WiMi Hologram(US:WIMI)2023-04-13 20:33Financial Performance - Total revenues for the years ended December 31, 2020, 2021, and 2022 were RMB 766.0 million, RMB 933.8 million, and RMB 682.3 million (USD 98.0 million) respectively, indicating a decline of approximately 26.9% from 2021 to 2022 [277]. - The company recorded net losses of RMB 145.0 million, RMB 254.4 million, and RMB 376.8 million (USD 54.1 million) for the years ended December 31, 2020, 2021, and 2022 respectively, reflecting a worsening financial performance [277]. - Revenues decreased by approximately RMB 251.5 million, or 26.9%, from RMB 933.8 million in 2021 to RMB 682.3 million (USD 98.0 million) in 2022, primarily due to a decline in semiconductor and AR entertainment revenues [293]. - The net loss for the year ended December 31, 2022 was approximately RMB 376.8 million (USD 54.1 million), influenced by various non-cash items including goodwill impairment loss of approximately RMB 35.5 million (USD 5.1 million) [328]. - The net loss attributable to WiMi Hologram Cloud, Inc. for the year ending December 31, 2022, was RMB 357,731,093, compared to a net loss of RMB 235,973,179 in 2021, indicating a significant increase in losses [473]. Revenue Breakdown - Revenue from AR advertising services accounted for approximately 70.6% of total revenues in 2022, up from 40.1% in 2020, while semiconductor business revenues decreased to 29.4% in 2022 from 56.0% in 2020 [277]. - AR advertising revenue increased by approximately RMB 44.5 million, or 10.2%, from RMB 435.9 million in 2021 to RMB 480.4 million (USD 69.0 million) in 2022, driven by increased revenue from the major customer [294]. - The company's semiconductor business generated revenues of RMB 200.6 million (USD 28.8 million) in 2022, a decline from RMB 483.8 million in 2021, indicating challenges in this segment [286]. - AR entertainment revenue decreased by approximately RMB 12.7 million, or 90.3%, from RMB 14.1 million in 2021 to RMB 1.4 million (USD 0.2 million) in 2022, due to reduced mobile game services [294]. Expenses and Costs - Research and development expenses increased significantly to RMB 341.6 million (USD 49.0 million) in 2022, up from RMB 85.0 million in 2020, highlighting a focus on technological advancement [281]. - The cost of revenues for AR advertising services increased to RMB 337.9 million (USD 48.5 million) in 2022, up from RMB 211.3 million in 2020, reflecting rising operational costs [287]. - Operating expenses for 2022 were approximately RMB 451.8 million (USD 64.9 million), a decrease of approximately RMB 61.5 million, or 12.0%, from RMB 513.2 million in 2021 [299]. - Selling expenses decreased by approximately RMB 4.7 million, or 44.1%, from RMB 10.6 million in 2021 to RMB 5.9 million (USD 0.9 million) in 2022, attributed to reduced salary and benefit expenses [299]. - General and administrative expenses decreased by approximately RMB 20.9 million, or 31.7%, from RMB 65.8 million in 2021 to RMB 44.9 million (USD 6.5 million) in 2022, mainly due to lower professional fees [299]. Cash Flow and Investments - Cash and short-term investments stood at approximately RMB 611.2 million as of December 31, 2022 [322]. - For the year ended December 31, 2022, net cash used in operating activities was approximately RMB 238.2 million (USD 34.2 million), a significant decline from net cash provided of approximately RMB 58.2 million in 2021 [326]. - Net cash used in investing activities for 2022 was approximately RMB 90.3 million (USD 13.0 million), down from RMB 237.7 million in 2021, primarily due to short-term investments and strategic alliances [329]. - Cash provided by financing activities for 2022 was approximately RMB 108.9 million (USD 15.6 million), a decrease from RMB 579.4 million in 2021, mainly from proceeds of recapitalization and related party loans [332]. Research and Development - The company continues to focus on technology investment, emphasizing the importance of research and development in maintaining competitiveness in the holographic AR industry [339]. - Research and development expenses increased significantly to approximately RMB 341.6 million (USD 49.0 million) for the year ended December 31, 2022, compared to RMB 155.6 million in 2021 [339]. - The company reported a significant increase in research and development expenses, which rose to RMB 341,611,729 in 2022, up from RMB 155,578,474 in 2021, reflecting a focus on innovation [473]. Corporate Governance - The company has established three committees under the board of directors: an audit committee, a compensation committee, and a nominating and corporate governance committee [353]. - The company’s audit committee is chaired by Teck Yong Heng, who qualifies as an "audit committee financial expert" and oversees the financial reporting processes [353]. - The audit committee includes an independent director, Teck Yong Heng, who qualifies as a financial expert [438]. - The company has adopted a code of ethics applicable to all directors, officers, and employees [439]. Market and Strategic Initiatives - The company aims to pursue strategic acquisitions and investments in the holographic AR and semiconductor industries to enhance its technology capabilities and competitive position [283]. - WiMi Hologram Cloud Inc. has been actively involved in mergers and acquisitions to enhance its market presence and technological capabilities [457]. - WiMi Hologram Cloud Inc. continues to explore strategic partnerships to leverage its technological advancements and expand its market reach [457]. Taxation and Legal Matters - The Cayman Islands imposes no taxes on profits, income, or gains for individuals or corporations, and there are no withholding taxes on dividends paid to ADS or Class B ordinary shares holders [396]. - Under the PRC EIT Law, a uniform 25% enterprise income tax rate applies to "resident enterprises," which may include companies with de facto management bodies in China [397]. - The company is not currently involved in any legal proceedings that could materially affect its business or financial position [385]. Employee and Shareholder Information - As of December 31, 2022, the company had 155 full-time employees, a decrease from 210 in 2021 and 202 in 2020 [368]. - The company has a dual-class ordinary share structure with 173,416,083 ordinary shares outstanding as of the date of the annual report [370]. - Jie Zhao holds 20,115,570 Class A ordinary shares, representing 100% of the voting power for that class, and 41,591,895 Class B ordinary shares, representing 27.1% of the total voting power [374].