Revenue and Profitability - Total revenues for the six months ended December 31, 2022, were $38,876,968, compared to $34,079,482 in the same period of 2021, representing a 14.1% increase[8] - Gross profit for the six months ended December 31, 2022, was $11,138,086, compared to $10,671,403 in the same period of 2021, reflecting a 4.4% increase[8] - Net loss for the six months ended December 31, 2022, was $3,316,128, compared to a net loss of $606,134 in the same period of 2021[8] - Net loss for the six months ended December 31, 2022 was $3,316,128, compared to $606,134 in the same period of 2021[15] Cash and Cash Equivalents - Cash and cash equivalents increased to $62,470,005 as of December 31, 2022, from $54,842,052 as of June 30, 2022, reflecting a 13.9% increase[5] - Cash and cash equivalents at the end of the period December 31, 2022 was $62,470,005, compared to $59,321,982 at the end of the same period in 2021[15] - RMB-denominated cash and cash equivalents amounted to $62,458,602 as of December 31, 2022, and $53,946,205 as of June 30, 2022[100] - Cash and cash equivalents include cash on hand, interest-bearing savings accounts, and time certificates of deposit with a maturity of three months or less[34] Accounts Receivable and Loan Receivables - Accounts receivable, net, increased to $2,099,251 as of December 31, 2022, from $877,931 as of June 30, 2022, representing a 139.2% increase[5] - Accounts receivable were deemed fully collectible with an allowance for doubtful accounts of $0 as of December 31, 2022, and June 30, 2022[35] - Loan receivables were also fully collectible with an allowance for doubtful loan receivables of $0 as of December 31, 2022, and June 30, 2022[36] - Loan receivables totaled $5,181,680 as of December 31, 2022, with $3,931,680 due from Jianping Guo and $1,250,000 from Yuwin Group Limited[128] Assets and Liabilities - Total current assets increased to $76,301,154 as of December 31, 2022, from $66,996,451 as of June 30, 2022, reflecting a 13.9% increase[5] - Total liabilities increased to $21,839,679 as of December 31, 2022, from $15,962,425 as of June 30, 2022, representing a 36.8% increase[5] - Total shareholders' equity increased to $88,459,376 as of December 31, 2022, from $64,529,884 as of June 30, 2022, reflecting a 37.1% increase[5] - The company's total assets as of December 31, 2022 were $88,459,376, compared to $86,332,791 at the beginning of the period[12] Expenses and Costs - Sales and marketing expenses increased to $8,340,234 for the six months ended December 31, 2022, from $4,357,836 in the same period of 2021, representing a 91.4% increase[8] - The company's equity incentive plan expense for the six months ended December 31, 2022 was $106,000[15] - Amortization expense for the years 2023 to 2027 is projected to be $1,465,813 annually, with a slight decrease to $1,455,549 in 2027[139] - Amortization of issuance costs, debt discount, and interest costs for the six months ended December 31, 2022, totaled $995,753, with $641,576 attributed to issuance costs and discount, and $354,177 to convertible note interest[192] Acquisitions and Business Combinations - The company acquired 75% ownership in Zhongrun, 60% ownership in Youyou, and 100% ownership in Chuangying during the six months ended December 31, 2022[10][11] - The company completed several business combinations with a total purchase consideration of $19,948,542, allocating $11,223,456 to goodwill for the six months ended December 31, 2022[111] - The company acquired 75% ownership in Zhongrun and 60% ownership in Youyou, with total consideration of $2,574,424 and recognized goodwill of $2,376,589[110] - The company acquired 100% ownership in Chuangying, with total consideration of $11,781,069 and recognized goodwill of $5,312,774[113] - The company's acquisitions are expected to achieve significant synergies and complement existing businesses[111] Leases and Right-of-Use Assets - Operating lease right-of-use assets, net increased from $6,050,465 in June 2022 to $6,150,306 in December 2022, with a total right-of-use assets at cost of $7,429,678[141] - The company acquired the right of use for farmland of 74 acres for $2,319,791 (RMB 15,000,000) in July 2021[141] - The weighted average discount rate used for operating leases was 4.06%, with a weighted average remaining lease term of 16.00 years[158] - Total undiscounted cash flows for operating leases as of June 30, 2022 amounted to $2,618,326, with Villas contributing $1,641,803, Base station tower $172,302, and Warehouse $804,221[164] - Total financing lease liabilities as of June 30, 2022 were $2,121,053, with Villas at $1,212,882, Base station tower at $155,261, and Warehouse at $752,910[164] - Total undiscounted cash flows for operating leases as of December 31, 2022 were $2,760,034, with Villas contributing $2,441,294, Base station tower $208,600, and Office $110,140[165] - Total financing lease liabilities as of December 31, 2022 were $2,251,835, with Villas at $1,956,260, Base station tower at $188,069, and Office at $107,506[165] Convertible Notes and Warrants - The Convertible Note 2021 has an original principal amount of $5,275,000, including an original issue discount of $250,000 and investor's legal costs of $25,000[173] - The Convertible Note 2022 has an original principal amount of $3,170,000, including an original issue discount of $150,000 and investor's legal costs of $20,000[182] - The company issued warrants to purchase up to 157,934 ordinary shares at $2.00 per share as part of the Convertible Note 2021 agreement[176] - The company issued warrants to purchase up to 386,585 ordinary shares at $0.49 per share as part of the Convertible Note 2022 agreement[185] - The equity component of the Convertible Note 2022 and warrants was valued at $816,765, with the equity component at $683,393 and warrants at $133,372[188] - The net carrying amount of the liability portion of the Convertible Notes as of December 31, 2022, was $4,628,249, with a principal outstanding of $5,796,148 and unamortized issuance costs of $1,167,899[190] - The net carrying amount of the equity component of the Convertible Notes as of December 31, 2022, was $1,472,987, with an allocated conversion option of $1,775,853 and issuance costs of $302,866[191] - The company issued warrants for 157,934 ordinary shares at $2 per share and 386,585 ordinary shares at $0.49 per share, exercisable within five years[195] - As of December 31, 2022, the company had 544,529 warrants outstanding with an average exercise price between $0.49 and $2[196] - The 2021 warrants were valued using the Black-Scholes model with a volatility of 117%, risk-free interest rate of 2.04%, and an expected term of 5 years[196] - The 2022 warrants were valued using the Black-Scholes model with a volatility of 129%, risk-free interest rate of 0.27%, and an expected term of 5 years[196] Intangible Assets and Goodwill - Intangible assets, including software and customer relationships, are amortized over 5 to 10 years[45] - Goodwill was assessed for impairment, and no further testing was required as of December 31, 2022[48] - Intangible assets - customer relationships valued at $1,426,798 with a useful life of ten years[137] - Intangible assets - copyrights and trademarks valued at $242,556 with a useful life of five years[137] - Goodwill recorded at $3,534,093[115] - Intangible assets, net increased significantly from $23,963 in June 2022 to $7,330,138 in December 2022, primarily due to customer relationships valued at $7,748,590[133] Other Financial Information - The company received government subsidies of $43,616 for the six months ended December 31, 2022, compared to $0 in the same period in 2021[84] - The company's financial instruments are subject to concentration of credit risks, primarily consisting of cash, cash equivalents, and accounts receivable[102] - The company is registered in the Cayman Islands and is not subject to tax on income or capital gain, with no withholding tax on dividend payments[198] - The company's financial statements are reported in USD, with RMB as the functional currency, and translation adjustments are included in accumulated other comprehensive (loss) income[92] - Comprehensive (loss) income includes foreign currency translation adjustments, reported in the consolidated statements of operations and other comprehensive (loss) income[91] Revenue Recognition - Revenue from installation and maintenance services is recognized at a point in time once the service is transferred to the customer[71] - Senior care services revenue is allocated between the sale of E-watches and care services, with E-watch revenue recognized at a point in time and care service revenue recognized over the service period[75][77] - Revenue from pharmaceutical products is recognized when control of the product is transferred to the customer, typically at delivery[78][82] - The company's standard payment terms are less than one year, and it does not assess contracts for significant financing components[82] Cash Flows - Net cash provided by operating activities for the six months ended December 31, 2022 was $3,805,834, compared to $1,784,209 in the same period of 2021[15] - Net cash used in investing activities for the six months ended December 31, 2022 was $3,468,043, compared to $121,856 in the same period of 2021[15] - Net cash provided by financing activities for the six months ended December 31, 2022 was $9,167,098, compared to $4,607,080 in the same period of 2021[15] Other Operational Information - The company completed a one-for-twenty reverse stock split on October 4, 2022, reducing the number of ordinary shares outstanding from 121,270,556 to 6,062,762[25] - The company acquired the remaining 33% equity interests of Fujian Happiness Yijia Family Service Co., Ltd. (HAPPY) for $466,889, making it a wholly owned subsidiary[22] - The company's VIE structure was dissolved on October 27, 2021, with E-Home Pingtan and Fuzhou Bangchang becoming wholly owned indirect subsidiaries[21] - The company operates in five segments: installation & maintenance, housekeeping, senior care services, sales of pharmaceutical products, and educational consulting services[96] - The company divested its ownership in Fuzhou Fumao, reducing it from 67% to 20% in September 2021, and fully transferred its 20% ownership in December 2022, recording a receivable amount of $861,500[140]
E-Home Household Service(EJH) - 2023 Q2 - Quarterly Report