SRRE 10-Q
Sunrise Real Estate Group Inc (SRRE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
For the quarterly period ended
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
Issuer’s telephone number:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ | Accelerated filer ☐ |
Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: December 11, 2025 –
FORM 10-Q
For the Quarter Ended September 30, 2025
INDEX
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUNRISE REAL ESTATE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Expressed in U.S. Dollars)
| September 30, |
| December 31, | |||
2025 | 2024 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash (Note 3) |
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Transactional financial assets (Note 4) |
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Accounts receivable |
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Real estate property under development (Note 5) | |
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Amount due from an unconsolidated affiliate | |
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Other receivables and deposits, net (Note 6) | |
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Total current assets | |
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Property and equipment, net (Note 7) | |
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Investment properties, net (Note 8) | |
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Investment in an unconsolidated affiliate (Note 9) | |
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Other investments (Note 10) | | | ||||
Total assets | $ | | $ | | ||
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LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
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Current liabilities |
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Promissory notes payable (Note 11) | |
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Accounts payable (Note 14) | |
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Amounts due to directors (Note 12) | |
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Amount due to an affiliate (Note 15) | |
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Customer deposits (Note 16) | |
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Other payables and accrued expenses (Note 13) | |
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Other taxes payable | |
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Income taxes payable (Note 17) | |
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Dividends payables | — | — | ||||
Total current liabilities | |
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Long-term income tax payable (Note 17) |
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Total liabilities |
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Commitments and contingencies (Note 18) |
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Shareholders’ equity |
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Common stock, par value $ | |
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Additional paid-in capital |
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Statutory reserve (Note 20) |
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Retained Earnings |
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Accumulated other comprehensive income |
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Total deficit of Sunrise Real Estate Group, Inc. |
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Non-controlling interests |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity | $ | | $ | | ||
See accompanying notes to consolidated financial statements.
3
SUNRISE REAL ESTATE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Expressed in U.S. Dollars)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2025 |
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Net revenues | $ | | $ | | $ | | $ | | ||||
Cost of revenues |
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Gross profit (loss) |
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Operating expenses |
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General and administrative expenses |
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Operating profit (loss) |
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Other income (expenses) |
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Interest income |
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Interest expense |
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Other income (loss), net |
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Total other Income |
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Income (loss) before income taxes |
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Income tax benefit (expense) |
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Net income (loss) | |
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Less: Net (income) loss attributable to non-controlling interests |
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Net income attributable to shareholders of Sunrise Real Estate Group, Inc. | $ | | $ | | $ | | $ | ( | ||||
Net income (loss) | | | | ( | ||||||||
Other comprehensive income (loss) Foreign currency translation adjustment | | | | | ||||||||
Discontinuation of the equity method for an investment | — | — | — | — | ||||||||
Comprehensive income (loss) | | | | ( | ||||||||
Less: Comprehensive income (loss) attributable to non-controlling interests | | ( | | | ||||||||
Total comprehensive income (loss) attributable to shareholders | | | | ( | ||||||||
Earnings per share – basic and fully diluted | $ | | $ | $ | | $ | ( | |||||
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Weighted average common shares outstanding |
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Basic and fully diluted |
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See accompanying notes to unaudited condensed consolidated financial statements.
4
SUNRISE REAL ESTATE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(Expressed in U.S. Dollars)
Accumulated | Total | |||||||||||||||||||||||
Common Stock | Additional | Retained | Other | Stockholders’ | ||||||||||||||||||||
Number of | Paid-in | Statutory | Earnings | Comprehensive | Non-controlling | (Deficit) | ||||||||||||||||||
| shares issued |
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| Capital |
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| (Deficits) |
| Income |
| Interests |
| Equity | |||||||||
Balance, December 31, 2024 | | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | |||||||||
Profit (loss) for the period | — | — | — | — | | — | ( | | ||||||||||||||||
Dividend | — | — | — | — | — | — | — | — | ||||||||||||||||
Translation of foreign operations | — | — | — | — | — | | ( | | ||||||||||||||||
Balance, September 30, 2025 |
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Accumulated | Total | |||||||||||||||||||||||
Common Stock | Additional | Retained | Other | Stockholders’ | ||||||||||||||||||||
Number of | Paid-in | Statutory | Earnings | Comprehensive | Non-controlling | (Deficit) | ||||||||||||||||||
| shares issued |
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Balance, June 30, 2025 | | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | |||||||||
Profit (loss) for the period | — | — | — | — | | — | ( | | ||||||||||||||||
Translation of foreign operations |
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Balance, September 30, 2025 |
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See accompanying notes to consolidated financial statements.
5
SUNRISE REAL ESTATE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(Expressed in U.S. Dollars)
Accumulated | Total | |||||||||||||||||||||||
Common Stock | Additional | Retained | Other | Stockholders’ | ||||||||||||||||||||
Number of | Paid-in | Statutory | Earnings | Comprehensive | Non-controlling | (Deficit) | ||||||||||||||||||
| shares issued |
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| Capital |
| Reserve |
| (Deficits) |
| Income |
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Balance, December 31, 2023 | | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | |||||||||
Profit (loss) for the period | — | — | — |
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Termination of company within the consolidated statements |
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Translation of foreign operations |
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Balance, September 30, 2024 |
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Accumulated | Total | |||||||||||||||||||||||
Common Stock | Additional | Retained | Other | Stockholders’ | ||||||||||||||||||||
Number of | Paid-in | Statutory | Earnings | Comprehensive | Non-controlling | (Deficit) | ||||||||||||||||||
| shares issued |
| Amount |
| Capital |
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| (Deficits) |
| Income |
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Balance, June 30, 2024 | | $ | | $ | | $ | | $ | | $ | | $ | ( | $ | | |||||||||
Profit (loss) for the period | — | — | — |
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Termination of company within the consolidated statements | — | — | — | ( | | — | ( | | ||||||||||||||||
Translation of foreign operations | — | — | — | — | — | |
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Balance, September 30, 2024 |
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See accompanying notes to consolidated financial statements.
6
SUNRISE REAL ESTATE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Expressed in U.S. Dollars)
| Nine Months Ended Sept. 30, | |||||
| 2025 |
| 2024 | |||
Cash flows from operating activities | ||||||
Net income (loss) | $ | | $ | ( | ||
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Adjustments to reconcile net income (loss) to net cash used in operating activities |
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Depreciation and amortization |
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Loss (Gain) on disposal of property, plant and equipment |
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Changes in assets and liabilities |
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Accounts receivable |
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Real estate property under development |
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Customer Deposits |
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Amount due from unconsolidated affiliates |
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Other receivables and deposits |
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Deferred tax assets | — | — | ||||
Net cash from directors | — | ( | ||||
Accounts payable |
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Other payables and accrued expenses |
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Dividend | — | — | ||||
Other taxes payable |
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Income taxes payable |
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Net cash provided by (used in) operating activities |
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Cash flows from investing activities | ||||||
Purchases of property and equipment | — | ( | ||||
Net Cash from Transactional financial assets | ( | | ||||
Dividend distribution of affiliates | — | — | ||||
Net cash provided by (used in) investing activities |
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Cash flows from financing activities | ||||||
Dividends paid to shareholders |
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Net cash provided by (used in) financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents, and restricted cash at beginning of period |
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Cash and cash equivalents, and restricted cash at end of period | $ | | $ | | ||
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Supplemental disclosure of cash flow information |
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Income taxes paid | $ | | $ | | ||
Interest paid |
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See accompanying notes to consolidated financial statements.
7
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Sunrise Real Estate Group, Inc. (“SRRE”) was incorporated in the State of Texas on October 10, 1996, under the name of Parallax Entertainment, Inc. SRRE, together with its subsidiaries and equity investment described below, are collectively referred to as “the Company”, “we”, “our” or “us”. The Company is primarily engaged in the provision of property brokerage services, which include property marketing, leasing and management services, and real estate development in the People’s Republic of China (the “PRC”).
As of September 30, 2025, the Company has the following major subsidiaries and equity investment.
% of Ownership | Relationship |
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Date of | Place of |
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Company Name |
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| Principal Activity |
Sunrise Real Estate Development Group, Inc. (CY-SRRE) |
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Lin Ray Yang Enterprise Limited (“LRY”) |
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Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”) |
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Shanghai Shang Yang Investment Management and consultation Company Limited (“SHSY”) |
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Suzhou Xi Ji Yang Real Estate Consultation Company Limited (“SZXJY”) |
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Linyi Shangyang Real Estate Development Company Limited (“LYSY”) |
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Sanya Shang Yang Real Estate Consultation Company Limited (“SYSY”) |
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Shanghai Rui Jian Design Company Limited (“SHRJ”) |
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Linyi Rui Lin Construction and Design Company Limited (“LYRL”) |
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Wuhan Yuan Yu Long Real Estate Development Company Limited (“WHYYL”) |
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Shanghai Da Er Wei Trading Company Limited (“SHDEW”) |
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Shanghai Hui Tian (“SHHT”) |
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Shanghai Shangyang Tianxi (“SHTX”) | | Subsidiary | ||||||||
Huaian Zhanbao Industrial Co., Ltd. (“HAZB”) | Subsidiary | |||||||||
Huaian Tianxi Real Estate Development Co., Ltd (“HATX”) | Subsidiary | |||||||||
Shanghai Taobuting Media Co., Ltd. (“TBT”) | Subsidiary | |||||||||
Shangyang International PTE. LTD. | Subsidiary | |||||||||
Shanghai Da Er Wei Industry Co., Ltd. (SYIP) | Subsidiary | |||||||||
Shanghai Zhuangyanting Trading Co., Ltd. (SHZYT) | Subsidiary | |||||||||
Shanghai Shifengmei Brand Mgmt. Co., Ltd. (SHSFM) |
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Shanghai Aoyue Bio-Tech Co., Ltd. (SHAY) |
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Shanghai Maitinghao Trading Co., Ltd. (SHMTH) |
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Shanghai Xinshangyang Creative Communication Co., Ltd. (SHXSY) | Subsidiary |
| 1. | The Company and a shareholder of LYSY, who holds |
| 2. | In December 2019, SHDEW had an employee stock bonus where its employees received their issued shares. This resulted in the dilution of our ownership of SHDEW from |
| 3. | We established HATX for real estate development in Huai’an through HAZB, of which we have |
The accompanying condensed consolidated balance sheet as of December 31, 2024, which has been derived from the audited consolidated financial statements and the accompanying unaudited condensed consolidated financial statements, has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations and the Company believes that the disclosures made are adequate to make the information not misleading.
8
In the opinion of the Company’s management, these condensed consolidated financial statements reflect all adjustments which are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of September 30, 2025 and the results of operations for the nine months ended September 30, 2025 and 2024, and the cash flows for the nine months ended September 30, 2025 and 2024. These condensed consolidated financial statements and related notes should be read in conjunction with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2024. The results of operations for the nine months ended September 30, 2025, are not necessarily indicative of the results which may be expected for the entire fiscal year.
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting and Principles of Consolidation
The condensed consolidated financial statements include the financial statements of Sunrise Real Estate Group, Inc. and its subsidiaries. All significant inter-company accounts and transactions have been eliminated on consolidation.
Investments in business entities, of which the Company does not have control but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method.
Foreign Currency Translation and Transactions
The functional currency of SRRE, CY-SRRE and LRY is U.S. dollars (“$”) and their financial records and financial statements are maintained and prepared in U.S. dollars. The functional currency of the Company’s subsidiaries and affiliates in China is Renminbi (“RMB”) and their financial records and statements are maintained and prepared in RMB.
Foreign currency transactions during the period are translated into each company’s denominated currency at the exchange rates ruling at the transaction dates. Gains and losses resulting from foreign currency transactions are included in the consolidated statement of operations. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated into each company’s denominated currency at period-end exchange rates. All exchange differences are dealt with in the consolidated statements of operations.
The financial statements of the Company’s operations based outside of the United States have been translated into U.S. dollars in accordance with ASC830. Management has determined that the functional currency for each of the Company’s foreign operations is its applicable local currency. When translating functional currency financial statements into U.S. dollars, period-end exchange rates are applied to the condensed consolidated balance sheets, while average exchange rates as to revenues and expenses are applied to consolidated statements of operations. The effect of foreign currency translation adjustments is included as a component of accumulated other comprehensive income in shareholders’ equity.
The exchange rates as of September 30, 2025, and December 31, 2024 are $
The RMB is not freely convertible into foreign currency and all foreign exchange transaction must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rate used in translation.
Real Estate Property under Development
Real estate property under development, which consists of residential unit sites and commercial and residential unit sites under development, is stated at the lower of carrying amounts or fair value less selling costs.
Expenditures for land development, including cost of land use rights, deed tax, pre-development costs and engineering costs, are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales value of units to the estimated total sales value times the total project costs.
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Costs of amenities transferred to buyers are allocated as common costs of the project that are allocated to specific units as a component of total construction costs. For amenities retained by the Company, costs in excess of the related fair value of the amenity are also treated as common costs. Results of operations of amenities retained by the Company are included in current operating results.
In accordance with ASC 360, “Property, Plant and Equipment” (“ASC 360”), real estate property under development is subject to valuation adjustments when the carrying amount exceeds fair value. An impairment loss is recognized only if the carrying amount of the assets is not recoverable and exceeds fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated by the assets.
In October 2011, we established LYSY and own
In October 2018, HATX purchased the property in Huai’an, Qingjiang Pu district with an area of
Long Term Investments
The Company accounts for long term investments in equities as follows:
Investment in Unconsolidated Affiliates
Affiliates are entities over which the Company has significant influence, but which it does not control. The Company generally considers an ownership interest of
When the Company’s share of losses in an affiliate equals or exceeds its interest in the affiliate, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of the affiliate.
The Company is required to perform an impairment assessment of its investments whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. An impairment loss is recorded when there has been a loss in the value of the investment that is not temporary. The Company did not record any impairment losses in any of the periods reported.
Other Investments
Where the Company has no significant influence, the investment is classified as other assets in the balance sheet and is carried under the measurement alternative which is measured at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. Investment income is recognized by the Company when the investee declares a dividend and the Company believes it is collectible. The Company periodically evaluates the carrying value of its investment under the measurement alternative method in the case of the investment in SHDEW and any decline in value is included in impairment of cost of the investment.
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Revenue Recognition
Most of the Company’s revenue is derived from real estate sales in the PRC. The majority of the Company’s contracts contain a single performance obligation involving significant real estate development activities that are performed together to deliver a real estate property to customers. Revenues arising from real estate sales are recognized when or as the control of the asset is transferred to the customer. The control of the asset may transfer over time or at a point in time. For the sales of individual condominium units in a real estate development project, the Company has an enforceable right to payment for performance completed to date, revenue is recognized over time by measuring the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the asset.
All revenues represent gross revenues less sales and business tax.
ASC 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. ASC 606 also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, ASC 606 requires extensive disclosures.
The Company adopted ASC 606 on January 1, 2018, using the modified retrospective approach with no restatement of comparative periods and no cumulative-effect adjustment to retained earnings recognized as of the date of adoption. A significant portion of the Company’s revenue is derived from development and sales of condominium real estate property in the PRC, with revenue previously recognized using the percentage of completion method. Under the new standard, to recognize revenue over time similar to the percentage of completion method, contractual provisions need to provide the Company with an enforceable right to payment, and the Company has no alternative use of the asset. Historically, all contracts executed by the Company contained an enforceable right to home purchase payments and the Company had no alternative use of assets. Therefore, the adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.
Net Earnings (Loss) per Common Share
The Company computes net earnings (loss) per share in accordance with ASC 260, “Earnings per Share” (“ASC 260”). Under the provisions of ASC 260, basic net earnings (loss) per share is computed by dividing net earnings (loss) available to common shareholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net earnings (loss) per share recognizes common stock equivalents, however, potential common stock in the diluted EPS computation is excluded in net loss periods, as their effect is anti-dilutive.
Recently Adopted Accounting Standards
On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which requires disclosure of gross write-offs of finance receivables by year of origination. The adoption of this standard did not have a material impact on our disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which would require additional transparency for income tax disclosures, including the income tax rate reconciliation table and cash taxes paid both in the United States and foreign jurisdictions. This standard is effective for annual periods beginning after December 15, 2024. We are currently assessing the impact this standard will have on our disclosures.
New Accounting Pronouncements
Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss new accounting pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
11
NOTE 3 – RESTRICTED CASH
The Company is required to maintain certain deposits with the bank for those home buyers that have applied for a housing loan from their bank. This deposit is a percentage of each home buyer’s bank loan for the purpose of purchasing a home in our project. Once we complete the transfer h to the buyer, these deposits become unrestricted. As of September 30, 2025 and December 31, 2024, the Company held cash deposits of $
NOTE 4 – TRANSACTIONAL FINANCIAL ASSETS
As of September 30, 2025, we had $
NOTE 5 – REAL ESTATE PROPERTY UNDER DEVELOPMENT
Real estate property under development represents the Company’s real estate development project in Linyi, the PRC (“Linyi Project”), which is located on the junction of Xiamen Road and Hong Kong Road in Linyi City Economic Development Zone, Shandong Province, PRC. This project covers a site area of approximately
In October 2018, HATX purchased the property in Huai’an, Qingjiang Pu district with an area of
As of September 30, 2025, land use rights included in real estate property under development totaled $
NOTE 6 – OTHER RECEIVABLES AND DEPOSITS, NET
| September 30, |
| December 31, | |||
2025 | 2024 | |||||
Advances to staff | $ | |
| | ||
Rental deposits |
| |
| | ||
Prepaid expense |
| |
| | ||
Prepaid tax |
| |
| | ||
Other receivables |
| |
| | ||
$ | | $ | | |||
Other receivables and deposits as of September 30, 2025 and December 31, 2024 were stated net of allowance for doubtful accounts of $
12
NOTE 7 – PROPERTY AND EQUIPMENT, NET
| September 30, |
| December 31, | |||
2025 | 2024 | |||||
Furniture and fixtures | $ | | $ | | ||
Computer and office equipment |
| |
| | ||
Motor vehicles |
| |
| | ||
Properties |
| |
| | ||
|
| |
| | ||
Less: Accumulated depreciation |
| ( |
| ( | ||
$ | | $ | | |||
Depreciation and amortization expense for property and equipment amounted to $
NOTE 8 – INVESTMENT PROPERTIES, NET
| September 30, |
| December 31, | |||
2025 | 2024 | |||||
Investment properties | $ | | $ | | ||
Less: Accumulated depreciation |
| ( |
| ( | ||
$ | | $ | | |||
Depreciation and amortization expense for investment properties amounted to $
NOTE 9 – INVESTMENT IN AND AMOUNT DUE FROM AN UNCONSOLIDATED AFFILIATE
The investments in unconsolidated affiliates primarily consist of SHDEW (
SHDEW was established in June 2013 as a skincare and cosmetic company. SHDEW is developing its own skincare products. SHDEW sells products under its own brands as well as the products of third parties. The products include skincare, cosmetics, personal care products such as soaps, shampoos, skin care devices and children’s apparel. SHDEW is improving its own online shopping platform where consumers can purchase its cosmetics and skincare products as well as products imported into China. The online shopping platform has been in operation since 2017.
NOTE 10 – OTHER INVESTMENTS, NET
According to ASU 2016-01, where the Company has no significant influence, the investment is classified as other investments in the balance sheet and is carried under the measurement alternative method. The measurement alternative measures the equity investment at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of September 30, 2025 and December 31, 2024, the carrying amount of the Company’s measurement alternative investments was $
The Company performs impairment assessment of its investments under the measurement alternative whenever events or changes in circumstances indicate that the carrying value of the investment may not be fully recoverable. Impairment charges in connection with the measurement alternative investments of
13
NOTE 11 – PROMISSORY NOTES PAYABLE
The promissory notes payable consists of the following unsecured notes to unrelated parties. Included in the balances are promissory notes with outstanding principal and unpaid interest of an aggregate of $
The promissory note with outstanding principal as of September 30, 2025 amounting to $
For the nine months ended September 30, 2025, the interest expense related to these promissory notes was $.
NOTE 12 – AMOUNTS DUE TO DIRECTORS
| September 30, |
| December 31, | |||
2025 | 2024 | |||||
Lin Chi-Jung | $ | | $ | | ||
Lin Hsin-Hung |
| |
| | ||
$ | | $ | | |||
| (a) | The balance due to Lin Chi-Jung consists of temporary advances. |
The balances are unsecured, interest-free and have no fixed term of repayment.
| (b) | The balances due to Lin Hsin-Hung are unsecured, interest-free and have no fixed term of repayment. |
NOTE 13 – OTHER PAYABLES AND ACCRUED EXPENSES
| September 30, |
| December 31, | |||
2025 | 2024 | |||||
Accrued staff commission and bonus | $ | | $ | | ||
Rental deposits received |
| |
| | ||
Bid bond |
| |
| | ||
Other payables |
| |
| | ||
$ | | $ | | |||
NOTE 14 – ACCOUNT PAYABLE
Account payable was mostly derived from our property development of the Linyi project and the HATX project. As of September 30, 2025, and December 31, 2024, the Company’s account payable amounted to $
NOTE 15 – AMOUNT DUE TO AFFILIATES
As of September 30, 2025, the amount due to Shanghai Shengji (“SHSJ”), a shareholder of HATX, was $
NOTE 16 – CUSTOMER DEPOSITS
Customer deposits were mostly derived from our property development of the Linyi project and the HATX project, which was pre-sale collection from our customers. As of September 30, 2025, and December 31, 2024, the Company’s customer deposits amounted to $
14
NOTE 17 – INCOME TAX PAYABLE
The 2017 Tax Act was enacted on December 22, 2017. Due to the complexities involved in the accounting for the 2017 Tax Act, the SEC issued SAB 118, which provides guidance on the application of US GAAP for income taxes in the period of enactment. SAB 118 requires companies to include in their financial statements a reasonable estimate of the impact of the 2017 Tax Act, to the extent such an estimate has been determined. As a result, our financial results reflect the income tax effects of the 2017 Tax Act for which the accounting is complete, as well as provisional amounts for those impacts for which the accounting is incomplete but a reasonable estimate could be determined.
NOTE 18 – COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
The Company leases certain of its office properties under non-cancellable operating lease arrangements. Payments under operating leases are expensed on a straight-line basis over the periods of their respective terms, and the terms of the leases do not contain rent escalation, or contingent rent, renewal, or purchase options. There are no restrictions placed upon the Company by entering into these leases. Rental expenses under operating leases for the nine months ended September 30, 2025 and 2024 were $
As of September 30, 2025, the Company had the following operating lease obligations.
| Amount | ||
Within one year | $ | | |
Two to five years |
| | |
$ | | ||
NOTE 19 – STATUTORY RESERVE
According to the relevant corporation laws in the PRC, a PRC company is required to transfer at least
According to the Law of the PRC on Enterprises with Wholly-Owned Foreign Investment, the Company PRC’s subsidiaries are required to make appropriations from after-tax profits as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) to non-distributable reserves. These reserve funds include one or more of the following: (i) a general reserve, (ii) an enterprise expansion reserve and (iii) a staff bonus and welfare fund. A wholly-owned PRC subsidiary is not required to make appropriations to the enterprise expansion reserve but annual appropriations to the general reserve are required to be made at
In addition to the general reserve, the Company’s PRC subsidiaries are required to obtain approval from the local PRC government prior to distributing any registered share capital. Accordingly, both the appropriations to general reserve and the registered share capital of the Company’s PRC subsidiary are considered as restricted net assets and are not distributable as cash dividends. As of September 30, 2025, and December 31, 2024, the Company’s statutory reserve fund was $
15
NOTE 20 - SEGMENT INFORMATION
The Company’s chief executive officer and chief operating officer have been identified as the chief operating decision makers. The Company’s chief operating decision makers direct the allocation of resources to operating segments based on the profitability and cash flows of each respective
The Company evaluates performance based on several factors, including net revenue, cost of revenue, operating expenses, and income from operations. The following tables show the operations of the Company’s operating segments:
Three Months Ended September 30, 2025 | |||||||||||||||
Property | Real Estate | Investment | |||||||||||||
| Brokerage Services |
| Development |
| Transaction |
| Others |
| Total | ||||||
Net revenues | $ | ( | $ | | $ | | $ | | $ | | |||||
Cost of revenues |
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Gross profit |
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Operating expenses |
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General and administrative expenses |
| ( |
| ( |
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Operating gain (loss) |
| ( |
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Other income (expenses) |
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Interest income |
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Interest expense |
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| ( |
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| ( | |||||
Other income, Net |
| ( |
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Total other (expenses) income |
| ( |
| ( |
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Income (loss) before income taxes |
| ( |
| ( |
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| ( |
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Income tax |
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| |
| |
| |
| | |||||
Net Income (loss) | $ | ( | $ | ( | $ | | $ | ( | $ | | |||||
16
Nine Months Ended September 30, 2025 | |||||||||||||||
Property | Real Estate | Investment | |||||||||||||
Brokerage Services |
| Development |
| Transaction |
| Others |
| Total | |||||||
Net revenues | $ | | $ | | $ | | $ | | $ | | |||||
Cost of revenues |
| ( |
| ( |
| |
| |
| ( | |||||
Gross profit |
| ( |
| |
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|
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Operating expenses |
| ( |
| ( |
| |
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| ( | |||||
General and administrative expenses |
| ( |
| ( |
| |
| ( |
| ( | |||||
Operating loss |
| ( |
| ( |
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| ( |
| ( | |||||
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Other income (expenses) |
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Interest income |
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Interest expense |
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| ( |
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Other income, Net | |
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Total other (expenses) income |
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| ( |
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Income (loss) before income taxes |
| ( |
| ( |
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Income tax |
| |
| ( |
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| |
| ( | |||||
Net Income (loss) | $ | ( | $ | ( | $ | | $ | | $ | | |||||
Three Months Ended September 30, 2024 | |||||||||||||||
Property | Real Estate | Investment | |||||||||||||
| Brokerage Services |
| Development |
| Transaction |
| Others |
| Total | ||||||
Net revenues | $ | | $ | | $ | | $ | | $ | | |||||
Cost of revenues |
| ( |
| ( |
| |
| |
| ( | |||||
Gross profit |
| |
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Operating expenses |
| |
| ( |
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| ( | |||||
General and administrative expenses |
| ( |
| ( |
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| ( |
| ( | |||||
Operating gain (loss) |
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| ( |
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Other income (expenses) |
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Interest income |
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Interest expense |
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Other income, Net |
| ( |
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Total other (expenses) income |
| ( |
| ( |
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Income (loss) before income taxes |
| ( |
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Income tax |
|
| ( |
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| ( | ||||||
Net Income(loss) | $ | ( | $ | | $ | | $ | ( | $ | | |||||
17
Nine Months Ended September 30, 2024 | |||||||||||||||
Property | Real Estate | Investment | |||||||||||||
| Brokerage Services |
| Development |
| Transaction |
| Others |
| Total | ||||||
Net revenues | $ | | $ | | $ | | $ | | $ | | |||||
Cost of revenues |
| ( |
| ( |
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| ( | |||||
Gross profit |
| ( |
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Operating expenses |
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| ( |
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| ( | |||||
General and administrative expenses |
| ( |
| ( |
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| ( |
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Operating loss |
| ( |
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Other income (expenses) |
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Interest income |
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Interest expense |
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Other income, Net |
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Total other (expenses) income |
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Income (loss) before income taxes |
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Income tax |
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Net Income (loss) | $ | ( | $ | ( | $ | | $ | ( | $ | ( | |||||
Property | Real Estate | Investment | |||||||||||||
| Brokerage Services |
| Development |
| Transaction |
| Others |
| Total | ||||||
As of September 30, 2025 |
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Real estate property under development | $ | | $ | | $ | | $ | | $ | | |||||
Total assets |
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As of September 30, 2024 |
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Real estate property under development | | | | | | ||||||||||
Total assets | $ | | $ | | $ | | $ | | $ | | |||||
NOTE 21 – RELATED PARTY TRANSACTIONS
We rented an office about
NOTE 22 - SUBSEQUENT EVENT
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred from October 1, 2025, through the date the Company issued the interim financial statements and identified no reportable events.
18
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATIONS
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-Q
In addition to historical information, this Form 10-Q contains forward-looking statements. Forward-looking statements are based on our current beliefs and expectations, information currently available to us, estimates and projections about our industry, and certain assumptions made by our management. These statements are not historical facts. We use words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, and similar expressions to identify our forward-looking statements, which include, among other things, our anticipated revenue and cost of our agency and investment business.
Because we are unable to control or predict many of the factors that will determine our future performance and financial results, including future economic, competitive, and market conditions, our forward-looking statements are not guarantees of future performance. They are subject to risks, uncertainties, and errors in assumptions that could cause our actual results to differ materially from those reflected in our forward-looking statements. We believe that the assumptions underlying our forward-looking statements are reasonable. However, the investor should not place undue reliance on these forward-looking statements. They only reflect our view and expectations as of the date of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement in light of new information, future events, or other occurrences.
There are several risks and uncertainties, including those relating to our ability to raise money and grow our business and potential difficulties in integrating new acquisitions with our current operations, especially as they pertain to foreign markets and market conditions. These risks and uncertainties can materially affect the results predicted. The Company’s future operating results over both the short and long term will be subject to annual and quarterly fluctuations due to several factors, some of which are outside our control. These factors include but are not limited to fluctuating market demand for our services, and general economic conditions.
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand Sunrise Real Estate Group, Inc. (“SRRE”). MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes.
OVERVIEW
In October 2004, the former shareholders of Sunrise Real Estate Development Group, Inc. (Cayman Islands) (“CY-SRRE”) and LIN RAY YANG Enterprise Ltd. (“LRY”) acquired a majority of our voting interests in a share exchange. Before the completion of the share exchange, SRRE had no continuing operations, and its historical results would not be meaningful if combined with the historical results of CY-SRRE, LRY and their subsidiaries.
As a result of the acquisition, the former owners of CY-SRRE and LRY hold a majority interest in the combined entity. Generally accepted accounting principles require in certain circumstances that a company whose shareholders retain the majority voting interest in the combined business be treated as the acquirer for financial reporting purposes. Accordingly, the acquisition has been accounted for as a “reverse acquisition” arrangement whereby CY-SRRE and LRY are deemed to have purchased SRRE. However, SRRE remains the legal entity and the Registrant for Securities and Exchange Commission reporting purposes. The historical financial statements prior to October 5, 2004 are those of CY-SRRE and LRY and their subsidiaries. All equity information and per share data prior to the acquisition have been restated to reflect the stock issuance as a recapitalization of CY-SRRE and LRY.
19
SRRE and its subsidiaries, namely, CY-SRRE, LRY, Shanghai Xin Ji Yang Real Estate Consultation Company Limited (“SHXJY”), Shanghai Shang Yang Real Estate Consultation Company, Ltd. (“SHSY”), Suzhou Gao Feng Hui Property Management Company, Ltd, (“SZGFH”), Suzhou Shang Yang Real Estate Consultation Company (“SZSY”), Suzhou Xin Ji Yang Real Estate Consultation Company, Ltd. (“SZXJY”), Linyi Shang Yang Real Estate Development Company Ltd (“LYSH”), Shangqiu Shang Yang Real Estate Consultation Company, Ltd., (“SQSY”), Wuhan Gao Feng Hui Consultation Company Ltd.(WHGFH), Sanya Shang Yang Real Estate Consultation Company, Ltd. (“SYSH”), Shanghai Rui Jian Design Company, Ltd., (“SHRJ”), Wuhan Yuan Yu Long Real Estate Development Company, Ltd. (“WHYYL”), and Shanghai Da Er Wei Trading Company Limited (“SHDEW”) are sometimes hereinafter collectively referred to as “the Company”, “we”, “our”, or “us”.
The principal activities of the Company are real estate agency sales, real estate marketing services, real estate investments, property leasing services, property management services, and real estate development in the PRC.
RECENT DEVELOPMENTS
Our major business is real estate agency sales, real estate marketing services, real estate investments, property leasing services, property management services, and real estate development in the PRC. Additionally, we expand our business to the field of financial activities such as entity investment, fund management, financial services and so on.
Since we started our agency sales operations in 2001, we have established a reputation as a sales and marketing agency for new projects. With our accumulated expertise and experience, we intend to take a more aggressive role by participating in property investments. We plan to select property developers with outstanding qualifications as our strategic partners, and continue to build strength in design, planning, positioning and marketing services.
In October 2011, we established LYSY and own 34% of the company. During the first quarter of 2012, we acquired approximately 103,385 sqm for the purpose of developing villa-style residential housing. The LYSY project has divided into three phases. Phase 1 has completed construction of 121 units in May 2015 and sold 119 units out of all 121 units at the end of October 31, 2025. Phase 2 was divided into north and south area and completed construction of 84 units at the end of 2020. All 84 units have been sold during phase 2 by the end of October 31, 2025. Phase 3 began construction in first quarter of 2021and sold 28 units out of 51units as of October 31,2025. In September 2020, the Company expanded the Linyi project by purchasing additional 54,312 sqm in the amount of 228 million RMB for future development.
SHDEW was established in June 2013 with its business as a skincare and cosmetic company. SHDEW develops its own skincare products as well as improving its online ecommerce platform. SHDEW sells products under its own brands as well as the products from third parties. The products include skincare, cosmetics, personal care products such as soaps, shampoos, skin care devices and children’s apparel. SHDEW has an online shopping app, “庭秘密,” where consumers can purchase its cosmetics and skincare products as well as products imported into China. On October 31st 2023, SHDEW held a shareholder meeting that agreed to SHDEW’s dissolution by end of 2026. There were no immediate dissolution plans at the time of the meeting but SHDEW management will be planning on one.
In October 2018, HATX purchased the property in Huai’an, Qingjiang Pu district with an area of 78,030 sqm. In December 2018, we established HAZB with a 78.46% ownership for the purpose of real estate investment and in March 2019, HAZB purchased 100% of HATX and its land usage rights to the Huai’an property. The Huai’an project, named Tianxi Times, started its first phase development in early 2019 with a GFA of 82,218 sqm totaling 679 units, and started its second phase in 2020 with a GFA of 99,123 sqm totaling 873 units. As of October 31, 2025, the Company sold and 655 units out of 679 units of the first phase and sold 600 units out of 873 of the second phase.
RECENTLY ADOPTED ACCOUNTING STANDARDS
In January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which requires disclosure of gross write-offs of finance receivables by year of origination. The adoption of this standard did not have a material impact on our disclosures.
20
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which would require additional transparency for income tax disclosures, including the income tax rate reconciliation table and cash taxes paid both in the United States and foreign jurisdictions. This standard is effective for annual periods beginning after December 15, 2024. We are currently assessing the impact this standard will have on our disclosures.
NEW ACCOUNTING PRONOUNCEMENTS
Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss new accounting pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. The most significant estimates and assumptions include revenue recognition, and the useful lives and impairment of property and equipment, and investment properties, the valuation of real estate property under development, the recognition of government subsidies, and the provisions for income taxes. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this Form 10-Q reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. We believe there have been no material changes to our critical accounting policies and estimates.
The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our condensed consolidated financial statements.
Revenue Recognition
Most of the Company’s revenue is derived from real estate sales in the PRC. The majority of the Company’s contracts contain a single performance obligation involving significant real estate development activities that are performed together to deliver a real estate property to customers. Revenues arising from real estate sales are recognized when or as the control of the asset is transferred to the customer. The control of the asset may transfer over time or at a point in time. For the sales of individual condominium units in a real estate development project, the Company has an enforceable right to payment for performance completed to date, revenue is recognized over time by measuring the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the asset.
All revenues represent gross revenues less sales and business tax.
ASC 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. ASC 606 also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, ASC 606 requires extensive disclosures.
21
The Company adopted ASC 606 on January 1, 2018 using the modified retrospective approach with no restatement of comparative periods and no cumulative-effect adjustment to retained earnings recognized as of the date of adoption. A significant portion of the Company’s revenue is derived from development and sales of condominium real estate property in the PRC, with revenue previously recognized using the percentage of completion method. Under the new standard, to recognize revenue over time similar to the percentage of completion method, contractual provisions need to provide the Company with an enforceable right to payment and the Company has no alternative use of the asset. Historically, all contracts executed contained an enforceable right to home purchase payments and the Company had no alternative use of assets, therefore, the adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.
Real Estate Property under Development
Real estate property under development, which consists of residential unit sites and commercial and residential unit sites under development, is stated at the lower of carrying amounts or fair value less selling costs.
Expenditures for land development, including cost of land use rights, deed tax, pre-development costs and engineering costs, are capitalized and allocated to development projects by the specific identification method. Costs are allocated to specific units within a project based on the ratio of the sales value of units to the estimated total sales value times the total project costs.
Costs of amenities transferred to buyers are allocated as common costs of the project that are allocated to specific units as a component of total construction costs. For amenities retained by the Company, costs in excess of the related fair value of the amenity are also treated as common costs. Results of operations of amenities retained by the Company are included in current operating results.
In accordance with ASC 360, “Property, Plant and Equipment” (“ASC 360”), real estate property under development is subject to valuation adjustments when the carrying amount exceeds fair value. An impairment loss is recognized only if the carrying amount of the assets is not recoverable and exceeds fair value. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated by the assets.
Income Taxes
The Company accounts for income taxes under ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. Deferred tax assets or liabilities were off-set by a 100% valuation allowance; therefore there has been no recognized benefit as of September 30, 2025 and December 31, 2024.
RESULTS OF OPERATIONS
We provide the following discussion and analyses of our changes in financial condition and results of operations for the period ended September 30, 2025 with comparisons to the period ended September 30, 2024.
Revenue
The following table shows the net revenue detail by line of business:
Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||||||||
| 2025 |
| % to total |
| 2024 |
| % to total |
| % change |
| 2025 |
| % to total |
| 2024 |
| % to total |
| % change | |
Property management | 213,803 | 23 | 379,416 | 5 | (44) | 856,584 |
| 7 |
| 1,024,314 |
| 8 |
| (16) | ||||||
House sales | 713,059 | 77 | 6,842,203 | 95 | (90) | 11,500,757 |
| 93 |
| 12,545,429 |
| 92 |
| (8) | ||||||
Net revenues | 926,862 | 100 | 4,448,409 | 100 | (87) | 12,357,341 |
| 100 |
| 13,569,743 |
| 100 |
| (9) | ||||||
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The net revenue for the third quarter of 2025 was $926,862, which decreased 87% from $7,221,619 from the third quarter of 2024. The net revenue for the first three quarters of 2025 was $12,357,341, which represented a decrease of 9% from $13,569,742 from the first three quarters of 2024. For the third quarter of 2025, property management and house sales represented 23% and 77% of our net revenues, respectively. For the first three quarters of 2025, property management and house sales represented 7% and 93% of our net revenues, respectively. The decrease in net revenue for the first three quarters of 2025 was mainly due to the recognition of revenue of Huaian Tianxi project when handover is complete.
Property Management
Property management represented 7% of our revenue for the first three quarters of 2025 and revenue from property management decreased by 16% compared with the same period in 2024.
House Sales
For the first three quarters of 2025, the Company has recognized house sales of Huaian Tianxi project at a certain portion. House sales represented 93% of our revenue for the first three quarters of 2025.
Cost of Revenue
The following table shows the cost of revenue detail by line of business:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2025 |
| % to total |
| 2024 |
| % to total |
| % change |
| 2025 |
| % to total |
| 2024 |
| % to total |
| % change | |
Property management | 560,760 | 56 | 190,297 | 3 | 195 |
| 1,510,274 |
| 13 |
| 1,103,937 |
| 8 |
| 37 | |||||
House sales | 441,550 | 44 | 5,515,466 | 97 | (92) |
| 10,004,335 |
| 87 |
| 10,268,053 |
| 92 |
| (3) | |||||
Cost of revenues | 1,002,310 | 100 | 5,705,763 | 100 | (82) |
| 11,514,609 |
| 100 |
| 11,371,990 |
| 100 |
| 1 | |||||
The cost of revenue for the third quarter of 2025 was $1,002,310, which decreased 82% from $5,705,763 during the third quarter of 2024. The cost of revenues for the first three quarters of 2025 was $11,514,609, which increased 1% from $11,371,989 during the first three quarters of 2024. For the third quarter of 2025, property management, and house sales represented 56% and 44% of our cost of revenue, respectively. For the first three quarters of 2025, property management, and house sales represented 13% and 87% of our cost of revenue, respectively. The increase in the cost of revenue in the third quarter and in the nine months ended September 30 2025 was mainly due to the Company recognizing the cost of revenue of Huaian Tianxi project when handover is complete.
Property Management
The cost of revenue for property management for the first three quarters of 2025 was $1,510,274, an increase of 37% from $1,103,937 in the same period in 2024.
House Sales
For the first three quarters of 2025, the Company recognized house sales of cost of revenue of Huaian Tianxi project at a certain portion. House sales represented 87% of our cost of revenue for the first three quarters of 2025.
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Operating Expenses
The following table shows operating expenses detail by line of business:
Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||||||||
| 2025 |
| % to total |
| 2024 |
| % to total |
| % change |
| 2025 |
| % to total |
| 2024 |
| % to total |
| % change | |
Property management | 156,709 | 47 | (178,957) | — | (188) | 397,985 |
| 42 |
| 90,289 |
| 13 |
| 340 | ||||||
House sales | 178,830 | 53 | 194,421 | 100 | (8) | 540,082 |
| 58 |
| 596,654 |
| 87 |
| (9) | ||||||
Operating expenses | 335,539 | 100 | 15,464 | 100 | 2,070 | 938,068 |
| 100 |
| 686,943 |
| 100 |
| 37 | ||||||
The operating expenses for the third quarter of 2025 were $335,539, which increased 2,070% from $15,465 for the same period in 2024. The total operating expenses for the first three quarters of 2025 were $938,068, which increased 37% from $686,943 for the same period in 2024. For the third quarter of 2025, property management and house sales represented 47%, and 53% of the total operating expenses, respectively. For the first three quarters of 2025, property management and house sales represented 42%, and 58% of the total operating expense, respectively. The increase in the overall operating expense resulted from the increase in property management for the third quarter and the first three quarters of 2025.
Property Management
The operating expenses for property management for the first three quarters of 2025 were $397,985, an increase of 340% from $90,289 in the same period in 2024. The increase is mainly due to the consulting expenses relating to the business.
House Sales
The operating expenses for house sales for the first three quarters of 2025 were $540,082 which decreased 9% from $596,654 in the same period in 2024. The decrease is mainly due to the operations of HATX project.
General and Administrative Expenses
General and administrative expenses in the first three quarters of 2025 were $2,248,168, an increase of 6% from $2,126,643, in the same period in 2024.
Other Income (Loss), Net
Net income for the first three quarters of 2025 was $3,709,767, an increase of 61% from a loss of $5,811,229 for the same period in 2024. Net income increased as a result of the increase in other income. Other gain for the first three quarters of 2025 was $7,505,561, an increase of 316% from a loss of $3,471,645 for the same period in 2024. The increase in other income was mainly due to the gain of transactional financial assets.
Major Related Party Transaction
A related party is an entity that can control or significantly influence the management or operating policies of another entity to the extent one of the entities may be prevented from pursuing its own interests. A related party may also be any party the entity deals with that can exercise that control.
Amount due to directors
The total amount due to directors for September 30, 2025, was $752,060. The amounts due are as follows:
Amount due to Lin Chi-Jung
The balances due to Lin Chi-Jung consists of temporary advances of $731,662 and are unsecured, interest-free and have no fixed term of repayment.
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Amount due to Lin Hsin Hung
The amount of $20,398 represents the salary payable to Lin Hsin Hung. The balances are unsecured, interest-free and have no fixed term of repayment.
Amount due to affiliate
As of September 30, 2025, the amounts due to SHSJ and JXSY, of $27,977,176 and $498,410, respectively, were intercompany transfers for day-to-day operation.
LIQUIDITY AND CAPITAL RESOURCES
For the first three quarters of 2025, our principal sources of cash were revenues from our house sales collection and property management business, as well as the dividend receipt from the affiliates. Most of our cash resources were used to fund our property development investment and revenue related expenses, such as salaries and commissions paid to the sales force, daily administrative expenses and the maintenance of regional offices.
We ended the period with a cash position of $17,234,750.
The Company’s net cash used in operating activities was $2,912,884, compared to $5,141,693 in the first three quarters in 2024. The improvement primarily reflected a decrease in real estate property under development, as several projects progressed to later stages. Operating cash flows were negatively affected by an increase in amounts due from unconsolidated affiliates, and a decrease in other payables and accrued expenses.,]. In addition, accounts receivable increased by approximately $7.9 million, largely due to an increase in government subsidies for residents to move from other locations, which subsidies had not yet been received by the Company.
The Company’s net cash used in investing activities was $1,011,984, which was primarily attributable to the investment in transactional financial assets.
The potential cash needs for 2025 are for investment in transactional financial assets, construction for our development projects in the Huai’an project (HATX) and the Linyi project.
Though the investment of SHDEW has been a main source of cashflow for the Company, we have no assurance that SHDEW will continue to pay dividends in the future.
Capital Resources
Considering our cash position, available credit facilities and cash generated from operating activities, we believe that we have sufficient funds to operate our existing business for the next twelve months. If our business otherwise grows more rapidly than we currently predict, we plan to raise funds through the issuance of additional shares of our equity securities in one or more public or private offerings. We will also consider raising funds through credit facilities obtained with lending institutions. There can be no guarantee that we will be able to obtain such funds through the issuance of debt or equity or obtain funds that are with terms satisfactory to management and our board of directors.
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A smaller reporting company is not required to provide the information required by this item.
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ITEM 4. CONTROLS AND PROCEDURES
A.Material Weaknesses
As discussed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024, we identified one material weakness in the design and operation of our internal controls. The material weakness is related to the Company’s accounting department personnel having limited knowledge and experience in U.S. GAAP. In response to the above identified material weakness and to continue strengthening the Company’s internal control over financial reporting, we are going to undertake the following remediation initiatives:
| ● | hiring additional personnel with sufficient knowledge and experience in U.S. GAAP; and |
| ● | providing ongoing training course in U.S. GAAP to existing personnel, including our Chief Financial Officer and Financial Controller. |
Since the first quarter of 2015, additional qualified accounting personnel have been hired and put into place to assist preparation of financial information, as required for interim and annual reporting, in accordance with generally accepted accounting principles in the U.S. As the newly implemented remediation activities have not operated for a sufficient period of time to demonstrate operating effectiveness, we will continue to monitor and assess our remediation activities to ensure that the aforementioned material weakness is remediated.
B.Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s management, with the participation of its principal executive and financial officers, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation and solely due to the unremediated material weakness described above, the Company’s principal executive and financial officers have concluded that such disclosure controls and procedures were ineffective for the purpose for which they were designed as of the end of such period. As a result of this conclusion, the financial statements for the period covered by this report were prepared with particular attention to the unremediated material weakness previously disclosed. Accordingly, management believes that the condensed consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the periods presented, in accordance with generally accepted accounting principles, notwithstanding the unremediated weaknesses.
C.Changes in Internal Control over Financial Reporting
Since the first quarter of 2015, we have put into place additional qualified accounting personnel to address the aforementioned material weakness. This action strengthened our internal controls over financial reporting.
Except for the above, there was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There have been no material developments in any legal proceedings since the disclosures contained in the Registrant’s Form 10-K for the year ended December 31, 2024.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
Exhibit |
| Description |
|
|
|
31.1* |
| Section 302 Certification by the Corporation’s Chief Executive Officer. |
|
|
|
31.2* |
| Section 302 Certification by the Corporation’s Chief Financial Officer. |
|
|
|
32.1* |
| |
|
|
|
101 |
| XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q. |
* Filed herewith
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUNRISE REAL ESTATE GROUP, INC.
Date: December 11, 2025 | ||
By: | /s/ Zhang, Jian |
|
Zhang, Jian, Chief Executive Officer, Principal Executive Officer |
| |
| ||
Date: December 11, 2025 |
| |
By: | /s/ Mi, Yong Jun |
|
Mi, Yong Jun, Chief Financial Officer, Principal Financial Officer |
| |
29