Financial Performance - For the three months ended September 30, 2025, the company generated revenues of $43,353,235, a decrease of 18.33% from $53,084,883 in the same period of 2024[227]. - Net income attributable to SBC Medical Group Holdings for the three months ended September 30, 2025, was $12,824,636, compared to $2,832,894 in 2024, reflecting a significant increase of 352.70%[230]. - Revenues, net for the nine months ended September 30, 2025 decreased by 16.74% to $134,040,783 from $160,995,005 in the same period of 2024[254]. - Net income for the nine months ended September 30, 2025 was $36,765,128, representing a decrease of $3,376,880 or 8.41% from $40,142,008 in the same period of 2024[270]. - Net income for the three months ended September 30, 2025 was $12,833,326, representing an increase of $9,998,859 or 352.76% from $2,834,467 in the same period of 2024[250]. Revenue Breakdown - Franchising revenue decreased by 36.71% to $9,929,387 for the three months ended September 30, 2025, from $15,688,528 in 2024, primarily due to a revision in the fee structure[235]. - Procurement revenue fell by 23.70% to $13,406,905 for the three months ended September 30, 2025, from $17,571,299 in 2024, attributed to reduced orders from medical corporations[236]. - Management services revenue decreased by 21.87% to $9,462,183 for the three months ended September 30, 2025, from $12,110,764 in 2024, mainly due to the discontinuation of certain supporting services[237]. - Franchising revenue decreased to $35,656,250, down by $9,768,802 or 21.51% from $45,425,052 for the same period in 2024, due to a revision in the fee structure[256]. - Procurement revenue decreased to $43,496,207, down by $807,684 or 1.82% from $44,303,891 for the same period in 2024, reflecting a decrease in orders from medical clinics[257]. - Management services revenue decreased to $23,328,864, down by $21,142,167 or 47.54% from $44,471,031 in the same period of 2024, primarily due to the discontinuation of clinic operation staff supporting services and a decrease in customer rewards program revenue[258]. - Rental services revenue increased to $6,219,645, up by $2,094,871 or 50.79% from $4,124,774 in the same period of 2024[238]. - Rental services revenue increased to $18,711,335, up by $7,515,447 or 67.13% from $11,195,888 in the same period of 2024, driven by the opening of new clinics and increased demand for medical equipment[259]. - Other revenues rose to $4,335,115, an increase of $745,597 or 20.77% from $3,589,518 for the same period in 2024, primarily due to contributions from Aesthetic Healthcare Holdings Pte. Ltd.[239]. Cash Flow and Liquidity - The company reported cash flows used in operating activities of $(27,295,426) for the nine months ended September 30, 2025, compared to cash flows provided of $27,886,231 in 2024[227]. - As of September 30, 2025, the company had $127,431,318 in cash and cash equivalents, compared to $125,044,092 as of December 31, 2024, indicating a slight increase in liquidity[272]. - Net cash used in operating activities was $27,295,426 for the nine months ended September 30, 2025, a significant decrease from net cash provided of $27,886,231 in the same period of 2024[279]. - During the nine months ended September 30, 2025, net cash provided by investing activities was $3,239,523, primarily from proceeds of $17.7 million from the redemption of life insurance policies[281]. - For the nine months ended September 30, 2025, net cash provided by financing activities was $18,470,001, mainly from long-term loans of $14.9 million[283]. Operating Expenses - Operating expenses decreased to $14,730,247, a reduction of $14,674,240 or 49.90% from $29,404,487 in the same period of 2024, mainly due to a decrease in stock-based compensation and consulting fees[243]. - Operating expenses decreased to $43,717,642, down by $12,874,450 or 22.75% from $56,592,092 in the same period of 2024, primarily due to a reduction in stock-based compensation and salaries[263]. Profitability Metrics - Gross profit decreased to $30,611,487, down by $12,627,603 or 29.20% from $43,239,090 in the same period of 2024, attributed to lower franchising and management services revenue[242]. - Gross profit for the nine months ended September 30, 2025 was $98,355,148, a decrease of $23,822,992 or 19.50% from $122,178,140 in the same period of 2024, mainly due to lower franchising and management services revenue[262]. - The effective tax rate decreased to 30.66% from 78.38% in the same period of 2024, primarily due to the absence of non-deductible stock-based compensation in 2025[249]. - The effective tax rate increased to 42.10% for the nine months ended September 30, 2025, compared to 40.44% for the same period in 2024[269]. Strategic Initiatives - The company plans to expand its "Shonan Beauty Clinic" brand and strengthen its market position in Japan, Vietnam, and Singapore[228]. - The company completed a business combination with Pono Capital Two, Inc. on September 17, 2024, and began trading on Nasdaq under the ticker symbol "SBC"[219]. - The Company plans to conduct a tender offer for up to 575,000 shares of Waqoo's common stock from November 14, 2025, to December 12, 2025[291]. - The Company intends to make Waqoo a consolidated subsidiary to enhance its research and development initiatives and integrate advanced technologies[287]. Other Financial Information - As of September 30, 2025, the company had retained earnings of $226,248,329[227]. - The average exchange rate of Japanese Yen against the U.S. dollar was 147.4096 for the three months ended September 30, 2025, compared to 148.9730 in 2024, impacting revenue and net income positively[234]. - The Company holds significant operating and finance leases, with total undiscounted lease payments amounting to $5,155,215[289]. - Future minimum borrowing payments total $21,122,794, with significant repayments due in 2026 and 2027[292]. - The Company is exposed to foreign currency exchange rate fluctuations, primarily due to operations in Japan and revenues in Japanese yen[294]. - The Company is classified as an "emerging growth company," allowing it to take advantage of certain reporting exemptions[297].
Pono Capital Two(PTWO) - 2025 Q3 - Quarterly Report