tax payable
| June 30, 2024 | December 31, 2023 | |||||||
| Income taxes payable | $ | $ | ||||||
| VAT and other tax payable | ||||||||
| Totals | $ | $ | ||||||
Uncertain tax positions
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2024 and December 31, 2023, the Group did not have any significant unrecognized uncertain tax positions. The Group did not incur any interest and penalties related to potential underpaid income tax expenses for the six months ended June 30, 2024 and 2023. The Group also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from June 30, 2024.
F-28
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12 — Equity
Ordinary Shares
On May 30, 2023, the
Company held an extraordinary general shareholders meeting. At the Meeting, the Company’s shareholders approved (i) a share consolidation
of thirty (
On September 5, 2023, the Company
held its 2023 special general meeting of shareholder. At the Meeting, the Company’s shareholders approved the following among other
items: (i) a share consolidation of every eight (
On December 1, 2023, the Company
held an extraordinary general meeting. At the Meeting, the Company’s shareholders approved the following among other items: (a)
the name of the Company be changed from Powerbridge Technologies Co., Ltd. to X3 Holdings Co., Ltd., and ticker symbol of the Company
be changed from “PBTS” to “XTKG” (the “Name Change”). (b) the authorized share capital of the Company
be increased from $
On November 4, 2024, the Company
held the annual general meeting. At the meeting, the Company’s shareholders approved the following among other items: (a) a share
consolidation of every twenty (
All historical share and per share amounts in these unaudited condensed financial statements have been retroactively adjusted to reflect the share consolidation.
The Company had
F-29
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12 — Equity (continued)
Shares issued for consulting services
During the period from January
4, 2023 to August 4, 2023, the Group issued in aggregated of
On November 29, 2023, the
Company signed a consulting agreement with an advisory firm with term of six months. The Group agreed to pay $
On December 8, 2023, the Company
signed a consulting agreement with an advisory firm with term of six months. The Group agreed to pay $
For the six months ended June
30, 2024 and 2023, the Company recorded a consulting fee expense of $
Restricted share units (“RSUs”) issued for consulting services
On July 15, 2022, the Company
signed six consulting agreements with six third-party consultants with term of three years. Pursuant to the agreements, the Company agreed
to pay total of
For the six months ended June
30, 2024 and 2023, the Company recorded a consulting fee expense of $
2018 Stock option plan
On August 18, 2018 and further
amended on February 10, 2019, the Board of Directors (“Board”) approved an amended the 2018 Stock Option Plan (the “2018
Plan”). The Plan provides for discretionary grants of stock options to key employees, directors and consultants of the Company.
The purpose of the Plan is to attract and retain the best available personnel and to promote the success of the Company’s business.
The Board authorized that the maximum aggregate number of ordinary shares reserved and available pursuant to this Plan shall be the aggregate
of (i)
F-30
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12 — Equity (continued)
On January 20, 2023, the Board
approved to register all the shares issuable under the Company’s Amended 2018 Plan in a registration statement on a Form S-8 (File
No. 333-269513) representing additional
On April 4, 2019, the Board
approved to issue
On May 26, 2021, the Board
approved to issue
The fair value of stock options
was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to
make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected
term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based
on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based
on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to
the contractual life of stock-based compensation instruments. The dividend yield assumption is based on historical patterns and future
expectations for the Company dividends.
| Options granted in May 2021 | Options Amended in January, 2022 | Options Amended in May, 2022 | Options Amended in December, 2022 | |||||||||||||
| Risk-free interest rate | % | % | % | % | ||||||||||||
| Expected life of the options | ||||||||||||||||
| Expected volatility | % | % | % | % | ||||||||||||
| Expected dividend yield | % | % | % | % | ||||||||||||
| Fair value | $ | $ | $ | $ | ||||||||||||
F-31
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12 — Equity (continued)
| Number of Share Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| $ | Year | $ | ||||||||||||||
| Outstanding as of December 31, 2022 | ||||||||||||||||
| Granted | - | |||||||||||||||
| Cancelled | - | |||||||||||||||
| Outstanding as of December 31, 2023 | ||||||||||||||||
| Granted | - | |||||||||||||||
| Cancelled | - | |||||||||||||||
| Outstanding as of June 30, 2024 | ||||||||||||||||
| Exercisable as of June 30, 2024 | ||||||||||||||||
For the six months ended June 30, 2024 and 2023, total share-based compensation expenses recognized for the share options granted both were , respectively. As of June 30, 2024 and December 31, 2023, there was no unrecognized share-based compensation expenses related to the share options granted, respectively.
Private placements
On September 1, 2022, the
Company entered into a securities purchase agreement with White Lion Capital LLC (“White Lion”). Pursuant to the agreement,
White Lion shall purchase up to $
On September 9, 2022, the
Company entered into a securities purchase agreement with YA II PN, LTD. Pursuant to the agreement, YA II PN, LTD. shall purchase up to
$
On December 29, 2022, the
Company entered into a securities purchase agreement with TBS Capital LP, (“TBS”). Pursuant to the agreement, TBS shall purchase
up to $
On May 17, 2023, the Company
entered into a securities purchase agreement with Spring Field Fund SPC. Spring Field Fund SPC agreed to purchase an aggregate of $
On November 24, 2023, the
Company entered into purchase agreements with twelve investors. The investors agreed to purchase an aggregate of $
F-32
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12 — Equity (continued)
Conversion of convertible notes
On February 3, 2023,
the Group issued an aggregate of
Shares issued for reserve
On August 5, 2021, the Company
issued
Shares issued for long-term investments/acquisitions
On January 5, 2023, the Company
entered into an equity transfer agreement with a shareholder of Smartconn which the Company agrees to purchase
On March 24, 2023, the Company
entered into an equity transfer agreement with a shareholder of DTI which the Group agrees to prepaid
On March 28, 2023, the Company
entered into an equity transfer agreement with fifteen individual shareholders of Boxinrui, pursuant to which the Group agreed to pre-issue
On November 22, 2023, the
Company entered into a compensation agreement with the original shareholders of Smartconn. Pursuant to the agreement, the Company shall
issue
On November 22, 2023, the
Company entered into a compensation agreement with the original shareholders of Boxinrui. Pursuant to the agreement, the Company shall
issue
Warrants
In connection with the initial
public offering (“IPO”) on April 4, 2019, the Company issued warrants totaling
During the year ended December
31, 2021, the Company completed in aggregate of $
F-33
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 12 — Equity (continued)
Dividend
On March 5, 2024, the board
of directors approved a special stock dividend to pay in total of
Statutory reserve
Under PRC law, the Company’s
subsidiary located in the PRC (collectively referred as the (“PRC entities”) are required to provide for certain statutory
reserves. The PRC entities are required to allocate at least
The Company’s subsidiaries in PRC had accumulated deficits as of June 30, 2024 and December 31, 2023, as a result, the statutory reserve balances were $ as of June 30, 2024 and December 31, 2023.
Note 13 — Commitments and contingencies
Contingencies
In the ordinary course of the business, the Group subject to periodic legal or administrative proceedings. The Group accrues liability when the loss is probable and reasonably estimable.
On
F-34
X3 HOLDINGS CO., LTD.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 14 — Segment reporting
For the six months ended June
30, 2024 and 2023, the Group’s CODM reviewed the financial information of the business carried out by the Group on a consolidated
basis. Therefore, the Group has
|
For the six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| REVENUES: | ||||||||
| Application development services* | $ | |
$ | |||||
| Consulting and technical support services | |
|||||||
| Subscription services | |
|||||||
| Trading revenue | |
|||||||
| Other revenue | |
|||||||
| Total revenues | $ | |
$ | |||||
| * |
Note 15 — Subsequent events
On July 4, 2024, Powerbridge
Zhuhai entered into a facility agreement with Shanghai Pudong Development Bank obtain a total facility of up to $
To explore oversea business,
the Group established one new subsidiary in Singapore. X3 TECHNOLOGIES PTE. LTD. was incorporated on July 22, 2024 and the Group has
The Group evaluated all events and transactions that occurred after June 30, 2024 up through the date the Group issued these unaudited condensed consolidated financial statements, for disclosure or recognition in the unaudited condensed consolidated financial statements of the Group as appropriate.
F-35
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our interim unaudited condensed consolidated financial statements and the related notes for the six months ended June 30, 2024 and the audited consolidated financial statements and accompanying notes for the year ended December 31, 2023 included in our annual report on Form 20-F filed with the SEC on April 30, 2024. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors.
Overview
X3 Holdings Co., Ltd. (hereinafter referred to as “we,” “our,” or the “Company”), formerly known as Powerbridge Technologies Co., Ltd., is a company that was established under the laws of the Cayman Islands on July 27, 2018 as a holding company.
We are a provider of software application and technology services to corporate and government customers engaged in global trade. All of our customers are located in China. We currently generate revenues from application development services, which represented 17.7% and 33.1% of total revenue for the six months ended June 30, 2024 and 2023, respectively. We generate revenue from consulting and technical support services, which represented 47.7% and 22.4% of our revenue for the six months ended June 30, 2024 and 2023, respectively. In addition, we also earn subscription service revenue from customers accessing our SaaS, which represented 4.3% and 4.5% of our revenue for the six months ended June 30, 2024 and 2023. Revenue from trading business, which represented 27.5% and 39.6% of total revenue for the six months ended June 30, 2024 and 2023, respectively. Other revenue represented 2.7% and 0.4% of our revenue for the six months ended June 30, 2024 and 2023, respectively.
Recent Developments
On May 1, 2024, we acquired 100% equity interest in Hong Kong Hongyi Holdings Limited (“Hongyi”) and its 100% held subsidiary Shenzhen Hongchuangxin Technology Co., Ltd. (“Hongchuangxin”) is engaged in AI education and hardware equipment sales. The fair value of the consideration for this acquisition was approximately $13.9 million.
On May 16, 2024, we entered into a standby equity purchase agreement (the “SEPA”) with YA II PN, LTD. (“YA”), pursuant to which YA purchased convertible promissory notes (the “Notes”) in the principal amount of $8,000,000 (the “Principal”), which shall be convertible into the Company’s ordinary shares, with par value US$0.40 per share (the “Offering”), for gross proceeds of approximately $7,425,000. The Offering will be conducted in four closings. The first closing consists of offer and sale of a Note in the principal amount of $4,756,986. The first closing occurred on May 16, 2024. The second closing consists of offer and sale of a Note in the principal amount of $1,500,000. The second closing occurred on June 17, 2024.
Key Factors that Affect Operating Results
We currently derive a majority of revenues from our application development services, consulting and technical support services, subscription services and trading. We intend to continually enhance our services and cross-sell new services to our existing customers and acquire new customers by increasing our market penetration with a deeper market coverage and a broader geographical reach. Our ability to maintain and expand our customer base with our application development services as well as consulting and technical support services significantly affect our operating results. We intend to expand the scope of our offerings to serve the existing customers and acquire new customers by continually making significant investments in R&D as well as sales marketing activities to increase our subscription revenue and profit. Our ability to drive increased customer adoption and usage of our SaaS services affects our operating results.
Our business of providing digital solutions and technology services spanning diverse industries. We harness cutting edge technologies to forge agile, innovative business models by integrating pivotal resources in technology applications, financial prowess, and streamlined operations. We target accelerated and transformative growth across digital technologies and crypto mining operations.
We intend to pursue strategic acquisitions and investments in selective technologies and businesses that will enhance our technology capabilities, expand our offerings and increase our market penetration. We believe our strategic acquisitions and investment strategies are critical for us to accelerate our growth and strengthen our competitive position. Our ability to identify and execute strategic acquisitions and investments will have a vital effect on our operating results.
| A. | Operating Results |
For the six months ended June 30, 2024 and 2023
The following table summarizes the results of our operations for the six months ended June 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.
| For the Six Months Ended | ||||||||||||||||
| June 30, | % | |||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| REVENUES: | ||||||||||||||||
| Application development services | $ | 884,538 | $ | 2,179,167 | $ | (1,294,629 | ) | (59.4 | )% | |||||||
| Consulting and technical support services | 2,383,000 | 1,477,740 | 905,260 | 61.3 | % | |||||||||||
| Subscription services | 215,355 | 294,528 | (79,173 | ) | (26.9 | )% | ||||||||||
| Trading revenue | 1,375,319 | 2,605,970 | (1,230,651 | ) | (47.2 | )% | ||||||||||
| Other revenue | 135,832 | 27,324 | 108,508 | 397.1 | % | |||||||||||
| Total revenues | 4,994,044 | 6,584,729 | (1,590,685 | ) | (24.2 | )% | ||||||||||
| COST OF REVENUES: | ||||||||||||||||
| Application development services | 301,601 | 1,497,466 | (1,195,865 | ) | (79.9 | )% | ||||||||||
| Consulting and technical support services | 1,019,261 | 607,587 | 411,674 | 67.8 | % | |||||||||||
| Subscription services | 27,749 | 37,293 | (9,544 | ) | (25.6 | )% | ||||||||||
| Trading | 1,371,067 | 2,559,490 | (1,188,423 | ) | (46.4 | )% | ||||||||||
| Others | 53,626 | 37,913 | 15,713 | 41.4 | % | |||||||||||
| Total cost of revenues | 2,773,304 | 4,739,749 | (1,966,445 | ) | (41.5 | )% | ||||||||||
| GROSS PROFIT | 2,220,740 | 1,844,980 | 375,760 | 20.4 | % | |||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Selling and marketing | 548,885 | 698,587 | (149,702 | ) | (21.4 | )% | ||||||||||
| General and administrative | 3,773,296 | 8,999,287 | (5,225,991 | ) | (58.1 | )% | ||||||||||
| Provision for credit losses | 3,773,492 | 483,137 | 3,290,355 | 681.0 | % | |||||||||||
| Research and development | 2,156,721 | 2,516,986 | (360,265 | ) | (14.3 | )% | ||||||||||
| Share-based compensation | 3,654,999 | 3,576,470 | 78,529 | 2.2 | % | |||||||||||
| Total operating expenses | 13,907,393 | 16,274,467 | (2,367,074 | ) | (14.5 | )% | ||||||||||
| OPERATING LOSS FROM OPERATIONS | (11,686,653 | ) | (14,429,487 | ) | 2,742,834 | (19.0 | )% | |||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Change in fair value of convertible debt | 1,048,271 | (530,501 | ) | 1,578,772 | (297.6 | )% | ||||||||||
| Gain from long term investment | - | 70,947 | (70,947 | ) | (100.0 | )% | ||||||||||
| Gain from fair value change in equity investments | - | 2,402,943 | (2,402,943 | ) | (100.0 | )% | ||||||||||
| Fair value loss on financial instruments | - | (45,063,404 | ) | 45,063,404 | (100.0 | )% | ||||||||||
| Loss from deregistering subsidiary | (113,361 | ) | - | (113,361 | ) | - | ||||||||||
| Other expenses | (585,759 | ) | (85,537 | ) | (500,222 | ) | 584.8 | % | ||||||||
| Total other income (expenses) | 349,151 | (43,205,552 | ) | 43,554,703 | (100.8 | )% | ||||||||||
| LOSS BEFORE INCOME TAXES | (11,337,502 | ) | (57,635,039 | ) | 46,297,537 | (80.3 | )% | |||||||||
| INCOME TAX BENEFIT | (144,951 | ) | (74,856 | ) | (70,095 | ) | 93.6 | % | ||||||||
| NET LOSS | $ | (11,192,551 | ) | $ | (57,560,183 | ) | $ | 46,367,632 | (80.6 | )% | ||||||
2
Revenues
We derive revenues from five sources: (1) application development services; (2) consulting and technical support services; (3) subscription services; (4) trading; and (5) others.
For the six months ended June 30, 2024, our total revenue was approximately $5.0 million as compared to $6.6 million for the six months ended June 30, 2023. Our total revenue decreased by approximately $1.6 million, or 24.2%. The overall decrease in the total revenue was primarily attributable to approximately $1.3 million decrease in revenue from application development services and approximately $1.2 million decrease in trading business, partially offset by approximately $0.9 million increase in the revenue from consulting and technical support services.
Revenue from application development services
Our application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization. Revenue from application development service is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.
For the six months ended June 30, 2024, our application development service revenue was approximately $0.9 million as compared to approximately $2.2 million for the six months ended June 30, 2023. The decrease in application development service revenue was approximately $1.3 million or 59.4% due to fewer new projects during such period. In certain application development service arrangements, the contracts also included the sales of IT equipment. Such revenue was approximately $0.3 million for the six months ended June 30, 2024, which decreased from approximately $1.3 million of the related revenue for the six months ended June 30, 2023.
Revenue from consulting and technical support services
Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to customers. Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation. The revenue from consulting and technical support services is recognized over the contract term on a straight-line basis as customers receive and consume benefits of such services.
For the six months ended June 30, 2024, our consulting and technical support service revenue was approximately $2.4 million as compared to approximately $1.5 million for the six months ended June 30, 2023. The increase in consulting and technical support service revenue was approximately $0.9 million or 61.3% due to more new projects during such period.
Revenue from subscription services
Revenue from subscription services is comprised of subscription fees from customers accessing our software-as-a-service applications. Our monthly or quarterly billings to customers are on the basis of the number of uses or the actual usage by the customers. The subscription services contracts typically include a single performance obligation. The revenue from subscription services is recognized over the contract term on a straight-line basis or based on the actual usage as customers receive and consume benefits of such services.
For the six months ended June 30, 2024, our subscription service revenue was approximately $0.2 million as compared to approximately $0.3 million for the six months ended June 30, 2023.
3
Trading revenue
The Company began to sell products to its customers since the year ended December 31, 2021. Revenue from trading revenue was approximately $1.4 million and approximately $2.6 million for the six months ended June 30, 2024 and 2023, respectively.
Others revenue
The Company began to receive income from other fields, such as membership fee, the revenue of which was approximately $0.1 million and approximately $0.03 million for the sixth months ended June 30, 2024 and 2023, respectively, and represented 2.7% and 0.4% of our total revenue for the six months ended June 30, 2024 and 2023, respectively.
Cost of Revenues
Our cost of revenues mainly consisted of compensation benefit expenses for our professionals, material cost, travel expenses related to revenue contracts and purchase cost of products.
Our total cost of revenues decreased by approximately $2.0 million or 41.5% to approximately $2.8 million for the six months ended June 30, 2024 from approximately $4.7 million for the six months ended June 30, 2023, which was in line with the decreased revenue, mainly attributable to a decrease of approximately $1.2 million in the cost of revenue from application development services and a decrease of approximately $1.2 million in the cost of revenue from trading business, partially offset by approximately $0.4 million increase in the cost of consulting and technical support services. Our cost of revenue from application development services, consulting and technical support services, subscription services, trading and other services was approximately $0.3 million, approximately $1.0 million, approximately $0.03 million, approximately $1.4 million and approximately $0.1 million for the six months ended June 30, 2024, respectively, as compared to approximately $1.5 million, approximately $0.6 million, approximately $0.04 million, approximately $2.6 million and approximately $0.04 million for the six months ended June 30, 2023 respectively.
Gross profit
| For the Six Months Ended | ||||||||||||||||
| June 30, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| GROSS PROFIT | Gross Profit | Gross Margin | Gross Profit (Loss) | Gross Margin | ||||||||||||
| Application development services | $ | 582,937 | 65.9 | % | $ | 681,701 | 31.3 | % | ||||||||
| Consulting and technical support services | 1,363,739 | 57.2 | % | 870,153 | 58.9 | % | ||||||||||
| Subscription services | 187,606 | 87.1 | % | 257,235 | 87.3 | % | ||||||||||
| Trading revenue | 4,252 | 0.3 | % | 46,480 | 1.8 | % | ||||||||||
| Others revenue | 82,206 | 60.5 | % | (10,589 | ) | (38.8 | )% | |||||||||
| Total gross profit | $ | 2,220,740 | 44.5 | % | $ | 1,844,980 | 28.0 | % | ||||||||
Our total gross profit increased by approximately $0.4 million or 20.4% from approximately $1.8 million for the six months ended June 30, 2023 to approximately $2.2 million for the six months ended June 30, 2024. Gross margin as a percent of overall revenue for the six months ended June 30, 2024 and 2023 was 44.5% and 28.0%, respectively.
4
Gross profit for application development services decreased by approximately $0.1 million or 14.5% from approximately $0.7 million for the six months ended June 30, 2023 to approximately $0.6 million for the six months ended June 30, 2024. The decrease was driven by less application development services revenue generated during such period. Gross profit margin for the six months ended June 30, 2024 and 2023 was 65.9% and 31.3%, respectively.
Gross profit for consulting and technical support services increased by approximately $0.5 million or 56.7% from approximately $0.9 million for the six months ended June 30, 2023 to approximately $1.4 million for the six months ended June 30, 2024. The increase was due to more consulting and technical support services revenue generated during such period. Gross profit margin for the six months ended June 30, 2024 and 2023 was 57.2% and 58.9%, respectively.
Gross profit for subscription services decreased by approximately $0.1 million or 27.1% from approximately $0.3 million for the six months ended June 30, 2023 to approximately $0.2 million for the six months ended June 30, 2024. Gross profit margin was 87.1% and 87.3% for the six months ended June 30, 2024 and 2023 respectively.
Gross profit for trading revenue decreased by approximately $0.04 million or 90.9% from approximately $0.05 million for the six months ended June 30, 2023 to approximately $0.004 million for the six months ended June 30, 2024. Gross profit margin was 0.3% and 1.8% for the six months ended June 30, 2024 and 2023, respectively.
Gross profit for others revenue was approximately $82,000 for the six months ended June 30, 2024 as compared to a gross loss of approximately $11,000 for the six months ended June 30, 2023. Gross profit (loss) margin was 60.5% and (38.8)% for the six months ended June 30, 2024 and 2023, respectively.
Operating Expenses
| For the Six Months Ended | ||||||||||||||||
| June 30, | % | |||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Selling and marketing | $ | 548,885 | $ | 698,587 | $ | (149,702 | ) | (21.4 | )% | |||||||
| General and administrative | 3,773,296 | 8,999,287 | (5,225,991 | ) | (58.1 | )% | ||||||||||
| Provision for credit losses | 3,773,492 | 483,137 | 3,290,355 | 681.0 | % | |||||||||||
| Research and development | 2,156,721 | 2,516,986 | (360,265 | ) | (14.3 | )% | ||||||||||
| Share based compensation | 3,654,999 | 3,576,470 | 78,529 | 2.2 | % | |||||||||||
| Total operating expenses | $ | 13,907,393 | $ | 16,274,467 | $ | (2,367,074 | ) | (14.5 | )% | |||||||
Our operating expenses consisted of selling and marketing, general and administrative, research and development (“R&D”) expenses, provision for credit losses and share based compensation. The total operating expenses decreased by approximately $2.4 million, or 14.5%, from approximately $16.3 million for the six months ended June 30, 2023 to approximately $13.9 million for the six months ended June 30, 2024. The decrease in our operating expenses was primarily due to approximately $5.2 million decrease in general and administrative expenses and approximately $0.4 million decrease in research and development expenses, partially offset by approximately $3.3 million increase in provision for credit losses.
Selling and marketing expenses primarily consisted of salary and compensation expenses relating to our sales and marketing personnel, and also included entertainment, travel and transportation, and other expenses relating to our sales and marketing activities. Selling and marketing expenses decreased by approximately $0.1 million or 21.4% from approximately $0.7 million for the six months ended June 30, 2023 to approximately $0.5 million for the six months ended June 30, 2024, as a result of decreased miscellaneous expenses.
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General and administrative expenses primarily consisted of salary and compensation expenses relating to our accounting, human resources and executive office personnel, and included rental expenses, depreciation and amortization expenses, office overhead, professional service fees and travel and transportation costs. General and administrative expenses decreased by approximately $5.2 million or 58.1% from approximately $9.0 million for the six months ended June 30, 2023 to approximately $3.8 million for the six months ended June 30, 2024, due to less depreciation and amortization expenses, professional consulting fees and salaries. As a percentage of revenues, general and administrative expenses were 75.6% and 136.7% of our total revenue for the six months ended June 30, 2024 and 2023, respectively.
Provision for credit losses increased by approximately $3.3 million from approximately $0.5 million for the six months ended June 30, 2023 to approximately $3.8 million for the six months ended June 30, 2024, due to slower collection.
R&D expenses primarily consisted of compensation and benefit expenses relating to our R&D personnel as well as office overhead and other expenses relating to our R&D activities. Our R&D expenses decreased by approximately $0.4 million from approximately $2.5 million for the six months ended June 30, 2023 to approximately $2.2 million for the six months ended June 30, 2024, representing 43.2% and 38.2% of our total revenues for the six months ended June 30, 2024 and 2023, respectively. We expect to continue to invest in R&D. We expect that our ability to effectively utilize our R&D capabilities significantly affect our results of operations in the future.
Share-based compensation increased by approximately $0.1 million from approximately $3.6 million for the six months ended June 30, 2023 to approximately $3.7 million for the six months ended June 30, 2024.
Other Income (Expense), net
Change in fair value of convertible debt
We elected the fair value option to account for convertible notes with Streeterville Capital, LLC. For the six months ended June 30, 2024 and 2023, we recognized an unrealized gain of approximately $1.0 million and an unrealized loss of approximately $0.5 million, respectively.
Gain from fair value change in equity investments
Gain from fair value change in equity investments derived from two step acquisitions. On January 5, 2023, the Company completed acquisition of 50.99% equity interest in Smartconn, consisting of an acquisition of 31% equity interest of Smartconn acquired from the previous shareholder and an investment of 19.99% equity interest in Smartconn which the Group has already held prior to January 5, 2023. The company recognized a loss of approximately $0.3 million in fair value change for the previous 19.99% equity interests. On March 28, 2023, the Company completed acquisition of 100% equity interest in Boxirui, consisting of an acquisition of 65% equity interest of Boxinrui acquired from the previous shareholder and an investment of 35% equity interest in Boxinrui which the Group has already held prior to March 28, 2023. The company recognized a gain of approximately $2.7 million in fair value change for the previous 35% equity interests. No such gain recognized for the six months ended June 30, 2024.
Fair value loss on financial instruments
Fair value loss on financial instrument is derived from acquisition of Smartconn on January 5, 2023, and acquisition of Boxinrui on March 28, 2023 which involved payments of future financial instrument upon the shares price is lower than the payment date price. Put options liabilities are recorded for the estimated fair value of the financial instrument on the merger date. The fair value of the financial instrument is re-measured at each reporting period, and the change in fair value is recognized as either income or expense. The Company recorded an unrealized loss of approximately $45.1 million for the six months ended June 30, 2023. No such loss incurred for the six months ended June 30, 2024.
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Income Tax Benefit
Income tax benefit was approximately $0.1 million for the six months ended June 30, 2024, compared to approximately $0.1 million for the six months ended June 30, 2023. Under the Income Tax Laws of the PRC, companies are generally subject to income tax at a rate of 25%. However, our major operating subsidiary - Powerbridge Zhuhai was recognized as the “high-tech enterprise” status, which reduced its statutory income tax rate to 15%. The rest of our subsidiaries in PRC are subject to income tax rate of 25%.
Net Loss
As a result of the foregoing, our net loss decreased by approximately $46.4 million, or 80.6%, from approximately $57.6 million for the six months ended June 30, 2023 to approximately $11.2 million for the six months ended June 30, 2024. The decreased net loss was the result of decreased operation expenses, fair value loss on financial instruments and financial assets and fair value loss on financial instruments and financial assets as discussed above.
Impact of Foreign Currency Fluctuations
Foreign currency translation loss was approximately $1.1 million and approximately $2.7 million for the six months ended June 30, 2024 and 2023, respectively. The balance sheet amounts with the exception of equity as of June 30, 2024 were translated at RMB7.2672 to USD1.00 as compared to RMB 7.0999 to USD1.00 as of December 31, 2023. The equity accounts were stated at their historical rate. The average translation rates applied to the income statements accounts for the six months ended June 30, 2024 and 2023 were RMB7.2150 to USD1.00 and RMB7.0809 to USD1.00, respectively. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying change in our business or results of operation.
Non-GAAP Financial Measures
The Company uses non-GAAP measures, such as adjusted net loss in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that the non-GAAP financial measures help to identify underlying trends in its business by excluding the impact of share-based compensation expenses, loss/gain on fair value change on financial instruments and convertible debt and fair value loss on financial instruments and financial assets. The Company believes that the non-GAAP financial measures provide useful information about our results of operations, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, cash flows or liquidity, investors should not consider them in isolation, or as a substitute for net loss, cash flows provided by operating activities or other consolidated statements of operations and cash flows data prepared in accordance with U.S. GAAP.
The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating our performance.
The following table sets forth unaudited reconciliation of GAAP and non-GAAP results for the periods indicated.
| For the Six Months ended | ||||||||
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| Net loss: | $ | (11,192,551 | ) | $ | (57,560,183 | ) | ||
| Add: | ||||||||
| Share-based compensation expenses | 3,654,999 | 3,576,470 | ||||||
| Change in fair value of convertible debt | (1,048,271 | ) | 530,501 | |||||
| Fair value change in financial instrument | - | 45,063,404 | ||||||
| Adjusted net loss | $ | (8,585,823 | ) | $ | (8,389,808 | ) | ||
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Our adjusted net losses increased by approximately $0.2 million or 2.3% from approximately $8.4 million for the six months ended June 30, 2023 to approximately $8.6 million for the six months ended June 30, 2024.
Recently issued accounting pronouncements
A list of recent relevant accounting pronouncements is included in Note 2 “Summary of Principal Accounting Policies” of our Unaudited Condensed Consolidated Financial Statements.
B. Liquidity and Capital Resources
Substantially all of our operations are conducted in China and all of our revenue, expenses, and cash are denominated in RMB. RMB is subject to the exchange control regulation in China, and, as a result, we may have difficulty distributing any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into U.S. dollars. As of June 30, 2024, cash, cash equivalents and restricted cash of approximately $2.7 million were held by the Company and its subsidiary in mainland PRC.
The Cayman holding company is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiary in China. As a result, our ability to pay dividends depends upon dividends paid by our subsidiary. Our subsidiaries in China are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, our subsidiary is required to set aside at least 10% of its after-tax profits each year based on PRC accounting standards, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. The statutory reserve funds are not distributable as cash dividends. Remittance of dividends by our subsidiary out of China is subject to examination by the banks designated by SAFE. Our subsidiary has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meet the requirements for statutory reserve funds. In addition, we would need to accrue and pay withholding taxes if we were to distribute funds from our subsidiary in China to us. We do not intend to repatriate such funds in the foreseeable future, as we plan to use existing cash balance in PRC for general corporate purposes.
For the six months ended June 30, 2024, we had a net loss of approximately $11.2 million and negative operation cash flow of approximately $1.1 million. We have historically funded our working capital needs primarily from public offering, operations, bank loans, advance payments from customers and shareholders. The working capital requirements are affected by the efficiency of operations, the numerical volume and dollar value of revenue contracts, the progress or execution on customer contracts, and the timing of accounts receivable collections.
In assessing its liquidity, we monitor and analyzes its cash on hand, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. As of June 30, 2024, we had cash and cash equivalents of approximately $1.5 million.
On November 24, 2023, the Group entered into purchase agreements with twelve investors. The investors agreed to purchase an aggregate of $40,000,000 of the Group’s Class A ordinary shares at a share price of $0.3 (split-adjusted $6.0) per share. The Group issued 130,463,140 (split-adjusted 6,523,157) Class A ordinary shares on November 24, 2023.
On May 16, 2024, we entered into a standby equity purchase agreement (the “SEPA”) with YA II PN, LTD. (“YA”), pursuant to which YA purchased convertible promissory notes (the “Notes”) in the principal amount of $8,000,000 (the “Principal”), which shall be convertible into the Company’s ordinary shares, with par value US$0.40 per share (the “Offering”), for gross proceeds of approximately $7,425,000. The Offering will be conducted in four closings. The first closing consists of offer and sale of a Note in the principal amount of $4,756,986. The first closing occurred on May 16, 2024. The second closing consists of offer and sale of a Note in the principal amount of $1,500,000. The second closing occurred on June 17, 2024.
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We believe that our cash on hand and financing cash flows will be sufficient to fund our operations over at least the next 12 months from the date of this report. However, we may need additional cash resources in the future if the Company experiences changed business conditions or other developments, and we may also need additional cash resources in the future if we wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed our amounts of cash on hand, we may seek to issue debt or equity securities or obtain a credit facility.
The following summarizes the key components of our cash flows for the six months ended June 30, 2024 and 2023.
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (1,095,791 | ) | $ | (7,018,648 | ) | ||
| Net cash used in provided by investing activities | (1,295,319 | ) | (2,630,858 | ) | ||||
| Net cash provided by financing activities | 930,802 | 6,792,048 | ||||||
| Effect of exchange rate change on cash, cash equivalents and restricted cash | (102,431 | ) | (427,274 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | $ | (1,562,739 | ) | $ | (3,284,732 | ) | ||
Operating Activities
Net cash used in operating activities was approximately $1.1 million for the six months ended June 30, 2024. Cash used in operating activities for the six months ended June 30, 2024 mainly consisted of approximately $11.2 million of net loss, adjustment of approximately $10.0 million non-cash items, an increase of approximately $0.4 million in accounts receivable and a decrease of approximately $0.5 million in deferred revenue, offset by an increase of approximately $1.1 million in accrued expenses and other current liabilities.
Net cash used in operating activities was approximately $7.0 million for the six months ended June 30, 2023. Cash used in operating activities for the six months ended June 30, 2023 mainly consisted of approximately $57.6 million of net loss, adjustment of approximately $52.3 million non-cash items, a decrease of approximately $0.6 million in accrued expenses and other current liabilities, an increase of approximately $0.5 million in accounts receivable, a decrease of approximately $0.5 million in accounts payable and an increase of approximately $0.5 million in prepayments, deposits and other assets.
Investing Activities
Net cash used in investing activities was approximately $1.3 million for the six months ended June 30, 2024. Cash used in investing activities for the six months ended June 30, 2024 consisted of approximately $1.0 million spending on purchases of intangible assets and property and equipment, loans to related party of approximately $0.2 million.
Net cash used in investing activities was approximately $2.6 million for the six months ended June 30, 2023. Cash used in investing activities for the six months ended June 30, 2023 consisted of approximately $2.2 million net loans to third parties and approximately $0.5 million purchase of intangible assets and property and equipment.
Financing Activities
Net cash provided by financing activities was approximately $0.9 million for the six months ended June 30, 2024. Net cash provided by financing activities for the six months ended June 30, 2024 mainly consisted of approximately $2.1 million from bank loan, net proceeds of approximately $1.4 million from convertible notes and proceeds of approximately $0.6 million from private placements and approximately $3.2 million repayment to bank loans.
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Net cash provided by financing activities was approximately $6.8 million for the six months ended June 30, 2023. Net cash provided by financing activities for the six months ended June 30, 2023 consisted of approximately $5.5 million net proceeds from private placements, approximately $3.3 million proceeds from bank loans, offset by approximately $1.9 million repayment of bank loans and approximately $0.2 million payment to related parties.
Capital Expenditures
The Company made capital expenditures of approximately $1.0 million and $0.5 million for the six months ended June 30, 2024 and 2023, respectively. In these periods, our capital expenditures were mainly used for purchases of office equipment, furniture and payments for capitalized development cost. The Company will continue to make capital expenditures to meet the expected growth of its business.
C. Research and Development, Patents and Licenses
See “Item 4. Information on the Company — B. Business Overview — Research and Development” and “Item 4. Information on the Company — B. Business Overview — Intellectual Property” of our annual report on Form 20-F for the year ended December 31, 2023 filed with the SEC on April 30, 2024.
D. Trend Information
Save as disclosed elsewhere in this interim report, we are not aware of any trends, uncertainties, demands, commitments or events for the six months ended June 30, 2024 and for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial condition.
E. Critical Accounting Estimates
We prepare our unaudited condensed consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and assumptions in the past two years, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.
We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations.
Use of estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in our unaudited condensed consolidated financial statements include but not limited to capitalized development cost, valuation of accounts receivables, impairment of long-lived assets and goodwill, revenue recognition and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates.
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Accounts receivable, net
Accounts receivable, net, is stated at the original invoiced amount net of write-offs and allowance for credit losses. The Company estimated allowance for credit losses to reserve for potentially uncollectible receivable amounts periodically, considering factors in assessing the collectability of its accounts receivable, such as historical distribution of the age of the amounts due, payment history, creditworthiness, forward-looking factor, historical collections data of the customers, to assess the credit risk characteristics. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable are considered impaired and written-off when it is probable that all contractual payments due will not be collected after all collection efforts have been exhausted.
Intangible assets, net
Our intangible assets mainly include capitalized development costs, purchased software and acquired software from business acquisitions. The Company follows the provisions of Accounting Standards Codification (“ASC”) 985-20, “Costs of Software to be Sold, Leased, or Marketed.” ASC 985-20 provides guidance on capitalization of the costs of software developed or obtained for sold, leased, or marketed. The Company expenses all costs incurred during the preliminary project stage of its development, and capitalizes costs incurred during the application development stage. Costs incurred relating to upgrades and enhancements to the application are capitalized if it is determined that these upgrades or enhancements add additional functionality to the application. The capitalized development cost is amortized on a straight-line basis over the estimated useful life, which is generally five years. We evaluate the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Impairment for long-lived assets other than goodwill
Long-lived assets, including property, equipment, furniture and fixtures and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When these events occur, we measure impairment by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, we would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash flow amount. For the six months ended June 30, 2024 and 2023, we did not recognize any impairment for the long-lived assets.
Goodwill
Goodwill is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. Goodwill is not subject to amortization, but rather is evaluated for impairment at least annually. The Company evaluates its goodwill for impairment during the fourth quarter of its fiscal year or more frequently if indicators of potential impairment exist, in accordance with ASC 350, Intangibles - Goodwill and Other. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit (generally defined as the businesses for which financial information is available and reviewed regularly by management) with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment. For the six months ended June 30, 2024, we performed a qualitative assessment for the reporting unit. Based on the requirements of ASC 350-20, we evaluated all relevant qualitative and quantitative factors, weighed all factors in their entirety and concluded that it was not more-likely-than-not that the fair value of the reporting unit was less than its carrying amount. Therefore, no goodwill impairment was recognized for the six months ended June 30, 2024 and 2023.
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Revenue recognition
We adopted ASC Topic 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to Our customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added tax (“VAT”). To achieve that core principle, the Group applies the following steps:
Step 1: Identify the contract (s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
We derive its revenues from five sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue. and (5) others revenue. All of our contracts with customer do not contain cancelable and refund-type provisions.
(1) Revenue from application development service
Our application development service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Company is generally required to provide post-contract customer support (“PCS’) for a period from three months to three years (“PCS period”) after the customized application development services are delivered. The type of services for PCS clause is generally not specified in the contracts or as stand-ready services on when-and-if-available basis. The unspecified PCS is stand-ready service on when-and-if-available basis. It grants the customers on line and telephone access to technical support personnel during the term of the service. Specified PCS includes specified service term in the contract such as training.
Our application development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant portion (30% - 50%) of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed.
We sometimes provide a warranty for its application development service contracts. The warranty period is typically 12-36 months upon the completion of the application development service. In accordance with ASC 606-10-25-19, the Company believes the warranty provision in the contracts generally represents service-type warranty, which is a distinct performance obligation and the Company also provides the similar service on standalone basis and customers can benefit from the related service-type warranty service. For the service warranty component, the customer simultaneously receives and consumes the benefits provided by the company performance over the warranty term, therefore, the service warranty is satisfied over time. The revenue allocated to the service warranty is recognized over the warranty period.
We assess that application development service, PCS or specific service and service-type warranty service, if applicable, are distinct performance obligations in the application development service contracts. We provide these services on standalone basis and customers are able to benefit from each of the service on its own. In addition, the timing of delivery of these performance obligations can be separately identifiable in the contracts. The transaction price is allocated to these identified performance obligations based on the relative standalone selling prices. The transaction price allocated to PCS or unspecific service and service-type warranty, if applicable, on a straight-line method over the contractual period. Revenue allocated to specified PCS is recognized as the related services are rendered. The transaction price allocated to application development service is recognized over time as our performance creates or enhances the project controlled by the customer and the control is transferred continuously to our customers. We use an input method based on cost incurred as the Company believes that this method most accurately reflects our progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the transaction price allocated to application development service is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.
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Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Company to make estimates of revenues and costs to complete the construction. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. Our estimates are based upon the professional knowledge and experience of our engineers and project managers to assess the contract’s schedule, performance, technical matters. We have adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for application development services include but not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values.
In certain application development service arrangements, the Company sells and delivers IT equipment on standalone basis prior to the delivery of the services. In these cases, the Company controls the IT equipment before they are transferred to the customer. We have the right to direct the suppliers and control the goods or assets transferred to its customers. Thus, the Company considers it should recognize revenue as a principal in the gross amount of consideration to which it is entitled in exchange for the IT equipment delivered. We assesse the sale of equipment is separately identifiable from other promises in the contract and it is distinct performance obligation within the context of the contract. Accordingly, the revenue from the related IT equipment based on its relative standalone selling price is recognized upon customer acceptance after delivery.
(2) Revenue from consulting and technical support services
Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to customers. Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation. The revenue from consulting and technical support services is recognized over the contract term on a straight-line basis as customers receive and consume benefits of such services.
(3) Revenue from subscription services
Revenue from subscription services is comprised of subscription fees from customers accessing our software-as-a-service applications for a subscribed period. Our monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription arrangements are considered service contracts because customers do not have the right to take possession of the software and can only benefit from the software when provided the right to access the software. Accordingly, the subscription services contracts typically include a single performance obligation. The revenue from subscription services is recognized over the contract term on a straight-line basis or based on the actual usage as customers receive and consume benefits of such services.
(4) Trading revenue
We started trading business for the year ended December 31, 2021 and recognized revenue at a point in time when control of such products transfers to the customer, which generally occurs upon shipment or delivery depending on the terms of the contracts with the customer. Product sale contracts typically include a single performance obligation and there are no rights of return. The transaction price is based on the fixed contractual price with the customer. Billings to the customer for the sale of products occur at the time the products are transferred to the customer.
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(5) Others revenue
In April 2023, the Company started regional authorization membership program to engage independent merchant to assist in developing specified geographical regions. The program grants non-exclusive geographical territory business development to the authorized distributors within that defined territory. Our services under regional cooperation agreements include marketing support to advertise as well as utilization of our trademark and copyrights for business promotion purpose. The term of cooperation agreements is typically one to two years. We charge a fixed amount authorization fee which is non-refundable and to be paid upon execution of an authorization agreement. For all our cooperation agreements, the amount of fee is fixed or determinable and no right of return provision indicated in the agreement. Since the Company provides no financing to authorized distributors and offers no guarantees on their behalf, the services provided by the Company are considered to represent a single performance obligation. The agreement price is fully allocated to the single performance obligation. The total authorization fees are recognized ratably on a straight-line basis over the term of the cooperation agreements. Other revenues accounted for 2.7% of our revenue for the six months ended June 30, 2024.
Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. We report revenues net of value added tax (“VAT”). Our subsidiaries in PRC are subject to a 3% to 13% value added tax (“VAT”) and related surcharges on the revenues earned from providing services and products.
Practical Expedient and Exemptions
We do not disclose the value of unsatisfied performance obligations within one year by applying the right to invoice practical expedient provided by ASC 606-10-55-18.
Contract balance
The accounts receivable includes both unbilled accounts receivable and billed accounts receivable. We record unbilled accounts receivable for revenue that has been recognized in advance of billing the customer, which is common for application development service contracts. The unbilled accounts receivable represents our right to consideration in exchange for the service that the Company has performed to the customer before payment is due and the unbilled account receivable will be reclassified into billed accounts receivable when the Company has the right to invoice. Contract liabilities are presented as deferred revenue on the consolidated balance sheet. Contract liabilities relate to payments received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the completion of performance obligations. As of June 30, 2024 and December 31,2023 the balance of deferred revenue amounted to approximately $2.0 million and $2.2 million, respectively.
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended June 30, 2024 and 2023. All of the tax returns of our subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing.
14
Document And Entity Information |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Document Information Line Items | |
| Entity Registrant Name | X3 HOLDINGS CO., LTD. |
| Document Type | 6-K |
| Current Fiscal Year End Date | --12-31 |
| Amendment Flag | false |
| Entity Central Index Key | 0001754323 |
| Document Period End Date | Jun. 30, 2024 |
| Document Fiscal Year Focus | 2024 |
| Document Fiscal Period Focus | Q2 |
| Entity File Number | 001-38851 |
Unaudited Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares |
Jun. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Class A Common Shares | ||||
| Common shares, par value (in Dollars per share) | [1] | $ 8 | $ 8 | |
| Common shares, shares authorized | [1] | 4,980,000,000 | 4,980,000,000 | |
| Common shares, shares issued | [1] | 13,757,773 | 12,973,209 | |
| Common shares, shares outstanding | [1] | 13,757,773 | 12,973,209 | |
| Class B Common Shares | ||||
| Common shares, par value (in Dollars per share) | [1] | $ 8 | $ 8 | |
| Common shares, shares authorized | [1] | 20,000,000 | 20,000,000 | |
| Common shares, shares issued | [1] | 12,195 | 12,195 | |
| Common shares, shares outstanding | [1] | 12,195 | 12,195 | |
| ||||
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) |
6 Months Ended | |||
|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|||
| REVENUES: | ||||
| Total revenues | $ 4,994,044 | $ 6,584,729 | ||
| COST OF REVENUES | ||||
| Total cost of revenues | 2,773,304 | 4,739,749 | ||
| GROSS PROFIT | 2,220,740 | 1,844,980 | ||
| OPERATING EXPENSES | ||||
| Sales and marketing | 548,885 | 698,587 | ||
| General and administrative | 3,773,296 | 8,999,287 | ||
| Provision for credit losses | 3,773,492 | 483,137 | ||
| Research and development | 2,156,721 | 2,516,986 | ||
| Share based compensation | 3,654,999 | 3,576,470 | ||
| Total operating expenses | 13,907,393 | 16,274,467 | ||
| OPERATING LOSS | (11,686,653) | (14,429,487) | ||
| OTHER INCOME (EXPENSE) | ||||
| Loss from deregistering of a subsidiary | (113,361) | |||
| Gain from equity investment | 70,947 | |||
| Gain from fair value change in equity investment | 2,402,943 | |||
| Change in fair value of convertible debt | 1,048,271 | (530,501) | ||
| Fair value loss on financial instruments | (45,063,404) | |||
| Other expense | (585,759) | (85,537) | ||
| Total other income (expense) | 349,151 | (43,205,552) | ||
| LOSS BEFORE INCOME TAXES | (11,337,502) | (57,635,039) | ||
| INCOME TAX BENEFIT | (144,951) | (74,856) | ||
| NET LOSS | (11,192,551) | (57,560,183) | ||
| Less: loss attributable to non-controlling interests | (705,479) | (97,230) | ||
| NET LOSS ATTRIBUTABLE TO X3 HOLDINGS CO., LTD | (10,487,072) | (57,462,953) | ||
| OTHER COMPREHENSIVE LOSS | ||||
| Foreign currency translation adjustment | (1,098,206) | (2,674,701) | ||
| COMPREHENSIVE LOSS | (12,290,757) | (60,234,884) | ||
| Less: comprehensive loss attributable to non-controlling interest | (648,203) | (85,268) | ||
| COMPREHENSIVE LOSS ATTRIBUTABLE TO X3 HOLDINGS CO., LTD | $ (11,642,554) | $ (60,149,616) | ||
| WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES* | ||||
| Basic (in Shares) | [1] | 13,140,537 | 145,057 | |
| Diluted (in Shares) | [1] | 13,140,537 | 145,057 | |
| LOSS PER SHARE | ||||
| Basic (in Dollars per share) | $ (0.8) | $ (396.14) | ||
| Diluted (in Dollars per share) | $ (0.8) | $ (396.14) | ||
| Application development services | ||||
| REVENUES: | ||||
| Total revenues | $ 884,538 | $ 2,179,167 | ||
| Consulting and technical support services | ||||
| REVENUES: | ||||
| Total revenues | 2,383,000 | 1,477,740 | ||
| Subscription services | ||||
| REVENUES: | ||||
| Total revenues | 215,355 | 294,528 | ||
| Trading revenue | ||||
| REVENUES: | ||||
| Total revenues | 1,375,319 | 2,605,970 | ||
| Others revenue | ||||
| REVENUES: | ||||
| Total revenues | 135,832 | 27,324 | ||
| Cost of application development services | ||||
| COST OF REVENUES | ||||
| Total cost of revenues | 301,601 | 1,497,466 | ||
| Cost of consulting and technical support services | ||||
| COST OF REVENUES | ||||
| Total cost of revenues | 1,019,261 | 607,587 | ||
| Cost of subscription services | ||||
| COST OF REVENUES | ||||
| Total cost of revenues | 27,749 | 37,293 | ||
| Cost of trading revenue | ||||
| COST OF REVENUES | ||||
| Total cost of revenues | 1,371,067 | 2,559,490 | ||
| Cost of others revenue | ||||
| COST OF REVENUES | ||||
| Total cost of revenues | $ 53,626 | $ 37,913 | ||
| ||||
Unaudited Condensed Consolidated Statements of Changes in Equity - USD ($) |
Ordinary shares
Class A
|
Ordinary shares
Class B
|
Additional Paid-in Capital |
Subscription Receivable |
Accumulated Deficit |
Non- controlling Interest |
Accumulated Other Comprehensive Loss |
Total |
||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2022 | $ 474,999 | [1] | $ 164,753,623 | $ (59,081,432) | $ (263,507) | $ (3,333,541) | $ 102,550,142 | |||||
| Balance (in Shares) at Dec. 31, 2022 | 59,375 | [1] | ||||||||||
| Conversion of convertible notes | $ 44,751 | [1] | 3,083,702 | 3,128,453 | ||||||||
| Conversion of convertible notes (in Shares) | 5,594 | [1] | ||||||||||
| Issuance shares for investments | $ 652,247 | [1] | 36,066,490 | 36,718,737 | ||||||||
| Issuance shares for investments (in Shares) | 81,531 | [1] | ||||||||||
| Issuance shares as prepayment for potential acquisition | $ 279,320 | [1] | 15,626,866 | 15,906,186 | ||||||||
| Issuance shares as prepayment for potential acquisition (in Shares) | 34,915 | [1] | ||||||||||
| Issuance of shares for private placement | $ 97,445 | [1] | 5,937,864 | (500,000) | 5,535,309 | |||||||
| Issuance of shares for private placement (in Shares) | 12,181 | [1] | ||||||||||
| Issuance of shares for services | $ 32,836 | [1] | 3,543,634 | 3,576,470 | ||||||||
| Issuance of shares for services (in Shares) | 4,105 | [1] | ||||||||||
| Split shares | $ (88) | [1] | (2,556) | (2,644) | ||||||||
| Split shares (in Shares) | (11) | [1] | ||||||||||
| Capital contribution by non-controlling shareholder | 117,583 | 117,583 | ||||||||||
| Net loss for the year | (57,462,953) | (97,230) | (57,560,183) | |||||||||
| Non-controlling interests recognized from step acquisitions | 23,946,670 | 23,946,670 | ||||||||||
| Foreign currency translation adjustment | 11,962 | (2,686,663) | (2,674,701) | |||||||||
| Balance at Jun. 30, 2023 | $ 1,581,510 | [1] | 229,009,623 | (500,000) | (116,544,385) | 23,715,478 | (6,020,204) | 131,242,022 | ||||
| Balance (in Shares) at Jun. 30, 2023 | 197,690 | [1] | ||||||||||
| Balance at Dec. 31, 2023 | $ 103,785,668 | [1] | $ 97,561 | [1] | 243,197,192 | (40,500,000) | (168,679,873) | 11,182,715 | (5,062,516) | 144,020,747 | ||
| Balance (in Shares) at Dec. 31, 2023 | [1] | 12,973,209 | 12,195 | |||||||||
| Issuance of shares for private placement | $ 46,602 | [1] | 55,037 | 500,000 | 601,639 | |||||||
| Issuance of shares for private placement (in Shares) | 5,825 | [1] | ||||||||||
| Stock dividend | $ 6,229,910 | [1] | 4,642,840 | (10,872,750) | ||||||||
| Stock dividend (in Shares) | 778,739 | [1] | ||||||||||
| Issuance of shares for services | 3,654,999 | 3,654,999 | ||||||||||
| Deregister a subsidiary | 113,361 | 113,361 | ||||||||||
| Net loss for the year | (10,487,072) | (705,479) | (11,192,551) | |||||||||
| Foreign currency translation adjustment | 57,276 | (1,155,482) | (1,098,206) | |||||||||
| Balance at Jun. 30, 2024 | $ 110,062,180 | [1] | $ 97,561 | [1] | $ 251,550,068 | $ (40,000,000) | $ (190,039,695) | $ 10,647,873 | $ (6,217,998) | $ 136,099,989 | ||
| Balance (in Shares) at Jun. 30, 2024 | [1] | 13,757,773 | 12,195 | |||||||||
| ||||||||||||
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net loss | $ (11,192,551) | $ (57,560,183) |
| Adjustments to reconcile net loss from operations to net cash used in operating activities: | ||
| Depreciation and amortization | 2,928,124 | 4,970,649 |
| Provision for doubtful accounts | 3,773,492 | 483,137 |
| Share based compensation | 3,654,999 | 3,576,470 |
| Loss from disposal of property and equipment | 191 | |
| Deferred tax benefit | (144,541) | (77,651) |
| Change in fair value of convertible debt | (1,048,271) | 530,501 |
| Gain from fair value change in equity investment | (2,402,943) | |
| Fair value loss on financial instruments | 45,063,404 | |
| Settlement loss on disposition of assets | 318,129 | |
| Gain from long term investment | (70,947) | |
| Loss from deregistering of a subsidiary | 113,361 | |
| Accrued interest of convertible debt | 192,471 | 157,607 |
| Right of use assets amortization | 185,657 | 53,706 |
| Changes in assets and liabilities: | ||
| Notes receivable | 27,720 | 12,990 |
| Accounts receivable | (357,380) | (542,166) |
| Prepayments, deposits and other assets | 25,289 | (468,349) |
| Accounts payable | 8,762 | (473,053) |
| Accounts payable-related party | ||
| Accrued expenses and other current liabilities | 1,110,024 | (612,350) |
| Taxes payable | (7,406) | 7,206 |
| Deferred revenue | (519,449) | 182,218 |
| Customer deposits | 193,925 | |
| Lease liabilities | (164,221) | (43,010) |
| NET CASH USED IN OPERATING ACTIVITIES | (1,095,791) | (7,018,648) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Loans to third parties | (94,494) | (2,219,444) |
| Purchases of property and equipment | (605,746) | (20,207) |
| Purchases of intangible assets | (396,847) | (450,594) |
| Proceeds from disposal of property and equipment | 61 | |
| Loans to related parties | (245,472) | |
| Cash received from acquisition | 47,240 | 59,326 |
| NET CASH USED IN INVESTING ACTIVITIES | (1,295,319) | (2,630,858) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from bank loans | 2,079,002 | 3,319,718 |
| Repayments of bank loans | (3,187,803) | (1,876,362) |
| Proceeds from private placement and market offering | 601,639 | 5,535,309 |
| Split shares | (2,644) | |
| Proceeds from issuance of convertible notes | 1,419,589 | |
| Loan from (repayment to) third party | 10,193 | |
| Proceeds from (payments to) related parties | 8,182 | (183,973) |
| NET CASH PROVIDE BY FINANCING ACTIVITIES | 930,802 | 6,792,048 |
| EFFECT OF EXCHANGE RATE CHANGES | (102,431) | (427,274) |
| NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (1,562,739) | (3,284,732) |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH - beginning of period | 4,715,500 | 9,380,322 |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH - end of period | 3,152,761 | 6,095,590 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
| Cash paid for interest | 152,140 | 63,806 |
| Cash (refunded) paid for income taxes | (271) | 10,810 |
| NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES | ||
| Right of use assets obtained in exchange of lease liabilities | 293,269 | 226,814 |
| Conversion of convertible notes | 3,128,453 | |
| Issuance shares as prepayment for potential acquisition | 15,906,186 | |
| Issuance shares for acquisitions | 36,718,737 | |
| Non-controlling interests recognized from step acquisitions | 23,946,670 | |
| Prepayments, deposits and other assets transferred from loan receivable | 59,761,223 | |
| Prepayments, deposits and other assets as consideration for acquisition | $ 13,854,016 | |
Nature of Business and Organization |
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| Nature of Business and Organization [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nature of Business and Organization | Note 1 — Nature of business and organization
X3 Holdings Co., Ltd. (“X3” or the “Company”), formerly known as Powerbridge Technologies Co., Ltd. is a company that was established under the laws of the Cayman Islands on July 27, 2018 as a holding company. The Group, through its subsidiaries (collectively the “Group”), is a provider of software application and technology services to corporate and government customers engaged in global trade. Mr. Stewart Lor, the Group’s Chairman of the Board and Chief Executive Officer (“CEO”) is the ultimate Controlling Shareholders of the Group.
Effective January 30, 2024, the Group has undergone a transformation, changing its corporate name from Powerbridge Technologies Co., Ltd. to X3 Holdings Co., Ltd. The Nasdaq stock symbol has also transitioned from PBTS to XTKG. This change reflects the Group’s evolving global expansion strategy and its commitment to broader technological and business horizons.
As of June 30, 2024, the details of the Group’s principal subsidiaries are as follows:
|
Summary of Significant Accounting Policies |
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| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of significant accounting policies | Note 2 — Summary of significant accounting policies
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”).
In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in the Group’s annual financial statements for the year ended December 31, 2023 filed with the SEC on April 30, 2024.
Principles of consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Group and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Subsidiaries are those entities in which the Group, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
Non-controlling interest represents the portion of the net assets of a subsidiary attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company.
Liquidity
As of June 30, 2024, the Group incurred a net loss of approximately $11.2 million and had negative operation cash flow of approximately $1.1 million. The Group has historically funded its working capital needs primarily from public offering, operations, bank loans, advance payments from customers and shareholders. The working capital requirements are affected by the efficiency of operations, the numerical volume and dollar value of revenue contracts, the progress or execution on customer contracts, and the timing of accounts receivable collections.
In assessing its liquidity, the Group monitors and analyzes its cash on hand, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. As of June 30, 2024, the Group had cash and cash equivalents of approximately $1.5 million.
On November 24, 2023, the Group entered into purchase agreements with twelve investors. The investors agreed to purchase an aggregate of $40,000,000 of the Group’s Class A ordinary shares at a share price of $0.3 (split-adjusted $6.0) per share. The Group issued 130,463,140 (split-adjusted 6,523,157) Class A ordinary shares on November 24, 2023.
On May 16, 2024, we entered into a standby equity purchase agreement (the “SEPA”) with YA II PN, LTD. (“YA”), pursuant to which YA purchases convertible promissory notes (the “Notes”) in the principal amount of $8,000,000 (the “Principal”), which shall be convertible into the Company’s ordinary shares, par value US$0.40 per share (the “Offering”), for gross proceeds of approximately $7,425,000. The Offering will be conducted in four closings. The first closing consists of offer and sale of a Note in the principal amount of $4,756,986. The first closing occurred on May 16, 2024. The second closing consists of offer and sale of a Note in the principal amount of $1,500,000. The second closing occurred on June 17, 2024.
The Group believes that its cash on hand and financing cash flows will be sufficient to fund its operations over at least the next 12 months from the date of this report. However, the Group may need additional cash resources in the future if the Group experiences changed business conditions or other developments, and may also need additional cash resources in the future if the Group wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Group’s amounts of cash on hand, the Group may seek to issue debt or equity securities or obtain a credit facility.
Use of estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Group’s unaudited condensed consolidated financial statements include but not limited to the useful lives of property and equipment and capitalized development cost, impairment of long-lived assets, valuation of accounts receivables, valuation of convertible notes, loans to third parties, revenue recognition and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates.
Fair value measurement
ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Unless otherwise disclosed, the fair value of the Group’s financial instruments including cash and cash equivalents, restricted cash, notes and accounts receivable, due from related parties, deposits and other current assets, short-term bank loans, accounts payable, deferred revenue, accrued expenses and other current liabilities due to related party, current operating lease liabilities and taxes payable approximates their recorded values due to their short-term maturities. The fair value of the long-term prepayment, deposits and other assets approximate their carrying amounts because the deposits were paid in cash.
Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis
The following tables represent the fair value hierarchy of the Group’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:
Streeterville Note
The Group elected the fair value option to account for Streeterville Note (Refer to Note 10 for additional information). The Group engaged an independent valuation firm to perform the valuation. The fair value of the Streeterville Note was calculated using the binomial tree model. The Streeterville Note was classified as level 3 instruments as the valuation was determined based on unobservable inputs which was supported by little or no market activity and reflect the Group’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of the Streeterville Note included time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion.
As the inputs used in developing the fair value for level 3 instruments are unobservable, and require significant management estimate, a change in these inputs could result in a significant change in the fair value measurement.
The following is a reconciliation of the beginning and ending balances for the Streeterville Note measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of June 30, 2024 and December 31, 2023:
Accounts receivable, net
Accounts receivable represents the amounts that the Group has an unconditional right to consideration and is recorded net of allowance for credit losses.
In 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Group has adopted this ASC Topic 326 and several associated ASUs on January 1, 2023 using a modified retrospective approach. The adoption has no material impact to the Group’s consolidated financial statements. The Group estimated allowance for credit losses to reserve for potentially uncollectible receivable amounts periodically, considering factors in assessing the collectability of its accounts receivable, such as historical distribution of the age of the amounts due, payment history, creditworthiness, forward-looking factor, historical collections data of the customers, to assess the credit risk characteristics. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable are considered impaired and written-off when it is probable that all contractual payments due will not be collected after all collection efforts have been exhausted.
Impairment for long-lived assets other than goodwill
Long-lived assets, including property, equipment, furniture and fixtures and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, the Group would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash flow amount. For the six months ended June 30, 2024 and 2023 the Group did not recognize any impairment on the long-lived assets.
Business combinations
The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of the cost of the acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings.
The determination and allocation of fair values to the identifiable net assets acquired, liabilities assumed and noncontrolling interest is based on various assumptions and valuation methodologies requiring considerable judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the acquiree’s current business model and industry comparisons. Although the Group believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.
Goodwill
Goodwill is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. Goodwill is not subject to amortization, but rather is evaluated for impairment at least annually. The Group evaluates its goodwill for impairment during the fourth quarter of its fiscal year or more frequently if indicators of potential impairment exist, in accordance with ASC 350, Intangibles - Goodwill and Other. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit (generally defined as the businesses for which financial information is available and reviewed regularly by management) with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment.
In the course of evaluating the potential impairment of goodwill, the Group may perform either a qualitative or a quantitative assessment. The Group’s qualitative assessment of potential impairment may result in the determination that a quantitative impairment analysis is not necessary. Under this elective process, the Group assesses qualitative factors to determine whether the existence of events or circumstances leads the Group to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events and circumstances, the Group determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing a quantitative analysis is not required. However, if the Group concludes otherwise, then the Group performs a quantitative impairment analysis.
If the Group either chooses not to perform a qualitative assessment, or the Group chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then the Group performs a quantitative evaluation. In the case of a quantitative assessment, the Group estimates the fair value of the reporting unit with which the goodwill that is subject to the quantitative analysis is associated and compares it to the carrying value. If the estimated fair value of a reporting unit is less than its carrying value, the excess is recorded as a goodwill impairment, which is limited to the total amount of goodwill allocated to that reporting unit.
For the six months ended June 30, 2024, the Group performed a qualitative assessment for the reporting unit. Based on the requirements of ASC 350-20, the Group evaluated all relevant qualitative and quantitative factors, weighed all factors in their entirety and concluded that it was not more-likely-than-not that the fair value of the reporting unit was less than its carrying amount. Therefore, no goodwill impairment was recognized for the six months ended June 30, 2024 and 2023.
Revenue recognition
The Group adopted ASC Topic 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added tax (“VAT”). To achieve that core principle, the Group applies the following steps:
Step 1: Identify the contract (s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The Group derives its revenues from four sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue and (5) others revenue. All of the Group’s contracts with customer do not contain cancelable and refund-type provisions.
(1) Revenue from application development service
The Group’s application development service contracts are primarily on a fixed-price basis, which require the Group to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Group is generally required to provide post-contract customer support (“PCS’) for a period from three months to three years (“PCS period”) after the customized application development services are delivered. The type of services for PCS clause is generally not specified in the contracts or as stand-ready services on when-and-if-available basis. The unspecified PCS is stand-ready service on when-and-if-available basis. It grants the customers on line and telephone access to technical support personnel during the term of the service. Specified PCS includes specified service term in the contract such as training.
The Group’s application development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant portion (30% - 50%) of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Group has enforceable right on payments for the work performed.
The Group sometimes provides a warranty for its application development service contracts. The warranty period is typically 12-36 months upon the completion of the application development service. In accordance with ASC 606-10-25-19, the Group believes the warranty provision in the contracts generally represents service-type warranty, which is a distinct performance obligation and the Group also provides the similar service on standalone basis and customers can benefit from the related service-type warranty service. For the service warranty component, the customer simultaneously receives and consumes the benefits provided by the Group performance over the warranty term, therefore, the service warranty is satisfied over time. The revenue allocated to the service warranty is recognized over the warranty period.
The Group assesses that application development service, PCS or specific service and service-type warranty, if applicable, are distinct performance obligations in the application development service contracts. The Group provides these services on standalone basis and customers are able to benefit from each of the service on its own. In addition, the timing of delivery of these performance obligations can be separately identifiable in the contracts. The transaction price is allocated to these identified performance obligations based on the relative standalone selling prices. The transaction price allocated to PCS or unspecific service and service-type warranty, if applicable, on a straight-line method over the contractual period. Revenue allocated to specified PCS is recognized as the related services are rendered. The transaction price allocated to application development service is recognized over time as the Group’s performance creates or enhances the project controlled by the customer and the control is transferred continuously to our customers. The Group uses an input method based on cost incurred as the Group believes that this method most accurately reflects the Group’s progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the transaction price allocated to application development service is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations.
Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Group to make estimates of revenues and costs to complete the construction. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Group’s estimates are based upon the professional knowledge and experience of our engineers and project managers to assess the contract’s schedule, performance, technical matters. The Group has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Group recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for application development services include but not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Group has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Group entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values.
In certain application development service arrangements, the Group sells and delivers IT equipment on standalone basis prior to the delivery of the services. In these cases, the Group controls the IT equipment before they are transferred to the customer. The Group has the right to direct the suppliers and control the goods or assets transferred to its customers. Thus, the Group considers it should recognize revenue as a principal in the gross amount of consideration to which it is entitled in exchange for the IT equipment delivered. The Group assesses the sale of equipment is separately identifiable from other promises in the contract and it is distinct performance obligation within the context of the contract. Accordingly, the revenue from the related IT equipment based on its relative standalone selling price is recognized upon customer acceptance after delivery.
(2) Revenue from consulting and technical support services
Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Group to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to customers. Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation. The revenue from consulting and technical support services is recognized over the contract term on a straight-line basis as customers receive and consume benefits of such services.
(3) Revenue from subscription services
Revenue from subscription services is comprised of subscription fees from customers accessing the Group’s software-as-a-service applications for a subscribed period. The Group’s monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription arrangements are considered service contracts because customers do not have the right to take possession of the software and can only benefit from the software when provided the right to access the software. Accordingly, the subscription services contracts typically include a single performance obligation. The revenue from subscription services is recognized over the contract term on a straight-line basis or based on the actual usage as customers receive and consume benefits of such services.
(4) Trading revenue
The Group started trading business for the year ended December 31, 2021 and recognized revenue at a point in time when control of such products transfers to the customer, which generally occurs upon shipment or delivery depending on the terms of the contracts with the customer. Product sale contracts typically include a single performance obligation and there are no rights of return. The transaction price is based on the fixed contractual price with the customer. Billings to the customer for the sale of products occur at the time the products are transferred to the customer.
(5) Others revenue
In April 2023, the Group started regional authorization membership program to engage independent merchant to assist in developing specified geographical regions. The program grants non-exclusive geographical territory business development to the authorized distributors within that defined territory. The Group’s services under regional cooperation agreements include marketing support to advertise as well as utilization of the Group’s trademark and copyrights for business promotion purpose. The term of cooperation agreements is typically one to two years. The Group charges a fixed amount authorization fee which is non-refundable and to be paid upon execution of an authorization agreement. For all the Group’s cooperation agreements, the amount of fee is fixed or determinable and no right of return provision indicated in the agreement. Since the Group provides no financing to authorized distributors and offers no guarantees on their behalf, the services provided by the Group are considered to represent a single performance obligation. The agreement price is fully allocated to the single performance obligation. The total authorization fees are recognized ratably on a straight-line basis over the term of the cooperation agreements. Other revenues accounted for 2.7% of the Group’s revenue for the six months ended June 30, 2024.
Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. The Group reports revenues net of value added tax (“VAT”). The Group’s subsidiaries in PRC are subject to a 3% to 13% value added tax (“VAT”) and related surcharges on the revenues earned from providing services or products.
Practical Expedient and Exemptions
The Group does not disclose the value of unsatisfied performance obligations within one year by applying the right to invoice practical expedient provided by ASC 606-10-55-18.
Contract balance
The accounts receivable includes both unbilled accounts receivable and billed accounts receivable. The Group records unbilled accounts receivable for revenue that has been recognized in advance of billing the customer, which is common for application development service contracts. The unbilled accounts receivable represents the Group’s right to consideration in exchange for the service that the Group has performed to the customer before payment is due and the unbilled account receivable will be reclassified into billed accounts receivable when the Group has the right to invoice. Contract liabilities are presented as deferred revenue on the consolidated balance sheet. Contract liabilities relate to payments received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the completion of performance obligations. As of June 30, 2024 and December 31, 2023 the balance of deferred revenue amounted to $1,987,674 and $2,175,896, respectively.
Operating leases
The Group adopted Topic 842 on January 1, 2022 using the modified retrospective transition approach. The Group has lease contracts for factory and office space under operating leases. The Group determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at lease commencement. The Group measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Group estimates its incremental borrowing rate based on an analysis of weighted average interest rate of its own bank loans. The Group measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing lease expense when the lessor makes the underlying asset available to the Group.
For leases with lease term less than one year (short-term leases), the Group records operating lease expense in its consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred.
Income taxes
The Group accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the six months ended June 30, 2024 and 2023. All of the tax returns of the Group’s subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing.
Loss per Share
Earnings (loss) per ordinary share is calculated in accordance with ASC 260, Earnings per Share. Basic earnings (loss) per ordinary share is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (loss) per share is computed using the weighted average number of ordinary shares and potential ordinary shares outstanding during the period. Potential ordinary shares include ordinary shares issuable upon the exercise of outstanding share options by using the treasury stock method and ordinary shares issuable upon the conversion of convertible instruments using the if-converted method. Potential ordinary shares are not included in the denominator of the diluted net (loss)/earnings per share calculation when inclusion of such shares would be anti-dilutive. For the six months ended June 30, 2024 and 2023, since the Group had a loss, basic and dilutive loss per share is the same.
Share-Based compensation
The Group accounts for share-based awards to employees and nonemployees directors and consultants in accordance with the provisions of ASC 718, Compensation—Stock Compensation, and under the recently issued guidance following FASB’s pronouncement, ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Under ASC 718, and applicable updates adopted, for employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite service period for the entire award. For the non-employee stock-based awards, the fair value of the awards to non-employees are measured every reporting period based on the value of the Group’s common stock.
Commitments and Contingencies
In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.
Segment reporting
The Group’s chief operating decision maker (“CODM”) has been identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. The Group’s long-lived assets are substantially all located in the PRC and all of the Group’s revenues are derived from the PRC. Therefore, no geographical segments are presented.
Concentrations of Risks
Assets that potentially subject the Group to significant concentration of credit risk primarily consist of cash, restricted cash, accounts receivable and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of June 30, 2024 and December 31, 2023, the aggregate amount of cash, cash equivalents and restricted cash of $2,650,752 and $4,056,150, respectively, were held at major financial institutions in PRC mainland, which the management believes are of high credit quality. On May 1, 2015, China’s new Deposit Insurance Regulation came into effect, pursuant to which banking financial institutions, such as commercial banks, established in China are required to purchase deposit insurance for deposits in RMB and in foreign currency placed with them. Such Deposit Insurance Regulation would not be effective in providing complete protection for the Group’s accounts, as its aggregate deposits are much higher than the compensation limit. However, the Group believes that the risk of failure of any of these Chinese banks is remote. Bank failure is uncommon in China and the Group believes that those Chinese banks are financially sound based on public available information. The Group conducts credit evaluations of its customers and suppliers, and generally does not require collateral or other security from them.
A majority of the Group’s expense transactions are denominated in RMB and a significant portion of the Group and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Group in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
The Group’s functional currency is the RMB, and the Group’s financial statements are presented in U.S. dollars. The RMB deprecation by 2.9% in fiscal year 2023 and further deprecation by 2.4% for the six months ended June 30, 2024. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB. To the extent that the Group needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Group would receive from the conversion. Conversely, if the Group decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Group.
For the six months ended June 30, 2024, three customers accounted for 13.7%, 12.9% and 10.0% of the Group’s total revenues. For the six months ended June 30, 2023, one customer accounted for 39.4% of the Group’s total revenues. As of June 30, 2024, one customer accounted for 15.3% of the Group’s accounts receivable. As of December 31, 2023, one customer accounted for 15.9% of the Group’s accounts receivable.
For the six months ended June 30, 2024, five suppliers accounted for 15.4%, 13.4%, 11.5%, 10.9% and 10.4% of the Group’s total purchases, respectively. For the six months ended June 30, 2023, one supplier accounted for 59.3% of the Group’s total purchases, respectively. As of June 30, 2024, two suppliers accounted for 22.6% and 10.8% of the Group’s total accounts payable. As of December 31, 2023, one supplier accounted for 24.5% of the Group’s total accounts payable.
Recently issued accounting pronouncements
The Group considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (“the JOBS Act”), the Group meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures. The Group is currently assessing the potential impact of the rule on our disclosures.
In November 2023, FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures when adopted, where applicable. The Group is currently assessing the potential impact of the rule on our disclosures.
In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Group is currently evaluating the potential impact of adopting this guidance on Financial Statements.
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Group is currently evaluating the potential impact of adopting this guidance on Financial Statements.
Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the condensed consolidated financial position, statements of operations and cash flows. |
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Acquisition |
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| Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition | Note 3 — Acquisition
Hongchuangxin Acquisition
On May 1, 2024, the Group acquired 100% equity interest in Hongchuangxin from its original shareholders. The fair value of the consideration for this acquisition was $13,854,016. The consolidated operating results of Hongchuangxin for the six months ended June 30, 2023 were not significant to the Group. The objective of the acquisition is to expand the Group’s business scope.
The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, which represents the net purchase price allocation at the date of the acquisition based on a valuation report performed by an independent valuation firm engaged by the Group. The valuation report considered generally accepted valuation methodologies such as the income, market and cost approaches.
The intangible assets are mainly attributable to franchise right acquired through the acquisition, which are amortized over 10 years. |
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Accounts Receivable, Net |
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| Accounts receivable, net | Note 4 — Accounts receivable, net
Accounts receivable, net, consists of the following:
Unbilled accounts receivable included in accounts receivable above amounted to $18,908,068 and $10,030,721 as of June 30, 2024 and December 31, 2023, respectively. The unbilled accounts receivables as of June 30, 2024 are expected to be billed within one year and collected over one year. The billed accounts receivable is expected to be collected within one year.
As of November 19, 2024, approximately $3.3 million (or 11.1%) of total accounts receivable as of June 30, 2024 was collected. It represented 13.0% of billed accounts receivable balance and 7.8% of unbilled accounts receivable balance as of June 30, 2024 were subsequently collected, respectively.
Movement of allowance for credit losses is as follows:
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Prepayments, Deposits and Other Assets, Net |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Prepayments, deposits and other assets, net | Note 5 — Prepayments, deposits and other assets, net
Prepayments, deposits and other assets, net consisted of the following:
Movement of allowance for credit losses is as follows:
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Intangible Assets, Net |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible assets, net | Note 6 — Intangible assets, net
Intangible assets, net, consist of the following:
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Related Party Balances and Transactions |
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Balances and Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related party balances and transactions | Note 7 — Related party balances and transactions
The relationship of related parties
Due from related parties*
Due to related parties*
Related party transactions
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Bank Loans |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank Loans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank loans | Note 8 — Bank loans
Outstanding balance of short-term bank loans consisted of the following:
The movement bank loans are as follows:
For the six months ended June 30, 2024 and 2023, interest expense was $77,673 and $63,806, respectively, with the weighted average interest rate of 4.0% and 4.2%m respectively. |
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Lease |
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease | Note 9 — Lease
The Group has several operating leases for offices. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Total lease expense for the six months ended June 30, 2024 and 2023 amounted to $258,823 and $140,499, respectively.
Cash paid for amounts included in the measurement of lease liabilities amounted to $164,221 and $43,010 for the six months ended June 30, 2024 and 2023, respectively.
Supplemental balance sheet information related to operating leases was as follows:
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2024:
The following is a schedule of maturities of lease liabilities as of June 30, 2024:
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Convertible Notes |
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes | Note 10 — Convertible Notes
Streeterville note
On September 1, 2022, the Group entered into a securities purchase agreement with Streeterville Capital, LLC (“Streeterville”), pursuant to which the Group issued the Investor an unsecured promissory note on September 1, 2022 in the original principal amount of $8,640,000 (the “Streeterville Note”), convertible into Class A ordinary shares of the Group, for $8,000,000 in gross proceeds. The transaction contemplated by the Purchase Agreement closed on September 1, 2022. The Streeterville Note bears interest at a rate of 6% per annum compounding daily. All outstanding principal and accrued interest on the Streeterville Note will become due and payable twelve months after the purchase price of the Note is delivered by Purchaser to the Group (the “Purchase Price Date”). The Streeterville Note includes an original issue discount of $640,000 along with $20,000 for Streeterville’s fees, costs and other transaction expenses incurred in connection with the purchase and sale of the Note. The Group may prepay all or a portion of the Streeterville Note at any time by paying 120% of the outstanding balance elected for pre-payment.
The Group elected the fair value option to account for the Streeterville note on instrument-by-instrument basis and engaged an independent valuation firm to perform the valuation. The fair value of the Streeterville note is calculated using the binomial tree model. The convertible notes are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Group’s own assumptions in measuring fair value. Significant inputs used in developing the fair value of the convertible notes include time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion.
For the year ended December 31, 2022, Streeterville delivered conversion notice in an aggregate of principle of $1,250,310 to the Group and the Group issued an aggregate of 58,257 (split-adjusted 2,913) Class A ordinary shares of the Group to Streeterville. For the year ended December 31, 2023, the Group repaid principal and interest in cash of $1,250,000 and issued in aggregated of 111,875 (split-adjusted 5,594) Class A ordinary shares to Streeterville upon conversions. As of December 31, 2023, the fair value of outstanding Streeterville note was 5,020,633.
For the six months ended June 30, 2024, the Group fully repaid the remaining principal and interest in aggerate of $4,059,983 in cash payments to Streeterville. As of June 30, 2024, the fair value of outstanding Streeterville note was . For the six months ended June 30, 2024 and 2023, the Group recognized a gain of change in fair value of convertible note of $1,048,271 and a loss of change in fair value of convertible note of $530,501, respectively. Interest expense recognized for these convertible notes for the six months ended June 30, 2024 and 2023, were $87,621 and $157,607, respectively
YA 2024 Notes
On May 16, 2024, the Group entered into entered into a standby equity purchase agreement with YA II PN, LTD (“YA”) Pursuant to the Purchase Agreement, YA purchases convertible notes in the principal amount of $8,000,000 (the “YA 2024 Notes”) and up to $30,000,000 (the “Commitment Amount”). The offering will be conducted in four tranches and each closing has conditions specified in the agreement. The principal will become due and payable before maturity date defined in specific agreement and bears an annual interest rate of 8% unless earlier converted or redeemed by the Group. At any time before the maturity date, YA may convert convertible notes at its option into Class A Ordinary Shares. The Group has the right, but not the obligation, to redeem a portion or all amounts outstanding under the convertible notes prior to the maturity date at a cash redemption price equal to the outstanding principal balance to be redeemed, plus the redemption premium, plus accrued and unpaid interest. The Group shall pay to the Investor a structuring fee in amount of $15,000 and shall pay to the Investor on the date of initial registration statement has been declared effective a commitment fee in amount equal to 1% (the “Commitment Fee”) of the Commitment Amount in cash or by issuance of ordinary shares (the “Commitment Shares”) which is equal to the Commitment Fee divided by the closing price of the ordinary shares as of the trading day immediately prior to the effective of the initial registration statement. The Group accounted for the above structuring fee and Commitment Fee as direct financing costs with the portion of $62,570 as direct financing cost to YA Notes and the remaining portion of $237,430 as deferred financing cost included in the prepayments, deposits and other assets.
On May 16, 2024, The Group closed the first tranche of the YA 2024 Notes for the principal amount of $4,756,986 with an origin issue discount (“OID”) of 7% for a maturity date at May 16, 2025. The net proceed from the first closing was $4,162,347 (after deducting OID and other issuance costs).
On June 17, 2024, The Group closed the second tranche of the YA 2024 Notes for the principal amount of $1,500,000 with an origin issue discount (“OID”) of 7% for a maturity date at May 16, 2025. The net proceed from the second tranche was $1,317,225 (after deducting OID and other issuance costs).
The Group adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) by using a modified retrospective transition method. In accordance with ASU 2020-06, since the YA 2024 Notes were not issued at a substantial premium, all of the proceeds received from the issuance are recorded as a liability on the unaudited condensed consolidated balance sheet in accordance with ASC 470-20. That is, no portion of the proceeds from issuing are attributed to the conversion option at inception. The difference between the principal amount and net proceeds from the issuance is considered debt discount and is amortized at their respective effective interest rates to accrete the carrying value to its face value on the respective put dates. During six months ended June 30, 2024, the effective interest rates of the first and second tranche of the YA 2024 Notes were 17.6% and 24.3%, respectively. The aggregated effective interest expense amounted to $104,850 for the six months ended June 30, 2024. |
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Taxes |
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Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Taxes | Note 11 — Taxes
Income tax
Cayman Islands
X3 was incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of Cayman Islands. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Hong Kong
Powerbridge HK is established in Hong Kong. Under the Hong Kong tax laws, Powerbridge HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.
PRC
Powerbridge Zhuhai is governed by the Enterprise Income Tax (“EIT”) laws of PRC. Under EIT laws of PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. Powerbridge Zhuhai, the Group’s operating subsidiary in PRC, has been approved as HNTEs in 2014 and successfully renewed it in 2023, which reduced its statutory income tax rate to 15%. The rest of the Group’s subsidiaries in PRC are subject to income tax rate of 25%.
The impact of the preferred tax treatment noted above decreased income taxes by $209,134 and $223,556 for the six months ended June 30, 2024 and 2023, respectively. The benefit of the preferred tax treatment on net income per share (basic and diluted) was $0.00 (split-adjusted 0.02) and $0.08 (split-adjusted 1.54) for the six months ended June 30, 2024 and 2023, respectively.
Significant components of the provision for income taxes are as follows:
The following table reconciles China statutory rates to the Group’s effective tax rate:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows:
As of June 30, 2024, the Group has approximately $13.8 million net operating loss (“NOL”) carryforwards with expirations by 2029. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the cumulative earnings and projected future taxable income in making this assessment. Recovery of substantially all of the group’s deferred tax assets is dependent upon the generation of future income, exclusive of reversing taxable temporary differences. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are recoverable, management provided $3,021,726 and $2,932,049 valuation allowance against the deferred tax assets that the Group does not expect to realize at June 30, 2024 and December 31, 2023, respectively.
Value added tax
Enterprises who sell goods in the PRC are subject to a value added tax in accordance with PRC laws. VAT standard rates are 3% to 13% of the gross sales price. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Group’s finished products can be used to offset the VAT due on sales of the finished products and services. Powerbridge Zhuhai obtained a VAT preferential status for its technology development business, accordingly, the certain Company’s technology development business is exempted from VAT.
Tax payable
Taxes payable consists of the following:
Uncertain tax positions
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of June 30, 2024 and December 31, 2023, the Group did not have any significant unrecognized uncertain tax positions. The Group did not incur any interest and penalties related to potential underpaid income tax expenses for the six months ended June 30, 2024 and 2023. The Group also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from June 30, 2024. |
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Equity |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | Note 12 — Equity
Ordinary Shares
On May 30, 2023, the Company held an extraordinary general shareholders meeting. At the Meeting, the Company’s shareholders approved (i) a share consolidation of thirty (30) issued and unissued Class A ordinary shares with par value of $0.00166667 each in the Company’s issued and unissued share capital into one (1) share with par value of US$ 0.050 (the “Share Consolidation”) and (ii) an increase in the authorized share capital of the Company from $16,666,700 (divided in to 333,333,333 shares) to $50,000,000 (divided in to 1,000,000,000 shares), all of which will rank pari passu in all respects with all existing shares of the Company. On June 21, 2023, the Company paid cash to certain minor shareholders and cancelled 220 shares due to share consolidation reconciliation.
On September 5, 2023, the Company held its 2023 special general meeting of shareholder. At the Meeting, the Company’s shareholders approved the following among other items: (i) a share consolidation of every eight (8) issued and unissued Class A ordinary shares with par value of $0.050 each in the Company’s issued and unissued share capital be consolidated into one (1) share with par value of $0.40 (the “Share Consolidation”); (ii) an increase in the authorized share capital of the Company from $50,000,000 divided into 125,000,000 shares of a nominal or par value of $0.40 each, to $200,000,000 divided into 500,000,000 shares of a nominal or par value of $0.40 each (the “Share Capital Increase”); (iii) a dual-class share structure of Class A and Class B ordinary shares of the Company, with each Class A and Class B ordinary share ranking pari passu and having the same rights, preferences, privileges and restrictions, except that, voting as the same class, each Class B ordinary share is entitled to thirty (30) votes and each Class A ordinary is entitled one (1) vote (the “Dual-class Share Structure”); (iv) a re-designation of 2,000,000 shares of the 500,000,000 authorized shares as Class B ordinary shares and 498,000,000 shares of the 500,000,000 authorized shares as Class A ordinary shares; (v) a re-designation of the 243,903 shares (after giving effect to the Share Consolidation) held by Mr. Stewart Lor, CEO and Chairman of the Board of the Company, as Class B ordinary shares (together with item (iv), the “Share Re-designation”). On October 2, 2023, the Company paid cash to certain minor shareholders and cancelled 635 shares due to share consolidation reconciliation.
On December 1, 2023, the Company held an extraordinary general meeting. At the Meeting, the Company’s shareholders approved the following among other items: (a) the name of the Company be changed from Powerbridge Technologies Co., Ltd. to X3 Holdings Co., Ltd., and ticker symbol of the Company be changed from “PBTS” to “XTKG” (the “Name Change”). (b) the authorized share capital of the Company be increased from $200,000,000 divided into 500,000,000 shares of a nominal or par value of $0.40 each to $2,000,000,000 divided into 5,000,000,000 ordinary shares of a nominal or par value of $0.40 each by creation of an additional 4,500,000,000 ordinary shares of a nominal or par value of US$0.40 each (the “Share Capital Increase”). (c) 18,000,000 ordinary shares of the additional 4,500,000,000 authorized ordinary shares be re-designated as Class B ordinary shares and 4,482,000,000 ordinary shares of the additional 4,500,000,000 authorized ordinary shares as Class A ordinary shares (together, the “Share Re-designation”), such the authorized share capital of the Company shall be changed to “$2,000,000,000 divided into (i) 4,980,000,000 Class A ordinary shares of a par value of US$0.40 each, and (ii) 20,000,000 Class B ordinary shares of a par value of $0.40 each.”
On November 4, 2024, the Company held the annual general meeting. At the meeting, the Company’s shareholders approved the following among other items: (a) a share consolidation of every twenty (20) issued and unissued Class A ordinary shares with par value of $0.40 each in the Company’s issued and unissued share capital be consolidated into one (1) share with par value of $8; (b) the authorized share capital of the Company be increased from $2,000,000,000 divided into 250,000,000 shares of par value of $8 each, to $40,000,000,000 divided into 5,000,000,000 shares of par value of $8 each, consisting of 4,999,000,000 Class A ordinary shares of a par value of $8.0 each and 1,000,000 Class B ordinary shares of a par value of $8 each, by creation of an additional 4,750,000,000 Class A ordinary shares of a nominal or par value of $8 each; (c) 19,000,000 Class A ordinary shares of the additional 4,750,000,000 authorized Class A ordinary shares be redesignated as Class B ordinary shares, such the authorized share capital of the Company shall be changed to $40,000,000,000 divided into (i) 4,980,000,000 Class A ordinary shares of a par value of $8.00 each; and (ii) 20,000,000 Class B ordinary shares of a par value of $8.00 each.
All historical share and per share amounts in these unaudited condensed financial statements have been retroactively adjusted to reflect the share consolidation.
The Company had 275,155,450 (split-adjusted 13,757,773) and 259,464,169 (split-adjusted 12,973,209) Class A ordinary shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively. The Company had 243,902 (split-adjusted 12,195) Class B ordinary shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.
Shares issued for consulting services
During the period from January 4, 2023 to August 4, 2023, the Group issued in aggregated of 161,708 (split-adjusted 8,085) Class A ordinary shares as compensation to an advisory firm for the related investor relations advisory service. The aggregated fair value of those shares was assessed at $1,520,867 based on the stock price of contract dates.
On November 29, 2023, the Company signed a consulting agreement with an advisory firm with term of six months. The Group agreed to pay $100,000 worth restricted shares as compensation to the advisory firm for the related investor relations advisory service. Accordingly, the Group issued 84,033 (split-adjusted 4,202) restricted Class A ordinary shares to the advisory firm.
On December 8, 2023, the Company signed a consulting agreement with an advisory firm with term of six months. The Group agreed to pay $1,500,000 worth restricted shares as compensation to the advisory firm for the related investor relations advisory service, accordingly the Company issued 1,260,504 (split-adjusted 63,025) restricted Class A ordinary shares to the advisory firm.
For the six months ended June 30, 2024 and 2023, the Company recorded a consulting fee expense of $1,474,999 and $1,396,470 included in the share-based compensation expense. As of June 30, 2024 and December 31, 2023, there were unrecognized share-based compensation expense related to the ordinary shares issued for consulting services amounted to and $1,474,999, respectively.
Restricted share units (“RSUs”) issued for consulting services
On July 15, 2022, the Company signed six consulting agreements with six third-party consultants with term of three years. Pursuant to the agreements, the Company agreed to pay total of 50,000 (split-adjusted 2,500) RSUs (representing 1 ordinary shares of the Company) as compensation for the services after signing of the agreements. The Company issued 50,000 (split-adjusted 2,500) RSUs on July 22, 2022. The fair value of those shares was assessed at $13,080,000 based on the stock price of contract date.
For the six months ended June 30, 2024 and 2023, the Company recorded a consulting fee expense of $2,180,000 and $2,180,000 included in the share-based compensation expense. As of June 30, 2024 and December 31, 2023, there were unrecognized share-based compensation expense related to RSUs issued for consulting services amounted to $4,541,667 and $6,721,667.
2018 Stock option plan
On August 18, 2018 and further amended on February 10, 2019, the Board of Directors (“Board”) approved an amended the 2018 Stock Option Plan (the “2018 Plan”). The Plan provides for discretionary grants of stock options to key employees, directors and consultants of the Company. The purpose of the Plan is to attract and retain the best available personnel and to promote the success of the Company’s business. The Board authorized that the maximum aggregate number of ordinary shares reserved and available pursuant to this Plan shall be the aggregate of (i) 4,316 (split-adjusted 216) shares, and (ii) on each January 1, starting with January 1, 2019, an additional number of shares equal to the lesser of (A) 2% of the outstanding number of ordinary shares (on a fully-diluted basis) on the immediately preceding December 31, and (B) such lower number of ordinary shares as may be determined by the Committee. The Plan shall become effective on the effective date of the Company’s contemplated initial public offering is completed, which was on April 4, 2019. The grants under the Plan generally have a maximum contractual term of ten years from the date of grant. Stock option awards granted under the plan at the determination of the Board shall be effective and exercisable after the Company’ completion of IPO of its securities. The terms of individual agreements for various grants under the Plan will be determined by the Board (or its Compensation Committee) and might contain both service and performance conditions. The Company believes the options contain an explicit service condition and a performance condition. On July 2, 2020, the Board approved to amend the 2018 Plan to adjust that the maximum aggregate number of ordinary shares reserved and available pursuant to the 2018 Plan shall not at any time exceed 20% of the total number of outstanding Ordinary Shares at the time of issuance, from time to time. Such amendment was approved during shareholders’ annual meeting on July 27, 2020.
On January 20, 2023, the Board approved to register all the shares issuable under the Company’s Amended 2018 Plan in a registration statement on a Form S-8 (File No. 333-269513) representing additional 259,473 (split-adjusted 12,974) Class A ordinary shares of the Company reserved for issuance under the Amended 2018 Plan, which are in addition to the 83,211 (split-adjusted 4,161) Class A ordinary shares s registered on the Prior Registration Statement. Accordingly, the number of ordinary shares of the Company issuable upon the exercise of all outstanding options granted under the Amended 2018 Plan is 342,684 (split-adjusted 17,135) Class A ordinary shares.
On April 4, 2019, the Board approved to issue 1,250 (split-adjusted 62) stock options to an external consultant under 2018 stock option plan with exercise price of $900 (split-adjusted $18,000) per share. These options were fully vested upon grant and will expire no later than April 3, 2029. On February 18, 2021, the consultant excised 242 (split-adjusted 12) shares options on a cashless basis. On February 6, 2021, the Company issued 100 (split-adjusted 5) Class A ordinary shares to the consultant.
On May 26, 2021, the Board approved to issue 31,687 (split-adjusted 1,584) stock options to its employees under 2018 stock option plan with exercise price of $292.8 (split-adjusted $5,856) per share. 16,729 (split-adjusted 836) of these stock options were fully vested upon grant; 14,958 (split-adjusted 748) of these stock options generally have vesting periods of 1-3 years. The options will expire no later than May 26, 2026. On January 26, 2022, the Board approved to amend the exercise price from $292.8 (split-adjusted $5,856) to $81.6 (split-adjusted $1,632) per share, 24,208 (split-adjusted 1,210) of these stock options were fully vested upon grant; 7,479 (split-adjusted 374) of these stock options was vested in one year after grant. The Company recorded modification expense of $2,139,555. On May 16, 2022, the Board further approved to amend the exercise price from $81.6 (split-adjusted $1,632) to $63.6 (split-adjusted $1,272) per share. The Company recorded modification expense of $137,641. On December 20, 2022, the Board further approved to amend the exercise price from $63.6 (split-adjusted $1,272) to $20.16 (split-adjusted $403.2) per share. The Company recorded modification expense of $206,461.
The fair value of stock options was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instruments. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. Assumptions used to estimate the fair value of stock options on the grant dates are as follows:
A summary of activities of the stock options is presented as follows:
For the six months ended June 30, 2024 and 2023, total share-based compensation expenses recognized for the share options granted both were , respectively. As of June 30, 2024 and December 31, 2023, there was no unrecognized share-based compensation expenses related to the share options granted, respectively.
Private placements
On September 1, 2022, the Company entered into a securities purchase agreement with White Lion Capital LLC (“White Lion”). Pursuant to the agreement, White Lion shall purchase up to $15 million of the Company’s Class A ordinary shares at the lowest daily VWAP of the Class A ordinary shares during the Valuation Period by 97%. As of December 31, 2023, the Company issued 153,646 (split-adjusted 7,683) Class A ordinary shares and net proceeds was $4,115,706.
On September 9, 2022, the Company entered into a securities purchase agreement with YA II PN, LTD. Pursuant to the agreement, YA II PN, LTD. shall purchase up to $30 million of the Company’s Class A ordinary shares at the market price by 96%, and the company shall issue to YA II PN, LTD. 933 (split-adjusted 47) Class A ordinary shares as a commitment fee. As of December 31, 2023, the Company issued 1,544,613 (split-adjusted 77,231) Class A ordinary shares and net proceeds was $10,375,969. In 2024, the Company issued 116,507 (split-adjusted 5,825) Class A ordinary shares and net proceeds was $101,639.
On December 29, 2022, the Company entered into a securities purchase agreement with TBS Capital LP, (“TBS”). Pursuant to the agreement, TBS shall purchase up to $15 million of the Company’s Class A ordinary shares at the market price by 96%, and the company shall issue to Yorkville 933 (split-adjusted 47) Class A ordinary shares as a commitment fee. As of December 31, 2023, the Company issued 50,252 (split-adjusted 2,513) Class A ordinary shares and net proceeds was $476,563, the remaining gross balance of $500,000 was collected by March 22, 2024.
On May 17, 2023, the Company entered into a securities purchase agreement with Spring Field Fund SPC. Spring Field Fund SPC agreed to purchase an aggregate of $600,000 of Class A ordinary shares at a share price of $13.42 (split-adjusted $268.4) per share. The Group received the proceeds of $600,000 on May 18, 2023 and has yet issued the related shares by June 30,2024.
On November 24, 2023, the Company entered into purchase agreements with twelve investors. The investors agreed to purchase an aggregate of $40,000,000 of the Company’s Class A ordinary shares at a share price of $0.3 (split-adjusted $6.0) per share. The Company issued 130,463,140 (split-adjusted 6,523,157) Class A ordinary shares on November 24, 2023. The subscription receivable was $40,000,000 as of June 30, 2024 and December 31, 2023. The Company expects to receive such subscription receivable by December 31, 2024.
Conversion of convertible notes
On February 3, 2023, the Group issued an aggregate of 111,875 (split-adjusted 5,594) Class A ordinary shares of the Group to Streeterville (Note 10). The fair value of the conversion note was assessed at $3,128,453 upon conversion based on the binomial model assessed by the independent valuation firm.
Shares issued for reserve
On August 5, 2021, the Company issued 16,729 (split-adjusted 836) Class A ordinary shares held in an escrow account as reserve solely for potential stock options. On September 20, 2022, the Company issued 10,069 (split-adjusted 503) Class A ordinary shares held in an escrow account as reserve solely for potential stock options. As of June 30, 2024, no shares were transferred to the holders.
Shares issued for long-term investments/acquisitions
On January 5, 2023, the Company entered into an equity transfer agreement with a shareholder of Smartconn which the Company agrees to purchase 31% equity of Smartconn at 90% of the appraisal price. The consideration of the Acquisition will be paid in the form of 478,747 (split-adjusted 23,937) Class A ordinary shares of the Company. The fair value of the shares issued amounted to $12,640,062
On March 24, 2023, the Company entered into an equity transfer agreement with a shareholder of DTI which the Group agrees to prepaid 698,301 (split-adjusted 34,915) Class A ordinary shares to purchase 32% equity of DTI. The fair value of the shares issued amounted to $15,906,186.
On March 28, 2023, the Company entered into an equity transfer agreement with fifteen individual shareholders of Boxinrui, pursuant to which the Group agreed to pre-issue 1,151,869 shares to further acquire 65% equity interest in Boxinrui for a consideration in form of 1,151,869 (split-adjusted 57,593) Class A ordinary shares to the Relevant Shareholders. The fair value of the shares issued amounted to $24,078,675.
On November 22, 2023, the Company entered into a compensation agreement with the original shareholders of Smartconn. Pursuant to the agreement, the Company shall issue 53,388,709 (split-adjusted 2,669,435) Class A ordinary shares to the previous shareholders as a compensation due to continuous declining share price. On November 23,2023, the Company fully issued the related compensation shares. The fair value of the shares issued amounted to $30,938,757.
On November 22, 2023, the Company entered into a compensation agreement with the original shareholders of Boxinrui. Pursuant to the agreement, the Company shall issue 69,141,256 (split-adjusted 3,457,063) Class A ordinary shares to the previous shareholders as a compensation due to continuous declining share price. On November 23,2023, the Company fully issued the related compensation shares. The fair value of the shares issued amounted to $40,067,357.
Warrants
In connection with the initial public offering (“IPO”) on April 4, 2019, the Company issued warrants totaling 510 (split-adjusted 26) units to the placement agents (the “Public Offering Warrants”). The warrants carry a term of five years and shall be exercisable at $1,320 (split-adjusted 26,400) per share. Management determined that these warrants are equity instruments because the warrants are both a) indexed to its own stock; and b) classified in shareholders’ equity. These warrants were fully expired on April 3, 2024.
During the year ended December 31, 2021, the Company completed in aggregate of $6.0 million convertible notes with YA and issued warrants 2,721 (split-adjusted 136) to YA. The warrants carry a term of five years and shall be exercisable at $876 (split-adjusted 17,520) per share. Management determined that these warrants are equity instruments because the warrants are both a) indexed to its own stock; and b) classified in shareholders’ equity.
Dividend
On March 5, 2024, the board of directors approved a special stock dividend to pay in total of 15,574,774 (split-adjusted 778,739) Class A ordinary shares to the holders of record of all the issued and outstanding shares of the Company as of the close of business on April 26, 2024, in the amount of six shares per 100 (split-adjusted 5) shares of the Company.
Statutory reserve
Under PRC law, the Company’s subsidiary located in the PRC (collectively referred as the (“PRC entities”) are required to provide for certain statutory reserves. The PRC entities are required to allocate at least 10% of their after-tax profits on an individual company basis as determined under PRC accounting standards to the statutory reserve and has the right to discontinue allocations to the statutory reserve if such reserve has reached 50% of registered capital on an individual company basis.
The Company’s subsidiaries in PRC had accumulated deficits as of June 30, 2024 and December 31, 2023, as a result, the statutory reserve balances were $ as of June 30, 2024 and December 31, 2023. |
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Commitments and Contingencies |
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Jun. 30, 2024 | |
| Commitments and contingencies [Abstract] | |
| Commitments and contingencies | Note 13 — Commitments and contingencies
Contingencies
In the ordinary course of the business, the Group subject to periodic legal or administrative proceedings. The Group accrues liability when the loss is probable and reasonably estimable.
On August 22, 2023, one supplier of the Group filed a lawsuit against the Group for a debt dispute of $1,389,806 (RMB 10,100,000). On November 16, 2023, the court ordered the Group to pay the supplier $1,389,806 (RMB 10,100,000) and related interest. On March 26, 2024. the Court made the final judgement to maintain the original ruling on November 16, 2023. The Group has recorded the disputed amount $1,389,806 (RMB10,100,000) in the accounts payable and related interest $48,379 (RMB351,578) in accrued expenses and other current liabilities based on the best estimate of the management and the Group’s legal counsel as of December 31, 2023. The supplier also applied an order to freeze total cash of $1,409,041 (RMB10,239,780), which was recorded as restricted cash as of June 30, 2024. The Group have fully paid the disputed and related interest by July 10, 2024, subsequently. |
Segment Reporting |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment reporting | Note 14 — Segment reporting
For the six months ended June 30, 2024 and 2023, the Group’s CODM reviewed the financial information of the business carried out by the Group on a consolidated basis. Therefore, the Group has one operating segment, which is the provision of global trade software application and technology services. The Group operates solely in the PRC and all of the Group’s long-lived assets are located in the PRC. The following table presents revenues by the service lines:
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2024 | |
| Subsequent Events [Abstract] | |
| Subsequent events | Note 15 — Subsequent events
On July 4, 2024, Powerbridge Zhuhai entered into a facility agreement with Shanghai Pudong Development Bank obtain a total facility of up to $915,070 (RMB6,650,000). The loan facility is available for the Group to withdraw from July 4, 2024 to June 28, 2025. The bank loan was guaranteed by the Group’s CEO and pledged approximately $1.6 million fixed assets as the collateral to secure the loan. On July 17, 2024, Powerbridge Zhuhai drew down $915,070 (RMB6,650,000) for a term of one year and at a fixed annual interest rate of 4.0%.
To explore oversea business, the Group established one new subsidiary in Singapore. X3 TECHNOLOGIES PTE. LTD. was incorporated on July 22, 2024 and the Group has 100% equity interest.
The Group evaluated all events and transactions that occurred after June 30, 2024 up through the date the Group issued these unaudited condensed consolidated financial statements, for disclosure or recognition in the unaudited condensed consolidated financial statements of the Group as appropriate. |
Accounting Policies, by Policy (Policies) |
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| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for the full year. The information included in this interim report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in the Group’s annual financial statements for the year ended December 31, 2023 filed with the SEC on April 30, 2024. |
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| Principles of consolidation | Principles of consolidation The unaudited condensed consolidated financial statements include the financial statements of the Group and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation. Subsidiaries are those entities in which the Group, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. Non-controlling interest represents the portion of the net assets of a subsidiary attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company. |
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| Liquidity | Liquidity As of June 30, 2024, the Group incurred a net loss of approximately $11.2 million and had negative operation cash flow of approximately $1.1 million. The Group has historically funded its working capital needs primarily from public offering, operations, bank loans, advance payments from customers and shareholders. The working capital requirements are affected by the efficiency of operations, the numerical volume and dollar value of revenue contracts, the progress or execution on customer contracts, and the timing of accounts receivable collections. In assessing its liquidity, the Group monitors and analyzes its cash on hand, its ability to generate sufficient revenue sources in the future and its operating and capital expenditure commitments. As of June 30, 2024, the Group had cash and cash equivalents of approximately $1.5 million. On November 24, 2023, the Group entered into purchase agreements with twelve investors. The investors agreed to purchase an aggregate of $40,000,000 of the Group’s Class A ordinary shares at a share price of $0.3 (split-adjusted $6.0) per share. The Group issued 130,463,140 (split-adjusted 6,523,157) Class A ordinary shares on November 24, 2023. On May 16, 2024, we entered into a standby equity purchase agreement (the “SEPA”) with YA II PN, LTD. (“YA”), pursuant to which YA purchases convertible promissory notes (the “Notes”) in the principal amount of $8,000,000 (the “Principal”), which shall be convertible into the Company’s ordinary shares, par value US$0.40 per share (the “Offering”), for gross proceeds of approximately $7,425,000. The Offering will be conducted in four closings. The first closing consists of offer and sale of a Note in the principal amount of $4,756,986. The first closing occurred on May 16, 2024. The second closing consists of offer and sale of a Note in the principal amount of $1,500,000. The second closing occurred on June 17, 2024. The Group believes that its cash on hand and financing cash flows will be sufficient to fund its operations over at least the next 12 months from the date of this report. However, the Group may need additional cash resources in the future if the Group experiences changed business conditions or other developments, and may also need additional cash resources in the future if the Group wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Group’s amounts of cash on hand, the Group may seek to issue debt or equity securities or obtain a credit facility.
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| Use of estimates | Use of estimates The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Group’s unaudited condensed consolidated financial statements include but not limited to the useful lives of property and equipment and capitalized development cost, impairment of long-lived assets, valuation of accounts receivables, valuation of convertible notes, loans to third parties, revenue recognition and realization of deferred tax assets and uncertain tax positions. Actual results could differ from these estimates. |
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| Fair value measurement | Fair value measurement ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Unless otherwise disclosed, the fair value of the Group’s financial instruments including cash and cash equivalents, restricted cash, notes and accounts receivable, due from related parties, deposits and other current assets, short-term bank loans, accounts payable, deferred revenue, accrued expenses and other current liabilities due to related party, current operating lease liabilities and taxes payable approximates their recorded values due to their short-term maturities. The fair value of the long-term prepayment, deposits and other assets approximate their carrying amounts because the deposits were paid in cash. Assets and Liabilities Measured or Disclosed at Fair Value on a recurring basis The following tables represent the fair value hierarchy of the Group’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:
Streeterville Note The Group elected the fair value option to account for Streeterville Note (Refer to Note 10 for additional information). The Group engaged an independent valuation firm to perform the valuation. The fair value of the Streeterville Note was calculated using the binomial tree model. The Streeterville Note was classified as level 3 instruments as the valuation was determined based on unobservable inputs which was supported by little or no market activity and reflect the Group’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of the Streeterville Note included time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion. As the inputs used in developing the fair value for level 3 instruments are unobservable, and require significant management estimate, a change in these inputs could result in a significant change in the fair value measurement. The following is a reconciliation of the beginning and ending balances for the Streeterville Note measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of June 30, 2024 and December 31, 2023:
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| Accounts receivable, net | Accounts receivable, net Accounts receivable represents the amounts that the Group has an unconditional right to consideration and is recorded net of allowance for credit losses. In 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Group has adopted this ASC Topic 326 and several associated ASUs on January 1, 2023 using a modified retrospective approach. The adoption has no material impact to the Group’s consolidated financial statements. The Group estimated allowance for credit losses to reserve for potentially uncollectible receivable amounts periodically, considering factors in assessing the collectability of its accounts receivable, such as historical distribution of the age of the amounts due, payment history, creditworthiness, forward-looking factor, historical collections data of the customers, to assess the credit risk characteristics. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable are considered impaired and written-off when it is probable that all contractual payments due will not be collected after all collection efforts have been exhausted. |
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| Impairment for long-lived assets other than goodwill | Impairment for long-lived assets other than goodwill Long-lived assets, including property, equipment, furniture and fixtures and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When these events occur, the Group measures impairment by comparing the carrying values of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amounts of the assets, the Group would recognize an impairment loss based on the excess of the carrying value over the assessed discounted cash flow amount. For the six months ended June 30, 2024 and 2023 the Group did not recognize any impairment on the long-lived assets. |
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| Business combinations | Business combinations The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of the cost of the acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings. The determination and allocation of fair values to the identifiable net assets acquired, liabilities assumed and noncontrolling interest is based on various assumptions and valuation methodologies requiring considerable judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the acquiree’s current business model and industry comparisons. Although the Group believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.
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| Goodwill | Goodwill Goodwill is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. Goodwill is not subject to amortization, but rather is evaluated for impairment at least annually. The Group evaluates its goodwill for impairment during the fourth quarter of its fiscal year or more frequently if indicators of potential impairment exist, in accordance with ASC 350, Intangibles - Goodwill and Other. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit (generally defined as the businesses for which financial information is available and reviewed regularly by management) with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment. In the course of evaluating the potential impairment of goodwill, the Group may perform either a qualitative or a quantitative assessment. The Group’s qualitative assessment of potential impairment may result in the determination that a quantitative impairment analysis is not necessary. Under this elective process, the Group assesses qualitative factors to determine whether the existence of events or circumstances leads the Group to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events and circumstances, the Group determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing a quantitative analysis is not required. However, if the Group concludes otherwise, then the Group performs a quantitative impairment analysis. If the Group either chooses not to perform a qualitative assessment, or the Group chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then the Group performs a quantitative evaluation. In the case of a quantitative assessment, the Group estimates the fair value of the reporting unit with which the goodwill that is subject to the quantitative analysis is associated and compares it to the carrying value. If the estimated fair value of a reporting unit is less than its carrying value, the excess is recorded as a goodwill impairment, which is limited to the total amount of goodwill allocated to that reporting unit. For the six months ended June 30, 2024, the Group performed a qualitative assessment for the reporting unit. Based on the requirements of ASC 350-20, the Group evaluated all relevant qualitative and quantitative factors, weighed all factors in their entirety and concluded that it was not more-likely-than-not that the fair value of the reporting unit was less than its carrying amount. Therefore, no goodwill impairment was recognized for the six months ended June 30, 2024 and 2023.
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| Revenue recognition | Revenue recognition The Group adopted ASC Topic 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Group’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added tax (“VAT”). To achieve that core principle, the Group applies the following steps: Step 1: Identify the contract (s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation The Group derives its revenues from four sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3) revenue from subscription services, (4) trading revenue and (5) others revenue. All of the Group’s contracts with customer do not contain cancelable and refund-type provisions. (1) Revenue from application development service The Group’s application development service contracts are primarily on a fixed-price basis, which require the Group to perform services including project planning, project design, application development and system integration based on customers’ specific needs. These services also require significant production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Group is generally required to provide post-contract customer support (“PCS’) for a period from three months to three years (“PCS period”) after the customized application development services are delivered. The type of services for PCS clause is generally not specified in the contracts or as stand-ready services on when-and-if-available basis. The unspecified PCS is stand-ready service on when-and-if-available basis. It grants the customers on line and telephone access to technical support personnel during the term of the service. Specified PCS includes specified service term in the contract such as training. The Group’s application development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant portion (30% - 50%) of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Group has enforceable right on payments for the work performed. The Group sometimes provides a warranty for its application development service contracts. The warranty period is typically 12-36 months upon the completion of the application development service. In accordance with ASC 606-10-25-19, the Group believes the warranty provision in the contracts generally represents service-type warranty, which is a distinct performance obligation and the Group also provides the similar service on standalone basis and customers can benefit from the related service-type warranty service. For the service warranty component, the customer simultaneously receives and consumes the benefits provided by the Group performance over the warranty term, therefore, the service warranty is satisfied over time. The revenue allocated to the service warranty is recognized over the warranty period.
The Group assesses that application development service, PCS or specific service and service-type warranty, if applicable, are distinct performance obligations in the application development service contracts. The Group provides these services on standalone basis and customers are able to benefit from each of the service on its own. In addition, the timing of delivery of these performance obligations can be separately identifiable in the contracts. The transaction price is allocated to these identified performance obligations based on the relative standalone selling prices. The transaction price allocated to PCS or unspecific service and service-type warranty, if applicable, on a straight-line method over the contractual period. Revenue allocated to specified PCS is recognized as the related services are rendered. The transaction price allocated to application development service is recognized over time as the Group’s performance creates or enhances the project controlled by the customer and the control is transferred continuously to our customers. The Group uses an input method based on cost incurred as the Group believes that this method most accurately reflects the Group’s progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the transaction price allocated to application development service is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Group to make estimates of revenues and costs to complete the construction. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Group’s estimates are based upon the professional knowledge and experience of our engineers and project managers to assess the contract’s schedule, performance, technical matters. The Group has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Group recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for application development services include but not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Group has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Group entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values. In certain application development service arrangements, the Group sells and delivers IT equipment on standalone basis prior to the delivery of the services. In these cases, the Group controls the IT equipment before they are transferred to the customer. The Group has the right to direct the suppliers and control the goods or assets transferred to its customers. Thus, the Group considers it should recognize revenue as a principal in the gross amount of consideration to which it is entitled in exchange for the IT equipment delivered. The Group assesses the sale of equipment is separately identifiable from other promises in the contract and it is distinct performance obligation within the context of the contract. Accordingly, the revenue from the related IT equipment based on its relative standalone selling price is recognized upon customer acceptance after delivery.
(2) Revenue from consulting and technical support services Revenue from consulting and technical support services is primarily comprised of fixed-fee contracts, which require the Group to provide professional consulting and technical support services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to customers. Billings to the customers are generally on a monthly or quarterly basis over the contract term, which is typically 12 to 24 months. The consulting and technical support services contracts typically include a single performance obligation. The revenue from consulting and technical support services is recognized over the contract term on a straight-line basis as customers receive and consume benefits of such services. (3) Revenue from subscription services Revenue from subscription services is comprised of subscription fees from customers accessing the Group’s software-as-a-service applications for a subscribed period. The Group’s monthly or quarterly billing to customer is on the basis of number of uses or the actual usage by the customers. The subscription arrangements are considered service contracts because customers do not have the right to take possession of the software and can only benefit from the software when provided the right to access the software. Accordingly, the subscription services contracts typically include a single performance obligation. The revenue from subscription services is recognized over the contract term on a straight-line basis or based on the actual usage as customers receive and consume benefits of such services. (4) Trading revenue The Group started trading business for the year ended December 31, 2021 and recognized revenue at a point in time when control of such products transfers to the customer, which generally occurs upon shipment or delivery depending on the terms of the contracts with the customer. Product sale contracts typically include a single performance obligation and there are no rights of return. The transaction price is based on the fixed contractual price with the customer. Billings to the customer for the sale of products occur at the time the products are transferred to the customer. (5) Others revenue In April 2023, the Group started regional authorization membership program to engage independent merchant to assist in developing specified geographical regions. The program grants non-exclusive geographical territory business development to the authorized distributors within that defined territory. The Group’s services under regional cooperation agreements include marketing support to advertise as well as utilization of the Group’s trademark and copyrights for business promotion purpose. The term of cooperation agreements is typically one to two years. The Group charges a fixed amount authorization fee which is non-refundable and to be paid upon execution of an authorization agreement. For all the Group’s cooperation agreements, the amount of fee is fixed or determinable and no right of return provision indicated in the agreement. Since the Group provides no financing to authorized distributors and offers no guarantees on their behalf, the services provided by the Group are considered to represent a single performance obligation. The agreement price is fully allocated to the single performance obligation. The total authorization fees are recognized ratably on a straight-line basis over the term of the cooperation agreements. Other revenues accounted for 2.7% of the Group’s revenue for the six months ended June 30, 2024. Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. The Group reports revenues net of value added tax (“VAT”). The Group’s subsidiaries in PRC are subject to a 3% to 13% value added tax (“VAT”) and related surcharges on the revenues earned from providing services or products. Practical Expedient and Exemptions The Group does not disclose the value of unsatisfied performance obligations within one year by applying the right to invoice practical expedient provided by ASC 606-10-55-18.
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| Contract balance | Contract balance The accounts receivable includes both unbilled accounts receivable and billed accounts receivable. The Group records unbilled accounts receivable for revenue that has been recognized in advance of billing the customer, which is common for application development service contracts. The unbilled accounts receivable represents the Group’s right to consideration in exchange for the service that the Group has performed to the customer before payment is due and the unbilled account receivable will be reclassified into billed accounts receivable when the Group has the right to invoice. Contract liabilities are presented as deferred revenue on the consolidated balance sheet. Contract liabilities relate to payments received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue upon the completion of performance obligations. As of June 30, 2024 and December 31, 2023 the balance of deferred revenue amounted to $1,987,674 and $2,175,896, respectively. |
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| Operating leases | Operating leases The Group adopted Topic 842 on January 1, 2022 using the modified retrospective transition approach. The Group has lease contracts for factory and office space under operating leases. The Group determines whether an arrangement constitutes a lease and records lease liabilities and right-of-use assets on its consolidated balance sheets at lease commencement. The Group measures its lease liabilities based on the present value of the total lease payments not yet paid discounted based on the more readily determinable of the rate implicit in the lease or its incremental borrowing rate, which is the estimated rate the Group would be required to pay for a collateralized borrowing equal to the total lease payments over the term of the lease. The Group estimates its incremental borrowing rate based on an analysis of weighted average interest rate of its own bank loans. The Group measures right-of-use assets based on the corresponding lease liability adjusted for payments made to the lessor at or before the commencement date, and initial direct costs it incurs under the lease. The Group begins recognizing lease expense when the lessor makes the underlying asset available to the Group. For leases with lease term less than one year (short-term leases), the Group records operating lease expense in its consolidated statements of operations on a straight-line basis over the lease term and record variable lease payments as incurred. |
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| Income taxes | Income taxes The Group accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the six months ended June 30, 2024 and 2023. All of the tax returns of the Group’s subsidiary in China remain subject to examination by the tax authorities for five years from the date of filing.
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| Loss per share | Loss per Share Earnings (loss) per ordinary share is calculated in accordance with ASC 260, Earnings per Share. Basic earnings (loss) per ordinary share is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings (loss) per share is computed using the weighted average number of ordinary shares and potential ordinary shares outstanding during the period. Potential ordinary shares include ordinary shares issuable upon the exercise of outstanding share options by using the treasury stock method and ordinary shares issuable upon the conversion of convertible instruments using the if-converted method. Potential ordinary shares are not included in the denominator of the diluted net (loss)/earnings per share calculation when inclusion of such shares would be anti-dilutive. For the six months ended June 30, 2024 and 2023, since the Group had a loss, basic and dilutive loss per share is the same. |
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| Share-Based compensation | Share-Based compensation The Group accounts for share-based awards to employees and nonemployees directors and consultants in accordance with the provisions of ASC 718, Compensation—Stock Compensation, and under the recently issued guidance following FASB’s pronouncement, ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Under ASC 718, and applicable updates adopted, for employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight-line basis over the requisite service period for the entire award. For the non-employee stock-based awards, the fair value of the awards to non-employees are measured every reporting period based on the value of the Group’s common stock. |
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| Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Group is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter. |
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| Segment reporting | Segment reporting The Group’s chief operating decision maker (“CODM”) has been identified as its CEO, who reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. The Group’s long-lived assets are substantially all located in the PRC and all of the Group’s revenues are derived from the PRC. Therefore, no geographical segments are presented.
|
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| Concentrations of Risks | Concentrations of Risks
Assets that potentially subject the Group to significant concentration of credit risk primarily consist of cash, restricted cash, accounts receivable and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of June 30, 2024 and December 31, 2023, the aggregate amount of cash, cash equivalents and restricted cash of $2,650,752 and $4,056,150, respectively, were held at major financial institutions in PRC mainland, which the management believes are of high credit quality. On May 1, 2015, China’s new Deposit Insurance Regulation came into effect, pursuant to which banking financial institutions, such as commercial banks, established in China are required to purchase deposit insurance for deposits in RMB and in foreign currency placed with them. Such Deposit Insurance Regulation would not be effective in providing complete protection for the Group’s accounts, as its aggregate deposits are much higher than the compensation limit. However, the Group believes that the risk of failure of any of these Chinese banks is remote. Bank failure is uncommon in China and the Group believes that those Chinese banks are financially sound based on public available information. The Group conducts credit evaluations of its customers and suppliers, and generally does not require collateral or other security from them.
A majority of the Group’s expense transactions are denominated in RMB and a significant portion of the Group and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Group in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance. The Group’s functional currency is the RMB, and the Group’s financial statements are presented in U.S. dollars. The RMB deprecation by 2.9% in fiscal year 2023 and further deprecation by 2.4% for the six months ended June 30, 2024. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB. To the extent that the Group needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Group would receive from the conversion. Conversely, if the Group decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Group.
For the six months ended June 30, 2024, three customers accounted for 13.7%, 12.9% and 10.0% of the Group’s total revenues. For the six months ended June 30, 2023, one customer accounted for 39.4% of the Group’s total revenues. As of June 30, 2024, one customer accounted for 15.3% of the Group’s accounts receivable. As of December 31, 2023, one customer accounted for 15.9% of the Group’s accounts receivable.
For the six months ended June 30, 2024, five suppliers accounted for 15.4%, 13.4%, 11.5%, 10.9% and 10.4% of the Group’s total purchases, respectively. For the six months ended June 30, 2023, one supplier accounted for 59.3% of the Group’s total purchases, respectively. As of June 30, 2024, two suppliers accounted for 22.6% and 10.8% of the Group’s total accounts payable. As of December 31, 2023, one supplier accounted for 24.5% of the Group’s total accounts payable.
|
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| Recently issued accounting pronouncements | Recently issued accounting pronouncements The Group considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (“the JOBS Act”), the Group meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2025. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. Once adopted, this ASU will result in additional disclosures. The Group is currently assessing the potential impact of the rule on our disclosures. In November 2023, FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted. This ASU will result in additional required disclosures when adopted, where applicable. The Group is currently assessing the potential impact of the rule on our disclosures. In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Group is currently evaluating the potential impact of adopting this guidance on Financial Statements. In March 2024, the FASB issued ASU 2024-02, “Codification Improvements – Amendments to Remove References to the Concept Statements” (“ASU 2024-02”). ASU 2024-02 contains amendments to the FASB Accounting Standards Codification that remove references to various FASB Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Group is currently evaluating the potential impact of adopting this guidance on Financial Statements. Except for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the condensed consolidated financial position, statements of operations and cash flows. |
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Nature of Business and Organization (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nature of Business and Organization [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Details of Group’s Principal Subsidiaries | As of June 30, 2024, the details
of the Group’s principal subsidiaries are as follows:
|
Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following tables represent
the fair value hierarchy of the Group’s financial assets and liabilities measured at fair value on a recurring basis as of June
30, 2024 and December 31, 2023:
|
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| Schedule of Recurring Basis using Significant Unobservable Inputs | The following is a reconciliation
of the beginning and ending balances for the Streeterville Note measured at fair value on a recurring basis using significant unobservable
inputs (Level 3) as of June 30, 2024 and December 31, 2023:
|
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Acquisition (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities Assumed | The following table summarizes
the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, which represents the net purchase
price allocation at the date of the acquisition based on a valuation report performed by an independent valuation firm engaged by the
Group. The valuation report considered generally accepted valuation methodologies such as the income, market and cost approaches.
|
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Accounts Receivable, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Receivable, Net | Accounts receivable, net,
consists of the following:
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| Schedule of Movement of Allowance for Doubtful Accounts | Movement of allowance for
credit losses is as follows:
|
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Prepayments, Deposits and Other Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepayments, Deposits and Other Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Prepayments, Deposits and Other Assets, Net | Prepayments, deposits and
other assets, net consisted of the following:
|
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| Schedule of Allowance for Credit Losses | Movement of allowance for
credit losses is as follows:
|
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Intangible Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Assets, Net | Intangible assets, net, consist
of the following:
|
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Related Party Balances and Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Balances and Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Relationship of Related Parties | The relationship of related parties
|
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| Schedule of Due from Related Parties | Due from related parties
|
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| Schedule of Due to Related Parties | Due to related parties
|
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| Schedule of Related Party Transactions | Related party transactions
|
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Bank Loans (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank Loans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Outstanding Balance of Short-Term Bank Loans | Outstanding balance of short-term
bank loans consisted of the following:
|
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| Schedule of Bank Loans | The movement bank loans are
as follows:
|
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Lease (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Leases | Supplemental balance sheet
information related to operating leases was as follows:
|
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| Schedule of Weighted Average Remaining Lease Terms and Discount Rates | The weighted average remaining
lease terms and discount rates for all of operating leases were as follows as of June 30, 2024:
|
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| Schedule of Maturities of Lease Liabilities | The following is a schedule
of maturities of lease liabilities as of June 30, 2024:
|
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Convertible Notes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Notes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Notes |
|
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Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Provision for Income Taxes | Significant components of
the provision for income taxes are as follows:
|
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| Schedule of Effective Tax Rate | The following table reconciles
China statutory rates to the Group’s effective tax rate:
|
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| Schedule of Deferred Tax Assets and Liabilities | The significant components of the deferred tax assets and liabilities are as follows:
|
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| Schedule of Taxes Payable | Taxes payable consists of
the following:
|
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Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Estimate the Fair Value of Stock Options | Assumptions used to estimate the fair value of stock options on the grant dates are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Activities of the Stock Options | A summary of activities of
the stock options is presented as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenues | The following table presents
revenues by the service lines:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business and Organization (Details) - Schedule of Details of Group’s Principal Subsidiaries |
6 Months Ended | |||||
|---|---|---|---|---|---|---|
Jun. 30, 2024 | ||||||
| Powerbridge Holding Limited (“Powerbridge HK”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Jul. 27, 2018 | |||||
| Place of Incorporation | Hong Kong, PRC | |||||
| Major Operation | Investment holding | |||||
| Boxinrui International Holdings Limited (“Boxinrui”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Aug. 05, 2021 | |||||
| Place of Incorporation | BVI | |||||
| Major Operation | Investment holding | |||||
| Hongding Technology Co., Ltd (“Hongding”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Jul. 28, 2020 | |||||
| Place of Incorporation | Hong Kong, PRC | |||||
| Major Operation | Investment holding | |||||
| Hong Kong Hongyi Holdings Limited(“Hongyi”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Apr. 24, 2023 | |||||
| Place of Incorporation | Hong Kong, PRC | |||||
| Major Operation | Investment holding | |||||
| Powercrypto Holding Pte. Ltd. (“Powercrypto”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Oct. 01, 2021 | |||||
| Place of Incorporation | Singapore | |||||
| Major Operation | Management consultancy services | |||||
| Powercrypto Inc [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Apr. 05, 2022 | [1] | ||||
| Place of Incorporation | USA | [1] | ||||
| Major Operation | Management consultancy services | [1] | ||||
| X3 HOLDINGS PTE. LTD. (“X3 HOLDINGS”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Nov. 08, 2023 | |||||
| Place of Incorporation | Singapore | |||||
| Major Operation | Investment holding | |||||
| Powerbridge High Technologies Holding Co., Ltd [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Jan. 11, 2023 | |||||
| Place of Incorporation | Macau | |||||
| Major Operation | Investment holding | |||||
| Powerbridge Technology Group Co., Ltd. (“Powerbridge Zhuhai”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Oct. 30, 1997 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Software application and technology services | |||||
| Powerstream Supply Chain Co., Ltd. (“Powerstream”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Aug. 17, 2021 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Supply chain business | |||||
| Powermeta Digital Co., Ltd. (“Powermeta”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Jan. 21, 2022 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Software application and technology services | |||||
| Powerbridge Digital Trade (HK) Co., Limited [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 51.00% | |||||
| Date of Incorporation | Jun. 26, 2023 | |||||
| Place of Incorporation | Hong Kong, PRC | |||||
| Major Operation | Investment holding | |||||
| SmartConn Co.Limited(“SmartConn”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 50.99% | |||||
| Date of Incorporation | Dec. 14, 2020 | |||||
| Place of Incorporation | Hong Kong, PRC | |||||
| Major Operation | Investment holding | |||||
| Hong Kong Anxin Jieda Co., Limited (“Anxin Jieda”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Nov. 30, 2021 | |||||
| Place of Incorporation | Hong Kong, PRC | |||||
| Major Operation | Investment holding | |||||
| Shenzhen Honghao Internet Technology Co., Ltd (“Honghao”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Jul. 28, 2020 | [1] | ||||
| Place of Incorporation | the PRC | [1] | ||||
| Major Operation | Software application and technology services | [1] | ||||
| Hongxi Data Technology Co., Ltd. [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 70.00% | |||||
| Date of Incorporation | Feb. 08, 2021 | |||||
| Place of Incorporation | Macau | |||||
| Major Operation | Software application and technology services | |||||
| Zhuhai Hongyang Supply Chain Co., Ltd. (“Zhuhai Hongyang”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 60.00% | |||||
| Date of Incorporation | Jul. 21, 2021 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Supply chain business | |||||
| Ningbo Zhijing Tongfu Technology Co., Ltd. (“Ningbo Zhijing”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 51.00% | |||||
| Date of Incorporation | Apr. 25, 2021 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | software application and technology services | |||||
| Hunan Powerverse Digital Co., Ltd. [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 51.00% | |||||
| Date of Incorporation | Mar. 09, 2023 | [2] | ||||
| Place of Incorporation | the PRC | [2] | ||||
| Major Operation | Software application and technology services | [2] | ||||
| Metafusion Digital Co., Ltd (“Metafusion”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 66.00% | |||||
| Date of Incorporation | Feb. 15, 2022 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Software application and technology services | |||||
| Shanghai Stamp Technolog Co., Ltd. [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Dec. 09, 2018 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Software application and technology services | |||||
| Ascendent Insight Education Co., Ltd. (“Ascendent”) [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 90.00% | |||||
| Date of Incorporation | Jan. 07, 2020 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Software application and technology services | |||||
| Xingtai Ningyao Technology Co., Ltd. [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Dec. 17, 2022 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Software application and technology services | |||||
| Guangdong Hongqiao Digital Technology Co., Ltd. [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 51.00% | |||||
| Date of Incorporation | Nov. 28, 2023 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Software application and technology services | |||||
| Shenzhen Hongchuangxin Technology Co., Ltd. [Member] | ||||||
| Schedule of Details of Group’s Principal Subsidiaries [Line Items] | ||||||
| Percentage of Ownership | 100.00% | |||||
| Date of Incorporation | Oct. 31, 2022 | |||||
| Place of Incorporation | the PRC | |||||
| Major Operation | Trading | |||||
| ||||||
Summary of Significant Accounting Policies (Details) - USD ($) |
6 Months Ended | 7 Months Ended | 12 Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 16, 2024 |
Dec. 08, 2023 |
Nov. 29, 2023 |
Nov. 24, 2023 |
Mar. 28, 2023 |
Mar. 24, 2023 |
Feb. 03, 2023 |
Jan. 20, 2023 |
Jan. 05, 2023 |
Dec. 29, 2022 |
Jul. 22, 2022 |
Jul. 15, 2022 |
Jan. 26, 2022 |
Dec. 31, 2021 |
May 26, 2021 |
Feb. 18, 2021 |
Feb. 06, 2021 |
Apr. 04, 2019 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Aug. 04, 2023 |
Dec. 31, 2023 |
|
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Operation cash flow (in Dollars) | $ 11,200,000 | |||||||||||||||||||||
| Net cash used in operating activities (in Dollars) | (1,095,791) | $ (7,018,648) | ||||||||||||||||||||
| Cash balances (in Dollars) | $ 2,650,752 | |||||||||||||||||||||
| Split-adjusted (in Dollars per share) | $ 6 | |||||||||||||||||||||
| Split-adjusted (in Shares) | 63,025 | 4,202 | 6,523,157 | 57,593 | 34,915 | 5,594 | 17,135 | 23,937 | 933 | 2,500 | 2,500 | 24,208 | 17,520 | 16,729 | 12 | 5 | 62 | 12,195 | 2,513 | |||
| Principal amount (in Dollars) | $ 4,756,986 | |||||||||||||||||||||
| Ordinary shares per share (in Dollars per share) | $ 0.4 | |||||||||||||||||||||
| Gross proceeds (in Dollars) | $ 7,425,000 | |||||||||||||||||||||
| Percentage of other revenue | 2.70% | |||||||||||||||||||||
| Deferred revenue (in Dollars) | $ 1,987,674 | $ 2,175,896 | ||||||||||||||||||||
| Restricted cash (in Dollars) | $ 4,056,150 | |||||||||||||||||||||
| Depreciation percentage | 2.40% | 2.90% | ||||||||||||||||||||
| Percentage of purchases | 59.30% | |||||||||||||||||||||
| Minimum [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| VAT percentage | 3.00% | |||||||||||||||||||||
| Maximum [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| VAT percentage | 13.00% | |||||||||||||||||||||
| Customer Concentration Risk [Member] | Minimum [Member] | Revenue Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 30.00% | |||||||||||||||||||||
| Customer Concentration Risk [Member] | Maximum [Member] | Revenue Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 50.00% | |||||||||||||||||||||
| Smartconn Acquisition [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Cash balances (in Dollars) | $ 1,500,000 | |||||||||||||||||||||
| Principal amount (in Dollars) | 8,000,000 | |||||||||||||||||||||
| SEPA [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Principal amount (in Dollars) | $ 1,500,000 | |||||||||||||||||||||
| Suppliers One [Member] | Customer Concentration Risk [Member] | Purchases Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 15.40% | |||||||||||||||||||||
| Suppliers One [Member] | Customer Concentration Risk [Member] | Accounts Payable Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 22.60% | 24.50% | ||||||||||||||||||||
| Suppliers Two [Member] | Customer Concentration Risk [Member] | Purchases Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 13.40% | |||||||||||||||||||||
| Suppliers Two [Member] | Customer Concentration Risk [Member] | Accounts Payable Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 10.80% | |||||||||||||||||||||
| Suppliers Three [Member] | Customer Concentration Risk [Member] | Purchases Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 11.50% | |||||||||||||||||||||
| Suppliers Four [Member] | Customer Concentration Risk [Member] | Purchases Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 10.90% | |||||||||||||||||||||
| Suppliers Five [Member] | Customer Concentration Risk [Member] | Purchases Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 10.40% | |||||||||||||||||||||
| Customer One [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 13.70% | 39.40% | ||||||||||||||||||||
| Customer One [Member] | Customer Concentration Risk [Member] | Accounts Receivable Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 15.30% | 15.90% | ||||||||||||||||||||
| Customers Two [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 12.90% | |||||||||||||||||||||
| Customers Three [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Concentration risk, percentage | 10.00% | |||||||||||||||||||||
| Class A Ordinary Shares [Member] | ||||||||||||||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||||||||||||||
| Investors agreed to purchase (in Dollars) | $ 40,000,000 | |||||||||||||||||||||
| Share price (in Dollars per share) | $ 0.3 | |||||||||||||||||||||
| Share issued (in Shares) | 130,463,140 | |||||||||||||||||||||
| Split-adjusted (in Shares) | 698,301 | 4,161 | 47 | 13,757,773 | 8,085 | 12,973,209 | ||||||||||||||||
Summary of Significant Accounting Policies (Details) - Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - Fair Value, Recurring [Member] - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Financial liabilities: | ||
| Financial liabilities, Total | $ 5,020,633 | |
| Quoted price in active markets for identical assets Level 1 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Significant other observable inputs Level 2 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Significant unobservable inputs Level 3 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | 5,020,633 | |
| Put Option Liability from Smartconn Acquisition [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Put Option Liability from Smartconn Acquisition [Member] | Quoted price in active markets for identical assets Level 1 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Put Option Liability from Smartconn Acquisition [Member] | Significant other observable inputs Level 2 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Put Option Liability from Smartconn Acquisition [Member] | Significant unobservable inputs Level 3 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Convertible Loan [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | 5,020,633 | |
| Convertible Loan [Member] | Quoted price in active markets for identical assets Level 1 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Convertible Loan [Member] | Significant other observable inputs Level 2 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | ||
| Convertible Loan [Member] | Significant unobservable inputs Level 3 [Member] | ||
| Financial liabilities: | ||
| Financial liabilities, Total | $ 5,020,633 |
Summary of Significant Accounting Policies (Details) - Schedule of Recurring Basis using Significant Unobservable Inputs - Fair Value, Inputs, Level 3 [Member] - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
| Schedule of Recurring Basis using Significant Unobservable Inputs [Line Items] | ||
| Opening balance | $ 5,020,633 | $ 9,079,966 |
| Loss on change in fair value of convertible notes | (1,048,271) | 21,166 |
| Accrued interest | 87,621 | 297,954 |
| Cash repaid | (4,059,983) | (1,250,000) |
| Conversion of convertible notes | (3,128,453) | |
| Total | $ 5,020,633 |
Acquisition (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2024 |
May 01, 2024 |
Jun. 30, 2024 |
|
| Acquisition [Line Items] | |||
| Fair value of consideration | $ 13,854,016 | ||
| Hongchuangxin Acquisition [Member] | |||
| Acquisition [Line Items] | |||
| Acquisition percentage | 100.00% | ||
| Intangible assets | 10 years | ||
| Hongchuangxin Acquisition [Member] | |||
| Acquisition [Line Items] | |||
| Fair value of consideration | $ 13,854,016 |
Acquisition (Details) - Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities Assumed |
Jun. 30, 2024
USD ($)
|
|---|---|
| Schedule of Fair Value of the Identifiable Assets Acquired and Liabilities Assumed [Abstract] | |
| Total consideration for acquisition | $ 13,854,016 |
| Assets acquired and liabilities assumed: | |
| Cash acquired | 47,073 |
| Accounts receivable | 1,048,422 |
| Loan receivable | 40,052 |
| Prepayments, deposits and other current assets | 650,632 |
| Intangible assets, net | 8,134,797 |
| Accounts payable | (1,401,816) |
| Deferred revenue | (378,979) |
| Other current liabilities | (3,212) |
| Deferred tax liabilities | (2,033,699) |
| Total net assets acquired | 6,103,270 |
| Goodwill | $ 7,750,746 |
Accounts Receivable, Net (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
| Accounts Receivable, Net [Line Items] | ||
| Unbilled accounts receivable | $ 18,908,068 | $ 10,030,721 |
| Total account receivable | $ 18,785,714 | $ 21,487,053 |
| Percentage of total accounts receivable | 11.10% | |
| Percentage of billed accounts receivable | 13.00% | |
| Accounts Receivable [Member] | ||
| Accounts Receivable, Net [Line Items] | ||
| Total account receivable | $ 3,300,000 | |
| Percentage of billed accounts receivable | 7.80% |
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable, Net - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Accounts Receivable, Net [Abstract] | ||
| Accounts receivable | $ 29,399,409 | $ 28,620,423 |
| Less: Allowance for credit losses | (10,613,695) | (7,133,370) |
| Total accounts receivable, net | $ 18,785,714 | $ 21,487,053 |
Accounts Receivable, Net (Details) - Schedule of Movement of Allowance for Doubtful Accounts - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
| Schedule of Movement of Allowance for Doubtful Accounts [Abstract] | ||
| Beginning balance | $ 7,133,370 | $ 7,080,677 |
| Provision for credit losses | 3,773,492 | 256,834 |
| Written-off | (128,035) | (6,214) |
| Foreign currency translation adjustments | (165,132) | (197,927) |
| Ending balance | $ 10,613,695 | $ 7,133,370 |
Prepayments, Deposits and Other Assets, Net (Details) |
6 Months Ended | 12 Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 08, 2023
shares
|
Nov. 29, 2023
shares
|
Nov. 24, 2023
shares
|
Mar. 28, 2023
shares
|
Mar. 24, 2023
USD ($)
shares
|
Feb. 03, 2023
shares
|
Jan. 20, 2023
shares
|
Jan. 05, 2023
USD ($)
shares
|
Dec. 29, 2022
shares
|
Jul. 22, 2022
shares
|
Jul. 15, 2022
shares
|
Jan. 26, 2022
shares
|
Dec. 31, 2021
shares
|
May 26, 2021
shares
|
Feb. 18, 2021
shares
|
Feb. 06, 2021
shares
|
Apr. 04, 2019
shares
|
Jun. 30, 2024
USD ($)
shares
|
Jun. 30, 2023
USD ($)
|
Dec. 31, 2023
shares
|
Jan. 05, 2023
CNY (¥)
|
|
| Prepayments, Deposits and Other Assets, Net [Line Items] | |||||||||||||||||||||
| Prepayment of company | 698,301 | ||||||||||||||||||||
| Split-adjusted shares | 63,025 | 4,202 | 6,523,157 | 57,593 | 34,915 | 5,594 | 17,135 | 23,937 | 933 | 2,500 | 2,500 | 24,208 | 17,520 | 16,729 | 12 | 5 | 62 | 12,195 | 2,513 | ||
| Equivalent purchase | $ | $ 15,906,186 | $ 15,906,186 | |||||||||||||||||||
| Percentage of equity | 32.00% | ||||||||||||||||||||
| Antique pieces | $ 59,651,975 | ¥ 411,157,212 | |||||||||||||||||||
| DTI Group Limited [Member] | |||||||||||||||||||||
| Prepayments, Deposits and Other Assets, Net [Line Items] | |||||||||||||||||||||
| Split-adjusted shares | 34,915 | ||||||||||||||||||||
Prepayments, Deposits and Other Assets, Net (Details) - Schedule of Prepayments, Deposits and Other Assets, Net - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
||||||
|---|---|---|---|---|---|---|---|---|
| Schedule of Prepayments, Deposits and Other Assets, Net [Abstract] | ||||||||
| Security deposits | [1] | $ 287,621 | $ 248,146 | |||||
| Advances to suppliers | 1,964,693 | 2,032,099 | ||||||
| Advances to employees | 107,772 | 46,293 | ||||||
| Prepaid expense | 815,742 | 1,099,950 | ||||||
| Prepayment for potential acquisition | [2] | 15,906,186 | 15,906,186 | |||||
| Antique art pieces | [3] | 45,479,830 | 59,651,975 | |||||
| Deferred financing cost | 237,430 | |||||||
| Others | 3,030 | 6,511 | ||||||
| Prepayments, deposits and other assets, net | 64,802,304 | 78,991,160 | ||||||
| Less: Long term portion | (46,275,401) | (76,274,752) | ||||||
| Allowance for credit losses | (281,694) | |||||||
| Prepayments, deposits and other assets – current portion | $ 18,526,903 | $ 2,434,714 | ||||||
| ||||||||
Prepayments, Deposits and Other Assets, Net (Details) - Schedule of Allowance for Credit Losses - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
| Schedule of Allowance for Credit Losses [Abstract] | ||
| Beginning balance | $ 281,694 | $ 364,973 |
| Written-off | (277,200) | (75,000) |
| Foreign currency translation adjustments | (4,494) | (8,279) |
| Ending balance | $ 281,694 |
Intangible Assets, Net (Details) - Schedule of Intangible Assets, Net - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Schedule of Intangible Assets, Net [Line Items] | ||||
| Subtotal | $ 55,309,085 | $ 47,913,201 | ||
| Less: accumulated amortization | (13,041,612) | (10,614,005) | ||
| Impairment of capitalized development cost and software acquired | (2,214,563) | (2,266,746) | ||
| Intangible assets, net | 40,052,910 | 35,032,450 | ||
| Capitalized development costs [Member] | ||||
| Schedule of Intangible Assets, Net [Line Items] | ||||
| Subtotal | [1] | 11,547,692 | 11,416,518 | |
| Purchased software [Member] | ||||
| Schedule of Intangible Assets, Net [Line Items] | ||||
| Subtotal | 386,342 | 395,446 | ||
| Software from business combinations [Member] | ||||
| Schedule of Intangible Assets, Net [Line Items] | ||||
| Subtotal | 35,270,142 | 36,101,237 | ||
| Franchise right [Member] | ||||
| Schedule of Intangible Assets, Net [Line Items] | ||||
| Subtotal | $ 8,104,909 | |||
| ||||
Related Party Balances and Transactions (Details) - Schedule of Relationship of Related Parties |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Stewart Lor [Member] | |
| Related Party Transaction [Line Items] | |
| Relationship to the Group | CEO |
| Ban Lor [Member] | |
| Related Party Transaction [Line Items] | |
| Relationship to the Group | Co-founder, CEO’s brother |
| Yuxia Xu [Member] | |
| Related Party Transaction [Line Items] | |
| Relationship to the Group | CFO |
| Phillip Tao Qiu [Member] | |
| Related Party Transaction [Line Items] | |
| Relationship to the Group | Independent Director |
| Xiaoyan Liu [Member] | |
| Related Party Transaction [Line Items] | |
| Relationship to the Group | Shareholder of Ascendent |
| Zhongchuan Dadi (Beijing) Technology Co., LTD [Member] | |
| Related Party Transaction [Line Items] | |
| Relationship to the Group | Shareholder of Ascendent |
| Shanghai Yue See cultural development Co., LTD [Member] | |
| Related Party Transaction [Line Items] | |
| Relationship to the Group | Shareholder of Metafusion |
Related Party Balances and Transactions (Details) - Schedule of Due from Related Parties - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Ban Lor [Member] | ||||
| Variable Interest Entity [Line Items] | ||||
| Due from related parties | [1] | $ 19,265 | $ 17,155 | |
| Stewart Lor [Member] | ||||
| Variable Interest Entity [Line Items] | ||||
| Due from related parties | [1] | 469,030 | 452,598 | |
| Yuxia Xu [Member] | ||||
| Variable Interest Entity [Line Items] | ||||
| Due from related parties | [1] | 434,561 | 207,236 | |
| Phillip Tao Qiu [Member] | ||||
| Variable Interest Entity [Line Items] | ||||
| Due from related parties | [1] | 600,000 | 600,000 | |
| Xiaoyan Liu [Member] | ||||
| Variable Interest Entity [Line Items] | ||||
| Due from related parties | [1] | 75,628 | 87,990 | |
| Related Party [Member] | ||||
| Variable Interest Entity [Line Items] | ||||
| Due from related parties | [1] | $ 1,598,484 | $ 1,364,979 | |
| ||||
Related Party Balances and Transactions (Details) - Schedule of Due to Related Parties - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
||
|---|---|---|---|---|
| Shanghai Yue See cultural development Co., LTD [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due to related parties | [1] | $ 39,064 | $ 39,985 | |
| Zhongchuan Dadi (Beijing) Technology Co., LTD [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due to related parties | [1] | 219 | 223 | |
| Related Party [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Due to related parties | [1] | $ 39,283 | $ 40,208 | |
| ||||
Related Party Balances and Transactions (Details) - Schedule of Related Party Transactions - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Stewart Lor [Member] | ||
| Related Party Transaction [Line Items] | ||
| Related party transactions | $ 8,003 | $ 37,620 |
| Yuxia XU [Member] | ||
| Related Party Transaction [Line Items] | ||
| Related party transactions | 6,998 | 10,037 |
| Shanghai Yue See cultural development Co., LTD [Member] | ||
| Related Party Transaction [Line Items] | ||
| Related party transactions | $ 4,287 | |
Bank Loans (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Bank Loans [Line Items] | ||
| Interest expense | $ 77,673 | $ 63,806 |
| Bank Loans [Member] | ||
| Bank Loans [Line Items] | ||
| Weighted average interest rate | 4.00% | 4.20% |
Bank Loans (Details) - Schedule of Outstanding Balance of Short-Term Bank Loans - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|---|---|
| Schedule of Outstanding Balance of Short-Term Bank Loans [Line Items] | ||||
| Bank loans | $ 2,752,092 | $ 3,943,718 | $ 3,861,377 | $ 2,609,755 |
| Loans from Bank of Communication [Member] | ||||
| Schedule of Outstanding Balance of Short-Term Bank Loans [Line Items] | ||||
| Bank loans | 2,752,092 | 2,816,942 | ||
| Loan from SPD Bank [Member] | ||||
| Schedule of Outstanding Balance of Short-Term Bank Loans [Line Items] | ||||
| Bank loans | $ 1,126,776 |
Bank Loans (Details) - Schedule of Outstanding Balance of Short-Term Bank Loans (Parentheticals) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2024 |
Dec. 31, 2023 |
|
| Loans from Bank of Communication [Member] | ||
| Schedule of Outstanding Balance of Short-Term Bank Loans [Line Items] | ||
| Aggregated carrying value | $ 2.2 | $ 2.3 |
| Loan from SPD Bank [Member] | ||
| Schedule of Outstanding Balance of Short-Term Bank Loans [Line Items] | ||
| Fixed interest rate | 4.10% | 4.10% |
| Aggregated carrying value | $ 1.6 | $ 1.7 |
| Maturity date | June 28, 2024 | June 28, 2024 |
| Minimum [Member] | Loans from Bank of Communication [Member] | ||
| Schedule of Outstanding Balance of Short-Term Bank Loans [Line Items] | ||
| Fixed interest rate | 3.90% | 3.90% |
| Maturity date | January 16, 2024 | January 16, 2024 |
| Maximum [Member] | Loans from Bank of Communication [Member] | ||
| Schedule of Outstanding Balance of Short-Term Bank Loans [Line Items] | ||
| Fixed interest rate | 4.20% | 4.20% |
| Maturity date | April 10, 2025 | April 10, 2025 |
Bank Loans (Details) - Schedule of Bank Loans - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Schedule of Bank Loans [Abstract] | ||
| Beginning balance | $ 3,943,718 | $ 2,609,755 |
| Additions | 2,079,002 | 3,319,718 |
| Repayments | (3,187,803) | (1,876,362) |
| Foreign currency translation adjustments | (82,825) | (191,734) |
| Ending balance | $ 2,752,092 | $ 3,861,377 |
Lease (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Lease [Abstract] | ||
| Total lease expense | $ 258,823 | $ 140,499 |
| Lease liabilities | $ (164,221) | $ (43,010) |
Lease (Details) - Schedule of Operating Leases - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Operating Leases [Abstract] | ||
| Right-of-use assets, net | $ 457,292 | $ 357,007 |
| Operating lease liabilities - current | 352,167 | 260,728 |
| Operating lease liabilities - non-current | 139,820 | 109,956 |
| Total operating lease liabilities | $ 491,987 | $ 370,684 |
Lease (Details) - Schedule of Weighted Average Remaining Lease Terms and Discount Rates |
Jun. 30, 2024 |
|---|---|
| Schedule of Weighted Average Remaining Lease Terms and Discount Rates [Abstract] | |
| Weighted average remaining lease term (years) | 1 year 8 months 12 days |
| Weighted average discount rate | 5.00% |
Lease (Details) - Schedule of Maturities of Lease Liabilities - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Maturities of Lease Liabilities [Abstract] | ||
| 2025 | $ 366,206 | |
| 2026 | 108,093 | |
| 2027 | 36,031 | |
| Total future minimum lease payments | 510,330 | |
| Less: imputed interest | (18,343) | |
| Present value of lease liabilities | $ 491,987 | $ 370,684 |
Convertible Notes (Details) - USD ($) |
6 Months Ended | 7 Months Ended | 12 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|---|
Jun. 17, 2024 |
May 16, 2024 |
May 18, 2023 |
Sep. 01, 2022 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Aug. 04, 2023 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
| Convertible Notes [Line Items] | |||||||||
| Gross proceeds | $ 8,000,000 | $ 1,419,589 | |||||||
| Original issue discount | 640,000 | ||||||||
| Fees | $ 15,000 | $ 20,000 | |||||||
| Percentage of outstanding balance elected for pre-payment | 120.00% | ||||||||
| Aggregate split adjusted shares (in Shares) | 2,913 | ||||||||
| Remaining principal and interest amount | 4,059,983 | $ 1,250,000 | |||||||
| Fair value of outstanding | 5,584,422 | 5,020,633 | |||||||
| Fair value of outstanding | |||||||||
| Gain (loss) of change in fair value of convertible note | 530,501 | ||||||||
| Commitment amount | $ 30,000,000 | ||||||||
| Percentage of converted rate | 8.00% | ||||||||
| Percentage of commitment fee | 1.00% | ||||||||
| Financing cost | $ 62,570 | ||||||||
| Deferred financing cost | 237,430 | ||||||||
| Net proceeds | $ 600,000 | ||||||||
| Streeterville Note [Member] | |||||||||
| Convertible Notes [Line Items] | |||||||||
| Aggregate principal amount | $ 8,640,000 | $ 1,250,310 | |||||||
| Percentage of interest rate | 6.00% | ||||||||
| Fair value of outstanding | $ 5,020,633 | ||||||||
| YA 2024 Notes [Member] | |||||||||
| Convertible Notes [Line Items] | |||||||||
| Aggregate principal amount | 8,000,000 | ||||||||
| Interest expense recognized for these convertible notes | $ 104,850 | ||||||||
| First Tranche of YA Notes [Member] | |||||||||
| Convertible Notes [Line Items] | |||||||||
| Aggregate principal amount | $ 4,756,986 | ||||||||
| Percentage of origin issue discount rate | 7.00% | 17.60% | |||||||
| Maturity date | May 16, 2025 | ||||||||
| Net proceeds | $ 4,162,347 | ||||||||
| Second Tranche of YA Notes [Member] | |||||||||
| Convertible Notes [Line Items] | |||||||||
| Aggregate principal amount | $ 1,500,000 | ||||||||
| Percentage of origin issue discount rate | 7.00% | 24.30% | |||||||
| Maturity date | May 16, 2025 | ||||||||
| Net proceeds | $ 1,317,225 | ||||||||
| Convertible Notes Payable [Member] | |||||||||
| Convertible Notes [Line Items] | |||||||||
| Gain (loss) of change in fair value of convertible note | $ 1,048,271 | ||||||||
| Interest expense recognized for these convertible notes | $ 87,621 | $ 157,607 | |||||||
| Common Class A [Member] | |||||||||
| Convertible Notes [Line Items] | |||||||||
| Aggregate split adjusted shares (in Shares) | 58,257 | ||||||||
| Aggregate split adjusted shares (in Shares) | 161,708 | ||||||||
| Common Class A [Member] | Streeterville Note [Member] | |||||||||
| Convertible Notes [Line Items] | |||||||||
| Aggregate split adjusted shares (in Shares) | 5,594 | ||||||||
| Aggregate split adjusted shares (in Shares) | 111,875 | ||||||||
Convertible Notes (Details) - Schedule of Convertible Notes - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Convertible Notes [Line Items] | ||
| Total convertible notes | $ 5,584,422 | $ 5,020,633 |
| Streeterville Note [Member] | ||
| Schedule of Convertible Notes [Line Items] | ||
| Total convertible notes | 5,020,633 | |
| YA Notes [Member] | ||
| Schedule of Convertible Notes [Line Items] | ||
| Total convertible notes | $ 5,584,422 |
Taxes (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
Dec. 31, 2023 |
|
| Taxes [Line Items] | |||
| Income tax rate while preferential tax rates | 25.00% | ||
| Income tax rate | 15.00% | ||
| Statutory income tax rate | 15.00% | ||
| Decreased income taxes (in Dollars) | $ 209,134 | $ 223,556 | |
| Preferred tax treatment description | The benefit of the preferred tax treatment on net income per share (basic and diluted) was $0.00 (split-adjusted 0.02) and $0.08 (split-adjusted 1.54) for the six months ended June 30, 2024 and 2023, respectively. | ||
| Net income per share (in Dollars per share) | $ 0 | $ 0.08 | |
| Net operating loss carryforwards (in Dollars) | $ 13,800,000 | ||
| Valuation allowance against deferred tax assets (in Dollars) | $ 3,021,726 | $ 2,932,049 | |
| PRC [Member] | |||
| Taxes [Line Items] | |||
| Subject to income tax rate | 25.00% | ||
| Minimum [Member] | |||
| Taxes [Line Items] | |||
| Value add tax standard rates | 3.00% | ||
| Maximum [Member] | |||
| Taxes [Line Items] | |||
| Value add tax standard rates | 13.00% | ||
Taxes (Details) - Schedule of Provision for Income Taxes - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Schedule of Provision For Income Taxes [Abstract] | ||
| Current | $ (410) | $ 2,795 |
| Deferred | (144,541) | (77,651) |
| Total income tax benefit | $ (144,951) | $ (74,856) |
Taxes (Details) - Schedule of Effective Tax Rate |
6 Months Ended | |
|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|
| Schedule of Effective Tax Rate [Abstract] | ||
| PRC statutory rates | 25.00% | 25.00% |
| Preferential tax rates | (1.90%) | (0.40%) |
| R&D credits | 1.20% | 0.30% |
| Change in valuation allowance and others | (23.30%) | (24.80%) |
| Effective tax rate | 1.00% | 0.10% |
Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Deferred tax assets: | ||
| Provision for credit losses | $ 1,455,081 | $ 1,268,962 |
| Depreciation and amortization | 194,760 | 185,676 |
| Net operating loss carryforward | 2,477,328 | 2,496,584 |
| Valuation allowance | (3,021,726) | (2,932,049) |
| Total deferred tax assets | 1,105,443 | 1,019,173 |
| Deferred tax liabilities: | ||
| Intangible assets arising from acquisitions | $ 1,992,457 |
Taxes (Details) - Schedule of Taxes Payable - USD ($) |
Jun. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Taxes Payable [Abstract] | ||
| Income taxes payable | $ 5,616 | $ 5,889 |
| VAT and other tax payable | 163,754 | 174,553 |
| Totals | $ 169,370 | $ 180,442 |
Equity (Details) - USD ($) |
6 Months Ended | 7 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 04, 2024 |
Aug. 18, 2024 |
Apr. 26, 2024 |
Mar. 22, 2024 |
Mar. 05, 2024 |
Dec. 08, 2023 |
Dec. 01, 2023 |
Nov. 29, 2023 |
Nov. 24, 2023 |
Nov. 22, 2023 |
Sep. 05, 2023 |
Jun. 21, 2023 |
May 30, 2023 |
May 18, 2023 |
May 17, 2023 |
Mar. 28, 2023 |
Mar. 24, 2023 |
Feb. 03, 2023 |
Jan. 20, 2023 |
Jan. 05, 2023 |
Dec. 29, 2022 |
Dec. 20, 2022 |
Sep. 20, 2022 |
Sep. 09, 2022 |
Sep. 01, 2022 |
Jul. 22, 2022 |
Jul. 15, 2022 |
May 16, 2022 |
Jan. 26, 2022 |
Dec. 31, 2021 |
Aug. 05, 2021 |
May 26, 2021 |
Feb. 18, 2021 |
Feb. 06, 2021 |
Jul. 02, 2020 |
Apr. 04, 2019 |
Aug. 18, 2018 |
Jun. 30, 2024 |
Jun. 30, 2023 |
Aug. 04, 2023 |
Dec. 31, 2024 |
Dec. 31, 2023 |
Oct. 02, 2023 |
|||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Share capital | (20) | 30 | |||||||||||||||||||||||||||||||||||||||||||||
| Cancelled shares | 220 | ||||||||||||||||||||||||||||||||||||||||||||||
| Designation shares | 2,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Cancelled shares | 635 | ||||||||||||||||||||||||||||||||||||||||||||||
| Additional ordinary shares | 4,500,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares outstanding | 243,902 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 63,025 | 4,202 | 6,523,157 | 57,593 | 34,915 | 5,594 | 17,135 | 23,937 | 933 | 2,500 | 2,500 | 24,208 | 17,520 | 16,729 | 12 | 5 | 62 | 12,195 | 2,513 | ||||||||||||||||||||||||||||
| Ordinary share issued | 342,684 | 1,250 | 243,902 | ||||||||||||||||||||||||||||||||||||||||||||
| Aggregate value (in Dollars) | $ 1,520,867 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted share price (in Dollars) | $ 100,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted share | 1,260,504 | ||||||||||||||||||||||||||||||||||||||||||||||
| Consulting fee expense (in Dollars) | $ 1,474,999 | $ 1,396,470 | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expenses (in Dollars) | 2,180,000 | 2,180,000 | |||||||||||||||||||||||||||||||||||||||||||||
| Fair value of shares (in Dollars) | $ 24,078,675 | $ 15,906,186 | $ 12,640,062 | $ 13,080,000 | |||||||||||||||||||||||||||||||||||||||||||
| Unrecognized compensation expense- (in Dollars) | $ 4,541,667 | $ 6,721,667 | |||||||||||||||||||||||||||||||||||||||||||||
| Reserved shares | 10,069 | 16,729 | |||||||||||||||||||||||||||||||||||||||||||||
| Number of outstanding percentage | 2.00% | 20.00% | |||||||||||||||||||||||||||||||||||||||||||||
| Contractual term | 10 years | ||||||||||||||||||||||||||||||||||||||||||||||
| Share excised | 242 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted split value (in Dollars) | $ 1,272 | $ 1,632 | $ 1,272 | ||||||||||||||||||||||||||||||||||||||||||||
| Stock options were fully vested | 7,479 | ||||||||||||||||||||||||||||||||||||||||||||||
| Vested adjusted shares | 374 | ||||||||||||||||||||||||||||||||||||||||||||||
| Modification expense (in Dollars) | $ 206,461 | $ 137,641 | $ 2,139,555 | ||||||||||||||||||||||||||||||||||||||||||||
| Stock spilit per shares (in Dollars per share) | $ 6 | $ 268.4 | $ 403.2 | ||||||||||||||||||||||||||||||||||||||||||||
| Net proceeds (in Dollars) | 10,375,969 | ||||||||||||||||||||||||||||||||||||||||||||||
| Purchase an aggregate share price (in Dollars per share) | $ 13.42 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net proceeds (in Dollars) | $ 600,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Investors agreed purchase aggregate (in Dollars) | $ 40,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Subscription receivable (in Dollars) | $ 40,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued | 111,875 | ||||||||||||||||||||||||||||||||||||||||||||||
| Conversion amount (in Dollars) | 3,128,453 | ||||||||||||||||||||||||||||||||||||||||||||||
| Equity purchase percentage | 31.00% | ||||||||||||||||||||||||||||||||||||||||||||||
| Appraisal percentage | 90.00% | ||||||||||||||||||||||||||||||||||||||||||||||
| Consideration of acquisition | 1,151,869 | 478,747 | |||||||||||||||||||||||||||||||||||||||||||||
| Consideration of equity interest percentage | 65.00% | ||||||||||||||||||||||||||||||||||||||||||||||
| Warrant term | 5 years | 5 years | |||||||||||||||||||||||||||||||||||||||||||||
| Warrant exercisable value (in Dollars) | $ 876 | $ 1,320 | |||||||||||||||||||||||||||||||||||||||||||||
| Convertible note (in Dollars) | $ 6,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Dividend stock | 100 | 15,574,774 | |||||||||||||||||||||||||||||||||||||||||||||
| Dividend stock shares split | 5 | 778,739 | |||||||||||||||||||||||||||||||||||||||||||||
| Dividend per share (in Dollars per share) | $ 6 | ||||||||||||||||||||||||||||||||||||||||||||||
| Allocation of statutory reserve percentage | 10.00% | ||||||||||||||||||||||||||||||||||||||||||||||
| Registered capital percentage | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||
| Statutory reserve balances (in Dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
| Warrant [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 26,400 | ||||||||||||||||||||||||||||||||||||||||||||||
| Consulting Services [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expenses (in Dollars) | $ 1,474,999 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 0.4 | $ 0.4 | |||||||||||||||||||||||||||||||||||||||||||||
| Authorized shares | 4,500,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units (RSUs) [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary share issued | 50,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted share | 50,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| DTI Group Limited [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity percentage | 32.00% | ||||||||||||||||||||||||||||||||||||||||||||||
| Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Reserved shares | 4,316 | ||||||||||||||||||||||||||||||||||||||||||||||
| Conversion Convertible Loan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Conversion amount (in Dollars) | $ 3,128,453 | ||||||||||||||||||||||||||||||||||||||||||||||
| Employees [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 1,584 | ||||||||||||||||||||||||||||||||||||||||||||||
| Private Placement [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary share issued | 1,544,613 | ||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of ordinary shares (in Dollars) | $ 15,000,000 | $ 30,000,000 | $ 15,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Market price percentage | 96.00% | 96.00% | |||||||||||||||||||||||||||||||||||||||||||||
| Net proceeds (in Dollars) | $ 500,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| IPO [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 26 | ||||||||||||||||||||||||||||||||||||||||||||||
| Warrant issued | 510 | ||||||||||||||||||||||||||||||||||||||||||||||
| Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Authorized share capital (in Dollars) | $ 2,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Additional ordinary shares | 4,750,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Forecast [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Forecast [Member] | Subsequent Event [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 216 | ||||||||||||||||||||||||||||||||||||||||||||||
| Forecast [Member] | Private Placement [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary share issued | 116,507 | ||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 748 | ||||||||||||||||||||||||||||||||||||||||||||||
| Minimum [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Authorized share capital (in Dollars) | $ 200,000,000 | $ 50,000,000 | $ 16,666,700 | ||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 500,000,000 | 125,000,000 | 333,333,333 | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise price (in Dollars per share) | 20.16 | $ 292.8 | |||||||||||||||||||||||||||||||||||||||||||||
| Adjusted split value (in Dollars) | $ 5,856 | ||||||||||||||||||||||||||||||||||||||||||||||
| Vesting period | 1 year | ||||||||||||||||||||||||||||||||||||||||||||||
| Minimum [Member] | Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 250,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Maximum [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Authorized share capital (in Dollars) | $ 2,000,000,000 | $ 200,000,000 | $ 50,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 5,000,000,000 | 500,000,000 | 1,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise price (in Dollars per share) | $ 63.6 | $ 81.6 | |||||||||||||||||||||||||||||||||||||||||||||
| Adjusted split value (in Dollars) | $ 1,632 | ||||||||||||||||||||||||||||||||||||||||||||||
| Vesting period | 3 years | ||||||||||||||||||||||||||||||||||||||||||||||
| Maximum [Member] | Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Authorized share capital (in Dollars) | $ 40,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 5,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Maximum [Member] | Forecast [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Maximum [Member] | Stock Options [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 836 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2018 Stock Option Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 18,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary share issued | 31,687 | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expenses (in Dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
| Exercise price (in Dollars per share) | $ 292.8 | $ 900 | |||||||||||||||||||||||||||||||||||||||||||||
| Adjusted split value (in Dollars) | $ 5,856 | ||||||||||||||||||||||||||||||||||||||||||||||
| 2018 Stock Option Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 1,210 | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise price (in Dollars per share) | $ 81.6 | $ 63.6 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock options were fully vested | 14,958 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 4,999,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Forecast [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders of Smartconn [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 2,669,435 | ||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders of Smartconn [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares issued | 53,388,709 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of shares (in Dollars) | $ 30,938,757 | ||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders of Boxinrui [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares issued | 69,141,256 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 3,457,063 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of shares (in Dollars) | $ 40,067,357 | ||||||||||||||||||||||||||||||||||||||||||||||
| White Lion Capital LLC [Member] | Private Placement [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Net proceeds (in Dollars) | $ 476,563 | ||||||||||||||||||||||||||||||||||||||||||||||
| YA II PN, LTD. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 933 | 136 | 77,231 | ||||||||||||||||||||||||||||||||||||||||||||
| Warrant issued | 2,721 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Share capital | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | [1] | $ 8 | $ 8 | ||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 4,980,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares issued | [1] | 13,757,773 | 12,973,209 | ||||||||||||||||||||||||||||||||||||||||||||
| Unissued shares | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Number of votes | one | ||||||||||||||||||||||||||||||||||||||||||||||
| Authorized shares | [1] | 4,980,000,000 | 4,980,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Additional ordinary shares | 83,211 | ||||||||||||||||||||||||||||||||||||||||||||||
| Increased from share capital (in Dollars) | $ 2,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares outstanding | [1] | 13,757,773 | 12,973,209 | ||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 698,301 | 4,161 | 47 | 13,757,773 | 8,085 | 12,973,209 | |||||||||||||||||||||||||||||||||||||||||
| Ordinary share issued | 130,463,140 | 100 | |||||||||||||||||||||||||||||||||||||||||||||
| Aggregated issued | 161,708 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restricted share price (in Dollars) | $ 1,500,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net proceeds (in Dollars) | $ 4,115,706 | ||||||||||||||||||||||||||||||||||||||||||||||
| Purchase an aggregate shares (in Dollars) | $ 600,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Purchase an aggregate share price (in Dollars per share) | $ 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||
| Reserve split adjusted | 503 | 836 | |||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 0.05 | $ 0.00166667 | |||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares issued | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Additional ordinary shares | 4,482,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary share issued | 50,252 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued | [2] | 5,594 | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion amount (in Dollars) | [2] | $ 44,751 | |||||||||||||||||||||||||||||||||||||||||||||
| Consideration of acquisition | [2] | 34,915 | |||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Private Placement [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 7,683 | ||||||||||||||||||||||||||||||||||||||||||||||
| Market price percentage | 97.00% | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 4,980,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Additional ordinary shares | 19,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 5,825 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net proceeds (in Dollars) | $ 101,639 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Forecast [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Authorized shares | 4,750,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Minimum [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Authorized shares | 498,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Maximum [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Authorized shares | 500,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Share Consolidation [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares issued | 259,464,169 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares outstanding | 259,464,169 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Amended 2018 Plan [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Additional ordinary shares | 259,473 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 12,974 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | Shareholders [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares issued | 275,155,450 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares outstanding | 275,155,450 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | White Lion Capital LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary share issued | 153,646 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Class A [Member] | YA II PN, LTD. [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted stock split | 47 | ||||||||||||||||||||||||||||||||||||||||||||||
| Share Consolidation [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Designation shares | 243,903 | ||||||||||||||||||||||||||||||||||||||||||||||
| Share Consolidation [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 0.4 | $ 0.05 | |||||||||||||||||||||||||||||||||||||||||||||
| Share Capital Increase [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 0.4 | $ 0.4 | |||||||||||||||||||||||||||||||||||||||||||||
| Class B Ordinary Shares [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | [1] | $ 8 | $ 8 | ||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 20,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares issued | [1] | 12,195 | 12,195 | ||||||||||||||||||||||||||||||||||||||||||||
| Number of votes | thirty | ||||||||||||||||||||||||||||||||||||||||||||||
| Authorized shares | [1] | 20,000,000 | 20,000,000 | ||||||||||||||||||||||||||||||||||||||||||||
| Additional ordinary shares | 18,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares, shares outstanding | [1] | 12,195 | 12,195 | ||||||||||||||||||||||||||||||||||||||||||||
| Class B Ordinary Shares [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 0.4 | ||||||||||||||||||||||||||||||||||||||||||||||
| Authorized shares | 500,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares issued | |||||||||||||||||||||||||||||||||||||||||||||||
| Conversion amount (in Dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
| Consideration of acquisition | |||||||||||||||||||||||||||||||||||||||||||||||
| Class B Ordinary Shares [Member] | Forecast [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Increased from share capital (in Dollars) | $ 40,000,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Class B Ordinary Shares [Member] | Forecast [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 8 | ||||||||||||||||||||||||||||||||||||||||||||||
| Divided shares | 20,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Restricted share | 84,033 | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock [Member] | Forecast [Member] | Common Stock [Member] | |||||||||||||||||||||||||||||||||||||||||||||||
| Class of Stock [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ 0.4 | ||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||
Equity (Details) - Schedule of Estimate the Fair Value of Stock Options |
6 Months Ended |
|---|---|
|
Jun. 30, 2024
USD ($)
| |
| Options Granted in May 2021 [Member] | |
| Schedule of Estimate the Fair Value of Stock Options [Line Items] | |
| Risk-free interest rate | 0.81% |
| Expected life of the options | 5 years |
| Expected volatility | 96.00% |
| Expected dividend yield | |
| Fair value (in Dollars) | $ 7,232,526 |
| Options Amended in January, 2022 [Member] | |
| Schedule of Estimate the Fair Value of Stock Options [Line Items] | |
| Risk-free interest rate | 1.66% |
| Expected life of the options | 4 years 3 months 29 days |
| Expected volatility | 96.00% |
| Expected dividend yield | |
| Fair value (in Dollars) | $ 2,106,163 |
| Options Amended in May, 2022 [Member] | |
| Schedule of Estimate the Fair Value of Stock Options [Line Items] | |
| Risk-free interest rate | 0.81% |
| Expected life of the options | 4 years 10 days |
| Expected volatility | 96.00% |
| Expected dividend yield | |
| Fair value (in Dollars) | $ 1,652,811 |
| Options Amended in December, 2022 [Member] | |
| Schedule of Estimate the Fair Value of Stock Options [Line Items] | |
| Risk-free interest rate | 4.44% |
| Expected life of the options | 3 years 5 months 4 days |
| Expected volatility | 96.00% |
| Expected dividend yield | |
| Fair value (in Dollars) | $ 689,971 |
Equity (Details) - Schedule of Activities of the Stock Options - Stock option [Member] - USD ($) |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
Jun. 30, 2024 |
Dec. 31, 2023 |
|
| Schedule of Activities of the Stock Options [Line Items] | ||||
| Number of Share Options, Granted | ||||
| Weighted Average Exercise Price, Granted | ||||
| Aggregate Intrinsic Value, Granted | ||||
| Number of Share Options, Cancelled | ||||
| Weighted Average Exercise Price, Cancelled | ||||
| Aggregate Intrinsic Value, Cancelled | ||||
| Number of Share Options, Outstanding | 1,634 | 1,634 | 1,634 | 1,634 |
| Weighted Average Exercise Price, Outstanding | $ 941.66 | $ 960 | $ 941.66 | $ 941.66 |
| Weighted Average Remaining Contractual Term, Outstanding | 2 years 5 months 26 days | 3 years 5 months 26 days | 1 year 11 months 26 days | |
| Aggregate Intrinsic Value, Outstanding | ||||
| Number of Share Options, Exercisable | 1,634 | |||
| Weighted Average Exercise Price, Exercisable | $ 941.66 | |||
| Weighted Average Remaining Contractual Term, Exercisable | 1 year 11 months 26 days | |||
| Aggregate Intrinsic Value, Exercisable |
Commitments and Contingencies (Details) |
6 Months Ended | 12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
|
Nov. 16, 2023
USD ($)
|
Nov. 16, 2023
CNY (¥)
|
Aug. 22, 2023
USD ($)
|
Aug. 22, 2023
CNY (¥)
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2024
CNY (¥)
|
Dec. 31, 2023
USD ($)
|
Dec. 31, 2023
CNY (¥)
|
Jun. 30, 2024
CNY (¥)
|
|
| Commitments and Contingencies [Abstract] | |||||||||
| Lawsuit filing date | Aug. 22, 2023 | Aug. 22, 2023 | |||||||
| Disputed amount | $ 1,389,806 | ¥ 10,100,000 | $ 1,389,806 | ¥ 10,100,000 | |||||
| Payment to supplier | $ 1,389,806 | ¥ 10,100,000 | |||||||
| Accrued expenses | $ 48,379 | ¥ 351,578 | |||||||
| Restricted cash | $ 1,409,041 | ¥ 10,239,780 | |||||||
Segment Reporting (Details) |
6 Months Ended | |
|---|---|---|
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
USD ($)
|
|
| Segment Reporting [Line Items] | ||
| Number of operating segment | 1 | |
| Revenue | $ 4,994,044 | $ 6,584,729 |
| Application Development Service [Member] | ||
| Segment Reporting [Line Items] | ||
| Revenue | $ 292,101 | $ 1,247,232 |
Segment Reporting (Details) - Schedule of Revenues - Other Operating Segment [Member] - USD ($) |
6 Months Ended | |||
|---|---|---|---|---|
Jun. 30, 2024 |
Jun. 30, 2023 |
|||
| REVENUES: | ||||
| Total revenues | $ 4,994,044 | $ 6,584,729 | ||
| Application development services [Member] | ||||
| REVENUES: | ||||
| Total revenues | [1] | 884,538 | 2,179,167 | |
| Consulting and technical support services [Member] | ||||
| REVENUES: | ||||
| Total revenues | 2,383,000 | 1,477,740 | ||
| Subscription services [Member] | ||||
| REVENUES: | ||||
| Total revenues | 215,355 | 294,528 | ||
| Trading revenue [Member] | ||||
| REVENUES: | ||||
| Total revenues | 1,375,319 | 2,605,970 | ||
| Other revenue [Member] | ||||
| REVENUES: | ||||
| Total revenues | $ 135,832 | $ 27,324 | ||
| ||||
Subsequent Events (Details) - Subsequent Event [Member] |
Jul. 17, 2024
USD ($)
|
Jul. 22, 2024 |
Jul. 17, 2024
CNY (¥)
|
Jul. 04, 2024
USD ($)
|
Jul. 04, 2024
CNY (¥)
|
|---|---|---|---|---|---|
| Subsequent Events [Line Items] | |||||
| Debt collateral over loan | $ 1,600,000 | ||||
| X3 TECHNOLOGIES PTE. LTD [Member] | |||||
| Subsequent Events [Line Items] | |||||
| Equity interest | 100.00% | ||||
| Shanghai Pudong Development Bank [Member] | |||||
| Subsequent Events [Line Items] | |||||
| Total facility | $ 915,070 | ¥ 6,650,000 | |||
| Powerbridge Zhuhai [Member] | |||||
| Subsequent Events [Line Items] | |||||
| Drew down | $ 915,070 | ¥ 6,650,000 | |||
| Credit term | one | ||||
| Fixed annual interest rate | 4.00% |
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