EUDA Health (EUDA) - 2024 Q2 - Quarterly Report

Unaudited Condensed Consolidated Balance Sheets As of June 30, 2024, EUDA Health Holdings Limited reported a significant increase in total assets, primarily driven by cash and intangible assets, while total liabilities decreased. The company continues to operate with a substantial shareholders' deficit, though it improved compared to December 31, 2023 Balance Sheet Overview As of June 30, 2024, EUDA Health Holdings Limited reported a significant increase in total assets, primarily driven by cash and intangible assets, while total liabilities decreased. The company continues to operate with a substantial shareholders' deficit, though it improved compared to December 31, 2023 Balance Sheet Summary | Metric | June 30, 2024 ($) | December 31, 2023 ($) | Change ($) | Percentage Change (%) | | :--------------------------------- | :------------ | :---------------- | :----- | :---------------- | | Assets | | | | | | Total Current Assets | $1,056,359 | $723,441 | $332,918 | 46.02% | | Total Assets | $2,027,942 | $1,310,508 | $717,434 | 54.75% | | Liabilities | | | | | | Total Current Liabilities | $7,884,030 | $8,717,333 | $(833,303) | -9.56% | | Total Liabilities | $8,039,452 | $8,792,444 | $(752,992) | -8.56% | | Shareholders' Deficit | | | | | | Total Shareholders' Deficit | $(6,011,510) | $(7,481,936) | $1,470,426 | -19.65% | - Cash increased significantly from $189,005 as of December 31, 2023, to $376,206 as of June 30, 2024, representing a 99.04% increase[2] - Intangible assets, net, increased from $0 to $350,847, reflecting recent acquisitions[2] - Convertible notes (current liabilities) decreased from $2,413,125 to $2,140,682, a 11.30% reduction[2] Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss For the six months ended June 30, 2024, EUDA Health Holdings Limited reported a substantial increase in net loss, primarily driven by a significant impairment loss on intangible assets. Revenues from property management services saw a modest increase, but operating expenses surged, leading to a higher loss from operations and a greater net loss attributable to the company Operations and Comprehensive Loss Overview For the six months ended June 30, 2024, EUDA Health Holdings Limited reported a substantial increase in net loss, primarily driven by a significant impairment loss on intangible assets. Revenues from property management services saw a modest increase, but operating expenses surged, leading to a higher loss from operations and a greater net loss attributable to the company Operations and Comprehensive Loss Summary | Metric | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | Change ($) | Percentage Change (%) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----- | :---------------- | | Total Revenues | $1,908,048 | $1,803,010 | $105,038 | 5.83% | | Gross Profit | $442,072 | $443,690 | $(1,618) | -0.36% | | Total Operating Expenses | $16,787,092 | $3,159,444 | $13,627,648 | 431.30% | | Loss From Operations | $(16,345,020) | $(2,715,754) | $(13,629,266) | 501.85% | | Net Loss Attributable to EUDA Health Holdings Limited | $(16,827,829) | $(8,514,303) | $(8,313,526) | 97.64% | | Basic and Diluted Loss Per Share (Total) | $(0.59) | $(0.40) | $(0.19) | 47.50% | - Impairment loss on intangible assets was $14,755,560 for the six months ended June 30, 2024, compared to $0 in the prior year period, significantly contributing to the increase in operating expenses[5] - Selling expenses decreased substantially from $377,472 in 2023 to $34,938 in 2024, a 90.74% reduction[5] - Net loss from discontinued operations decreased significantly from $(1,323,406) in 2023 to $(84,673) in 2024[5] Unaudited Condensed Consolidated Statements of Change in Shareholders' Deficit For the six months ended June 30, 2024, EUDA Health Holdings Limited's total shareholders' deficit improved, decreasing from $(7,481,936) to $(6,011,510). This improvement was primarily driven by significant capital increases from the issuance of ordinary shares through private placements, conversion of convertible notes, settlement of debts, and an asset acquisition, partially offset by a net loss Shareholders' Deficit Changes Overview For the six months ended June 30, 2024, EUDA Health Holdings Limited's total shareholders' deficit improved, decreasing from $(7,481,936) to $(6,011,510). This improvement was primarily driven by significant capital increases from the issuance of ordinary shares through private placements, conversion of convertible notes, settlement of debts, and an asset acquisition, partially offset by a net loss Shareholders' Deficit Summary | Metric | December 31, 2023 | June 30, 2024 | | :------------------------------------------------ | :---------------- | :------------ | | Ordinary shares outstanding (shares) | 24,627,509 | 35,744,299 | | Ordinary shares capital ($) | $27,430,187 | $45,693,774 | | Accumulated deficit ($) | $(34,743,270) | $(51,571,099) | | Total Shareholders' Deficit ($) | $(7,481,936) | $(6,011,510) | - Issuance of ordinary shares in assets acquisition contributed $15,000,000 to capital[8] - Issuance of ordinary shares upon conversion of convertible notes added $1,500,000 to capital[8] - Net loss for the period was $(16,827,829), increasing the accumulated deficit[8] Unaudited Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, EUDA Health Holdings Limited experienced a net increase in cash, primarily due to significant cash provided by financing activities, which offset cash used in operating and investing activities. This marks a reversal from the prior year's net decrease in cash Cash Flows Overview For the six months ended June 30, 2024, EUDA Health Holdings Limited experienced a net increase in cash, primarily due to significant cash provided by financing activities, which offset cash used in operating and investing activities. This marks a reversal from the prior year's net decrease in cash Cash Flows Summary | Cash Flow Activity | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(1,258,597) | $(2,176,501) | | Net cash used in investing activities | $(4,021) | $(1,098) | | Net cash provided by financing activities | $1,497,514 | $1,711,519 | | Net change in cash | $193,024 | $(463,999) | | Cash, end of the period | $390,578 | $320,486 | - Cash used in operating activities from continuing operations decreased by 55.37% from $(2,511,774) in 2023 to $(1,120,810) in 2024[10] - Financing activities in 2024 included $1,500,000 from convertible notes and $267,216 from short-term loans (private lenders), partially offset by repayments[10] - Non-cash investing and financing activities included $15,000,000 for issuance of ordinary shares in assets acquisition in 2024, and $2,368,000 for settlement of prepaid forward contracts in 2023[11] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed disclosures on accounting policies, financial statement components, and significant events, offering crucial context Note 1 – Nature of business and organization EUDA Health Holdings Limited, formerly 8i Acquisition 2 Corp., completed a business combination in November 2022, acquiring EUDA Health Limited. The company underwent several reorganizations under common control. Following the discontinuation of its medical services in September 2023, the company now operates primarily in property management services. A recent development includes the acquisition of Fortress Cove Limited in May 2024, expanding into direct sales of holistic wellness consumer products in Malaysia - EUDA Health Holdings Limited (formerly 8i Acquisition 2 Corp.) consummated a business combination with EUDA Health Limited (EHL) on November 17, 2022, making EHL a wholly-owned subsidiary[13] - In September 2023, the company streamlined its medical services practice, accounting for it as a discontinued operation due to a strategic shift. The company is transitioning to other medical service fields[21] - The company now operates in a single business segment: property management services for shopping malls, office buildings, and residential apartments[20] - On May 6, 2024, EUDA acquired Fortress Cove Limited, which owns CK Health Plus Sdn Bhd, a Malaysian company in the direct sale business of holistic wellness consumer products[22] Note 2 – Going concern The company's recurring losses from operations, negative cash flows, and a working capital deficit of approximately $6.8 million as of June 30, 2024, raise substantial doubt about its ability to continue as a going concern. Management is actively seeking various financing resources, including shareholder borrowings and potential public offerings, to address liquidity needs - As of June 30, 2024, the Company's working capital deficit was approximately $6.8 million, and cash on hand was approximately $0.4 million[27] - The Company has experienced recurring losses from operations and negative cash flows from operating activities since 2020[27] - Management has determined that these conditions raise substantial doubt about the Company's ability to continue as a going concern within one year[27] - Management is trying to alleviate the going concern risk by securing various financing resources, including borrowing from shareholders and the possibility of raising funds through a future public offering[30] Note 3 – Summary of significant accounting policies This note details the Company's significant accounting policies, covering U.S. GAAP, consolidation, estimates, revenue recognition, asset valuation, and liability measurement, and highlights key changes like ASU 2019-05 adoption and medical services reclassification - The financial statements are prepared in accordance with U.S. GAAP and reflect normal recurring adjustments for interim periods[31] - Following the discontinuation of medical service operations in September 2023, the Company now has one operating segment: property management services[37][38] - The Company adopted FASB ASU 2019-05 on January 1, 2023, for expected credit losses, which did not have a significant impact on the financial statements[41][42] - Revenue from property management services (common area and security management) is recognized on a straight-line basis over the contract term, typically one year[61][62] - The Company accounts for leases in accordance with ASC 842, classifying them as either finance or operating leases based on specific criteria, and recognizing ROU assets and lease liabilities[84][86] Basis of Presentation and Consolidation The financial statements adhere to U.S. GAAP and consolidate the Company and its subsidiaries, eliminating intercompany transactions - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include all adjustments considered necessary for fair presentation[31] - The financial statements consolidate the Company and its subsidiaries, eliminating all intercompany transactions and balances[32] Use of Estimates and Non-Controlling Interests Management relies on estimates for financial statement preparation, and non-controlling interests represent equity not attributable to the Company in subsidiaries - Preparation of financial statements requires management to make estimates and assumptions, including lease classification, asset valuations, credit loss allowances, and impairment assessments[35] - Non-controlling interests reflect the equity portion not attributable to the Company in non-wholly owned subsidiaries[36] Segment Reporting The Company uses the management approach for segment reporting, now operating in a single segment: property management services - The Company uses the management approach for segment reporting, with the CEO as the CODM[37] - After discontinuing medical services in September 2023, the Company operates in a single reportable segment: property management services[37][38] Asset Acquisitions and Cash Asset acquisitions are accounted for by allocating costs based on fair value, and cash includes demand deposits with short maturities - Asset acquisitions are accounted for by allocating costs based on relative fair value, with any excess cost generally allocated to acquired assets[39] - Cash includes cash on hand and demand deposits with original maturities less than three months[40] Receivables and Prepayments Accounts receivable are recorded net of allowances for uncollectible amounts, and prepayments are cash advances to suppliers - Accounts receivable are recorded net of an allowance for uncollectible accounts, with adequacy reviewed using historical trends and economic conditions[41][42] - Prepayments are cash advanced to suppliers, with allowances recognized if advances are determined not to result in receipts or refunds[43] - Other receivables include employee advances and refundable deposits, with allowances recorded for at-risk amounts[44] Property and Equipment, Intangible Assets, and Impairment Property and equipment are depreciated using the straight-line method, purchased intangible assets are amortized, and long-lived assets are reviewed for impairment, with a significant impairment loss recognized in 2024 - Property and equipment are stated at cost less accumulated depreciation, computed using the straight-line method over estimated useful lives[47] - Purchased intangible assets are recognized at fair value and amortized over their useful lives (e.g., distribution rights 2-3 years, software 5 years)[49] - Long-lived assets, including property and equipment, intangible assets, and ROU assets, are reviewed for impairment when circumstances indicate carrying value may not be recoverable[52] - An impairment loss of $14,755,560 on long-lived assets was recognized for the six months ended June 30, 2024[52] Warrants and Forward Purchase Agreements Warrants are equity-classified, while prepaid forward purchase liabilities are measured at fair value with changes recognized in earnings - Warrants are equity-classified instruments, recorded as a component of equity at issuance[53][54] - Prepaid forward purchase liabilities are recognized in accordance with ASC 480-10-25-8, initially and subsequently measured at fair value with changes recognized in earnings[57][119] Revenue Recognition and Cost of Revenues The Company follows ASC 606 for revenue recognition, applying a five-step model, with property management services revenue recognized on a straight-line basis - The Company follows ASC 606, applying a five-step model to recognize revenue from customer contracts[58][59] - Property management services revenue is recognized on a straight-line basis over the service period[62] Disaggregated Revenues by Service | Service | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Common area management | $1,379,191 | $1,311,964 | | Security management | $528,857 | $491,046 | | Total Revenues | $1,908,048 | $1,803,010 | - Cost of revenues primarily consists of labor expenses attributable to property management services[66] Income Taxes and Discontinued Operations Income taxes are accounted for using the balance sheet liability method, and discontinued operations are reported for strategic shifts with major financial effects - Income taxes are accounted for using the balance sheet liability method, recognizing deferred tax liabilities for taxable temporary differences and deferred tax assets when probable of utilization[72] - A discontinued operation is reported if it represents a strategic shift with a major effect on operations and financial results[76] Loss Per Share and Fair Value Measurements Basic EPS is calculated based on weighted average ordinary shares, while fair value is defined as the price in an orderly transaction, categorized by input levels - Basic EPS is net income divided by weighted average ordinary shares outstanding; diluted EPS includes potential ordinary shares unless anti-dilutive[78] - Fair value is defined as the price received or paid in an orderly transaction, categorized into Level 1, 2, or 3 inputs[80][81] Leases and Related Parties Leases are accounted for under ASC 842, recognizing ROU assets and lease liabilities, and related parties are defined by control or significant influence - Leases are accounted for under ASC 842, with ROU assets and lease liabilities recognized at the present value of lease payments using the incremental borrowing rate[86] - Parties are considered related if one has the ability to control or exercise significant influence over the other[91] Recent Accounting Pronouncements As an emerging growth company, the Company has elected an extended transition period for new accounting standards and is evaluating the impact of recently issued ASUs - The Company, as an emerging growth company, has elected the extended transition period for complying with new or revised accounting standards[93] - The Company is evaluating the impact of recently issued ASUs, including ASU 2023-06 (Disclosure Improvements), ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Taxes), and ASU 2024-01 (Stock Compensation)[94][95][96][97] Note 4 – Discontinued operations In September 2023, EUDA Health Holdings Limited's Board resolved to streamline its medical services practice, classifying it as a discontinued operation due to its strategic shift and major effect on financial results. This note provides a reconciliation of assets, liabilities, income, and cash flows specifically related to these discontinued operations for the periods presented - The medical services practice, carried out through several entities, was accounted for as a discontinued operation starting September 2023[99] Assets and Liabilities of Discontinued Operations | Metric | June 30, 2024 ($) | December 31, 2023 ($) | | :--------------------------------------- | :------------ | :---------------- | | Total Current Assets of Discontinued Operations | $104,991 | $102,839 | | Total Assets of Discontinued Operations | $104,991 | $102,839 | | Total Current Liabilities of Discontinued Operations | $2,406,571 | $2,624,068 | | Total Liabilities of Discontinued Operations | $2,406,571 | $2,624,068 | Income and Losses from Discontinued Operations | Metric | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $0 | $1,002,810 | | Gross Profit | $0 | $257,913 | | Total Operating Expenses | $98,246 | $1,576,792 | | Loss From Operations | $(98,246) | $(1,318,879) | | Net Loss Attributable to EUDA | $(84,673) | $(1,323,406) | Cash Flows from Discontinued Operations | Cash Flow Activity | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(137,787) | $335,273 | | Net cash provided by (used in) financing activities | $197,739 | $(392,209) | Note 5 – Acquisition of Fortress Cove On May 6, 2024, EUDA acquired Fortress Cove Limited, which owns CK Health Plus Sdn Bhd (CKHP), a Malaysian company focused on direct sales of holistic wellness consumer products. The acquisition was treated as an asset purchase for accounting purposes, with a consideration of $15.0 million in newly issued ordinary shares. An impairment loss of $14,762,562 was recorded on the acquired identifiable intangible assets, which include distribution contracts - EUDA acquired Fortress Cove Limited and its subsidiary CKHP on May 8, 2024, for an aggregate consideration of 8,571,429 newly issued ordinary shares, valued at $15.0 million[103][109] - CKHP's principal activities include exclusive distribution rights for 'YOROYAL' brand collagens and bioenergy cabins in Malaysia, Vietnam, and Indonesia[103] - The acquisition was accounted for as an asset purchase under U.S. GAAP, not a business combination[104][106] - An impairment loss of $14,762,562 was recorded on the identifiable intangible assets (distribution contracts) related to the acquisition, resulting in no goodwill[106][107] - Contingent consideration of up to 1,000,000 additional ordinary shares is tied to CKHP's net income milestones for FY2024 ($2.0M) and FY2025 ($5.0M), but its fair value was estimated at $0 due to low probability[103][109] Note 6 – Accounts receivable, net This note details the Company's accounts receivable and the associated allowance for credit losses. As of June 30, 2024, net accounts receivable decreased compared to December 31, 2023, with a slight reduction in the allowance for credit losses Accounts Receivable, Net | Metric | June 30, 2024 ($) | December 31, 2023 ($) | | :------------------------ | :------------ | :---------------- | | Accounts receivable | $179,426 | $239,978 | | Allowance for credit losses | $(2,438) | $(2,504) | | Total accounts receivable, net | $176,988 | $237,474 | Movements of Allowance for Credit Losses | Metric | Six Months Ended June 30, 2024 ($) | Year Ended December 31, 2023 ($) | | :-------------------- | :----------------------------- | :--------------------------- | | Beginning balance | $2,504 | $0 | | Addition | $0 | $2,463 | | Exchange rate effect | $(66) | $41 | | Ending balance | $2,438 | $2,504 | Note 7 – Other receivables Other receivables, primarily consisting of employee advances and other items, significantly increased as of June 30, 2024, compared to December 31, 2023 Other Receivables | Metric | June 30, 2024 ($) | December 31, 2023 ($) | | :------------------------ | :------------ | :---------------- | | Employee advance and others | $19,293 | $1,711 | Note 8 – Property and equipment, net The Company's net property and equipment increased as of June 30, 2024, primarily due to additions to office equipment, partially offset by accumulated depreciation. Depreciation expense for the six months ended June 30, 2024, was slightly lower than the prior year Property and Equipment, Net | Metric | June 30, 2024 ($) | December 31, 2023 ($) | | :------------------------ | :------------ | :---------------- | | Office equipment | $80,316 | $76,285 | | Leasehold improvement | $2,191 | $2,250 | | Subtotal | $82,507 | $78,535 | | Less: accumulated depreciation | $(72,547) | $(71,803) | | Total | $9,960 | $6,732 | - Depreciation expense for the six months ended June 30, 2024, was $2,327, compared to $2,574 for the same period in 2023[112] Note 9 – Intangible assets, net Intangible assets, net, significantly increased to $350,847 as of June 30, 2024, primarily due to the recognition of distribution rights and software. The period also saw the first amortization expense and a substantial impairment loss on intangible assets Intangible Assets, Net | Metric | June 30, 2024 ($) | December 31, 2023 ($) | | :------------------------ | :------------ | :---------------- | | Software | $18,654 | $0 | | Distribution rights | $337,828 | $0 | | Total intangible assets | $356,482 | $0 | | Less: accumulated amortization | $(5,635) | $0 | | Total intangible assets, net | $350,847 | $0 | - Amortization expense for the six months ended June 30, 2024, was $5,631, compared to $0 in the prior year period[113] - An impairment of intangible assets amounting to $14,755,560 was recorded for the six months ended June 30, 2024, compared to $0 in the prior year period[113] Note 10 – Forward Purchase Agreements The Company entered into Prepaid Forward Agreements in November 2022, which were initially recognized as a prepaid forward purchase liability. These agreements were amended and settled on June 8, 2023, resulting in the issuance of 1,600,000 ordinary shares and a recognized loss on settlement of $2,635,816. As of June 30, 2024, and December 31, 2023, the liability balance was $0 - Prepaid Forward Agreements were entered into on November 9 and 13, 2022, with institutional investors for equity prepaid forward transactions[114] - The Company recognized a 'prepaid forward purchase liability' in accordance with ASC 480, initially measured at fair value and subsequently at fair value with changes recognized in earnings[119] - On June 8, 2023, the agreements were amended and accelerated, leading to the issuance of 1,600,000 ordinary shares to the sellers[121] - A $2,635,816 loss on settlement of the Prepaid Forward Agreements was recognized for the six months ended June 30, 2023[121] - The prepaid forward purchase liability was $0 as of June 30, 2024, and December 31, 2023[120] Note 11 – Credit facilities This note details the Company's credit facilities, including short-term loans from private lenders and related parties, and convertible notes from third parties and related parties. Significant changes include new short-term loans from private lenders, a decrease in related party short-term loans due to conversions, and new convertible notes issued to both third parties and related parties, with some conversions into ordinary shares Short Term Loans – Private Lenders | Lender Name | Maturities | Interest Rate (%) | June 30, 2024 ($) | | :---------------------- | :--------------- | :------------ | :------------ | | FS Capital Ptd. Ltd. | Dec 31, 2024 | 12.0% | $73,719 | | Raleigh Investment | Jan 31, 2025 | 3.0% | $49,147 | | Xpress Capital Funding Pte Ltd | Aug 31, 2024 | 4.0% | $20,273 | | Total | | | $143,139 | Short Term Loans – Related Parties | Lender Name | Maturities | Interest Rate (%) | June 30, 2024 ($) | December 31, 2023 ($) | | :-------------------- | :--------------- | :------------ | :------------ | :---------------- | | Meng Dong (James) Tan | Dec 31, 2023 | 8.0% | $0 | $23,634 | | Alfred Lim | Dec 31, 2024 | 8.0% | $143,255 | $138,119 | | 8i Enterprises Pte. Ltd | Dec 31, 2023 | 8.0% | $0 | $597,689 | | Total | | | $143,255 | $759,442 | Convertible Notes – Third Parties | Lender Name | Maturities | Interest Rate (%) | June 30, 2024 ($) | December 31, 2023 ($) | | :-------------------- | :--------------- | :------------ | :------------ | :---------------- | | Maxim Group LLC | July 31, 2024 | 0.0% | $2,113,125 | $2,113,125 | | Loeb & Loeb LLP | Nov 17, 2023 | 0.0% | $0 | $300,000 | | Madam Chong Ah Kaw | Jan 25, 2025 | 6.0% | $25,437 | $0 | | Rosli Bin Abd Latif | Jan 25, 2025 | 6.0% | $2,120 | $0 | | Total | | | $2,140,682 | $2,413,125 | Convertible Notes – Related Parties | Lender Name | Maturities | Interest Rate (%) | June 30, 2024 ($) | December 31, 2023 ($) | | :-------------------- | :--------------- | :------------ | :------------ | :---------------- | | 8i Holdings 2 Ptd Ltd | Mar 15, 2025 | 0.0% | $22,373 | $0 | | Meng Dong ("James") Tan | Mar 14, 2025 | 0.0% | $24,004 | $0 | | Total | | | $46,377 | $0 | Movement of Convertible Notes | Metric | Third Parties ($) | Related Parties ($) | | :------------------------------ | :------------ | :-------------- | | December 31, 2023 balance | $2,413,125 | $0 | | Issuance of the convertible notes | $1,500,000 | $935,377 | | Acquired from Fortress Cove Acquisition | $27,557 | $0 | | Repayments | $(300,000) | $0 | | Conversion | $(1,500,000) | $(889,000) | | June 30, 2024 balance (unaudited) | $2,140,682 | $46,377 | Note 12 – Other payables and accrued liabilities Other payables and accrued liabilities increased to $1,959,302 as of June 30, 2024, from $1,887,412 at December 31, 2023. This increase was primarily driven by higher accrued expenses and the introduction of a new 'Other payable' balance, partially offset by decreases in accrued payroll and accrued interests Other Payables and Accrued Liabilities | Metric | June 30, 2024 ($) | December 31, 2023 ($) | | :-------------------------------- | :------------ | :---------------- | | Accrued expenses | $968,062 | $823,345 | | Accrued payroll | $640,572 | $811,680 | | Accrued interests | $154,810 | $249,867 | | Other payable (8i Asia) | $173,768 | $0 | | Others | $22,090 | $2,520 | | Total other payables and accrued liabilities | $1,959,302 | $1,887,412 | - Accrued expenses increased by $144,717, representing amounts due to third-party service providers[131][132] - Accrued payroll decreased by $171,108[131] - A new 'Other payable' of $173,768 was recorded, representing a balance payable to 8i Asia, for which CKHP acts as an escrow agent[131][134] Note 13 – Related party balances and transactions This note details the Company's financial interactions with related parties, including an increase in other receivables from a related party and a decrease in other payables to related parties. It also references short-term loans and convertible notes with related parties, and highlights the acquisition of Fortress Cove, which involved a significant shareholder of EUDA Other Receivable – Related Party | Name of Related Party | Relationship | Nature | June 30, 2024 ($) | December 31, 2023 ($) | | :-------------------- | :------------- | :------------- | :------------ | :---------------- | | Alex Lai Kum Weng | Director of CKHP | Employee advance | $20,557 | $0 | Other Payables – Related Parties | Name of Related Party | Relationship | June 30, 2024 ($) | December 31, 2023 ($) | | :-------------------- | :------------- | :------------ | :---------------- | | Kelvin Chen | CEO, Director, Shareholder | $166,104 | $2,779 | | Kent Ridge Health Pte Ltd | Shareholders also shareholders of Company | $395,779 | $547,214 | | UG Digital Sdn Bhd | Subsidiary (40% owned) | $0 | $11,502 | | James Tan | Shareholder | $2,181 | $0 | | Chong Yew Yen | Director of CKHP, Shareholder | $230 | $0 | | 8i Enterprises Pte Ltd | Shareholders also shareholders of Company | $14,822 | $135,000 | | Total | | $579,116 | $696,495 | - The acquisition of Fortress Cove and its subsidiary CKHP on May 8, 2024, involved Meng Dong (James) Tan, a significant shareholder of EUDA who held more than 25% of EUDA's ordinary shares and was a 40% shareholder of Fortress Cove[141] Note 14 – Shareholders' equity This note details the changes in shareholders' equity, including the issuance of ordinary shares through private placements, conversion of debts and convertible notes, settlement of prepaid forward contracts, and shares issued for asset acquisition. It also provides information on outstanding warrants and earnout shares, outlining their terms and valuation - The Company is authorized to issue unlimited ordinary shares of no par value, with holders entitled to one vote per share[142] - In June 2024, the Company issued 50,000 ordinary shares for $50,000 in a private placement[146] - For the six months ended June 30, 2024, the Company issued 995,362 restricted ordinary shares for debt settlements, resulting in a $448,000 loss on debt settlements[151][153] - The Company issued 1,500,000 ordinary shares upon conversion of convertible notes during the six months ended June 30, 2024[154][155] - 8,571,429 ordinary shares, valued at $15.0 million, were issued in May 2024 for the acquisition of Fortress Cove[157] - As of June 30, 2024, the Company had 8,917,250 warrants outstanding (8,625,000 Public Warrants and 292,250 Private Warrants), each entitling the holder to purchase one-half share at $11.50 per share[160] - 4,000,000 Earnout Shares are subject to four triggering events related to share price and financial metrics, with the fair value for Triggering Event 1 and 2 estimated at $1,926,610 and $3,273,019, respectively[165][166] Note 15 – Income taxes This note outlines the Company's income tax situation across its operating jurisdictions (British Virgin Islands, Singapore, and Malaysia), detailing applicable tax rates, components of loss before income taxes, and the provision for income taxes. It also addresses deferred tax assets and liabilities, net operating loss carryforwards, and uncertain tax positions, noting a 100% valuation allowance on deferred tax assets due to uncertainty of utilization - The Company's subsidiaries are subject to tax in Singapore (17% rate) and Malaysia (24% rate), while BVI entities are not subject to income or capital gains tax[168][170][171] Loss Before Income Taxes by Component | Component | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :---------- | :----------------------------- | :----------------------------- | | Singapore | $(667,572) | $(655,579) | | Foreign | $(16,081,681) | $(6,524,186) | | Total loss before income taxes | $(16,749,253) | $(7,189,765) | Provision (Benefit) for Income Taxes | Component | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :---------- | :----------------------------- | :----------------------------- | | Current | $0 | $0 | | Deferred | $(979) | $0 | | Provision (benefit) for income taxes | $(979) | $0 | - As of June 30, 2024, the Company had net operating losses carry forward of approximately $3.8 million, with a 100% valuation allowance on related deferred tax assets due to uncertainty of utilization[173] Taxes Payable | Metric | June 30, 2024 ($) | December 31, 2023 ($) | | :---------------- | :------------ | :---------------- | | GST taxes payable | $218,019 | $192,956 | | Income taxes payable | $2,822 | $15,699 | | Totals | $220,841 | $208,655 | Note 16 – Concentrations risks This note addresses the Company's concentration risks related to customers, vendors, and credit risk. While no single customer or vendor accounted for 10% or more of total revenues or purchases, there are concentrations in accounts receivable and payables. The Company also faces credit risk from cash balances held in banks, with portions exceeding insured limits in Singapore and Malaysia - For the six months ended June 30, 2024 and 2023, no single customer accounted for 10% or more of total revenues[175] - As of June 30, 2024, three customers accounted for 23.7%, 23.7%, and 16.6% of total accounts receivable[175] - No single vendor accounted for 10% or more of total purchases for the six months ended June 30, 2024 and 2023[176] - As of June 30, 2024, $0 of cash in Singapore banks and $92,336 of cash in Malaysia banks were subject to credit risk, exceeding insured limits[177] Note 17 – Leases The Company has both operating and finance leases for offices and office equipment, respectively. Lease expenses for both types increased for the six months ended June 30, 2024, compared to the prior year. The note provides details on weighted-average remaining terms, discount rates, and future minimum lease payments - As of June 30, 2024, the Company has three operating leases for offices and two finance leases for office equipment[179] Operating and Finance Lease Expenses | Expense Type | Six Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2023 ($) | | :-------------------------- | :----------------------------- | :----------------------------- | | Operating lease expenses | $73,811 | $35,024 | | Amortization of leased asset (Finance) | $3,561 | $4,729 | | Interest on lease liabilities (Finance) | $1,478 | $1,267 | | Total lease expenses | $78,850 | $41,020 | Weighted-Average Remaining Term and Discount Rate | Metric | June 30, 2024 | December 31, 2023 | | :-------------------------- | :------------ | :---------------- | | Weighted-average remaining term (Operating lease) (years) | 1.17 | 1.29 | | Weighted-average remaining term (Finance leases) (years) | 3.92 | 4.42 | | Weighted-average discount rate (Operating lease) (%) | 7.12% | 7.35% | | Weighted-average discount rate (Finance leases) (%) | 9.60% | 9.60% | Minimum Lease Payments as of June 30, 2024 | Period | Operating Lease Payments ($) | Finance Lease Payments ($) | Total ($) | | :-------------------------- | :----------------------- | :--------------------- | :------ | | Twelve months ending June 30, 2025 | $211,333 | $6,489 | $217,822 | | Twelve months ending June 30, 2026 | $52,231 | $7,959 | $60,190 | | Twelve months ending June 30, 2027 | $0 | $7,959 | $7,959 | | Twelve months ending June 30, 2028 | $0 | $14,584 | $14,584 | | Total lease payments | $263,564 | $36,991 | $300,555 | | Less: discount | $(11,131) | $(7,258) | $(18,389) | | Present value of lease liabilities | $252,433 | $29,733 | $282,166 | Note 18 – Commitments and contingencies The Company is involved in certain legal proceedings and claims, including ongoing disagreements among directors and former directors regarding appointments and removals, which the Board has deemed prima facie invalid. Additionally, the Company filed a claim against a former director for unlawfully obstructing access to client and clinic management systems, a case that is ongoing. The Company does not expect these matters to have a material adverse effect on its business or financial condition - Disagreements exist between directors and former directors concerning the legitimacy of appointments, removals, and shareholder resolutions[187] - The Board determined that certain resolutions were prima facie invalid and does not expect these legal challenges to have a material adverse effect[188] - The Company filed a claim in July 2023 against Mr. Capes and another defendant for unlawfully obstructing access to KRHSG's systems, which is ongoing[189] Note 19 – Subsequent events Events occurring after June 30, 2024, include a promissory note agreement between CKHP and 8i Asia for an extended repayment period, the commencement of CKHP's direct sales operations for wellness products, and the disposal of 100% equity interest in Zukiheath to an executive director - On August 19, 2024, CKHP and 8i Asia entered into a promissory note agreement, granting CKHP an extended repayment period until December 31, 2024, for outstanding Purchase Consideration with 0% interest[192] - In August 2024, CKHP commenced its operations in the direct sales business of wellness products, therapies, and services[192] - On August 16, the Company disposed of its 100% equity interest in Zukiheath to Alfred Lim, an executive director, for no consideration[193]