10-K: Jingbo Technology Reports Widening Losses Amidst Strategic Shifts and Going Concern Doubts

Jingbo Technology, Inc. reported an increased net loss for the fiscal year ended February 28, 2025, alongside a significant accumulated deficit and a going concern warning, despite revenue growth from its smart parking and new winery sales segments.

Summary

• Jingbo Technology, Inc. (formerly Savmobi Technology Inc.) is a Nevada holding company operating primarily in mainland China through a Variable Interest Entity (VIE) structure, focusing on smart parking application software and platform business.
• For the fiscal year ended February 28, 2025, the company reported total net revenues of $2,141,654, an increase from $1,583,637 in the prior year.
• Revenue from parking fees increased to $1,657,057 in 2025 from $1,582,679 in 2024, primarily due to growth from the Leshan project.
• The company introduced a new income stream from winery sales, generating $420,180 in revenue for the fiscal year 2025.
• Gross loss decreased to $396,198 in 2025 from $538,292 in 2024, attributed to increased revenue and stable cost of revenue.
• However, net loss widened to $6,016,408 in 2025, compared to $5,482,077 in 2024.
• The company's accumulated deficit grew to $35,326,578 as of February 28, 2025, from $29,311,229 in the previous year.
• A working capital deficit of $6,584,506 was reported as of February 28, 2025, a significant improvement from $24,379,757 in 2024.
• Cash and cash equivalents decreased to $105,265 in 2025 from $142,434 in 2024.
• Net cash used in operating activities improved to $(1,325,190) in 2025 from $(1,833,699) in 2024.
• The company completed the acquisition of Xinghe Technology Limited on December 9, 2024, issuing 550,000,000 shares of common stock, making Hangdu (Xinghe's sole shareholder) the largest shareholder of Jingbo with approximately 99.0% ownership.
• Following the Xinghe acquisition, a significant long-term loan of $22,032,891 owed to Shaoxing Keqiao (now a subsidiary) was reclassified as long-term payables and effectively no longer owed to the controlling person of Shaoxing Keqiao.
• The company conducted a 1-for-200 reverse stock split on February 5, 2024, and increased authorized common stock from 50,000,000 to 50,000,000,000 shares on October 17, 2024.
• Management has identified substantial doubt about the company's ability to continue as a going concern due to its net loss, accumulated deficit, and working capital deficit.
• Material weaknesses in internal control over financial reporting were identified, including a lack of a functioning audit committee, inadequate segregation of duties, and insufficient written policies for accounting and financial reporting.

Sentiment

Score: 3

Explanation: The company faces significant financial distress, evidenced by increasing net losses, a substantial accumulated deficit, and an explicit going concern warning. While revenue growth and a new business segment are positive, they are overshadowed by the severe financial challenges and identified material weaknesses in internal controls. The reliance on future financing and related-party support highlights the precarious financial position.

Positives

• Total net revenues increased by 35.2% to $2,141,654 in fiscal year 2025, up from $1,583,637 in fiscal year 2024.
• The company successfully diversified its revenue streams by entering the winery sales market, generating $420,180 in its first year.
• Gross loss decreased by 26.4% to $396,198 in fiscal year 2025, indicating improved efficiency in managing direct costs relative to revenue.
• Net cash used in operating activities significantly improved, decreasing to $1,325,190 in 2025 from $1,833,699 in 2024.
• The working capital deficit substantially reduced to $6,584,506 in 2025 from $24,379,757 in 2024, indicating better management of current assets and liabilities.
• The acquisition of Xinghe Technology Limited and its subsidiaries, including Shaoxing Keqiao, consolidates intelligent parking projects and resolves a significant related-party debt issue by reclassifying it as long-term payable within the consolidated entity.
• The company's smart parking platform, Any-e Life, offers advanced features like license plate recognition (99.9% accuracy), unattended management, and cloud-based operations, addressing key market inefficiencies.

Negatives

• The company reported a widening net loss of $6,016,408 for the fiscal year ended February 28, 2025, compared to $5,482,077 in the prior year.
• Accumulated deficit increased to $35,326,578 as of February 28, 2025, indicating a persistent history of losses.
• Management has identified substantial doubt about the company's ability to continue as a going concern.
• Selling and marketing expenses increased significantly to $579,810 in 2025 from $295,609 in 2024, primarily due to increased hospitality expenses.
• Impairment losses surged to $539,954 in 2025 from $52,097 in 2024, with an additional $437,477 impairment of property, plant, and equipment, indicating asset value deterioration.
• Total liabilities increased to $35,231,324 in 2025 from $31,568,840 in 2024, while total assets decreased, worsening the overall financial position.
• Cash and cash equivalents declined to $105,265 in 2025 from $142,434 in 2024, indicating a reduction in liquid assets.

Risks

• The company's reliance on a Variable Interest Entity (VIE) structure in China exposes it to significant uncertainties regarding the interpretation and application of Chinese Mainland laws and regulations, including the validity and enforcement of VIE agreements.
• There is a risk that the Chinese Mainland government could disallow the VIE structure, which would materially change operations and potentially render securities worthless.
• The company is exposed to legal and operational risks due to substantial government influence and potential changes in laws and regulations in Chinese Mainland, including those related to taxation, data security, and foreign investment.
• Uncertainties exist regarding the implementation and interpretation of new Chinese Mainland regulations, such as the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies and the Archives Rules, which could affect future financing activities and listing status.
• The company faces risks under the Holding Foreign Companies Accountable Act (HFCA Act), where its securities could be prohibited from trading in the U.S. if the PCAOB is unable to inspect or investigate its auditors completely for two consecutive years.
• The enforceability of contractual arrangements with VIEs depends on nominee shareholders, whose interests may conflict with the company's, potentially leading to a loss of control over operations.
• The company's controlling intangible assets (chops and seals) could be misused or misappropriated by key employees or legal representatives, disrupting business operations.
• Changes in Chinese Mainland tax policies or determinations by tax authorities regarding related-party transactions could result in additional tax liabilities.
• Restrictions on currency exchange in Chinese Mainland may limit the company's ability to convert Renminbi into foreign currencies to fund offshore operations or pay dividends.
• Fluctuations in exchange rates between Renminbi and the U.S. dollar could result in foreign currency exchange losses.
• The company's ability to continue as a going concern is in substantial doubt due to recurring net losses, accumulated deficit, and working capital deficit, requiring additional financing.
• The company has identified material weaknesses in its internal control over financial reporting, including a lack of a functioning audit committee, inadequate segregation of duties, and insufficient written policies and procedures.

Future Outlook

Jingbo Technology aims to build a smart digital parking cloud platform, form a harmonious digital ecosystem around smart parking, construct intelligent cities globally, and create a brighter future for smart living. The core goal is to integrate resources, build a platform ecosystem, and achieve multi-scenario user satisfaction. The company plans to expand its brand into Asian and European markets within the next three years, followed by a global market service system.

Management Comments

• "Management has determined there is substantial doubt about its ability to continue as a going concern."
• "Management will implement strategies and plans to grow the Company’s business and generate substantial revenue, and take further measures to control operating costs."
• "Management is trying to alleviate the going concern risk through the following sources: Equity financing to support its working capital; Other available sources of financing (including debt) from banks and other financial institutions; and Financial support and credit guarantee commitments from the Company’s related parties."
• "Manager is of the opinion that the Company will probably not have sufficient funds to meet its working capital requirements if the Company is unable to obtain additional financing."
• "We anticipate hiring additional employees in the next twelve months. We anticipate hiring necessary personnel based on an as needed basis only on a per contract basis to be compensated directly from revenues."
• "We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company."
• "Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company’s Board."
• "Management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes."

Industry Context

The Chinese smart parking industry faces significant challenges, including a severe shortage of parking spaces (China's average car-to-parking space ratio is less than 1:0.5 compared to 1:1.3 in developed countries) and low utilization rates (average 40%). The market is highly fragmented with low specialization and a lack of unified national standards, leading to 'information islands' and inconsistent user experiences. However, the industry is attracting significant capital and technological integration from internet giants like Alibaba, Tencent, and Baidu, driving trends towards unattended and sensorless payment systems. This influx of capital and technology is expected to accelerate industry integration and consolidation, presenting both opportunities for growth and intensified competition.

Comparison to Industry Standards

• China's average car-to-parking space ratio is less than 1:0.5, significantly lower than the 1:1.3 ratio in developed countries, indicating a substantial market opportunity for smart parking solutions.
• The coverage rate of intelligent parking lots in major Chinese cities like Beijing, Shanghai, Guangzhou, and Shenzhen is less than 10%, suggesting a vast untapped market for smart parking technology adoption.
• The company's focus on integrating IoT, big data, cloud computing, and mobile payment aligns with the industry trend driven by major internet companies like Alibaba (J-Parking), Tencent (Xiamen Ketuo Co.), and Baidu (ETCP), which are investing heavily in smart parking platforms to enable unattended and sensorless payment.

Management Changes

Corporate Governance

Legal Proceedings

• A corporate plaintiff filed a claim against Hangzhou Zhuyi for a contract dispute, resulting in a trial court ruling against Hangzhou Zhuyi for $97,924. The company has filed an appeal.

Related Party Transactions

• The company had amounts due from related parties totaling $70,104 as of February 28, 2025, including $5,000 from Intellegence Triumph Holdings Limited, $5,200 from Virtue Victory Holdings Limited, $5,800 from Strength Union Holdings Limited, $1,240 from Hongwei Li, and $52,864 from Sichuan Zhicheng Qifeng Technology Co., Ltd.
• The company owed funds to related parties totaling $2,245,834 as of February 28, 2025, including $2,046,179 to Guowei Zhang, $172,193 to Xiujuan Chen, and $27,462 to Chuchu Zhang.
• Advances from Guowei Zhang are unsecured, non-interest bearing, and due on demand.
• Significant long-term loans, originally from Beijing Zhibo Innovation Technology Co., Ltd. (deregistered), were transferred to various partnerships and subsequently taken over by Shaoxing Keqiao (whose sole shareholder is Xiujuan Chen). These loans, totaling $21,495,468 as of February 28, 2025, are now reclassified as long-term payables due to the business combination with Xinghe (which owns Shaoxing Keqiao).
• Interest on these long-term loans is waived until October 1, 2028, after which it will be paid monthly at an annual rate of 3% or 4%, with principal due at maturity (September 30, 2029).

Stakeholder Impact

• **Shareholders**: Face significant risk due to the company's going concern warning, increasing net losses, and accumulated deficit. The substantial increase in authorized shares could lead to significant dilution in future capital raises. The delisting risk under the HFCA Act also poses a threat to liquidity and share value.
• **Employees**: The company anticipates hiring additional employees on an as-needed basis, which could offer employment opportunities, but the overall financial instability and going concern risk may create job insecurity.
• **Customers**: The expansion of smart parking projects and the introduction of winery sales aim to provide enhanced services and new products, potentially benefiting customers. However, the company's financial instability could impact service continuity or quality.
• **Suppliers/Creditors**: The company's working capital deficit and reliance on related-party financing and future capital raises indicate potential challenges in meeting short-term obligations, posing a risk to suppliers and creditors. The reclassification of significant related-party debt to long-term payables may provide some relief but highlights past financial strains.
• **Regulatory Bodies**: The company is under heightened scrutiny from Chinese Mainland regulatory authorities due to its VIE structure, data security laws, and overseas listing regulations. Non-compliance could lead to severe penalties and operational restrictions.

Next Steps

• Management plans to implement strategies to grow the business and generate substantial revenue.
• Management intends to take further measures to control operating costs.
• The company will seek equity financing to support its working capital.
• The company will explore other available sources of financing, including debt from banks and other financial institutions.
• The company will seek financial support and credit guarantee commitments from related parties.
• The company plans to hire additional employees on an as-needed, per-contract basis, compensated directly from revenues.
• The company is committed to improving its financial organization by creating a position to segregate duties and increasing personnel resources and technical accounting expertise when funds are available.
• The company plans to appoint one or more outside directors to its board, who will be appointed to a fully functioning audit committee.
• The company will prepare and implement sufficient written policies and checklists for accounting and financial reporting to comply with US GAAP and SEC disclosure requirements.
• The company will continue to monitor and evaluate the effectiveness of its internal controls and procedures on an ongoing basis.

Key Dates

Recommendation

Keywords

Smart Parking, China, VIE Structure, SEC Filing, 10-K, Financial Report, Technology, Winery Sales, Corporate Governance, Risk Management, Going Concern, Chinese Regulations, HFCA Act, IoT, Big Data, Cloud Computing, Mobile Payment