F-1/A: DeepGreenX Shifts to Digital Assets, Faces Nasdaq Debut Risks

DeepGreenX Group Inc. is transitioning from green logistics to an intelligent platform for tokenizing real-world assets and sustainability data, while preparing for a direct listing on Nasdaq amidst significant financial losses and regulatory uncertainties.

Summary

• DeepGreenX is evolving from a green logistics supply chain firm into an intelligent platform company, the 'DXG RWA Factory', focused on converting sustainability and real-world asset data into digital financial instruments for monetization on digital exchanges.
• The company reported a net loss of $2,453,422 in 2024, an increase from a $96,698 net loss in 2023, and a net profit of $99,461 in 2022.
• Revenue significantly increased to $24,081,848 in 2024 from $5,954,563 in 2023, primarily from commodity trading services which commenced in Q3 2023.
• DeepGreenX is pursuing a direct listing on the Nasdaq Global Market for up to 93,745,000 common shares held by registered shareholders, without a traditional underwritten initial public offering.
• An independent valuation by Frost & Sullivan in July 2025 estimated the fair market value of the company's tokenization pipeline between $13.686 billion and $28.246 billion as of December 31, 2024, though no revenue has been generated from this segment to date.
• The company's auditor expressed substantial doubt about its ability to continue as a going concern due to historical losses and the need for additional capital.
• DeepGreenX is a Canadian holding company with primary operations in China (legacy logistics) and Korea, exposing it to complex PRC regulatory and foreign exchange risks.
• Ms. Lan Yang, the ultimate beneficial owner, controls approximately 78% of the company's voting power, making DeepGreenX a 'controlled company' under Nasdaq rules, allowing exemptions from certain corporate governance requirements.

Sentiment

Score: 3

Explanation: The company presents an ambitious vision in a high-growth market (digital assets, sustainability) with a very high third-party valuation for its pipeline. However, this is heavily offset by significant current financial losses, negative cash flow, an auditor's going concern warning, heavy reliance on related-party funding, and substantial regulatory and execution risks in its nascent core business. The direct listing process itself also introduces significant volatility risks. The high potential is speculative and far from realized, while the financial distress is current and material.

Positives

• Revenue from commodity trading services saw substantial growth, increasing from $5,954,563 in 2023 to $24,081,848 in 2024.
• The company has a clear strategic vision to expand into the high-growth digital assets market, specifically tokenizing sustainability and real-world asset data.
• An independent valuation by Frost & Sullivan indicates a significant potential fair market value for the tokenization pipeline, ranging from $13.686 billion to $28.246 billion.
• DeepGreenX has secured a loan agreement with an affiliate, Sun Seven Stars Investment Group (SSSIG), providing up to $75,000,000 in funding, with $10,264,185 drawn between January 1, 2025, and July 31, 2025.
• The company has a full-time software development team and has engaged leading cybersecurity and legal firms to support its platform development and compliance.
• A tokenization milestone was successfully completed in a controlled environment for the Forest First Joint Venture, generating a token on the Avalanche blockchain.

Negatives

• The company has a history of net losses, reporting $(2,453,422) in 2024 and $(96,698) in 2023, and negative cash flows from operating activities.
• The independent registered public accounting firm has expressed substantial doubt about the company's ability to continue as a going concern.
• The company is heavily reliant on related-party financing from Sun Seven Stars Investment Group (SSSIG) for its liquidity and capital needs.
• The core tokenization business, which underpins the high valuation, has not yet generated any revenue and is in early stages of development, with no guarantee of commercial success or market adoption.
• A significant portion of outstanding common shares (714,338,756) are not subject to any contractual lock-up agreements, potentially leading to high volatility and downward pressure on the stock price after listing.
• There is a material risk of significant penalties and liabilities (up to $5.167 billion) if Korean tax authorities disagree with the valuation used for the Korean subsidiary during a past reorganization.

Risks

• The company is a growth-stage entity with a history of losses, negative cash flows, and negative working capital, and may not achieve profitability in the future.
• Significant additional capital will be required to support business growth, which may not be available on commercially reasonable terms or could lead to shareholder dilution.
• Dependence on a single funding source (SSSIG) for liquidity poses a risk if that support is delayed, reduced, or terminated.
• The long-term success depends on the ability to successfully introduce and market new products and services, which may face market acceptance and technological challenges.
• Failure to maintain and enhance brand and reputation, especially in markets outside China, could harm business and operations.
• Intensifying competition in the green industrial supply chain industry, coupled with the need for continuous technological innovation, poses a risk to competitiveness.
• Increases in the cost or reduction in the supply of renewable resources could adversely impact the business.
• The carbon credit market is volatile, and any decline in the value of carbon credits or carbon offsets could materially and adversely affect the business.
• The digital assets industry is new and rapidly evolving, with uncertain market acceptance and potential for malicious activity, which could affect the value of digital asset products.
• Inability to adequately evaluate or address legal, regulatory, and other risks associated with the DXG RWA Factory platform, especially concerning NFTs and tokenized real-world assets.
• Recent extreme volatility and disruption in digital asset markets could negatively impact the value of digital financial instruments and the company's common shares.
• Failure to maintain an effective system of internal control over financial reporting could adversely affect investor confidence and lead to regulatory sanctions.
• Reliance on third-party service providers for key aspects of the business exposes the company to risks of disruption or inadequate service delivery.
• Research and development efforts may not yield expected results, leading to delays in product launches or failure to meet customer demand.
• Exposure to foreign exchange rate fluctuations and interest rate changes due to global operations.
• Business and legal risks associated with global operations, particularly in China, including complex laws, uncertain enforcement, and compliance with anti-corruption laws.
• Uncertainties with respect to the PRC legal system, including rapid changes in rules and regulations, could adversely affect operations.
• Difficulties for U.S. investors in enforcing judgments against the company or its directors in foreign jurisdictions like China and Canada.
• The PRC government may intervene or influence operations at any time, or exert more control over overseas offerings and foreign investment in China-based issuers, potentially limiting the ability to offer securities or causing their value to decline.
• The approval or filing of the CSRC or other PRC regulatory agencies may be required for listing status or future offshore securities offerings, and failure to comply could result in sanctions.
• The PRC government may disallow the holding company structure, leading to material changes in operations and value of securities.
• Recent greater oversight by the Cyberspace Administration of China (CAC) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact the business.
• Legal risks exist with activities relating to Carbon Emission Credits and Renewable Energy Certificates (REC) due to an evolving regulatory framework in China.
• PRC authorities may restrict or prohibit trading of REC-based or carbon emission-based financial products, even if conducted outside China.
• PRC regulations on loans to and direct investment in PRC entities by offshore holding companies may delay or prevent funding and business expansion.
• Inflation in the PRC or a slowing PRC economy could negatively affect profitability and growth.
• PRC SAFE regulations regarding offshore financing activities by PRC residents may increase administrative burden and create uncertainties.
• The PCAOB may determine it is unable to inspect the company's auditor, potentially leading to delisting under the Holding Foreign Companies Accountable Act (HFCAA).
• PRC regulations establish complex procedures for acquisitions by foreign investors, making growth through acquisitions in China more difficult.
• Failure to maintain or renew required licenses, permits, and approvals from PRC authorities could materially affect the business.
• 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 IPO, potentially leading to greater price volatility and uncertain trading volume.
• The trading price of common shares may not reflect the Frost & Sullivan valuation report, which relies on assumptions about systems not yet fully developed or recognized.
• Future sales of common shares or other equity securities, especially by non-lock-up shareholders, could depress the stock price.
• Canadian law differs from U.S. law and may afford less protection to holders of securities.
• Provisions in charter documents and Canadian legislation could delay or deter a change of control.
• The company's articles permit the issuance of an unlimited number of common shares, leading to potential dilution.
• No intention to pay dividends for the foreseeable future, relying on retained earnings for growth.
• As a holding company, dependence on distributions from subsidiaries to service debt and pay expenses, which may be restricted.
• Potential classification as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes could result in adverse tax consequences for U.S. holders.
• Subject to additional tax liabilities due to future legislation, including a global minimum tax.
• Increased costs associated with being a public company, particularly after ceasing to qualify as an emerging growth company.

Future Outlook

DeepGreenX intends to expand its business by developing an intelligent software platform, the 'DXG RWA Factory', to convert sustainability and real-world asset data into digital financial instruments. This platform is expected to generate revenue primarily from subscription and usage fees, and digital asset trading. The company plans to source customers from its legacy green logistics business and new relationships in nature-based carbon capture, green data/computing centers, and alternative energy solutions. Commercial tokenization activities are projected to begin in fiscal year 2025, with a forecasted tokenization revenue of $541 million for that year, assuming successful execution and market adoption. The fully scaled version of the DXG RWA Factory is not expected to be operational within the next 12 to 18 months.

Management Comments

• We intend to expand from a green logistics supply chain firm into an intelligent platform operating company that will be creating profitable recurring revenue streams by converting sustainability and other real-world asset data into digital currencies that are to be traded and monetized on digital asset exchanges.
• 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 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.
• We currently believe that the projected tokenization revenue of $541 million for the 2025 fiscal year is a reasonable estimate, assuming successful execution of our current business plans, continued market adoption of tokenized assets, and no material delays or regulatory impediments.

Industry Context

DeepGreenX is positioning itself at the intersection of the energy, digitalization, and finance markets, aiming to capitalize on the growing global emphasis on sustainable development and the emerging market for digitally converted assets. The company's strategy aligns with international climate agreements and national policies promoting clean energy and low-carbon technologies. The projected growth of the digitally converted assets market from $1.0 trillion in 2024 to $16 trillion by 2030, as cited from a Boston Consulting Group report, indicates a significant market opportunity. The company's focus on green logistics and carbon trading also taps into prominent areas of ESG investment. However, the industry is in an early developmental stage, characterized by evolving regulations, technological innovation demands, and market volatility, particularly in carbon credits and digital assets.

Comparison to Industry Standards

• DeepGreenX's historical revenues ($24.08 million in 2024) are substantially lower than the comparable companies used in the Frost & Sullivan valuation report, which include Palantir Technologies Inc. ($2,865.51 million in 2024), C3.ai, Inc. ($389.06 million in 2025 fiscal year), Coinbase Global, Inc. ($6,564.03 million in 2024), HIVE Digital Technologies Ltd. ($115.28 million in 2025 fiscal year), Marathon Digital Holdings, Inc. ($656.38 million in 2024), and Galaxy Digital Holdings Ltd. ($1,154.56 million in 2024).
• Unlike many of the profitable benchmark companies, DeepGreenX has reported net losses in 2023 and 2024, indicating an earlier stage of development and lack of consistent profitability.
• The valuation multiples and discounted cash flow assumptions derived from these larger, more mature peers may not accurately reflect how investors would value DeepGreenX's early-stage tokenization pipeline, which has not yet generated revenue.
• DeepGreenX's business model, while involving digital assets, differs from pure crypto exchanges (Coinbase) or crypto miners (HIVE, Marathon), and its valuation may be influenced by sector-specific dynamics not directly aligned with these peers.
• The company's reliance on developing proprietary systems (ECaaS Platform, dMRVS System) and obtaining regulatory approvals for tokenization contrasts with the established operational and regulatory compliance of the benchmark companies.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party to any material legal or administrative proceedings, but may become involved in such proceedings in the ordinary course of business.

Related Party Transactions

• The company has an outstanding consulting service fee receivable of $195,000 from Giga Carbon Neutrality Inc., an entity with the same ultimate beneficial owner (Ms. Lan Yang), which is non-interest bearing and repayable on demand.
• Loans from Sun Seven Stars Investment Group Limited (SSSIG), controlled by Ms. Lan Yang, and its subsidiary Enlighta Medical Technology Group, totaled $3,625,333 as of December 31, 2024. These loans are non-interest bearing, non-secured, payable on demand after January 1, 2027, with board discretion to delay repayment for up to one year.
• Between January 1, 2025, and July 31, 2025, SSSIG increased its loans to the company by an additional $10,264,185.
• An Asset Authority Confirmation Letter was received from Fourcore, Inc., an institutional investment advisor managing assets for Ms. Lan Yang and her affiliated entities, confirming the availability of assets to support SSSIG's funding commitments. Approximately 30.9% of Fourcore is owned by Carbonomi Trust (owned by Ms. Yang's children) and 15.26% by PB Nobel Sustainability Capital Group Limited (in which Sun Seven Stars Trust, an affiliate of Ms. Yang, has a significant interest).
• Legal services have been provided by Griffitts LLP, a law firm in which the Chief Legal Officer, Robert Griffitts, has an interest, with approximately $631,594 in fees paid or accrued to date.
• In August 2024, a wholly-owned subsidiary, Beijing Deep Green Intelligent Technology Co., Ltd., disposed of its 100% equity interest in Fujian GCN IoT Ltd. to Beijing Powermers Smart Industries Technology Co., a wholly-owned subsidiary of the then-controlling shareholder, Powermers Smart Industries Inc. (PSI), as part of an internal reorganization.

Stakeholder Impact

• Shareholders face significant dilution risk from future equity offerings and potential volatility in share price due to the direct listing process and the large number of non-lock-up shares.
• Shareholders are exposed to substantial financial risk due to the company's history of losses, negative cash flow, and the auditor's going concern warning.
• Shareholders may have reduced corporate governance protections due to the company's 'controlled company' status and foreign private issuer exemptions.
• Shareholders face potential adverse U.S. federal income tax consequences if the company is classified as a Passive Foreign Investment Company (PFIC).
• Shareholders are exposed to significant regulatory and legal risks, particularly concerning operations in China and the evolving digital asset market, which could materially impact the value of their investment.
• Employees and contractors are impacted by the company's growth strategy, with plans to convert independent contractors to full-time employees, but also face uncertainty given the company's financial condition and reliance on external funding.
• Customers of the legacy green logistics business may benefit from the company's expansion into an intelligent platform, potentially offering new services for sustainability data monetization.
• Potential customers for the new tokenization platform face risks related to the early-stage nature of the technology, the need for regulatory approvals, and the company's ability to successfully implement and scale the platform.
• Creditors, particularly related-party lenders like SSSIG, are providing significant financial support, indicating a high level of exposure to the company's financial performance and ability to achieve profitability.

Next Steps

• Complete the development and full deployment of the intelligent software platform, the 'DXG RWA Factory', over the next 12 to 18 months.
• Source customers for the new platform from existing green logistics contacts and new relationships in sustainability sectors (nature-based carbon capture, green data/computing centers, alternative energy solutions).
• Develop digital trading relationships and interfaces with global digital trading platforms (e.g., Binance, Coinbase) and certification agencies (e.g., WSSO, CBDCCO).
• Obtain all necessary regulatory approvals and permits for tokenization-related business activities in various jurisdictions.
• Begin commercial tokenization activities in fiscal year 2025, including projects related to logistics & commodities, RECs, carbon, AI tokens, and nature-based assets.
• Convert independent-contracted executive, operational, and administrative personnel to full-time employee status.
• Secure directors and officers liability insurance coverage for DeepGreenX Group Inc. prior to the effectiveness of the listing.
• Establish an Audit Committee, and eventually a compensation committee and a nomination and corporate governance committee, within 12 months following the direct listing.
• Monitor and assess any developments or regulatory inquiries regarding the potential Korean tax liability from the reorganization valuation differential.
• Update foreign exchange filings in Korea and complete other remedial processes with Korean authorities.

Key Dates

Recommendation

DeepGreenX presents a highly speculative investment opportunity. While the Frost & Sullivan valuation suggests immense potential in the tokenization of real-world assets and sustainability data, this business segment is nascent, has generated no revenue to date, and faces substantial execution, technological, and regulatory hurdles. The company's current financial state is precarious, marked by significant losses, negative operating cash flow, and an auditor's 'going concern' warning. Its heavy reliance on related-party financing, coupled with the inherent volatility and lack of price stabilization mechanisms in a direct listing, makes the stock extremely high-risk. Existing shareholders might hold to see if the ambitious vision materializes, but new investors should exercise extreme caution due to the significant downside risks and the highly speculative nature of the future business model.

Keywords

Green Logistics, Real-World Assets, Tokenization, Sustainability Data, Digital Financial Instruments, Carbon Credits, Renewable Energy Certificates, Nasdaq Direct Listing, SEC F-1/A, China Operations, Corporate Governance, Blockchain Technology, ESG, Financial Technology, Supply Chain Management