Financial Performance - Revenues for the nine months ended September 30, 2025, were $55,044,610, a decrease of 9.5% compared to $60,978,809 for the same period in 2024[165]. - Net income for the nine months ended September 30, 2025, was $1,040,049, down 42.9% from $1,827,860 in 2024[165]. - Total revenues decreased by 9.7% from $60,978,809 for the nine months ended September 30, 2024 to $55,044,610 for the nine months ended September 30, 2025[201]. - Gross profit decreased by $2,560,514 from $17,536,290 for the nine months ended September 30, 2024 to $14,975,776 for the nine months ended September 30, 2025, with a gross profit margin decline from 28.7% to 27.2%[208]. - Income before income tax expense decreased to $803,190 for the nine months ended September 30, 2025, from $1,849,386 for the same period in 2024, attributed to lower revenues[212]. - Net income decreased from $1,827,860 for the nine months ended September 30, 2024, to $1,040,049 for the same period in 2025[215]. Revenue Sources - Wholesale income represented 58.9% of total revenues in 2025, slightly increasing from 58.5% in 2024, with net wholesale income of $32,441,649[171][175]. - Online retail sales income increased to $17,296,459 in 2025, representing 31.5% of total revenues, up from 25.1% in 2024[181]. - Agency income decreased significantly to $4,582,151, accounting for 8.3% of total revenues, down from 14.8% in 2024[183]. - Wholesale income decreased by $3,212,741 from $35,654,390 for the nine months ended September 30, 2024 to $32,441,649 for the nine months ended September 30, 2025, due to a reduction in sales volume from 380,475 units to 354,842 units[202]. - Online retail sales income increased by $1,964,651 from $15,331,808 for the nine months ended September 30, 2024 to $17,296,459 for the nine months ended September 30, 2025, with units sold rising from 104,711 to 121,922[204]. - Agency income decreased by $4,415,556 from $8,997,707 for the nine months ended September 30, 2024 to $4,582,151 for the nine months ended September 30, 2025, with sales volume falling from 312,846 units to 166,239 units[205]. Expenses - Cost of revenues represented 72.8% of total revenues in 2025, compared to 71.2% in 2024, indicating rising costs[187]. - Selling and marketing expenses accounted for 10.5% of total revenues in 2025, slightly increasing from 10.1% in 2024[190]. - General and administrative expenses rose to 19.1% of total revenues in 2025, up from 17.2% in 2024[191]. - Cost of revenues decreased by $3,373,685, or 7.8%, from $43,442,519 for the nine months ended September 30, 2024 to $40,068,834 for the nine months ended September 30, 2025[207]. - Selling and marketing expenses decreased by $384,422 from $6,152,821 for the nine months ended September 30, 2024 to $5,768,399 for the nine months ended September 30, 2025[209]. - General and administrative expenses decreased by $8,739 to $10,498,297 for the nine months ended September 30, 2025, from $10,507,036 for the same period in 2024[210]. Cash Flow and Assets - Net cash provided by operating activities increased to $1,314,448 for the nine months ended September 30, 2025, compared to $398,057 for the same period in 2024[220]. - Cash and cash equivalents at the end of the period increased to $688,857 as of September 30, 2025, from $640,489 as of September 30, 2024[220]. - Net cash used in financing activities decreased significantly to $757,149 for the nine months ended September 30, 2025, from $4,238,787 for the same period in 2024[225]. - The company recognized deferred tax assets of $644,958 as of September 30, 2025, compared to $21,047 as of September 30, 2024, resulting in a significant income tax benefit[214]. Customer and Vendor Concentration - Major customers accounted for 52% of revenues for the nine months ended September 30, 2025, with Customer A and Customer B contributing $15,115,107 (27%) and $13,728,920 (25%) respectively[232]. - Major vendors accounted for 85% of purchases for the nine months ended September 30, 2025, with Vendor A contributing $11,300,733 (37%) and Vendor B contributing $5,613,136 (18%)[233]. Provisions and Liabilities - The allowance for expected credit loss against financial assets was $541,934 as of September 30, 2025, compared to $563,269 as of December 31, 2024[248]. - Contract liabilities for return allowances were $353,822 as of September 30, 2025, up from $316,979 as of December 31, 2024[249]. - The warranty provision balance increased to $325,487 as of September 30, 2025, from $188,880 as of December 31, 2024[250]. Economic Environment - The year-over-year percent change in the consumer price index rose by 3.0% for the nine months ended September 30, 2025[245]. - Inflation in the United States showed a year-over-year increase of 3.0% for the nine months ended September 30, 2025 and 2024, but has not materially affected the company's operations[245]. - The company does not anticipate any material effects on net revenue or profitability from current trends or uncertainties[244]. Legal Matters - FedEx filed a civil complaint seeking damages of approximately $750,000 related to an alleged early termination of contract[240]. Risk Management - The company is actively pursuing strategies to mitigate risks from escalating trade tensions and tariff policy volatility[170]. - The company has not experienced any losses in bank accounts and believes there is no significant credit risk on cash and cash equivalents[229].
SONIC LIGHTING(SONC) - 2025 Q3 - Quarterly Report