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SEC filingRevenue tripled to $1.9M from new high-margin account management fees amid China's e-commerce recovery, driving gross margin to 85.7%, but operating and net losses widened due to higher expenses and credit provisions from liquor customer delays.
Gross profit surged 267.3% to $1.6 million, lifting gross margin to 85.7% from prior levels. The margin expansion stems from the shift to lower-cost account management fees, combined with cost of revenues reductions including lower employee salaries, system fees, and warehouse storage. This efficiency supports scalability as the Company pivots from transactional to recurring fee models.
Despite top-line strength, operating income deteriorated 20.2% to -$3.8 million from -$3.2 million, yielding an operating margin of -203.5%. The wider loss reflects elevated operating expenses, significantly driven by revenue growth alongside higher labor costs. Additionally, expected credit loss provisions rose due to liquor business customers postponing payments amid capital constraints, increasing accounts receivable. Net income followed suit, deepening 58.5% to -$3.9 million, with diluted EPS at -$107.26 versus -$0.18. An income tax benefit from utilizing prior-year net operating losses provided some offset.
These results highlight strategic progress in high-margin business lines but underscore risks from customer payment delays in liquor operations and expense leverage. Past performance does not predict future periods, as external demand and credit dynamics remain volatile.