Taoping(TAOP) - 2024 Q2 - Quarterly Report

Financial Performance - Total revenue for the six months ended June 30, 2024, was $18,078,547, representing a 28.4$14,078,009 in the same period of 2023[8] - Gross profit for the same period was $4,140,692, up from$3,874,900, indicating a gross margin improvement[8] - Net income attributable to the company for the six months ended June 30, 2024, was $588,744, a significant recovery from a net loss of$1,809,030 in the prior year[8] - The company reported a gross profit margin of approximately 22.9% for the six months ended June 30, 2024, compared to 27.5% in the same period of 2023[8] - For the six months ended June 30, 2024, Taoping Inc. reported a net income of $588,744, a significant improvement compared to a net loss of$1,809,030 for the same period in 2023[18] - Revenue achieved a 28.4% period-over-period increase in the first half of 2024, driven by recovery in market conditions and customer demand[45] - Basic earnings per share for the six months ended June 30, 2024, was $0.13, compared to a loss of$1.10 per share for the same period in 2023[120] Assets and Liabilities - Total current assets increased to $27,450,267 as of June 30, 2024, compared to$25,250,915 at the end of 2023, reflecting a growth of 8.7%[6] - Total assets reached $34,079,694, up from$32,826,314, marking a 3.8% increase[6] - Total liabilities decreased to $18,241,825 from$20,063,017, a reduction of 9.1%[6] - As of June 30, 2024, accounts receivable totaled approximately $14.2 million, down from$19.5 million as of December 31, 2023, indicating a decrease of about 27.5%[62] - The net accounts receivable as of June 30, 2024, was approximately $7.4 million, compared to$8.1 million as of December 31, 2023, reflecting a decline of about 7.8%[62] - The allowance for credit losses decreased to approximately $6.9 million as of June 30, 2024, from$25.6 million as of December 31, 2023, representing a reduction of approximately 73.1%[63] - The company held approximately $0.5 million in cash as of June 30, 2024, down from$1.3 million as of December 31, 2023, a decrease of approximately 61.5%[58] Operational Expenses - Research and development expenses were $1,224,244, down from$1,585,894, indicating a 22.8% reduction[8] - Cash used in operating activities for the first half of 2024 was $(2,532,001), a decline from$(670,271) in the same period of 2023, reflecting operational challenges[18] - The Company reported depreciation expenses of approximately $1.1 million for the six months ended June 30, 2024, compared to$1.3 million for the same period in 2023[130] - The Company recognized impairments for obsolete inventories of approximately $10,700 for the six months ended June 30, 2024, compared to$8,400 for the same period in 2023[128] Financing Activities - The company issued 2,891,822 ordinary shares for financing purposes, raising $2,887,990 during the first half of 2024[18] - The holder of the company's convertible promissory note converted$100,000 of principal and accrued interest into 149,925 ordinary shares in May 2024, reflecting ongoing financing activities[24] - The Company issued a Convertible Promissory Note on September 27, 2023, with an aggregate principal amount of $609,000, maturing in 12 months and carrying an annual interest rate of 8$550,000 after accounting for transaction costs and original issue discount[177] - The Company recognized interest expense of approximately $119,000 for the period ended June 30, 2024, including$22,000 related to contractual interest obligations[180] Strategic Initiatives - Taoping Inc. continues to focus on providing cloud-based technologies for Smart City IoT platforms and digital advertising delivery, targeting various sectors including government and education[26] - The Company established a subsidiary for off-grid wastewater treatment in May 2023 and acquired 80% of Fujian Taoping Investment Co., Ltd. in September 2023, expanding its digital advertising business[35] - The Company has entered into long-term strategic cooperation agreements to provide cloud-based intelligent product solutions, expected to generate revenue for years[46] Tax and Regulatory Matters - The PRC statutory tax rate remains at 25% for the company[147] - The company's tax loss carryforwards totaled RMB143.8 million ($20.0 million) as of June 30, 2024, with expiration dates through June 30, 2034[149] - Current income tax expense for the six months ended June 30, 2024, was$5,347, a decrease of 84.5% compared to $34,513 for the same period in 2023[146] - The expected income tax benefit for the six months ended June 30, 2024, was$148,523, compared to a tax benefit of $(443,629) in the same period of 2023[147] Shareholder Matters - The company implemented a one-for-ten reverse stock split on August 1, 2023, affecting the number of shares outstanding[8] - A one-for-ten reverse stock split of the Company's ordinary shares was effective on August 1, 2023[52] - The Company is authorized to issue 100,000,000 ordinary shares, with various issuances occurring throughout 2023 and 2024 generating significant net proceeds[188] Other Financial Information - The Company generated approximately$123,000 and $128,000 in rental income for the periods ended June 30, 2024, and 2023, respectively[91] - The Company recognized revenue of approximately$682,000 and $463,000 from advances from customers for the six months ended June 30, 2024, and 2023, respectively[93] - The total minimum rental income to be received in the next five years is projected to be$452,486, with $123,405 in 2024,$246,811 in 2025, and $82,270 in 2026[92] - The Company’s advertising revenue is fixed based on the number of advertisement deliveries and contract duration, with no variable consideration[86]