Revenue Performance - For the three months ended March 31, 2023, the company's revenue decreased to $17,832,376 from $23,356,215 in the same period of 2022, representing a decline of approximately 23.5%[165] - Revenue from central processing advertising algorithm services increased to $16,397,686 in Q1 2023, up from $14,675,711 in Q1 2022, marking a growth of about 11.7%[166] - Sales of intelligent chips plummeted to $1,434,690 in Q1 2023 from $8,680,504 in Q1 2022, a decrease of approximately 83.5%[166] Profitability and Loss - The company's gross profit decreased by approximately $440,351, from $5,396,383 in Q1 2022 to $4,956,032 in Q1 2023, with overall gross margin improving from 23.1% to 27.8%[170] - Operating income shifted from a profit of $1,176,852 in Q1 2022 to an operating loss of $1,413,284 in Q1 2023[173] - The company reported a net loss of $1,264,983 for Q1 2023, compared to a net income of $888,357 in Q1 2022[176] Expenses - Research and development expenses increased from $3,203,060 in Q1 2022 to $5,227,067 in Q1 2023, reflecting a focus on developing more efficient bespoke algorithms[174] - General and administrative expenses rose from $809,248 in Q1 2022 to $1,017,386 in Q1 2023, attributed to increased administrative costs following the De-SPAC transaction[175] Cash Flow and Financial Position - As of March 31, 2023, the company had cash and cash equivalents of $21,008,606 and working capital of approximately $50.3 million[177] - The company experienced a significant increase in cash used in operating activities, from a net cash provided of $456,596 in Q1 2022 to a net cash used of $2,761,637 in Q1 2023[180] - As of March 31, 2023, the company has an allowance for accounts receivable of $1,218,672[192] Asset Impairment - For the three months ended March 31, 2023, the company recognized an impairment of long-lived assets amounting to $29,232[200] - The company did not record any impairment charges for its investments for the three months ended March 31, 2023[195] Revenue Recognition - Revenue from advertising services is recognized at a point in time when the related services have been delivered, typically based on cost per impression (CPM)[208] - The company records revenue from jointly operated mobile game publishing services on a net basis, as it does not control the services provided by game developers[217] - Revenue from the sale of intelligent chips is recognized at a point in time when control of the products is transferred to customers[220] Accounting Standards and Policies - The company evaluates its cost method investments for impairment when facts indicate that the fair value is less than its carrying value[195] - The company accounts for its Public Warrants as equity and Private Warrants as liabilities, with changes in estimated fair value recognized as non-cash gains or losses[205] - The FASB issued ASU 2019-05 in May 2019, introducing the expected credit losses methodology for financial assets measured at amortized cost, replacing the incurred loss methodology[224] - ASU No. 2019-10 was issued in November 2019, updating the effective date for private companies and certain smaller reporting companies to fiscal years beginning after December 15, 2022[225] - ASU 2020-08, effective for annual and interim reporting periods beginning July 1, 2021, clarifies the Codification regarding nonrefundable fees and other costs, with no material impact on the company's financial statements[226] - The company does not anticipate that other recently issued but not yet effective accounting standards will have a material effect on its consolidated financial statements[227] - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[228]
MicroAlgo (MLGO) - 2023 Q1 - Quarterly Report