Financial Performance - Q1 2025 revenue was reported at $5.9 million, a decline compared to the same period in 2024 due to several factors including BTC halving and market conditions[11] - Total revenue for Q1 2025 was $5.936 million, a decrease of 52.7% compared to $12.549 million in Q1 2024[29] - Cryptocurrency mining revenue decreased to $2.999 million, down 53.1% from $6.396 million in the same period last year[29] - Data hosting revenue also declined to $2.402 million, a 54.5% decrease from $5.278 million in Q1 2024[29] - The net loss attributable to Soluna Holdings, Inc. for Q1 2025 was $7.556 million, compared to a net loss of $5.254 million in Q1 2024[29] - Basic and diluted loss per share for Q1 2025 was $0.88, an improvement from a loss of $2.62 per share in Q1 2024[29] - The net loss from continuing operations for the three months ended March 31, 2025, was $7,354 million, an increase from a loss of $2,544 million in the same period of 2024[36] - Adjusted EBITDA declined to a loss of $1.6 million, down $6.8 million from Q1 2024, influenced by revenue and cost factors[15] - Adjusted EBITDA for the three months ended March 31, 2025, was $(1,648) million, down from $5,147 million in the previous year[36] Cash and Assets - Unrestricted cash increased to $9.2 million, reflecting a $1.4 million growth from December 31, 2024[11] - Total current assets increased to $15.758 million as of March 31, 2025, up from $13.495 million at the end of 2024[26] - Cash and restricted cash at the end of Q1 2025 totaled $14.448 million, an increase from $11.394 million at the end of Q1 2024[31] Liabilities and Expenses - Total liabilities rose to $63.056 million as of March 31, 2025, compared to $60.678 million at the end of 2024[26] - Operating expenses for Q1 2025 were $8.350 million, up from $6.397 million in Q1 2024, reflecting increased general and administrative costs[29] - The company reported a significant increase in stock-based compensation, totaling $1.847 million in Q1 2025 compared to $661,000 in Q1 2024[31] - Interest expense for the three months ended March 31, 2025, was $838 million, compared to $424 million in the previous year[36] Projects and Development - The company has 220MW of new projects in development, contributing to a total project pipeline of approximately 698MW across operations, construction, and development[10] - Project Dorothy 2 is expected to increase Bitcoin hosting capacity by 64%, reaching a total of 123MW, with an expected completion timeline of Q4 2025[7] - The termination of the HP Enterprises contract allows the company to refocus on crypto-mining and AI data center development[6] - The company anticipates revenue stabilization and growth as additional MW of Bitcoin hosting capacity is commissioned over the next two years[11] Patents and Technology - The second utility patent was awarded in April 2025, expanding the scope of Soluna's Modular Data Center technology[10] Historical Comparison - Total revenue for the three months ended March 31, 2024, was $12,549 million, a decrease from $11,674 million in the previous quarter[33] - Cryptocurrency mining revenue was $6,396 million, while data hosting revenue was $5,278 million for the same period[33] - Segment operating income for the three months ended March 31, 2024, was $5,703 million, compared to $3,229 million in the previous year[33] - Total cost of revenue for the three months ended March 31, 2024, was $5,615 million, compared to $4,763 million in the previous quarter[35] - The gross profit for the three months ended March 31, 2024, was $6,934 million, a decrease from $1,173 million in the previous quarter[35] - Demand response revenue for the three months ended March 31, 2024, was $875 million, while it was $507 million in the same period of 2025[35] - The total segment cost of revenue for the three months ended March 31, 2024, was $5,777 million, an increase from $5,615 million in the previous quarter[33]

Revenue and Profitability - Revenue increased 4,432% to $925,635 in Q1 2025, compared to $20,426 in Q1 2024[5] - Net loss was approximately $2.85 million in Q1 2025, compared to a net loss of approximately $1.41 million in Q1 2024, with the net profit margin improving from approximately (6,947)% to (309)% year-over-year[5] - Adjusted EBITDA was approximately $(1.96) million in Q1 2025, compared to approximately $(1.34) million in Q1 2024[5] - Net loss for Q1 2025 was $2,850,351, compared to a net loss of $1,419,045 in Q1 2024, representing an increase of 101% in losses year-over-year[18] - Adjusted EBITDA for Q1 2025 was $(1,960,997), compared to $(1,337,147) in Q1 2024, indicating a decline of 47% in operational performance[21] Cash and Liquidity - Cash was approximately $1.2 million as of Q1 2025, down from $3.1 million in Q1 2024[5] - Cash and cash equivalents at the end of Q1 2025 were $1,204,400, down from $4,838,146 at the end of Q1 2024, reflecting a decrease of 75%[18] - Cash used in operating activities for Q1 2025 was $(2,267,103), an increase of 48% compared to $(1,527,238) in Q1 2024[18] - Total adjustments to reconcile net loss to net cash used in operating activities were $583,248 in Q1 2025, compared to $(108,193) in Q1 2024[18] - Cash used for additions to capitalized software was $(91,310) in Q1 2025, slightly lower than $(97,700) in Q1 2024[18] - Proceeds from issuance of common stock in Q1 2025 amounted to $231,235, with no such proceeds reported in Q1 2024[18] - Net cash provided by investing activities was $244,554 in Q1 2025, compared to $(19,700) in Q1 2024, indicating a significant improvement[18] Operating Performance - Operating expenses increased to $2.94 million in Q1 2025, compared to $1.31 million in Q1 2024[15] - The company incurred $205,247 in interest expense in Q1 2025, compared to $10,445 in Q1 2024, marking a substantial increase[21] Assets and Investments - Total assets increased to $18.54 million as of March 31, 2025, compared to $11.99 million as of December 31, 2024[12] - The acquisition of GTG Financial contributed to originating 36 mortgages for a total loan volume of approximately $22.4 million since its acquisition in Q1 2025[6] Corporate Developments - The company secured a $5 million media-for-equity investment from Mercurius Media Capital LP on March 10, 2025[7] - The company launched several tools to enhance operational efficiency, including a new public-facing website for Be My Neighbor[6] - The company appointed Piyush Phadke as Chief Financial Officer and Vijay Rathna as Chief Crypto Officer[6] Gains and Losses - The company reported a gain on the sale of properties of $0 in Q1 2025, compared to a gain of $(31,378) in Q1 2024[18]

Financial Performance - Net sales decreased 1.4% to $1.554 billion, with pricing/mix down 0.3% and volume down 2.7%, while the Simple Mills acquisition contributed 1.6%[6] - Net income decreased 27.4% to $53.0 million, representing 3.4% of sales, and diluted EPS decreased $0.09 to $0.25[6] - Adjusted EBITDA increased 1.6% to $162.0 million, representing 10.4% of net sales, a 30-basis point increase[6] - Net sales for the 16-week period ended April 19, 2025, were $1,554,230, a decrease of 1.4% compared to $1,576,818 for the same period in 2024[26] - Branded Retail sales decreased by 0.4% to $1,011,273 from $1,015,130 year-over-year[30] - Adjusted net income per diluted common share for the 16-week period ended April 19, 2025, was $0.35, down from $0.38 in the prior year[34] - EBITDA for the 16-week period ended April 19, 2025, was $134,518, compared to $149,941 in the prior year, reflecting a decline in profitability[39] - Adjusted net income for the 16-week period ended April 19, 2025, was $73,706, down from $80,261 in the prior year[43] - The gross margin for the 16-week period ended April 19, 2025, was $748,400, slightly lower than $753,279 in the prior year[36] Future Guidance - The company expects net sales for Fiscal 2025 to be between $5.297 billion and $5.395 billion, representing 3.8% to 5.7% growth compared to the prior year[7] - Adjusted diluted EPS is projected to be approximately $1.05 to $1.15, compared to prior guidance of $1.11 to $1.24[7] - The company provided full-year fiscal 2025 guidance for net income per diluted common share in the range of $0.95 to $1.05[43] Acquisitions and Strategic Moves - The acquisition of Simple Mills contributed $24.3 million in net sales but resulted in a net loss of $4.2 million[6] - The acquisition of Simple Mills was highlighted as a strategic move to enhance market presence and product offerings[20] - The company experienced a 2.4% increase in net sales due to acquisitions, contributing positively to overall sales performance[36] Expenses and Costs - Selling, distribution, and administrative expenses were 40.8% of net sales, a 110-basis point increase due to higher workforce-related costs[11] - Selling, distribution, and administrative expenses (SD&A) were $633,513 for the 16-week period ended April 19, 2025, compared to $625,251 in the prior year[37] - The company incurred restructuring charges of $573 and plant closure costs of $7,397 during the 16-week period[26] Cash Flow and Assets - Cash flow from operating activities increased by $30.5 million to $135.6 million in the first quarter[10] - The company reported a net cash provided by operating activities of $135,634, an increase from $105,149 in the prior year[28] - Cash and cash equivalents at the end of the period were $7,340, up from $5,005 at the beginning of the period[28] - Total assets increased to $4,326,946 as of April 19, 2025, compared to $3,400,447 at the end of the previous fiscal year[23] - Long-term debt rose significantly to $1,790,379 from $1,021,644, indicating increased leverage[23] Capital Expenditures - Capital expenditures are expected to be approximately $140 million to $150 million, with $4 million to $6 million related to an enterprise resource planning system upgrade[7]

Financial Performance - Net sales for the three months ended April 30, 2025 increased 11.4% to $382.6 million compared to $343.4 million in the same period in the prior year, driven by organic sales growth of 1.6% and acquisition-related growth of 10.5%[68] - For the nine months ended April 30, 2025, net sales increased 11.9% to $1,116.3 million compared to $998.0 million in the same period in the prior year, with organic sales growth of 2.6% and acquisition-related growth of 10.2%[69] - Operating income for the three months ended April 30, 2025 increased 5.7% to $67.2 million, while for the nine months it remained relatively stable at $177.3 million, reflecting organic sales growth in higher gross margin product lines[73] - Net income for the three months ended April 30, 2025, was $52.3 million, or 13.7% of sales, compared to $50.9 million (14.8% of sales) in the same period of 2024[74] - Total company organic sales growth was 1.6% in the three months ended April 30, 2025, compared to 4.5% in the same period of 2024[80] Expenses - Gross margin for the three months ended April 30, 2025 was $195.1 million, a 10.2% increase from $177.0 million in the same period last year, although the gross margin percentage decreased to 51.0% from 51.6%[70] - Research and development (R&D) expenses increased 8.5% to $19.2 million for the three months ended April 30, 2025, and 13.2% to $56.8 million for the nine months ended April 30, 2025, reflecting a commitment to new product development[71] - Selling, general and administrative (SG&A) expenses rose 13.4% to $108.7 million for the three months ended April 30, 2025, and 15.2% to $326.4 million for the nine months ended April 30, 2025, primarily due to increased headcount and acquisition-related costs[72] Cash Flow and Liquidity - The company had cash of $152.2 million and total available liquidity of $1,237.4 million as of April 30, 2025, supporting its growth strategy and ability to manage economic challenges[63] - Cash and cash equivalents decreased by $98.0 million to $152.2 million at April 30, 2025, primarily due to changes in working capital and increased inventory outflows[91] - Net cash provided by operating activities was $122.9 million in the nine months ended April 30, 2025, down from $171.1 million in the same period of 2024[91] - Net cash used in investing activities was $165.1 million in the nine months ended April 30, 2025, primarily for business acquisitions of $147.2 million[92] Debt and Financial Obligations - As of April 30, 2025, the outstanding balance on the Company's credit agreement was $102.8 million, with a maximum outstanding amount of $144.8 million during the nine months ended April 30, 2025[98] - The Company has $195.2 million available for future borrowing under the credit agreement, which can be increased to $1,085.2 million at the Company's option, subject to certain conditions[98] - The Company is in compliance with financial covenants, maintaining a debt to EBITDA ratio of 0.3 to 1.0 and an interest expense coverage ratio of 71.5 to 1.0 as of April 30, 2025[99] - The credit agreement has a final maturity date of November 14, 2027, and includes an increase in lending commitments to $300 million[96] - The Company had letters of credit outstanding under the credit agreement of $2.0 million as of April 30, 2025[98] Strategic Focus - The company is focused on integrating recent acquisitions to enhance its strategic position and accelerate long-term sales growth[61] - The company plans to mitigate inflationary pressures and tariff impacts through targeted price increases, strategic sourcing adjustments, and operational efficiency gains[62] - The Company aims to enhance its digital capabilities and customer service through improved sales channels and data-driven marketing automation tools[61] Tax and Compliance - The company's income tax rate was 20.5% for the three months ended April 30, 2025, down from 21.0% in the same period of 2024, with an expected ongoing annual rate of approximately 21%[78] - The Company does not believe that cash requirements for uncertain tax positions will be material[94] Future Outlook - The Company anticipates future financial position and business strategy changes, including projected sales and capital expenditures, as part of its forward-looking statements[100] - The Company has material cash requirements for known contractual obligations, including capital expenditures and lease obligations, and expects net cash from operating activities to be adequate for liquidity needs over the next 12 months[94] - The Company does not have significant agreements for minimum order quantities for inventory purchases, indicating flexibility in managing cash flow[94]

Financial Performance - Sales for the third quarter ended April 30, 2025, increased by 11.4% to $382.6 million, compared to $343.4 million in the same quarter last year[3]. - Adjusted Diluted EPS for the third quarter was $1.22, an increase of 11.9% compared to $1.09 in the same quarter last year[6]. - Adjusted Net Income for the third quarter was $58.8 million, up from $52.7 million in the same quarter last year[5]. - For the nine-month period ended April 30, 2025, sales increased by 11.9% to $1.12 billion compared to $998.0 million in the same period last year[7]. - Adjusted Income Before Income Taxes for the nine-month period was $205.4 million, an increase of 10.0% compared to the same period last year[8]. - Adjusted Net Income for the nine months ended April 30, 2025, was $161,098 million, compared to $147,201 million for the same period in 2024, reflecting a 9.4% increase[26]. - Adjusted Diluted EPS for the nine months ended April 30, 2025, was $3.34, compared to $3.03 in the same period of 2024, indicating a 10.3% increase[27]. Shareholder Returns - The Company returned $44.5 million to shareholders through dividends and share repurchases during the quarter[6]. - The Company repurchased 476,000 shares for $33.2 million during the quarter[10]. Guidance and Projections - The Company tightened its Adjusted Diluted EPS guidance for the fiscal year ending July 31, 2025, to a range of $4.48 to $4.63 per share[11]. - Fiscal 2025 guidance for Adjusted Diluted EPS is projected between $4.48 and $4.63, with a GAAP measure expectation of $3.95 to $4.10[28]. - Amortization expense for fiscal 2025 is expected to remain constant at $0.30 per Class A Nonvoting Common Share[28]. - Facility closure and other reorganization costs are projected at $0.15 per Class A Nonvoting Common Share for fiscal 2025[28]. - Non-recurring acquisition-related costs and other expenses are expected to be $0.08 per Class A Nonvoting Common Share for fiscal 2025[28]. Income and Expenses - Income before income taxes for the third quarter increased by 2.1% to $65.7 million compared to $64.4 million in the same quarter last year[4]. - Adjusted Income Before Income Taxes for the three months ended April 30, 2025, was $74.43 million, compared to $66.78 million in the same period of 2024[24]. - The company reported a net income of $139.38 million for the nine months ended April 30, 2025, slightly down from $141.76 million in the same period of 2024[21]. - The company reported a GAAP net income of $52,263 million for Q3 2025, compared to $50,890 million in Q3 2024, a 2.7% increase[26]. - The company incurred $2,947 million in facility closure and reorganization costs for Q3 2025, compared to no such costs in Q3 2024[26]. Cash and Liabilities - The company’s net cash provided by operating activities for the nine months ended April 30, 2025, was $122.87 million, down from $171.09 million in the same period of 2024[21]. - Cash and cash equivalents decreased to $152.15 million as of April 30, 2025, from $250.12 million at the beginning of the period[21]. - Total liabilities increased to $530.56 million as of April 30, 2025, compared to $448.91 million as of July 31, 2024[20]. - The company’s long-term debt increased to $102.82 million as of April 30, 2025, from $90.94 million as of July 31, 2024[20]. - The company’s total stockholders' equity rose to $1.17 billion as of April 30, 2025, up from $1.07 billion as of July 31, 2024[20]. Regional Performance - The Americas & Asia region saw organic sales growth of 5.4%, while Europe & Australia experienced an organic sales decline of 5.4%[3]. - The Americas & Asia segment reported net sales of $253.65 million, up 12.9% year-over-year, while Europe & Australia segment sales increased by 8.7% to $128.94 million[22]. - The company’s segment profit margin for the Americas & Asia was 22.5% for the three months ended April 30, 2025, compared to 22.1% in the same period of 2024[22].

Revenue Performance - Revenue for the three months ended March 31, 2025, decreased by $2,062,762 or 39% to $3,160,480 compared to $5,223,242 in the same period last year, primarily due to a strategic shift away from the recommerce business[164] - For the nine months ended March 31, 2025, revenue declined by $9,438,325 or 45% to $11,522,487, with approximately $8,277,000 of the decline related to the strategic shift away from recommerce[173] Cost and Profitability - Cost of revenue decreased by $2,354,185 or 60%, leading to a gross profit increase of approximately $290,000 and a gross profit margin increase to 49% from 24% year-over-year[165] - The net loss for the three months ended March 31, 2025, was $3,831,660, a decrease from a loss of $4,118,612 in the same period last year[172] Expenses - General and administrative expenses increased by $828,028 or 46%, attributed to legal and auditing costs, with expectations for normalization post-restructuring[168] Cash Flow and Working Capital - Cash flows used in operating activities for continuing operations were $(4,137,346) for the nine months ended March 31, 2025, compared to $(3,700,706) in the prior year[184] - The company had current assets of $3,968,157 and current liabilities of $10,796,201 as of March 31, 2025, resulting in a working capital deficit of $(6,828,044)[183] - Management expects sufficient working capital to fund operations and meet debt obligations over the next twelve months following the issuance of the financial statements[189] Investment Activities - Net cash provided by investing activities for the nine months ended March 31, 2025, was $5,757,517, primarily from the sale of a building and collection of the purchase price for E-core[186] - On April 24, 2025, the company closed a private placement offering, selling 35,970,383 shares at $2.28 per share, raising approximately $92,586,000 net[188]

Financial Performance - For the three months ended March 31, 2025, revenue decreased to $4,100,640 from $4,287,760 for the same period in 2024, representing a reduction of $187,120 or 4.4% year-over-year[143] - The company reported a net loss of $1,602,046 for the three months ended March 31, 2025, compared to a net loss of $2,256,450 for the same period in 2024[142] - Operating loss for the three months ended March 31, 2025, was $1,464,101, an improvement from the operating loss of $2,083,746 in the same period of 2024[142] - Fr8Tech had an accumulated deficit of approximately $46.5 million and reported operating losses and negative cash flows from operations for the quarter ended March 31, 2025[155] Cost Management - Cost of revenue for the three months ended March 31, 2025, decreased to $3,593,300 from $4,056,627 in the same period of 2024, a reduction of $463,327 or 11.4% year-over-year[144] - Fr8Tech's compensation and employee benefits expenses decreased by $199,552 or 13.7% year-over-year to $1,254,789 for Q1 2025, primarily due to a reduction in headcount[145] - General and administrative expenses fell by $134,784 or 18.4% to $596,753 for Q1 2025, mainly due to lower spending on professional services and insurance[146] - Sales and marketing expenses decreased by $2,749 or 14.6% to $16,045 for Q1 2025, attributed to reduced online advertising and industry event expenditures[147] - Interest expense decreased by $38,601 to $134,864 for Q1 2025, primarily due to lower borrowing against the revolving credit facility[150] Cash Flow and Liquidity - Net cash used in operating activities for Q1 2025 was $3,096,429, driven by a net loss of $1,602,046 and cash used for working capital of $1,823,320[162] - Net cash provided by financing activities increased to $3,421,713 for Q1 2025, primarily from the issuance of Series A4 shares and short-term borrowings[166] - The liquidity condition raises substantial doubt about Fr8Tech's ability to continue as a going concern for the next twelve months[158] Strategic Focus and Market Conditions - The demand for the company's platform is influenced by overall economic conditions in North America, including international trade levels[137] - The company is focused on enhancing its digital freight matching capabilities to address supply chain challenges and improve operational efficiency[138] - The company believes that the near-shoring trend will continue to create market opportunities for digital brokers in cross-border commerce[139] Financing Activities - The company raised $3,000,000 from the issuance of Series A4 preferred shares in February 2025, contributing to its financing efforts[136] - The company expects to have sufficient funds to carry out planned operations through December 31, 2025, and for at least 12 months beyond that period[136] Accounts Receivable and Payable - Accounts receivable and unbilled receivable balance increased by $1.8 million or 45.1% to $5.9 million as of March 31, 2025, due to lower collections[152] - Accounts payable, short-term borrowings, and accrued expenses rose by $750,000 or 12.4% to $6.8 million as of March 31, 2025, mainly due to higher accrued expenses[153]

Financial Performance - Revenues for Q1 2025 reached $925,635, a significant increase from $20,426 in Q1 2024, representing a growth of 4,433%[14] - Gross profit for Q1 2025 was $518,667, compared to $2,177 in Q1 2024, indicating a substantial increase[14] - The net loss for Q1 2025 was $2,850,351, compared to a net loss of $1,419,045 in Q1 2024, representing an increase in losses of 101%[14] - Operating expenses for Q1 2025 totaled $2,940,925, up from $1,308,835 in Q1 2024, indicating a rise of 125%[14] - The company reported a net loss of $2,850,351 for the three months ended March 31, 2025, compared to a net loss of $1,419,045 for the same period in 2024, representing an increase in losses of approximately 101%[18] - Adjusted EBITDA for the three months ended March 31, 2025, was $(1,960,997), compared to $(1,337,147) for the same period in 2024[201] Assets and Liabilities - Total current assets increased to $6,895,822 as of March 31, 2025, up from $4,043,098 as of December 31, 2024, reflecting a growth of 70%[11] - Total liabilities rose to $19,503,879 as of March 31, 2025, compared to $10,426,986 as of December 31, 2024, marking an increase of 87%[12] - Cash decreased to $1,204,400 as of March 31, 2025, down from $3,123,530 as of December 31, 2024, a decline of 61%[11] - The total stockholders' equity deficit was $(965,220) as of March 31, 2025, compared to $1,567,472 as of December 31, 2024, indicating a deterioration in equity position[12] Cash Flow and Financing - Cash used in operating activities was $2,267,103 for the three months ended March 31, 2025, compared to $1,527,238 in the prior year, indicating a 48% increase in cash outflow[18] - The company had a net cash decrease of $1,919,544, with cash at the end of the period amounting to $1,204,400, down from $4,838,146 at the end of the same period in 2024[18] - The company anticipates continuing operating losses for the next 12 months due to growth initiatives, while also planning to raise capital through additional debt and/or equity financings[47] - The company plans to utilize equity or debt offerings to raise funds as needed, depending on market conditions and investor demand[202] - The company may require additional financing to support operations, which could lead to unfavorable terms and dilution of stockholder ownership[206] Acquisitions and Business Strategy - The company acquired Naamche, Inc. and AiChat Pte Ltd. to enhance its AI capabilities, which is expected to strengthen its software development and engagement tools[22] - The company is transitioning to a technology-driven model with the reAlpha platform aimed at simplifying the homebuying process and generating revenue through various real estate services[21] - The company plans to continue acquiring complementary companies to enhance its service offerings and revenue potential[158] - The company has acquired several firms, including Be My Neighbor and GTG Financial, increasing its mortgage brokerage operations to 30 U.S. states[159] Stock and Equity - The Company issued 264,063 shares of Series A Preferred Stock with a stated value of $20 per share in connection with the GTG Financial acquisition[94] - The total number of shares of common stock issued and outstanding increased to 46,230,934 as of March 31, 2025, from 45,864,503 as of December 31, 2024[102] - The Company granted 550,000 Restricted Stock Units (RSUs) during the quarter ended March 31, 2025, with a weighted-average grant-date fair value of $1.84[106][107] - The Company issued 160,879 shares of common stock under its ATM program at a weighted-average price of $1.44 per share, resulting in total gross proceeds of approximately $231,235[118] Future Outlook - The company anticipates continued operating losses in the near future but expects to generate more significant revenues through commercialization of products and acquisition of complementary businesses[204] - The company estimates that its cash and cash equivalents will be sufficient to fund operating expenses and capital expenditures into the third quarter of 2025, assuming no additional capital is raised[204] - The reAlpha platform aims to expand nationwide by the end of 2026, currently available in 20 counties in Florida[157] Regulatory and Compliance - The Company is subject to SEC's "baby shelf rules," which may limit future issuances of shares under its Form S-3[120] - The Company maintains indemnification agreements with directors and officers, which may require indemnification against liabilities arising from their service[122]

Revenue Performance - Total revenues decreased by approximately US$180,776 or 7.3% to approximately US$2,309,219 for the year ended December 31, 2024, from approximately US$2,489,995 for the year ended December 31, 2023[61]. - Total revenues increased by approximately US$818,878 or 49.0% to approximately US$2,489,995 for the year ended December 31, 2023, from approximately US$1,671,117 for the year ended December 31, 2022[61]. - Net income for the years ended December 31, 2022, and 2023 was US$780,648 and US$937,609, respectively, while there was a net loss of US$431,544 for the year ended December 31, 2024[61]. Market and Competition - The ERP software market is highly competitive, with increasing competition from established players and new entrants, which may harm the company's ability to grow its customer base and maintain pricing[78]. - Competitors may offer lower-priced products, leading to potential reductions in margins and revenue, adversely affecting the company's financial condition[79]. - Larger competitors possess significant advantages, including greater financial resources and broader product lines, which could impact the company's market share and competitive position[80]. - The company must continuously innovate and enhance its platform to meet evolving customer needs, or risk losing market demand[81]. - The market for ERP SaaS solutions is not as mature as traditional enterprise software, and the company faces uncertainty regarding demand and market acceptance[77]. Customer Relationships and Marketing - The company’s revenue growth for ERP SaaS services depends on maintaining and growing relationships with existing customers, with subscription plans typically having 12-month terms[65]. - The company plans to expand its marketing and sales operations both domestically and internationally to increase its customer base[71]. - Maintaining and growing brand recognition is vital for attracting and retaining customers, especially as competition increases in the market[75]. - The effectiveness of online advertising may vary due to competition and changes in search engine algorithms, which could adversely affect marketing costs and traffic to the website[72]. - The company’s ability to attract new customers cost-effectively is crucial, as reliance on client referrals and various marketing channels is essential for growth[69]. Operational Risks - The company relies on third-party data hosting services, and any disruptions or increased costs from these providers could impair functionality and harm revenue[91][95]. - Insufficient computing resources and bandwidth could lead to service disruptions, negatively impacting customer retention and acquisition[96]. - High-quality customer support is critical for the renewal and expansion of agreements with existing customers, and any failure in this area could harm the company's reputation and customer retention[110]. - The operating subsidiary does not enter into long-term sales agreements, leading to fluctuating purchase orders based on customer demand[112]. Compliance and Regulatory Challenges - Compliance with data protection laws in Hong Kong is critical, and any failure to meet these regulations could harm the company's operations and financial condition[97]. - The company is focused on compliance with evolving privacy and data protection laws in Hong Kong and internationally, which may impose significant operational costs and risks[99]. - Future international expansion may expose the company to various compliance challenges and increased operational costs, potentially affecting its ability to offer services in certain jurisdictions[106]. - The company anticipates that evolving global data privacy regulations could limit the adoption of its services and expose it to liability, impacting its international growth strategy[105]. - The company may face difficulties in managing international operations, including compliance with differing technology standards and data privacy regulations, which could hinder its market expansion efforts[109]. Financial Condition and Capital Requirements - As of December 31, 2023, the company reported a working capital deficit of $268,232, raising substantial doubt about its ability to continue as a going concern[153]. - The working capital deficit was $875,448 as of December 31, 2022, indicating a worsening financial situation year-over-year[153]. - The company plans to meet cash requirements for the next 12 months through operations and financial support from its controlling shareholder and investors[154]. - The company has funded its operations primarily through equity and debt financings, and it may require additional financing to support future capital requirements[133]. Cybersecurity and Data Privacy - Cybersecurity threats and data breaches pose significant risks, potentially harming reputation and incurring liability[117]. - The company depends on third-party service providers for data security, which limits its ability to monitor and control security practices[119]. - Concerns regarding data privacy and security may adversely affect user trust and engagement, impacting the company's revenue growth[104]. - The company is subject to potential investigations and enforcement actions related to data privacy compliance, which could result in fines and damage its reputation[103]. Strategic Growth and Acquisitions - The company may pursue acquisitions and joint ventures as part of its growth strategy, but these could expose it to potential liabilities and significant transaction costs[132]. - The company may face challenges in executing its acquisition strategy, which could disrupt operations and affect financial performance[126]. - The company may incur substantial costs in maintaining and protecting its intellectual property, which is critical for its competitive position[136]. Economic and Geopolitical Factors - The company is highly susceptible to factors adversely affecting Hong Kong, which could materially disrupt its operations and financial condition[143]. - Inflation and increases in labor costs in Hong Kong may adversely affect the company's business and results of operations[144]. - The company's business performance is significantly influenced by the economic conditions in Hong Kong, which are sensitive to changes in Mainland China's political and economic environment[186]. - Heightened international tensions, particularly between the U.S. and China, may negatively impact the Hong Kong economy and, consequently, the company's business operations[190]. Stock Market and Regulatory Compliance - The company has received a notification from Nasdaq regarding its failure to maintain a minimum bid price of $1.00 per share for 33 consecutive business days, putting it at risk of delisting[210]. - The company has a compliance period of 180 days to regain compliance with Nasdaq's Minimum Bid Price Requirement, with no assurance of success[210]. - The company is subject to the Holding Foreign Companies Accountable Act, which may prohibit its shares from trading on U.S. exchanges if its auditor is not PCAOB inspected for two consecutive years[217]. - The PCAOB has determined it is unable to inspect registered public accounting firms in China and Hong Kong, which could affect the company's compliance and trading status[219]. Internal Controls and Governance - The company identified material weaknesses in its internal control over financial reporting, including insufficient accounting personnel and lack of internal audit functions[255]. - Plans are in place to improve internal controls, including hiring qualified staff and establishing a formal financial control framework[256]. - The company may incur significant legal, accounting, and other expenses as it transitions from an emerging growth company to a public company[248].

Interim Financial Information, Individual and Consolidated | March 31, 2025 Index | Index | 2 | | --- | --- | | Statements of Financial Position | 4 | | Statements of Income (Loss) | 5 | | Statements of Comprehensive Income (Loss) | 6 | | Statements of Changes in Equity | 7 | | Statements of Cash Flows | 8 | | Statements of Value Added | 9 | | Management Report | 10 | | 1. Company's Operations | 45 | | 2. Basic of preparation and presentation of interim financial information | 49 | | 3. Summary of material ...