Investment hit drives MicroCloud Hologram (NASDAQ: HOLO) into first-half loss
MicroCloud Hologram Inc. (HOLO) furnished unaudited financial statements for the six months ended June 30, 2026. Total operating revenues rose to RMB 213.8 million from RMB 159.6 million, driven mainly by holographic services revenue growth.
Despite higher revenue, gross profit declined to RMB 29.4 million and profit from operations was only RMB 9.6 million, while a substantial investment loss of RMB 134.1 million on short-term investments turned other income negative. This led to a net loss of RMB 111.8 million attributable to shareholders versus prior-period net income of RMB 237.9 million, and a comprehensive loss of RMB 197.9 million. Cash and cash equivalents fell to RMB 752.1 million as the company shifted heavily into short-term investments totaling RMB 1.80 billion, while total liabilities remained relatively low at RMB 74.5 million and shareholders’ equity decreased to RMB 2.50 billion.
Positive
- Revenue grew to RMB 213.8 million from RMB 159.6 million year over year for the six-month period, reflecting expansion in holographic services.
- Operating activities generated RMB 22.6 million of net cash inflow, indicating the core business produced positive operating cash flow despite the net loss.
- Total liabilities were only RMB 74.5 million against RMB 2.58 billion in assets, leaving the company with a low reported leverage position.
Negative
- Net result swung to a loss of RMB 111.8 million for the first half of 2026 from net income of RMB 238.1 million a year earlier.
- Investment loss of RMB 134.1 million on short-term investments drove total other income negative and was a major contributor to the period’s net loss.
- Shareholders’ equity declined to RMB 2.50 billion from RMB 2.70 billion at December 31, 2025, reflecting accumulated losses and foreign currency translation impacts.
Filing Explained
Potential warrant issuance could dilute existing holders, while the filing leaves the post-July status of RMB 43,862,196 in convertible bonds unresolved.
This Form 6-K furnishes MicroCloud Hologram’s six-month interim information and incorporates it into registration statements; it updates the registered disclosure rather than announcing a new securities sale.
At
The public warrants were exercisable for cash because a current registration statement covered the underlying shares, but registration itself does not sell securities. Each public warrant covers one-half of an ordinary share; the private warrants are cashless and have separate transfer and redemption restrictions.
If warrants are exercised and shares are issued, the total share count would increase and existing holders’ percentage ownership would decrease absent offsetting changes. The private warrants had a nil recorded liability at both reporting dates because their exercise price was significantly above the company’s share price.
The filing reports
Key Figures
Key Terms
reverse recapitalization financial
emerging growth company regulatory
short-term investments financial
warrant liabilities financial
non-controlling interests financial
contract liabilities financial
FAQ
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What was MicroCloud Hologram’s (HOLO) cash flow from operations in the first half of 2026?
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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 August 2026
Commission File Number:
(Exact name of registrant as specified in its charter)
Yue Xing Sixth Road, Nanshan District,
People’s
Republic of
(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
MicroCloud Hologram Inc. (the “Company”) is furnishing this Form 6-K to provide its six-month interim financial statements and to incorporate such financial statements into the Company’s registration statements referenced below.
This Form 6-K and Exhibits 99.1 and 99.2 to this Form 6-K shall be deemed to be incorporated by reference in the registration statements filed with the Securities and Exchange Commission, to the extent not superseded by documents or reports subsequently filed.
1
Exhibit Index
| Exhibit No. | Exhibit Description | |
| 99.1 | Unaudited Interim Consolidated Financial Statements for the Six Months Ended June 30, 2026 and 2025. | |
| 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operation for The First Half of 2026 | |
| 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) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 27, 2026
| MicroCloud Hologram Inc. | ||
| By: | /s/ Haiyan Zhang | |
| Name: | Haiyan Zhang | |
| Title: | Chief Executive Officer | |
3
Exhibit 99.1
MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEETS
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Short-term investments | ||||||||||||
| Notes receivable | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Prepayments and other current assets | ||||||||||||
| Inventories, net | ||||||||||||
| Total current assets | ||||||||||||
| NON-CURRENT ASSETS | ||||||||||||
| Property, plant and equipment, net | ||||||||||||
| Investments in unconsolidated entities | ||||||||||||
| Right-of-use assets, net | ||||||||||||
| Total non-current assets | ||||||||||||
| Total assets | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payable | ||||||||||||
| Contract liabilities | ||||||||||||
| Other payables and accrued liabilities | ||||||||||||
| Operating lease liabilities - current | ||||||||||||
| Loan payable | ||||||||||||
| Taxes payable | ||||||||||||
| Convertible bonds | ||||||||||||
| Total current liabilities | ||||||||||||
| NON-CURRENT LIABILITIES | ||||||||||||
| Operating lease liabilities - non-current | - | - | - | |||||||||
| Total non-current liabilities | - | - | - | |||||||||
| Total liabilities | ||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| SHAREHOLDERS’ EQUITY | ||||||||||||
| Class A Ordinary shares, $ |
||||||||||||
| Class B Ordinary shares, $ |
||||||||||||
| Additional paid-in capital | ||||||||||||
| Accumulated deficit | ( |
) | ( |
) | ( |
) | ||||||
| Statutory reserves | ||||||||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ( |
) | ||||||
| Total MICROCLOUD HOLOGRAM INC. shareholders’ equity | ||||||||||||
| Non-controlling interests | ||||||||||||
| Total shareholders’ equity | ||||||||||||
| Total liabilities and shareholders’ equity | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-1
MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
| For the Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| RMB | RMB | USD | ||||||||||
| OPERATING REVENUES | ||||||||||||
| Products | ||||||||||||
| Services | ||||||||||||
| Total operating revenues | ||||||||||||
| Cost of Revenues | ( |
) | ( |
) | ( |
) | ||||||
| GROSS PROFIT | ||||||||||||
| Operating expenses: | ||||||||||||
| Selling expenses | ( |
) | ( |
) | ( |
) | ||||||
| General and administrative expenses | ( |
) | ( |
) | ( |
) | ||||||
| Research and development expenses | ( |
) | ( |
) | ( |
) | ||||||
| Allowance (reversal) for credit losses | ( |
) | ( |
) | ||||||||
| Total operating expenses | ( |
) | ( |
) | ( |
) | ||||||
| Profit from operations | ||||||||||||
| Other income (expenses) | ||||||||||||
| Finance income, net | ||||||||||||
| Investment gain (loss) | ( |
) | ( |
) | ||||||||
| Other (expenses)/income, net | ( |
) | ||||||||||
| Total other income (expenses), net | ( |
) | ( |
) | ||||||||
| Income (Loss) before income taxes | ( |
) | ( |
) | ||||||||
| Income tax expense | ( |
) | ( |
) | ( |
) | ||||||
| Net income (loss) | ( |
) | ( |
) | ||||||||
| Less: Net gain attributable to non-controlling interests | ||||||||||||
| Net income (loss) attributable to MicroCloud Hologram Inc’s shareholders | ( |
) | ( |
) | ||||||||
| Other comprehensive loss | ||||||||||||
| Foreign currency translation adjustment | ( |
) | ( |
) | ( |
) | ||||||
| Comprehensive income (loss) | ( |
) | ( |
) | ||||||||
| Less: Comprehensive gain attributable to non-controlling interests | ||||||||||||
| Comprehensive income (loss) attributable to MicroCloud Hologram Inc’s shareholders | ( |
) | ( |
) | ||||||||
| Weighted average number of ordinary shares | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
| Earnings (Loss) per share | ||||||||||||
| Basic | ( |
) | ( |
) | ||||||||
| Diluted | ( |
) | ( |
) | ||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-2
MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
| Class A | Class B | Additional | Other | Non- | Total | Total | ||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ordinary shares | ordinary shares | paid-in | Statutory | Retained | comprehensive | controlling | Shareholders’ | Shareholders’ | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | reserves | earnings | income | interests | Equity | Equity | ||||||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | USD | ||||||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2024 | - | - | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
| Shares converted from convertible promissory note | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||||||
| BALANCE, June 30, 2025 | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Class A | Class B | Additional | Other | Non- | Total | Total | ||||||||||||||||||||||||||||||||||||||
| ordinary shares | ordinary shares | paid-in | Statutory | Accumulated | comprehensive | controlling | Shareholders’ | Shareholders’ | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | reserves | deficit | income | interests | Equity | Equity | ||||||||||||||||||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | USD | ||||||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2025 | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( |
) | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
| Disposal of subsidiaries | - | - | - | - | - | ( |
) | - | - | - | - | |||||||||||||||||||||||||||||||||
| Increase in non-controlling interest from disposal of subsidiary | - | - | - | - | - | - | ( |
) | - | - | - | |||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | - | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||||||||||||||||||||||
| BALANCE, June 30, 2026 | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-3
MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six Months Ended June 30, | ||||||||||||
| 2025 | 2026 | 2026 | ||||||||||
| RMB | RMB | USD | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net income(loss) | ( |
) | ( |
) | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Amortization of operating lease right-of-use assets | ||||||||||||
| (Reversal) Allowance for credit losses | ( |
) | ||||||||||
| Reversal for inventory reserve | - | ( |
) | ( |
) | |||||||
| (Gain) loss from short-term investments | ( |
) | ||||||||||
| Loss on disposal of property, plant and equipment | - | |||||||||||
| Change in operating assets and liabilities: | ||||||||||||
| Notes receivable | - | ( |
) | ( |
) | |||||||
| Accounts receivable | ( |
) | ||||||||||
| Prepayment and other current assets | ( |
) | ( |
) | ||||||||
| Inventories | ||||||||||||
| Accounts payable | ( |
) | ( |
) | ||||||||
| Operating lease liabilities | ( |
) | ( |
) | ( |
) | ||||||
| Contract liabilities | ( |
) | ( |
) | ( |
) | ||||||
| Other payables and accrued liabilities | ||||||||||||
| Taxes payable | ( |
) | ||||||||||
| Net cash provided by operating activities | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchases of property, plant and equipment | ( |
) | ( |
) | ( |
) | ||||||
| Proceeds from disposal of property, plant and equipment | - | |||||||||||
| Purchases of short-term investments | ( |
) | ( |
) | ( |
) | ||||||
| Redemption of short-term investments | ||||||||||||
| Proceeds from sales and redemption of short-term investments | - | |||||||||||
| Net cash used in investing activities | ( |
) | ( |
) | ( |
) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Cash received from convertible bonds | - | - | ||||||||||
| Repayments of bank loans | ( |
) | - | - | ||||||||
| Proceeds from bank loans | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate on cash and cash equivalents | ( |
) | ( |
) | ||||||||
| Change in cash and cash equivalents | ( |
) | ( |
) | ||||||||
| Cash and cash equivalents, at beginning of period | ||||||||||||
| Cash and cash equivalents, at end of period | ||||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||
| Cash paid for income taxes | ||||||||||||
| Cash paid for interest | ||||||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
| Convertible bonds exercise the right of conversion | ( |
) | - | - | ||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
F-4
MICROCLOUD HOLOGRAM INC. AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of business and organization
MicroCloud Hologram Inc. (“MicroCloud”, formerly known as Golden Path Acquisition Corporation (“Golden Path” or “the Company”)), a Cayman Islands exempted company, is a leading holographic digitalization technology service provider in China, which is committed to providing first-class holographic technology services to the customers worldwide.
On September 16, 2022, the Company consummated the previously announced business combination pursuant to the Merger Agreement, by and among Golden Path, Golden Path Merger Sub, and MC Hologram Inc. (“MC”). Pursuant to the Merger Agreement, MC merged with Golden Path Merger Sub, survived the merger and continued as the surviving company and a wholly owned subsidiary of Golden Path (the “Merger”, and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”).
As a result of the consummation of the Business Combination, MC is now a wholly owned subsidiary of the Company, which has changed its name to MicroCloud Hologram Inc.
Following the Closing, on September 19, 2022, the ordinary shares and public warrants outstanding upon the Closing began trading on the NASDAQ Stock Exchange (the “NASDAQ”) under the symbols “HOLO” and “HOLOW,” respectively.
The transaction was accounted for as a “reverse recapitalization” in accordance with accounting principles generally accepted in the United States (“GAAP”) because the primary assets of Golden Path would be nominal following the close of the Merger. Under this method of accounting, Golden Path was treated as the “acquired” company for financial reporting purposes and MC was determined to be the accounting acquirer based on the terms of the Merger and other factors including: (i) MC’s stockholders have a majority of the voting power of the combined company, (ii) MC comprises a majority of the governing body of the combined company, and MC’s senior management comprises all of the senior management of the combined company, and (iii) MC comprises all of the ongoing operations of the combined entity. Accordingly, for accounting purposes, this transaction was treated as the equivalent of the Company issuing shares for the net assets of Golden Path, accompanied by a recapitalization. The shares and net loss per common share, prior to the Reverse Recapitalization, have been retroactively restated as shares reflecting the Exchange Ratio established in the Reverse Recapitalization (one Golden Path share for one Company share). The net assets of Golden Path were recorded at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Reverse Recapitalization are those of MC.
F-5
| Schedule of accompanying consolidated financial statements | ||||||
| Name | Background | Ownership | ||||
|---|---|---|---|---|---|---|
| - | A Cayman Islands company | |||||
| - | Formed on November 10, 2020 | |||||
| - | ||||||
| - | A holding company | |||||
| - | A Hong Kong company | |||||
| - | Formed on November 25, 2020 | |||||
| - | ||||||
| - | A holding company | |||||
| - | A PRC limited liability company | |||||
| - | Formed on May 11, 2021 | |||||
| - | ||||||
| - | A holding company | |||||
| - | A PRC limited liability company | |||||
| - | Formed on March 24, 2016 | |||||
| - | ||||||
| - | Primarily engages in holographic integrated solutions. | |||||
| - | A PRC limited liability company | |||||
| - | Formed on March 15, 2016 | |||||
| - | ||||||
| - | Primarily engages in holographic integrated solutions. | |||||
| - | A PRC limited liability company | |||||
| - | Formed on April 12, 2016 | |||||
| - | ||||||
| - | Primarily engages in holographic PCBA solutions. | |||||
| - | A Hong Kong company | |||||
| - | Formed on February 2, 2016 | |||||
| - | ||||||
| - | Primarily engages in holographic integrated solutions. | |||||
| - | A Hong Kong company | |||||
| - | Formed on November 5, 2020 | |||||
| - | ||||||
| - | No operation | |||||
F-6
| Name | Background | Ownership | ||||
| - | A Hong Kong company | |||||
| - | Formed on November 4, 2021 | |||||
| - | ||||||
| - | No operation | |||||
| - | A PRC limited liability company | |||||
| - | Formed on December 3, 2021 | |||||
| - | ||||||
| - | No operation | |||||
| - | A PRC limited liability company | |||||
| - | Formed on February 26, 2024 | |||||
| - | ||||||
| - | No operation | |||||
| - | A PRC limited liability company | |||||
| - | Formed on February 18, 2022 | |||||
| - | ||||||
| - | Advertising service | |||||
| - | A BVI Business company | |||||
| - | ||||||
| - | No operation | |||||
| - | A Cayman Islands company | |||||
| - | ||||||
| - | Primarily engages in holographic integrated solutions. | |||||
| - | A Hong Kong company | |||||
| - | Formed on May 27, 2025 | |||||
| - | ||||||
| - | No operation | |||||
| - | A PRC limited liability company | |||||
| - | Formed on June 27, 2025 | |||||
| - | ||||||
| - | No operation | |||||
| - | A PRC limited liability company | |||||
| - | Formed on February 11, 2018 | |||||
| - | ||||||
| - | Primarily engages in advertising services. | |||||
F-7
Note 2 — Summary of significant accounting policies
Basis of presentation
The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding financial reporting, and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results; these condensed statements are prepared under ASC 270 and do not include all disclosures required by US GAAP for annual financial statements. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of results to be expected for any other interim period or for the full year of 2026. Accordingly, these unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial statements and note thereto as of and for the year ended December 31, 2025.
Principles of consolidation
The unaudited consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
Use of estimates and assumptions
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. The Company’s critical accounting estimates relevant to the financial statements for the six months ended June 30, 2026, included allowance for credit losses on receivables, fair value measurement of short-term investments and valuation allowance against deferred tax assets. These estimates include, among others, assessments of recoverability of assets and valuation allowances, which are subject to significant judgment and may be affected by future events and conditions. Actual results could differ from these estimates.
Emerging Growth Company
As of the date of this report, the Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
However, we will lose our status as an “emerging growth company” after the date of December 31, 2026 and it may significantly increase our legal, accounting, and compliance costs, and place a greater strain on our management.
F-8
Foreign currency translation and other comprehensive income (loss)
On June 30, 2023, the Company determined that it would qualify as a foreign private issuer, as that term is defined in Rule 3b-4(c) promulgated under the Securities Exchange Act of 1934, beginning as of July 1, 2023. The Company’s functional currency and reporting currency are Renminbi (“RMB”) for the six months ended June 30, 2026.
Pursuant to Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters,” the Company determined that its functional currency is RMB. The Company and certain of its subsidiaries, including MC, Mengyun HK, Mcloudvr HK, Ocean HK, Broadvision HK, HaiYun Group, HaiCloud Inc. and HaiCloud Ltd., maintain their books and records in U.S. dollars (“USD”). Accordingly, the financial information of these entities is translated into RMB for purposes of preparing the consolidated financial statements.
Assets and liabilities denominated in foreign currencies are translated at the exchange rates in effect at the balance sheet dates, equity accounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average exchange rates for the relevant periods. The resulting foreign currency translation adjustments are recorded in other comprehensive income (loss).
In the unaudited interim condensed consolidated financial statements, the financial information of the Company and other entities located outside the PRC has been translated into RMB. The resulting foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss).
The Company has also presented certain financial information in USD solely for the convenience of readers. The USD amounts are supplemental information only and do not represent a separate presentation currency, functional currency, or a separate set of financial statements prepared under a different functional currency. The convenience translation does not affect the Company’s consolidated financial statements prepared in RMB.
For convenience translation purposes, RMB amounts have been translated into USD using the exchange rates described below. Such translations should not be construed as a representation that RMB amounts have been, could have been, or could be converted into USD at the stated rates.
The balance sheet amounts, except for shareholders’ equity, as of June 30, 2026 and December 31, 2025 were translated at
Cash flows are also translated using average translation rates for the period. Therefore, amounts reported in the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.
Cash and cash equivalents
Cash and cash equivalents primarily consist of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash and cash equivalents also consist of funds earned from the Company’s operating revenues which were held at third party platform fund accounts which are unrestricted as to immediate use or withdraw. The Company maintains its bank accounts in the PRC, Singapore and Hong Kong.
Short-term investments
Short-term investments consist primarily of structured financial products issued by international financial institutions, equity securities traded in active markets, currency linked structured investment and time deposits. The structured financial products are generally Phoenix auto-callable notes linked to the performance of certain underlying equity securities. These instruments are typically settled or redeemable within a relatively short period of time.
Short-term investments are measured at fair value. Changes in fair value are recognized in investment gain (loss), net in the consolidated statements of income and comprehensive income.
F-9
Accounts receivable, net
Accounts receivable, net are stated at the original amount less an allowance for credit losses. The credit terms are generally 90 days.
Accounts receivable, net are recognized in the period when the Company has provided services to its customers and when its right to consideration is unconditional. On January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments — credit losses (Accounting Standards Codification (“ASC” Topic 326): Measurement on credit losses on Financial Instruments”, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”). ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of this ASU does not have a material effect on the Company’s consolidated financial statements.
The Company evaluates its accounts receivable for credit losses on a regular basis. The Company maintains an estimated allowance for credit losses to reduce its accounts receivable to the amount that it believes will be collected. The Company’s estimation of allowance for credit losses considers factors such as historical credit loss experience, age of receivable balances, current market conditions, reasonable and supportable forecasts of future economic conditions, as well as an assessment of receivables due from specific identifiable counterparties to determine whether these receivables are considered at risk or uncollectible. The Company adjusts the allowance percentage periodically when there are significant differences between estimated bad debts and actual bad debts. If there is strong evidence indicating that the accounts receivable are likely to be unrecoverable, the Company also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted.
The allowance for credit losses as of December 31, 2025 and June 30, 2026 was RMB
Prepayments and other current assets
Prepayments and other current assets are mainly payments made to vendors or service providers for purchasing goods or services that have not been received or provided, deposits for rent and utilities and employee advances. This amount is refundable and bears no interest. Prepayment and deposit are classified as either current or non-current based on the terms of the respective agreements. These advances are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. As of June 30, 2026, management has assessed that the prepayments are recoverable, as the underlying contracts remain valid and the related goods or services are expected to be received.
Property, plant and equipment, net
Property, plant and equipment are stated at cost less accumulated depreciation and impairment if applicable. Depreciation is computed using the straight-line method over the estimated useful lives of the assets with 5% residual value. The estimated useful lives are as follows:
| Schedule of estimated useful lives | |||
| Useful Life | |||
| Office equipment | |||
| Mechanical equipment | |||
| Electronic and other equipment | |||
| Vehicles |
Management reviews the estimated useful lives and residual values of property, plant and equipment at least annually and revises them as necessary to reflect changes in expected usage, technological developments, and physical condition.
F-10
Cost method investments
The Company accounts for investments with less than 20% of the voting shares and does not have the ability to exercise significant influence over operating and financial policies of the investee using the cost method. The Company records cost method investments at the historical cost in its condensed consolidated financial statements and subsequently records any dividends received from the net accumulated earnings of the investee as income. Dividends received in excess of earnings are considered a return of investment and are recorded as reduction in the cost of the investments.
Cost method investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investments is less than its carrying value. An impairment is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investments; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.
Impairment for long-lived assets
Long-lived assets, including property, plant and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values.
Convertible bonds
Convertible bonds are debt or equity instruments that either require or permit the investor to convert the instrument into equity securities of the issuer. The Company accounts for its convertible notes in accordance with ASC 470-20 Debt with Conversion and Other Options, whereby the convertible instrument is initially accounted for as a single unit of account, unless it contains a derivative that must be bifurcated from the host contract in accordance with ASC 815-15 Derivatives and hedging – Embedded Derivatives or the substantial premium model in ASC 470-20 Debt – Debt with Conversion and Other Options applies.
Business combination
The purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the Company’s consolidated statements of operations. The results of operations of the acquired business are included in the Company’s operating results from the date of acquisition.
Fair value measurement
The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.
F-11
The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined 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, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. |
Warrant liabilities
The Company accounts for warrants (Public Warrants or Private Warrants) as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480 and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The Company has elected to account for its Public Warrants as equity and the Private Warrants as liabilities.
The Company has classified its Public Warrants as equity instruments and its Private Warrants as liability-classified instruments. The fair value of the Private Warrants is estimated using a Black-Scholes option pricing model and is classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs.
The Company reassesses the classification of its warrants at each reporting date and will reclassify warrants if facts and circumstances change.
Revenue recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. Revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to receive.
The Company’s revenue is derived from holographic solutions and related services, including product sales, software development, licensing, advertising, and other services.
For arrangements that include variable consideration, such as cost-per-action, cost-per-connection, or revenue-sharing arrangements, the Company estimates the amount of consideration to which it expects to be entitled and applies the constraint such that revenue is recognized only to the extent that it is probable that a significant reversal will not occur.
F-12
Revenue is recognized when the following 5-step revenue recognition criteria are met:
| 1) | Identify the contract with a customer | |
| 2) | Identify the performance obligations in the contract | |
| 3) | Determine the transaction price | |
| 4) | Allocate the transaction price | |
| 5) | Recognize revenue when or as the entity satisfies a performance obligation |
The Company’s revenue recognition policies effective upon the adoption of ASC 606 are as follows:
(i) Holographic Solutions
a. Holographic Technology LiDAR Products
The Company generates light detection and ranging (“LiDAR”) revenue through selling integrated circuit board embedded with holographic software. The Company typically enters into written contracts with its customer where the rights of the parties, including payment terms, are identified and sales prices to the customers are fixed with no separate sales rebate, discount, or other incentive and no right of return exists on sales of inventory. The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a point in time when the control of products is transferred to customers.
b. Holographic Technology Intelligence Vision software and Technology Development Service
The Company generates revenue by developing advanced driver assistance systems (“ADAS”) software and technology, which are generally on a fixed-priced basis. The Company has no alternative use for the customized software and the Company has an enforceable right to payment for performance completed to date. Revenues from ADAS software development contracts are recognized over time during the contract period based on the Company’s measurement of progress towards completion using input method, which is usually measured by comparing labor hours expended to date to total estimated labor hours needed to satisfy the performance obligation. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivable and deferred revenues at each reporting period. The Company has a long history of developing various ADAS software resulting in its ability to reasonably estimate the progress toward completion on each fixed price customized contracts.
c. Holographic Technology Licensing and Content Products
The Company provides holographic content products and holographic software for music videos, shows, and commercials on a fixed-price basis. These contents and software are generally pre-developed and exist when made available to the customer. Content products are delivered through its website or offline using hard drive.
Revenues from licensing and content products are recognized at the point in time when the control of products or services is transferred to customers. No upgrades, maintenance, or any other post-contract customer support are provided.
F-13
d. Holographic Technology Hardware Sales
The Company is a distributor of holographic hardware and generates revenue through resale. In accordance with ASC 606, revenue recognition: principal agent consideration, an entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. Otherwise, the entity is an agent in the transaction. The Company evaluates three indicators of control in accordance with ASU 2016-08: 1) For hardware sales, the Company is the most visible entity to customers and assumes fulfillment risk and risks related to the acceptability of products, including addressing customer complaints directly and handling of product returns or refunds directly. 2) The Company assumes inventory risk after taking the title from vendors and is responsible for product damage during shipment period prior to acceptance of its customers and is also responsible for product return if the customer is not satisfied with the products. 3) The Company determines the resale price of hardware products. 4) The Company is the party that directs the use of the inventory and can prevent the vendor from transferring the product to a customer or to redirect the products to a different customer. After evaluating the above scenario, the Company considers itself the principal of these arrangements and records hardware sales revenue on a gross basis.
Hardware sales contracts are on a fixed price basis with no separate sales rebate, discount, or other incentive. Revenue is recognized at a point in time when the Company has delivered products and the acceptance by its customer with no future obligation. The Company generally permits returns of products due to deficits; however, returns are historically insignificant.
(ii) Holographic Technology Service
Holographic advertisements are the use of holographic technology integrated into advertisements on media platforms and offline display. The Company enters advertising contracts with advertisers to promote merchandises and services where the price, which is generally based on cost per action (“CPA”), is fixed and determinable. The Company provides its advertising service to channel providers where the amounts cost per action are also fixed and determinable. Revenue is recognized at a point in time when agreed actions are performed. The Company assesses whether it is acting as a principal or an agent in these arrangements in accordance with ASC 606, Revenue from Contracts with Customers. Based on this assessment, the Company recognizes revenue on a gross basis (as principal) rather than on a net basis (as agent). The Company has concluded that gross reporting is appropriate because the Company 1) has a right to a service to be performed by the other party, which gives the Company the ability to direct that party to provide the service to the customers on the Company’s behalf. 2) has discretion in setting the price for the service 3) invoices monthly advertising fee directly to customers by settling valid CPA data with customers. Therefore, the Company acts as the principal of these arrangements and reports revenue earned and costs incurred related to these transactions on a gross basis. The Company also provides advertisement services through influencers on social networks. The Company charges advertisers a fixed rate, which is generally a fixed percentage of total value of merchandise sold over a specific period (“GMV”). Revenue is recognized at a point of time when merchandise is sold through social network.
Contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Company has satisfied its performance obligation and has unconditional right to the payment. Contract assets represent the Company’s right to consideration in exchange for goods or services that the Company has transferred to a customer. The Company has
Contract liabilities represent cash received for services in advance of revenue recognition which is recognized as revenue when all the Company’s revenue recognition criteria are met. The Company’s contract liabilities amounted to RMB
The Company applies the practical expedient under ASC 606 and does not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less.
F-14
Cost of revenues
For holographic solutions, the cost of revenue consists primarily of the costs of hardware products sold and outsourced content providers, third party software development costs, and compensation expenses for the Company’s professionals.
For holographic technology service, the cost of revenue consists primarily of costs paid to channel distributors for advertising services and compensation expenses for the Company’s professionals.
Cost allocation
Cost allocation includes allocation of certain general and administrative and financial expenses paid by the Parent. General and administrative expenses consist primarily of salary and related expenses of senior management and employees, shared management expenses, including accounting, consulting, legal support services, and other expenses to provide operating support to the related businesses. These allocations are made using a proportional cost allocation method by considering the proportion of revenues, headcounts as well as estimates of time spent on the provision of services attributable to the Company and the related expenses resulted from the acquisition of subsidiary.
Research and development
Research and development expenses include salaries and other compensation-related expenses to the Company’s research and product development personnel, outsourced subcontractors, as well as office rental, depreciation and related expenses for the Company’s research and product development team.
Value added taxes (“VAT”)
Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13% in China, depending on the type of service provided or product sold. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns filed by the Company’s subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing.
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the condensed consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
F-15
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. No penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. PRC tax returns filed are subject to examination by any applicable tax authorities.
Leases
Effective January 1, 2022, the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component.
The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All the Company’s real estate leases are classified as operating leases.
When determining the lease payments for an operating lease transitioning to ASC 842 using the effective date, it’s based on future payments at the transition date, based on the present value of lease payments over the remaining lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
Employee benefit
The full-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment insurance and other welfare, which are government mandated defined contribution plans. The Company is required to accrue for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued.
F-16
Non-controlling interests
Our non-controlling interests represent the minority shareholders’ ownership interests related to our subsidiaries, including 44% for Ocean HK, 35% for HaiCloud Inc and their subsidiaries. The non-controlling interests are presented in the consolidated balance sheets separately from equity attributable to our shareholders. Non-controlling interests in the result are presented on the consolidated statement of income as allocations of the total income or loss for the six months ended June 30, 2026 between non-controlling interest holders and our shareholders.
Non-controlling interests consist of the following:
| Schedule of Non-controlling interests | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Ocean HK | ( |
) | ||||||||||
| HaiCloud Inc | ||||||||||||
| Total non-controlling interests | ||||||||||||
Earnings (Loss) per share
The Company computes earnings (loss) per share in accordance with ASC 260, “Earnings (Loss) per Share”. ASC 260 requires companies to present basic and diluted earnings (loss) per share. Basic earnings (loss) per share is measured as net income/loss divided by the weighted average ordinary share outstanding for the period. Diluted earnings (loss) per share presents the dilutive effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings (loss) per share.
Statutory reserves
Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulated loss.
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.
F-17
The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial information of the separate operating segments when making decisions about allocating resources and assessing the performance of the group. The majority of the Company’s business activities are carried out in the PRC, hence no geographical segment is disclosed. The Company has determined two operating segments: (1) Holographic solutions, and (2) Holographic technology service.
Recently issued accounting pronouncements
In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The adoption resulted in enhanced disclosures and did not have a material impact on the Company’s consolidated financial position or results of operations.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.
Note 3 — Deregistration of subsidiary
In January 2026, the Company resolved to deregister Shenzhen Yushian Technology Co., Ltd. (“Shenzhen Yushian”) as part of the Group’s business and resource optimization. Shenzhen Yushian ceased substantive operations from January 2026 and was deregistered in May 2026.
The deregistration also resulted in the reclassification of approximately RMB
Note 4 — Short-term investments
Short-term investments consist of the following:
| Schedule of Short-term Investments | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Equity securities and ETFs | ||||||||||||
| Time deposits | - | |||||||||||
| Currency linked structured investment | - | |||||||||||
| Structured financial products | ||||||||||||
| Total | ||||||||||||
Fair value measurements
The Company measures its short-term investments at fair value on a recurring basis in accordance with the fair value hierarchy established under applicable accounting standards:
| ● | Level 1: Quoted prices (unadjusted) in active markets for identical assets. |
F-18
| ● | Level 2: Observable inputs other than quoted prices included within Level 1. |
| ● | Level 3: Unobservable inputs supported by little or no market activity. |
The following tables present the Company’s short-term investments measured at fair value on a recurring basis:
| Schedule of Fair value disclosure | ||||||||||||||||
| December 31, 2025 | ||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Equity securities and ETFs | - | - | ||||||||||||||
| Structured financial products | - | - | ||||||||||||||
| Total | - | |||||||||||||||
| June 30, 2026 | ||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Equity securities and ETFs | - | - | ||||||||||||||
| Time deposits | - | - | ||||||||||||||
| Currency linked structured investment | - | - | ||||||||||||||
| Structured financial products | - | - | ||||||||||||||
| Total | - | |||||||||||||||
Equity securities and exchange-traded funds are classified as Level 1 as their fair values are based on quoted market prices in active markets. Time deposits, currency-linked structured investments and structured financial products are classified as Level 2 as their fair values are based on valuation amounts provided by financial institutions, which are determined using observable market inputs. For time deposits, the valuation amounts are consistent with the contractual principal amounts plus accrued interest.
During the six months ended June 30, 2026, the Company invested a total of RMB
Note 5 — Accounts receivable, net
Accounts receivable, net consist of the following:
| Schedule of Accounts receivable, net | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Accounts receivable | ||||||||||||
| Less: allowance for credit loss | ( |
) | ( |
) | ( |
) | ||||||
| Accounts receivable, net | ||||||||||||
F-19
The following table summarizes the changes in allowance for credit loss:
| Schedule of allowance for doubtful accounts | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Beginning balance | ||||||||||||
| Allowance for credit loss | ||||||||||||
| Write-off | ( |
) | ( |
) | ( |
) | ||||||
| Other changes - Deconsolidation | ( |
) | ( |
) | ( |
) | ||||||
| Exchange rate difference | - | - | ||||||||||
| Ending balance | ||||||||||||
For the six months ended June 30, 2026, the Company recognized allowance for expected credit loss of RMB
Note 6 — Prepayment and other current assets
Prepayment and other current assets consisted of the following:
| Schedule of Prepayment and other current assets | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Prepayments | ||||||||||||
| Other receivables | ||||||||||||
| Less: impairment losses | ( |
) | - | - | ||||||||
| Prepayment and other current assets | ||||||||||||
During the six months ended June 30, 2026, the Company wrote off RMB
Note 7 — Inventories, net
Inventories, net consist of the following:
| Schedule of inventories | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Raw materials | ||||||||||||
| Finished goods | ||||||||||||
| Total | ||||||||||||
| Less: Inventory allowance | ( |
) | ( |
) | ( |
) | ||||||
| Inventories, net | ||||||||||||
F-20
Note 8 — Property, plant and equipment, net
Property, plant and equipment, net consist of the following:
| Schedule of Property, plant and equipment, net | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Office equipment | ||||||||||||
| Mechanical equipment | ||||||||||||
| Electronic and other equipment | ||||||||||||
| Vehicles | ||||||||||||
| Subtotal | ||||||||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ( |
) | ||||||
| Total | ||||||||||||
Depreciation expense for the six months ended June 30, 2025 and 2026 amounted to RMB
Note 9 — Other payables and accrued liabilities
Other payables and accrued liabilities consist of the following:
| Schedule of Other payables and accrued liabilities | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Payroll payables | ||||||||||||
| Other payables | ||||||||||||
| Total | ||||||||||||
Note 10 — Convertible bonds
Convertible bonds consist of the following:
| Schedule of Bonds payable | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Investors | ||||||||||||
F-21
The Company evaluated the embedded conversion feature under ASC 815 and determined that it meets the definition of a derivative. The conversion feature exposes the holder to variability in the Company’s share price and allows settlement through shares that are readily convertible to cash, thereby meeting the net settlement criterion.
However, the Company further assessed whether the embedded feature qualifies for the scope exception under ASC 815-40. As the conversion price is based on a variable formula (70% of the lowest closing price over the preceding 60 trading days), the feature is not considered indexed solely to the Company’s own stock and therefore does not qualify for equity classification.
Accordingly, the embedded conversion feature would generally require bifurcation and separate accounting as a derivative liability.
However, the Company noted that a substantial portion of the Notes was converted within a short period after issuance, in many cases within days to a few weeks. Based on a sensitivity analysis of price variability and the short duration of exposure, the Company concluded that the fair value impact of the embedded derivative is not material to the financial statements.
The Company evaluated the embedded conversion feature under ASC 815 and concluded that, while the feature may meet the definition of a derivative, the fair value of the embedded feature was not material to the financial statements. Accordingly, the Company did not separately account for the feature. The Company considered the short duration between issuance and conversion in its assessment. Therefore, the Notes were accounted for as a single liability instrument.
As of June 30, 2026, convertible bonds of RMB
Note 11 — Taxes
Cayman Islands
MicroCloud, MC and HaiCloud Inc were incorporated in the Cayman Islands and is not subject to tax on income or capital gains under the laws of the Cayman Islands. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Hong Kong
Mengyun HK, Mcloudvr HK, Ocean HK, Broadvision HK and HaiCloud Ltd, our subsidiaries incorporated in Hong Kong, are subject to a two-tiered income tax rate for taxable income earned in Hong Kong. The first HK$2 million profits earned by a company is subject to be taxed at an income tax rate of
PRC
The subsidiaries incorporated in the PRC are governed by the income tax laws of the PRC and the income tax provision for operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are subject to a unified
F-22
Significant components of the income tax expense are as follows:
| Schedule of income tax expense benefit | ||||||||||||
| June 30, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Current income tax expense | ( |
) | ( |
) | ( |
) | ||||||
| Deferred income tax benefit (expense) | - | - | - | |||||||||
| Income tax expense | ( |
) | ( |
) | ( |
) | ||||||
The following table reconciles China statutory rates to the Company’s effective tax rate:
| Schedule of effective income tax rate reconciliation | ||||||||
| For the Six Months Ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| China statutory income tax rate | % | % | ||||||
| Preferential tax rate reduction | ( |
)% | % | |||||
| Change in valuation allowance | % | ( |
)% | |||||
| Additional R&D deduction in China | ( |
)% | % | |||||
| Permanent difference | ( |
)% | % | |||||
| Tax rate difference outside China(1) | ( |
)% | ( |
)% | ||||
| Effective tax rate | - | % | ( |
)% | ||||
| (1) |
|
Deferred tax assets and liabilities
Significant components of deferred tax assets and liabilities were as follows:
| Schedule of deferred tax assets and liabilities | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Deferred tax assets: | ||||||||||||
| Allowance for credit losses | ||||||||||||
| Impairment loss for investment | ||||||||||||
| Net operating loss carry forward | ||||||||||||
| Inventory reserve | ||||||||||||
| Right of use | - | - | - | |||||||||
| Less: valuation allowance | ( |
) | ( |
) | ( |
) | ||||||
| Deferred tax assets, net | - | - | - | |||||||||
| Deferred tax liabilities: | ||||||||||||
| Recognition of intangible assets arising from business combinations | - | - | - | |||||||||
| Deferred tax liabilities, net | - | - | - | |||||||||
| Total deferred tax assets, net | - | - | - | |||||||||
F-23
The Company evaluated the recoverable amounts of deferred tax assets and provided a valuation allowance to the extent that future taxable profits will be available against which the net operating loss and temporary differences can be utilized. Valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. Valuation allowance was provided for net operating loss carry forward because it was more likely than not that such deferred tax assets would not be realized based on the Company’s estimate of its future taxable income. If events occur in the future that allow the Company to realize more of its deferred income tax than the presently recorded amounts, an adjustment to the valuation allowances will result in a decrease in tax expense when those events occur. The Company has recorded a full valuation allowance against its deferred tax assets as of December 31, 2025 and June 30, 2026.
Value added taxes (“VAT”)
Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price. VAT rate is 6% on services and 13% on goods in China.
Taxes payable consisted of the following:
| Schedule of Taxes payable | ||||||||||||
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| VAT taxes payable | ||||||||||||
| Income taxes payable | - | |||||||||||
| Other taxes payable | ||||||||||||
| Totals | ||||||||||||
Note 12 — Concentration of risk
Credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. In China, the insurance coverage for cash deposits at each bank is RMB
F-24
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 PBOC. Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.
Customer concentration risk
For the six months ended June 30, 2026, two customers accounted for
As of June 30, 2026, two customers accounted for
Vendor concentration risk
For the six months ended June 30, 2026, five vendors accounted for
As of June 30, 2026, five vendors accounted for
Note 13 — Leases
Lease commitments
The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty.
The Company has several office lease agreements with lease terms ranging from two to six years. The weighted average discount rate is 7%. As of June 30, 2026, the Company’s operating leases had a weighted average remaining lease term of approximately 0.39 years.
Operating lease expenses are allocated between the cost of revenue and selling, general, and administrative expenses. Rent expenses for the six months ended June 30, 2025 and 2026 were RMB
F-25
The five-year maturity of the Company’s operating lease obligations is presented below:
| Schedule of lease liabilities | ||||||||
| Twelve Months Ending December 31, | Operating Lease Amount |
Operating Lease Amount |
||||||
| RMB | USD | |||||||
| 2026 (remaining six months) | ||||||||
| Total lease payments | ||||||||
| Less: Interest | ( |
) | ( |
) | ||||
| Present value of lease liabilities | ||||||||
Future amortization of Company’s ROU assets is presented below:
| Schedule of Future amortization of Company’s ROU assets | ||||||||
| Twelve Months Ending December 31, | Right-of-use assets Amount |
Right-of-use assets Amount |
||||||
| RMB | USD | |||||||
| 2026 (remaining six months) | ||||||||
| Total | ||||||||
Note 14 — Warrant liabilities
The Company issued Public Warrants and Private Warrants in connection with its initial public offering and concurrent private placement. As of June 30, 2026, the Company had
The Company accounts for its outstanding Warrants in accordance with ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity.” The Public Warrants meet the criteria for equity classification and are recorded within shareholders’ equity. The Private Warrants do not meet the criteria for equity classification and are therefore classified as liabilities and measured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations. Management has determined that under the Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private Warrants as liabilities at their fair value and adjusts the Private Warrants to fair value at each reporting period. Management has further determined that its Public Warrants qualify for equity treatment. Warrant liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. The Private Warrants are valued using a Black-Scholes model.
Public Warrants
On June 24, 2021, the Company sold
F-26
The Public Warrants became exercisable on September 16, 2022, the Business Combination date. As of June 30, 2026, the Public Warrants are exercisable for cash as the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company may call the warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of $0.01 per warrant:
| ● | at any time while the Public Warrants are exercisable, |
| ● | upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder, |
| ● | if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.50 per share, for any 20 trading days within a 30-trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and |
| ● | if, and only if, there is a current registration statement in effect with respect to the issuance of the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
Subsequent to issuance, the Company effected multiple reverse share splits. In accordance with the terms of the warrant agreement, these events resulted in proportional adjustments to both (i) the exercise price of the warrants and (ii) the number of shares issuable upon exercise of each warrant.
These adjustments increased the exercise price while correspondingly decreasing the number of shares underlying each warrant. As a result, such changes did not alter the economic substance of the warrants.
Private Warrants
Simultaneously with the closing of the Initial Public Offering, the Company consummated a private placement of
The Private Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the balance sheets. The warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs.
The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $
The Company’s warrant liabilities amounted to nil and nil as of December 31, 2025 and June 30, 2026.
F-27
Fair Value of Private Warrants
As of December 31, 2025 and June 30, 2026, the exercise price of the Private Warrants, after giving effect to adjustments under the warrant agreement, was significantly higher than the market price of the Company’s ordinary shares. Accordingly, the warrants were deeply out-of-the-money.
As a result, the estimated fair value of the Private Warrants was de minimis as of both reporting dates, and the Company has presented the warrant liability as nil in the accompanying consolidated balance sheets.
Changes in Fair Value
The change in fair value of the Private Warrants during the six months ended June 30, 2026 was primarily attributable to (i) the decline in the Company’s share price, (ii) the reduction in the remaining contractual term, and (iii) adjustments to the exercise price resulting from reverse share splits.
The following table summarizes the Company’s Warrants activities and status of Warrants on June 30, 2026:
| Schedule of Warrants activities | ||||||||||||
| Private Warrants | Warrants | Weighted Average Exercise Price Per Share |
Average Remaining Period (Years) |
|||||||||
| Outstanding as of December 31, 2025 | $ | |||||||||||
| Issued | - | - | - | |||||||||
| Forfeited | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Expired | - | - | - | |||||||||
| Outstanding as of June 30, 2026 | $ | |||||||||||
Note 15 — Commitments and contingencies
Commitments
The Company had no significant commitments as of June 30, 2026.
Contingencies
The Company is party to the following legal proceedings, as well as unasserted claims.
Litigation
The Company, along with its shareholder Joyous JD Limited, has initiated litigation in the New York Supreme Court New York County against Greenland Asset Management Corporation, the sponsor of the pre-business combination company, Golden Path Acquisition Corporation (“Sponsor”).
Gain Contingencies (Potential Recovery) that gain contingencies are not recognized until realized, per ASC 450-30.
| 1. | Joyous JD Limited is seeking damages in connection with the Sponsor’s breach of certain investment agreements which was executed by and between the Sponsor and Joyous JD Limited; |
| 2. | The Company is seeking damages in connection with the Sponsor’s noncompliant misuse of Form S-4 in registering shares during the course of the business combination, which resulted in a forced withdrawal of the Form S-4. The Company has commenced a lawsuit seeking damages. |
F-28
Loss Contingencies (Potential Obligations)
| 3. | Greenland Asset Management initiated a countersuit against the Company in response to the Company’s lawsuit. |
Due to the uncertainty surrounding the process and outcome of the lawsuit, and given that the litigation is ongoing and has not yet been finalized, the final ruling of the Court will prevail.
Note 16 — Shareholders’ equity
Ordinary shares
The Company is authorized to issue
On February 2, 2024, the Company effected a share consolidation at a ratio of one-for-ten (10) ordinary shares with a par value of US$0.0001 each in the Company’s issued share capital into one ordinary share with a par value of US$0.001. The Company believed that it was appropriate to reflect the transactions on a retroactive basis pursuant to ASC 260, Earnings Per Share. The Company has retroactively adjusted all share and per share data for all periods presented.
In October, 2024, the Company effected a share consolidation at a ratio of one-for-twenty (20) ordinary shares with a par value of US$0.001 each in the Company’s issued share capital into one ordinary share with a par value of US$0.02, and changed
On April 21, 2025, the Company effected a share consolidation at a ratio of one-for-forty (40) ordinary shares with a par value of US$
Giving the effects of the share consolidation, as of December 31, 2025 and June 30, 2026, there were
Restricted assets
The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by Beijing Xihuiyun and Shanghai Mengyun (collectively “Mengyun PRC entities”) only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the accompanying unaudited consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Mengyun PRC entities.
Mengyun PRC entities are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, Mengyun PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund and staff bonus and welfare fund at its discretion. Mengyun PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange.
F-29
As a result of the foregoing restrictions, MicroCloud’s PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulations in the PRC may further restrict MicroCloud’s PRC entities from transferring funds to the Company in the form of dividends, loans and advances. As of June 30, 2026, amounts restricted are the paid-in-capital and statutory reserve of MicroCloud’s PRC entities, which amounted to RMB
Statutory reserve
During the six months ending June 30, 2025 and 2026, MicroCloud’s PRC entities collectively reduced RMB nil and 26,956 of statutory reserves, respectively.
Note 17 — Segments
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 detailing the Company’s business segments.
The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial information of the separate operating segments when making decisions about allocating resources and assessing the performance of the group. The Company’s revenues are primarily generated in the PRC. Information about geographic areas, including revenues and long-lived assets, is disclosed separately. The CODM evaluates segment performance primarily based on revenue and gross profit. The Company has determined that it has two operating segments: (1) holographic solutions, and (2) holographic technology service. The segments differ based on the nature of products and services and how they are managed and evaluated internally.
The following tables present summary information by segment for the six months ended June 30, 2025 and 2026:
| Schedule of segments | ||||||||||||||||
| Holographic solutions |
Holographic technology service |
Total June 30, 2025 |
Total June 30, 2025 |
|||||||||||||
| RMB | RMB | RMB | USD | |||||||||||||
| Revenues | ||||||||||||||||
| Cost of revenues | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Gross profit | ||||||||||||||||
| Depreciation and amortization | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total capital expenditures | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Holographic solutions |
Holographic technology service |
Total June 30, 2026 |
Total June 30, 2026 |
|||||||||||||
| RMB | RMB | RMB | USD | |||||||||||||
| Revenues | ||||||||||||||||
| Cost of revenues | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Gross profit | ||||||||||||||||
| Depreciation and amortization | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total capital expenditures | ( |
) | - | ( |
) | ( |
) | |||||||||
F-30
Total assets as of:
| December 31, 2025 |
June 30, 2026 |
June 30, 2026 |
||||||||||
| RMB | RMB | USD | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Holographic solutions | ||||||||||||
| Holographic technology service | ||||||||||||
| Total assets | ||||||||||||
Significant segment expenses are as follows:
| Holographic solutions |
Holographic technology service |
Total June 30, 2025 |
||||||||||
| RMB | RMB | RMB | ||||||||||
| Selling expenses | ( |
) | ( |
) | ( |
) | ||||||
| General and administrative expenses | ( |
) | ( |
) | ( |
) | ||||||
| Research and development expenses | ( |
) | ( |
) | ( |
) | ||||||
| Allowance for credit losses | ||||||||||||
| Total | ( |
) | ( |
) | ( |
) | ||||||
| Holographic solutions |
Holographic technology service |
Total June 30, 2026 |
||||||||||
| RMB | RMB | RMB | ||||||||||
| Selling expenses | ( |
) | ( |
) | ( |
) | ||||||
| General and administrative expenses | ( |
) | ( |
) | ( |
) | ||||||
| Research and development expenses | ( |
) | ( |
) | ( |
) | ||||||
| Allowance for credit losses | ( |
) | ( |
) | ||||||||
| Total | ( |
) | ( |
) | ( |
) | ||||||
Note 18 — Subsequent events
The Company evaluated all events and transactions that occurred after June 30, 2026 up through the date the Company issued these unaudited interim condensed consolidated financial statements, and determined that it does not have any additional material subsequent events to disclose in these financial statements.
F-31
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed unaudited interim condensed consolidated financial statements and related notes included in Exhibit 99.1. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Report and our annual report on Form 20-F for the fiscal year ended December 31, 2025 under Forward-Looking Statements and Item Item 3.D. Risk Factors, filed with the SEC on March 27, 2026.
| A. | Operating Results |
Overview
We are a leading holographic digitalization technology service provider in China. We are committed to providing first-class holographic technology services to our customers worldwide. Our holographic technology services include high-precision holographic light detection and ranging (“LiDAR”) solutions, based on holographic technology, exclusive holographic LiDAR point cloud algorithms architecture design, breakthrough technical holographic imaging solutions, holographic LiDAR sensor chip design and holographic vehicle intelligent vision technology to service customers that provide reliable holographic advanced driver assistance systems (“ADAS”). We also provide holographic digital twin technology services for customers and have built a proprietary holographic digital twin technology resource library. Our holographic digital twin technology resource library captures shapes and objects in 3D holographic form by utilizing a combination of our holographic digital twin software, digital content, spatial data-driven data science, holographic digital cloud algorithm, and holographic 3D capture technology. Our holographic digital twin technology and resource library has the potential to become the new norm for the digital twin augmented physical world in the near future. We are a distributor of holographic hardware and generate revenue through resale.
Business Combination
Golden Path Acquisition Corporation (“Golden Path”) was a former blank check company incorporated in the Cayman Islands on May 9, 2018. Golden Path was formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
MicroCloud Hologram Inc. (formerly known as Golden Path Acquisition Corporation), a Cayman Islands exempted company, entered into the Merger Agreement dated September 10, 2021 (as amended on August 5, 2022 and August 10, 2022), by and among Golden Path, Golden Path Merger Sub, a Cayman Islands exempted company incorporated for the purpose of effectuating the business combination, and MC, a Cayman Islands exempted company.
Pursuant to the Merger Agreement, MC would merge with the Golden Path Merger Sub and survive the merger and continue as the surviving company and a wholly owned subsidiary of Golden Path and continue its business operations (the “Merger”, and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”).
On September 8, 2022, Golden Path held an Extraordinary General Meeting (the “Extraordinary General Meeting”) to approve the Merger and the transactions contemplated by the Merger Agreement.
On September 16, 2022, in accordance with the Merger Agreement, the closing of the Business Combination (the “Closing”) occurred, pursuant to which Golden Path issued 44,554,455 ordinary shares to MC shareholders. As a result of the consummation of the Business Combination, MC became a wholly owned subsidiary of Golden Path which changed its name to MicroCloud Hologram Inc.
Following the Closing, on September 19, 2022, the ordinary shares and public warrants outstanding upon the Closing began trading on the NASDAQ under the symbols “HOLO” and “HOLOW,” respectively.
F-1
Results of Operations - Six months ended June 30, 2026 Compared to Six months ended June 30, 2025
Revenues
Our breakdown of revenues by business segment for the six months ended June 30, 2025 and 2026, respectively, is summarized below:
| For the Six Months Ended June 30, |
||||||||||||||||
| 2025 | 2026 | 2026 | Variance | |||||||||||||
| RMB | RMB | USD | % | |||||||||||||
| Revenues | ||||||||||||||||
| Holographic solutions | 65,306,664 | 140,691,479 | 20,403,080 | 115.0 | ||||||||||||
| Holographic technology service | 94,291,988 | 73,084,755 | 10,598,752 | (22.0 | ) | |||||||||||
| Total/Overall | 159,598,652 | 213,776,234 | 31,001,832 | 34.0 | ||||||||||||
Our total operating revenues increased by approximately 34.0% from RMB 159.6 million for the six months ended June 30, 2025 to RMB 213.8 million (USD 31.0 million) for the six months ended June 30, 2026.
Holographic solutions Revenues
Holographic solutions revenues increased by approximately 115.0% from RMB 65.3 million for the six months ended June 30, 2025 to RMB 140.7 million (USD 20.4 million) for the six months ended June 30, 2026. This is mainly due to the increased demand from customers for holographic solutions.
Holographic technology services Revenues
Holographic technology services revenues decreased by approximately 22.0% from RMB 94.3 million for the six months ended June 30, 2025 to RMB 73.1 million (USD 10.6 million) for the six months ended June 30, 2026. The main reason for the decline in holographic technology service revenue is the sluggish market environment and the reduction in customer demand.
Ability to retain and attract customers
The Company’s management team monitors the number of total customers, number of new customers, number of high paying customers, and customer retention rate as indicators of the growth and condition of the Company’s overall business. As to performance metrics, the number of high paying customers reflects the quality of the Company’s earnings. The retention rate reflects the Company’s service quality, customer loyalty to our services, and the sustainability of the Company’s business growth. If the number of new customers, high paying customers, and retention rate fall, the Company may need to re-evaluate its business strategy or evaluate its service efficiency. The quantitative information in number of customers and retention rate provides investors with information to evaluate the Company revenue growth, revenue quality, and concentration risk on a periodic basis. This information also provides investors insights on how the Company measures and monitors its performance.
The Company’s total customers were 84 and 39, respectively for the six months ended June 30, 2025 and 2026, a decrease of 53.6%, among which 25 were new customers. However, the decrease in the number of customers did not lead to a decline in total revenue.
The Company considers customers with or over RMB 0.5 million revenue as high paying customers. The numbers of high paying customers were 43 and 17, respectively for the six months ended June 30, 2025 and 2026, representing 96.3% and 99.1% of total revenue for each period and a 37.8% increase.
The Company’s overall customer retention rates are 33% and 17% respectively for the six months ended June 30, 2025 and 2026. Retention rates of high paying customers were 36% and 14% respectively for the same period. Retention rates of the Company’s top 10 customers are 40% and 30% for the six months ended June 30, 2025 and 2026, respectively.
F-2
Retention rate is calculated by first counting the number of customers at the beginning of the period (denominator) and the number of old customers during measurement period (numerator), then dividing the numerator by the denominator. Old customers are repeat customers who remain loyal to the Company’s services throughout the measurement periods and calculated as number of total customers at the end of measurement period minus new customers obtained during the measurement period. Customers counted for the purpose of calculating retention rate are based on those that were customers at any point during the period.
The Company’s overall customer retention rates are 33% and 17%, for the six months ended June 30, 2025 and 2026. This is due to the increase in customer concentration.
Cost of Revenues
Our breakdown of cost of revenues by business segment for the six months ended June 30, 2025 and 2026, respectively, is summarized below:
| For the Six Months Ended June 30, |
||||||||||||||||
| 2025 | 2026 | 2026 | Variance | |||||||||||||
| RMB | RMB | USD | % | |||||||||||||
| Cost of revenues | ||||||||||||||||
| Holographic solutions | 53,110,990 | 119,325,397 | 17,304,571 | 124.7 | ||||||||||||
| Holographic technology service | 70,742,697 | 65,060,518 | 9,435,077 | (8.0 | ) | |||||||||||
| Total/Overall | 123,853,687 | 184,385,915 | 26,739,648 | 48.9 | ||||||||||||
Our total cost of revenues increased by approximately 48.9% from RMB 123.9 million for the six months ended June 30, 2025 to RMB 184.4 million (USD 26.7 million) for the six months ended June 30, 2026.
Cost of Holographic Solutions Revenues
Cost of holographic solutions revenues was RMB 119.3 million (USD 17.3 million) for the six months ended June 30, 2026, compared to RMB 53.1 million for the six months ended June 30, 2025.
Our cost of revenues for holographic solutions sales increased by approximately RMB 66.2 million, representing a 124.7% growth. The amount grew from approximately RMB 53.1 million for the six months ended June 30, 2025, to approximately RMB 119.3 million (USD 17.3 million) for the six months ended June 30, 2026. The increase in the cost of revenue is mainly due to increased customer demand. The associated costs related to producing and delivering those holographic solutions also increased, ultimately leading to the observed increased in the cost of revenues.
Cost of Holographic Technology Service Revenues
Cost of holographic technology service revenues was RMB 65.1 million (USD 9.4 million) for the six months ended June 30, 2026, compared to RMB 70.7 million for the six months ended June 30, 2025.
Our cost of revenues for services decreased by approximately RMB 5.6 million, representing an 8.0% decline. The amount decreased from approximately RMB 70.7 million for the six months ended June 30, 2025, to approximately RMB 65.1 million (USD 9.4 million) for the six months ended June 30, 2026. The decrease in the cost of revenues was mainly due to the constantly decreasing Holographic technology service sales.
F-3
Gross Profit
| For the Six Months Ended June 30, |
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| 2025 | 2026 | 2026 | Variance | |||||||||||||
| RMB | RMB | USD | % | |||||||||||||
| Holographic solutions | ||||||||||||||||
| Gross profit | 12,195,674 | 21,366,082 | 3,098,509 | 9,170,408 | ||||||||||||
| Gross margin (%) | 18.7 | 15.2 | 15.2 | 75.2 | ||||||||||||
| Holographic technology service | ||||||||||||||||
| Gross profit | 23,549,291 | 8,024,237 | 1,163,675 | (15,525,054 | ) | |||||||||||
| Gross margin (%) | 25.0 | 11.0 | 11.0 | (65.9 | ) | |||||||||||
| Total/Overall | ||||||||||||||||
| Gross profit | 35,744,965 | 29,390,319 | 4,262,184 | (6,354,646 | ) | |||||||||||
| Gross margin (%) | 22.4 | 13.7 | 13.7 | (17.8 | ) | |||||||||||
Our gross profit decreased by approximately RMB 6.3 million, from approximately RMB 35.7 million for the six months ended June 30, 2025 to approximately RMB 29.4 million (USD 4.3 million) for the six months ended June 30, 2026. For the six months ended June 30, 2025 and 2026, our overall gross margin was 22.4% and 13.7%, respectively. The Holographic solutions’ gross margin decreased from 18.7% to 15.2% for the six months ended June 30, 2025 and 2026, respectively, due to the deterioration of market competition. The holographic technology service’ margin decreased from 25.0% to 11.0% for the six months ended June 30, 2025 and 2026, respectively, due to the sluggish market environment and reduced customer demand.
Operating Expenses
For the six months ended June 30, 2026, we incurred approximately RMB 19.8 million (USD 2.9 million) in operating expenses, representing a decrease of approximately RMB 15.3 million, or 43.7%, from approximately RMB 35.1 million for the six months ended June 30, 2025 as a result of the reduction in operating costs.
Our selling expenses primarily consist of salaries and benefits of sales department, advertising fee and marketing expense. Selling expenses decreased by approximately RMB 0.3 million from approximately RMB 1.2 million for the six months ended June 30, 2025 to approximately RMB 0.9 million (USD 0.1 million) for the six months ended June 30, 2026.
Our general and administrative expenses consist primarily of salaries and benefits for members of our management, professional service fees, office rental, depreciation and other administrative related expenses. General and administrative expenses decreased by approximately RMB 0.3 million, or 2.4%, from RMB 10.4 million for the six months ended June 30, 2025 to approximately RMB 10.1 million (USD 1.5 million) for the six months ended June 30, 2026.
Research and development expenses decreased by approximately RMB 15.4 million, or 63.9%, from approximately RMB 24.1 million for the six months ended June 30, 2025 to approximately RMB 8.7 million (USD 1.3 million) for the six months ended June 30, 2026. The decrease was primarily due to the company’s comprehensive review and optimization of its research and development projects in 2026. Some projects with uncertain market prospects were terminated, thereby reducing the corresponding research and development investment.
Other income (expenses), net
Total other income was approximately RMB 237.5 million for the six months ended June 30, 2025 compared to other expenses of approximately RMB 121.1 million (USD 17.6 million) for the six months ended June 30, 2026.
F-4
Financial income, net. We had net financial income of approximately RMB 22.6 million and RMB 12.6 million (USD 1.8 million) which consisted primarily of bank charges and interest income for the six months ended June 30, 2025 and 2026, respectively. The decrease was due to a decrease in bank term deposits for the six months ended June 30, 2026.
Investment gain (loss). We had investment gain of approximately RMB 214.9 million and investment loss of approximately RMB 134.1 million (USD 19.4 million) for the six months ended June 30, 2025 and 2026, respectively. The decrease is from loss recognized from the fair value change in short-term investments for the six months ended June 30, 2026.
Income tax expense
Our income tax expense amounted to approximately RMB 0.004 million and RMB 0.3 million for the six months ended June 30, 2025 and 2026.
Net income/loss
As a result of the foregoing, we had reported a net income of RMB 238.1 million and a net loss of RMB 111.8 million (USD 16.2 million), respectively, for the six months ended June 30, 2025 and 2026.
| B. | LIQUIDITY AND CAPITAL RESOURCES |
As of June 30, 2026, we had cash and cash equivalents of RMB 752.1 million (USD 110.4 million). Our working capital was approximately RMB 2,502.1 million (USD 367.4 million) as of June 30, 2026. In assessing our liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. To date, we have financed our working capital requirements through cash flow generated from operations, debt and equity financing.
We are subject to risks and uncertainties frequently encountered by technological companies including, but not limited to, the uncertainty of successfully developing products, securing certain contracts, building a customer base, successfully executing business and marketing strategies, and hiring appropriate personnel.
Failure to generate sufficient revenues, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, financial condition, and ability to achieve our intended business objectives.
Cash Flows
The following table provides summary information about our net cash flow for financial statement periods presented in this report:
| For the Six Months Ended June 30, |
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| 2025 | 2026 | 2026 | ||||||||||
| RMB | RMB | USD | ||||||||||
| Net cash provided by operating activities | 23,067,685 | 22,641,335 | 3,283,446 | |||||||||
| Net cash used in investing activities | (379,435,494 | ) | (1,072,200,591 | ) | (155,490,544 | ) | ||||||
| Net cash provided by financing activities | 1,104,593,216 | 1,000,000 | 145,020 | |||||||||
| Effect of exchange rate on cash and cash equivalents | (3,387,011 | ) | (42,764,824 | ) | 220,598 | |||||||
| Change in cash and cash equivalents | 744,838,396 | (1,091,324,080 | ) | (151,841,480 | ) | |||||||
| Cash and cash equivalents, beginning of period | 851,470,436 | 1,843,388,870 | 262,262,245 | |||||||||
| Cash and cash equivalents, end of period | 1,596,308,832 | 752,064,790 | 110,420,765 | |||||||||
F-5
Operating Activities
Net cash provided by operating activities was approximately RMB 23.1 million for the six months ended June 30, 2025, derived mainly from net income of approximately RMB 238.1 million adjusted by the gain from short-term investments of approximately RMB 214.3 million, and net changes in our operating assets and liabilities, principally comprising of an increase of approximately RMB 2.2 million in accounts receivable, a decrease of approximately RMB 2.3 million in prepayments and other current assets, a decrease of approximately RMB 2.4 million in contract liabilities, and an increase of approximately RMB 1.6 million in other payables and accrued liabilities.
Net cash provided by operating activities was approximately RMB 22.6 million (USD 3.3 million) for the six months ended June 30, 2026, derived mainly from net loss of approximately RMB 111.8 million (USD 16.2 million) adjusted by the decrease from short-term investments of approximately RMB 134.1 million (USD 19.4 million) and net changes in our operating assets and liabilities, principally comprising of a decrease of approximately RMB 4.8 million (USD 0.7 million) in accounts receivable, a decrease of approximately RMB 3.5 million (USD 0.5 million) in accounts payable.
Investing Activities
Net cash used in investing activities was approximately RMB 379.4 million for the six months ended June 30, 2025, primarily due to the purchases of short-term investments of approximately RMB 522.6 million and redemption of short-term investments of approximately RMB 143.2 million.
Net cash used in investing activities was approximately RMB 1,072.2 million (USD 155.5 million) for the six months ended June 30, 2026, primarily due to the purchases of short-term investments of approximately RMB 7,309.3 million (USD 1,060.0 million) and redemption of short-term investments of approximately RMB 6,226.6 million (USD 903.0 million).
Risks Related to Certain Investing Activities
Our short-term investments include holdings in structured financial products. The value of these underlying assets is subject to extreme price fluctuations and regulatory uncertainty. An adverse movement could result in a significant or total loss of invested capital, materially impacting our financial condition and results of operations.
Our capital management strategy is to maintain substantial cash reserves to support operations and R&D, not primarily to seek investment returns. However, deploying a portion of these reserves into short-term investments has introduced risks inconsistent with our capital preservation objectives, including liquidity risks and potential impairment charges that may adversely affect our reported results.
In response, we are strengthening our risk monitoring and oversight, including: (i) reviewing our investment portfolio for concentration and liquidity risks; (ii) implementing enhanced approval procedures for financial product investments; (iii) reducing speculative assets and reallocating toward high-quality, liquid instruments;
There can be no assurance that these measures will fully mitigate existing risks or prevent future losses, particularly given ongoing regulatory uncertainty in the financial asset markets.
Financing Activities
Net cash provided by financing activities was approximately RMB 1,104.6 million for the six months ended June 30, 2025, which was primarily derived from proceeds of approximately RMB 1,106.4 million from convertible bonds, proceeds of approximately RMB 0.7 million from bank loans, partially offset by a repayment of bank loans of approximately RMB 2.5 million.
Net cash provided by financing activities was approximately RMB 1.0 million (USD 0.1 million) for the six months ended June 30, 2026, which was primarily derived from proceeds of approximately RMB 1.0 million (USD 0.1 million) from bank loans.
F-6
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company’s year-end financial statements, which could result in significant differences from this unaudited financial information.
Safe Harbor Statement
This report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as “may, “will, “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company’s expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company’s goals and strategies; the Company’s future business development; product and service demand and acceptance; changes in technology; economic conditions; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
F-7