20-F: X3 Holdings Reports Reduced 2025 Loss Amid Revenue Drop

X3 Holdings Co., Ltd. announced a significant reduction in net loss for fiscal year 2025, driven by decreased operating expenses and strategic divestitures, despite a notable decline in total revenue.

Summary

• Net loss decreased by 68.5% to $26.4 million for the year ended December 31, 2025, compared to $83.8 million in 2024.
• Total revenue decreased by 45.8% to $6.3 million in 2025 from $11.6 million in 2024.
• Operating expenses decreased by 58.9% to $36.2 million in 2025 from $88.0 million in 2024, primarily due to a $42.6 million decrease in impairment charges and a $6.7 million decrease in provision for credit losses.
• Application development services revenue decreased by 42.2% to $3.1 million in 2025.
• Consulting and technical support services revenue decreased by 31.9% to $2.4 million in 2025.
• Subscription services revenue increased by 15.0% to $0.7 million in 2025.
• Trading revenue was nil in 2025, down from $2.1 million in 2024.
• The company divested Anxin Jieda and its subsidiaries on July 29, 2025, resulting in a gain of $4.6 million.
• Acquired 100% equity in Creation Intelligent Co., Limited on August 1, 2025, for approximately $8.9 million, gaining indirect control of PicAIGames Technology Co., Ltd., a mobile game developer.
• Material weaknesses in internal control over financial reporting were identified, including a lack of accounting staff with U.S. GAAP/SEC knowledge and insufficient documented financial closing policies.
• The company received a Nasdaq delisting determination letter on February 10, 2026, due to non-compliance with the minimum bid price requirement, and is ineligible for a compliance period after a 30-to-1 reverse stock split.
• A 30-to-1 reverse stock split for Class A ordinary shares became effective for trading on Nasdaq on March 5, 2026.
• The company has a dual-class voting structure, with Class B shares (held by Stewart Lor and Yuxia Xu) having 30 votes per share, which was increased to 100 votes per share as of February 9, 2026, compared to Class A shares' one vote.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a company facing severe operational and financial headwinds, including substantial revenue decline and a Nasdaq delisting threat, which overshadow the positive reduction in net loss driven by expense cuts and asset sales.

Positives

• Net loss significantly decreased by $57.4 million (68.5%) from $83.8 million in 2024 to $26.4 million in 2025.
• Operating expenses decreased substantially by $51.8 million (58.9%) in 2025, primarily due to lower impairment charges and credit loss provisions.
• The company recorded a recovery of credit losses of approximately $1.4 million in 2025, a positive reversal from a $5.4 million provision in 2024.
• A gain of approximately $4.6 million was realized from the disposition of a subsidiary (Anxin Jieda) in 2025.
• Subscription services revenue showed growth, increasing by 15.0% to $0.7 million in 2025.
• The acquisition of Creation Intelligent (and indirectly PicAIGames) aligns with the company's strategic pivot into AI Gaming.
• Overall gross margin improved significantly to 64.3% in 2025 from 39.8% in 2024.
• Powerbridge Zhuhai, a major operating subsidiary, maintains its high-tech enterprise status, benefiting from a reduced statutory income tax rate of 15%.

Negatives

• Total revenue experienced a significant decline of 45.8% to $6.3 million in 2025.
• Revenue from application development services decreased by 42.2% to $3.1 million in 2025 due to fewer new projects.
• Consulting and technical support services revenue decreased by 31.9% to $2.4 million in 2025.
• Trading revenue dropped to nil in 2025 from $2.1 million in 2024, indicating a cessation of this revenue stream.
• The company reported an ongoing net loss of $26.4 million and negative operating cash flow of $3.2 million in 2025, raising substantial doubt about its ability to continue as a going concern.
• Significant impairment charges of $21.8 million were recorded in 2025, following $64.5 million in 2024, reflecting challenges in asset recoverability.
• Material weaknesses in internal control over financial reporting were identified, indicating deficiencies in financial processes and compliance.
• The company received a Nasdaq delisting determination letter due to non-compliance with the minimum bid price requirement, and is ineligible for a compliance period after a reverse stock split.
• A significant portion of revenues (39.8% and 11.0% from two customers in 2025) and accounts receivable (19.2% and 10.1% from two customers in 2025) are concentrated among a small number of major customers, posing a risk if these relationships deteriorate.

Risks

• Economic uncertainties or downturns could materially adversely affect the business.
• The growth and success of the business depends on the ability to develop new services and enhance existing services to keep pace with rapid changes in technology.
• Failure to attract new customers and grow revenues from existing customers may prevent achievement of revenue growth goals.
• Inability to effectively manage expansion for anticipated growth could place significant strain on management personnel, systems, and resources.
• Extended selling and implementation cycles for services require significant resource commitments prior to realizing revenues.
• Adverse changes in the economic environment, either in China or globally, could reduce customer purchases and increase pricing pressure.
• Generating a significant portion of revenues from a relatively small number of major customers means loss of business from these customers could significantly harm the business.
• Forced reduction in service prices due to increased competition and reduced bargaining power could lead to reduced revenues and profitability.
• Inability to accurately estimate costs and determine resource requirements for fixed-price projects could reduce margins and profitability.
• Revenues and results of operations are affected by seasonal trends.
• Inability to collect receivables from existing customers could adversely affect results of operations and cash flows.
• Risks associated with targeting larger organizations for sales, including higher costs and longer sales cycles.
• Dependence on services to the public sector means significant changes in contracting or fiscal policies could have an adverse effect.
• Failure to offer high-quality customer support may adversely affect relationships with customers.
• Incorrect or improper implementation or use of services could result in customer dissatisfaction and negatively affect the business.
• Failure to adhere to regulations that govern customer businesses could result in breaches of contracts.
• New enhancements to services may not achieve sufficient market acceptance, impacting financial results and competitive position.
• Disruptions to customer businesses or inadequate service could lead to claims for substantial damages.
• Unauthorized disclosure, destruction, or modification of data through cybersecurity breaches, computer viruses, or otherwise could expose the company to liability and damage its reputation.
• Interruptions or performance problems associated with technology and infrastructure may adversely affect the business.
• The market for BaaS (blockchain-as-a-service) services is new and unproven, which could result in limited customer adoption or retention.
• Difficulty in predicting future operating results and potential overestimation of the total addressable market.
• Intense competition from onshore and offshore software application and technology service providers.
• Inability to maintain corporate culture as the company grows could lead to loss of innovation, creativity, and teamwork.
• Dependence on the continuing efforts of senior executives and other key personnel; loss of their services could severely disrupt the business.
• Failure to attract and retain enough sufficiently trained personnel to support operations.
• Profitability will suffer if resource utilization levels are not maintained and productivity levels are not improved.
• Failure to maintain a strong brand for services and increase market awareness could adversely affect the business.
• Unsuccessful strategic alliances or identification and acquisition of suitable candidates could impede growth.
• Incorporation of open-source software could negatively affect the ability to sell services and subject the company to possible litigation.
• Liability to customers for damages caused by unauthorized disclosure of sensitive and confidential information.
• Inability to prevent others from unauthorized use of intellectual property.
• Intellectual property infringement claims could be time-consuming and costly to defend.
• Inability to maintain licenses for third-party software or errors in such software could result in increased costs or reduced service levels.
• Need for additional capital; failure to raise additional capital on favorable terms could limit the ability to grow.
• Failure to comply with anti-bribery, anti-corruption, and anti-money laundering laws could subject the company to penalties.
• Fluctuation in the value of the Renminbi and other currencies may have a material adverse effect on the value of investment.
• Adverse developments affecting the financial services industry, such as liquidity concerns or defaults by financial institutions, could adversely affect business operations.
• International expansion subjects the business to risks associated with international operations.
• Ability to generate revenue from the AI gaming segment depends on the successful development, launch, and ongoing performance of a limited number of game titles.
• Use of artificial intelligence technologies in game development and operations may not produce expected benefits and may expose the company to operational, legal, and reputational risks.
• Dependence on third-party platforms, distribution channels, and publishing partners for AI gaming, with changes in their policies or relationships potentially affecting the business.
• Reliance on third-party developers, co-development arrangements, and outsourced production for AI gaming may expose the company to delays and quality issues.
• Evolving regulatory requirements, data privacy obligations, and intellectual property risks related to the use of AI and data-driven technologies.
• Cybersecurity threats, including those leveraging artificial intelligence, may disrupt operations and compromise user data.
• Operations may be subject to regulatory restrictions on game content, monetization features, and user engagement practices in various jurisdictions.
• Operational cost may exceed the award for solving blocks or transaction fees in cryptomining.
• Lack of business liability disruption or litigation insurance coverage.
• Negative publicity could materially and adversely affect reputation, business, and results of operations.
• Future sales of ordinary shares could cause the market price of ordinary shares to decline.
• The dual-class voting structure will limit the ability of Class A shareholders to influence corporate matters.
• The trading prices of ordinary shares have been and are likely to continue to be volatile.
• An active public trading market for ordinary shares may not develop or be sustained.
• 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.
• Uncertainties with respect to the PRC legal system, including interpretation and enforcement of laws, and sudden changes in regulations.
• Recent regulatory initiatives implemented by PRC authorities on cyberspace data security may introduce uncertainty in business operations and compliance status.
• U.S. regulators' ability to conduct investigations or enforce rules in China is limited.
• Uncertainty regarding PRC tax reporting obligations and consequences for certain indirect transfers of stock.
• PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject PRC resident shareholders to personal liability and limit capital injection/profit distribution.
• Reliance on dividends and other distributions from PRC subsidiaries to fund cash and financing requirements, with limitations on their ability to make payments.
• PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent the use of proceeds.
• Governmental control of currency conversion may limit the ability to use revenues effectively and the ability of PRC subsidiaries to obtain financing.
• Classification as a resident enterprise for PRC enterprise income tax purposes could result in unfavorable tax consequences.
• The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors.
• Failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject participants or the company to penalties.
• Failure to make adequate contributions to various mandatory social security plans as required by PRC regulations may subject the company to penalties.
• Current employment practices may be restricted under the PRC Labor Contract Law, potentially increasing labor costs.
• If the chops of PRC company and branches are not kept safely, are stolen, or are used by unauthorized persons or for unauthorized purposes, corporate governance could be severely compromised.
• Difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against the company or its management.
• Ordinary Shares may be delisted under the HFCAA if the PCAOB is unable to inspect auditors or their affiliates that are located in mainland China.
• Material weaknesses in internal control over financial reporting could impair the ability to produce accurate financial statements or comply with regulations.

Future Outlook

The company plans to expand its market coverage internationally, with a focus on Belt and Road (B&R) countries, and intends to scale up bitcoin cryptomining capacities using sustainable energy sources. It will also focus on developing large-scale integrated renewable energy projects and amplifying its market presence in AI-driven game development and publishing solutions. The company expects to continue investing significantly in R&D, sales, and marketing activities. While current cash and financing cash flows are believed to be sufficient for the next 12 months, additional resources may be required for future investment, acquisition, or expansion opportunities.

Management Comments

• "We harness cutting edge technologies to forge agile, innovative business models across targeted global markets by integrating pivotal resources in technology applications, financial prowess, and streamlined operations."
• "Our vision is to be a differentiated and valuable company excelling in high growth industries with a global reach."
• "We believe our competitive strengths are contributing to our success and differentiating us from our competitors."
• "We are striving to create values for all stakeholders, facilitated by our globally integrated resources and operations to support our overall growth."
• "We believe that there is a potent entrepreneurial spirit prevalent throughout our global operations, shared by our management, employees, and business partners, led by our agile and seasoned management team and complemented by a partnership network adept at realizing our global vision."
• "We expect to continue to adjust our workforce according to operational needs."
• "We believe 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."

Industry Context

StockSavvy.ai notes that X3 Holdings' strategic pivot towards AI gaming, cryptomining, and renewable energy aligns with broader technology and sustainability trends, aiming to diversify beyond its traditional digital trade solutions. The significant revenue decline in core digital technology services, however, highlights the urgency of successful execution in these new, high-growth segments. The company's focus on B&R countries for international expansion also reflects a strategy to tap into emerging markets, similar to other tech firms seeking growth outside saturated Western markets. The challenges in maintaining Nasdaq listing and internal control weaknesses are critical concerns that could impact investor confidence and the company's ability to fund its ambitious growth strategies.

Comparison to Industry Standards

• The filing states that the market for digital solutions is highly competitive and fragmented, but does not provide specific comparable companies, projects, or results to industry standards for direct assessment.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party to any legal proceedings or investigations which, in the opinion of management, is likely to have a material adverse effect on its business, financial condition, operating results, or cash flows.

Related Party Transactions

• As of December 31, 2025, the company had $219,832 due from Stewart Lor (CEO), $248,327 due from Yuxia Xu (CFO), $148,747 due from Phillip Tao Qiu (Independent Director), and $2,860 due from Zhanjiang Huarong Enterprise Management Service Co., Ltd. (equity method investee).
• As of December 31, 2025, the company had $334 due to Tingru Ou (Chief Product Officer).
• Mr. Stewart Lor pledged his personal assets as collateral and signed guarantee agreements to provide guarantee to the company's bank loans.
• For the year ended December 31, 2025, Stewart Lor received $10,742 in interest income from the company.
• On January 5, 2026, the company issued 4,500,000 Class B restricted Ordinary Shares to Hogstream International Ltd. (100% held by Mr. Stewart Lor) and 3,200,000 Class B restricted Ordinary Shares to Ms. Yuxia Xu as stock bonuses for the year ended December 31, 2025.

Stakeholder Impact

• **Shareholders:** Face potential significant dilution from ongoing and future equity offerings, limited influence on corporate matters due to the dual-class voting structure, and a high risk of delisting from the Nasdaq Capital Market, which could severely impact liquidity and share value.
• **Employees:** Experienced personnel optimization in 2025 (headcount reduced from 137 to 117), indicating potential job insecurity. Ongoing R&D investment suggests continued demand for skilled personnel in new strategic areas.
• **Customers:** May experience impacts from the significant revenue decline in core digital technology services, but could benefit from new offerings in AI gaming and expanded international reach. The company's focus on high-quality customer support is crucial for retention.
• **Creditors:** Exposed to the company's going concern uncertainty, ongoing net losses, and negative operating cash flow. The reliance on personal guarantees from the CEO for some bank loans highlights the elevated risk profile.
• **Suppliers:** The company's financial health and liquidity challenges could impact its ability to make timely payments, potentially affecting supplier relationships.

Next Steps

• Regain compliance with Nasdaq minimum bid price requirements to avoid delisting.
• Implement measures to remediate identified material weaknesses in internal control over financial reporting.
• Continue to execute business segment strategies in digital technologies, cryptomining, renewable energy, and AI gaming.
• Expand market coverage internationally, focusing on Belt and Road (B&R) countries.
• Accelerate research and development of cutting-edge technologies to expand solutions and service offerings.
• Pursue organic and inorganic growth opportunities wherever strategic opportunities emerge.
• Continue to raise capital through equity offerings as per existing agreements with investors.

Key Dates

Recommendation

Given the severe financial challenges, including a substantial 45.8% revenue decline, ongoing net losses, and negative operating cash flow, the company faces significant uncertainty and risk regarding its ability to continue as a going concern. The imminent threat of Nasdaq delisting due to minimum bid price non-compliance, compounded by identified material weaknesses in internal controls, further deteriorates the investment profile. While strategic shifts into AI gaming and renewable energy are underway, their success is unproven and insufficient to offset the current precarious financial health. A seasoned investor would likely view these factors as strong indicators to exit the position.

Keywords

X3 Holdings, Annual Report, SEC Filing, Financial Results, Digital Solutions, Technology Services, AI Gaming, Cryptomining, Renewable Energy, China, Nasdaq, Corporate Governance, Risk Factors, Financial Performance, Share Consolidation, Capital Raise, Internal Controls, PRC Regulations, Cybersecurity, Equity Investments, Acquisitions, Divestitures