Technology

Lakeside Announces Fiscal 2025 Second Quarter and Six-Month Results

Published

2 years ago

February 14, 2025

ITASCA, Ill. , Feb. 14, 2025 /PRNewswire/ — Lakeside Holding Limited (“Lakeside” or the “Company”) (Nasdaq: LSH), a U.S.-based cross-border supply chain solution provider with a unique focus on the Asia-Pacific market operating through two specialized subsidiaries—American Bear Logistics and Hupan Pharmaceutical (Hubei) Co., Ltd., today announced financial results for its fiscal 2025 second quarter and first half ended December 31, 2024.

Management Commentary

Henry Liu, Chairman and Chief Executive Officer of Lakeside commented, “While we faced industry-wide headwinds in the second quarter, we’ve made tremendous strategic progress in positioning Lakeside for long-term growth. Our expansion into pharmaceutical logistics through Hupan Pharmaceutical, our new partnerships with major e-commerce platforms, and our significantly-expanded Dallas-Fort Worth facilities demonstrate our commitment to diversifying and strengthening our business. The strong growth in our Asia-based customer revenues, up 29.4% in the first half, validates our strategic shift toward serving the rapidly expanding cross-border e-commerce market. With these foundational pieces in place and our continued investment in operational capabilities, we’re excited about the opportunities ahead as we build a more robust, diversified logistics enterprise.”

Operational Highlights

E-Commerce & Cross-Border Logistics:

Entered one-year agreement with a major Asian e-commerce platformPartnered with a leading global social media and e-commerce platform for customs brokerage servicesLaunched new Pick & Pack Fulfillment service for a major Chinese logistics partner

U.S. Facilities Expansion:

Expanded Dallas-Fort Worth operations:More than doubled warehouse space from 20,000 to 46,657 square feetAdded staff to support expanded operationsPart of multi-hub strategy including Chicago O’Hare (ORD), Dallas-Fort Worth (DFW), and Los Angeles (LAX)

Medical/Pharmaceutical Business Development:

Acquired Hupan Pharmaceutical (Hubei) Co., Ltd:Purchase price: RMB 4.0M ($0.6M)Expected annual revenue contribution: $7MGained licenses for drug wholesale, retail, and medical device distributionPartnerships with 15 major Wuhan hospitalsEstablished partnership with Sinopharm Group Hubei Co., Ltd. for:Essential medicine storageTransportation servicesLogistics servicesSigned RMB 11.0M ($1.5M) sales agreement with Sinopharm Holding Hubei New Special Medicine Co., Ltd:One-year contract effective January 1, 2025Covers critical medicines including Sodium Bicarbonate, Glucose, and Glucose Sodium Chloride

Financial Results for the Three Months Ending December 31, 2024:

Total revenues decreased by $1.5 million, or 31.3% to $3.4 million for the three months ended December 31, 2024, compared with $4.9 million for the three months ended December 31, 2023. The decrease was primarily driven by a significant decline in volume we handled from our cross-border airfreight solutions.

Revenues from our cross-border airfreight solutions decreased by $1.1 million or 35.5%, from $3.1 million in the three months ended December 31, 2023, to $2.0 million in the three months ended December 31, 2024. The decrease was primarily due to a decrease in the volume of cross-border air freight processed, from approximately 8,217 tons for the three months ended December 31, 2023, to approximately 4,459 tons for the three months ended December 31, 2024.

Revenues from our cross-border ocean freight solutions decreased by $0.4 million, or 24.2%, from $1.8 million in the three months ended December 31, 2023, to $1.4 million in the three months ended December 31, 2024. This reduction was primarily due to a decrease in the volume of cross-border ocean freights processed and forwarded, dropping from 1,330 TEU in the three months ended December 31, 2023, to 1,046 TEU in the three months ended December 31, 2024.

For the three months ended December 31, 2024, our total revenue from pharmaceutical product distribution amounted to $0.2 million, compared to no revenue from this segment in the same period of the prior year. Starting from December 2024, we established a new revenue stream through the distribution of pharmaceutical products. We procured pharmaceuticals—primarily pharmaceutical solutions—directly from manufacturers and supplied them to distributors, hospitals, and clinics.

Revenues by Customer Geographic

For the three months ended December 31,

2024

2023

Revenues

Amount

% of
total
Revenues

Amount

% of
total
Revenues

Amount
Increase
(Decrease)

Percentage
Increase
(Decrease)

Revenue from cross-border freight solutions

Asia-based customers

2,750,202

76.5

2,602,745

52.9

147,457

5.7

U.S.-based customers

627,301

17.4

2,313,358

47.1

(1,686,057)

(72.9)

3,377,503

93.9

4,916,103

100.0

(1,538,600)

(31.3)

Revenue from distribution of pharmaceuticals

Asia-based customers

218,086

6.1

–

218,086

N/A

Total revenues

3,595,587

100.0

4,916,103

100.0

(1,320,514)

(26.9)

Revenues from Asia-based customers increased by $0.1 million, or 5.7%, from $2.6 million in the three months ended December 31, 2023, to $2.8 million in the three months ended December 31, 2024. The increase in revenues from Asia-based customers was driven by a surge in volume from these customers, particularly those serving large e-commerce platforms. This growth reflects the rising demand for our services, a direct result of the overall expansion of the U.S. e-commerce market.

Revenues from U.S.-based customers decreased by $1.7 million, or 72.9%, from $2.3 million in the three months ended December 31, 2023 to $0.6 million in the same period in 2024. The decrease in revenue from the U.S.-based customers in the three months ended December 31, 2024, compared to the same period in 2023, was primarily due to our strategic shift toward Asia-based e-commerce customers.

Total cost of revenues decreased by $0.2 million, or 5.6%, from $3.9 million in the three months ended December 31, 2023, to $3.6 million in the three months ended December 31, 2024.

Our overall gross loss was $42,231 in the three months ended December 31, 2024, compared to gross profit of $1,064,509 in same period last year . Our gross margin was mainly impacted by higher cost of revenue, particular in fixed overhead costs, and an industry-wide decline in revenue.

Our gross margin of distribution of pharmaceuticals was 44.2% for the three months ended December 31, 2024.

General and administrative expenses increased by $0.9 million, or 94.1%, from $1.0 million in the three months ended December 31, 2023, to $1.9 million in the three months ended December 31, 2024. These expenses represented 53.2% and 20.0% of our total revenues for the three months ended December 31, 2024 and 2023, respectively. The increase was primarily attributed to higher salary and employee benefit expenses and professional fees operating as a listed company.

Net loss was $1.9 million for the three months ended December 31, 2024, compared to a net income of $0.06 million for the three months ended December 31, 2023.

Financial Results for the Six Months Ending December 31, 2024:

Total revenues decreased by $1.6 million, or 17.7%, from $9.1 million for the six months ended December 31, 2023, to $7.5 million for the six months ended December 31, 2024. The decrease was primarily driven by a significant decline in volume we handled from our cross-border airfreight solutions.

Revenues from our cross-border airfreight solutions decreased by $1.3 million or 23.4%, from $5.5 million in the six months ended December 31, 2023, to $4.2 million in the six months ended December 31, 2024. The decrease was primarily due to a decrease in the volume of cross-border air freight processed, from approximately 16,034 tons for the six months ended December 31, 2023, to approximately 11,732 tons for the six months ended December 31, 2024.

Revenues from our cross-border ocean freight solutions decreased by $0.3 million, or 8.7%, from $3.5 million in the six months ended December 31, 2023, to $3.2 million in the six months ended December 31, 2024. This growth was primarily due to a decrease in the volume of cross-border ocean freights processed and forwarded, dropping from 2,620 TEU in the six months ended December 31, 2023, to 2,476 TEU in the six months ended December 31, 2024.

Revenues by Customer Geographic

For the six months ended December 31,

2024

2023

Revenues

Amount

% of
total
Revenues

Amount

% of
total
Revenues

Amount
Increase
(Decrease)

Percentage
Increase
(Decrease)

Revenue from cross-border freight solutions

Asia-based customers

5,559,837

72.4

4,296,968

47.4

1,262,869

29.4

U.S.-based customers

1,899,220

24.7

4,767,611

52.6

(2,868,391)

(60.2)

7,459,057

97.2

9,064,579

100.0

(1,605,522)

(17.7)

Revenue from distribution of pharmaceuticals

Asia-based customers

218,086

2.8

–

218,086

N/A

Total revenues

7,677,143

100.0

9,064,579

100.0

(1,387,436)

(15.3)

Revenues from Asia-based customers increased by $1.3 million, or 29.4%, from $4.3 million in the six months ended December 31, 2023, to $5.6 million in the six months ended December 31, 2024. The increase in revenues from Asia-based customers was driven by an increase in volume from these customers, particularly those serving large e-commerce platforms. This growth reflects the rising demand for our services, a direct result of the overall expansion of the U.S. e-commerce market.

Revenues from cross-border freight solutions for the U.S.-based customers decreased by $2.9 million, or 60.2%, from $4.8 million in the six months ended December 31, 2023 to $1.9 million in the same period in 2024. The decrease in revenue from the U.S.-based customers in the three months ended December 31, 2024, compared to the same period in 2023, was primarily due to our strategic shift toward Asia-based e-commerce customers.

Cost of revenues decreased by $0.2 million, or 2.1%, from $7.4 million in the six months ended December 31, 2023, to $7.2 million in the six months ended December 31, 2024.

Gross profit decreased by $1.2 million, or 71.9%, from $1.7 million in the six months ended December 31, 2023, to $0.5 million in the six months ended December 31, 2024. Our gross margin of cross-border freight solution was 5.1% for the six months ended December 31, 2024, compared to 18.9% for the six months ended December 31, 2023. The decline in gross margin was primarily attributable to reduced revenue from cross-border airfreight solutions and an increase in our cost of revenue in warehouse services, custom declaration and terminal charges, freights arranged charges and overhead costs allocated.

General and administrative expenses increased by $1.9 million, or 103.7%, from $1.8 million in the six months ended December 31, 2023, to $3.7 million in the six months ended December 31, 2024. These expenses represented 48.8% and 20.3% of our total revenues for the six months ended December 31, 2024 and 2023, respectively. The increase was primarily attributed to higher salary and employee benefit expenses, professional fees, office expenses and traveling, insurance expenses and entertainment expenses, operating as a listed company.

Net loss was $3.3 million for the six months ended December 31, 2024, compared to a net loss of $0.2 million for the six months ended December 31, 2023.

Conference Call & Audio Webcast

Lakeside’s management team will hold an earnings conference call at 4:30 PM Eastern Time (3:30 PM Central Time) on Tuesday, February 17 to discuss the Company’s financial results and provide an overview of the Company’s operations. Management will lead the conference call and be available to answer questions.

To access the call by phone, please dial 1- 877-407-9716 (international callers, please dial 1- 201-493-6779) approximately 10 minutes before the start of the call. Refer to conference ID: LAKESIDE. **NOTE: THIS CONFERENCE ID WILL BE REQUIRED FOR ENTRY

A live audio conference call webcast will be available online at
https://viavid.webcasts.com/starthere.jsp?ei=1708554&tp_key=b4f1b10725

About Lakeside Holding Limited

Lakeside Holding Limited is a U.S.-based cross-border supply chain solution provider with a unique focus on the Asia-Pacific market. Through two specialized subsidiaries—American Bear Logistics and Hupan Pharmaceutical (Hubei) Co., Ltd.—Lakeside delivers tailored logistics solutions spanning general and specialized sectors.

American Bear Logistics, with strategic hubs in Chicago, Dallas, Los Angeles, and New York, offers customized cross-border ocean and airfreight solutions, connecting Asia-based logistics service companies and e-commerce platforms with the U.S. market.

Lakeside recently acquired Hupan Pharmaceutical (Hubei) Co., Ltd., expanding its service scope and enhancing its pharmaceutical logistics and distribution capabilities within China. This strategic move underscores Lakeside’s commitment to advancing integrated cross-border logistics solutions.

For more information, please visit https://lakeside-holding.com.

Safe Harbor Statement

This press release contains forward-looking statements that reflect our current expectations and views of future events. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements involve various risks and uncertainties. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. We qualify all of our forward-looking statements by these cautionary statements.

Investor Relations Contact:

Matthew Abenante, IRC
President
Strategic Investor Relations, LLC
Tel: 347-947-2093
Email: matthew@strategic-ir.com

(tables follow)

LAKESIDE HOLDING LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

As of
December 31,
2024

(unaudited)

As of
June 30,
2024

(audited)

ASSETS

CURRENT ASSETS

Cash

1,123,414

123,550

Accounts receivable – third parties, net

1,645,774

2,082,152

Accounts receivable – related party, net

207,293

763,285

Prepayment and other receivable

49,476

—

Contract assets

31,388

129,506

Inventory, net

10,328

—

Due from related parties

682,980

441,279

Loan to a third party

686,697

—

Total current assets

4,437,350

3,539,772

NON-CURRENT ASSETS

Investment in other entity

15,741

Property and equipment at cost, net of accumulated depreciation

514,073

344,883

Intangible asset, net

418,867

—

Right of use operating lease assets

4,074,617

3,471,172

Right of use financing lease assets

110,998

37,476

Deferred tax asset

—

89,581

Deferred offering costs

—

1,492,798

Deposit and prepayment

265,480

202,336

Total non-current assets

5,399,776

5,653,987

TOTAL ASSETS

9,837,126

9,193,759

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accounts payables – third parties

1,233,142

1,161,858

Accounts payables – related parties

71,557

227,722

Accrued liabilities and other payables

1,244,501

1,335,804

Current portion of obligations under operating leases

2,203,766

1,186,809

Current portion of obligations under financing leases

48,865

37,619

Loans payable, current

609,935

746,962

Dividend payable

—

98,850

Tax payable

79,825

Due to shareholders

—

1,018,281

Total current liabilities

5,491,591

5,893,730

NON-CURRENT LIABILITIES

Loans payable, non-current

174,846

136,375

Deferred tax liabilities

104,717

—

Obligations under operating leases, non-current

2,339,439

2,506,402

Obligations under financing leases, non-current

80,252

17,460

Total non-current liabilities

2,699,254

2,660,237

TOTAL LIABILITIES

8,190,845

8,553,967

Commitments and Contingencies

EQUITY

Common stocks, $0.0001 par value, 200,000,000 shares authorized,
7,500,000 and 6,000,000 issued and outstanding as of December 31,
2024 and June 30, 2024, respectively

750

600

Subscription receivable

—

(600)

Additional paid-in capital

4,942,791

642,639

Accumulated other comprehensive income

(9,214)

2,972

Deficits

(3,288,046)

(5,819)

Total equity

1,646,281

639,792

TOTAL LIABILITIES AND EQUITY

9,837,126

9,193,759

LAKESIDE HOLDING LIMITED

CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

Six Months Ended
December 31,

Three Months Ended
December 31,

2024

2023

2024

2023

Revenue from cross-border freight
solutions – third party

6,702,063

8,639,983

3,102,276

4,585,696

Revenue from cross-border freight
solutions – related parties

756,994

424,596

275,227

330,407

Revenue from distribution of pharmaceutical
products – third parties

218,086

—

218,086

—

Total revenue

7,677,143

9,064,579

3,595,589

4,916,103

Cost of revenue from cross-border
freight solutions – third party

6,153,994

6,329,650

3,159,709

3,424,053

Cost of revenue from cross-border
freight solutions – related party

921,050

1,022,877

356,320

427,541

Cost of revenue from pharmaceutical
products – related parties

121,791

—

121,791

—

Total cost of revenue

7,196,835

7,352,527

3,637,820

3,851,594

Gross profit (loss)

480,308

1,712,052

(42,231)

1,064,509

Operating expenses:

Selling expenses

54,488

—

54,488

—

General and administrative expenses

3,749,059

1,840,831

1,911,853

985,053

Loss from deconsolidation of a subsidiary

—

73,151

—

Provision (reversal) of allowance for expected
credit loss

1,956

49,591

(10,881)

(2,531)

Total operating expenses

3,805,503

1,963,573

1,955,460

982,522

Income (loss) from operations

(3,325,195)

(251,521)

(1,997,691)

81,987

Other income

Other income, net

201,541

88,449

91,753

41,500

Interest expense

(68,992)

(53,864)

(40,882)

(31,079)

Total other income

132,549

34,585

50,871

10,421

(Loss) income before income taxes

(3,192,646)

(216,936)

(1,946,820)

92,408

Income tax expense (credit)

89,581

26,125

—

28,184

Net (loss) income

(3,282,227)

(243,061)

(1,946,820)

64,224

Less: net loss attributable to non-controlling interest

—

(3,025)

—

Net (loss) income attributable to the Company

(3,282,227)

(240,036)

(1,946,820)

64,224

Other comprehensive (loss) income:

Foreign currency translation income

(12,186)

3,122

(25,179)

—

Comprehensive (loss) income

(3,294,413)

(239,939)

(1,971,999)

64,224

Less: comprehensive loss attributable to
non-controlling interest

—

(3,119)

—

Comprehensive (loss) income attributable
to the Company

(3,294,413)

(236,820)

(1,971,999)

64,224

(Loss) earnings per share – basic and diluted

(0.44)

(0.04)

(0.26)

0.01

Weighted Average Shares Outstanding –
basic and diluted

7,500,000

6,000,000

7,500,000

6,000,000

LAKESIDE HOLDING LIMITED

CONDENSSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the Six Months Ended
December 31,

2024

2023

Cash flows from operating activities:

Net loss

(3,282,227)

(243,061)

Adjustments to reconcile net loss to net cash provided by
operating activities:

Depreciation – G&A

50,804

35,991

Depreciation – cost of revenue

36,328

Amortization and interest expense of operating lease assets

989,003

439,142

Depreciation of right-of-use finance assets

15,480

14,385

Provision of allowance for expected credit loss

1,956

49,591

Deferred tax expense

89,581

26,125

Loss from derecognition of shares in subsidiary

—

73,151

Changes in operating assets and liabilities:

Accounts receivable – third parties

424,648

(479,056)

Accounts receivable – related parties

565,766

(192,609)

Contract assets

98,118

(27,169)

Inventories, net

(10,328)

—

Due from related parties

(241,702)

40,740

Prepayment, other deposit

(112,620)

(23,269)

Accounts payables – third parties

28,285

539,542

Accounts payables – related parties

(156,165)

241,721

Accrued expense and other payables

312,722

122,547

Operating lease liabilities

(742,649)

(396,263)

Net cash (used in) provided by operating activities

(1,933,000)

257,836

Cash flows from investing activities:

Purchase of furniture and equipment

(36,072)

—

Payment for leasehold improvement

(75,008)

—

Net cash payment for asset acquisition

(552,721)

—

Loan to a third party

(686,697)

—

Payment made for investment in other entity

—

(29,906)

Net cash outflow from deconsolidation of a subsidiary
(Appendix A)

—

(48,893)

Net cash used in investing activities

(1,350,498)

(78,799)

Cash flows from financing activities:

Proceeds from loans

195,000

225,000

Repayment of loans

(339,914)

(185,856)

Repayment of equipment and vehicle loans

(55,877)

(59,708)

Principal payment of finance lease liabilities

(14,964)

(13,429)

Payment for deferring offering cost

—

(140,000)

Advances from Hupan Pharmaceutical prior to acquisition

276,365

—

Proceeds from initial public offering, net of share issuance
costs

5,351,281

—

Advanced to related parties

(311,185)

—

Proceeds from shareholders

—

158,455

Repayment to shareholders

(805,345)

—

Net cash provided by (used in) financing activities

4,295,361

(15,538)

Effect of exchange rate changes on cash

(11,999)

3,216

Net increase in cash

999,864

166,715

Cash, beginning of the period

123,550

174,018

Cash, end of the period

1,123,414

340,733

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:

Cash paid for income tax

—

Cash paid for interest

45,953

15,503

SUPPLEMENTAL SCHEDULE OF NON-CASH IN
INVESTING AND FINANCING ACTIVITIES

Deferred offering costs within due to shareholders

—

500,826

Deferred offering costs within accrued expense and other
payables

—

241,176

Additions to property and equipment included in loan
payable

102,235

—

Additions to leasehold improvement and furniture and
fixture through account payable

42,803

—

Settlement of due to shareholder and advance to related
party

311,815

—

NON-CASH ACTIVITIES

Right of use assets obtained in exchange for operating lease
obligations

1,445,498

—

Right of use assets obtained in exchange for finance lease
obligation

89,003

19,982

APPENDIX A – Net cash outflow from deconsolidation of
a subsidiary

Working capital, net

29,812

Investment in other entity recognized

(15,741)

Elimination of NCl at deconsolidation of a subsidiary

10,187

Loss from deconsolidation of a subsidiary

(73,151)

Cash

(48,893)

View original content:https://www.prnewswire.com/news-releases/lakeside-announces-fiscal-2025-second-quarter-and-six-month-results-302377335.html

SOURCE Lakeside Holding Limited

Technology

Shenzhen Unveils APEC China 2026 Host-City Theme Song and Music Video

Published

1 hour ago

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SHENZHEN, China, Nov. 1, 2026 /PRNewswire/ — The host-city theme song for APEC China 2026, Meet You Where Wonders Bloom (在奇迹之城遇见你), was produced by the Publicity Department of the CPC Shenzhen Municipal Committee and created by Shenzhen Media Group. Written and composed by He Muyang, Vice Chairman of the Chinese Musicians Association and a Shenzhen-based musician, the song is performed by popular singers Jane Zhang and Joseph Zeng. With its fresh, youthful pop sound, the song tells the stories of ordinary dreamers, weaving together personal aspirations, Shenzhen’s remarkable development, and the broader vision of Asia-Pacific cooperation.

Released alongside the song, the music video goes beyond showcasing Shenzhen’s cityscape to put people at the heart of the story. Through the experiences of people from all walks of life, particularly young people and those from overseas, it captures the energy and appeal of Shenzhen, the City of Miracles, and its warm welcome to the world. Running 4 minutes and 45 seconds, the video features 176 shots filmed across Shenzhen, with more than 100 residents appearing on screen. From location coordination and filming support to bringing participants together, the production was a citywide effort. More than just a music video, it became a shared expression of Shenzhen’s enthusiasm as APEC host city.

From a refreshing melody to a city ready to welcome the world, Shenzhen is embracing its role as APEC host with openness and inclusiveness, extending a warm invitation to guests from near and far to gather in Shenzhen.

View original content to download multimedia:https://www.prnewswire.com/news-releases/shenzhen-unveils-apec-china-2026-host-city-theme-song-and-music-video-302925715.html

SOURCE Shenzhen Media Group

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Shenzhen Unveils APEC China 2026 Host-City Theme Song and Music Video

Published

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View original content to download multimedia:https://www.prnewswire.com/news-releases/shenzhen-unveils-apec-china-2026-host-city-theme-song-and-music-video-302925715.html

SOURCE Shenzhen Media Group

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Context Labs AI Distillery™ Lets Enterprises Run Sovereign AI on Data They Own

Published

5 hours ago

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Company launches the Context Engine for trusted sovereign AI, which packages an enterprise’s own data with verified lineage for use with the frontier or open-weight model the enterprise chooses.

ABU DHABI, United Arab Emirates, Nov. 1, 2026 /PRNewswire/ — Context Labs B.V. (“Context Labs”), the AI Data Infrastructure company, today launched the Context Labs AI Distillery™, the Context Engine for trusted sovereign AI. The AI Distillery converts an enterprise’s operational and business data into a governed Context Package that the enterprise owns, creating their own protected competitive moat. Every answer an AI model draws from the package is traced to its source records, and the package works with the frontier or open weight model the customer chooses, inside the customer’s own environment.

Analysts have quantified the obstacle to scaling enterprise AI. Gartner predicts that through 2026 organizations will abandon 60% of AI projects unsupported by AI-ready data, and that over 40% of agentic AI projects will be canceled by the end of 2027. McKinsey reports that eight in ten companies name data limitations as the barrier to scaling AI agents. Gartner has also described what enterprises now need: software that lets teams construct, govern and deliver semantically organized knowledge to AI agents, built on ontologies and knowledge graphs.

The Context Labs AI Distillery™ is designed around six outcomes:

Own your IP. An enterprise’s knowledge, know-how and operating context stay inside a Context Package that only it controls and are not used to train third-party AI models.

Own your AI. The intelligence employees create in everyday use accrues to the enterprise, not to a model provider, and grows with every interaction.

Trusted, provable answers. Every output carries its data lineage and decision provenance, so answers can be verified, audited, and defended.

Build, protect and scale a proprietary competitive asset. The Context Package captures how the enterprise describes and runs its operations, starting with one facility and extending to others without rebuilding.

Sovereign by design. The AI Distillery runs inside the customer’s own data center or chosen cloud, so data stays where the customer decides.

Freedom of model choice, at lower cost. Customers can use any frontier or open-weight model and switch models without rebuilding the Context Package. Precise, verified context reduces the tokens each query uses.

The AI Distillery works in three steps: distill, package, and prove. It maps an enterprise’s structured and unstructured data to industry-specific ontologies, stores the result in a Context Package with cryptographic provenance, and checks answers against the company’s own records before any model goes into production. Work that has typically required teams of specialist engineers becomes a guided, governed workflow.

Context Agents and the Semantic Context Tunnel. Context Agents answer operational, commercial and compliance questions from the enterprise’s Context Package, with every figure traced to its source. The Semantic Context Tunnel brings the same context into the AI assistant employees already use. Both work within the access controls the enterprise sets.

“Models come and go. An enterprise’s context should not,” said Dan Harple, Founder, Chairman and CEO of Context Labs. “Frontier models will keep improving, but they do not supply governance, provenance or trust, and they should not absorb the knowledge that makes a company competitive. The AI Distillery gives enterprises a moat they own: their own context, proven and protected, working with whichever model they choose. That is how our customers own their IP and own their AI.”

At ADIPEC 2026, Context Labs is demonstrating the AI Distillery on energy-sector use cases, in which a Context Agent answers operational questions with every figure traced to the underlying plant records. Context Labs is located Arab Development Group stand, Stand #5240, Hall 5 and in the Dell AI Factory with NVIDIA, AI Zone, Hall 13.

Availability. The Context Labs AI Distillery™ is available now through the Microsoft Marketplace. Each enterprise license includes an industry starter kit to accelerate time to value. Companies can request a briefing or technical working session at contextlabs.com/distillery.

About Context Labs B.V.

Context Labs is an AI Data Infrastructure company delivering the Context Engine for Trusted and Secure Sovereign AI. Its platform turns complex, fragmented operational, engineering and enterprise data into continuously verified, auditable information that AI systems, people and markets can trust. Built on an extensible library of industry-specific ontologies that map to established standards published by ISO and other standards bodies, the platform is deployable across sectors, with use-case applications delivering decision-ready intelligence on a common foundation. The Context Labs AI Distillery™ lets enterprises run sovereign AI inside their own data centers, so they own their IP and own their AI. Formed out of MIT research and led by a team that helped drive the at-scale growth of the Internet, Context Labs has offices in Amsterdam, Cambridge (Mass.), Houston and Abu Dhabi. Learn more at www.contextlabs.com.

Media contact
press@contextlabs.com | 1-617-902-0932 | contextlabs.com/resources

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