Lichen China(US:LICN)2025-09-19 20:31Financial Performance - Total revenues for the six months ended June 30, 2025, were $14,260,000, a decrease of 21.5% compared to $18,096,000 for the same period in 2024[7] - Gross profit for the six months ended June 30, 2025, was $6,595,000, down 39.5% from $10,965,000 in 2024[7] - Net loss attributable to Lichen International Limited for the six months ended June 30, 2025, was $9,356,000, compared to a net income of $767,000 in 2024[7] - The company reported a comprehensive loss of $9,028,000 for the six months ended June 30, 2025, compared to a comprehensive income of $86,000 in 2024[7] - For the six months ended June 30, 2025, Lichen International Limited reported a net loss of $9,182,000 compared to a net income of $767,000 for the same period in 2024[14] Assets and Liabilities - Total assets decreased to $67,207,000 as of June 30, 2025, from $79,840,000 as of December 31, 2024, reflecting a decline of 16.0%[3] - Cash and cash equivalents as of June 30, 2025, were $22,573,000, down from $26,712,000 as of December 31, 2024, representing a decrease of 15.9%[3] - Total current liabilities decreased to $2,780,000 as of June 30, 2025, from $4,270,000 as of December 31, 2024, a reduction of 34.9%[3] - As of June 30, 2025, the company's cash balance decreased to $22,573,000 from $34,187,000 at the end of June 2024[14] - The net property and equipment amounted to $7,059 thousand, a decrease of 48.7% from $13,693 thousand as of December 31, 2024[89] Cash Flows - Cash flows from operating activities resulted in a net cash outflow of $1,854,000 for the first half of 2025, a significant decrease from the net cash inflow of $3,687,000 in 2024[14] - Cash used in investing activities totaled $8,606,000, which included an acquisition of Bondly HK for $5,330,000 and deposits for software amounting to $3,341,000[14] - Cash provided by financing activities was $5,095,000, down from $7,266,000 in the previous year, primarily from the issuance of ordinary shares[14] Shareholder Information - The weighted average number of ordinary shares outstanding increased to 282,846 for the six months ended June 30, 2025, compared to 169,988 in 2024[7] - The company consolidated its common shares on March 3, 2025, on a basis of 200 pre-consolidation shares for one post-consolidation share[4] - The Company issued 870,000 Class A Ordinary Shares under the 2023 Equity incentive plan, with a share-based compensation expense of $1,009,200 recognized for the six months ended June 30, 2024[118][119] Revenue Recognition - The Company adopted ASC Topic 606 for revenue recognition effective January 1, 2019, and revenues are recorded net of value-added tax[61] - Revenues from financial and taxation solution services are recognized progressively based on contract costs incurred to date[62] - Revenues from the sales of educational materials are recognized when the goods are delivered to customers, with no right of return[63] - Contract liabilities are recognized as revenue when the Company performs the services under the contract, indicating a focus on revenue recognition practices[68] Investments and Acquisitions - The acquisition of 100% equity interest in Bondly HK was completed in February 2025, enhancing the company's investment portfolio[22] - The Company acquired 60% equity interest in Bondly HK for a total cash consideration of $8,000,000 on July 29, 2024, and the remaining 40% for $5,330,000 on February 26, 2025[114][115] - The total identifiable net assets from the acquisition of Bondly HK were valued at $5,910,000, with goodwill recognized at $4,454,000[117] Expenses - Selling and marketing expenses increased to $5,910,000 for the six months ended June 30, 2025, up 56.3% from $3,783,000 in 2024[7] - Advertising expenses increased to approximately $5.17 million for the six months ended June 30, 2025, compared to $3.48 million in 2024, reflecting a rise of 48.5%[76] - Amortization expense for intangible assets for the six months ended June 30, 2025, was approximately $1.58 million, an increase of 20.4% compared to $1.31 million for the same period in 2024[93] Currency and Exchange Rates - The period-end RMB to US$1 exchange rate was 7.1586 as of June 30, 2025, compared to 7.1884 as of December 31, 2024[36] - The period-average RMB to US$1 exchange rate for the six months ended June 30, 2025, was 7.1839, up from 7.1051 for the same period in 2024[36] - The appreciation of the RMB against the U.S. dollar could adversely affect the amount received from currency conversions for capital expenditures[139] Legal and Regulatory Matters - The Company does not anticipate that any ongoing legal proceedings will have a material adverse effect on its financial position or results of operations[144] - The Company is evaluating the impact of new accounting standards but does not expect them to have a material impact on financial statements[80][81] Other Information - The Company established a wholly-owned subsidiary, Xiamen Legend Technology Co., Ltd, on July 9, 2025, which currently has no operating business[145] - All revenue was derived from customers located in the PRC, with no individual customer contributing more than 10% of total revenues[140] - The Company evaluated events for potential recognition or disclosure through September 19, 2025, with no adjustments required for the financial statements[147]