Sunrise Real Estate Group, Inc. (SRRE) reported significant financial challenges in its latest 10-Q filing for the quarter ending June 30, 2024. The company experienced a substantial decline in net revenues, which totaled $4.4 million for the three months ended June 30, 2024, down 37% from $7.0 million in the same period of 2023. For the first half of 2024, net revenues were $6.3 million, a 50% decrease compared to $12.8 million in the first half of 2023. This decline was primarily attributed to reduced recognized sales revenue from the Huai’an project.

The gross profit for the second quarter of 2024 was $689,029, significantly lower than the $1.1 million reported in the same quarter of the previous year. The company reported an operating loss of $(349,209) for Q2 2024, compared to a loss of $(132,335) in Q2 2023. The net loss for the quarter was $(4.3 million), a stark contrast to the net income of $200,776 in Q2 2023. The loss attributable to shareholders was $(3.6 million), compared to a profit of $341,995 in the prior year.

For the six months ended June 30, 2024, the company reported a net loss of $(9.1 million), worsening from a loss of $(1.7 million) in the same period of 2023. The operating loss for the first half of 2024 was $(1.4 million), compared to $(841,460) in the first half of 2023.

In terms of assets, total assets decreased to $195.8 million as of June 30, 2024, down from $207.9 million at the end of 2023. Current assets also fell to $153.7 million, while total current liabilities decreased slightly to $89.5 million. The company’s total equity declined to $110.8 million from $119.3 million at the end of 2023.

Strategically, the company has been focusing on its real estate development projects, with significant investments in properties under development. The Linyi project has seen progress, with 119 of 121 villas sold in Phase 1 and all units in Phase 2 sold by August 2024. The Huai’an project has also reported sales, with 664 out of 679 units sold in Phase 1 and 503 out of 873 units sold in Phase 2.

Despite these challenges, the company reported a net cash increase of $4.5 million for the first half of 2024, contrasting with a cash decrease of $(12.9 million) in the same period of 2023. The cash position at the end of Q2 2024 stood at $27.7 million, reflecting a strategic focus on managing cash flow amid operational difficulties.

The company has identified a material weakness in its accounting department related to U.S. GAAP compliance and is taking steps to address this by hiring additional qualified personnel and providing ongoing training.