MicroCloud Hologram (US:HOLO)2022-11-10 18:06Revenue Performance - For the three months ended September 30, 2022, total operating revenues reached RMB 172,453,161 (approximately US$ 24,243,082), a significant increase from RMB 54,044,387 in the same period of 2021[222]. - Total operating revenues increased by approximately 219.1% from RMB 54.0 million for the three months ended September 30, 2021, to RMB 172.5 million (US$ 24.2 million) for the same period in 2022[275]. - Total operating revenues increased by approximately 56.1% from RMB 272.0 million for the nine months ended September 30, 2021 to RMB 424.6 million (US$ 60.0 million) for the nine months ended September 30, 2022[288]. - Services revenues surged by approximately 304.6% from RMB 37.7 million to RMB 152.5 million (US$ 21.4 million), driven by higher demand for advertising and promotion services[275]. - Products revenues increased by approximately 22.2% from RMB 16.4 million to RMB 20.0 million (US$ 2.8 million) due to increased demand for holographic solutions[275]. Cost and Expenses - The cost of revenues for the three months ended September 30, 2022, was RMB 105,442,629 (61.2% of total revenues), compared to RMB 17,640,958 (32.6%) in Q3 2021, reflecting increased service costs[223]. - Cost of revenue increased by approximately 497.7% from RMB 17.6 million to RMB 105.4 million (US$ 14.8 million) for the same period[276]. - Cost of services skyrocketed by approximately 1,863.4% from RMB 4.6 million to RMB 90.5 million (US$ 12.7 million) due to increased outsourcing and content provider costs[276]. - Operating expenses totaled RMB 59.7 million (US$ 8.4 million) for the three months ended September 30, 2022, compared to RMB 29.7 million for the same period in 2021[274]. - Research and development expenses increased by approximately 150.6% from RMB 19.6 million for the three months ended September 30, 2021 to RMB 49.0 million (US$ 6.9 million) for the three months ended September 30, 2022[281]. - Selling expenses as a percentage of revenues decreased from 2.6% in Q3 2021 to 1.3% in Q3 2022, suggesting better cost management in sales operations[224]. - General and Administrative expenses as a percentage of revenues significantly dropped from 14.8% in Q3 2021 to 3.6% in Q3 2022, highlighting enhanced operational efficiency[225]. Profitability - Gross profit increased by approximately 84.1% from RMB 36.4 million to RMB 67.0 million (US$ 9.4 million) for the three months ended September 30, 2022[277]. - Gross margin decreased from 67.4% to 38.9% as outsourcing costs rose faster than revenue increases in advertising and promotion[277]. - Net income attributable to shareholders was RMB 9.1 million (US$ 1.3 million) for the three months ended September 30, 2022, compared to RMB 7.0 million for the same period in 2021[274]. - Net income increased from approximately RMB 7.0 million to RMB 11.8 million (US$ 1.7 million) for the three months ended September 30, 2021 and 2022, respectively[287]. - The net income for the nine months ended September 30, 2022, was RMB 48.4 million (US$ 6.8 million), with a significant difference from net cash provided by operating activities primarily due to adjustments in non-cash items and changes in working capital[314]. Cash Flow - Cash and cash equivalents increased from RMB 44.2 million to RMB 334.1 million (US$ 47.0 million) as of September 30, 2022[307]. - Net cash provided by operating activities decreased from RMB 126.6 million to RMB 34.7 million (US$ 4.9 million) for the nine months ended September 30, 2021 and 2022, respectively[312]. - For the nine months ended September 30, 2022, net cash provided by operating activities was RMB 34.7 million (US$ 4.9 million), compared to RMB 126.6 million for the same period in 2021[314][315]. - Net cash provided by investing activities for the nine months ended September 30, 2022, was RMB 15.2 million (US$ 2.1 million), mainly from loan repayments and cash received on acquisition[317]. - In contrast, net cash used in investing activities for the nine months ended September 30, 2021, was RMB 111.2 million, primarily due to payments for business acquisitions and loan proceeds[318]. - Net cash provided by financing activities for the nine months ended September 30, 2022, was RMB 234.7 million (US$ 33.0 million), driven by increased capital contributions[319]. - For the nine months ended September 30, 2021, net cash used in financing activities was RMB 1.8 million, mainly due to repayments to related parties and third parties[320]. Business Developments - The company completed a business combination with Golden Path Acquisition Corporation on September 16, 2022, resulting in the issuance of 44,554,455 ordinary shares[217]. - Following the business combination, the company had 50,812,035 ordinary shares issued and outstanding, and 6,020,500 warrants outstanding[218]. - The company is focused on expanding its holographic technology services, including LiDAR solutions and digital twin technology, to capture a larger market share in the digitalization sector[212]. - The company has established a proprietary holographic digital twin technology resource library, which is expected to become a new standard in the digital twin augmented physical world[212]. Tax and Regulatory - Eligible small enterprises in China can benefit from a 75% reduction on a 20% tax rate, resulting in an effective rate of 5% for annual taxable income up to RMB 1,000,000[233]. - The company is subject to a value-added tax (VAT) of 6% on services and 13% on goods in China[235]. - The company is classified as a smaller reporting company and is not required to provide additional market risk disclosures[323]. Accounting and Reporting - The company recognizes revenue from Holographic Technology LiDAR Products at a point in time when control is transferred to customers, with no separate sales rebate or right of return[257]. - Revenue from ADAS software development contracts is recognized over time based on progress, with significant estimates affecting revenue recognition[258]. - The company follows ASC Topic 606 for revenue recognition, which requires control transfer to customers for revenue to be recognized[256]. - Noncontrolling interests represent 44% ownership for Ocean HK and its subsidiaries, impacting the consolidated financial statements[253]. - The company accounts for common stock warrants as either equity instruments or liabilities based on specific terms[255]. - The reporting currency for the company is Renminbi (RMB), with foreign currency transactions translated at applicable exchange rates[241]. - No impairment of long-lived assets was recognized for the nine months ended September 30, 2021, and 2022[247].