F-1/A: DeepGreenX Group Files for Nasdaq Direct Listing Amidst Significant Losses and Ambitious Digital Asset Expansion

DeepGreenX Group Inc., a Canadian holding company, is pursuing a direct listing on Nasdaq to fund its pivot from a legacy green logistics business to an intelligent platform for tokenizing sustainability and real-world asset data, despite reporting substantial net losses and a 'going concern' warning from its auditor.

Summary

• DeepGreenX Group Inc. is a Canadian holding company aiming for a direct listing on the Nasdaq Global Market.
• The company is transitioning from a legacy green logistics supply chain business, primarily in China, to an intelligent platform (DXG RWA Factory) that converts sustainability and real-world asset data into digital financial instruments for monetization on digital asset exchanges.
• The legacy logistics business generated revenue of $24,081,848 in 2024, a significant increase from $5,954,563 in 2023, and $0 in 2022.
• Despite revenue growth, the company reported net losses of $2,453,422 in 2024 and $96,698 in 2023, compared to a net profit of $99,461 in 2022.
• Operating expenses increased substantially in 2024, with general and administrative expenses rising over 1,000% to $1,784,135 and professional expenses increasing over 1,000% to $691,148.
• The company had negative cash flows from operating activities of $2,195,962 in 2024 and $55,119 in 2023.
• As of December 31, 2024, DeepGreenX had a total deficit of $2,641,598 and total liabilities of $4,381,382.
• The independent registered public accounting firm expressed 'substantial doubt about our ability to continue as a going concern' due to historical losses, accumulated deficit, and the need for additional capital.
• The direct listing will not involve an underwriting process, book-building, or price stabilization, and the company will not receive any proceeds from the sale of ADSs by Registered Shareholders.
• Ms. Lan Yang, the ultimate beneficial owner, controls approximately 92% of the company's voting power, making it a 'controlled company' under Nasdaq rules, allowing it to rely on certain corporate governance exemptions.
• The company is also a 'foreign private issuer,' exempting it from certain U.S. domestic issuer reporting requirements.

Sentiment

Score: 3

Explanation: The company faces severe financial challenges, including substantial net losses, negative operating cash flows, and an auditor's 'going concern' warning. While it has ambitious plans in a high-growth sector (digital assets/sustainability), these plans are in early development with no guaranteed success or timely completion. Significant regulatory and operational risks, particularly concerning its China operations and the nascent digital asset market, further weigh down the sentiment. The direct listing itself provides no capital to the company, and the lack of lock-up agreements adds to potential share price volatility.

Positives

• DeepGreenX is expanding into the intelligent platform sector for sustainability and real-world asset data monetization, a market projected to grow from $1.0 trillion in 2024 to $16 trillion by 2030, according to Boston Consulting Group.
• The company's mission is to accelerate world sustainability and digital capital innovation by creating a profitable ecosystem for green-focused enterprises and projects.
• Management believes the platform will create new profit centers from sustainability and RWA data, enhancing project attractiveness and accelerating customer acquisition.
• DeepGreenX is developing relationships with major global digital trading platforms (e.g., Binance, Coinbase, Bybit, OKX) and certification agencies (e.g., WSSO, CBDCCO, Climate Action Reserve).
• Discussions are underway with several entities across diverse sustainability sectors (nature-based carbon capture, data/computing centers, alternative energy) for platform deployment.
• The company has hired a full-time software development team, engaged a leading cybersecurity firm (fyeo.io) for smart contract audits, and retained global law firms (Jones Day) for legal and compliance matters.
• The legacy green logistics business provides a strategic foundation, generating significant revenue ($24,081,848 in 2024) and offering valuable real-world data and customer relationships for the new platform.
• Management asserts that its fee-based business model for the new platform is not linked to fluctuations in digital asset values, aiming for revenue stability.
• Cash and cash equivalents increased significantly to $1,051,936 in 2024 from $14,316 in 2023, supported by related party loans.
• The company has committed financial support from Fourcore Capital Inc. (a related party) to meet liquidity requirements for at least the next 12 months.

Negatives

• The company has a history of significant net losses, including $2,453,422 in 2024 and $96,698 in 2023, with only one profitable year (2022) since inception.
• Operating activities consistently resulted in negative cash flows, with $2,195,962 used in 2024 and $55,119 in 2023.
• DeepGreenX has a substantial accumulated deficit of $2,772,203 and negative working capital of $2,641,598 as of December 31, 2024.
• The independent registered public accounting firm issued an explanatory paragraph expressing 'substantial doubt about our ability to continue as a going concern.'
• The direct listing will not generate any proceeds for the company, as it is solely for the resale of existing shares by Registered Shareholders.
• There is no public market for the ADSs or common shares currently, and the direct listing lacks traditional book-building or price stabilization, potentially leading to high price volatility.
• Existing shareholders are not subject to contractual lock-up agreements, which could result in a significant volume of sales immediately after listing, depressing the share price.
• The company's 'controlled company' status and 'foreign private issuer' status allow it to opt out of certain Nasdaq corporate governance and U.S. domestic issuer requirements, potentially offering fewer protections to shareholders.
• Operations in China expose the company to significant regulatory and operational risks, including uncertainties in the PRC legal system, potential government intervention, and restrictions on cash transfers out of China.
• The company's Korean foreign exchange filings are not in compliance, which could lead to penalties, share confiscation, or criminal liability.
• The PCAOB's potential inability to inspect the company's Malaysia-based auditor (J&S Associate PLT) due to PRC involvement could lead to delisting under the Holding Foreign Companies Accountable Act.
• The DXG RWA Factory, the core of the company's new business, is in early development, with no tokens created or issued as of the filing date, and its success is not guaranteed.
• The company does not intend to pay cash dividends on its common shares for the foreseeable future, retaining earnings for business development and growth.
• The company is heavily dependent on financing and other support from related parties, which may not always be available on commercially reasonable terms.
• The legal and regulatory framework for digital assets, NFTs, and tokenized real-world assets is highly uncertain and evolving, posing significant compliance and operational risks.

Risks

• History of losses, negative cash flows from operating activities, and negative working capital, raising substantial doubt about the ability to continue as a going concern.
• Requirement for significant additional capital to support business growth, which may not be available on commercially reasonable terms and could lead to dilution or burdensome debt.
• Inability to sustain revenue growth rate in the future.
• Complexity and lengthy implementation process of new platforms; any failure to satisfy customers or perform as desired could harm the business.
• Failure to successfully develop and deploy new technologies to address customer needs.
• Inability to maintain and enhance brand and reputation, especially in markets outside China.
• Breaches in data security, failure of information security systems, and privacy concerns could lead to penalties, reputational damage, and business loss.
• Failure to manage future growth effectively.
• Volatility in the carbon credit market; any decline in value of carbon credits or carbon offsets could materially and adversely affect the business.
• Digital assets represent a new and rapidly evolving industry, and the value of ADSs may depend on the acceptance of proposed digital asset products.
• Banks may not provide or may cut off banking services to businesses involved in digital asset-related services.
• Privacy-preserving features in digital asset networks could increase the risk of criminal/civil lawsuits or banking service cut-offs.
• Digital asset networks are in early stages of development and may not function as intended, dampening growth.
• Dependence on the internet; disruption could affect digital asset value.
• Scaling challenges and upgrades in digital asset networks may not be effective or may fail.
• Flaws in source code for digital assets have been exposed and exploited in the past.
• Inability to adequately evaluate risks associated with the planned DXG RWA Factory platform, potentially exposing the company to legal, regulatory, and other risks.
• Uncertainty in the legal and regulatory framework around NFTs and other tokenized real-world assets.
• Extreme volatility and disruption in digital asset markets (e.g., FTX, Celsius, Voyager, BlockFi bankruptcies) could negatively impact the value of ADSs.
• Increased regulatory and enforcement scrutiny on the digital asset industry could lead to new costs and compliance burdens.
• Failure to maintain an effective system of internal control over financial reporting could adversely affect investor confidence and lead to SEC sanctions or delisting.
• Reliance on third-party service providers; any disruption or delays in service could materially and adversely affect the business.
• Research and development efforts may not yield expected results, delaying product/service timelines.
• Historical results of operations are not indicative of future performance, and past growth may not be sustained.
• Dependence on the continued efforts of key personnel and the ability to recruit new talent.
• Exposure to risks from fluctuations in foreign exchange rates and interest rates.
• Global operations expose the company to business and legal risks, including complexity of laws, enforcement uncertainty, export controls, anti-corruption laws, and trade restrictions.
• Uncertainties with respect to the PRC legal system, including rapid changes in rules and regulations.
• Difficulty for U.S. investors to enforce judgments against the company or its directors/officers in foreign jurisdictions (China and Canada).
• PRC government intervention or influence over operations, potentially limiting or hindering the ability to offer securities.
• The approval or filing of the CSRC or other PRC regulatory agencies may be required for listing status or future offshore securities offerings, with potential penalties for non-compliance.
• The PRC government may disallow the company's holding company structure, resulting in material changes to operations and value of securities.
• Restrictions on cash or asset transfers out of the PRC due to government controls and regulations.
• The PCAOB may determine it is unable to inspect the company's auditor (J&S Associate PLT) due to PRC involvement, potentially leading to delisting under the HFCA Act.
• PRC regulations establish complex procedures for foreign investor acquisitions, potentially delaying or preventing growth through acquisitions in China.
• PRC subsidiaries are required to maintain various licenses/permits, and failure to do so could materially affect the business.
• Legal risks with activities relating to Carbon Emission Credits and Renewable Energy Certificates (RECs) due to evolving regulatory frameworks and market volatility.
• Legal risks with cryptocurrency transactions; Chinese regulatory authorities may restrict or prohibit trading of REC-based or carbon emission-based financial products.
• Potential classification as a resident enterprise for PRC enterprise income tax purposes, resulting in unfavorable tax consequences for the company and non-PRC shareholders.
• Exposure to adverse Canadian federal income tax consequences.
• Risk of company chops (seals) of PRC subsidiaries not being kept safely, stolen, or used by unauthorized persons, severely compromising corporate governance.
• Overseas regulators may struggle to investigate or gather evidence in China due to PRC Securities Law restrictions.
• The direct listing differs significantly from an underwritten initial public offering, leading to potential price volatility and uncertain trading volume.
• Limitations on the voting rights of holders of ADSs due to the terms of the deposit agreement.
• ADS holders may not receive dividends or other distributions if it is illegal or impractical to make them available.
• Limitations on the transfer of ADSs.
• ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement.
• Future sales of ADSs or other equity securities, and the availability of a large number of such securities for sale, could depress the price of the ADSs.
• Canadian law differs from U.S. law and may afford less protection to holders of securities.
• Provisions of charter documents and certain Canadian legislation could delay or deter a change of control.
• Unlimited number of common shares authorized, potentially leading to dilution from future issuances.
• The company is a holding company, dependent upon distributions from its subsidiaries to service debt and pay dividends, which may be restricted.
• Potential classification as a passive foreign investment company (PFIC) for U.S. federal income tax purposes, resulting in adverse tax consequences to U.S. holders.
• Potential for additional tax liabilities due to future legislation, including a global minimum tax.
• Increased costs as a public company, particularly after ceasing to qualify as an emerging growth company.

Future Outlook

DeepGreenX intends to expand from a green logistics supply chain firm into an intelligent platform operating company, the DXG RWA Factory, to create profitable recurring revenue streams by converting sustainability and real-world asset data into digital currencies for monetization on digital asset exchanges. The company expects to generate revenue primarily from subscription and usage fees and digital asset trading. The DXG RWA Factory is in early development, with the fully scaled version not expected to be operational within the next 12 to 18 months. The first tokenization project is in the planning phase and, if successful, is expected later in 2025. The company plans to source customers from its legacy green logistics business and new relationships in sustainability sectors like nature-based carbon capture, green data/computing centers, and alternative energy solutions. It also intends to work with financial institutions to create new capital sources for RWA projects. The company expects to continue incurring operating and net losses in the near term as it develops and implements its new business platform and will require significant additional capital, likely through equity or debt financing, to support business growth.

Management Comments

• "Our long-term mission is to help accelerate world sustainability and digital capital innovation by making it easier for green-focused enterprises, sustainability projects, real-world asset projects, capital, and data to come together in a simple, repeatable, and profitable ecosystem."
• "We believe the incremental profitability produced by adding our services to sustainability projects may induce more capital sources to fund sustainability programs generally."
• "We believe the sum of all these activities may increase the overall economic attractiveness of sustainability initiatives, with the real economic returns on commercial capital deployed being redeployed into additional sustainability projects in the future."
• "We intend to operate at the intersection of three of the worlds largest global markets: energy, digitalization, and finance."
• "We believe our ability to create these new profit centers from sustainability and RWA data will enhance the attractiveness of these projects to potential sponsors and capital sources alike, which we believe will, in turn, accelerate the creation of new projects and customers for us over time."
• "While we are confident that our platform has the potential to simplify and automate the conversion of sustainability and RWA data into monetizable instruments, there is no guarantee that our expansion will be successful."
• "The expansion and success of our new platform will be dependent on our ability to generate future revenue from operations and sourcing additional outside investment, none of which are guaranteed."
• "Our company motto, Turning Green into Gold, encapsulates our ambition to redefine sustainability by making it profitable and, therefore, inherently sustainable."
• "We believe that sustainability driven by real economic value and profitability is the key to long-term environmental progress."
• "We do not anticipate that these changes will impact our financial stability or expose us to material risks from the broader volatility in digital asset markets. We are not involved in handling crypto assets for third parties, nor do we expect to have exposure to customer funds in the future. Our model is primarily fee-based, driven by our platforms functionality and not linked to fluctuations in digital asset values. Therefore, even in the event of significant market volatility, we do not expect a material adverse impact on our fee revenue."

Industry Context

The announcement positions DeepGreenX Group at the intersection of global energy, digitalization, and finance markets, aligning with the increasing international recognition of sustainable development and carbon reduction. The industry is driven by carbon neutrality goals, demand for long-term sustainable development, and technological innovations like IoT and blockchain. The global sustainable investment assets exceed $30 trillion and are growing. The digital assets market, particularly for digitally converted assets, is projected to grow from $1.0 trillion in 2024 to $16 trillion by 2030, representing a significant market opportunity for the company's new platform. The green logistics industry is undergoing electrification, intelligent upgrading, and standardization/trading of carbon sinks. The global carbon market is evolving towards collaborative initiatives, with 36 operational markets covering over 18% of global greenhouse gas emissions and cumulative revenue of $74 billion in 2023. DeepGreenX aims to address inefficiencies in carbon credit and REC markets through its intelligent platform.

Comparison to Industry Standards

• The document highlights the projected growth of the digitally converted assets market from $1.0 trillion in 2024 to $16 trillion by 2030, citing a Boston Consulting Group report, indicating a significant market opportunity for the company's new business model.
• It references BlackRock's BUIDL fund as an example of successful institutional tokenization efforts that the company is modeling its approach on, aiming to appeal to traditional investors.
• The company intends to follow generally accepted industry nomenclature for digital asset activities and aims to develop relationships with major digital trading platforms like Binance, Coinbase, Bybit, and OKX, which are leading players in the digital asset exchange space.
• The document notes that the global carbon market has 36 operational markets covering over 18% of global greenhouse gas emissions, with cumulative revenue of $74 billion as of 2023, providing context for the company's focus on carbon credits and RECs.
• The company acknowledges that it faces competition from large enterprise software companies, government contractors, system integrators, and emerging/established companies entering the market, many of whom have more experience, customers, and greater resources.

Management Changes

Corporate Governance

Legal Proceedings

• Currently not party to any material legal or administrative proceedings.
• May become involved in legal or administrative proceedings in the ordinary course of business in the future.

Related Party Transactions

• Outstanding consulting service fee receivables of $195,039 (2024), $195,000 (2023), and $240,000 (2022) from Giga Carbon Neutrality Inc., an entity owned by Ms. Lan Yang (ultimate beneficial owner of DeepGreenX). These are non-interest bearing, repayable on demand, and intended to be settled prior to listing.
• Loans received from Enlighta Medical Technology Group (a subsidiary of Sun Seven Stars Investment Group, controlled by Ms. Lan Yang) totaling $483,842 (2024), $435,000 (2023), and $350,000 (2022). These loans are non-interest bearing, non-secured, have no stated maturity, and are payable on demand with board discretion to delay repayment.
• Loans received from Sun Seven Stars Investment Group (SSSIG) totaling $3,138,285 (2024). These loans are non-interest bearing, non-secured, have no stated maturity, and are payable on demand with board discretion to delay repayment.
• Non-trade reimbursement of $39 (2024) from Tianjin Powermers Technology Co., Ltd., a subsidiary of Powermers Smart Industries Inc. (PSI), which has the same ultimate beneficial owner as DeepGreenX.
• Disposal of 100% equity interest in Fujian GCN IoT Ltd. (and its subsidiary Fujian Oxylus Space Ocean Group Ltd.) by Beijing Deep Green Intelligent Technology Co., Ltd. to Beijing Powermers Smart Industries Technology Co. (a wholly-owned subsidiary of PSI) in August 2024 as part of an internal reorganization plan.
• A reorganization in May 2025 where all shareholders of DeepGreenX Korea (related parties) exchanged their equity interests for common stock of the Canadian holding company, making DeepGreenX Korea a wholly-owned subsidiary.
• Sun Seven Star Gift Holdings LTD., the company's majority shareholder, has agreed to indemnify directors and executive officers against liabilities until formal directors and officers liability insurance coverage is secured.

Stakeholder Impact

• Shareholders/Investors: Face significant risks including substantial financial losses, auditor's 'going concern' warning, potential dilution from future capital raises, high volatility due to direct listing structure (no underwriting, no lock-ups), limited voting rights for ADS holders, and potential delisting under the HFCA Act. Also exposed to complex and evolving PRC regulatory risks and potential unfavorable tax consequences. However, there is potential for long-term growth if the new digital asset platform succeeds in a large and growing market.
• Employees: The company's success depends on retaining and recruiting key talent, particularly for its new technology platform. Employee misconduct could expose the company to legal liabilities and reputational harm.
• Customers: Potential customers for the new DXG RWA Factory could benefit from the platform's ability to convert sustainability and real-world asset data into monetizable digital financial instruments. However, risks exist if the platform fails to perform as desired or if services are disrupted.
• Suppliers/Partners: The company relies on third-party service providers for key aspects of its business, and any failure by these partners could adversely impact operations and reputation. The company is actively evaluating and engaging with third-party partners for blockchain infrastructure, tokenization, asset verification, and custody.
• Creditors: The company's 'going concern' status and reliance on related party loans indicate a higher risk profile for creditors. Future debt financing could contain restrictive covenants.

Next Steps

• Complete the Direct Listing on Nasdaq.
• Continue developing the DXG RWA Factory intelligent software platform.
• Source customers for the new platform from legacy green logistics and new sustainability sectors.
• Develop relationships and interfaces with global digital trading platforms (Binance, Coinbase, Bybit, OKX) and certification agencies (WSSO, CBDCCO, Climate Action Reserve).
• Finalize specific entity assignments and operational processes for the DXG RWA Factory.
• Launch the first tokenization project, expected later in 2025.
• Source related party and third-party capital to fund business expansion and development.
• Appoint more independent directors after the Direct Listing over time.
• Establish a compensation committee and a nomination and corporate governance committee of the board within the first 12 months following the Direct Listing.
• Secure directors and officers liability insurance coverage for DeepGreenX Group Inc.
• Convert independent-contracted executive, operational, and administrative personnel to full-time employee status shortly after the Direct Listing.
• Update and complete remedial processes for non-compliant Korean foreign exchange filings.

Key Dates

Recommendation

Keywords

Green logistics, Supply chain management, Intelligent platform, Real-world assets, RWA tokenization, Digital currencies, Sustainability, Carbon credits, Renewable energy certificates, Blockchain technology, FinTech, Nasdaq Direct Listing, SEC filing, F-1/A, China operations, Corporate governance, Risk management, Emerging growth company, Foreign private issuer, Controlled company