Li Bang International Corp Inc 6-K, filed Jun 17, 2025
Li Bang International Corp Inc. (LBGJ)
About this 6-K
Li Bang International Corp Inc filed this 6-K on June 17, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For
the month of June
Commission
File Number:
(Exact Name of Registrant as Specified in its Charter)
No. 190 Xizhang Road, Gushan Town,
Jiangyin City, Jiangsu Province
People’s Republic of China
+86 0510-81630030
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
On June 17, 2025, Li Bang International Corporation Inc., a Cayman Islands exempted company (“Li Bang International”), issued a press release announcing the financial results for the six months ended December 31, 2024. In addition, it is furnishing this Form 6-K to provide the unaudited condensed consolidated financial statements of Li Bang International and its consolidated subsidiaries as of and for the six months ended December 31, 2024 and 2023.
Financial Statements and Exhibit Index.
Exhibits:
| Exhibit No. | Description | |
| 99.1 | Press Release | |
| 99.2 | Unaudited Condensed Consolidated Financial Statements as of December 31, 2024 and for the Six Months Ended December 31, 2024 and 2023. | |
| 99.3 | Management’s Discussion and Analysis in Connection with the Unaudited Condensed Consolidated Financial Statements for the Six Months Ended December 31, 2024 and 2023. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
1
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Li Bang International Corporation Inc. | ||
| Date: June 17, 2025 | By: | /s/ Feng Huang |
| Feng Huang | ||
| Chief (Principal) Executive Officer | ||
| By: | /s/ Liang Xia | |
| Liang Xia | ||
| Chief (Principal) Financial Officer |
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Exhibit 99.1
Li Bang International Announces Its Interim Financial Results for the Six Months Ended December 31, 2024
JIANGYIN, China, Jun. 17, 2025 /PRNewswire/ — Li Bang International Corporation Inc. (“Li Bang International”) and its subsidiaries (collectively, the “Company,” “we,” “us,” “our company,” or “Li Bang”) (Nasdaq: LBGJ), a company engaged in designing, developing, producing, and selling stainless steel commercial kitchen equipment in China, today announced its unaudited interim financial results for the six months ended December 31, 2024.
Highlights for the Six Months Ended December 31, 2024
| ● | Revenue - for the six months ended December 31, 2024, total revenues of approximately $4.7 million, compared to revenues of approximately $3.7 million for the six months ended 2023, reflecting an increase of approximately 27% due mainly to higher revenue from project sales. | |
| ● | Gross profit - for the six months ended December 31, 2024, gross profit of $841,000, compared to gross profit of approximately $612,000 for the six months ended 2023, reflecting an increase of approximately 37% due mainly to higher revenues and margin improvement. | |
| ● | Despite the challenges from a slow down in the PRC economy, the Company was able to reduce its net loss to approximately $1.1 million for the six months ended December 31, 2024, as comparted to net loss of approximately $1.5 million for the six months ended 2023. |
Unaudited Financial Results for the Six Months Ended December 31, 2024 and 2023
| For the Six Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||||||||||
| Amount (Unaudited) | % of revenue | Amount (Unaudited) | % of revenue | Amount (Unaudited) | % | |||||||||||||||||||
| Revenues | $ | 4,716,845 | 100.0 | % | $ | 3,729,845 | 100.0 | % | $ | 987,000 | 26.5 | % | ||||||||||||
| Cost of revenues | (3,875,916 | ) | (82.2 | )% | (3,118,057 | ) | (83.6 | )% | (757,859 | ) | 24.3 | % | ||||||||||||
| Gross profit | 840,929 | 17.8 | % | 611,788 | 16.4 | % | 229,141 | 37.5 | % | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Selling | 423,228 | 9.0 | % | $ | 368,409 | 9.9 | % | $ | 54,819 | 14.9 | % | |||||||||||||
| General and administrative | 1,464,679 | 31.1 | % | 1,479,561 | 39.7 | % | (14,882 | ) | (1.0 | )% | ||||||||||||||
| Provision for expected credit losses | 135,456 | 2.9 | % | 342,542 | 9.2 | % | (207,086 | ) | (60.5 | )% | ||||||||||||||
| Total operating expenses | 2,023,363 | 43.0 | % | $ | 2,190,512 | 58.8 | % | $ | (167,149 | ) | (7.6 | )% | ||||||||||||
| Loss from operations | (1,182,434 | ) | (25.2 | )% | (1,578,724 | ) | (42.4 | )% | 396,290 | (25.1 | )% | |||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||
| Interest expense | (205,482 | ) | (4.4 | )% | (213,102 | ) | (5.7 | )% | 7,620 | (3.6 | )% | |||||||||||||
| Other income, net | 194,583 | 4.1 | % | 347,670 | 9.3 | % | (153,087 | ) | (44.0 | )% | ||||||||||||||
| Total other (expense) income, net | (10,899 | ) | (0.3 | )% | 134,568 | 3.6 | % | (145,467 | ) | (108.1 | )% | |||||||||||||
| Loss before provision for income taxes | (1,193,333 | ) | (25.5 | )% | (1,444,156 | ) | (38.8 | )% | 250,823 | (17.4 | )% | |||||||||||||
| Income tax (benefit) expense | (67,418 | ) | (1.4 | )% | 18,892 | 0.5 | % | (86,310 | ) | (456.9 | )% | |||||||||||||
| Net loss | (1,125,915 | ) | (24.1 | )% | (1,463,048 | ) | (39.3 | )% | 337,133 | (23.0 | )% | |||||||||||||
| Net loss attributable to non-controlling interests | (877 | ) | 0.0 | % | (1,350 | ) | 0.0 | % | 473 | (35.0 | )% | |||||||||||||
| Net loss attributable to ordinary shareholders | $ | (1,125,038 | ) | (24.1 | )% | (1,461,698 | ) | (39.3 | )% | 336,660 | (23.0 | )% | ||||||||||||
Revenues
Total revenue for the six months ended December 31, 2024 increased by $987,000, or 26.5%, to $4,716,845 for the six months ended December 31, 2024 from $3,729,845 for the comparable period in 2023. The increase in the Company’s revenues was primarily attributable to the increase in the revenue from project sales.
| ● | Revenue for project sales increased by $963,906 or 27.6% to $4,451,937 for the six months ended December 31, 2024 from $3,488,031 for 2023. The increase was primarily due to three more projects completed in the six months ended December 31, 2024 compared to the comparable period in 2023. |
| ● | Revenues from retail sales increased by $23,094 or 9.6% to $264,908 for the six months ended December 31, 2024 from $241,814 for 2023. The change in retail revenues is primarily due to slight increase in total number of retail orders. |
Gross Profit
Gross profit was $840,929 for the six months ended December 31, 2024, an increase of $229,141, from $611,788 for the six months ended December 31, 2023. Gross margin increases by 1.4%, to 17.8% for the six months ended December 31, 2024 from 16.4% for the six months ended December 31, 2023. The increase in gross margin was mainly due to the lower proportion of purchased parts and higher proportion of self-produced products in specific projects compared to the six months ended December 31, 2023, resulting in lower overall costs. The product mix is determined by project types and contract terms. Management believes the Company’s gross margin will continue to improve as production efficiency increases.
Operating Expenses
Operating expenses were approximately $2.02 million for the six months ended December 31, 2024, a decrease of $167,149 from approximately $2.19 million for the six months ended December 31, 2023.
| ● | Selling expenses were $423,228 for the six months ended December 31, 2024, an increase of $54,819, or 14.9%, from $368,409 for the comparable period in 2023. The net increase was mainly due to the increase in market expansion fees and project bidding fees, which consistent with the revenue growth during the period. |
| ● | General and administrative expenses were $1,464,679 for the six months ended December 31, 2024, a decrease of $14,882 or 1.0%, from $1,479,561 for the comparable period in 2023. The decrease was mainly due to the reduction in headcount in administrative departments, net of higher consulting fees compared with the six months ended December 31, 2023. |
| ● | Provision for expected credit losses was $135,456 for the six months ended December 31, 2024, a decrease of $207,086 or 60.5%, from $342,542 for the comparable period in 2023. The decrease was mainly due to the collection of the accounts receivables from previous projects. And these receivables were recognized as credit losses in prior periods. |
Other (Expense) Income
Other (expense) income was expense of $890,201 and income of $1,493,465 for the six months ended December 31, 2024 and 2023, respectively. The decrease was primarily due to: (a) brand charge revenue decreased by $77,017; (b) government subsidies decreased by $36,969; and (c) non-project installation and maintenance revenue decreased by $27,782.
Net Loss
Net loss was $1,125,915 for the six months ended December 31, 2024, a decrease of $337,133 from net loss of $1,463,048 for the same period in 2023.
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Balance Sheet
As of December 31, 2024, the Company had cash of $1,094,269, compared to $153,914 as of June 30, 2024.
Cash Flow
Net cash provided by operating activities was $258,431 for the six months ended December 31, 2024, an increase of $430,260 from net cash used of $171,829 for the same period in 2023. The change was primarily attributable to the Company’s enhanced profitability and receivable management.
Net cash used in investing activities was $4,532,991 for the year ended December 31, 2024, an increase of $4,446,120 compared to net cash used in investing activities of $86,871 for the same period in 2023. The change was primarily attributable to the increase in loans lent to third parties.
Net cash provided by financing activities was $5,236,406 for the year ended December 31, 2024, an increase of $5,218,493 compared to net cash provided by financing activities of $17,913 for the same period in 2023. The change was primarily attributable to the completion of the Company’s initial public offering(“IPO”) in 2024, which provided net proceeds of approximately $5.23 million.
About Li Bang International Corporation Inc.
Li Bang International Corporation Inc. specializes in the independently research, development, production, and sale of stainless-steel commercial kitchen equipment under its own “Li Bang” brand in China. In addition to its product offerings, the Company provides comprehensive services from early-stage design of commercial kitchen appliances to equipment installation and after-sales maintenance. Committed to innovation and high-quality, the Company uses modern production facilities and state-of-the-art procedures and strives to become a first-class commercial kitchen appliance manufacturer in China. The Company’s long-term vision is to establish itself as a household name, synonymous with the products it manufactures. For more information, please visit the company’s website at https://ir.libangco.cn.
Cautionary Statement Regarding Forward Looking Statements
We have made statements in this report that constitute forward-looking statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “could” and similar expressions. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.
These forward-looking statements include statements about: our business and operating strategies and plans for the development of existing and new businesses, ability to implement such strategies and plans and expected time; developments in, or changes to, laws, regulations, governmental policies, incentives, taxation and regulatory and policy environment affecting our operations and the cryptocurrency and blockchain industry; our future business development, financial condition and results of operations; expected changes in our revenues, costs or expenditures; general business, political, social and economic conditions in mainland China where we base our operations.
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The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. Many factors could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Consequently, you should not place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except as required by law; we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update this forward-looking information. Nonetheless, we reserve the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this interim report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
CONTACTS
Li
Bang International Corporation Inc.
Investor Relations Department
Email: guanli@libangco.cn
Ascent
Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: investors@ascent-ir.com
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LI BANG INTERNATIONAL CORPORATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars, except for the number of shares)
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 1,094,269 | $ | 153,914 | ||||
| Restricted cash | 96,125 | 80,293 | ||||||
| Accounts receivable, net | 11,662,750 | 12,286,665 | ||||||
| Notes receivable | 22,543 | 172,348 | ||||||
| Loans receivable | 4,515,050 | - | ||||||
| Inventories | 1,728,639 | 1,750,369 | ||||||
| Advances to suppliers, net | 846,772 | 991,518 | ||||||
| Prepaid expenses and other current assets, net | 348,042 | 283,061 | ||||||
| Total current assets | 20,314,190 | 15,718,168 | ||||||
| Non-current assets: | ||||||||
| Fixed deposits | 2,643,147 | 2,665,993 | ||||||
| Non-current accounts receivable | 526,939 | 670,146 | ||||||
| Prepayment for land use rights | 1,391,130 | 1,403,154 | ||||||
| Deferred offering cost | - | 588,013 | ||||||
| Property and equipment, net | 2,687,078 | 2,790,891 | ||||||
| Intangible assets, net | 527,846 | 539,925 | ||||||
| Deferred tax assets, net | 575,376 | 533,345 | ||||||
| Other non-current assets | 134,790 | 169,933 | ||||||
| Total non-current assets | 8,486,306 | 9,361,400 | ||||||
| Total Assets | $ | 28,800,496 | $ | 25,079,568 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Short-term loans | $ | 425,951 | $ | 6,857,415 | ||||
| Accounts payable | 4,697,264 | 4,694,905 | ||||||
| Advances from customers | 1,173,881 | 1,027,164 | ||||||
| Taxes payable | 3,027,617 | 3,273,227 | ||||||
| Due to related parties | 224,636 | 131,574 | ||||||
| Other payables and other current liabilities | 1,403,386 | 1,033,729 | ||||||
| Total current liabilities | 10,952,735 | 17,018,014 | ||||||
| Non-current Liabilities: | ||||||||
| Long-term loans | 10,155,250 | 3,806,557 | ||||||
| Total non-current liabilities | 10,155,250 | 3,806,557 | ||||||
| Total Liabilities | 21,107,985 | 20,824,571 | ||||||
| Commitments and contingencies | - | - | ||||||
| Equity: | ||||||||
| Ordinary shares (par value $0.0001 per share, 500,000,000 shares authorized, 18,748,000 and 17,000,000 shares issued and outstanding as of December 31, 2024 and June 30, 2024, respectively) | 1,875 | 1,700 | ||||||
| Subscription receivable | (1,699 | ) | (1,699 | ) | ||||
| Additional paid-in capital | 6,833,912 | 2,236,677 | ||||||
| Statutory reserves | 761,989 | 755,100 | ||||||
| Retained earnings | 452,050 | 1,583,977 | ||||||
| Accumulated other comprehensive loss | (293,423 | ) | (258,907 | ) | ||||
| Total shareholders’ equity of the Company | 7,754,704 | 4,316,848 | ||||||
| Non-controlling interests | (62,193 | ) | (61,851 | ) | ||||
| Total Equity | 7,692,511 | 4,254,997 | ||||||
| Total Liabilities and Equity | $ | 28,800,496 | $ | 25,079,568 | ||||
5
LI BANG INTERNATIONAL CORPORATION INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars, except for the number of shares)
| For the Six Months Ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| Revenues： | ||||||||
| Project revenues | $ | 4,451,937 | $ | 3,488,031 | ||||
| Retail revenues | 264,908 | 241,814 | ||||||
| Total revenues | 4,716,845 | $ | 3,729,845 | |||||
| Cost of revenues | (3,875,916 | ) | (3,118,057 | ) | ||||
| Gross profit | 840,929 | 611,788 | ||||||
| Operating expenses: | ||||||||
| Selling and marketing | 423,228 | 368,409 | ||||||
| General and administrative | 1,464,679 | 1,479,561 | ||||||
| Provision for expected credit losses | 135,456 | 342,542 | ||||||
| Total operating expenses | 2,023,363 | 2,190,512 | ||||||
| Loss from operations | (1,182,434 | ) | (1,578,724 | ) | ||||
| Other (expenses) income: | ||||||||
| Interest expense | (205,482 | ) | (213,102 | ) | ||||
| Other income, net | 194,583 | 347,670 | ||||||
| Total other (expenses) income, net | (10,899 | ) | 134,568 | |||||
| Loss before provision for income taxes | (1,193,333 | ) | (1,444,156 | ) | ||||
| Income tax (benefit) expense | (67,418 | ) | 18,892 | |||||
| Net loss | (1,125,915 | ) | (1,463,048 | ) | ||||
| Less: net loss attributable to non-controlling interests | (877 | ) | (1,350 | ) | ||||
| Net loss attributable to ordinary shareholders | $ | (1,125,038 | ) | $ | (1,461,698 | ) | ||
| Comprehensive loss | ||||||||
| Net loss | $ | (1,125,915 | ) | $ | (1,463,048 | ) | ||
| Foreign currency translation (loss) gain | (33,981 | ) | 102,560 | |||||
| Total comprehensive loss | (1,159,896 | ) | (1,360,488 | ) | ||||
| Comprehensive loss attributable to non-controlling interests | (342 | ) | (2,543 | ) | ||||
| Comprehensive loss attributable to ordinary shareholders | $ | (1,159,554 | ) | $ | (1,357,945 | ) | ||
| Loss per ordinary share | ||||||||
| – Basic and diluted | $ | (0.06 | ) | $ | (0.09 | ) | ||
| Weighted average number of ordinary shares outstanding | ||||||||
| – Basic and diluted | 17,628,239 | 17,000,000 | ||||||
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LI BANG INTERNATIONAL CORPORATION INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
| For the Six Months Ended December 31, |
||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,125,915 | ) | $ | (1,463,048 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 218,547 | 230,934 | ||||||
| Gain on disposal of property and equipment | (17,245 | ) | (14,785 | ) | ||||
| Provision for expected credit losses | 135,456 | 342,542 | ||||||
| Deferred tax expense | (46,935 | ) | 18,892 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 713,032 | 287,094 | ||||||
| Notes receivable | 149,390 | (673,822 | ) | |||||
| Advances to suppliers | (39,082 | ) | (624,146 | ) | ||||
| Inventories | 6,779 | (419,768 | ) | |||||
| Prepaid expenses and other current assets | (45,089 | ) | 237,785 | |||||
| Accounts payable | 42,896 | 746,266 | ||||||
| Advances from customers | 156,632 | 763,878 | ||||||
| Taxes payable | (219,118 | ) | (90,259 | ) | ||||
| Due to related parties | (522 | ) | (14,032 | ) | ||||
| Other payables and other current liabilities | 329,605 | 500,640 | ||||||
| Net cash provided by (used in) operating activities | 258,431 | (171,829 | ) | |||||
| Cash flows from investing activities: | ||||||||
| Loans to third parties | (4,515,050 | ) | - | |||||
| Purchases of property and equipment | (42,177 | ) | (104,142 | ) | ||||
| Proceeds from disposal of property and equipment | 24,236 | 17,271 | ||||||
| Net cash used in investing activities | (4,532,991 | ) | (86,871 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loans | 56,044 | 783,945 | ||||||
| Repayments of loans | (47,370 | ) | (691,466 | ) | ||||
| Payment of offering costs | - | (74,566 | ) | |||||
| Net proceeds from initial public offering | 5,227,732 | - | ||||||
| Net cash provided by financing activities | 5,236,406 | 17,913 | ||||||
| Effect of foreign exchange rate on cash | (2,449 | ) | 8,352 | |||||
| Net increase (decrease) in cash and restricted cash | 959,397 | (232,435 | ) | |||||
| Cash and restricted cash at the beginning of the period | 230,997 | 541,127 | ||||||
| Cash and restricted cash at the end of the period | $ | 1,190,394 | $ | 308,692 | ||||
| Reconciliation of cash and restricted cash | ||||||||
| Cash | $ | 1,094,269 | $ | 169,996 | ||||
| Restricted cash | 96,125 | 138,696 | ||||||
| Total cash and restricted cash per the statements of cash flows | $ | 1,190,394 | $ | 308,692 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | 202,787 | $ | 217,565 | ||||
| Income taxes paid | $ | 124 | $ | - | ||||
| Non-cash transactions: | ||||||||
| Reclassification of deferred offering cost | $ | 630,322 | $ | - | ||||
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Exhibit 99.2
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
LI BANG INTERNATIONAL CORPORATION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars, except for the number of shares)
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Notes receivable | ||||||||
| Loans receivable | ||||||||
| Inventories | ||||||||
| Advances to suppliers, net | ||||||||
| Prepaid expenses and other current assets, net | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Fixed deposits | ||||||||
| Non-current accounts receivable | ||||||||
| Prepayment for land use rights | ||||||||
| Deferred offering cost | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Deferred tax assets, net | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Short-term loans | $ | $ | ||||||
| Accounts payable | ||||||||
| Advances from customers | ||||||||
| Taxes payable | ||||||||
| Due to related parties | ||||||||
| Other payables and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current Liabilities: | ||||||||
| Long-term loans | ||||||||
| Total non-current liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
| Ordinary shares (par value $ | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders’ equity of the Company | ||||||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
LI BANG INTERNATIONAL CORPORATION INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars, except for the number of shares)
For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues： | ||||||||
| Project revenues | $ | $ | ||||||
| Retail revenues | ||||||||
| Total revenues | $ | |||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Provision for expected credit losses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (expenses) income: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income, net | ||||||||
| Total other (expenses) income, net | ( | ) | ||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Income tax (benefit) expense | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Less: net loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Net loss attributable to ordinary shareholders | $ | ( | ) | $ | ( | ) | ||
| Comprehensive loss | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation (loss) gain | ( | ) | ||||||
| Total comprehensive loss | ( | ) | ( | ) | ||||
| Comprehensive loss attributable to non-controlling interests | ( | ) | ( | ) | ||||
| Comprehensive loss attributable to ordinary shareholders | $ | ( | ) | $ | ( | ) | ||
| Loss per ordinary share | ||||||||
| – Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of ordinary shares outstanding | ||||||||
| – Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
LI BANG INTERNATIONAL CORPORATION INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
SIX MONTHS ENDED DECEMBER 31, 2024 AND 2023
(Expressed in U.S. Dollars, except for the number of shares)
| Ordinary shares | Subscription | Additional paid-in | Statutory | Retained | Accumulated other comprehensive | Total
shareholders’ | Non-controlling | Total | ||||||||||||||||||||||||||||||||
| Shares | Amount | receivable | capital | reserves | earnings | loss | equity | interests | equity | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 (unaudited) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Ordinary shares | Subscription | Additional paid-in | Statutory | Retained | Accumulated other comprehensive | Total
shareholders’ | Non-controlling | Total | ||||||||||||||||||||||||||||||||
| Shares | Amount | receivable | capital | reserves | earnings | loss | equity | interests | equity | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||
| Shares issued in connection with initial public offering | ||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Appropriation to statutory reserve | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 (unaudited) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
LI BANG INTERNATIONAL CORPORATION INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain on disposal of property and equipment | ( | ) | ( | ) | ||||
| Provision for expected credit losses | ||||||||
| Deferred tax expense | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Notes receivable | ( | ) | ||||||
| Advances to suppliers | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Advances from customers | ||||||||
| Taxes payable | ( | ) | ( | ) | ||||
| Due to related parties | ( | ) | ( | ) | ||||
| Other payables and other current liabilities | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Loans to third parties | ( | ) | ||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loans | ||||||||
| Repayments of loans | ( | ) | ( | ) | ||||
| Payment of offering costs | ( | ) | ||||||
| Net proceeds from initial public offering | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange rate on cash | ( | ) | ||||||
| Net increase (decrease) in cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash at the beginning of the period | ||||||||
| Cash and restricted cash at the end of the period | $ | $ | ||||||
| Reconciliation of cash and restricted cash | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash and restricted cash per the statements of cash flows | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash transactions: | ||||||||
| Reclassification of deferred offering cost | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
LI BANG INTERNATIONAL CORPORATION INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024 and 2023
NOTE 1 –BUSINESS DESCRIPTION
Li Bang International Corporation Inc. (“Li
Bang International”) was incorporated in the Cayman Islands on
Corporate History
On July 8, 2021, the Company’s shareholders
approved a Memorandum and Articles of Association, pursuant to which
| ● |
| ● |
| ● |
| ● |
Of the total
On July 26, 2021, Li Bang International formed its wholly owned subsidiary, Li Bang International Hong Kong Holdings Limited (“Li Bang HK”) in Hong Kong. On August 18, 2021, Li Bang HK formed its wholly owned subsidiary, Jiangsu Li Bang Intelligent Technology Co., Limited (“Li Bang Intelligent Technology” or “WFOE”) in the PRC.
Suzhou Deji Kitchen Engineering Co., Limited (“Suzhou Deji”),
a limited liability company incorporated on April 8, 2010, under the laws of China, became a Li Bang Intelligent Technology’s wholly-owned
subsidiary on November 24, 2021. Wuxi Li Bang Kitchen Appliance Co., Limited (“Wuxi Li Bang”), a limited liability company
incorporated on May 18, 2007, under the laws of China, became a Li Bang Intelligent Technology’s wholly-owned subsidiary on December
23, 2021. Li Bang Kitchen Appliance Co., Limited (“Li Bang Kitchen Appliance”), a limited liability company incorporated on
March 22, 2019, under the laws of China, became a Li Bang Intelligent Technology’s wholly-owned subsidiary on December 24, 2021.
On December 2, 2019, Li Bang Kitchen Appliance established Yangzhou Bangshijie Kitchen Appliance Co., Ltd. (“Yangzhou Bangshijie”),
holding
Reorganization
The Reorganization involved the incorporation
of Li Bang International and Li Bang Intelligent Technology, and the transfer of the
The Reorganization was accounted for as a recapitalization among entities under common control since the controlling shareholder, Huang Feng, controlled these entities before and after the Reorganization. The consolidation of Li Bang International and its subsidiaries was accounted for at historical cost and prepared on the basis as if the aforementioned transactions became effective as of the beginning of the first period presented in the Company’s consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.
Initial Public Offering (the IPO”)
On October 23, 2024, Li Bang International completed
its IPO and was listed on the Nasdaq Capital Market. It issued
F-6
The Company’s current corporate structure is as follows:
NOTE 2 – LIQUIDITY
As
reflected in the accompanying unaudited condensed consolidated financial statements (“CFS”), the Company reported net loss
of $
In
assessing its liquidity, management monitors and analyzes the Company’s cash flow requirements, its ability to generate sufficient
revenue sources in the future, and its operating and capital expenditure commitments. The Company’s working capital requirements
are influenced by the level of the Company’s operations and timing of accounts receivable collections. As of December 31, 2024,
the Company had cash of approximately $
The accompanying CFS were prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying CFS do not include any adjustments related to the recoverability and or classification of the recorded asset amounts and or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying CFS were prepared in accordance with accounting principles generally accepted in the U.S. of America (“U.S. GAAP”) and the rules and regulations of the Securities Exchange Commission (“SEC”). All adjustments necessary to present fairly in all material respects the financial position, results of operations and cash flows for all periods presented were made. While these CFS are prepared in accordance with US GAAP, they do not include all the information required for annual financial statements and should be read in conjunction with the audited CFS and accompanying notes included in the Company’s Form 20-F for the year ended June 30, 2024.
F-7
Principles of consolidation
The CFS include the financial statements of the Company and its majority-owned subsidiaries. All transactions and balances between the Company and its subsidiaries were eliminated upon consolidation.
Non-controlling interests
Non-controlling
interests (“NCIs”) are recognized to reflect the portion of their equity that is not attributable, directly or indirectly,
to the Company as the controlling shareholder. For the Company’s consolidated subsidiaries, non-controlling interests are a minority
shareholder’s
Use of estimates
In preparing the CFS in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the CFS, as well as the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, the assessment of the allowance for doubtful accounts, the valuation of inventories, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, uncertain tax positions and realization of deferred tax assets. Actual results could differ from those estimates.
Cash
Cash
includes cash on hand and demand deposits in accounts maintained with commercial banks. The Company maintains its bank accounts in Mainland
China. China’s Deposit Insurance Regulation requires banking financial institutions, such as commercial banks, established in the
PRC are required to purchase deposit insurance for deposits in RMB and in foreign currency placed with them. The insurance limit is RMB
Restricted cash
Restricted cash consists of guarantee that is not freely available for immediate use. It’s the amount the Company puts aside and holds to ensure project performance. With the progress of the project, the liability under this guarantee is discharged and the restricted cash is converted within three months after the end of the reporting period. The Company presents restricted cash in the CFS as a current asset.
Accounts receivable and expected credit losses
Accounts receivable is presented net of an allowance for estimated credit losses. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 210-10-45, non-current accounts receivable are the amounts the Company does not reasonably expect to be realized during the normal operating cycle of the Company. Considering the payment period in the contract, in accordance with ASC 210-10-45, the operating cycle of the Company is not identifiable. Therefore, the Company uses a one-year period as the basis for the separation of current and non-current accounts receivable.
The
Company signs contracts with its customers and provides products according to the sales contract or sales list. The payment clause in
the sales contracts generally stipulates that customers will pay
The Company adopted ASC 326, Credit Losses (“ASC 326”) on July 1, 2023, which replaced previously issued guidance regarding the impairment of financial instruments with an expected loss methodology that will result in more timely recognition of credit losses. The Company used a modified retrospective approach and did not restate the comparable prior periods. The adoption did not have a material impact on the Company’s CFS.
F-8
In accordance with ASC 326, the Company maintains an allowance for credit losses and records the allowance for expected credit losses, if warranted, as an offset to assets such as accounts receivable, and the estimated credit losses charged to the allowance are classified as general and administrative expenses in the consolidated statements of loss and comprehensive loss. The Company assesses collectability by reviewing receivables on a collective basis where similar characteristics exist, primarily based on the size and nature of specific customers’ receivables (the “CECL model”). In determining the amount of the allowance for expected credit losses, the Company considers not only the input from its CECL model but also the historical collectability based on past due status, the age of the receivable balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from its customers. Bad debts are written off as incurred.
Notes receivable
Notes
receivable are trade accounts receivable from customers where the customers’ banks guaranteed the underlying payment to the Company.
The notes receivable are non-interest bearing and generally range from three to six months from the date of issuance. The balance of
$
Advances to suppliers, net
Advances to suppliers consist of balance paid to suppliers for inventories that have not been provided or received. The Company reviews its advances to suppliers on a periodic basis and makes general and specific allowances when there is doubt as to the ability of a supplier to provide supplies to the Company or refund the advance.
Inventories
Inventories consist of raw materials, work in progress and finished goods, and are stated at the lower of cost or net realizable value. Cost is determined using the weighted average method. The Company periodically evaluates its inventories and will record an allowance for inventories that are either slow-moving, may not be saleable or whose cost exceeds its net realizable value. There was no allowance for inventory as of December 31 and June 30, 2024.
Property and equipment, net
Property and equipment are carried at cost and are depreciated on the straight-line basis over the estimated useful lives of the underlying assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of its property and equipment, when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
Estimated useful lives are as follows:
| Category | Estimated useful lives | |
| Buildings | ||
| Computer and office equipment | ||
| Machinery and equipment | ||
| Vehicles |
Intangible assets, net
Intangible
assets consist of land use rights purchased from third parties and they are initially recorded at cost and amortized on a straight-line
basis over their estimated economic useful lives of
F-9
Impairment of long-lived assets
The Company reviews long-lived assets, including definite-lived intangible assets and property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such events occur, the Company assesses the recoverability of the asset group based on the undiscounted future cash flows the asset group is expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset group plus net proceeds expected from disposition of the asset group, if any, is less than the carrying value of the asset group. If the Company identifies an impairment, the Company reduces the carrying amount of the asset group to its estimated fair value (“FV”) based on a discounted cash flow approach or, when available and appropriate, to comparable market values and the impairment loss, if any, is recognized in “Others, net” in the consolidated statements of income and comprehensive income (loss). The Company uses estimates and judgments in its impairment tests and if different estimates or judgments had been utilized, the timing or the amount of any impairment charges could be different. Asset groups to be disposed of would be reported at the lower of the carrying amount or FV less costs to sell, and no longer depreciated. No impairment of long-lived assets was recognized for the six months ended December 31, 2024 and 2023, respectively.
Fair value of financial instruments
FASB ASC 820, “Fair Value Measurement,” requires certain disclosures regarding the FV of financial instruments. FV is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level FV hierarchy prioritizes the inputs used to measure FV. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure FV are as follows:
| ● | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. |
| ● | Level 3 - inputs to the valuation methodology that are unobservable. |
Unless otherwise disclosed, the FV of the Company’s financial instruments including cash, restricted cash, accounts receivable, notes receivable, advances to suppliers, inventories, prepaid expenses and other current assets, short-term bank loans, accounts payable, advances from customers, due to related parties, taxes payable, and other payables and other current liabilities approximate their FVs due to their short-term maturities.
The Company’s non-financial assets, such as property and equipment would be measured at FV only if they were determined impaired.
Revenue recognition
In accordance with FASB ASC 606, “Revenue from Contracts with Customers”, the Company recognizes revenue for the transfer of products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This requires the Company identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of the product or the benefit of the service transfers to the customer. Under ASC 606, the Company is required to (a) identify the contract with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract and (e) recognize revenue when (or as) the Company satisfies its performance obligations.
The Company’s revenue is divided into two categories: project revenue, that is, contracts signed through bidding to sell and install kitchen equipment according to the customer’s needs; and retail revenue, which is mainly to purchase individual kitchen equipment from other suppliers and sell it to former or new customers who learned about the Company’s products in other ways. Revenues are the consideration the Company is entitled to in exchange for the promised goods or services in the ordinary course of the Company’s activities and is recorded net of value-added tax (“VAT”). Consistent with the criteria of ASC 606, the Group recognizes revenue when the performance obligation in a contract is satisfied by transferring the control of promised goods or services to the customer. The Company also evaluates whether it is appropriate to record the gross amount of goods and services sold and the related costs. If the Company receives an advance from a customer, such advance is recorded as advances from customers.
F-10
Project sales:
The Company signs contracts with customers and provides products according to the sales contract or sales list. The customer issues a product check and acceptance document after checking the quantity and quality of the products received and installed. Revenue is recognized when the Company receives confirmation of product acceptance. Revenues are recorded net of value-added tax and discounts.
The Company provides design services including equipment configuration plans, detailed mechanical and electrical graphic designs, kitchen drawings and assisting customers with passing inspections. The design services are normally completed in five days and are inseparable from project sales. The detailed mechanical plans, electrical design and kitchen drawings are specifically detailed for the Company’s customized equipment and installation. These services are interdependent and never transferred to the customer on their own. Customers do not have the option to purchase these services separately due to the customization of each project. Accordingly, these services are not considered separate performance obligations and no revenue is recognized for these services under ASC 606 until the project is complete.
The Company provides on-site installation and maintenance services and according to the contracts, the customers do not have the option to purchase these services separately. The warranty does not provide the customers with a service in addition to the assurance the product complies with agreed-upon contract specifications and is considered an assurance warranty. The after-sales services and the warranty are not considered separate performance obligations and no revenue is associated with these services under ASC 606.
Retail sales:
Retail revenue is generated by the Company when retail sales of products occur without a signed contract on a retail basis. Retail sales usually occur when prior customers need to replace or add individual products. Retail customers usually purchase the products by WeChat or telephone with the salesperson. In addition, there are customers who come directly to the factory to purchase products. The Company identifies the fulfillment of its obligation when transferring the product and issuing the VAT invoice to the customer at which time revenue is recognized. Revenues are recorded net of value-added tax, business taxes and discounts.
Cost of revenues
Cost of revenues consists primarily of the cost of merchandise sold, delivery cost and installation fees, that are directly attributable to the sale of certain designated products.
General and administrative expenses
General and administrative expenses are mainly payroll and related costs for employees involved in general corporate functions, including accounting, finance, tax, legal and human resources, professional fees and other general corporate expenses as well as costs associated with the use by these functions of facilities and equipment, such as depreciation and rent.
Selling expenses
Selling expenses are mainly payroll and benefits for employees involved in the sales and distribution functions, and freight out.
F-11
Interest expenses
Interest expense is interest on short- and long-term borrowings.
Mainland China employee contribution plans
As
stipulated by the regulations of the PRC, full-time employees of the Company are entitled to various statutory employee benefits, including
medical, maternity, workplace injury, and unemployment insurance and pension benefits through a PRC government-mandated multi-employer
defined contribution plan. The Company is required to contribute to the plan based on percentages of employees’ salaries. Total
expenses the Company incurred for the plan were $
Income taxes
The Company’s subsidiaries in the PRC and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No taxable income was generated outside the PRC for the six months ended December 31, 2024 and 2023. The Company accounts for income taxes in accordance with FASB ASC 740, Income Taxes. ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are also recognized for carry-forward loses that can be used to offset taxable income in the future. A valuation allowance is provided for net deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or future deductibility is uncertain.
ASC 740-10-25 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. It also provides guidance on the recognition of income tax assets and liabilities, classification accounting for interest and penalties associated with tax positions, years open for tax examination, accounting for income taxes in interim periods and income tax disclosures. There were no material uncertain tax positions as of December 31, 2024 and June 30, 2024.
Value Added Tax (“VAT”)
The
VAT rate for revenue from providing products is
(Loss) earnings per share
The Company computes (loss) earnings per share (“EPS”) in accordance with FASB ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is computed by dividing net income (loss) available to ordinary shareholders of the Company by the weighted average ordinary shares outstanding during the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. When the Company has a net (loss), diluted securities are not included as they would be anti-dilutive. For the six months ended December 31, 2024 and 2023, there were no dilutive securities.
Comprehensive income (loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains, and losses that under U.S. GAAP are recorded as an element of equity but are excluded from net income (loss). Other comprehensive income (loss) consists of foreign currency translation adjustments from the Company not using the U.S. dollar as its functional currency.
F-12
Foreign currency translation and transactions
The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The Company’s CFS are reported using the U.S. dollar (“US$” or “$”). The unaudited condensed consolidated statements of loss and cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contributions. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive loss included in the consolidated statements of changes in shareholders’ equity. Gains and losses from foreign currency transactions are included in the Company’s unaudited condensed consolidated statements of loss and comprehensive loss.
The
value of the RMB against the US$ fluctuates and is affected by, among other things, changes in the PRC’s political and economic
conditions. Any significant revaluation of the RMB may materially affect the Company’s financial condition in terms of US$ reporting.
| December 31, | June 30, | Six months ended December 31, | ||||||||||||||
| 2024 | 2024 | 2024 | 2023 | |||||||||||||
| Foreign currency | Balance Sheet | Balance Sheet | Profit/Loss | Profit/Loss | ||||||||||||
| RMB:1USD | ||||||||||||||||
Segment reporting
FASB ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments.
The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM was identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company.
Based
on the management’s assessment, the Company determined it has only
Statements of cash flows
In accordance with FASB ASC 230, “Statement of Cash Flows”, cash flows from the Company’s operations are reported based upon the local currencies, and then translated at average translation rates for the periods presented. As a result, assets and liabilities changes reported on the statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
Significant risks
Currency risk
A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other Company foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
As of December 31, 2024 and June 30, 2024, all cash balances held in PRC banks are covered by insurance.
F-13
Concentration and credit risk
Currently, all of the Company’s operations are in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
Financial
instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, accounts receivable,
notes receivable, advances to suppliers and amount due from related parties. A portion of the Company’s sales are credit sales
which are to customers whose ability to pay is dependent upon industry economics prevailing in these areas; however, concentrations of
credit risk with respect to trade accounts receivable is limited due to most clients of the Company are state-owned enterprises. The
Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. As of December 31, 2024, $
Interest rate risk
Fluctuations in market interest rates may negatively affect the Company’s financial condition and results of operations. The Company is exposed to floating interest rate risk principally on floating rate borrowings, and the risks due to changes in interest rates is not considered material. The Company has not used any derivative financial instruments to manage the Company’s interest risk exposure.
Inflation risk
Inflationary factors, such as increases in the cost of raw materials, personnel and overhead costs, could impair our operating results. Although we do not believe inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of sales revenue if the revenues from our products do not increase with such increased costs. Considering that there is no sign of inflation in China’s current economic environment, this risk should not affect the Company’s operations.
Other uncertainty risks
The Company’s major operations are in the PRC. Accordingly, the political, economic, and legal environment in the PRC, as well as the general state of the PRC’s economy may influence the Company’s business, financial condition, and results of operations.
The Company’s operations in the PRC are subject to considerations and risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, and legal environment. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws, this may not be indicative of future results.
Related parties
A party is considered related to the Company if it directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of their immediate families and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
F-14
Recent accounting pronouncements
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information about an entity’s effective tax rate reconciliation and additional discloses on income taxes paid. The new requirements are effective for annual periods beginning after December 15, 2024. The guidance is to be applied prospectively, with an option for retrospective application. The Company is currently evaluating the impact of this new guidance on its CFS.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s CFS.
NOTE 4 – ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Total trade accounts receivable | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | ||||||||
| Accounts receivable - current | ||||||||
| Accounts receivable - non-current | $ | $ | ||||||
Accounts receivable – non-current is the non-current portion of warranty retainage as of December 31, 2024, as follows by due date:
| Due date of accounts receivable - non current | Amount | |||
| 1-2years | $ | |||
| 2-3years | ||||
| >3 years | ||||
| Total | $ | |||
As
of December 31, 2024 and June 30, 2024, warranty retainage included in total accounts receivable was approximately $
| Due date of warranty retainage as of December 31, 2024 | Amount | |||
| Within 1 year | $ | |||
| 1-2years | ||||
| 2-3years | ||||
| >3 years | ||||
| Total | $ | |||
F-15
The movement of the allowance for expected credit losses was follows:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Balance at June 30 | $ | ( | ) | $ | ( | ) | ||
| Current period addition | ( | ) | ||||||
| Reversal of allowance | ||||||||
| Foreign exchange difference | ( | ) | ||||||
| Balance at December 31 (unaudited) | $ | ( | ) | $ | ( | ) | ||
NOTE 5 – ADVANCES TO SUPPLIERS, NET
Advances to suppliers, net consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Advances for products and services | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Advances to suppliers, net | $ | $ | ||||||
The movement of the allowance for expected credit losses was as follows:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Balance at June 30 | $ | ( | ) | $ | ( | ) | ||
| Current period addition | ( | ) | ( | ) | ||||
| Foreign exchange difference | ( | ) | ||||||
| Balance at December 31 (unaudited) | $ | ( | ) | $ | ( | ) | ||
NOTE 6 – INVENTORIES
Inventories consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Work in progress | ||||||||
| Inventories | $ | $ | ||||||
The Company reviews its inventories periodically to determine if reserve is necessary for slow-moving inventory or if a write-down is necessary when the carrying value exceeds net realizable value. For the six months ended December 31, 2024 and 2023, there was no provision for slow-moving or obsolete inventory.
F-16
NOTE 7 – LOANS RECEIVABLE
Loans receivable consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| WELL FANCY DEVELOPMENT LTD. (1) | $ | $ | ||||||
| HAMASEN INTERNATIONAL CONSULTANCY LIMITED (2) | ||||||||
| LIBRA APPRAISAL LIMITED (3) | ||||||||
| GIANT IMAGE LIMITED (4) | ||||||||
| OIC CORPORATE SERVICES LIMITED (5) | ||||||||
| Total loan receivable - current | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
NOTE 8 – FIXED DEPOSITS
Fixed
deposits are time deposits placed with banks with a maturity date over one year. Interest earned is recorded as interest income in the
statements of (loss) income and comprehensive (loss) income. As of December 31, 2024, the Company’s time deposits were RMB
Fixed deposits consisted of the following:
| As of December 31, 2024 | ||||||||||||||
| No. | Principal Amount | Interest Rate | Deposit date | Maturity date | ||||||||||
| RMB | ||||||||||||||
| (1) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||||
| (2) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||||
| (3) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||||
| Total | ||||||||||||||
| As of June 30, 2024 | ||||||||||||||
| No. | Principal Amount | Interest Rate | Deposit date | Maturity date | ||||||||||
| RMB | ||||||||||||||
| (1) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||||
| (2) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||||
| (3) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||||
| Total | ||||||||||||||
F-17
NOTE 9 – PREPAYMENT FOR LAND USE RIGHTS
On
November 26, 2021, the Company prepaid RMB
NOTE 10 – PROPERTY AND EQUIPMENT, NET
Property and equipment, at cost less accumulated depreciation, consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Buildings and improvements | $ | $ | ||||||
| Computer and office equipment | ||||||||
| Machinery and equipment | ||||||||
| Vehicles | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
For
the six months ended December 31, 2024 and 2023, depreciation was $
NOTE 11 – INTANGIBLE ASSETS, NET
Intangible assets, net consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Land use rights | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
For
the six months ended December 31, 2024 and 2023, amortization was $
Estimated future amortization is as follows as of December 31, 2024:
| 12 months ending December 31, | Amortization | |||
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | $ | |||
F-18
NOTE 12 – BANK BORROWINGS
The Company’s total bank borrowings are as following:
December 31, 2024 (Unaudited) | ||||||||||||
| No. | Principal Amount | Annual Interest Rate | Contract term | |||||||||
| $ | ||||||||||||
| (1) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (2) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (3) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (4) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (5) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (6) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (7) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (8) | Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | ||||||||||
| (9) | Jiangyin Rural Commercial Bank | % | ||||||||||
| (10) | China Merchants Bank Co., Ltd. | % | ||||||||||
| (11) | Jiangsu Bank Co., Ltd. | % | ||||||||||
| (12) | Jiangsu Bank Co., Ltd. | % | ||||||||||
| (13) | Jiangyin Rural Commercial Bank | % | ||||||||||
| (14) | Jiangyin Rural Commercial Bank | % | ||||||||||
| (15) | Jiangyin Rural Commercial Bank | % | ||||||||||
| (16) | Bank of Hangzhou Co., Ltd | % | ||||||||||
| (17) | Shenzhen Qianhai Webank | % | ||||||||||
| (18) | Shenzhen Qianhai Webank | % | ||||||||||
| Total bank borrowings | ||||||||||||
| Less: current portion | ||||||||||||
| Bank borrowings - non current | $ | |||||||||||
| June 30, 2024 | ||||||||||
Principal Amount | Annual Interest Rate | Contract term | ||||||||
| $ | ||||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | $ | % | ||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | |||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | |||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | |||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | |||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | |||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | |||||||||
| Jiangsu Suzhou Rural Commercial Bank Co., Ltd | % | |||||||||
| Jiangyin Rural Commercial Bank | % | |||||||||
| China Merchants Bank Co., Ltd. | % | |||||||||
| Jiangsu Bank Co., Ltd. | % | |||||||||
| Jiangsu Bank Co., Ltd. | % | |||||||||
| Jiangyin Rural Commercial Bank | % | |||||||||
| Jiangyin Rural Commercial Bank | % | |||||||||
| Jiangyin Rural Commercial Bank | % | |||||||||
| Bank of Hangzhou Co., Ltd | % | |||||||||
| Shenzhen Qianhai Webank | % | |||||||||
| Total bank borrowings | ||||||||||
| Less: current portion | ||||||||||
| Bank borrowings-non current | $ | |||||||||
F-19
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
| (6) |
| (7) |
| (8) |
| (9) |
| (10) |
| (11) |
| (12) |
F-20
| (13) |
| (14) |
| (15) |
| (16) |
| (17) |
| (18) |
NOTE 13 – OTHER PAYABLES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Payroll payable | $ | $ | ||||||
| Interest-free borrowing from third parties | ||||||||
| Accrued expenses | ||||||||
| Other | ||||||||
| Other payables and other current liabilities | $ | $ | ||||||
NOTE 14 – RELATED PARTY BALANCES AND TRANSACTIONS
The table below sets forth the major related parties and their relationships with the Company as of December 31, 2024:
| Name of related parties | Relationship with the Group | |
| Huang Feng | ||
| Xia Liang | ||
| Li Funa | ||
| Fan Hu | ||
| Suzhou Beifusi Trading Co., Ltd. (“Suzhou Beifusi”) |
F-21
The following are related party balances which are non-interest bearing as of December 31, 2024 and June 30, 2024:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Amounts due to related parties: | ||||||||
Huang Feng (1) | $ | $ | ||||||
| Fan Hu (1) | ||||||||
| $ | $ | |||||||
| (1) |
NOTE 15 – NON-CONTROLLING INTERESTS
Non-controlling interests consisted of the following:
| December 31, 2024 | ||||||||||||
Yangzhou Bangshijie | Nanjing Bangshijie | Total | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Deficit | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Accumulated other comprehensive income | ||||||||||||
| Total non-controlling interests | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| June 30, 2024 | ||||||||||||
Yangzhou Bangshijie | Nanjing Bangshijie | Total | ||||||||||
| Deficit | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Accumulated other comprehensive income | ||||||||||||
| Total non-controlling interests | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Yangzhou
Bangshijie is a limited liability company incorporated on December 2, 2019, under the laws of China; Li Bang Kitchen Appliance holds
a
No capital contributions were received from non-controlling shareholders during the six months ended December 31, 2024 and 2023.
F-22
NOTE 16 – OTHER INCOME (EXPENSE), NET
Other income (expense), net consisted of the following:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Non-project installation and maintenance revenue | $ | $ | ||||||
| Rental income, net (1) | ||||||||
| Brand charge | ||||||||
| Waste sales | ||||||||
| Interest income from fixed deposits and loans receivable | ||||||||
| Government subsidies (2) | ||||||||
| Other expense | ( | ) | ( | ) | ||||
| Total other income (expense), net | $ | $ | ||||||
| (1) | On February 10, 2021, Wuxi Li Bang leased the property at No. 179 Xizhang Road, Gushan Town to Jiangyin Shuaina Home Furniture Technology Co., Ltd for six years and the rent is RMB
On February 1, 2022, Wuxi Li Bang leased part of the property at No. 190 Xizhang Road, Gushan Town, Jiangyin City to Leiluo Intelligent Technology (Jiangsu) Co., Ltd. for three years and the rent is RMB |
| (2) |
NOTE 17 – TAXES
Corporation income taxes (“CIT”)
The Company is subject to income taxes on an entity basis on income from the location in which each entity is domiciled.
Li Bang International is incorporated in Cayman Islands as an offshore holding company and is not subject to tax on income or capital gains under the laws of the Cayman Islands.
Li Bang HK is incorporated in Hong Kong as a holding company with no activities. Under Hong Kong tax laws, an entity is not subject to income tax if no revenue is generated in Hong Kong.
The Company’s subsidiaries incorporated in the PRC are subject to Corporate Income Tax (“CIT”) on their taxable income as reported in their respective statutory financial statements adjusted in accordance with the PRC Enterprise Income Tax Laws (“PRC Income Tax Laws”). Each subsidiary in the PRC must file its own tax returns as consolidated returns are not permitted in the PRC.
Under
the Enterprise Income Tax (“EIT”) Law of the PRC, domestic enterprises and Foreign Investment Enterprises (the “FIE”)
are subject to a unified
Wuxi
Li Bang was approved as an HNTE in November 2016, and was re-approved in December 2019. Wuxi Li Bang is entitled to a reduced income
tax rate of
F-23
Loss before provision for income taxes consisted of:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Outside China | $ | ( | ) | $ | ( | ) | ||
| China | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | $ | ( | ) | $ | ( | ) | ||
Income tax (benefit) expense consisted of the following:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Current | ||||||||
| China | $ | $ | ||||||
| Deferred | ||||||||
| China | ( | ) | ||||||
| Income tax (benefit) expense | $ | ( | ) | $ | ||||
The following table reconciles the statutory rate to the Company’s effective tax rate:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Income tax at expected tax rates | % | % | ||||||
| Non-deductible expenses | ( | )% | ( | )% | ||||
| Effect of PRC preferential tax rate (1) | % | ( | )% | |||||
| Non-PRC entities not subject to PRC tax | ( | )% | ( | )% | ||||
| Allowance for DTA (2) | ( | )% | ( | )% | ||||
| Other | ( | )% | ( | )% | ||||
| Effective tax rate | % | ( | )% | |||||
| (1) | Li Bang Kitchen Appliance obtained recognition of HNTE on October 12,2022; and the preferential rate of
For the six months ended December 31, 2024, the net income generated by Li Bang Kitchen Appliance was offset by the losses of other subsidiaries of the Company, therefore the preferential tax rate of Li Bang Kitchen Appliance increased the overall effective tax rate of the Company.
For the six months ended December 31, 2023, both Li Bang Kitchen Appliance and other subsidiaries incurred losses, and the preferential tax rate reduced the overall effective tax rate of the Company. |
| (2) |
Deferred tax assets:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| Allowance for expected credit losses | $ | $ | ||||||
F-24
Taxes Payable:
Taxes payable consisted of the following:
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| VAT | $ | $ | ||||||
| Income taxes | ||||||||
| Dividend withholding | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
NOTE 18 – CONCENTRATION OF MAJOR CUSTOMERS AND SUPPLIERS
Major customers
Details of customers accounting for 10% or more of the Company’s net revenues are as follows:
| For the Six Months Ended December 31, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Customer A | $ | % | ||||||||||||||
| Customer B | % | |||||||||||||||
| Customer C | $ | % | ||||||||||||||
| Customer D | % | |||||||||||||||
| Total | $ | % | $ | % | ||||||||||||
Details of customers which accounted for 10% or more of the Company’s accounts receivable are as follows:
| December 31, | June 30, | |||||||||||||||
| 2024 | 2024 | |||||||||||||||
| (Unaudited) | ||||||||||||||||
| Customer E | $ | $ | % | |||||||||||||
| Total | $ | $ | % | |||||||||||||
Major suppliers
Details of suppliers accounting for 10% or more of the Company’s total purchases are as follows:
| For the Six Months Ended December 31, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Supplier A | $ | $ | % | |||||||||||||
| Total | $ | $ | % | |||||||||||||
As of December 31, 2024 and June 30, 2024, no supplier accounted for more than 10% of the Company’s trade accounts payable.
F-25
NOTE 19 – COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Amounts accrued, as well as the total amount of possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the CFS. As of December 31, 2024 and June 30, 2024, the Company was not aware of any litigation or proceedings against it.
Warranties
In
connection with the Company’s sales and installations, it provides warranties from
Employment agreements
We entered into an employment agreement with each of our executive officers and employee directors. Each of them is employed for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer. We may also terminate an executive officer’s employment without cause upon advance written notice. The chief executive officer and employee director may resign at any time with advance written notice.
On December 16, 2024, Li Bang International entered into an employment
agreement with our Chief Executive Officer, Mr. Huang Feng, for
On April 28, 2024, Li Bang International entered into an employment
agreement with our Chief Financial Officer, Mr. Xia Liang, for
On December 16, 2024, Li Bang International entered into an employment
agreement with our Chief Operating Officer, Mr. Wu Jianhua, for
On May 14, 2022, Ms. Li Funa, a director, received and signed the offer
letter provided by Li Bang International. The term shall continue until her successor is elected and qualified. The BOD may terminate
the position as a director for any or no reason. The position is up for re-appointment every year by the BOD of the Company. Ms. Li is
entitled to US$
Lease Obligations
The Company leases certain office premises and apartments for employees under operating lease agreements with various terms that are less than one year in duration. The Company made full payment for lease agreements in advance.
Rent
expense for the six months ended December 31, 2024 and 2023 was $
NOTE 20 – SUBSEQUENT EVENTS
On March 3, 2025, Li Bang Kitchen Appliance obtained
a working capital loan from Jiangyin Rural Commercial Bank, for RMB
On March 3, 2025, Wuxi Libang entered into a credit
facility of RMB
On March 5, 2025, Wuxi Libang obtained a working
capital loan from Jiangyin Rural Commercial Bank, for RMB
F-26
On May 12, 2025, Wuxi Libang obtained a working capital loan of RMB
On June 10, 2025, Li Bang Kitchen Appliance obtained
a working capital loan from China Merchants Bank Co., Ltd., for RMB
On June 11, 2025, Li Bang Kitchen Appliance obtained a working capital
loan from Jiangsu Bank Co., Ltd., for RMB
NOTE 21 – PARENT COMPANY INFORMATION
Pursuant
to the requirements of Rule 12-04(a), 5-04(c) and 4-08(e)(3) of Regulation S-X, the condensed financial information of the parent company
shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end
of the most recently completed fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in
accordance with such requirement and concluded that it was applicable to the Company as the restricted net assets of the Company’s
PRC Subsidiary exceeded
For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the Company’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party.
The condensed financial information of the parent company was prepared using the same accounting policies as set out in the Company’s CFS except that the parent company used the equity method to account for investment in its subsidiaries. Such investment is presented on the condensed balance sheets as “Investment in subsidiaries” and the respective profit or loss as “Equity in loss of subsidiaries” on the condensed statements of loss.
The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the CFS of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
As of December 31, 2024 and June 30, 2024, there were no material contingencies, significant provisions for long-term obligations, or guarantees of the Company, except for those which have been separately disclosed in the CFS, if any.
F-27
LI BANG INTERNATIONAL CORPORATION INC.
PARENT COMPANY BALANCE SHEETS
| As of December 31, | As of June 30, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Loans receivable | ||||||||
| Other receivables | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Deferred offering cost | ||||||||
| Investment in subsidiaries | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities | ||||||||
| Other payables and other current liabilities | $ | $ | ||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | ||||||||
| Ordinary shares (par value $ | ||||||||
| Subscription receivables | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
F-28
LI BANG INTERNATIONAL CORPORATION INC.
PARENT COMPANY STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Equity in loss of subsidiaries | $ | ( | ) | $ | ( | ) | ||
| Operating expenses: | ||||||||
| General and administrative | ( | ) | ( | ) | ||||
| Total Operating expenses | ( | ) | ( | ) | ||||
| Other income: | ||||||||
| Other income, net | ||||||||
| Total other income, net | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
F-29
LI BANG INTERNATIONAL CORPORATION INC.
PARENT COMPANY STATEMENTS OF CASH FLOWS
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Equity in loss of subsidiaries | ||||||||
| Other receivables | ( | ) | ||||||
| Other payables and other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Loans to third parties | ( | ) | ||||||
| Purchases of long-term investments | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Net proceeds from initial public offering | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at the beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
F-30
Exhibit 99.3
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements (“CFS”) and related notes that appear in this interim report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Overview
Li Bang International Corporation Inc. (“Li Bang International”) was incorporated in the Cayman Islands on July 8, 2021. Li Bang International and its subsidiaries (collectively, the “Company” or “we”) conduct its operations in China through its operating subsidiaries in China. Our main business is to design, develop, produce and sell stainless steel commercial kitchen equipment in China under our “Li Bang” brand. Additionally, we provide customers with comprehensive services, from commercial kitchen design in the early stage to equipment installation and after-sales maintenance.
Our production plant in China is more than 10,000 square meters. We use modern production facilities and state-of-the-art procedures. Furthermore, as a new technology enterprise in Jiangsu Province, we fall within the scope of advanced technology enterprises that benefit from key national support for residential companies that employ continuous R&D activities and transformational technical achievements to form core independent intellectual property rights. On this basis, we carry out our business activities within the PRC and enjoy the advantage of a 15% preferential corporate income tax rate for companies that have been registered for more than one year. Our Company approaches technology R&D as the keystone principle to obtain new national invention patents, utility model patents, and for passing a number of system certifications. We have earned a great reputation in the industry by having our products featured in the Government Energy-Saving Equipment Catalog. The future of R&D in the manufacturing sector of commercial kitchen appliance equipment will trend toward automation, scale, service integration, intelligence, energy conservation, and environmental protection, and we expect our market prospects will be broader.
Our Operating Subsidiaries mainly undertake projects of middle- and high-end customer groups by bidding on contracts. Our customer base consists of international hotels, companies, public institutions, educational institutions, hospitals, and other facilities. Our Operating Subsidiaries provide customized design solutions for different types of customer groups. In addition, our Operating Subsidiaries have qualifications and certificates of professional engineering construction and installation so that our Operating Subsidiaries can provide independent installation services.
Our Operating Subsidiaries sell products and provide services under our “Li Bang” brand, and our income comes from these sales, of which installation and after-sales services do not separately generate revenue. Our Operating Subsidiaries established sustainable business relationships with clients in Shanghai, Jiangsu and Zhejiang by setting up branches and subsidiaries to provide after-sales services for local projects. In addition, Our Operating Subsidiaries are also actively building our sales network and client base in Shenzhen and Beijing, the sixth and second largest cities in China, respectively.
At the same time, Our Operating Subsidiaries always pay attention to the extension of services after the delivery of commercial kitchen equipment with our existing clients. Our Operating Subsidiaries vigorously promote our after-sales service module, providing technical consultation, training and guidance, post-sale upgrades, and other comprehensive supporting services to increase customer loyalty. The reputation we foster by doing so is conducive to enlarging our client base through gaining new customers.
Our Operating Subsidiaries are committed to making innovative and high-quality kitchen appliance products, and strive to become a first-class commercial kitchen appliance manufacturer in China. Our goal is to develop into a household name brand synonymous with the products we manufacture.
1
Our Organization
Li Bang International was incorporated in the Cayman Islands on July 8, 2021.
On July 8, 2021, the Company’s shareholders approved a Memorandum and Articles of Association, pursuant to which 500,000,000 shares were authorized as ordinary shares with a par value of US$0.0001 per share, and the Company issued 10,000 ordinary shares. On July 15, 2022, in connection with the reorganization, the Company issued 16,990,000 ordinary shares which was treated as a stock split. The Company issued:
| ● | 12,801,000 ordinary shares to Maple Huang Holdings Limited; |
| ● | 2,635,000 ordinary shares to Funa Lee Holdings Limited; |
| ● | 799,000 ordinary shares to Army Chan Holdings Limited; and |
| ● | 765,000 ordinary shares to Delight Wang Holdings Limited. |
Of the 17,000,000 outstanding ordinary shares, 75.3% are owned by Maple Huang Holdings Limited, a British Virgin Islands(“BVI”) company, controlled by Huang Feng, our CEO and Chairman of the Board; and 15.5% are owned by Funa Lee Holdings Limited, a BVI company, controlled by Li Funa, Huang Feng’s spouse. Therefore, Huang Feng beneficially owns 90.8% of the Company.
On July 26, 2021, Li Bang International formed its wholly owned subsidiary, Li Bang International Hong Kong Holdings Limited (“Li Bang HK”) in Hong Kong. On August 18, 2021, Li Bang HK formed its wholly owned subsidiary, Jiangsu Li Bang Intelligent Technology Co., Limited (“Li Bang Intelligent Technology” or “WOFE”) in PRC.
Suzhou Deji Kitchen Engineering Co., Limited (“Suzhou Deji”), a limited liability company incorporated on April 8, 2010 under the laws of China, became a Li Bang Intelligent Technology’s wholly-owned subsidiary on November 24, 2021. Wuxi Li Bang Kitchen Appliance Co., Limited (“Wuxi Li Bang”), a limited liability company incorporated on May 18, 2007 under the laws of China, became a Li Bang Intelligent Technology’s wholly-owned subsidiary on December 23, 2021. Li Bang Kitchen Appliance Co., Limited (“Li Bang Kitchen Appliance”), a limited liability company incorporated on March 22, 2019 under the laws of China, became a Li Bang Intelligent Technology’s wholly-owned subsidiary on December 24, 2021. On December 2, 2019, Li Bang Kitchen Appliance established Yangzhou Bangshijie Kitchen Appliance Co., Ltd. (“Yangzhou Bangshijie”), holding 90% of its equity interests. On November 25, 2015, Wuxi Li Bang established Nanjing Bangshijie Kitchen Appliance Co., Ltd. (“Nanjing Bangshijie”), holding 95% of its equity interests. In March 2019, Wuxi Li Bang transferred its ownership in Nanjing Bangshijie to Li Bang Kitchen Appliance.
Suzhou Deji, Wuxi Li Bang, Li Bang Kitchen Appliance, Yangzhou Bangshijie and Nanjing Bangshijie are our operating entities. (collectively the “Operating Subsidiaries”, or the “PRC Subsidiaries”)
On October 23, 2024, Li Bang International completed its initial public offering(“IPO”), was listed on the Nasdaq Capital Market, issuing 1,520,000 Ordinary Shares with a par value of US$0.0001 per share and at $4.00 per share, with gross proceeds of $6.08 million. On November 14, 2024, Li Bang International issued 228,000 additional shares for the over-allotment, with par value of US$0.0001 per share and at $4.00 per share, with gross proceeds of $0.91 million. After deducting underwriting discounts, offering expenses, the Company received total net proceeds of approximately $5.23 million.
2
Reorganization
The Reorganization involved the incorporation of Li Bang International and Li Bang Intelligent Technology, and the transfer of the 100% equity interest of Li Bang Kitchen Appliance, Suzhou Deji and Wuxi Li Bang. Consequently, Li Bang International, through its subsidiary Li Bang HK, directly controls Li Bang Kitchen Appliance, Suzhou Deji and Wuxi Li Bang, and became the ultimate holding company of all other entities mentioned above.
The Reorganization was accounted for as a recapitalization among entities under common control since the controlling shareholder, Huang Feng, controlled these entities before and after the Reorganization. The Company’s consolidation was accounted for at historical cost and prepared on the basis as if the aforementioned transactions became effective as of the beginning of the first period presented in our consolidated financial statements
Our current corporate structure is as follows:
We generate revenues primarily from providing project and retail sales. Our total revenues increased by approximately $0.99 million or 26.5%, from $3.73 million for the six months ended December 31, 2023 to approximately $4.72 million for the six months ended December 31, 2024. Our gross profit increased by approximately $0.23 million or 37.5% from approximately $0.61 million for the six months ended December 31, 2023, to $0.84 million for the six months ended December 31, 2024. Gross margin increased by 1.4%, to 17.8% for the six months ended December 31, 2024, from 16.4% for the same period in 2023. We had net loss of approximately $1.13 million and approximately $1.46 million for the six months ended December 31, 2024 and 2023, respectively.
Factors Affecting Our Results of Operations
Government policies may impact our business and operating results.
We have not seen any significant impact of unfavorable government policies upon our business in recent years. However, our business and operating results will be affected by the overall economic growth and government policies in the PRC, and our products are currently eligible for certain favorable government tax and other incentives. Unfavorable changes in government policies and these incentives could affect the demand for our products and could materially and adversely affect our results of operations. However, we will seek to make adjustments as required if and when government policies shift.
Exchange rate fluctuations may significantly impact our business and profitability.
All of our operations are in the PRC. Thus, our revenue and operating results may be impacted by exchange rate fluctuations between RMB and U.S. dollars. For the six months ended December 31, 2024 and 2023, we had an unrealized foreign currency translation loss of $33,981 and translation gain of $102,560 respectively, because of changes in the exchange rates. For the fiscal years ended June 30, 2024 and 2023, we had an unrealized foreign currency translation gain of $79,844 and translation loss of $417,717 respectively, because of changes in the exchange rates.
3
Results of Operations
Comparison of Results of Operations for the Six Months Ended December 31, 2024 and 2023
The following table summarizes our results of operations for the six months ended December 31,2024 and 2023, and provides information regarding the dollar and percentage increase or (decrease) during such periods.
| For the Six Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||||||||||
| Amount (Unaudited) | % of revenue | Amount (Unaudited) | % of revenue | Amount (Unaudited) | % | |||||||||||||||||||
| Revenues | $ | 4,716,845 | 100.0 | % | $ | 3,729,845 | 100.0 | % | $ | 987,000 | 26.5 | % | ||||||||||||
| Cost of revenues | (3,875,916 | ) | (82.2 | )% | (3,118,057 | ) | (83.6 | )% | (757,859 | ) | 24.3 | % | ||||||||||||
| Gross profit | 840,929 | 17.8 | % | 611,788 | 16.4 | % | 229,141 | 37.5 | % | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Selling | 423,228 | 9.0 | % | $ | 368,409 | 9.9 | % | $ | 54,819 | 14.9 | % | |||||||||||||
| General and administrative | 1,464,679 | 31.1 | % | 1,479,561 | 39.7 | % | (14,882 | ) | (1.0 | )% | ||||||||||||||
| Provision for expected credit losses | 135,456 | 2.9 | % | 342,542 | 9.2 | % | (207,086 | ) | (60.5 | )% | ||||||||||||||
| Total operating expenses | 2,023,363 | 43.0 | % | $ | 2,190,512 | 58.8 | % | $ | (167,149 | ) | (7.6 | )% | ||||||||||||
| Loss from operations | (1,182,434 | ) | (25.2 | )% | (1,578,724 | ) | (42.4 | )% | 396,290 | (25.1 | )% | |||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||
| Interest expense | (205,482 | ) | (4.4 | )% | (213,102 | ) | (5.7 | )% | 7,620 | (3.6 | )% | |||||||||||||
| Other income, net | 194,583 | 4.1 | % | 347,670 | 9.3 | % | (153,087 | ) | (44.0 | )% | ||||||||||||||
| Total other (expense) income, net | (10,899 | ) | (0.3 | )% | 134,568 | 3.6 | % | (145,467 | ) | (108.1 | )% | |||||||||||||
| Loss before provision for income taxes | (1,193,333 | ) | (25.5 | )% | (1,444,156 | ) | (38.8 | )% | 250,823 | (17.4 | )% | |||||||||||||
| Income tax (benefit) expense | (67,418 | ) | (1.4 | )% | 18,892 | 0.5 | % | (86,310 | ) | (456.9 | )% | |||||||||||||
| Net loss | (1,125,915 | ) | (24.1 | )% | (1,463,048 | ) | (39.3 | )% | 337,133 | (23.0 | )% | |||||||||||||
| Net loss attributable to non-controlling interests | (877 | ) | 0.0 | % | (1,350 | ) | 0.0 | % | 473 | (35.0 | )% | |||||||||||||
| Net loss attributable to ordinary shareholders | $ | (1,125,038 | ) | (24.1 | )% | (1,461,698 | ) | (39.3 | )% | 336,660 | (23.0 | )% | ||||||||||||
Revenues
Currently, we have two revenue streams: project and retail sales. Total revenue for the six months ended December 31, 2024 increased by $987,000, or 26.5%, to $4,716,845 for the six months ended December 31, 2024 from $3,729,845 for the comparable period in 2023. The increase in our revenues was primarily attributable to the increase in the revenue from project sales.
The following table sets forth the breakdown of our revenues for the six months ended December 31, 2024 and 2023:
| For the Six Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||||||||||
Amount (Unaudited) | % | Amount (Unaudited) | % | Amount (Unaudited) | % | |||||||||||||||||||
| Project revenues | $ | 4,451,937 | 94.4 | % | $ | 3,488,031 | 93.5 | % | $ | 963,906 | 27.6 | % | ||||||||||||
| Retail revenues | 264,908 | 5.6 | % | 241,814 | 6.5 | % | 23,094 | 9.6 | % | |||||||||||||||
| Total | $ | 4,716,845 | 100.0 | % | $ | 3,729,845 | 100.0 | % | $ | 987,000 | 26.5 | % | ||||||||||||
Revenues from project sales. Revenues from project sales accounted for 94.4% and 93.5% of our total revenues for the six months ended December 31, 2024 and 2023, respectively. Revenue for project sales increased by $963,906 or 27.6% to $4,451,937 for the six months ended December 31, 2024 from $3,488,031 for 2023. The increase was primarily due to three more projects completed in the six months ended December 31, 2024 compared to the comparable period in 2023.
4
Revenues from retail sales. Revenues from retail sales accounted for 5.6% and 6.5% of our total revenues for the six months ended December 31, 2024 and 2023, respectively. Revenues from retail sales increased by $23,094 or 9.6% to $264,908 for the six months ended December 31, 2024 from $241,814 for 2023. The change in retail revenues is primarily due to slight increase in total number of retail orders.
Cost of Revenues
The following table sets forth the breakdown of our cost of revenue for the six months ended December 31, 2024 and 2023:
| For the Six Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||||||||||
Amount (Unaudited) | % | Amount (Unaudited) | % | Amount (Unaudited) | % | |||||||||||||||||||
| Project cost | $ | 3,676,676 | 94.9 | % | $ | 2,932,088 | 94.0 | % | $ | 744,588 | 25.4 | % | ||||||||||||
| Retail cost | 199,240 | 5.1 | % | 185,969 | 6.0 | % | 13,271 | 7.1 | % | |||||||||||||||
| Total | $ | 3,875,916 | 100.0 | % | $ | 3,118,057 | 100.0 | % | $ | 757,859 | 24.3 | % | ||||||||||||
Cost of project sales increased by $744,588, or 25.4%, to $3,676,676 for the six months ended December 31, 2024 from $2,932,088 for the six months ended December 31,2023. The increase in cost of project sales was primarily due to the increase in project revenues.
Cost of retail sales increased by $13,271 or 7.1% to $199,240 for the six months ended December 31, 2024 from $185,969 for the six months ended December 31, 2023. The increase was mainly due to the increase in retail revenues.
Gross Profit
Gross profit was $840,929 for the six months ended December 31, 2024, an increase of $229,141, from $611,788 for the six months ended December 31, 2023. Gross margin increases by 1.4%, to 17.8% for the six months ended December 31, 2024 from 16.4% for the six months ended December 31, 2023.
Our gross profit and gross margin by revenue types were as follows:
| For the Six Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||||||||||
Gross (Unaudited) | Margin % | Gross (Unaudited) | Margin % | Gross profit (Unaudited) | Margin % | |||||||||||||||||||
| Project revenues | $ | 775,261 | 17.4 | % | $ | 555,943 | 15.9 | % | $ | 219,318 | 1.5 | % | ||||||||||||
| Retail revenues | 65,668 | 24.8 | % | 55,845 | 23.1 | % | 9,823 | 1.7 | % | |||||||||||||||
| Total | $ | 840,929 | 17.8 | % | $ | 611,788 | 16.4 | % | $ | 229,141 | 1.4 | % | ||||||||||||
Gross profit for project sales increased by $219,318 to $775,261 for the six months ended December 31,2024, as compared to $555,943 for the six months ended December 31, 2023. Gross margin increased by 1.5%, to 17.4% for the six months ended December 31, 2024, from 15.9% for the comparable period in 2023. The increase in gross profit was due to the lower proportion of purchased parts and higher proportion of self- produced products in specific projects compared to the six months ended December 31, 2023, resulting in lower overall costs. The product mix is determined by project types and contract terms. Management believes the Company’s gross margin will continue to improve as production efficiency increases.
Gross profit for retail sales increased to $65,668 for the six months ended December 31, 2024 from $55,845 for 2023. Gross margin increased by 1.7% to 24.8% for the six months ended December 31, 2024 from 23.1% for the six months ended December 31, 2023. Gross margin has no significant changes for the six months ended December 31, 2024 and 2023.
5
Operating Expenses
| For the Six Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variance | ||||||||||||||||||||||
| Amount (Unaudited) | % | Amount (Unaudited) | % | Amount (Unaudited) | % | |||||||||||||||||||
| Selling | $ | 423,228 | 20.9 | % | $ | 368,409 | 16.9 | % | $ | 54,819 | 14.9 | % | ||||||||||||
| General and administrative | 1,464,679 | 72.4 | % | 1,479,561 | 67.6 | % | (14,882 | ) | (1.0 | )% | ||||||||||||||
| Provision for expected credit losses | 135,456 | 6.7 | % | 342,542 | 15.6 | % | (207,086 | ) | (60.5 | )% | ||||||||||||||
| Total operating expenses | $ | 2,023,363 | 100.0 | % | $ | 2,190,512 | 100.0 | % | $ | (167,149 | ) | (7.6 | )% | |||||||||||
Selling Expenses
Selling expenses were $423,228 for the six months ended December 31, 2024, an increase of $54,819, or 14.9%, from $368,409 for the comparable period in 2023. The net increase was mainly due to the increase in market expansion fees and project bidding fees, which consistent with the revenue growth during the period. The fluctuation in selling expenses is mainly attributable to adjustments in the marketing strategy. Selling expenses may continue to increase as the Company further expands its market presence.
General and Administrative Expenses
Our general and administrative expenses were $1,464,679 for the six months ended December 31, 2024, a decrease of $14,882 or 1.0%, from $1,479,561 for the comparable period in 2023. The decrease was mainly due to the reduction in headcount in administrative departments, net of higher consulting fees compared with the six months ended December 31, 2023. General and administrative expenses may increase due to higher compliance and management requirements after the Company’s IPO.
Provision for expected credit losses
Our provision for expected credit losses was $135,456 for the six months ended December 31, 2024, a decrease of $207,086 or 60.5%, from $342,542 for the comparable period in 2023. The decrease was mainly due to the collection of the accounts receivables from previous projects. And these receivables were recognized as credit losses in prior periods.
Other (expense) income
Interest expense
Interest expense decreased by $7,620, or 3.6%, to $205,482 for the six months ended December 31, 2024, from $213,102 for the six months ended December 31, 2023. Average loan balances were $10,622,587 and $10,125,669 for the six months ended December 31, 2024 and 2023, respectively.
Other income, net
Other income, net decreased by $153,087, or 44.0%, to $ 194,583 for the six months ended December 31, 2024, from $347,670 for the six months ended December 31, 2023, which was mainly due to: (a) brand charge revenue decreased by $77,017; and (b) government subsidies decreased by $36,969; and (c) non-project installation and maintenance revenue decreased by $27,782.
6
Income tax (benefit) expense
Our income tax benefit was $67,418 for the six months ended December 31, 2024, an increase of $86,310, or 456.9% from expense of $18,892 for the six months ended December 31, 2023.
Income tax benefit for the six months ended December 31, 2024 was primarily due to the net loss incurred in this period, and management only recognized deferred tax assets (DTA) and income tax benefit related to the expected credit losses.
Income tax expense for the six months ended December 31, 2023 was primarily due to the full allowance of DTA that was provisioned in previous years.
Net Loss
As a result of the foregoing, our net loss for the six months ended December 31, 2024 and 2023 was $1,125,915 and $1,463,048, respectively.
Net loss attributable to non-controlling interests
Non-controlling interests are recognized to reflect the portion of net income that is not attributable, directly or indirectly, to the Company from the controlling shareholder. For the Company’s consolidated subsidiaries, non-controlling interests represent a minority shareholder’s 10% and 5% ownership interest in Yangzhou Bangshijie and Nanjing Bangshijie, respectively. The net loss attributable to non-controlling interests was $877 and $1,350 for the six months ended December 31, 2024 and 2023, respectively.
Net loss attributable to ordinary shareholders
Net loss attributable to the Company’s ordinary shareholders decreased by $336,660, or 23% from $1,461,698 for the six months ended December 31, 2023, to $1,125,038 for the six months ended December 31, 2024.
Liquidity and Capital Resources
Our principal sources of liquidity are generated from our operations, bank loans and equity financing. As of December 31, 2024, and June 30, 2024, we had cash of $1,094,269 and $153,914 respectively. Our current assets were $20,314,190 and $15,718,168 as of December 31, 2024 and June 30, 2024, respectively. Our current liabilities were $10,952,735 and $17,018,014 as of December 31, 2024 and June 30, 2024, respectively. Our current ratios as of December 31, 2024 and June 30, 2024 were 1.85 and 0.92, respectively. Total shareholders’ equity as of December 31, 2024 and June 30, 2024 was $7,754,704 and $4,316,848, respectively.
In assessing liquidity, we monitored and analyzed our cash flow requirements, our ability to generate sufficient revenue sources in the future, and operating and capital expenditure commitments. Our working capital requirements are influenced by the level of our operations and timing of accounts receivable collections. As of December 31, 2024, we had cash of approximately $1.1 million and outstanding bank loans of approximately $10.6 million. If the we require additional funding to finance our operations, our major shareholders indicated their intent and ability to provide such financial support. Based on our current operating activities, we believe the operating activities and existing funds can provide sufficient liquidity for us to meet future liquidity and working capital requirement for at least 12 months through December 31, 2025.
Our capital needs are for daily operations and for financing the development of our business. With the uncertainty of the current market and macroeconomic conditions, our management believes it is necessary to enhance collection of outstanding accounts receivable and other receivables, and to be cautious on operational decisions and project selection. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. Our management is confident that the Company’s accounts receivable and other receivables are collectable.
7
We may also raise additional capital through public offerings or private placements to finance our business development and to consummate any merger or acquisition, if necessary. Such transfer of funds from Li Bang International or any of our offshore subsidiaries to our PRC Subsidiaries is subject to the PRC regulatory restrictions and procedures: (i) the capital increase of the existing PRC Subsidiaries and establishment of new PRC Subsidiaries must be either filed with or approved by the Ministry of Commerce, or its local counterparts depending on whether the business of the PRC subsidiary is subject to restrictions with respect to foreign investment under the PRC law, and registered with local banks authorized by State Administration of Foreign Exchange (“SAFE”); and (ii) loans to any of our PRC Subsidiaries must not exceed the statutory limits and must be filed with SAFE.
Cash Flows Analysis
Six Months Ended December 31, 2024 Compared to Six Months Ended December 31, 2023
The following table sets forth a summary of our cash flows for the periods indicated:
| For the Six Months Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Net cash provided by (used in) operating activities | $ | 258,431 | $ | (171,829 | ) | |||
| Net cash used in investing activities | (4,532,991 | ) | (86,871 | ) | ||||
| Net cash provided by financing activities | 5,236,406 | 17,913 | ||||||
| Effect of foreign exchange rate on cash | (2,449 | ) | 8,352 | |||||
| Net increase (decrease) in cash and restricted cash | 959,397 | (232,435 | ) | |||||
| Cash and restricted cash at the beginning of the period | 230,997 | 541,127 | ||||||
| Cash and restricted cash at the end of the period | $ | 1,190,394 | $ | 308,692 | ||||
Operating Activities
Net cash provided by operating activities was $258,431 for the six months ended December 31, 2024, an increase of $430,260 from net cash used of $171,829 for 2023. The increase was mainly due to: (a) a decrease of $337,133 in net loss; (b) an increase of $1.25 million in cash provided by accounts receivable and notes receivable, for the reduced impact from the COVID-19 and improved payment capabilities of customers; and (c) a decrease of $426,547 in cash used in inventories, primarily due to the decrease in procurement for hotel projects. These were partially offset by: (a) a decrease of $207,086 in non-cash expenses for provision for expected credit losses; (b) a decrease of $1.31 million in cash provided by accounts payable and advances from customers, for the decrease in procurement for hotel projects; and (c) an increase of $128,859 in cash used in taxes payable, for the increase in the revenues and related value-added tax.
Investing Activities
Net cash used in investing activities amounted to $4,532,991 for the six months ended December 31, 2024. It was primarily due to: (a) an increase of $4,515,050 in loans lent to third parties; and (b) an increase of $42,177 for purchases of property and equipment.
Net cash used in investing activities was $86,871 for the six months ended December 31, 2023. It was primarily due to the purchase of property and equipment.
Financing Activities
Net cash provided by financing activities was $5,236,406 for the six months ended December 31, 2024. During the six months ended December 31, 2024, the Company completed its IPO on the Nasdaq Capital Market and received total net proceeds of approximately $5.23 million.
Net cash provided by financing activities was $17,913 for the six months ended December 31, 2023. During the six months ended December 31, 2023, the Company borrowed $783,945 in bank loans as working capital from Suzhou Rural Commercial Bank Co., Ltd., Jiangyin Rural Commercial Bank, Bank of Jiangsu, Bank of Hangzhou and Shenzhen Qianhai Webank, which were offset by the repayment of $691,466. In addition, for the six months ended December 31, 2023, the Company paid deferred registration fees of $74,566.
8
Loan Facilities
On December 30, 2021, Suzhou Deji entered into two credit facilities of RMB2.1 million (approximately $292,000) and RMB27.7 million (approximately $3.85 million) with Jiangsu Suzhou Rural Commercial Bank to finance its working capital requirements. Suzhou Deji drew RMB20.8 million ($2,893,551) with interest of 3.5% and RMB6.2 million ($862,501) with interest of 3.8% in March, 2024. These loans will mature on March 20, 2027.
On March 4, 2024, Li Bang Kitchen Appliance obtained a working capital loan of RMB10 million (approximately $1.4 million) from Jiangyin Rural Commercial Bank and a maturity date of March 3, 2025. The loan was guaranteed by Mr. Huang Feng and Ms. Li Funa. The loan was refinanced and extended to March 2, 2026 with interest of 3.65%. For presentation purposes, the loan is classified as a long-term loan.
On April 2, 2024, Li Bang Kitchen Appliance obtained a working capital loan of RMB2.7 million ($375,605) from China Merchants Bank Co., Ltd., and a maturity date of October 2, 2024. On September 23, 2024, Li Bang Kitchen Appliance extended the loan to March 23, 2025.The loan was repaid in full upon maturity.
On May 30, 2024, Li Bang Kitchen Appliance obtained a working capital loan of RMB3 million ($417,339) from Jiangsu Bank Co., Ltd. and a maturity date of May 29, 2025. On May 28, 2025, Li Bang Kitchen Appliance extended the loan to May 28, 2026 with interest of 3.50%. For presentation purposes, the loan is classified as a long-term loan.
On June 18, 2024, Li Bang Kitchen Appliance obtained a working capital loan of RMB5 million ($695,565) from Jiangsu Bank Co., Ltd. and a maturity date of June 17, 2025. The loan is collateralized by real estate, land use rights and patents. The loan was refinanced and extended to June 10, 2026 with interest of 3.10%. For presentation purposes, the loan is classified as a long-term loan.
On May 15, 2024, Wuxi Libang obtained a working capital loan of 6 million ($834,678) from Jiangyin Rural Commercial Bank and due on May 13, 2025. The loan was guaranteed by Mr. Huang Feng and collateralized by real estate and land use rights. The loan was refinanced and extended to March 2, 2026 with interest of 3.65%. For presentation purposes, the loan is classified as a long-term loan.
On March 6, 2024, Wuxi Libang obtained a working capital loan of 10 million (approximately $1.4 million) from Jiangyin Rural Commercial Bank and due on March 5, 2025. The loan was guaranteed by Mr. Huang Feng and Ms. Li Funa. The loan was refinanced and extended to March 2, 2026 with interest of 3.65%. For presentation purposes, the loan is classified as a long-term loan.
On May 14, 2024, Wuxi Libang obtained a working capital loan of 12 million yuan (approximately $1.7 million) from Jiangyin Rural Commercial Bank and due on May 12, 2025. The loan was collateralized by real estate and land use rights. The loan was refinanced and extended to May 5, 2026 with interest of 3.65%. For presentation purposes, the loan is classified as a long-term loan.
On July 29, 2024, Wuxi Libang obtained a working capital loan from the Bank of Hangzhou, for RMB210,000 ($29,214) and a maturity date of July 27, 2026. According to the agreement, the Company shall repay the principal and interest monthly. As of December 31, 2024, the outstanding principal balance of the loan was RMB181,429 ($25,240). The loan was repaid in full on March 5, 2025.
On July 29, 2024, Wuxi Libang obtained a working capital loan from Shenzhen Qianhai Webank for RMB90,000 ($12,520) and a maturity date of July 27, 2026. The loan was repaid in full on March 5, 2025.
On August 7, 2024, Wuxi Libang obtained a working capital loan from Shenzhen Qianhai Webank for RMB100,000 ($13,911) and a maturity date of July 27, 2026. According to the agreement, the Company shall repay the principal and interest monthly. As of December 31, 2024, the outstanding principal balance of the loan was RMB90,476 ($12,586). The loan was repaid in full on March 5, 2025.
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Contingencies
From time to time, the Company may be subject to certain legal proceedings, claims, and disputes that arise in the ordinary course of business. Amounts accrued, as well as the total amount of possible losses with respect to such matters, individually and in the aggregate, are not currently considered to be material to the consolidated financial statements.
Contractual Obligations
The Company leases offices premises and apartments in Suzhou, Nanjing, Hefei and Hangzhou for employees under operating lease with terms that are less than one year in duration. The Company made full payment for lease agreements in advance.
Off-Balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our CFS. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit support to us or engages in leasing, hedging, or research and development services with us.
Seasonality
The nature of our business does not appear to be affected by seasonal variations.
Critical Accounting Estimates
Our CFS are prepared in accordance with accounting principles generally accepted in the U.S., which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities. On an ongoing basis, we evaluate our estimates, including those estimates that may have a significant effect on our financial condition and results of operations. Our significant accounting policies are disclosed in Note 3 to our CFS. We base our estimates and judgment on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
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We consider an accounting estimate to be critical if:
| (a) | the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change; and |
| (b) | the impact of the estimate on financial condition or operating performance is material. |
There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
For a detailed description of our significant accounting policies and related judgments, please see Note 3. You should read the following description of critical accounting estimates in conjunction with our CFS and other disclosures included in our annual report for the year ended June 30, 2024.
Expected Credit Losses
Nature of estimate: Accounting Standards Update (ASU) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” requires us to record the full amount of expected credit losses for the life of a financial asset at the time it is originated or acquired, adjusted for subsequent changes in expected lifetime credit losses.
Assumptions: The Company assesses collectability by reviewing receivables on a collective basis where similar characteristics exist, primarily based on the size and nature of specific customers’ receivables. In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status, the age of the receivable balances, credit quality of the Company’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Company’s ability to collect from customers. Our allowance for expected credit losses is based on its assumptions regarding the probability of default. The expected probability of payment and time to default, which include assumptions about macroeconomic factors and customers’ performance. We recognized $135,456 and $342,542 expected credit losses of receivables and advances to suppliers for the six-months period ended December 31, 2024 and 2023, respectively.
Our estimate of the key assumptions did not change significantly throughout the periods presented.
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