Executive Summary

Q1 2024 revenue was $3.531M with gross profit of $0.072M (2% margin), improving from a gross loss and -5% margin in Q1 2023; net loss narrowed to $0.850M and EPS was $(0.12) versus $(0.16) YoY .
Management attributed the revenue decline to a deliberate switch of the primary search-engine supplier, which caused delivery delays but improved unit economics; gross margin on the core SEM distribution business improved to 2% from -2.5% YoY .
Liquidity tightened: cash fell to $0.467M and working capital to ~$3.43M; management disclosed substantial doubt about going concern absent margin improvement and/or new financing .
Strategic actions: acquired 51% of Beijing Yi En to expand SEM distribution and seek scale synergies; resumed emphasis on optimizing internet resource costs and receivable collections to lift cash flow .

What Went Well and What Went Wrong

Gross margin turned positive: overall gross margin improved to 2% from -5% YoY; core SEM distribution gross margin improved to 2% from -2.5% YoY, reflecting better pricing and supplier changes .
Operating loss narrowed: loss from operations improved to $(0.922)M from $(1.312)M YoY, supported by lower cost of revenues and flat operating expenses .
Strategic focus on profitability: “The Company changed its primary supplier of search engine marketing services in order to improve its profitability,” despite near-term delivery delays .

Revenue fell sharply YoY as SEM distribution delays and a de-emphasis of low-growth internet ad placements reduced total revenue from $6.316M to $3.531M; blockchain SaaS recognized no revenue in Q1 2024 .
Liquidity constraints intensified: cash declined to $0.467M, advances from customers rose to $1.427M (contract liabilities), and management flagged substantial doubt about going concern without improved margins or financing .
Credit costs and concentration risks persisted: allowance for credit losses increased (accounts receivable allowance $4.261M), with notable customer and supplier concentration, raising execution risk on collections and supplier terms .

Metric	Q1 2023	Q1 2024
Revenue ($USD Millions)	$6.316	$3.531
Gross Margin %	-5%	2%
Loss from Operations ($USD Millions)	$(1.312)	$(0.922)
Net Loss ($USD Millions)	$(1.143)	$(0.850)
EPS (Basic & Diluted, $USD)	$(0.16)	$(0.12)

Segment and service breakdown (revenue):

Revenue Type ($USD Thousands)	Q1 2023	Q1 2024
Distribution of right to use search engine marketing service	$6,161	$3,525
Online advertising placements	$130	$6
Blockchain-based SaaS services	$25	$0
Total	$6,316	$3,531

Cost and margin by service:

Service	Q1 2023 Revenue ($K)	Q1 2023 Cost ($K)	Q1 2023 GP %	Q1 2024 Revenue ($K)	Q1 2024 Cost ($K)	Q1 2024 GP %
SEM distribution	6,161	6,317	-2.5%	3,525	3,453	2%
Online ad placements	130	103	20.8%	6	6	0%
Blockchain SaaS	25	210	-740%	0	0	N/A
Total	6,316	6,630	-5%	3,531	3,459	2%

KPIs and balance sheet items:

KPI ($USD Millions unless noted)	Q4 2023 (Dec 31)	Q1 2024 (Mar 31)
Cash & Cash Equivalents	$0.817	$0.467
Accounts Receivable, net	$0.844	$0.749
Prepayments & Deposits to Suppliers	$4.505	$5.210
Advances from Customers (Contract Liabilities)	$0.843	$1.427
Working Capital	$4.11	~$3.43
Weighted Avg Shares (Basic & Diluted)	7,174,506	7,204,506

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q2 onward	None disclosed in filings reviewed	None disclosed	Maintained (no formal guidance)
Gross Margin	FY/Q2 onward	None disclosed	None disclosed	Maintained (no formal guidance)
Operating Expenses	FY/Q2 onward	None disclosed	None disclosed	Maintained (no formal guidance)
Tax Rate	FY/Q2 onward	None disclosed	None disclosed	Maintained (no formal guidance)
Segment-Specific	FY/Q2 onward	None disclosed	None disclosed	Maintained (no formal guidance)

Note: No formal quantitative guidance was provided in the Q1 2024 10‑Q or contemporaneous 8‑K/press releases reviewed .

No Q1 2024 earnings call transcript was available in the filings catalog; themes below reflect management’s MD&A and prior 8‑K commentary.

Topic	Q-2 (Q3 2023) Mentions	Q-1 (Q4 2023) Mentions	Current Period (Q1 2024)	Trend
Supplier change to improve profitability	N/A in Q3 release	N/A	Switched primary SEM supplier; delays but better margins	Improving unit economics; near-term delivery headwinds
Macro PRC advertising demand	N/A in Q3 release	N/A	PRC downturn impacting ad spend; stimulus uncertain	Persistent macro headwinds
Blockchain SaaS	Minimal; business underperforming expectations (implied)	N/A	No revenue in Q1; continued low contribution	Deprioritized near term
R&D execution	Some spend historically	N/A	$0 R&D in Q1 due to headcount reduction	Cost focus continues
Regulatory/HFCAA/PCAOB	Not discussed in Q3 8‑K	N/A	Detailed HFCAA/PCAOB disclosure and risks	Ongoing regulatory overhang
Receivables/credit losses	Allowance increased in 2023	N/A	Higher allowances; tighter collections plan	Tightening credit discipline

Profitability-first pivot: “The Company changed its primary supplier of search engine marketing services in order to improve its profitability,” acknowledging service delivery delays in Q1 .
Margin improvement drivers: SEM distribution gross margin increased to 2% as supplier shift reduced resource costs .
Liquidity plan and going concern: management plans to “optimize internet resources cost investment strategy,” strengthen collections, negotiate supplier payment terms, and reduce operating costs; nonetheless, “These factors raise substantial doubt about our ability to continue as a going concern” without margin improvement or financing .
Strategic expansion: acquired 51% of Beijing Yi En to expand SEM distribution, seeking “economies of scale that will generate operating profits and additional cash inflow in the next 12 months” .

No earnings call/Q&A transcript was available in the filings reviewed for Q1 2024; guidance clarifications were not provided in written materials .

Wall Street consensus (S&P Global) for Q1 2024 EPS and revenue was not available due to S&P Global daily request limits; as a result, we cannot assess beats/misses for the quarter. Values retrieved from S&P Global were unavailable due to system limits.*

Execution on supplier transition is key: improved SEM margins are encouraging; monitor delivery normalization and pricing discipline to sustain positive gross margin .
Liquidity risk is material: sub-$0.5M cash and a going-concern warning heighten financing/event risk; track collections, supplier terms, and any credit facility drawdowns .
Cost control continues: R&D and SG&A are contained; but operating losses persist—watch for further efficiency gains tied to Beijing Yi En integration .
Revenue mix shift: low-margin SEM dominates; minimal blockchain SaaS contribution; focus on higher-margin channels or pricing uplift within SEM .
Concentration exposures: customer and supplier concentration amplify volatility; diversification/integration synergies will be critical .
Regulatory overhang: HFCAA/PCAOB risks and PRC controls on cash transfers remain headline risks for valuation and capital access .
Near-term trading: watch for any financing announcements, receivables collection updates, and margin cadence—positive gross margin durability could be a catalyst; conversely, liquidity actions may pressure shares .