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E-Home Household Service(EJH) - 2023 Q2 - Quarterly Report
EJHE-Home Household Service(EJH)2023-05-24 16:00

Revenue and Profitability - Total revenues for the six months ended December 31, 2022, were 38,876,968,comparedto38,876,968, 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,comparedto11,138,086, 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,comparedtoanetlossof3,316,128, 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,comparedto3,316,128, compared to 606,134 in the same period of 2021[15] Cash and Cash Equivalents - Cash and cash equivalents increased to 62,470,005asofDecember31,2022,from62,470,005 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,comparedto62,470,005, compared to 59,321,982 at the end of the same period in 2021[15] - RMB-denominated cash and cash equivalents amounted to 62,458,602asofDecember31,2022,and62,458,602 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 2,099,251asofDecember31,2022,from2,099,251 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 0asofDecember31,2022,andJune30,2022[35]−Loanreceivableswerealsofullycollectiblewithanallowancefordoubtfulloanreceivablesof0 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 5,181,680asofDecember31,2022,with5,181,680 as of December 31, 2022, with 3,931,680 due from Jianping Guo and 1,250,000fromYuwinGroupLimited[128]AssetsandLiabilities−Totalcurrentassetsincreasedto1,250,000 from Yuwin Group Limited[128] Assets and Liabilities - Total current assets increased to 76,301,154 as of December 31, 2022, from 66,996,451asofJune30,2022,reflectinga13.966,996,451 as of June 30, 2022, reflecting a 13.9% increase[5] - Total liabilities increased to 21,839,679 as of December 31, 2022, from 15,962,425asofJune30,2022,representinga36.815,962,425 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 64,529,884asofJune30,2022,reflectinga37.164,529,884 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 86,332,791atthebeginningoftheperiod[12]ExpensesandCosts−Salesandmarketingexpensesincreasedto86,332,791 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 4,357,836inthesameperiodof2021,representinga91.44,357,836 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 1,465,813annually,withaslightdecreaseto1,465,813 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,with995,753, with 641,576 attributed to issuance costs and discount, and 354,177toconvertiblenoteinterest[192]AcquisitionsandBusinessCombinations−Thecompanyacquired75354,177 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 11,223,456togoodwillforthesixmonthsendedDecember31,2022[111]−Thecompanyacquired7511,223,456 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]−Thecompanyacquired1002,376,589[110] - The company acquired 100% ownership in Chuangying, with total consideration of 11,781,069 and recognized goodwill of 5,312,774[113]−Thecompany′sacquisitionsareexpectedtoachievesignificantsynergiesandcomplementexistingbusinesses[111]LeasesandRight−of−UseAssets−Operatingleaseright−of−useassets,netincreasedfrom5,312,774[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 6,150,306inDecember2022,withatotalright−of−useassetsatcostof6,150,306 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(RMB15,000,000)inJuly2021[141]−Theweightedaveragediscountrateusedforoperatingleaseswas4.062,319,791 (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,Basestationtower1,641,803, Base station tower 172,302, and Warehouse 804,221[164]−TotalfinancingleaseliabilitiesasofJune30,2022were804,221[164] - Total financing lease liabilities as of June 30, 2022 were 2,121,053, with Villas at 1,212,882,Basestationtowerat1,212,882, Base station tower at 155,261, and Warehouse at 752,910[164]−TotalundiscountedcashflowsforoperatingleasesasofDecember31,2022were752,910[164] - Total undiscounted cash flows for operating leases as of December 31, 2022 were 2,760,034, with Villas contributing 2,441,294,Basestationtower2,441,294, Base station tower 208,600, and Office 110,140[165]−TotalfinancingleaseliabilitiesasofDecember31,2022were110,140[165] - Total financing lease liabilities as of December 31, 2022 were 2,251,835, with Villas at 1,956,260,Basestationtowerat1,956,260, Base station tower at 188,069, and Office at 107,506[165]ConvertibleNotesandWarrants−TheConvertibleNote2021hasanoriginalprincipalamountof107,506[165] Convertible Notes and Warrants - The Convertible Note 2021 has an original principal amount of 5,275,000, including an original issue discount of 250,000andinvestor′slegalcostsof250,000 and investor's legal costs of 25,000[173] - The Convertible Note 2022 has an original principal amount of 3,170,000,includinganoriginalissuediscountof3,170,000, including an original issue discount of 150,000 and investor's legal costs of 20,000[182]−Thecompanyissuedwarrantstopurchaseupto157,934ordinarysharesat20,000[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 0.49pershareaspartoftheConvertibleNote2022agreement[185]−TheequitycomponentoftheConvertibleNote2022andwarrantswasvaluedat0.49 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 683,393andwarrantsat683,393 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,withaprincipaloutstandingof4,628,249, with a principal outstanding of 5,796,148 and unamortized issuance costs of 1,167,899[190]−ThenetcarryingamountoftheequitycomponentoftheConvertibleNotesasofDecember31,2022,was1,167,899[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 1,775,853andissuancecostsof1,775,853 and issuance costs of 302,866[191] - The company issued warrants for 157,934 ordinary shares at 2pershareand386,585ordinarysharesat2 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 0.49and0.49 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 1,426,798withausefullifeoftenyears[137]−Intangibleassets−copyrightsandtrademarksvaluedat1,426,798 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]−Intangibleassets,netincreasedsignificantlyfrom3,534,093[115] - Intangible assets, net increased significantly from 23,963 in June 2022 to 7,330,138inDecember2022,primarilyduetocustomerrelationshipsvaluedat7,330,138 in December 2022, primarily due to customer relationships valued at 7,748,590[133] Other Financial Information - The company received government subsidies of 43,616forthesixmonthsendedDecember31,2022,comparedto43,616 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,comparedto3,805,834, 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,comparedto3,468,043, 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,comparedto9,167,098, 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]