Greenpro Capital Corp. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Unaudited results are compared with the same periods in 2021. The company provides corporate advisory and business services, invests in early-stage companies, and owns real estate for rental or sale. U.S. dollars unless stated otherwise.
Key financial results
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $807,942 | $792,025 | $1,383,788 | $1,381,598 |
| Gross profit | $723,967 | $690,766 | $1,097,403 | $1,184,722 |
| Gross margin | 89.6% | 87.2% | 79.3% | 85.8% |
| Operating loss | $(304,668) | $(489,066) | $(835,371) | $(1,376,364) |
| Net loss | $(952,160) | $(766,257) | $(1,962,030) | $(7,061,399) |
| Net loss attributable to Greenpro common shareholders | $(945,780) | $(770,854) | $(1,979,462) | $(7,069,374) |
| Net loss per share, basic and diluted | $(0.01) | $(0.01) | $(0.03) | $(0.11) |
Q2 service revenue was $777,552; rental revenue was $30,390, with no real estate sale revenue. First-half service revenue was $1,132,585, rental revenue $64,330, and real estate sale revenue $186,873. The first-half property sale generated a $59,532 gain on sale; its reported cost was $127,341.
At June 30, cash and cash equivalents, including restricted cash, were $4.09 million, down $1.24 million from year-end. Six-month operating cash outflow was $1.36 million; investing activities provided $180,590 and financing activities used $93,768. Total assets were $20.37 million, total liabilities $3.45 million, and equity $16.92 million. Current assets were $6.14 million versus current liabilities of $3.45 million. The balance sheet reports no convertible-note debt; lease liabilities were $63,617, all current. Cash paid for interest was zero.
Changes and management commentary
- Six-month revenue was nearly flat year over year: service revenue declined $184,114, offset by $186,873 from a property sale. Service revenue fell mainly because listing-service revenue decreased. Q2 revenue increased modestly, while service revenue rose slightly as some listing-service obligations were completed.
- Six-month operating loss narrowed by $540,993, principally as G&A fell by $628,312. The six-month net loss improved by $5.10 million, primarily because 2021 included substantial convertible-note interest expense, alongside lower investment impairment and lower G&A in 2022.
- Other-investment impairment was $1,213,800 in the first half of 2022, including $677,400 in Q2, versus $3,246,000 in the first half of 2021. The company’s related-party equity investments totaled $8.41 million at June 30, down from $9.62 million at year-end.
- Management expects business-service revenue to improve as it expands into new territories and pandemic effects wane; it expects rental income to remain stable and G&A to increase slightly with expansion and integration. These are expectations, not quantified guidance.
Liquidity, risks, and unusual matters
- Going concern: The filing says the first-half net loss and operating cash outflow raise substantial doubt about the company’s ability to continue as a going concern within one year. Management believes shareholder support or external financing can meet obligations and estimates current cash is sufficient for anticipated working capital for 12 months, but states financing availability and terms are not assured. The financial statements include no adjustments for a potential failure to continue as a going concern.
- Legal contingency: Millennium Fine Art Inc. alleges breach of an NFT contract involving 7,700 NFTs and $16 million worth of company shares, seeking $66 million in damages, specific performance, and legal fees. Greenpro denies the allegations. The matter is in arbitration; fact discovery was scheduled through December 16, 2022, with a hearing set for July 14, 2023. The filing does not provide a clear estimate of any probable loss or financial-statement accrual.
- Related-party exposure: Due from related parties was $1.23 million, including amounts that are interest-free, unsecured, and have no fixed repayment terms. Due to related parties was $716,996. Related parties generated $507,171 of first-half service revenue; related-party investment impairment was $1.21 million.
- Concentration and regional risks: Two customers accounted for 45% of Q2 revenue and 32% of first-half revenue. The company cites exposure to COVID-19 impacts, foreign currency movements, and political, regulatory, and economic conditions in Asia, including China and Malaysia.
- Share split: The company effected a 10-for-1 reverse stock split on July 28, 2022. The filing reports 7,867,188 shares outstanding as of August 12, 2022, while certain June 30 balance-sheet and weighted-average share disclosures appear inconsistent about whether share amounts are pre- or post-split.
- Management assessed disclosure controls as effective at June 30, 2022 and reported no material changes in internal control over financial reporting. No significant off-balance-sheet arrangements were reported.
Most important facts to verify
- Current status and potential financial exposure of the MFAI arbitration, including whether any loss accrual is warranted.
- Cash runway and the availability, amount, and terms of expected shareholder support or external financing given the going-concern warning.
- Recoverability and valuation of the $8.41 million investment portfolio, including further impairment risk and related-party exposures.
- Repayment prospects and terms for the $1.23 million due from related parties, and the company’s continuing dependence on related-party revenue.
- Correct post-reverse-split share counts, weighted-average shares, and per-share comparisons across the filing.