Financial Performance - For the three months ended September 30, 2024, the company generated revenues of 53,084,883,a12.2847,278,685 in the same period of 2023[174]. - Net income attributable to SBC Medical Group Holdings Incorporated for the three months ended September 30, 2024, was 2,832,894,adecreaseof66.108,356,414 in the same period of 2023[174]. - Revenues, net for the nine months ended September 30, 2024, increased by 22.72% to 160,995,005from131,192,729 in 2023[196]. - Net income for the nine months ended September 30, 2024, was 40,142,008,representinganincreaseof15,811,044 or 64.98% from the same period in 2023[211]. - Net income for the three months ended September 30, 2024, was 2,834,467,adecreaseof5,223,324 or 64.82% from 8,057,791in2023[193].RevenueBreakdown−Royaltyincomeincreasedby82.2815,688,528 for the three months ended September 30, 2024, from 8,606,999inthesameperiodof2023[180].−Procurementservicesrevenueroseby96.1217,571,299 for the three months ended September 30, 2024, compared to 8,959,689inthesameperiodof2023[181].−Managementservicesrevenuedecreasedby47.2712,110,764 for the three months ended September 30, 2024, from 22,969,187inthesameperiodof2023[181].−Rentalservicesrevenueincreasedby208.324,124,774 for the three months ended September 30, 2024, from 1,337,803inthesameperiodof2023[182].−Royaltyincomeroseby19,979,012 or 78.52% to 45,425,052fortheninemonthsendedSeptember30,2024,attributedtochangesinbillingandbusinessexpansionofmaincustomers[198].−Procurementservicesrevenueincreasedby9,640,957 or 27.81% to 44,303,891fortheninemonthsendedSeptember30,2024,drivenbyhigherdemandformedicalmaterials[199].−Managementservicesrevenuedecreasedto44,471,031, down by 9,222,917or17.1811,195,888, up by 6,514,675or139.179,845,793 for the three months ended September 30, 2024, down from 13,780,309in2023,primarilyduetothediscontinuationofclinicoperationstaffsupportingservices[183].−Grossprofitincreasedby9,740,714 or 29.08% to 43,239,090forthethreemonthsendedSeptember30,2024,drivenbyhigherroyaltyincomeandprocurementservices[184].−Operatingexpensessurgedto29,404,487 for the three months ended September 30, 2024, an increase of 15,929,353or118.2113,475,134 in 2023, mainly due to stock-based compensation and consulting fees[185]. - Gross profit increased to 122,178,140,anincreaseof28,241,477 or 30.06% compared to the same period in 2023[203]. - Operating expenses increased to 56,592,092,upby9,326,188 or 19.73% compared to the same period in 2023[204]. Cash Flow and Liquidity - The company reported cash flow provided by operating activities of 27,886,231fortheninemonthsendedSeptember30,2024,comparedto22,753,983 for the same period in 2023[174]. - Cash and cash equivalents as of September 30, 2024, were 137,393,070,anincreaseof34,370,138 or 33.77% compared to the beginning of the period[217]. - Net cash provided by operating activities was 27,886,231,reflectinganincreaseof5,132,248 or 22.56% compared to the same period in 2023[218]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was 11,584,038,comparedto6,262,589 for the same period in 2023, primarily due to proceeds from recapitalization of Pono Shares[220]. - The company anticipates obtaining additional funds through indebtedness or equity financings to meet long-term liquidity needs[215]. Taxation - Income tax expense decreased by 2,738,878or21.0510,273,384 for the three months ended September 30, 2024, reflecting a reduction in income before tax[191]. - The effective tax rate increased to 78.38% for the three months ended September 30, 2024, from 61.76% in 2023, primarily due to stock-based compensation recognition[192]. - The effective tax rate decreased to 40.44% from 51.35% in the previous year, a reduction of 10.91 percentage points[210]. Corporate Developments - The company plans to expand its "Shonan Beauty Clinic" brand in Japan, Vietnam, and the United States, aiming for global growth[175]. - The company has entered into an agreement to acquire 100% equity interest of Aesthetic Healthcare Holdings for approximately SGD7.8million(equivalenttoapproximatelyUS6.0 million)[221]. - The company has restated its previously reported consolidated balance sheets and statements of operations for the years ended December 31, 2022, and 2021, as well as for the nine months ended September 30, 2023, and 2022[224]. - Misappropriations of funds amounted to approximately JPY632 million (5.6million),withtheformerdirectorreceivingapproximatelyJPY335million(3.0 million) from April 2016 until the discovery in January 2024[222]. Accounting and Reporting - The company generates revenue from various sources, including franchising, procurement, management services, and rental services, with specific revenue recognition policies under ASC Topics 606 and 842[231][242]. - The company accounts for stock-based compensation awards in accordance with ASC Topic 718, recognizing costs based on estimated fair value on the grant date and amortizing over the requisite service period[249]. - The fair value of warrants is determined using the binomial option pricing model, with significant estimates related to forecasted revenues and cash flows[250]. - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements, including auditor attestation requirements[251]. - The JOBS Act exempts emerging growth companies from complying with new or revised financial accounting standards until private companies are required to do so[252]. - The company is also classified as a "smaller reporting company," which allows it to provide only two years of audited financial statements[253]. - The company will remain a smaller reporting company until the market value of its common stock held by non-affiliates exceeds 250millionorannualrevenueexceeds100 million with a market value exceeding 700million[253].−Asasmallerreportingcompany,thecompanyisnotrequiredtoprovidecertaindisclosuresaboutmarketrisk[254].ForeignExchangeandRisk−Theunfavorableimpactsofforeignexchangeratechangesonnetrevenueswere2,570,776 for the three months ended September 30, 2024[179]. - The company is exposed to foreign currency exchange rate fluctuations, primarily due to operations in Japan and revenues and costs denominated in Japanese yen[228].
