WiMi Hologram(WIMI) - 2024 Q2 - Quarterly Report

Financial Performance - Total operating revenues for the six months ended June 30, 2024, increased to RMB 290,815,771, up from RMB 264,759,505 in the same period of 2023, representing a growth of approximately 9.4%[3] - Gross profit for the six months ended June 30, 2024, was RMB 87,571,390, compared to RMB 80,982,075 for the same period in 2023, reflecting an increase of about 8.5%[3] - The net income attributable to WiMi Hologram Cloud, Inc. for the six months ended June 30, 2024, was RMB 7,663,918, a significant turnaround from a net loss of RMB 2,194,537 in the same period of 2023[3] - The company reported a comprehensive loss of RMB 42,429,344 for the six months ended June 30, 2024, compared to a comprehensive income of RMB 9,656,566 in the same period of 2023[3] - For the six months ended June 30, 2024, the company reported a net income of RMB 12,288,585 (approximately USD 1,724,277), a significant recovery from a net loss of RMB 18,426,496 in the same period of 2023[7] - Operating cash flow for the six months ended June 30, 2024, was RMB 150,230,330 (approximately USD 21,079,632), compared to a cash outflow of RMB 4,076,206 in the prior year[7] Assets and Liabilities - Total current assets as of June 30, 2024, reached RMB 1,254,133,046, an increase of approximately 46.2% from RMB 857,714,128 as of December 31, 2023[2] - Total liabilities increased to RMB 553,264,009 as of June 30, 2024, compared to RMB 269,465,821 as of December 31, 2023, indicating a rise of about 105.5%[2] - Cash and cash equivalents as of June 30, 2024, amounted to RMB 502,705,130, an increase from RMB 338,175,706 as of December 31, 2023, representing a growth of approximately 48.7%[2] - The company’s total assets increased, with accumulated deficits reported at RMB (932,667,280) as of June 30, 2024[4] - The company’s balance of additional paid-in capital reached RMB 1,651,937,055 as of June 30, 2024, reflecting ongoing investment activities[4] Research and Development - Research and development expenses decreased to RMB 75,820,156 for the six months ended June 30, 2024, down from RMB 92,239,461 in the same period of 2023, a reduction of about 17.7%[3] - Research and development expenses encompass salaries, outsourced subcontractors, and related office expenses, indicating the Company's commitment to innovation and product development[108] Revenue Sources - The revenue from AR services was RMB 290,815,771 for the year ended June 30, 2024, compared to RMB 254,823,992 for the year ended June 30, 2023, indicating a growth of about 14.1%[103] - The Company recorded international revenues of RMB 19,890,692 for the year ended June 30, 2024, up from RMB 9,935,513 for the year ended June 30, 2023, marking an increase of about 100%[103] - Revenues from Mainland PRC for the six months ended June 30, 2024, were RMB 239,886,094, compared to RMB 254,823,992 for the same period in 2023, showing a decline of approximately 5.8%[196] Investments and Subsidiaries - The company has established multiple subsidiaries and joint ventures to expand its operations in augmented reality and semiconductor industries[8][9][14] - VIYI Technology Inc. was established to accelerate the development of AI algorithms and cloud computing services, with a focus on enhancing competitiveness in the semiconductor market[18] - VIYI acquired 100% equity interests of Fe-da Electronics Company for an undisclosed amount to boost its computer chip and intelligent chip business[19] - As of June 30, 2024, noncontrolling interests include 48% equity interest in MicroAlgo valued at RMB 171,530,262 and total noncontrolling interests of RMB 122,663,493[120][121] Accounting and Compliance - The company accounts for Beijing WiMi as a Variable Interest Entity (VIE) and consolidates its accounts in accordance with SEC regulations [50] - The unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include all normal and recurring adjustments deemed necessary for fair presentation [51] - The Company operates under ASC 606 guidelines, determining revenue recognition based on whether it acts as a principal or agent in transactions, affecting how revenues are reported[88] - The Company has adopted FASB ASU 2016-02 for leases, recognizing lease liabilities and assets based on the present value of lease payments[113] Customer Concentration and Risks - For the six months ended June 30, 2024, one customer accounted for 11.5% of the company's total revenues, indicating a shift in customer concentration risk[169] - The company has determined that the likelihood of loss regarding its current corporate structure or contractual arrangements is remote based on current facts and circumstances[192]