Erayak(RAYA) - 2025 Q2 - Quarterly Report

Financial Performance - Sales for the six months ended June 30, 2025, were $8.74 million, a decrease of 26.3% compared to $11.94 million for the same period in 2024[3] - Gross profit increased to $1.74 million in the first half of 2025, up 51.3% from $1.15 million in the prior year[3] - Operating loss improved to $(631,468) for the six months ended June 30, 2025, compared to $(1,288,315) in the same period of 2024, reflecting a reduction of 51.0%[3] - Net loss narrowed to $(516,655) in the first half of 2025, compared to $(1,058,540) in the same period of 2024, indicating a 51.1% improvement[3] - Total sales for the first half of 2025 were $8,744,869, a decrease of 26.3% compared to $11,943,904 in the same period of 2024[96] Assets and Liabilities - Total assets increased to $49.20 million as of June 30, 2025, up from $46.03 million at December 31, 2024, representing a growth of 4.7%[2] - Cash and cash equivalents decreased to $177,098 as of June 30, 2025, down from $532,605 at December 31, 2024, a decline of 66.8%[2] - Total current liabilities increased to $16.75 million as of June 30, 2025, compared to $15.53 million at December 31, 2024, an increase of 7.8%[2] - The company’s total shareholders' equity decreased to $26.40 million as of June 30, 2025, down from $26.59 million at December 31, 2024, a decline of 0.7%[2] - As of June 30, 2025, accounts receivable amounted to $13,715,978, with a net amount of $13,451,506 after an allowance for doubtful accounts of $264,472, compared to $12,296,691 and $12,037,136, respectively, as of December 31, 2024[71] Cash Flow and Operating Activities - Cash used in operating activities was $(782,378) for the first half of 2025, a significant improvement from $(12,859,999) in the same period of 2024[8] - The company does not anticipate negative impacts on working capital needs without funds from related parties, as current cash and operations are expected to meet needs for at least the next twelve months[70] Investments and Capital - As of June 30, 2025, Erayak HK had a paid-in capital of $3,900,000, while Ruike had a paid-in capital of $5,010,035[13][14] - The paid-in capital for Wenjie was $3,000,000 as of June 30, 2025[15] - Leiya's paid-in capital was RMB 6,900,000 as of June 30, 2025, with its principal activities including the development, production, and sales of inverters, chargers, and gasoline generators[16] - New Focus had a paid-in capital of RMB 5,000,000 as of June 30, 2025, primarily involved in the sale of Leiya's products[17][18] - The Company acquired a 15% equity interest in a privately held entity for RMB 3 million during the fiscal year ended December 31, 2024[41] Expenses - General and administrative expenses increased to $1,257,167 in 2025, up 9.1% from $1,153,066 in 2024[97] - Selling and marketing expenses decreased significantly to $329,644 in 2025, down 27.5% from $454,841 in 2024[98] - Research and development expenses totaled $781,775 in 2025, a decrease of 5.6% compared to $828,013 in 2024[99] - Net interest expenses rose to $136,575 in 2025, compared to $64,588 in 2024, reflecting an increase of 111.5%[100] - Total rental income, net, decreased to $77,775 in 2025 from $109,449 in 2024, a decline of 29.0%[101] Other Financial Information - The company received government grants of $87,823 and $36,036 for the six months ended June 30, 2025, and 2024, respectively, included in other income on the Income Statement[53] - Other net income increased to $167,406 in 2025, up 14.6% from $145,952 in 2024, driven by higher government grants[102] - The company had total outstanding balances due to related parties of $2,063,754 as of June 30, 2025, down from $3,510,165 at the end of 2024[104] Business Operations - Erayak Group is currently not actively engaging in any business operations[10] - The company plans to expand its business in the energy storage industry, with a $1,000,000 advance payment related to a potential long-term lease for a customized factory[74] Property and Equipment - As of June 30, 2025, total property, plant, and equipment (net) amounted to $3,937,116, a significant increase from $2,157,214 as of December 31, 2024, representing an 82.5% growth[75] - Additions to property and equipment for the fiscal period ended June 30, 2025, were $1,963,158, compared to $715,202 for the same period in 2024, indicating a 174.5% increase[76] - Depreciation expenses for the six months ended June 30, 2025, were $245,460, up from $203,787 in 2024, reflecting a 20.5% increase[77] - Intangible assets (net) as of June 30, 2025, totaled $2,599,087, a substantial rise from $61,972 as of December 31, 2024[78] Financing Activities - Total short-term borrowings from financial institutions amounted to RMB 32,250,209 ($4,501,956) as of June 30, 2025, compared to RMB 7,706,808 ($1,055,828) as of December 31, 2024, indicating a significant increase[91] - Long-term loans as of June 30, 2025, totaled RMB 47,750,000 ($6,665,643), with a current portion of long-term loans amounting to RMB 4,166,666 ($616,543)[92] - The company entered into a project financing loan agreement for RMB 90,000,000 at an interest rate of 2.70% to fund the development of a 150 MWh Annual Energy Storage Project, with an outstanding amount of RMB 16,000,000 ($2,233,514) as of June 30, 2025[94] Shareholder Activities - The company completed an initial public offering in December 2022, raising net proceeds of $10,646,322[107] - A private placement in May 2024 resulted in the issuance of 16,000,000 Class A ordinary shares for a total of $8,000,000[108]