E-Home Household Service(EJH) - 2025 Q4 - Annual Report

Revenue Generation and Financial Structure - E-Home generates revenue primarily through its subsidiaries in mainland China, specifically E-Home (Pingtan) Home Service Co., Ltd. and Fuzhou Bangchang Technology Co. Ltd.[28] - The company has not made any dividends or distributions to investors and does not plan to do so in the foreseeable future[36] - E-Home provided loans of $30,072,414, $6,625,136, and $76,000,000 to its intermediate holding companies and subsidiaries for the fiscal years ended June 30, 2023, 2024, and 2025, respectively[51] - As of the date of the annual report, E-Home has not paid any dividends or made distributions to U.S. investors and does not expect to do so in the foreseeable future[54] - The capital reorganization completed on March 6, 2025, reduced the par value of the Company's issued ordinary shares from $10.00 to $0.001 per share, resulting in an authorized share capital of $1,000,020,000[61] - E-Home entered into a Securities Purchase Agreement on March 10, 2025, to sell 75,000,000 ordinary shares at a purchase price of $0.20 per share for an aggregate price of $15,000,000[62] - On March 20, 2025, the Company entered into a Securities Purchase Agreement to sell 100,000,000 ordinary shares at $0.30 per share, raising a total of $30,000,000[63] - On August 8, 2025, the Company agreed to sell 16,000,000 ordinary shares at $1.10 per share, generating gross proceeds of $17,600,000 before expenses[65] Regulatory Compliance and Risks - The company dissolved its Variable Interest Entity (VIE) structure in October 2021, minimizing risks associated with potential penalties from the Chinese government[31] - As of the date of the report, E-Home has not completed filings with the China Securities Regulatory Commission (CSRC) under the New Overseas Listing Rules, which could result in fines ranging from RMB1 million to RMB10 million for non-compliance[32] - The PRC government has initiated regulatory actions affecting companies listed overseas, but E-Home's subsidiaries do not engage in activities that would trigger these regulations[30] - E-Home's PRC subsidiaries are not subject to restrictions from the Special Administrative Measures for the Access of Foreign Investment (Negative List) as of November 1, 2024[38] - The company has not received any inquiries or sanctions from the CSRC or other PRC governmental authorities regarding its offerings[34] - E-Home's business activities do not involve the collection of user data, thus avoiding cybersecurity review requirements under the new regulations[33] - The company is currently not in compliance with the New Overseas Listing Rules, which may lead to sanctions from the China Securities Regulatory Commission[69] - The Chinese government has announced plans to enhance regulatory oversight of Chinese companies listing overseas, potentially impacting the company's ability to raise capital[116] - The company has not completed filings with the CSRC for previous offerings since the effectiveness of the New Overseas Listing Rules, leading to uncertainty regarding future compliance[118] - The company is subject to the International Tax Co-operation (Economic Substance) Act in the Cayman Islands, which may have long-term implications for its operations[108] Operational Performance and Market Conditions - Overall revenue from continuing operations for the year ended June 30, 2025, decreased to approximately $49.40 million from approximately $50.47 million for the year ended June 30, 2024, representing a decrease of approximately 2.11%[179] - Net loss from continuing operations decreased to approximately $5.91 million from $19.14 million for the year ended June 30, 2024, representing a decrease in net loss of approximately 69.13%[179] - The number of registered members increased to more than 5.72 million for the year ended June 30, 2025, up from 5.26 million for the year ended June 30, 2024, indicating a growth of approximately 8.74%[175] - The company received over 1,176,394 service orders in the fiscal year ended June 30, 2025, compared to 1,087,093 service orders in the fiscal year ended June 30, 2024, representing an increase of approximately 8.19%[173] - Overall revenue for the year ended June 30, 2024, decreased to approximately $50.47 million from approximately $65.95 million for the year ended June 30, 2023, representing a decrease of approximately 23.48%[180] Business Strategy and Market Position - The company plans to further expand its business to include smart community services and sales of smart home supplementary merchandise[172] - The company has partnerships with more than 1,700 individuals and service stores providing home appliance services across China[171] - The company aims to enhance brand recognition through online and offline marketing strategies, including WeChat events and peer-to-peer marketing[175] - Revenue from installation and maintenance services increased by $2,344,152, or 7.87%, to $32,117,882 for the year ended June 30, 2025, accounting for 65.01% of total revenue[192] - Revenue from housekeeping services amounted to $15,861,366 for the year ended June 30, 2025, representing a slight increase of $451,442, or 2.93%, from the previous year, accounting for 32.11% of total revenue[197] Human Resources and Employee Welfare - The company currently has approximately 527 employees to support its operations[172] - The company provides social security insurance, including pension, unemployment, work-related injury, maternity, and medical insurance for employees[210] - The company has invested in building a sales and marketing team of 449 personnel as of June 30, 2025, to enhance brand awareness and customer engagement[203] Legal and Compliance Challenges - There are material weaknesses in the company's internal control over financial reporting, which could adversely affect the accuracy of financial results[104] - The company expects increased legal and financial compliance costs after ceasing to qualify as an "emerging growth company" under the JOBS Act[106] - The company is subject to significant uncertainties regarding PRC government policies, which could materially impact its operations and financial condition[138] - The lack of PCAOB inspection could lead to potential delisting from Nasdaq under the Holding Foreign Companies Accountable Act[137] - The company faces legal and operational risks associated with its PRC subsidiaries, which may affect its ability to operate and attract foreign investments[138] Cybersecurity and Data Protection - The State Council published the Regulation on Network Data Security Management, effective January 1, 2025, requiring national security reviews for data processing activities that may affect national security[125] - The Cybersecurity Review Measures mandate cybersecurity reviews for operators with personal information of over 1 million users intending to list abroad, which could impact the company's ability to accept foreign investments[124] - The Data Security Law imposes fines of up to RMB 5 million for violations and requires data processing activities to follow a classification and protection system[122] - The Personal Information Protection Law, effective November 1, 2021, includes significant fines for serious violations, up to RMB 50 million or 5% of annual revenues from the prior year[126] - The company believes it does not constitute a critical information infrastructure operator under the Cybersecurity Review Measures, which could mitigate some regulatory risks[123] - The company has established necessary mechanisms to protect information security, including anti-virus firewalls and data encryption[224] Market Competition and Economic Factors - The Company faces significant risks including intense competition, potential regulatory changes in China, and challenges in customer retention and service quality[69] - The success of the Company is heavily dependent on the growth of the Chinese economy and the ability to manage operational complexities during expansion[80] - The Company competes in a highly competitive market for home appliance and housekeeping services, facing challenges from better-resourced competitors[79] - Labor costs in China are projected to continue increasing, which may adversely affect the company's financial condition if these costs cannot be passed on to customers[102] - The company’s growth forecasts are subject to significant uncertainty, and even if market growth occurs, the company may not achieve similar growth rates[101] - The company’s expansion into new services and technologies may expose it to competitive risks and challenges, potentially affecting profitability in these areas[85] - The company’s operations depend on the performance of internet infrastructure in China, which may impact service delivery and operational costs[94] - The company’s marketing effectiveness may vary, and if customer acquisition costs rise, it may need to alter its growth strategy, impacting overall performance[88] Shareholder Considerations - The trading price of the Company's ordinary shares has been highly volatile, which could result in substantial losses for shareholders[73] - The Company does not expect to pay dividends in the foreseeable future, relying instead on share price appreciation for returns[73] - The company is a foreign private issuer, exempt from certain U.S. securities regulations, which may limit the information available to investors[150] - The company may follow home country corporate governance practices that differ from Nasdaq standards, potentially offering less protection to shareholders[151] - There is a risk that the company could be classified as a passive foreign investment company (PFIC), which may have adverse tax consequences for U.S. investors[153]