EX-99.1 2 ea024271401ex99-1_epwk.htm UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 AND FOR THE SIX MONTHS ENDED DECEMBER 31, 2024 AND 2023

Exhibit 99.1

 

EPWK HOLDINGS LTD. (“EPWK,” the “Company,” “we,” “our,” or “us”) (Nasdaq: EPWK), an innovative and efficient crowdsourcing platform to connect businesses with great talents, announced its unaudited financial results for the six months ended December 31, 2024.

 

First Half 2024 Financial Highlights

 

●Total revenues for the six months ended December 31, 2024 were US$8.48 million, representing a decrease of 0.61% from US$8.53 million in the same period of 2023.

 

●Gross profit for the six months ended December 31, 2024 was US$1.39 million with a gross profit margin of 16.37%, compared to US$2.46 million with a gross profit margin of 28.83% in the same period of 2023.

 

●Income from operations for the six months ended December 31, 2024 was net loss US$0.79 million, representing a decrease of 55.36% from net loss US$0.51 million in the same period of 2023.

 

●Net income for the six months ended December 31, 2024 was net loss US$484,013 from US$20,263 in the same period of 2023.

 

Management Commentary

 

CEO Statement by Mr. Guohua Huang: “During the six months ended December 31, 2024, we achieved stable total revenue of $8.48 million, maintaining performance in line with the same period in 2023. The year-over-year decline in net profit was primarily driven by two factors: (1) increased costs associated with our premium business solutions service, which rose proportionally with revenue growth in that segment; and (2) additional expenses incurred to accelerate our initial public offering process, including IPO advisory and compliance-related costs.

 

Looking ahead, we will focus on the following strategic priorities: strengthening strategic partnerships to enhance customer acquisition capabilities, and deploying AI tools across our platform to mitigate the disruptive impact of AI adoption on core service volumes.”

 

First Half 2024 Financial Results

 

Net revenues

 

Our net revenues decreased by US$0.05 million or 0.61% from US$8.53 million for the six months ended December 31, 2023 to US$8.48 million for the same period of 2024.

 

   For the six months ended December 31,   Change     
   2024   2023   Amount   % 
Online Promotion revenue  $1,601,447   $1,887,336   $(285,889)   -15.15%
Premium business solutions revenue   6,073,510    5,031,837    1,041,673    20.70%
Value-Added Services revenue   301,413    957,976    (656,563)   -68.54%
Shared office rental and management revenue   500,795    651,732    (150,937)   -23.16%
Total  $8,477,165   $8,528,881   $(51,716)   -0.61%

 

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Revenue from online promotion decreased by 15.15% from US$1.89 million six months ended December 31, 2023 to US$1.60 million for the same period of 2024, mainly because SMEs have significantly curtailed marketing outsourcing expenditures, while widespread AI adoption has disrupted demand for basic design and copywriting services, collectively contributing to reduced corporate order volumes on the platform.

 

Revenue from premium business solutions increased by 20.70% from US$5.03 million for the six months ended December 31, 2023 to US$6.07 million for the same period of 2024, mainly because we sacrificed profit margins to drive business volume growth.

 

Revenue from value-added services decreased by 68.54% from US$0.96 million for the six months ended December 31, 2023 to US$0.30 million for the same period of 2024, mainly because the reduction in government policy subsidies under the current macroeconomic environment, the demand for qualification processing has correspondingly decreased, leading to a decline in its business scale.

 

Revenue from shared office rental and management decreased by 23.16% from US$0.65 million for the six months ended December 31, 2023 to US$0.50 million for the same period of 2024, mainly because the expiration of leases for some maker spaces has led to tenant move-outs and a corresponding decrease in revenue.

 

Cost of revenues

 

Our cost of revenues increased by US$1.02 million or 16.80% from US$6.07 million for the six months ended December 31, 2023 to US$7.09 million for the same period of 2024, primarily attribute to an increase in premium business solutions service.

 

Gross profit

 

Our gross profit decreased by US$1.07 million or 43.50% from US$2.46 million for the six months ended December 31, 2023 to US$1.39 million for the same period of 2024. Our gross profit margin was 16.37% for the six months ended December 31, 2024 and 28.83% for the same period of 2023, primarily attribute to an increase in low-margin premium business solutions service and a decrease in high-margin online promotion services.

 

Operating expenses

 

Total operating expenses decreased by 26.60% from US$2.97 million for the six months ended December 31, 2023 to US$2.17 million for the same period of 2024.

 

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Sales and marketing expenses. Our sales and marketing expenses in total decreased by US$0.76 million or 48.10% from US$1.58 million for the six months ended December 31, 2023 to US$0.82 million for the same period of 2024, primarily because the marketing expenses for obtaining new customers decreased US$0.69 million.

 

General and administrative(G&A) expenses. Our general and administrative expenses increased by US$0.37 million or 50.00% from US$0.74 million for the six months ended December 31, 2023 to US$1.11 million for the same period of 2024, primary because professional service fees about listing and other consulting services increased US$0.33 million.

 

Research and development expense. Our research and development expenses decreased by US$0.40 million or 61.54% from US$0.65 million for the six months ended December 31, 2023 to US$0.25 million for the same period of 2024, primarily due to the development projects are in their final stages, requiring fewer resources.

 

Other (income) expenses, net

 

Total other income decreased by US$0.23 million from US$0.53 million for the six months ended December 31, 2023 to US$0.30 million for the same period of 2024, primarily due to decrease of subsidy income.

 

Income(loss) before income tax

 

Our loss before income tax was US$484,087 for the six months ended December 31, 2024 and income before income tax was US$25,901 for the same period of 2023, respectively.

 

Net income/loss

 

As a result of the foregoing, our net loss was US$484,013 for the six months ended December 31, 2024 and net income was US$20,263 for the same period of 2023, respectively.

 

Financial Conditions

 

As of December 31, 2024, the Company had cash and cash equivalents of $0.38 million, compared to $0.23 million as of June 30, 2024. Account receivable, net was $0.26 million as of December 31, 2024, compared to $0.16 million as of June 30, 2024. Advance to suppliers was $0.55 million as of December 31, 2024, compared to $0.25 million as of June 30, 2024. As of December 31, 2024, the Company had current assets of $1.75 million and current liabilities of $10.16 million, resulting in negative working capital of $8.41 million, as compared with current assets of $1.12 million, current liabilities of $9.24 million, and negative working capital of $8.12 million as of June 30, 2024. Although the working capital is negative, overall liquidity risk remains manageable, primarily due to the composition of current liabilities: bank borrowings (32.3% of total current liabilities) and related-party loans (23.01%). The bank loans do not have concentrated repayment schedules, and related-party loans are repayable based on the company’s operational performance.

 

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Exchange Rate

 

This announcement contains translations of amounts in Renminbi (“RMB”) into U.S. dollars (“US$”).

 

The following table outlines the currency exchange rates that were used in creating the consolidated financial statements, which is derived from company’s own simple exchange rate conversion:

 

   As of 
   December 31,   June 30, 
   2024   2024 
Balance sheet items, except for equity accounts   7.2993    7.2672 

 

   For the six months ended 
   December 31, 
   2024   2023 
Items in the statements of operations and comprehensive loss, and statements of cash flows   7.1767    7.2347 

 

Forward-Looking Statements

 

This report contains forward-looking statements. All statements other than statements of historical fact in this report are forward-looking statements, including but not limited to, the intent, belief or current expectations of Planet Image and members of its management, as well as the assumptions on which such statements are based. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs, including the expectation that the offering will be successfully completed. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement on Form F-1 and in its other filings with the U.S. Securities and Exchange Commission.

 

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EPWK HOLDINGS LTD. AND ITS SUBSIDIARIES AND VARIABLE INTEREST ENTITIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In U.S. dollars, except for share or otherwise noted)

 

   As of 
   December 31,   June 30, 
   2024   2024 
   (Unaudited)     
Assets        
Current assets:        
Cash  $375,597   $227,826 
User funds   456,008    446,775 
Accounts receivable, net   257,166    162,910 
Advance to suppliers   551,770    245,723 
Prepaid expenses and other receivables, net   105,483    40,167 
Deferred Tax Asset   2,037    1,384 
Total current assets   1,748,061    1,124,785 
Property and equipment, net   596,544    671,038 
Right-of-use assets   2,204,356    2,473,165 
Intangible assets, net   109,071    135,993 
Deferred expense long-term   -    - 
Other non-current assets   90,079    107,466 
Total non-current assets   3,000,050    3,387,662 
TOTAL ASSETS  $4,748,111   $4,512,447 
Liabilities          
Current liabilities:          
Short term bank loans  $3,282,507   $3,385,073 
Accounts payable   502,496    560,062 
Contract liabilities – current   2,354,292    2,098,022 
User accounts payable   456,008    446,775 
Related parties payable   2,338,950    1,386,022 
Accrued expenses and other current liabilities   626,085    781,942 
Deferred subsidies   -    - 
Lease payable-current portion   602,547    584,591 
Total current liabilities   10,162,885    9,242,487 
           
Contract liabilities – non-current   219,562    127,439 
Lease payable-non-current   1,984,824    2,299,697 
Other non-current liabilities   25,955    43,723 
Total non-current liabilities   2,230,341    2,470,859 
TOTAL LIABILITIES  $12,393,226   $11,713,346 
           
Shareholders’ Deficit          
Ordinary shares 500,000,000 shares authorized, par value $0.0001          
(15,601,494 Class A shares issued and outstanding as of December 31 and June 30, 2024)   1,560    1,560 
(3,555,948 Class B shares issued and outstanding as of December 31 and June 30, 2024)   356    356 
Subscription receivable   (1,916)   (1,916)
Additional paid in capital   11,149,482    11,149,482 
Accumulated deficits   (19,347,428)   (18,863,415)
Accumulated other comprehensive income   552,831    513,034 
Total Shareholders’ deficit   (7,645,115)   (7,200,899)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT  $4,748,111   $4,512,447 

 

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EPWK HOLDINGS LTD. AND ITS SUBSIDIARIES AND VARIABLE INTEREST ENTITIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In U.S. dollars, except for share or otherwise noted)

 

   For the six months ended 
   December 31, 
   2024   2023 
         
Net revenue  $8,477,165   $8,528,881 
Cost of revenue   7,089,388    6,069,691 
Gross profit   1,387,777    2,459,190 
           
Operating Expenses          
Selling expenses   822,123    1,576,187 
General and administrative expenses   1,105,043    738,388 
Research and development expense   247,728    651,272 
Total operating expense   2,174,894    2,965,847 
           
Operating loss   (787,117)   (506,657)
           
Non-operating Income (Expenses)          
loss on disposal of assets   (5,749)   - 
Other income   23,449    6,847 
Other expenses   (119)   (322)
Interest expense, net   (71,498)   (72,274)
Subsidy income   356,947    598,307 
Total other income and expenses, net   303,030    532,558 
           
Income(Loss) before income tax   (484,087)   25,901 
           
Income tax expense   (74)   5,638 
Net income(loss)  $(484,013)  $20,263 
Other comprehensive income:          
Foreign currency translation (loss) gain, net  of income taxes   39,797    (131,474)
Total comprehensive loss  $(444,216)  $(111,211)
           
Basic & diluted earnings(loss) per share   (0.03)   0.00 
Weighted average shares outstanding   19,157,442    19,157,442 

 

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EPWK HOLDINGS LTD. AND ITS SUBSIDIARIES AND VARIABLE INTEREST ENTITIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

For the Six-month ended December 31, 2024 and 2023

(In U.S. dollars, except for share or otherwise noted)

 

                               Accumulated     
   Class A   Class B       Additional       other   Total 
   Ordinary Shares   Ordinary Shares   Subscription   paid-in   Accumulated   comprehensive   shareholder’s 
   Share   Amount   Share   Amount   receivable   capital   deficit   income (loss)   deficit 
Balance as of June 30, 2023   15,601,494    1,560    3,555,948    356    (1,916)   11,149,482    (17,660,499)   496,374    (6,014,643)
Net gain   -    -    -    -    -    -    20,263    -    20,263 
Foreign currency translation adjustment   -    -    -    -    -    -    -    (131,474)   (131,474)
Balance as of December 31,2023 (Unaudited)   15,601,494    1,560    3,555,948    356    (1,916)   11,149,482    (17,640,236)   364,900    (6,125,854)
                                              
Balance as of June 30, 2024   15,601,494    1,560    3,555,948    356    (1,916)   11,149,482    (18,863,415)   513,034    (7,200,899)
Net loss   -    -    -    -    -    -    (484,013)   -    (484,013)
Foreign currency translation adjustment   -    -    -    -    -    -    -    39,797    39,797 
Balance as of December 31,2024 (Unaudited)   15,601,494    1,560    3,555,948    356    (1,916)   11,149,482    (19,347,428)   552,831    (7,645,115)

 

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EPWK HOLDINGS LTD. AND ITS SUBSIDIARIES AND VARIABLE INTEREST ENTITIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. dollars, except for share or otherwise noted)

 

   For the Six-month ended 
   December 31, 
   2024   2023 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss)  $(484,013)  $20,263 
Adjustments to reconcile net income(loss) to net cash used in operating activities:          
Depreciation   70,412    110,545 
Amortization   26,773    26,689 
Noncash operating lease expense   263,020    452,001 
Deferred tax benefits   (669)   5,638 
Allowance for expected credit loss   4,512    (37,710)
Loss from the disposal of property and equipment   6,137    - 
Changes in assets and liabilities：          
Accounts receivable   (104,892)   453,114 
Advance to suppliers   (312,374)   37,743 
Prepaid expenses and other current assets   (66,613)   8,693 
Lease liabilities   (289,770)   (478,961)
Other non-current assets   17,203    4,423 
Other non-current liabilities   (17,876)   (39,904)
Accounts payable   (56,045)   (652,888)
Contract liabilities   364,300    (321,266)
Advance from customers   -    290,994 
Deferred subsidies   -    (47,288)
Accrued expenses and other liabilities   (155,021)   (89,149)
Net cash used in operating activities  $(734,916)  $(257,063)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Lend to related parties  $-   $(117,740)
Repayment from related parties   -    117,740 
Net cash provided by investing activities  $-   $- 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from bank loans  $1,254,058   $1,326,931 
Repayment of bank loans   (1,343,236)   (1,249,471)
Borrowing from related parties   2,149,613    406,373 
Repayment to related parties   (1,174,207)   (567,539)
Net cash (used in)  / provided by financing activities  $886,228   $(83,706)
           
Effect of exchange rate changes   (3,541)   6,845 
Total cash flows  $147,771   $(333,924)
           
Cash at beginning of period   227,826    607,449 
Cash at end of period   375,597    273,525 
Net decrease in cash  $147,771   $(333,924)
           
Supplementary Cash Flows Information          
Interest expense paid   71,596    72,598 
Income tax paid   1,393    - 
Non-Cash investing and financing activities          
To offset accounts receivable and exchange for fixed assets   3,785    - 

 

 

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