Zhongchao(ZCMD) - 2024 Q2 - Quarterly Report

Financial Statements The H1 2024 financials reflect a return to profitability and positive operating cash flow, offset by significant capital expenditures and adverse currency effects Unaudited Condensed Consolidated Balance Sheets As of June 30, 2024, total assets slightly decreased to $24.03 million, while property and equipment saw a significant increase | Balance Sheet Items | June 30, 2024 (USD) | Dec 31, 2023 (USD) | Change | | :--- | :--- | :--- | :--- | | Total Assets | $24,033,166 | $24,416,643 | -1.6% | | Cash and cash equivalents | $6,279,809 | $7,548,694 | -16.8% | | Property and equipment, net | $5,073,142 | $3,222,252 | +57.4% | | Total Liabilities | $3,313,550 | $3,378,473 | -1.9% | | Accounts payable | $1,225,720 | $683,937 | +79.2% | | Total Equity | $20,719,616 | $21,038,170 | -1.5% | - Total current assets decreased to $16.71 million from $18.71 million, mainly due to a reduction in cash[1] - A significant increase in Property and equipment, net, was observed, rising by over 57% to $5.07 million[1] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss The company returned to profitability in H1 2024 with a net income of $182,933, despite a decrease in total revenues | Income Statement Items | Six Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2023 (USD) | | :--- | :--- | :--- | | Total Revenues | $8,348,329 | $10,376,170 | | Service Revenue | $6,595,083 | $4,856,333 | | Product Revenue | $1,753,246 | $5,519,837 | | Gross Profit | $4,737,096 | $4,323,339 | | Total Operating Expenses | ($4,788,646) | ($10,347,910) | | Net Income (Loss) | $182,933 | ($4,779,858) | | Basic and Diluted EPS | $0.03 | ($1.81) | - The company's revenue mix shifted significantly, with service revenue growing by 35.8% YoY, while product revenue declined by 68.2% YoY[2] - Profitability improved dramatically, with the company swinging from a loss from operations of $6.02 million in H1 2023 to a minimal loss of $51,550 in H1 2024, primarily due to a more than 50% reduction in operating expenses[2] Unaudited Condensed Consolidated Statements of Changes in Equity Total equity decreased to $20.72 million as net income was offset by negative foreign currency translation adjustments | Equity Changes (Six Months Ended June 30, 2024) | Amount (USD) | | :--- | :--- | | Balance as of Dec 31, 2023 | $21,038,170 | | Share-based compensation expenses | $26,279 | | Net income | $182,933 | | Foreign currency translation adjustments | ($527,766) | | Balance as of June 30, 2024 | $20,719,616 | - The accumulated deficit improved from ($7.27 million) to ($7.12 million) due to the net income recorded during the period[3] Unaudited Condensed Consolidated Statements of Cash Flows The company generated positive operating cash flow of $0.81 million, but a net cash decrease resulted from significant investing activities | Cash Flow Items (Six Months Ended June 30) | 2024 (USD) | 2023 (USD) | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $809,598 | ($1,853,153) | | Net Cash (Used in) Provided by Investing Activities | ($1,797,664) | $1,938,682 | | Net Cash Provided by Financing Activities | $0 | $0 | | Effect of exchange rate changes on cash | ($280,819) | ($319,161) | | Net decrease in cash and cash equivalents | ($1,268,885) | ($233,632) | | Cash and cash equivalents at end of period | $6,279,809 | $11,286,821 | - The company's cash flow from operations turned positive, driven by net income and favorable changes in working capital, such as an increase in accounts payable[6] - A significant cash outflow of $2.10 million was used for the purchase of property and equipment, contrasting with a minimal purchase of $12,269 in the same period last year[6]