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Planet Image International Ltd

Planet Image International LtdYIBOEarnings & Financial Report

Nasdaq · space industry

Planet Labs PBC, known as "Planet.", is a publicly traded American Earth imaging company based in San Francisco, California. Their goal is to image the entirety of the Earth daily to monitor changes and pinpoint trends.

What changed in Planet Image International Ltd's 20-F — 2023 vs 2024

Top changes in Planet Image International Ltd's 2024 20-F

379 paragraphs added · 484 removed · 329 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

110 edited+12 added−49 removed499 unchanged
Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or complete hinder our ability to offer or continue to offer our securities to investors and cause the value of such securities to significantly decline or be worthless. See “Item 3. Key Information—D.
Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or complete hinder our ability to continue to offer our securities to investors and cause the value of such securities to significantly decline or be worthless. See “Item 3. Key Information—D.
Given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
According to the Administration Measures and the Notice, overseas offering and listing refers to overseas offerings by domestic companies of equity shares, depository receipts, convertible corporate bonds, or other equity-like securities, and overseas listing of the securities for trading.
According to the Administration Measures and the Notice, overseas offering and listing refers to overseas offerings by domestic companies of equity shares, depository receipts, convertible corporate bonds, or other equity-like securities, and overseas listing of the securities for trading.
Overseas offering and listing, which is specifically divided into direct overseas offerings and listing and indirect overseas offerings and listing, shall be filed in accordance with the Administration Measures.
Overseas offering and listing, which is specifically divided into direct overseas offerings and listing and indirect overseas offerings and listing, shall be filed in accordance with the Administration Measures.
On March 30, 2015, SAFE promulgated the Circular on Reforming the Administration Measures on Conversion of Foreign Exchange Registered Capital of Foreign-invested Enterprises, or SAFE Circular 19.
On March 30, 2015, SAFE promulgated the Circular on Reforming the Administration Measures on Conversion of Foreign Exchange Registered Capital of Foreign-invested Enterprises, or SAFE Circular 19.
SAFE Circular 19, however, allows foreign invested enterprises in Mainland China to use their registered capital settled in RMB converted from foreign currencies to make equity investments, but the registered capital of a foreign invested company settled in RMB converted from foreign currencies remains not allowed to be used, among other things, for investment in the security markets, or offering entrustment loans, unless otherwise regulated by other laws and regulations.
SAFE Circular 19, however, allows foreign invested enterprises in Mainland China to use their registered capital settled in RMB converted from foreign currencies to make equity investments, but the registered capital of a foreign invested company settled in RMB converted from foreign currencies remains not allowed to be used, among other things, for investment in the security markets, or offering entrustment loans, unless otherwise regulated by other laws and regulations.
On June 9, 2016, SAFE further issued the Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, which, among other things, amended certain provisions of Circular 19.
On June 9, 2016, SAFE further issued the Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, which, among other things, amended certain provisions of Circular 19.
According to SAFE Circular 19 and SAFE Circular 16, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign invested company is regulated such that Renminbi capital may not be used for purposes beyond its business scope or to provide loans to non-affiliates unless otherwise permitted under its business scope.
According to SAFE Circular 19 and SAFE Circular 16, the flow and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign invested company is regulated such that Renminbi capital may not be used for purposes beyond its business scope or to provide loans to non-affiliates unless otherwise permitted under its business scope.
On October 23, 2019, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-Border Trade and Investment, or SAFE Circular 28, which removes the restrictions on domestic equity investments by non-investment foreign-invested enterprises with their capital funds, provided that certain conditions are met.
On October 23, 2019, SAFE promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the Facilitation of Cross-Border Trade and Investment, or SAFE Circular 28, which removes the restrictions on domestic equity investments by non-investment foreign-invested enterprises with their capital funds, provided that certain conditions are met.
Certain holders of our Class A ordinary shares may cause us to register under the Securities Act the sale of their shares. Registration of these shares under the Securities Act would result in these ordinary shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of such registration.
Certain holders of our Class A ordinary shares may cause us to register under the Securities Act the sale of their shares. Registration of these shares under the Securities Act would result in these Class A ordinary shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of such registration.
In addition to market and industry factors, the price and trading volume for our Class A ordinary shares may be highly volatile for factors specific to our own operations, including the following: ● Actual or anticipated variations in our revenues, earnings, cash flow, and changes or revisions of our expected results; ● fluctuations in operating metrics; 32 ● announcements of new investments, acquisitions, strategic partnerships, or joint ventures by us or our competitors; ● announcements of new products and services and expansions by us or our competitors; ● changes in financial estimates by securities analysts; ● announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other companies in our industry; ● detrimental negative publicity about us, our competitors, or our industry; ● additions or departures of key personnel; ● regulatory developments affect us or our industry; ● general economic or political conditions in China or elsewhere in the world; ● fluctuations of exchange rates between the RMB and the U.S. dollar; and ● potential litigation or regulatory investigations.
In addition to market and industry factors, the price and trading volume for our Class A ordinary shares may be highly volatile for factors specific to our own operations, including the following: ● actual or anticipated variations in our revenues, earnings, cash flow, and changes or revisions of our expected results; ● fluctuations in operating metrics; 32 ● announcements of new investments, acquisitions, strategic partnerships, or joint ventures by us or our competitors; ● announcements of new products and services and expansions by us or our competitors; ● changes in financial estimates by securities analysts; ● announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other companies in our industry; ● detrimental negative publicity about us, our competitors, or our industry; ● additions or departures of key personnel; ● regulatory developments affect us or our industry; ● general economic or political conditions in China or elsewhere in the world; ● fluctuations of exchange rates between the RMB and the U.S. dollar or between Euros and the U.S. dollar; and ● potential litigation or regulatory investigations.
See “— The approval of relevant PRC regulatory authorities and compliance procedures may be required in connection with our future offerings and, we cannot predict whether we will be able to obtain such approval.” We may rely on dividends and other distributions on equity paid by our Mainland PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our Mainland PRC subsidiaries to make payments to us and any tax we are required to pay could have a material and adverse effect on our ability to conduct our business.
See also “— The approval of relevant PRC regulatory authorities and compliance procedures may be required in connection with our future offerings and, we cannot predict whether we will be able to obtain such approval.” We may rely on dividends and other distributions on equity paid by our Mainland PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our Mainland PRC subsidiaries to make payments to us and any tax we are required to pay could have a material and adverse effect on our ability to conduct our business.
KEY INFORMATION As used in this annual report, (i) “we,” “us,” “our company,” or “our” refers to Planet Image International Limited, and, when describing Planet Image International Limited’s consolidated financial information, also includes its subsidiaries; (ii) “our subsidiaries” refers to the direct and indirect subsidiaries of Planet Image International Limited; and (iii) “our operating subsidiaries” refers to the direct and indirect subsidiaries of Planet Image International Limited with operating activities, namely (a) Jiangxi Yibo E-Tech Co., Ltd., Jiangxi Leibotai E-Tech Co., Ltd., and Yantuo (Guangdong) Technology Co., Ltd., our operating subsidiaries formed in Mainland China, (b) Your Office Supplies Company Limited, Iprint Enterprise Limited, Amstech Limited, Aztech Enterprise Limited, Supplies4u Limited, Access Supplies Limited, Dellon Technology Company Limited, our operating subsidiaries formed in Hong Kong, (c) Aster Graphics Inc., Eco Imaging Inc., Revol Trading Inc. and Intercon International Corp., our operating subsidiaries formed in the State of California; (d) Aster Technology Holland B.V. and Proimage B.V., our operating subsidiaries formed in Netherlands, (e) Aster Technology Italia S.R.L., an operating subsidiary formed in Italy, (f) Aster Supplies GmbH, an operating subsidiary formed in Germany, (g) Aster Technology France, an operating subsidiary formed in France, and (h) Aster Technology UK Ltd., an operating subsidiary formed in the United Kingdom.
KEY INFORMATION As used in this annual report, (i) “we,” “us,” “our company,” or “our” refers to Planet Image International Limited, and, when describing Planet Image International Limited’s consolidated financial information, also includes its subsidiaries; (ii) “our subsidiaries” refers to the direct and indirect subsidiaries of Planet Image International Limited; and (iii) “our operating subsidiaries” refers to the direct and indirect subsidiaries of Planet Image International Limited with operating activities, namely (a) Jiangxi Yibo E-Tech Co., Ltd., Jiangxi Leibotai E-Tech Co., Ltd., Yantuo (Guangdong) Technology Co., Ltd., and Planet Image International Electronics Technology Shenzhen Co., Ltd., our operating subsidiaries formed in Mainland China, (b) Your Office Supplies Company Limited, Iprint Enterprise Limited, Amstech Limited, Aztech Enterprise Limited, Supplies4u Limited, Access Supplies Limited, Dellon Technology Company Limited, our operating subsidiaries formed in Hong Kong, (c) Aster Graphics Inc., Eco Imaging Inc., Revol Trading Inc. and Intercon International Corp., our operating subsidiaries formed in the State of California; (d) Aster Technology Holland B.V. and Proimage B.V., our operating subsidiaries formed in the Netherlands, (e) Aster Technology Italia S.R.L., an operating subsidiary formed in Italy, (f) Aster Supplies GmbH, an operating subsidiary formed in Germany, (g) Aster Technology France, an operating subsidiary formed in France, and (h) Aster Technology UK Ltd., an operating subsidiary formed in the United Kingdom.
The applicable foreign exchange circulars and rules may limit our ability to transfer the net proceeds from our offerings to our Mainland PRC subsidiaries and convert the net proceeds into RMB, which may adversely affect our business, financial condition, and results of operations. 26 Restrictions on the remittance of Renminbi into and out of Mainland China and government control of currency conversion may limit our ability to pay dividends and other obligations and affect the value of your investment.
The applicable foreign exchange circulars and rules may limit our ability to transfer the net proceeds from our securities offerings to our Mainland PRC subsidiaries and convert the net proceeds into RMB, which may adversely affect our business, financial condition, and results of operations. 26 Restrictions on the remittance of Renminbi into and out of Mainland China and government control of currency conversion may limit our ability to pay dividends and other obligations and affect the value of your investment.
Any such failure in compliance or increased operating costs could materially and adversely affect our business, financial condition and results of operations. 18 Non-compliance with existing and future health, safety and environmental policies, laws, rules and regulations may lead to imposition of fines penalties and other liabilities and our compliance costs may increase if environmental protection laws become more onerous.
Any such failure in compliance or increased operating costs could materially and adversely affect our business, financial condition, and results of operations. Non-compliance with existing and future health, safety and environmental policies, laws, rules and regulations may lead to imposition of fines penalties and other liabilities and our compliance costs may increase if environmental protection laws become more onerous.
Federal Income Tax Consequences — Passive Foreign Investment Company . ” For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.
Federal Income Tax Consequences — Passive Foreign Investment Company (“PFIC”) Consequences. ” For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.
If this occurs, the operating subsidiaries may incur losses for their research and development expenses, production costs and marketing expenses relating to such obsolete inventories (see page 10 of this annual report); ● the operating subsidiaries may not be able to maintain or increase the selling prices of their products (see page 11 of this annual report); ● raw material purchase prices are subject to fluctuation and the operating subsidiaries could face shortage in supply of their raw materials (see page 11 of this annual report); ● the business of the operating subsidiaries rely significantly on export sales which may be adversely affected by present or future export regulations or enforcement (see page 12 of this annual report); and ● the operating subsidiaries may fail to maintain an effective quality control system and may be subject to claims by their customers in respect of product quality and compliance with relevant health and safety standards (see page 15 of this annual report).
If this occurs, the operating subsidiaries may incur losses for their research and development expenses, production costs and marketing expenses relating to such obsolete inventories (see page 10 of this annual report); ● the operating subsidiaries may not be able to maintain or increase the selling prices of their products (see page 11 of this annual report); ● raw material purchase prices are subject to fluctuation and the operating subsidiaries could face shortage in supply of their raw materials (see page 11 of this annual report); ● the business of the operating subsidiaries relies significantly on export sales which may be adversely affected by present or future export regulations or enforcement (see page 12 of this annual report); and ● the operating subsidiaries may fail to maintain an effective quality control system and may be subject to claims by their customers in respect of product quality and compliance with relevant health and safety standards (see page 15 of this annual report).
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors Investing in our securities involves significant risks. You should carefully consider all of the information in this annual report before investing in our securities. Below is a summary of the principal risks we face.
Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 6 D. Risk Factors Summary of Risk Factors Investing in our securities involves significant risks. You should carefully consider all of the information in this annual report before investing in our securities. Below is a summary of the principal risks we face.
The applicable foreign exchange circulars and rules may limit our ability to transfer the net proceeds from our offerings to our Mainland PRC subsidiaries and convert the net proceeds into RMB, which may adversely affect our business, financial condition, and results of operations. See “Item 3. Key Information—D.
The applicable foreign exchange circulars and rules may limit our ability to transfer the net proceeds from our securities offerings to our Mainland PRC subsidiaries and convert the net proceeds into RMB, which may adversely affect our business, financial condition, and results of operations. See “Item 3. Key Information—D.
In their business operations, the operating subsidiaries have developed trademarks, patents, copyrights, industry know-how, product formulas, production processes, technologies and other intellectual property rights that we believe are of significant value to the operating subsidiaries’ operations.
In their business operations, the operating subsidiaries have developed trademarks, patents, industry know-how, product formulas, production processes, technologies and other intellectual property rights that we believe are of significant value to the operating subsidiaries’ operations.
For the operating subsidiaries’ branded products sold on an online e-commerce selling platform, the operating subsidiaries generally set the retail price based on the base selling prices, marketing expenses, fees paid to the online selling platform, different brand positioning and prices of competing products.
For the operating subsidiaries’ branded products sold on an online e-commerce selling platform, the operating subsidiaries generally set the retail price based on the base selling prices, marketing expenses, fees paid to online selling platforms, different brand positioning and prices of competing products.
Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021.
The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021.
These risks are discussed more fully under “Item 3. Key Information—D. Risk Factors.” 6 Risks Relating to the Business and Industry of the Operating Subsidiaries (for a more detailed discussion, see “Item 3. Key Information—D.
These risks are discussed more fully under “Item 3. Key Information—D. Risk Factors.” Risks Relating to the Business and Industry of the Operating Subsidiaries (for a more detailed discussion, see “Item 3. Key Information—D.
Risk Factors — Risks Relating to Doing Business in the PRC — The Chinese government exerts substantial influence over the manner in which the PRC subsidiaries must conduct their business activities and may intervene or influence their operations at any time, which could result in a material change in their operations and the value of our Class A ordinary shares.” Other than the filing requirement under the Administrative Measures, we, our Mainland PRC subsidiaries, and our Hong Kong subsidiaries are not required to obtain any permission or approval from the Chinese authorities under current PRC laws and regulations for the offering of securities being registered hereunder to foreign investors.
Risk Factors — Risks Relating to Doing Business in the PRC — The Chinese government exerts substantial influence over the manner in which the PRC subsidiaries must conduct their business activities and may intervene or influence their operations at any time, which could result in a material change in their operations and the value of our Class A ordinary shares.” Other than the filing requirement under the Administrative Measures, we, our Mainland PRC subsidiaries, and our Hong Kong subsidiaries are not required to obtain any permission or approval from the Chinese authorities under current PRC laws and regulations for the offering of securities to foreign investors.
We derive a significant portion of our revenue from export sales which accounted for substantially all of our revenue for the years ended December 31, 2021, 2022 and 2023. Export sales are generally subject to export regulations including tariffs, quotas, customs and other import or export restrictions and impose trade barriers, market access regulations, trade sanctions or anti-dumping measures.
We derive a significant portion of our revenue from export sales which accounted for substantially all of our revenue for the years ended December 31, 2022, 2023 and 2024. Export sales are generally subject to export regulations including tariffs, quotas, customs and other import or export restrictions and impose trade barriers, market access regulations, trade sanctions or anti-dumping measures.
On September 25, 2023, we received CSRC’s approval of our initial public offering under the Administration Measures. Since January 25, 2024, our Class A ordinary shares have been listed on the Nasdaq. In the future, in the event that we conduct any subsequent offerings, we could be subject to filing requirements with the CSRC.
On September 25, 2023, we received CSRC’s approval of our initial public offering under the Administration Measures. Since January 25, 2024, our Class A ordinary shares have been listed on the Nasdaq. In the future, in the event that we conduct any subsequent offerings, we may be subject to filing requirements with the CSRC.
Our subsidiaries received cash in the amount of US$13.7 million, US$4.7 million, US$0.8 million, nil, US$2,600, and nil for the years ended December 31, 2019, 2020, 2021, 2022 and 2023, and from December 31, 2023 to the date of this annual report, respectively, from our Cayman Islands holding company for operating activities.
Our subsidiaries received cash in the amount of US$13.7 million, US$4.7 million, US$0.8 million, nil, US$2,600, US$707 and US$0 for the years ended December 31, 2019, 2020, 2021, 2022, 2023 and 2024, and from December 31, 2024 to the date of this annual report, respectively, from our Cayman Islands holding company for operating activities.
In addition, there can be no assurance that the operating subsidiaries would be able to develop new relationships with additional customers, in order to expand their sales network. Our business relies significantly on export sales which may be adversely affected by present or future export regulations or enforcement.
In addition, there can be no assurance that the operating subsidiaries would be able to develop new relationships with additional customers, in order to expand their sales network. The business of the operating subsidiaries relies significantly on export sales which may be adversely affected by present or future export regulations or enforcement.
Based on the current and anticipated value of our assets and the composition of our income assets, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year ending December 31, 2024 or in the foreseeable future.
Based on the current and anticipated value of our assets and the composition of our income assets, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year ending December 31, 2025 or in the foreseeable future.
In addition, the utilization rate of production facilities depends primarily on the demand for the operating subsidiaries’ products and the availability and maintenance of the operating subsidiaries’ equipment, but may also be affected by other factors, such as the availability of employees, a stable supply of electricity, and seasonal factors.
The utilization rate of production facilities depends primarily on the demand for the operating subsidiaries’ products and the availability and maintenance of the operating subsidiaries’ equipment, but may also be affected by other factors, such as the availability of employees, a stable supply of electricity, and seasonal factors.
Such cash transactions for the years ended December 31, 2021, 2022 and 2023 were included in net cash generated from operating activities together with our Cayman Islands holding company’s other operational cash transactions in its financial statements.
Such cash transactions for the years ended December 31, 2022, 2023 and 2024 were included in net cash generated from operating activities together with our Cayman Islands holding company’s other operational cash transactions in its financial statements.
In addition, any litigation or legal proceedings could incur substantial legal expenses as well as significant time and attention of our management, diverting their attention from our business and operations. During the fiscal years ended December 31, 2021, 2022 and 2023, there were no material product recalls, product returns, product liability claims or customer complaints that adversely affected our business.
In addition, any litigation or legal proceedings could incur substantial legal expenses as well as significant time and attention of our management, diverting their attention from our business and operations. During the years ended December 31, 2022, 2023 and 2024, there were no material product recalls, product returns, product liability claims or customer complaints that adversely affected our business.
Government advices regarding, or restrictions on, holding offline events, in the event of an outbreak of any contagious disease or occurrence of natural disasters may have a material adverse effect on our business and operating results.
Government advice regarding, or restrictions on, holding offline events, in the event of an outbreak of any contagious disease or occurrence of natural disasters may have a material adverse effect on our business and operating results.
The holder of Class B ordinary shares have the ability to control matters requiring shareholders’ approval, including any amendment of our memorandum and articles of association. Any future issuances of Class B ordinary shares may be dilutive to the voting power of holders of Class A ordinary shares.
The holder of Class B ordinary shares has the ability to control matters requiring shareholders’ approval, including any amendment of our memorandum and articles of association. Any future issuances of Class B ordinary shares may be dilutive to the voting power of holders of Class A ordinary shares.
Senate passed the Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two.
Senate passed the Accelerating Holding Foreign Companies Accountable Act and on December 29, 2022, the Consolidated Appropriations Act was signed into law, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two.
Our Cayman Islands holding company, which was incorporated in August 2019, received cash in the amount of US$27,040, US$5.5 million, US$1.3 million, US$0.5 million, US$1.0 million and US$0.2 million for the years ended December 31, 2019, 2020, 2021, 2022, and 2023, and from December 31, 2023 to the date of this annual report, respectively, from our subsidiaries for operating activities.
Our Cayman Islands holding company, which was incorporated in August 2019, received cash in the amount of US$27,040, US$5.5 million, US$1.3 million, US$0.5 million, US$1.0 million, US$0.17 million and US$0 for the years ended December 31, 2019, 2020, 2021, 2022, 2023 and 2024, and from December 31, 2024 to the date of this annual report, respectively, from our subsidiaries for operating activities.
With the introduction of automated production lines, the operating subsidiaries are becoming less reliant upon a significant number of skilled workers over time. However, the operation of automated production lines require workers with relevant experience and expertise.
With the introduction of automated production lines, the operating subsidiaries are becoming less reliant upon a significant number of skilled workers over time. However, the operation of automated production lines requires workers with relevant experience and expertise.
See “Note 19 Condensed Financial Information of the Parent Company — Condensed statements of cash flows” in our financial statements appearing elsewhere in this annual report. The following table summarizes the cash flows that occurred between our Mainland PRC subsidiaries and our other subsidiaries for the fiscal years ended December 31, 2021, 2022 and 2023.
See “Note 19 Condensed Financial Information of the Parent Company — Condensed statements of cash flows” in our financial statements appearing elsewhere in this annual report. The following table summarizes the cash flows that occurred between our Mainland PRC subsidiaries and our other subsidiaries for the years ended December 31, 2021, 2023 and 2024.
Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council of the PRC (the “State Council”) jointly issued the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions, which were made available to the public on July 6, 2021.
For instance, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council of the PRC (the “State Council”) jointly issued the Opinions on Severely Cracking Down on Illegal Securities Activities According to Law, or the Opinions, which were made available to the public on July 6, 2021.
Our Mainland PRC subsidiaries may be subject to an aggregate maximum penalty of RMB50,000 for all five unregistered lease agreements in Mainland PRC. Our Mainland PRC subsidiaries may incur additional expenses if any fines were imposed upon them, which may adversely affect our business and results of operations. 17 The operating subsidiaries’ production and sales are affected by seasonality.
Our Mainland PRC subsidiaries may be subject to an aggregate maximum penalty of RMB90,000 for all nine unregistered lease agreements in Mainland PRC. Our Mainland PRC subsidiaries may incur additional expenses if any fines were imposed upon them, which may adversely affect our business and results of operations. 17 The operating subsidiaries’ production and sales are affected by seasonality.
Further, economic factors in U.S. or Europe such as a reduction in the availability of credit, increased unemployment levels, rising interest rates, financial market volatility, recession, reduced consumer confidence, and other factors affecting consumer spending behavior such as acts of terrorism or major epidemics could reduce demand for the operating subsidiaries’ products.
Further, economic factors in North America or Europe such as a reduction in the availability of credit, increased unemployment levels, rising interest rates, financial market volatility, recession, reduced consumer confidence, and other factors affecting consumer spending behavior such as acts of terrorism or major epidemics could reduce demand for the operating subsidiaries’ products.
During the fiscal years ended December 31, 2021, 2022 and 2023, our Mainland PRC subsidiaries did not make adequate contributions to the social insurance and/or housing fund for certain employees as they voluntarily waived the contributions by our Mainland PRC subsidiaries.
During the years ended December 31, 2022, 2023 and 2024, our Mainland PRC subsidiaries did not make adequate contributions to the social insurance and/or housing fund for certain employees as they voluntarily waived the contributions by our Mainland PRC subsidiaries.
Changes in export regulations may place restrictions on the operating subsidiaries in selling their products in the overseas markets, which could adversely affect our business, financial condition and results of operations. 12 The operating subsidiaries face intense competition in the compatible toner cartridge industry with their competitors and original brand toner cartridge manufacturers in the U.S. and Europe.
Changes in export regulations may place restrictions on the operating subsidiaries in selling their products in the overseas markets, which could adversely affect our business, financial condition and results of operations. 12 The operating subsidiaries face intense competition in the compatible toner cartridge industry with their competitors and original brand toner cartridge manufacturers in North America and Europe.
We can offer no assurance that the operating subsidiaries will be able to respond quickly to any economic, market or regulatory changes in the U.S. or European market, and any failure to do so may result in an adverse effect on our business performance, financial condition and results of operations.
We can offer no assurance that the operating subsidiaries will be able to respond quickly to any economic, market or regulatory changes in the North American or European market, and any failure to do so may result in an adverse effect on our business performance, financial condition, and results of operations.
As such, the operating subsidiaries rely on a combination of skilled workers and experienced automated production line operating personnel to support their product development and manufacturing processes. As of December 31, 2023, the operating subsidiaries had a total of 510 employees for manufacturing. Our success is dependent on the operating subsidiaries’ ability to hire, train, retain and motivate their employees.
As such, the operating subsidiaries rely on a combination of skilled workers and experienced automated production line operating personnel to support their product development and manufacturing processes. As of December 31, 2024, the operating subsidiaries had a total of 609 employees for manufacturing. Our success is dependent on the operating subsidiaries’ ability to hire, train, retain and motivate their employees.
In addition, our results of operations could be adversely affected to the extent that the outbreak harms the PRC economy in general. We are also vulnerable to natural disasters and other calamities. Any future outbreak of contagious diseases, extreme unexpected bad weather or natural disasters would adversely affect our business operations.
In addition, our results of operations could be adversely affected to the extent that the outbreak harms the PRC economy or economy in North America or Europe in general. 20 We are also vulnerable to natural disasters and other calamities. Any future outbreak of contagious diseases, extreme unexpected bad weather or natural disasters would adversely affect our business operations.
Public Company Accounting Oversight Board, or the PCAOB, determines that it cannot inspect the workpapers prepared by our auditor, and that as a result an exchange may determine to delist our securities. On June 22, 2021, the U.S.
Public Company Accounting Oversight Board, or the PCAOB, determines that it cannot inspect the workpapers prepared by our auditor for two consecutive years, and that as a result an exchange may determine to delist our securities. On June 22, 2021, the U.S.
During the fiscal years ended December 31, 2021, 2022 and 2023, our Mainland PRC subsidiaries did not make adequate contributions to social insurance plans for certain employees.
During the years ended December 31, 2022, 2023 and 2024, our Mainland PRC subsidiaries did not make adequate contributions to social insurance plans for certain employees.
For the years ended December 31, 2021, 2022 and 2023, average turnover days of our trade receivables were 66.9 days, 66.5 days and 68.6 days, respectively, which were within our credit period. As of December 31, 2021, 2022 and 2023, our trade receivables were approximately US$26.9 million, US$24.9 million and US$31.3 million, respectively.
For the years ended December 31, 2022, 2023 and 2024, average turnover days of our trade receivables were 66.5 days, 68.6 days and 76.9 days, respectively, which were within our credit period. As of December 31, 2022, 2023 and 2024, our trade receivables were approximately US$24.9 million, US$31.3 million and US$31.6 million, respectively.
The products the operating subsidiaries offer for sale on the online selling platform must comply with the requirements and restrictions of the platform, including all applicable platform policies, and all applicable laws and regulations. The platform has adopted comprehensive policies including general policies, intellectual property policies, product and requirements, shipping and tax policies.
The products the operating subsidiaries offer for sale on the online selling platforms must comply with the requirements and restrictions of such platforms, including all applicable platform policies, and all applicable laws and regulations. The platforms have adopted comprehensive policies including general policies, intellectual property policies, product and requirements, shipping and tax policies.
We recorded currency translation loss of US$0.9 million, currency translation gain of US$1.5 million, and currency translation gain of US$0.3 million for the years ended December 31, 2021, 2022 and 2023, respectively. Accordingly, we may incur currency translation losses or gains due to translation of functional currency into the presentation currency which may adversely affect our financial position.
We recorded currency translation gain of US$1.5 million, currency translation gain of US$0.3 million and current translation gain of US$0.1 million for the years ended December 31, 2022, 2023 and 2024, respectively. Accordingly, we may incur currency translation losses or gains due to translation of functional currency into the presentation currency which may adversely affect our financial position.
If there is any change in the management or control of the U.S. or European customers of the operating subsidiaries, then such U.S. or European customers may in turn change their business strategy, which may cause their demand for compatible toner cartridges to decrease.
If there is any change in the management or control of the North American or European customers of the operating subsidiaries, then such North American or European customers may in turn change their business strategy, which may cause their demand for compatible toner cartridges to decrease.
Risk Factors — Risks Relating to Doing Business in the PRC — The Chinese government exerts substantial influence over the manner in which the PRC subsidiaries must conduct their business activities and may intervene or influence their operations at any time, which could result in a material change in their operations and the value of our Class A ordinary shares.” We are and our subsidiaries are required to obtain the following requisite licenses and approvals for our operations in Mainland China: Company Name Scope of Business Operation Governmental Permission Required Status Jiangxi Yibo (i) production, processing and sales of laser printers and laser toner cartridges, toner, inkjet printers and ink cartridges, inks, computer peripherals and other printer consumables and accessories for the above products; (ii) electronic product research and development; (iii) electronic product technology development; and (iv) printer and consumable software design and development Not required N/A Filling, processing and sales of recycled laser printer toner cartridges and inkjet cartridges Pollution Discharge Permission Obtained Import and export of goods and technology Record-filing of customs declaration entities Completed Yantuo (i) Sales service of printer consumables and related accessories; (ii) technical consultation; (iii) commodity circulation information consultation; and (iv) marketing planning Not required N/A Import and export of goods and technology Record-filing of customs declaration entities Completed Jiangxi Leibotai Procurement and sales of printer toner cartridges and their materials and accessories Not required N/A Import and export of goods and technology Record-filing of customs declaration entities Completed Shenzhen Dinghong This subsidiary has no business operations.
Risk Factors — Risks Relating to Doing Business in the PRC — The Chinese government exerts substantial influence over the manner in which the PRC subsidiaries must conduct their business activities and may intervene or influence their operations at any time, which could result in a material change in their operations and the value of our Class A ordinary shares.” We are and our subsidiaries are required to obtain the following requisite licenses and approvals for our operations in Mainland China: Company Name Scope of Business Operation Governmental Permission Required Status Jiangxi Yibo (i) production, processing and sales of laser printers and laser toner cartridges, toner, inkjet printers and ink cartridges, inks, computer peripherals and other printer consumables and accessories for the above products; (ii) electronic product research and development; (iii) electronic product technology development; and (iv) printer and consumable software design and development Not required N/A Filling, processing and sales of recycled laser printer toner cartridges and inkjet cartridges Pollution Discharge Permission Obtained Import and export of goods and technology Record-filing of customs declaration entities Completed Yantuo (i) Sales service of printer consumables and related accessories; (ii) technical consultation; (iii) commodity circulation information consultation; and (iv) marketing planning Not required N/A Import and export of goods and technology Record-filing of customs declaration entities Completed Jiangxi Leibotai Procurement and sales of printer toner cartridges and their materials and accessories Not required N/A Import and export of goods and technology Record-filing of customs declaration entities Completed Planet Image Shenzhen Sales service of printer consumables and related accessories; Not required N/A 1 We believe that each of our Mainland PRC subsidiaries has all requisite permissions or approvals to conduct its business in the manner presently conducted and described in this annual report.
We received government grants of US$0.9 million, US$1.2 million and US$0.5 million, respectively, during the fiscal years ended December 31, 2021, 2022 and 2023.
We received government grants of US$1.2 million, US$0.5 million and US$0.9 million, respectively, during the years ended December 31, 2022, 2023 and 2024.
An economic downturn in U.S. or Europe or continued uncertainties regarding future prospects that affect consumer spending habits in the U.S. or Europe may have an adverse effect on the placing of orders by the operating subsidiaries’ customers.
An economic downturn in North America or Europe or continued uncertainties regarding future prospects that affect consumer spending habits in North America or Europe may have an adverse effect on the placing of orders by the operating subsidiaries’ customers.
The recent outbreak of war in Ukraine has already affected global economic markets, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s recent military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia.
The war in Ukraine has already affected global economic markets, and the uncertain resolution of this conflict could result in protracted and/or severe damage to the global economy. Russia’s military interventions in Ukraine have led to, and may lead to, additional sanctions being levied by North American countries, European Union and other countries against Russia.
To date, our Cayman Islands holding company has received cash in an aggregate amount of US$2.9 million from our subsidiaries in Hong Kong for operating activities, and our subsidiaries in Hong Kong has received cash from our Cayman Islands holding company in an aggregate amount of US$14.4 million for operating activities.
To date, our Cayman Islands holding company has received cash in an aggregate amount of US$2.94 million from our subsidiaries in Hong Kong for operating activities, and our subsidiaries in Hong Kong has received cash from our Cayman Islands holding company in an aggregate amount of US$14.23 million for operating activities.
On the other hand, any change in U.S. or the European global trade policy, including tightening regulatory restrictions, industry-specific quotas, tariffs, non-tariff barriers and taxes, may have the effect of limiting the operating subsidiaries’ products exported from the PRC and, hence, an adverse effect on our business.
On the other hand, any change in the global trade policy in North America or the Europe, including tightening regulatory restrictions, industry-specific quotas, tariffs, non-tariff barriers and taxes, may have the effect of limiting the operating subsidiaries’ products exported from the PRC and, hence, an adverse effect on our business.
A potential serious downturn in the overall economy of U.S. or Europe or in U.S. or European compatible toner cartridge industry, or policies unfavorable to the import of goods into U.S. or Europe may cause the financial conditions and purchasing powers of the operating subsidiaries’ customers in U.S. or Europe to deteriorate.
A potential serious downturn in the overall economy of the North America or Europe or in North American or European compatible toner cartridge industry, or policies unfavorable to the import of goods into North America or Europe may cause the financial conditions and purchasing powers of the operating subsidiaries’ customers in North America or Europe to deteriorate.
Risk Factors — Risks Relating to Doing Business in the PRC — If we are classified as a Mainland PRC resident enterprise for Mainland PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-Mainland PRC shareholders.” The PRC government also imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of Mainland PRC.
See “— If we are classified as a Mainland PRC resident enterprise for Mainland PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-Mainland PRC shareholders.” The PRC government also imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of Mainland PRC.
The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies. We are a public company in the United States. As a public company, we are required to file periodic reports with the U.S. Securities and Exchange Commission upon the occurrence of matters that are material to our Company and shareholders.
The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies. We are a public company in the United States. As a public company, we are required to file periodic reports with the SEC upon the occurrence of matters that are material to our Company and shareholders.
As a result, the operating subsidiaries are subject to labor laws of these European countries, which are relatively stringent. As of December 31, 2023, the operating subsidiaries had 1,248 full-time employees, among whom 28 are located in European countries. Labor laws in Europe are generally more protective of employees.
As a result, the operating subsidiaries are subject to labor laws of these European countries, which are relatively stringent. As of December 31, 2024, the operating subsidiaries had 1,404 full-time employees, among whom 37 are located in European countries. Labor laws in Europe are generally more protective of employees.
Risk Factors — Risks Relating to Doing Business in the PRC — PRC regulations of loans and direct investment by offshore holding companies to Mainland PRC entities may delay or prevent us from using the proceeds of our offshore financing to make loans or additional capital contributions to our Mainland PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” 5 From our non-Mainland PRC subsidiaries to their parent companies Other than Mainland China, operating subsidiaries formed in Hong Kong, the State of California, and Netherlands contributed the vast majority of our revenues in the fiscal years ended December 31, 2021, 2022 and 2023.
Risk Factors — Risks Relating to Doing Business in the PRC — PRC regulations of loans and direct investment by offshore holding companies to Mainland PRC entities may delay or prevent us from using the proceeds of our offshore financing to make loans or additional capital contributions to our Mainland PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” 5 From our Hong Kong PRC subsidiaries to their parent companies Other than Mainland China, operating subsidiaries formed in Hong Kong contributed a material amount of our revenues in the years ended December 31, 2022, 2023 and 2024.
Our revenue generated from Russia were $5.7 million, $5.5 million and $6.3 million for the years ended December 31, 2021, 2022 and 2023, representing 4.0%, 3.9% and 4.2% of our total revenues, respectively.
Our revenue generated from Russia were US$5.5 million, US$6.3 million and US$3.5 million for the years ended December 31, 2022, 2023 and 2024, representing 3.9%, 4.2% and 2.3% of our total revenues, respectively.
Our revenue generated from the online retail stores was approximately US$25.7 million, US$11.5 million and US$11.4 million, accounting for approximately 18.1%, 8.1% and 7.6% of our total revenue generated for the years ended December 31, 2021, 2022 and 2023, respectively.
Our revenue generated from the online retail stores was approximately US$11.5 million, US$11.4 million and US$12.9 million, accounting for approximately 8.1%, 7.6% and 8.6% of our total revenue generated for the years ended December 31, 2022, 2023 and 2024, respectively.
Our revenue generated from online sales was US$25.7 million for the year ended December 31, 2021, US$11.5 million for the year ended December 31, 2022 and US$11.4 million for the year ended December 31, 2023, accounting for 18.1%, 8.1% and 7.6% of our total revenues for the respective period.
Our revenue generated from online sales was US$11.5 million for the year ended December 31, 2022, US$11.4 million for the year ended December 31, 2023 and US$12.9 million for the year ended December 31, 2024, accounting for 8.1%, 7.6% and 8.6% of our total revenues for the respective period.
If we are considered a tax resident enterprise of Mainland PRC for tax purposes, any dividends we pay to our overseas shareholders may be regarded as Mainland China-sourced income and as a result may be subject to Mainland PRC withholding tax. See “Item 3. Key Information—D.
If we are considered a tax resident enterprise of Mainland PRC for tax purposes, any dividends we pay to our overseas shareholders may be regarded as Mainland China-sourced income and as a result may be subject to Mainland PRC withholding tax.
Any changes in the economic and regulatory conditions or global trade policy of the U.S. or Europe or changes in the business strategies of U.S. customers or Europe customers may have an adverse effect on our business. For each of years ended December 31, 2021, 2022 and 2023, our revenue mainly derived from U.S. and Europe.
Any changes in the economic and regulatory conditions or global trade policy in North America or Europe or changes in the business strategies of North American customers or Europe customers may have an adverse effect on our business. For each of the years ended December 31, 2022, 2023 and 2024, our revenue mainly derived from North America and Europe.
In addition, the 15% tariff on the first batch of goods was reduced from 15% to 7.5% since February 14, 2020.
In addition, the 15% tariff on the first batch of goods was reduced from 15% to 7.5% since February 14, 2020. In February 2025, President Donald J.
Our revenue generated from Eastern Europe were $15.8 million, $15.2 million and $13.6 million for the years ended December 31, 2021, 2022 and 2023, representing 11.2%, 10.7% and 9.1% of our total revenue, respectively.
Our revenue generated from Eastern Europe were US$15.2 million, US$13.6 million and nil for the years ended December 31, 2022, 2023 and 2024, representing 10.7%, 9.1% and nil of our total revenue, respectively.
For the years ended December 31, 2021, 2022 and 2023, the total patent registration and patent litigation cost we incurred amounted to US$0.31 million, US$0.21 million, and US$0.14 million, respectively.
For the years ended December 31, 2022, 2023 and 2024, the total patent registration and patent litigation costs we incurred amounted to US$0.21 million, US$0.14 million, and US$0.25 million, respectively.
Our financial performance depends significantly on general economic conditions in U.S. and Europe and their impact on consumer confidence and discretionary consumer spending.
Our financial performance depends significantly on general economic conditions in North America and Europe and their impact on consumer confidence and discretionary consumer spending.
Our revenue amounted to approximately US$141.5 million, US$142.1 million and US$150.2 million, respectively, while our gross profit amounted to approximately US$48.8 million, US$55.0 million and US$59.0 million, respectively, with gross profit margin of approximately 34.5%, 38.7% and 39.3%, respectively, for the years ended December 31, 2021, 2022 and 2023.
Our revenue amounted to approximately US$142.1 million, US$150.2 million and US$149.8 million, respectively, while our gross profit amounted to approximately US$55.0 million, US$59.0 million and US$52.3 million, respectively, with gross profit margin of approximately 38.7%, 39.3% and 34.9%, respectively, for the years ended December 31, 2022, 2023 and 2024.
For the years ended December 31, 2021, 2022 and 2023, we derived revenue from offline sales in the U.S. amounting to approximately US$54.4 million, US$63.7 million and US$78.6 million, respectively, representing 47.0%, 48.8% and 56.6%, respectively, of our total revenue from offline sales for the respective years.
For the years ended December 31, 2022, 2023 and 2024, we derived revenue from offline sales in the U.S. amounting to approximately US$63.7 million, US$78.6 million and US$66.9 million, respectively, representing 48.8%, 56.6% and 48.8%, respectively, of our total revenue from offline sales for the respective years.
For the years ended December 31, 2021, 2022 and 2023, the operating subsidiaries’ balance of inventories amounted to approximately US$24.4 million, US$21.1 million, and US$17.5 million, respectively, and the operating subsidiaries’ inventory turnover days were 112.3 days, 103.8 days, and 78.3 days, respectively.
For the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries’ balance of inventories amounted to approximately US$21.1 million, US$17.5 million, and US$20.6 million, respectively, and the operating subsidiaries’ inventory turnover days were 103.8 days, 78.3 days, and 76.1 days, respectively.
Information on the Company —B. Business Overview — Intellectual Property” for details.
See “Item 4. Information on the Company —B. Business Overview — Intellectual Property” for details.
Our cost of inventory sold accounted for 74.7%, 77.3% and 81.6%, respectively, of our total cost of sales for the years ended December 31, 2021, 2022 and 2023.
Our cost of inventory sold accounted for 77.3%, 81.6% and 76.4%, respectively, of our total cost of sales for the years ended December 31, 2022, 2023 and 2024.
See “Business — Legal Proceedings.” Our Mainland PRC subsidiaries received confirmations from relevant local authorities that they were not subject to any penalty for failing to make full contributions to the social insurance fund and housing fund during the fiscal years ended December 31, 2021, 2022 and 2023.
See “Business — Legal Proceedings.” Our Mainland PRC subsidiaries received confirmations from relevant local authorities that they were not subject to any penalty for failing to make full contributions to the social insurance fund and housing fund during the years ended December 31, 2022, 2023 and 2024. These laws designed to enhance labor protection tend to increase our labor costs.
Any such interruption to the operating subsidiaries’ information technology system could disrupt their operations and negatively impact their production capacity and ability to fulfill sales orders, which could have an adverse effect on our business, financial condition and results of operations.
Any such interruption to the operating subsidiaries’ information technology system could disrupt their operations and negatively impact their production capacity and ability to fulfill sales orders, which could have an adverse effect on our business, financial condition and results of operations. 18 The operating subsidiaries are subject to the policies of online selling platforms on which the operating subsidiaries operate their online retail stores.
Registered institutes, such as banks, have their own internal policies, procedures and controls in the relevant operational areas so as to meet their anti-money laundering and counter-financing of terrorism statutory and regulatory requirements and guard against money laundering and terrorist financing. State of California.
Additionally, such remittances should not be used for money laundering or terrorist financing purposes. Registered institutes, such as banks, have their own internal policies, procedures and controls in the relevant operational areas so as to meet their anti-money laundering and counter-financing of terrorism statutory and regulatory requirements and guard against money laundering and terrorist financing.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Enterprise Income Tax on Indirect Transfer of Property between Non-Resident Enterprises According to the Announcement on Several Issues Concerning Enterprise Income Tax for Indirect Transfer of Assets by Non-Resident Enterprises (“Circular No.7”) issued by the SAT of the People’s Republic of China and immediately implemented on February 3, 2015, where a non-resident enterprise indirectly transfers equity interests or other assets of a Mainland PRC resident enterprise by implementing arrangements that are not for reasonable commercial purposes to avoid its obligation to pay enterprise income tax, such an indirect transfer shall be redefined and recognized as the direct transfer of equity interests or other assets of the Mainland PRC resident enterprise.
Enterprise Income Tax on Indirect Transfer of Property between Non-Resident Enterprises According to the Announcement on Several Issues Concerning Enterprise Income Tax for Indirect Transfer of Assets by Non-Resident Enterprises (“Circular 7”) issued by the SAT of the People’s Republic of China and immediately implemented on February 3, 2015, where a non-resident enterprise indirectly transfers equity interests or other assets of a Mainland PRC resident enterprise by implementing arrangements that are not for reasonable commercial purposes to avoid its obligation to pay enterprise income tax, such an indirect transfer shall be redefined and recognized as the direct transfer of equity interests or other assets of the Mainland PRC resident enterprise.
Taxation Enterprise Income Tax According to the Enterprise Income Tax Law of the People’s Republic of China (“EIT Law”), which was promulgated by the NPC on March 16, 2007, became effective on January 1, 2008 and revised on February 24, 2017 and December 29, 2018, respectively, and the Regulation on Implementation of the EIT Law of the People’s Republic of China (“Implementation Regulations of the EIT Law”), which was promulgated by the State Council on December 6, 2007, became effective on January 1, 2008 and revised on April 23, 2019, income tax rate of 25% is applied to the resident enterprises (including foreign-owned enterprises) since January 1, 2008.
Taxation Enterprise Income Tax According to the Enterprise Income Tax Law of the People’s Republic of China (“EIT Law”), which was promulgated by the NPC on March 16, 2007, became effective on January 1, 2008 and revised on February 24, 2017 and December 29, 2018, respectively, and the Regulation on Implementation of the EIT Law of the People’s Republic of China (“Implementation Regulations of the EIT Law”), which was promulgated by the State Council on December 6, 2007, became effective on January 1, 2008 and revised on April 23, 2019 and December 6, 2024, respectively, income tax rate of 25% is applied to the resident enterprises (including foreign-owned enterprises) since January 1, 2008.
Section 2 provides, among others, that “trade description” in relation to services means an indication, direct or indirect, and by whatever means given, with respect to the service or any part of the service including an indication of any of the matters nature, scope, quantity (including the number of occasions on which, and the length of time for which the service is supplied or to be supplied), standard, quality, value or grade; fitness for purpose, strength, performance, effectiveness, benefits or risks; method and procedure by which, manner in which, and location at which, the service is supplied or to be supplied; availability; testing by any person and the results of the testing; approval by any person or conformity with a type approved by any person; a person by whom it has been acquired, or who has agreed to acquire it; the person by whom the service is supplied or to be supplied; after-sale service assistance concerning the service; price, how price is calculated or the existence of any price advantage or discount. 80 Section 7 provides that no person shall in the course of trade or business apply a false trade description to any goods or sell or offer for sale any goods with false trade descriptions applied thereto.
Section 2 provides, among others, that “trade description” in relation to services means an indication, direct or indirect, and by whatever means given, with respect to the service or any part of the service including an indication of any of the matters nature, scope, quantity (including the number of occasions on which, and the length of time for which the service is supplied or to be supplied), standard, quality, value or grade; fitness for purpose, strength, performance, effectiveness, benefits or risks; method and procedure by which, manner in which, and location at which, the service is supplied or to be supplied; availability; testing by any person and the results of the testing; approval by any person or conformity with a type approved by any person; a person by whom it has been acquired, or who has agreed to acquire it; the person by whom the service is supplied or to be supplied; after-sale service assistance concerning the service; price, how price is calculated or the existence of any price advantage or discount. 74 Section 7 provides that no person shall in the course of trade or business apply a false trade description to any goods or sell or offer for sale any goods with false trade descriptions applied thereto.
Currently, we directly hold 100% equity interests in our subsidiaries, and we do not currently use a VIE structure. Corporate Information Our principal executive offices are located at No. 756 Guangfu Road, Hi-tech Development Zone, Xinyu City, Jiangxi Province, People’s Republic of China. Our telephone number at this address is +86 0790-7138216.
Currently, we directly hold 100% of the equity interests in our subsidiaries, and we do not currently use a VIE structure. Corporate Information Our principal executive offices are located at No. 756 Guangfu Road, Hi-tech Development Zone, Xinyu City, Jiangxi Province, People’s Republic of China. Our telephone number at this address is +86 0790-7138216.
Intellectual Property Patent According to the Patent Law of the People’s Republic of China, promulgated on March 12, 1984 and recently amended on October 17, 2020, which became effective on June 1, 2021, and the Implementation Rules of Patent Law of the People’s Republic of China revised on December 11, 2023, there are three types of patents in Mainland China, which are “invention”, “utility model” and “design”.
Intellectual Property Patent According to the Patent Law of the People’s Republic of China, promulgated on March 12, 1984 and amended on October 17, 2020, which became effective on June 1, 2021, and the Implementation Rules of Patent Law of the People’s Republic of China revised on December 11, 2023, there are three types of patents in Mainland China, which are “invention”, “utility model” and “design”.
The operating subsidiaries reply on a combination of patent, copyright, and trademark laws and restrictions in Mainland PRC and other jurisdictions, fair trade practice, as well as confidentiality procedures and contractual provisions to protect their intellectual property rights and in order to provide patent safe and self-developed products to their customers.
The operating subsidiaries reply on a combination of patent, and trademark laws and restrictions in Mainland PRC and other jurisdictions, fair trade practice, as well as confidentiality procedures and contractual provisions to protect their intellectual property rights and in order to provide patent safe and self-developed products to their customers.
Environmental and Social We are committed to environmental protection and conservation and through the operating subsidiaries, we have adopted environmental policies in relation to the environmental protection and conversation. The operating subsidiaries are subject to the PRC environmental laws, regulations and standards where the operating subsidiaries manufacture their products. See “—Regulation” for details of applicable environmental laws, regulations and standards.
Environmental and Social We are committed to environmental protection and conservation and through the operating subsidiaries, we have adopted environmental policies in relation to the environmental protection and conversation. The operating subsidiaries are subject to the PRC environmental laws, regulations and standards where the operating subsidiaries manufacture their products. See "—Regulation” for details of applicable environmental laws, regulations and standards.
Suppliers Selection criteria of suppliers The operating subsidiaries conduct assessments on all of their new suppliers before the operating subsidiaries source raw materials from such new suppliers. The operating subsidiaries assess these new suppliers based on several key criteria, such as the quality of their goods, delivery speed, quality of technical support, and responsiveness.
Suppliers Selection criteria of raw material suppliers The operating subsidiaries conduct assessments on all of their new suppliers before the operating subsidiaries source raw materials from such new suppliers. The operating subsidiaries assess these new suppliers based on several key criteria, such as the quality of their goods, delivery speed, quality of technical support, and responsiveness.
Our Business Model The following diagram illustrates generally the business model of the operating subsidiaries: 46 ODM business. The operating subsidiaries conduct their ODM business through selling their products to customers located overseas, who purchase their products on an ODM basis.
Our Business Model The following diagram illustrates generally the business model of the operating subsidiaries: ODM business. The operating subsidiaries conduct their ODM business through selling their products to customers located overseas, who purchase their products on an ODM basis.
In accordance with the Administration Measures for Pollutant Discharge Permit (Trial) promulgated by the former Ministry of Environmental Protection on January 10, 2018 and revised by the Ministry of Ecology and Environment on August 22, 2019, and in accordance with the Administration' Measures for Pollutant Discharge Permit promulgated by the Ministry of Ecology and Environment on April 1, 2024 (will- become effective on July l, 2024), enterprises, public institutions and other producers and business operators (the “pollutant discharge entities”) included in the Catalogue of Classified Management of Pollutant Discharge Permit for Stationary Pollution Sources shall apply for and obtain a pollutant discharge permit or submit Pollutant Discharge Registration within the prescribed time limit; and it is temporarily unnecessary for pollutant discharge entities not included in the Catalogue of Classified Management of Pollutant Discharge Permit for Stationary Pollution Sources to apply for a pollutant discharge permit.
In accordance with the Administration Measures for Pollutant Discharge Permit (Trial) promulgated by the former Ministry of Environmental Protection on January 10, 2018 and revised by the Ministry of Ecology and Environment on August 22, 2019, and in accordance with the Administration' Measures for Pollutant Discharge Permit promulgated by the Ministry of Ecology and Environment on April 1, 2024 and became effective on July l, 2024, enterprises, public institutions and other producers and business operators (the “pollutant discharge entities”) included in the Catalogue of Classified Management of Pollutant Discharge Permit for Stationary Pollution Sources shall apply for and obtain a pollutant discharge permit or submit Pollutant Discharge Registration within the prescribed time limit; and it is temporarily unnecessary for pollutant discharge entities not included in the Catalogue of Classified Management of Pollutant Discharge Permit for Stationary Pollution Sources to apply for a pollutant discharge permit.
The following diagram illustrates the principal production process: Production Facilities All of the operating subsidiaries’ production facilities are located in Xinyu City, Jiangxi Province, the PRC and occupy approximately 182,986 square meters. As of December 31, 2023, the operating subsidiaries owned a production factory with two single-level buildings of similar size accommodating our 39 production lines.
The following diagram illustrates the principal production process: Production Facilities All of the operating subsidiaries’ production facilities are located in Xinyu City, Jiangxi Province, the PRC and occupy approximately 182,986 square meters. As of December 31, 2024, the operating subsidiaries owned a production factory with two single-level buildings of similar size accommodating our 39 production lines.
Intellectual Property Through the operating subsidiaries, we currently hold a broad collection of rights relating to certain aspects of our in-house designed products. Such rights include trademarks, copyrights, domain names, trade names, trade secrets and other proprietary rights in a number of overseas jurisdictions including the U.S., Europe, and Mainland PRC.
Intellectual Property Through the operating subsidiaries, we currently hold a broad collection of rights relating to certain aspects of our in-house designed products. Such rights include trademarks, patents, domain names, trade names, trade secrets and other proprietary rights in a number of overseas jurisdictions including the U.S., Europe, and Mainland PRC.
The outstanding social insurance plan contributions payable was approximately US$0.1 million as of December 31, 2023, which is accrued in our consolidated financial statements included elsewhere in this annual report and the maximum amount of such penalties that we could be imposed on is approximately US$0.3 million.
The outstanding social insurance plan contributions payable was approximately US$0.1 million as of December 31, 2024, which is accrued in our consolidated financial statements included elsewhere in this annual report and the maximum amount of such penalties that we could be imposed on is approximately US$0.3 million.
In the event that the amount of defective products exceed 1% of the total amount of products, ODM customers can return the defective ODM products back to the operating subsidiaries as credit. Such rebate agreement generally is valid for one year and shall be automatically extended at its expiration if neither party objects.
In the event that the amount of defective products exceeds 1% of the total amount of products, ODM customers can return the defective ODM products back to the operating subsidiaries as credit. Such rebate agreement generally is valid for one year and shall be automatically extended at its expiration if neither party objects.
Through the rebates agreements, the operating subsidiaries offer them a discount on the selling price of 1% to 2% if ODM customers accept the responsibility to provide warranty services to end users for purchased goods with manufacturing defects, or if the customers make purchases of or above certain volume.
Through the rebate agreements, the operating subsidiaries offer them a discount on the selling price of 1% to 2% if ODM customers accept the responsibility to provide warranty services to end users for purchased goods with manufacturing defects, or if the customers make purchases of or above certain volume.
During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries did not experience any significant incidents or accidents in relation to workers’ safety or subject to any material claim, whether for personal or property damage, or penalty in relation to health, work safety, social or environmental production issues, or involved in any accident or fatality, and had been in compliance with applicable laws and regulations in all material aspects during the fiscal years ended December 31, 2021, 2022 and 2023.
During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries did not experience any significant incidents or accidents in relation to workers’ safety or subject to any material claim, whether for personal or property damage, or penalty in relation to health, work safety, social or environmental production issues, or involved in any accident or fatality, and had been in compliance with applicable laws and regulations in all material aspects during the years ended December 31, 2022, 2023 and 2024.
A majority of the customers of the operating subsidiaries in North America, primarily in the U.S., can also track product deliveries through the operating subsidiaries’ Matrix system which integrates with the operating subsidiaries’ EDI ordering system for better sales management. Branded products.
A majority of the customers of the operating subsidiaries in North America, primarily in the U.S., can also track product deliveries through the operating subsidiaries’ Matrix system which integrates with the operating subsidiaries’ EDI ordering system for better sales management. Branded products and household products.
HK$50,000 and to a further fine of HK$1,000 for each day during which the offence continues in the case of a continuing offence. 79 Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) This ordinance aims to codify the laws relating to the sale of goods.
HK$50,000 and to a further fine of HK$1,000 for each day during which the offence continues in the case of a continuing offence. 73 Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) This ordinance aims to codify the laws relating to the sale of goods.
For the years ended December 31, 2021, 2022 and 2023, we derived approximately 18.1%, 8.1% and 7.6% of our total revenue from the operating subsidiaries’ overseas B2C business, or sale of branded products, respectively. The Operating Subsidiaries’ Products Overview The operating subsidiaries primarily manufacture various compatible toner cartridges for use with commonly available models of printer from different brands.
For the years ended December 31, 2022, 2023 and 2024, we derived approximately 8.1%, 7.6% and 8.6% of our total revenue from the operating subsidiaries’ overseas B2C business, or sale of branded products, respectively. The Operating Subsidiaries’ Products Overview The operating subsidiaries primarily manufacture various compatible toner cartridges for use with commonly available models of printer from different brands.
Through the operating subsidiaries, we currently own over 300 registered patents in the U.S., Europe and the PRC for the production process, equipment and proprietary technologies we developed relating to the manufacture of our compatible toner cartridges.
Through the operating subsidiaries, we currently own over 400 registered patents in the U.S., Europe and the PRC for the production process, equipment and proprietary technologies we developed relating to the manufacture of our compatible toner cartridges.
We received confirmations from relevant local authorities that we were not subject to any penalty for failing to make full contributions to the social insurance fund during the fiscal years ended December 31, 2021, 2022 and 2023. As of the date of this annual report, we have not been ordered to pay outstanding contributions or related penalties.
We received confirmations from relevant local authorities that we were not subject to any penalty for failing to make full contributions to the social insurance fund during the years ended December 31, 2022, 2023 and 2024. As of the date of this annual report, we have not been ordered to pay outstanding contributions or related penalties.
The operating subsidiaries conduct regular maintenance of their machinery and equipment so as to ensure that their business operations will not be disrupted unnecessarily. During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries did not encounter any breakdown of their production facilities that had a material adverse impact on their business operations.
The operating subsidiaries conduct regular maintenance of their machinery and equipment so as to ensure that their business operations will not be disrupted unnecessarily. During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries did not encounter any breakdown of their production facilities that had a material adverse impact on their business operations.
During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries did not experience any material labor disputes with their employees, receive any complaints, notices or orders from relevant government authorities or third parties, or receive any claims from their employees relating to social insurance or housing provident funds.
During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries did not experience any material labor disputes with their employees, receive any complaints, notices or orders from relevant government authorities or third parties, or receive any claims from their employees relating to social insurance or housing provident funds.
During the fiscal years ended December 31, 2021, 2022 and 2023, there were no material product recalls, product returns, product liability claims or customer complaints that adversely affected our business. In addition, the operating subsidiaries are committed to providing premium customer service quality to their customers.
During the years ended December 31, 2022, 2023 and 2024, there were no material product recalls, product returns, product liability claims or customer complaints that adversely affected our business. In addition, the operating subsidiaries are committed to providing premium customer service quality to their customers.
Business Overview Overview Our Mission Our mission is to deliver high-quality and cost-effective printing solutions to consumers around the world with proprietary technology, research and development capabilities and integrated and localized sales, logistics and service platform. 40 Who we are Through the operating subsidiaries, we are a leading export-oriented manufacturer and seller of compatible toner cartridges based in China, the U.S. and Europe.
Business Overview Overview Our Mission Our mission is to deliver high-quality and cost-effective printing solutions to consumers around the world with proprietary technology, research and development capabilities and integrated and localized sales, logistics and service platform. 40 Who we are Through the operating subsidiaries, we are a leading export-oriented manufacturer and seller of compatible toner cartridges based in China, North America and Europe.
During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries did not experience any shortage or material delay in the supply of raw materials. In addition, in the event that there is any material fluctuation in purchase price of raw materials, the operating subsidiaries may adjust the selling price of their products accordingly.
During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries did not experience any shortage or material delay in the supply of raw materials. In addition, in the event that there is any material fluctuation in purchase price of raw materials, the operating subsidiaries may adjust the selling price of their products accordingly.
During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries had complied with the applicable environmental laws and regulations in all material respects, and that the operating subsidiaries were not subject to any material fines or legal actions involving non-compliance with any relevant regulations in the PRC.
During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries had complied with the applicable environmental laws and regulations in all material respects, and that the operating subsidiaries were not subject to any material fines or legal actions involving non-compliance with any relevant regulations in the PRC.
During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries did not make any material insurance claims in relation to their business. Our management evaluates the adequacy of the operating subsidiaries’ insurance coverage from time to time, and the operating subsidiaries purchase additional insurance policies as needed.
During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries did not make any material insurance claims in relation to their business. Our management evaluates the adequacy of the operating subsidiaries’ insurance coverage from time to time, and the operating subsidiaries purchase additional insurance policies as needed.
Overseas customers may also hesitate to purchase their products as they might get involved in infringement litigation. As of December 31, 2023, through the operating subsidiaries, we had obtained 432 patents registered in the U.S., Europe, and the PRC, for the production processes, equipment and proprietary technologies the operating subsidiaries developed relating to the manufacture of compatible toner cartridges.
Overseas customers may also hesitate to purchase their products as they might get involved in infringement litigation. As of December 31, 2024, through the operating subsidiaries, we had obtained 460 patents registered in the U.S., Europe, and the PRC, for the production processes, equipment and proprietary technologies the operating subsidiaries developed relating to the manufacture of compatible toner cartridges.
Low product return rates reflect the high quality of the operating subsidiaries’ products. During the fiscal years ended December 31, 2021, 2022 and 2023, the total value of products returned amounted to US$4.2 million, US$3.8 million and US$4.4 million, respectively, representing approximately 3.0%, 2.7% and 2.9% of our total revenue generated for the corresponding years.
Low product return rates reflect the high quality of the operating subsidiaries’ products. During the years ended December 31, 2022, 2023 and 2024, the total value of products returned amounted to US$3.8 million, US$4.4 million and US$4.5 million, respectively, representing approximately 2.7%, 2.9% and 3.0% of our total revenue generated for the corresponding years.
As of December 31, 2023, the operating subsidiaries had after-sales and technical service teams of 75 employees working according to the office hours in U.S. and European time zones to provide 24-hour service to these customers. The operating subsidiaries’ local sales team will also provide sales-related follow-up works for their customers.
As of December 31, 2024, the operating subsidiaries had after-sales and technical service teams of 74 employees working according to the office hours in U.S. and European time zones to provide 24-hour service to these customers. The operating subsidiaries’ local sales team will also provide sales-related follow-up works for their customers.
During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries did not enter into any sales agreements or long-term contracts with their ODM customers other than rebate agreements for their ODM products.
During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries did not enter into any sales agreements or long-term contracts with their ODM customers other than rebate agreements for their ODM products.
During the fiscal years ended December 31, 2021, 2022 and 2023, and from January 1, 2024 to the date of this annual report, the operating subsidiaries did not commit any material non-compliance of the applicable laws and regulations.
During the years ended December 31, 2022, 2023 and 2024, and from January 1, 2025 to the date of this annual report, the operating subsidiaries did not commit any material non-compliance of the applicable laws and regulations.
Currently, the operating subsidiaries have 11 online stores across different platforms, mainly targeting the U.S. or European markets, and the operating subsidiaries’ sales to online retail customers are conducted on a per-order basis. For each online store, the operating subsidiaries design a distinct and unique layout and use different pictures to display their products.
Currently, the operating subsidiaries have 11 online stores across different platforms, mainly targeting North American or European markets, and the operating subsidiaries’ sales to online retail customers are conducted on a per-order basis. For each online store, the operating subsidiaries design a distinct and unique layout and use different pictures to display their products.
As of December 31, 2023, the operating subsidiaries’ research and development team consisted of a total of 138 professional engineers and skilled technicians, who were supervised and led by the chairman of our board of directors, Mr. Weidong Gu, who has over 20 years of experience in the compatible toner cartridge industry.
As of December 31, 2024, the operating subsidiaries’ research and development team consisted of a total of 137 professional engineers and skilled technicians, who were supervised and led by the chairman of our board of directors, Mr. Weidong Gu, who has over 20 years of experience in the compatible toner cartridge industry.
The operating subsidiaries’ sales are conducted on a purchase order basis. During the fiscal years ended December 31, 2021, 2022 and 2023, there were no material sales return from the operating subsidiaries’ customers purchasing their ODM products.
The operating subsidiaries’ sales are conducted on a purchase order basis. During the years ended December 31, 2022, 2023 and 2024, there were no material sales return from the operating subsidiaries’ customers purchasing their ODM products.
The operating subsidiaries do not main key-man life insurance or insurance policies covering damages to their IT infrastructure or information technology systems. We believe that the operating subsidiaries are covered by adequate property and liability insurance policies which are customary for similar companies in the PRC, the U.S. and Europe.
The operating subsidiaries do not main key-man life insurance or insurance policies covering damages to their IT infrastructure or information technology systems. We believe that the operating subsidiaries are covered by adequate property and liability insurance policies which are customary for similar companies in the PRC, North America and Europe.
During the fiscal years ended December 31, 2021, 2022 and 2023, the operating subsidiaries did not experience any significant difficulties in obtaining raw materials and packaging materials, and the operating subsidiaries did not encounter any significant problems with the quality of their raw materials or packaging materials.
During the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries did not experience any significant difficulties in obtaining raw materials and packaging materials, and the operating subsidiaries did not encounter any significant problems with the quality of their raw materials or packaging materials.
However, from time to time we and/or the operating subsidiaries may be involved in disputes relating to intellectual property rights belonging to or asserted by third parties. Competition The operating subsidiaries are a specialized manufacturer, supplier and seller of toner cartridge to our customers mainly in the U.S. and Europe.
However, from time to time we and/or the operating subsidiaries may be involved in disputes relating to intellectual property rights belonging to or asserted by third parties. Competition The operating subsidiaries are a specialized manufacturer, supplier and seller of toner cartridge to our customers mainly in North America and Europe.
The majority of our revenue generated during the fiscal years ended December 31, 2021, 2022 and 2023 was related to sales of compatible toner cartridges developed by the operating subsidiaries’ research and development team.
The majority of our revenue generated during the years ended December 31, 2022, 2023 and 2024 was related to sales of compatible toner cartridges developed by the operating subsidiaries’ research and development team.
Purchases from the operating subsidiaries’ top five suppliers amounted to approximately US$23.8 million, US$23.2 million and US$36.5 million, respectively, representing approximately 32.3%, 33.8% and 47.9% of total purchases, respectively. Other than color toner, the operating subsidiaries’ raw materials are generally available from a large number of local suppliers. There is only a limited number of color toner manufacturers globally.
Purchases from the operating subsidiaries’ top five suppliers amounted to approximately US$23.2 million, US$36.5 million and US$37.9 million, respectively, representing approximately 33.8%, 47.9% and 43.7% of total purchases, respectively. Other than color toner, the operating subsidiaries’ raw materials are generally available from a large number of local suppliers. There is only a limited number of color toner manufacturers globally.
Research and Development The operating subsidiaries engage in ongoing research and development activities to meet their customers’ increasingly sophisticated needs and maintain their leading-edge capabilities. As of December 31, 2023, the operating subsidiaries’ research and development team was comprised of 138 professional engineers and skilled technicians. The team was led by Mr.
Research and Development The operating subsidiaries engage in ongoing research and development activities to meet their customers’ increasingly sophisticated needs and maintain their leading-edge capabilities. As of December 31, 2024, the operating subsidiaries’ research and development team was comprised of 137 professional engineers and skilled technicians. The team was led by Mr.
Services to Online Retail Customers The operating subsidiaries allow their customers purchased through their online channels to exchange or return goods within 30 days of receipt of shipment for any reason. The operating subsidiaries generally allow their customers to exchange or return any defective products with quality issues at any time after purchase.
Services to Online Retail Customers The operating subsidiaries allow their customers purchased through their online channels to exchange or return goods within 30 days of receipt of shipment for any reason, including their branded products and household products. The operating subsidiaries generally allow their customers to exchange or return any defective products with quality issues at any time after purchase.
We believe that the operating subsidiaries are well-positioned to capture the significant market opportunities, continue to increase our total revenue and profit, and further expand our market share. The U.S. and Europe have each experienced steady growth in the global compatible toner cartridge market.
We believe that the operating subsidiaries are well-positioned to capture the significant market opportunities, continue to increase our total revenue and profit, and further expand our market share. North America and Europe have each experienced steady growth in the global compatible toner cartridge market.
The operating subsidiaries conduct their overseas B2C business through selling the products that the operating subsidiaries design, develop and manufacture with their own brand names on Amazon and other online selling platforms. The operating subsidiaries have 11 online stores across different platforms, mainly targeting the U.S. or European markets.
The operating subsidiaries conduct their overseas B2C business through selling the products that the operating subsidiaries design, develop and manufacture with their own brand names on Amazon and other online selling platforms. The operating subsidiaries have 11 online stores across different platforms, mainly targeting North American or European markets.
The operating subsidiaries’ quality control system covers the entire production process, from the selection of suppliers and procurement of raw materials to production, quality and reliability assurance. The operating subsidiaries have a dedicated quality control department comprising 18 experienced engineers, supervisors and inspectors as of December 31, 2023.
The operating subsidiaries’ quality control system covers the entire production process, from the selection of suppliers and procurement of raw materials to production, quality and reliability assurance. The operating subsidiaries have a dedicated quality control department comprising 44 experienced engineers, supervisors and inspectors as of December 31, 2024.
The Company Law as revised on December 29, 2023 will become effective on July 1, 2024. Foreign-invested companies must comply with the Company Law, unless otherwise stipulated by foreign investment laws.
The Company Law as revised on December 29, 2023 became effective on July 1, 2024. Foreign-invested companies must comply with the Company Law, unless otherwise stipulated by foreign investment laws.
In recent years, through the operating subsidiaries, benefiting from the growth in the online compatible toner cartridge market in the U.S. and Europe, we have seen a substantial growth in our sales to offline overseas dealers with growing online sales business.
In recent years, through the operating subsidiaries, benefiting from the growth in the online compatible toner cartridge market in North America and Europe, we have seen a substantial growth in our sales to offline overseas dealers with growing online sales business.
For the years ended December 31, 2021, 2022 and 2023, the operating subsidiaries’ sales of white-label products and self-branded products to dealers were approximately US$53.1 million, US$72.6 million and US$84.9 million, representing 37.5%, 51.1% and 56.5% of total revenue for respective periods. 57 Sales to Online Retail Customers The operating subsidiaries’ online retail customers are those who mainly purchase the operating subsidiaries’ branded products through their online retail stores on Amazon and other online retail platforms.
For the years ended December 31, 2022, 2023 and 2024, the operating subsidiaries’ sales of white-label products and self-branded products to dealers were approximately US$72.6 million, US$84.9 million and US$85.9 million, representing 51.1%, 56.5% and 57.3% of total revenue for respective periods. 57 Sales to Online Retail Customers The operating subsidiaries’ online retail customers are those who mainly purchase the operating subsidiaries’ branded products and household products through their online retail stores on Amazon and other online retail platforms.
For the years ended December 31, 2021, 2022 and 2023, we derived approximately 37.5%, 51.1% and 56.5% of our total revenue from the operating subsidiaries’ overseas B2B business, or sale of self-branded products and white-label products to dealers, respectively. Overseas B2C business.
For the years ended December 31, 2022, 2023 and 2024, we derived approximately 51.1%, 56.5% and 57.3% of our total revenue from the operating subsidiaries’ overseas B2B business, or sale of self-branded products and white-label products to dealers, respectively. Overseas B2C business.
After the operating subsidiaries include a supplier on their approved suppliers list, the operating subsidiaries still reassess it every year. 48 Concentration of suppliers During the fiscal year ended December 31, 2021, 2022 and 2023, purchases from the operating subsidiaries’ largest supplier amounted to approximately US$9.6 million, US$9.4 million and US$17.7 million, respectively, representing approximately 13.0%, 13.6% and 23.3% of the operating subsidiaries’ total purchases, respectively.
After the operating subsidiaries include a supplier on their approved suppliers list, the operating subsidiaries still reassess it every year. 48 Concentration of raw material suppliers During the fiscal year ended December 31, 2022, 2023 and 2024, purchases from the operating subsidiaries’ largest supplier amounted to approximately US$9.4 million, US$17.7 million and US$16.7 million, respectively, representing approximately 13.6%, 23.3% and 19.3% of the operating subsidiaries’ total purchases, respectively.
As of December 31, 2023, the operating subsidiaries had after-sales and technical service teams of 110 employees, with 75 of them working according to the office hours of the overseas time zones to provide timely service to these customers, which we believe significantly enhances their user experience and promotes customer loyalty.
As of December 31, 2024, the operating subsidiaries had after-sales and technical service teams of 108 employees, with 74 of them working according to the office hours of the overseas time zones to provide timely service to these customers, which we believe significantly enhances their user experience and promotes customer loyalty.
Members of our core management team have deep expertise and experience in toner cartridge manufacturing and corporate management. They have an average of 20 years of experience in our industry and have been with our Company since our foundation. Mr.
Members of our core management team have deep expertise and experience in toner cartridge manufacturing and corporate management. They all have over 20 years of experience in our industry and have been with our Company since our foundation. Mr.
If the operating subsidiaries determine that a supplier has met their requirements, the operating subsidiaries will add it to their approved suppliers list. As of December 31, 2023, the operating subsidiaries had over 400 approved suppliers on the list.
If the operating subsidiaries determine that a supplier has met their requirements, the operating subsidiaries will add it to their approved suppliers list. As of December 31, 2024, the operating subsidiaries had over 250 approved suppliers on the list.
Procurement agreements with suppliers The operating subsidiaries generally enter into legally binding procurement agreements with their suppliers.
Procurement agreements with raw material suppliers The operating subsidiaries generally enter into legally binding procurement agreements with their suppliers.
To closely monitor the operating subsidiaries’ manufacturing process, the operating subsidiaries’ product group had a quality assurance division consisting of a team of 18 experienced engineers, supervisors and inspectors as of December 31, 2023.
To closely monitor the operating subsidiaries’ manufacturing process, the operating subsidiaries’ product group had a quality assurance division consisting of a team of 44 experienced engineers, supervisors and inspectors as of December 31, 2024.
For the fiscal year ended December 31, 2021, we sold approximately 44.3%, 37.5%, and 18.1% of our products to ODM customers, dealers and online retail customers, respectively, compared to 40.8%, 51.1%, and 8.1% for the fiscal year ended December 31, 2022, and 35.9%, 56.6% and 7.6% for the fiscal year ended December 31, 2023. 56 Sales to ODM Customers ODM customers are those who purchase products from the operating subsidiaries which are manufactured according to the operating subsidiaries’ specifications and packaged under the ODM customers’ brands.
For the fiscal year ended December 31, 2022, we sold approximately 40.8%, 51.1%, and 8.1% of our products to ODM customers, dealers and online retail customers, respectively, compared to 35.9%, 56.6% and 7.6% for the fiscal year ended December 31, 2023, and 34.1%, 57.3% and 8.6% for the fiscal year ended December 31, 2024. 56 Sales to ODM Customers ODM customers are those who purchase products from the operating subsidiaries which are manufactured according to the operating subsidiaries’ specifications and packaged under the ODM customers’ brands.
Foreign investors and foreign-owned enterprises undertaking investment activities in Mainland China are subject to the Special Administrative Measures (Negative List) for the Access of Foreign Investment, of which the latest version was promulgated by the NDRC and the MOFCOM on December 27, 2021 and became effective on January 1, 2022, and Catalogue of Encouraged Industries for Foreign Investment, of which the latest version was promulgated by the NDRC and the MOFCOM on October 26, 2022 and became effective on January 1, 2023.
Foreign investors and foreign-owned enterprises undertaking investment activities in Mainland China are subject to the Special Administrative Measures (Negative List) for the Access of Foreign Investment, of which the latest version was promulgated by the NDRC and the MOFCOM on September 6, 2024 and became effective on November 1, 2024, and Catalogue of Encouraged Industries for Foreign Investment, of which the latest version was promulgated by the NDRC and the MOFCOM on October 26, 2022 and became effective on January 1, 2023.
From July 2019 to March 2020, in anticipation of the proposed initial public offering, we completed a series of reorganizational steps.
From July 2019 to March 2020, in anticipation of our initial public offering, we completed a series of reorganizational steps.
We spent US$5.4 million, US$6.8 million and US$6.6 million for the years ended December 31, 2021, 2022 and 2023, respectively, on research and development activities. We consider the operating subsidiaries’ research and development activities critical to the continuing success of our business.
We spent US$6.8 million, US$6.6 million and US$6.2 million for the years ended December 31, 2022, 2023 and 2024, respectively, on research and development activities. We consider the operating subsidiaries’ research and development activities critical to the continuing success of our business.
For the years ended December 31, 2021, 2022 and 2023, revenue for sales of compatible toner cartridges was US$134.9 million, US$139.6 million and US$144.5 million, respectively, representing 95.4%, 98.2% and 96.2% of our total revenue for the respective periods. 47 Remanufactured Toner Cartridges The operating subsidiaries procure used original-brand toner cartridges from empty-cartridge brokers overseas and ship the empty cartridges to their factory located in Jiangxi Province, the PRC.
For the years ended December 31, 2022, 2023 and 2024, revenue for sales of compatible toner cartridges was US$139.6 million, US$144.5 million and US$138.1 million, respectively, representing 98.2%, 96.2% and 92.2% of our total revenue for the respective periods. 47 Remanufactured Toner Cartridges The operating subsidiaries procure used original-brand toner cartridges from empty-cartridge brokers overseas and ship the empty cartridges to their factory located in Jiangxi Province, the PRC.
For the years ended December 31, 2021, 2022 and 2023, revenue generated from our online retail stores from branded products were approximately US$25.6 million, US$11.5 million and US$11.4 million, representing 18.1%, 8.1% and 7.6%, respectively, of total revenue for the periods. Geographic Coverage The operating subsidiaries’ products are currently sold to customers in over 50 countries.
For the years ended December 31, 2022, 2023 and 2024, revenue generated from our online retail stores from branded products were approximately US$11.5 million, US$11.4 million and US$12.9 million, representing 8.1%, 7.6% and 8.6%, respectively, of total revenue for the periods. Geographic Coverage The operating subsidiaries’ products are currently sold to customers in over 54 countries.
Weidong Gu and the management team’s continuous leadership and contributions over the years, we have expanded our footprint to the U.S. and European markets through the operating subsidiaries.
Weidong Gu and the management team’s continuous leadership and contributions over the years, we have expanded our footprint to North America and European markets through the operating subsidiaries.
For the years ended December 31, 2021, 2022 and 2023, revenue for sales of remanufactured toner cartridges was US$6.6 million, US$2.5 million and US$1.2 million, respectively, representing 4.6%, 1.8% and 0.8%, respectively, of total revenue for the periods.
For the years ended December 31, 2022, 2023 and 2024, revenue for sales of remanufactured toner cartridges was US$2.5 million, US$1.2 million and US$1.0 million, respectively, representing 1.8%, 0.8% and 0.7%, respectively, of total revenue for the periods.
Through the operating subsidiaries, we have a wide international footprint through established sales channels, with products sold to customers in over 45 countries, and sales in the U.S. and Europe representing the majority of our revenue.
Through the operating subsidiaries, we have a wide international footprint through established sales channels, with products sold to customers in over 54 countries, and sales in North America and Europe representing the majority of our revenue.
For the fiscal years ended December 31, 2021, 2022 and 2023, our revenues generated from sales of the operating subsidiaries’ self-developed compatible toner cartridges were 95.4%, 98.2% and 96.2% of our total revenues for the respective periods.
For the years ended December 31, 2022, 2023 and 2024, our revenues generated from sales of the operating subsidiaries’ self-developed compatible toner cartridges were 98.2%, 96.2% and 99.3% of our total revenues for the respective periods.
The operating subsidiaries also lease lands and buildings from independent third parties with an aggregate gross floor area of 231,945 square feet in Mainland PRC, the U.S., the Netherlands, Italy, the United Kingdom and France. These leases vary in duration from three years to nine years.
The operating subsidiaries also lease lands and buildings from independent third parties with an aggregate gross floor area of 186,747 square feet in Mainland PRC, the U.S., the Netherlands, Italy, the United Kingdom and France. These leases vary in duration from one year to ten years.
Our growth is partially attributable to our comprehensive sales strategy and our highly efficient and complementary sales channels. During the fiscal years ended December 31, 2021, 2022 and 2023, our revenue was primarily generated from the U.S. and Europe.
Our growth is partially attributable to our comprehensive sales strategy and our highly efficient and complementary sales channels. During the years ended December 31, 2022, 2023 and 2024, our revenue was primarily generated from North America and Europe.
For the fiscal years ended December 31, 2021, 2022 and 2023, we derived approximately 44.3%, 40.8% and 35.9% of our total revenue from sales of the operating subsidiaries’ ODM business, or sale of ODM products, respectively. Overseas B2B business.
For the years ended December 31, 2022, 2023 and 2024, we derived approximately 40.8%, 35.9% and 34.1% of our total revenue from sales of the operating subsidiaries’ ODM business, or sale of ODM products, respectively. 46 Overseas B2B business.
Continue to increase sales and deliver customer services to offline overseas dealers, who sells our white labels or self-branded products through online channels to end customers The operating subsidiaries plan to further develop and expand their overseas local B2B business in future years.
In Europe, the operating subsidiaries plan to lease a warehouse in Poland for tapping in the Eastern Europe market. 45 Continue to increase sales and deliver customer services to offline overseas dealers, who sells our white labels or self-branded products through online channels to end customers The operating subsidiaries plan to further develop and expand their overseas local B2B business in future years.
Individuals and small to micro sized enterprises mainly order through online stores, and as a result of COVID-19, more consumers switched to online purchases. We expect the operating subsidiaries’ sales to online retail customers to achieve the highest increase and serve as the driver for the operating subsidiaries’ future business growth, among the existing three sales channels.
Individuals and small to micro sized enterprises mainly order through online stores. We expect the operating subsidiaries’ sales to online retail customers to achieve the highest increase and serve as the driver for the operating subsidiaries’ future business growth, among the existing three sales channels.
We have recently experienced significant growth through offline sales channels, with revenue derived from offline sales channels increased from $51.14 million for the year ended December 31, 2021, representing 36.1% of our total revenue for that year, to $67.95 million for the year ended December 31, 2022, representing 47.8% of our total revenue for that year, and further to US$79.5 million for the year ended December 31, 2023, representing 52.9% of our total revenue for that six months.
We have recently experienced significant growth through offline sales channels, with revenue derived from offline sales channels increased from $67.95 million for the year ended December 31, 2022, representing 47.8% of our total revenue for that year, to US$79.5 million for the year ended December 31, 2023, representing 52.9% of our total revenue for that year, and further to US$85.9 million for the year ended December 31, 2024, representing 57.3% of our total revenue for that year.
In the U.S., the operating subsidiaries plan to lease a warehouse in Dallas, Chicago and Atlanta to achieve a full coverage of major commercial regions in the U.S. In Europe, the operating subsidiaries plan to lease a warehouse in Poland for tapping in the Eastern Europe market.
In the U.S., the operating subsidiaries plan to lease a warehouse in Dallas, Chicago and Atlanta to achieve a full coverage of major commercial regions in the U.S.
For the years ended December 31, 2021, 2022 and 2023, sales to ODM customers were US$62.7 million, US$58.0 million and US$54.0 million, accounting for approximately 44.3%, 40.8% and 35.9% of our total revenues for those years, respectively.
For the years ended December 31, 2022, 2023 and 2024, sales to ODM customers were US$58.0 million, US$54.0 million and US$51.1 million, accounting for approximately 40.8%, 35.9% and 34.1% of our total revenues for those years, respectively.
Sales to U.S. and European customers represent the majority of our total revenue.
Sales to North American and European customers represent the majority of our total revenue.
If there is no clear rule or the relevant standard is lower than our requirements, the product warranty period shall be two years from the date of acceptance. ● Confidentiality: Without obtaining written consent from the other party, either party may not disclose any trade secrets or intellectual property to the public. 49 Manufacturing and Quality Assurance Production Process The toner cartridges the operating subsidiaries produce include compatible toner cartridges and remanufactured toner cartridges.
If there is no clear rule or the relevant standard is lower than our requirements, the product warranty period shall be two years from the date of acceptance. ● Confidentiality: Without obtaining written consent from the other party, either party may not disclose any trade secrets or intellectual property to the public.
Our Corporate Structure The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and other entities that are material to our business: 39 Note: Through Aster Online Company Limited, we also directly own 100% of equity interests of 11 limited liability companies incorporated in Hong Kong in March 2020, namely Peony Trade Co., Limited, White Poplar Co., Limited, Joyful Product Trade Co., Limited, Grand Future Trade Co., Limited, Oriental Poetry Co., Limited, Prosperity Product Trade Co., Limited, Atlantic Marketing Co., Limited, Pigeon King Co., Limited, Dragon Product Trade Co., Limited, Plum Blossom Co., Limited and Blue Ocean Product Trade Co., Limited.
Our Corporate Structure The following diagram illustrates our corporate structure as of the date of this annual report, including our principal subsidiaries and other entities that are material to our business: Note: Through Aster Online Company Limited, we also directly own 100% of the equity interests of 11 limited liability companies incorporated in Hong Kong in March 2020, namely Peony Trade Co., Limited, White Poplar Co., Limited, Joyful Product Trade Co., Limited, Grand Future Trade Co., Limited, Oriental Poetry Co., Limited, Prosperity Product Trade Co., Limited, Atlantic Marketing Co., Limited, Pigeon King Co., Limited, Dragon Product Trade Co., Limited, Plum Blossom Co., Limited and Blue Ocean Product Trade Co., Limited. 39 These above-mentioned 11 limited liability companies have no operations but instead purely serve as holding companies for the operating companies we set up in various jurisdictions for our online shops, including seven operating companies we set up in Hong Kong, one in the Netherlands and three in California, United States.
In addition, the operating subsidiaries manufacture and sell their products under four brands with different target audience, namely TrueImage, CoolToner, Aztech and Toner Bank, allowing the operating subsidiaries to attract potential customers with different preferences for toner cartridge products.
In addition, the operating subsidiaries manufacture and sell their toner cartridge products under four brands with different target audience, namely TrueImage, CoolToner, Aztech and Toner Bank, allowing the operating subsidiaries to attract potential customers with different preferences. and household products. Additionally, the Company sells third-party manufactured household products through the online stores to customers.
Under the operating subsidiaries’ intellectual property protection measures, as of December 31, 2023, we had 432 registered patents, including utility patents, design patents and others, in Mainland PRC and worldwide, including approximately 413 registered patents in Mainland PRC. As of December 31, 2023, we had 105 pending patent applications worldwide, including 92 of such pending applications in Mainland PRC.
Under the operating subsidiaries’ intellectual property protection measures, as of December 31, 2024, we had 460 registered patents, including utility patents, design patents and others, in Mainland PRC and worldwide, including 437 registered patents in Mainland PRC. As of December 31, 2024, we had 93 pending patent applications worldwide, including 80 of such pending applications in Mainland PRC.
Out of the 1,248 full-time employees we had as of December 31, 2023, 1,194 of them were located in Mainland China and 54 of them were located overseas.
Employees We had 1,111, 1,248 and 1,404 full-time employees as of December 31, 2022, 2023 and 2024, respectively. Out of the 1,404 full-time employees we had as of December 31, 2024, 1,339 of them were located in Mainland China and 65 of them were located overseas.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

87 edited+22 added−16 removed66 unchanged
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Intellectual Property” and “Item 4. Information on the Company—B.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. 88 C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Intellectual Property” and “Item 4. Information on the Company—B.
Derivative instruments Our derivative instruments consist of foreign currency forward contracts that we enter into as firm commitments to exchange a specific number of foreign currencies for RMB at a predetermined exchange rate on a specified future date without initial investment but a deposit required. This instrument is used to manage the volatility of changes in of exchange rates.
Derivative instruments Our derivative instruments consist of foreign currency forward contracts that we enter into as firm commitments to exchange a specific number of foreign currencies for RMB at a predetermined exchange rate on a specified future date without initial investment but a deposit required. This instrument is used to manage the volatility of changes of exchange rates.
General and administrative expenses General and administrative expenses primarily consist of: (i) salaries and benefits for our administrative personnel; (ii) depreciation and amortization expenses relating to our property, plant and equipment and leased properties used for administrative purposes; (iii) bank charges for various bank transactions in the ordinary course of our business; (iv) office expenses, representing expenses for office supplies and consumables; (v) utilities which is primarily represented by water and electricity charges for administrative purposes; (vi) legal and professional fees, which primarily represented fees we paid for legal services in the ordinary course of our business, including tax filings and review, consultation and regulation of patents and trademarks, contract dispute resolution, among others and legal, accounting and consulting fees we paid in connection with the our proposed initial public listing; (vii) others, which primarily include bad debt expenses, utilities, traveling, repair and maintenance, recruitment expenses, and other miscellaneous expenses for administrative purposes.
General and administrative expenses General and administrative expenses primarily consist of: (i) salaries and benefits for our administrative personnel; (ii) depreciation and amortization expenses relating to our property, plant and equipment and leased properties used for administrative purposes; (iii) bank charges for various bank transactions in the ordinary course of our business; (iv) office expenses, representing expenses for office supplies and consumables; (v) utilities which is primarily represented by water and electricity charges for administrative purposes; (vi) legal and professional fees, which primarily represented fees we paid for legal services in the ordinary course of our business, including tax filings and review, consultation and regulation of patents and trademarks, contract dispute resolution, among others and legal, accounting and consulting fees we paid in connection with our initial public listing; (vii) others, which primarily include bad debt expenses, utilities, traveling, repair and maintenance, recruitment expenses, property premium, and other miscellaneous expenses for administrative purposes.
We believe the operating subsidiaries’ strong design, research and development capabilities represent a key strength that allows us to provide patent-compliant products with advanced technologies to their customers. 82 Ability to manage inventories efficiently Our inventories consist of raw materials, work-in-progress and finished goods.
We believe the operating subsidiaries’ strong design, research and development capabilities represent a key strength that allows us to provide patent-compliant products with advanced technologies to their customers. Ability to manage inventories efficiently Our inventories consist of raw materials, work-in-progress and finished goods.
When reviewing our financial statements, you should consider (i) our selection of critical accounting policies; (ii) the judgments and other uncertainties affecting the application of such policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions. 94 Use of estimates The preparation of the consolidated financial statements in accordance with U.S.
When reviewing our financial statements, you should consider (i) our selection of critical accounting policies; (ii) the judgments and other uncertainties affecting the application of such policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions. Use of estimates The preparation of the consolidated financial statements in accordance with U.S.
Trend Information Other than as disclosed below and elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Trend Information Other than as disclosed below and elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from January 1, 2024 to December 31, 2024 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity, or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.
Results of operations of our affiliated entities in Mainland PRC for the years ended December 31, 2021, 2022 and 2023, remain open for statutory examination by PRC tax authorities. Recent accounting pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 to our consolidated financial statements included elsewhere in this annual report.
Results of operations of our affiliated entities in Mainland PRC for the years ended December 31, 2022, 2023 and 2024, remain open for statutory examination by PRC tax authorities. Recent accounting pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 to our consolidated financial statements included elsewhere in this annual report.
We adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement on Credit Losses on Financial Instruments”, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”) on July 1, 2023 using the modified retrospective transition approach.
We adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement on Credit Losses on Financial Instruments”, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”) on January 1, 2023 using the modified retrospective transition approach.
Operating lease obligations consist of leases in relation to certain offices and buildings, plants and other property for our sales and after-sales network. Other than those shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2023.
Operating lease obligations consist of leases in relation to certain offices and buildings, plants and other property for our sales and after-sales network. Other than those shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2024.
For the year ended December 31, 2022, our net cash provided from financing activities was US$4.4 million, which consisted of the proceeds from short-term bank borrowings of US$32.1 million, offset by repayments of short-term bank borrowings of US$27.7 million and payments for the offering costs of US$0.1 million.
Financing activities For the year ended December 31, 2022, our net cash provided from financing activities was US$4.4 million, which consisted of the proceeds from short-term bank borrowings of US$32.1 million, offset by repayments of short-term bank borrowings of US$27.7 million and payments for initial public offering costs of US$0.1 million.
We evaluate the probability of these redeemable ordinary shares becoming redeemable at each reporting date. If it is probable that the redeemable ordinary shares will become redeemable, we recognize changes in redemption value immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period.
We evaluate the probability of these redeemable ordinary shares becoming redeemable at each reporting date. If it is probable that the redeemable ordinary shares will become redeemable, we recognize changes in redemption value immediately as they occur and will adjust the carrying value of the instrument to equal the redemption value at the end of each reporting period.
This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. We believe there were no uncertain tax positions as of December 31, 2022 and 2023, respectively.
This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. We believe there were no uncertain tax positions as of December 31, 2023 and 2024, respectively.
We elected to take advantage of the extended transition periods that leads to our financial statements may not be comparable to companies that comply with public company effective dates. However, this election will not apply should we cease to be classified as an EGC. 97
We elected to take advantage of the extended transition periods that leads to our financial statements may not be comparable to companies that comply with public company effective dates. However, this election will not apply should we cease to be classified as an EGC. 92
Liquidity and Capital Resources Liquidity and Capital Resources As of December 31, 2023, we had US$64.1 million in cash and cash equivalents and restricted cash, which consisted of (i) cash in mainland China of US$53.91 million; (ii) cash in the BVI of US$7.44 million; (iii) cash in Europe of US$1.66 million; (iv) cash in the U.S. of US$0.69 million; (v) cash in the UK of US$0.26 million; (vi) cash in the Cayman Islands of $0.12 million; and (vii) cash in Hong Kong of US$0.09 million.
As of December 31, 2023, we had US$64.1 million in cash and cash equivalents and restricted cash, which consisted of (i) cash in mainland China of US$53.91 million; (ii) cash in the BVI of US$7.44 million; (iii) cash in Europe of US$1.66 million; (iv) cash in the U.S. of US$0.69 million; (v) cash in the UK of US$0.26 million; (vi) cash in the Cayman Islands of $0.12 million; and (vii) cash in Hong Kong of US$0.09 million.
We considered that the foreign currency forward contract does not meet the criteria for designated hedging instruments and hedged transactions to qualify for cash flow hedge or fair value hedge accounting.
We consider that the foreign currency forward contract does not meet the criteria for designated hedging instruments and hedged transactions to qualify for cash flow hedge or fair value hedge accounting.
Capital expenditures Our capital expenditures are incurred primarily in connection with purchase of moulds for production, upgrades of production equipment, purchases of motor vehicles and electronic and other equipment for office use, and office renovation. Our capital expenditures were US$1.9 million, US$1.2 million and US$1.0 million for the years ended December 31, 2021, 2022 and 2023, respectively.
Capital expenditures Our capital expenditures are incurred primarily in connection with purchase of moulds for production, upgrades of production equipment, purchases of motor vehicles and electronic and other equipment for office use, and office renovation. Our capital expenditures were US$1.2 million, US$1.0 million and US$1.1 million for the years ended December 31, 2022, 2023 and 2024, respectively.
Our disaggregation of revenues for the years ended December 31, 2021, 2022 and 2023 are disclosed in Note 15 of our consolidated financial statements included elsewhere in this annual report.
Our disaggregation of revenues for the years ended December 31, 2022, 2023 and 2024 are disclosed in Note 15 of our consolidated financial statements included elsewhere in this annual report.
Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. Accounts receivable, net Accounts receivables are recognized in the period when we have provided services to its customers and when its right to consideration is unconditional.
Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. Accounts receivable, net Accounts receivables are recognized in the period when we have provided services to its customers and when its right to consideration is unconditional.
For details, see “Risk Factors — Risks Relating to Our Business and Industry — We may face risks related to the ongoing Russian invasion of Ukraine and any other conflicts that may arise on a global or regional scale which could adversely affect our business and results of operations.” To mitigate any supply chain risks we may face in the future, we are increasing our purchase from suppliers located in close proximity to our production facilities, and intend to negotiate purchase agreements with our suppliers and source raw materials with fixed pricing and delivery commitments. 83 Results of operations The following table sets forth a summary of our consolidated results of operations for the periods indicated.
For details, see “Risk Factors — Risks Relating to Our Business and Industry — We may face risks related to the ongoing Russian invasion of Ukraine and any other conflicts that may arise on a global or regional scale which could adversely affect our business and results of operations.” To mitigate any supply chain risks we may face in the future, we are increasing our purchase from suppliers located in close proximity to our production facilities, and intend to negotiate purchase agreements with our suppliers and source raw materials with fixed pricing and delivery commitments.
Our revenue generated from Russia were US$5.7 million, US$5.5 million and US$6.3 million for the years ended December 31, 2021, 2022 and 2023, representing 4.0%, 3.9% and 4.2% of our total revenues, respectively.
Our revenue generated from Russia were US$5.5 million, US$6.3 million and US$3.5 million for the years ended December 31, 2022, 2023 and 2024, representing 3.9%, 4.2% and 2.3% of our total revenues, respectively.
ASC 326 introduces an approach based on expected losses to estimate the allowance for doubtful accounts, which replaces the previous incurred loss impairment model. The adoption of the new standard did not have a material effect on the Group’s unaudited condensed consolidated financial statements. Account receivables are stated net of provision of credit losses.
ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of the new standard did not have a material effect on the our consolidated financial statements. Account receivables are stated net of provision of credit losses.
We consider historical collection rates, current financial status, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Inventories, net Inventories, primarily consisting of raw materials, semi-finished goods and finished goods, are stated at the lower of cost or net realizable value.
We consider historical collection rates, current financial status, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. 89 Inventories, net Inventories, primarily consisting of raw materials, goods in transit, worked in progress and finished goods, are stated at the lower of cost or net realizable value.
Contract balance When either party to a revenue contract has performed, we present the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between our performance and the customer’s payment.
Contract balance When either party to a revenue contract has performed, we present the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between our performance and the customer’s payment. We merely incur cost to obtain a contract with a customer.
For the year ended December 31, 2022, along with our dealers’ expansion on their online sales business, we achieved significant growth in sales of products to dealers.
For the year ended December 31, 2024, along with our dealers’ expansion on their online sales business, we achieved a steady growth in sales of products to dealers.
Our gross profit margin represents our gross profit as a percentage of our revenue. For the years ended December 31, 2021, 2022 and 2023, our gross profit was US$48.8 million, US$55.0 million and US$59.0 million, respectively, and our gross profit margins were 34.5%, 38.7% and 39.3%, respectively.
Our gross profit margin represents our gross profit as a percentage of our revenue. For the years ended December 31, 2022, 2023 and 2024, our gross profit was US$55.0 million, US$59.0 million and US$52.3 million, respectively, and our gross profit margins were 38.7%, 39.3% and 34.9%, respectively.
For our online sales, we mainly sell self-branded products through the Online Selling Platforms.
For our online sales, we mainly sell self-branded and household products through online selling platforms.
Our revenue generated from Eastern Europe were $15.8 million, $15.2 million and US$13.6 million for the years ended December 31, 2021, 2022 and 2023, representing 11.2%, 10.7% and 9.1% of our total revenue, respectively.
Our revenue generated from Eastern Europe was US$15.2 million, US $13.6 million and nil for the years ended December 31, 2022, 2023 and 2024, representing 10.7%, 9.1% and nil of our total revenue, respectively.
The prices of the operating subsidiaries’ raw materials are largely dependent on market forces, such as fluctuations of commodity prices, market supply and demand, and logistics and transport costs.
The operating subsidiaries source raw materials predominantly from PRC suppliers. The prices of the operating subsidiaries’ raw materials are largely dependent on market forces, such as fluctuations of commodity prices, market supply and demand, and logistics and transport costs.
For the years ended December 31, Change 2021 2022 2023 Amount % Gross Gross Profit Gross Gross Profit Gross Gross Profit Gross Profit Margin Profit Margin Profit Margin Profit (in USD in thousand) Offline sales to dealers $ 19,784 37.3 % $ 33,719 46.4 % $ 39,321 46.1 % $ 5,601 16.6 % Offline sales to ODM customers 12,293 19.6 % 13,658 23.6 % 11,917 21.8 % (1,741 ) (12.7 )% Online sales to retail customers 16,707 65.1 % 7,646 66.2 % 7,733 68.0 % 88 1.2 % Total $ 48,784 34.5 % $ 55,023 38.7 % $ 58,971 39.3 % $ 3,948 7.2 % Selling expenses Selling expenses primarily consist of: (i) salaries and benefits for our sales and marketing personnel; (ii) sales commission of the Online Selling Platforms; (iii) freight charges from our warehouses to our customers; (iv) traveling expenses incurred by our sales and marketing personnel for business purposes; (v) advertising and marketing expenses for promotion; (vi) depreciation relating to property, plant and equipment and leased properties used for selling and marketing purposes; and (vii) others, which primarily includes low-value consumables, office expenses, and consulting expenses.
For the years ended December 31, Change 2022 2023 2024 Amount % Gross Gross Profit Gross Gross Profit Gross Gross Profit Gross Profit Margin Profit Margin Profit Margin Profit (in USD in thousand) Offline sales to dealers $ 33,719 46.4 % $ 39,321 46.1 % $ 31,346 36.5 % $ (7,975 ) (20.3 )% Offline sales to ODM customers 13,658 23.6 % 11,917 21.8 % 12,458 24.4 % 541 4.5 % Online sales to retail customers 7,646 66.2 % 7,733 68.0 % 8,482 65.9 % 749 9.7 % Total $ 55,023 38.7 % $ 58,971 39.3 % $ 52,286 34.9 % $ (6,685 ) (11.3 )% Selling expenses Selling expenses primarily consist of: (i) salaries and benefits for our sales and marketing personnel; (ii) sales commission of the Online Selling Platforms; (iii) freight charges from our warehouses to our customers; (iv) traveling expenses incurred by our sales and marketing personnel for business purposes; (v) advertising and marketing expenses for promotion; (vi) depreciation relating to property, plant and equipment and leased properties used for selling and marketing purposes; and (vii) others, which primarily includes low-value consumables, office expenses, rental fees and consulting expenses.
Net income As a result of the foregoing, our net income increased by 47.1% from US$4.9 million for the year ended December 31, 2021 to US$7.2 million for the year ended December 31, 2022. 91 B.
Net income As a result of the foregoing, our net income increased by 7.4% from US$7.2 million for the year ended December 31, 2022 to US$7.8 million for the year ended December 31, 2023. B.
Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost of inventory is determined using the weighted average cost method. We record inventory impairment for obsolete and slow-moving inventories.
Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost of inventory is determined using the weighted average cost method.
There is no major difference in terms of product capability between the ODM products and white-label products offered by the operating subsidiaries, and the main difference lies in product packaging and pricing. Our revenue increased by US$8.1 million, or 5.7%, from US$142.1 million for the year ended December 31, 2022 to US$150.2 million for the year ended December 31, 2023.
There is no major difference in terms of product capability between the ODM products and white-label products offered by the operating subsidiaries, and the main difference lies in product packaging and pricing. Our revenue decreased by US$0.4 million, or 0.3%, from US$150.2 million for the year ended December 31, 2023 to US$149.8 million for the year ended December 31, 2024.
The following table sets forth the disaggregation of revenue by area: For the years ended December 31, Change 2021 2022 2023 Amount % (in USD in thousands) North America $ 80,954 $ 76,664 $ 89,662 $ 12,998 17.0 % Europe 56,210 57,392 52,976 (4,416 ) (7.7 )% Others 4,341 8,075 7,584 (491 ) (6.1 )% Total $ 141,505 $ 142,131 $ 150,222 $ 8,091 5.7 % Cost of revenue Our cost of revenue primarily consists of the following components: (i) inventory costs, which primarily include procurement costs for chips, toner and OPC drum; (ii) staff costs, which consist of salaries and benefits of workers; (iii) depreciation expense relating to the depreciation of our plant, property and equipment used for production; (iv) freight charges incurred by us for delivering products from our factories to our warehouses abroad; (v) tariffs imposed to our products sold in the U.S.; and (vi) others, which primarily include overhead costs relating to consumables and electricity used for production.
The following table sets forth the disaggregation of revenue by area: For the years ended December 31, Change 2022 2023 2024 Amount % (in USD in thousands) North America $ 76,664 $ 89,662 $ 89,971 $ 309 0.3 % Europe 57,392 52,976 48,360 (4,616 ) (8.7 )% Others 8,075 7,584 11,497 3,913 51.6 % Total $ 142,131 $ 150,222 $ 149,828 $ (394 ) (0.3 )% Cost of revenue Our cost of revenue primarily consists of the following components: (i) inventory costs, which primarily include procurement costs for chips, toner and OPC drum; (ii) staff costs, which consist of salaries and benefits of workers; (iii) depreciation expense relating to the depreciation of our plant, property and equipment used for production; (iv) freight charges incurred by us for delivering products from our factories to our warehouses abroad; (v) tariffs imposed to our products sold in the U.S.; and (vi) others, which primarily include overhead costs relating to consumables and electricity used for production.
Dividends paid by our Mainland PRC subsidiaries in Mainland China to our Hong Kong subsidiaries will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Double Taxation Avoidance Arrangement and receives approval from the relevant tax authority.
We are also subject to surcharges on value-added tax payments in accordance with Mainland PRC law. 81 Dividends paid by our Mainland PRC subsidiaries in Mainland China to our Hong Kong subsidiaries will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Double Taxation Avoidance Arrangement and receives approval from the relevant tax authority.
Comparison by Area Our revenue generated from North America increased by 17.0% from US$76.7 million for the year ended December 31, 2022 to US$89.7 million for the year ended December 31, 2023, which was primarily attributable to our market expansion in the U.S. and increased sales to local dealers with our well-developed warehousing, logistics and IT system and our advanced products.
In addition, wo seek to develop online sales channel of more household products to enrich our product portfolio to mitigate the competition impact. 84 Comparison by Area Our revenue generated from North America increased by 17.0% from US$76.7 million for the year ended December 31, 2022 to US$89.7 million for the year ended December 31, 2023, which was primarily attributable to our market expansion in the U.S. and increased sales to local dealers with our well-developed warehousing, logistics and IT system and our advanced products.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, at the balance sheet date, and revenues and expenses during the reported periods.
Research and development expenses Our research and develop expenses remained relatively stable of US$6.6 million for the year ended December 31, 2023, compared with US$6.8 million for the year ended December 31, 2022, which was primarily attributable to (i) a decrease in materials consumption of US$0.9 million for adjusting research and development activities with less need for materials, and was offset by (ii) an increase in staff costs of US$0.7 million.
General and administrative expenses Our general and administrative expenses increased by 18.8% from US$7.6 million for the year ended December 31, 2022 to US$9.0 million for the year ended December 31, 2023, which was primarily attributable to (i) an increase in payroll expenses of US$0.7 million due to an increased average number of, and the increase of salary of, management officers, and (ii) an increase in consulting fees and other professional service fees of US$0.3 million. 85 Research and development expenses Our research and develop expenses remained relatively stable of US$6.6 million for the year ended December 31, 2023, compared with US$6.8 million for the year ended December 31, 2022, which was primarily attributable to (i) a decrease in materials consumption of US$0.9 million for adjusting research and development activities with less need for materials, and was offset by (ii) an increase in staff costs of US$0.7 million.
Other income (expenses) Other income primarily consists of: (i) other non-operating income, inclusive of packing and labeling service fees, which represent fees we receive from providing services of adding labels with our customers’ brand names and contact information on our white-label products, and sales of scrap materials, which represent sales of excess miscellaneous materials left over from our production; (ii) government subsidy for research and development activities and award for tax contributions; (iii) fair value changes on derivative instruments arising from foreign exchange forward contracts; (iv) foreign exchange gain or loss arising from currency exchange among US$, EUR, Hong Kong Dollar, RMB and Great Britain Pound; and (v) interest expense on short-term bank borrowings, and interest expense on lease liabilities, which is non-cash and calculated as the difference between lease payments and the net present value of the lease payment over the entire term of the lease. 86 Income tax expenses Cayman Islands Our Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Act of the Cayman Islands and accordingly is not subject to income tax from business carried in the Cayman Islands.
Research and development expenses Research and development expenses primarily include: (i) costs for procuring materials for research and development activities; (ii) salaries and benefits for research and development personnel; (iii) depreciation, which represents depreciation expenses for property, plant and equipment used for research and development purposes; (iv) patent registration related expenses and patent litigation expenses; and (v) others, which primarily include consumables, traveling expenses, utilities and miscellaneous expenses. 80 Other income (expenses) Other income primarily consists of: (i) other non-operating income, inclusive of packing and labeling service fees, which represent fees we receive from providing services of adding labels with our customers’ brand names and contact information on our white-label products, and sales of scrap materials, which represent sales of excess miscellaneous materials left over from our production; (ii) government subsidy for research and development activities and award for tax contributions; (iii) fair value changes on derivative instruments arising from foreign exchange forward contracts; (iv) foreign exchange gain or loss arising from currency exchange among US$, EUR, Hong Kong Dollar, RMB and Great Britain Pound; and (v) interest expense on short-term bank borrowings, and interest expense on lease liabilities, which is non-cash and calculated as the difference between lease payments and the net present value of the lease payment over the entire term of the lease.
During the years ended December 31, 2021, 2022 and 2023, our revenue was primarily generated from our customers in the U.S. and Europe. 81 Through the operating subsidiaries, we sell our products: (i) to offline overseas customers who own their brands on an ODM basis; (ii) to offline overseas dealers who primarily resell white-label products and self-branded products to end consumers; and (iii) directly to customers on a retail basis under self-owned brands through online retail platforms.
Through the operating subsidiaries, we sell our products: (i) to offline overseas customers who own their brands on an ODM basis; (ii) to offline overseas dealers who primarily resell white-label products and self-branded products to end consumers; and (iii) directly to customers on a retail basis under self-owned brands through online retail platforms.
Increases or decreases in the carrying amount of redeemable ordinary shares shall be affected by charges against retained earnings. Impairment of long-lived assets We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.
Impairment of long-lived assets We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.
Gross profit and gross profit margin Gross profit of offline sales to dealers increased by 16.6% from $33.7 million for the year ended December 31, 2022 to $39.3 million for the year ended December 31, 2023 and the gross profit margin rate slightly decreased from 46.4% to 46.1%, primarily due to an increase of material costs synchronized with the increase of revenue under stricter production standards. 88 Gross profit of offline sales to ODM customers decreased by 12.7% from $13.7 million for the year ended December 31, 2022 to $11.9 million for the year ended December 31, 2023, and the gross margin rate decreased from 23.6% to 21.8%, primarily due to lower selling price under the tense competition especially in Mexican, Portland and Brazil markets.
Gross profit and gross profit margin Gross profit of offline sales to dealers increased by 16.6% from $33.7 million for the year ended December 31, 2022 to $39.3 million for the year ended December 31, 2023 and the gross profit margin rate slightly decreased from 46.4% to 46.1%, primarily due to an increase of material costs synchronized with the increase of revenue under stricter production standards.
Our revenue from offline sales to dealers increased by 36.8% from US$53.1 million for the year ended December 31, 2021 to US$72.6 million for the year ended December 31, 2022, which was mainly because we expanded our local sales to dealers with online sales operations, utilized our warehousing, logistics and IT system and obtained more orders from dealers.
Our revenue from offline sales to dealers increased by 1.2% from US$84.9 million for the year ended December 31, 2023 to US$85.9 million for the year ended December 31, 2024, mainly because we continuously expanded our local sales to dealers with online sales operations, utilized our warehousing, logistics and IT system and obtained more orders from dealers.
Our net income increased by US$0.6 million, or 7.4%, from US$7.2 million for the year ended December 31, 2022 to US$7.8 million for the year ended December 31, 2023, which was mainly due to (i) an increase of gross margin of US$3.9 million for (a) an increase of revenue of US$8.1 million with our flexible strategy for sales channel and continuous efforts of market expansion; (b) an increase of cost of revenue of US$7.1 million in production costs synchronized with the increase of revenue with our improvement in production line automation, which was mitigated by a decrease of US$2.8 million in cost of revenue mainly in the aspect of ocean freight charges, and was offset by (ii) an increase of generative and administrative expenses of US$1.4 million for increased staff salary and professional services fees; (iii) an increase of selling expenses of US$1.3 million for increased advertising expenses and staff salary; and (iv) an increase of loss on changes in fair value of foreign currency exchange forward contracts that we purchased to manage the volatility of changes in foreign exchange rate which led to an increase of loss of US$1.7 million, which was mitigated by an increase in foreign exchange gain of US$1.7 million.
Our net income increased by US$0.6 million, or 7.4%, from US$7.2 million for the year ended December 31, 2022 to US$7.8 million for the year ended December 31, 2023, which was mainly due to (i) an increase of gross margin of US$3.9 million for (a) an increase of revenue of US$8.1 million with our flexible strategy for sales channel and continuous efforts of market expansion; (b) an increase of cost of revenue of US$7.1 million in production costs synchronized with the increase of revenue with our improvement in production line automation, which was mitigated by a decrease of US$2.8 million in cost of revenue mainly in the aspect of ocean freight charges, and was offset by (ii) an increase of generative and administrative expenses of US$1.4 million for increased staff salary and professional services fees; (iii) an increase of selling expenses of US$1.3 million for increased advertising expenses and staff salary; and (iv) an increase of loss on changes in fair value of foreign currency exchange forward contracts that we purchased to manage the volatility of changes in foreign exchange rate which led to an increase of loss of US$1.7 million, which was mitigated by an increase in foreign exchange gain of US$1.7 million. 76 Major Factors Affecting Our Results of Operations Our business and results of operations are affected by a number of general factors that impact compatible toner cartridge industry including, among others, economic, political and social conditions in the PRC, export regulations or enforcement, economic and regulatory conditions or global trade policy of the U.S. or Europe, changes in the business strategies of U.S. customers or European customers, any increase in customer demand for our products, raw material costs, and the competitive environment.
The foreign currency forward contracts therefore are accounted for as derivative instruments, with fair value changes reported as fair value change of derivative instruments in the consolidated statements of income and other comprehensive income. 95 Redeemable ordinary shares We account for ordinary shares subject to possible redemption in accordance with ASC 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to conditional redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control is classified as mezzanine equity.
Redeemable ordinary shares We account for ordinary shares subject to possible redemption in accordance with ASC 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to conditional redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control is classified as mezzanine equity.
Net income As a result of the foregoing, our net income increased by 7.4% from US$7.2 million for the year ended December 31, 2022 to US$7.8 million for the year ended December 31, 2023. 89 Comparison of Results of Operations for the Years Ended December 31, 2021 and 2022 Net revenue Comparison by Sales Channel For our offline sales to dealers, we mainly sell white-label products and self-branded products through our offline channels.
Comparison of Results of Operations for the Years Ended December 31, 2022 and 2023 Net revenue Comparison by Sales Channel For our offline sales to dealers, we mainly sell white-label products and self-branded products through our offline channels.
Our revenue increased by US$0.6 million, or 0.4%, from US$141.5 million for the year ended December 31, 2021 to US$142.1 million for the year ended December 31, 2022.
Our revenue increased by US$8.1 million, or 5.7%, from US$142.1 million for the year ended December 31, 2022 to US$150.2 million for the year ended December 31, 2023.
Therefore, it is probable that we will collect substantially all of the consideration without existence of any significant financing component. 96 Disaggregation of Revenue We disaggregate our revenue from contracts by sales channel and region, as we believe it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors.
Disaggregation of Revenue We disaggregate our revenue from contracts by sales channel and region, as we believe it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors.
According to the PRC Tax Administration and Collection Law and its implementation rules, EIT Law and Implementation Regulations of the EIT Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent.
Our affiliated entities in Mainland PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent.
If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairments of long-lived assets were recognized as of December 31, 2021, 2022 and 2023.
If the sum of the expected undiscounted cash flow is less than the carrying amount of the asset group, we would recognize an impairment loss, which is the excess of carrying amount over the fair value of the asset group, using the expected future discounted cash flows.
Payment is usually required within four months after the issuance of invoice for offline customers and the consideration of online orders is collected in advance of shipment by online platform.
Payment is usually required within four months after the issuance of invoice for offline customers and the consideration of online orders is collected in advance of shipment by online platform. Therefore, it is probable that we will collect substantially all of the consideration without existence of any significant financing component.
For the years ended December 31, Change 2021 2022 2023 Amount % (in USD in thousands) Offline sales to dealers $ 33,303 $ 38,894 $ 45,572 $ 6,678 17.2 % Offline sales to ODM customers 50,443 44,312 42,054 (2,258 ) (5.1 )% Online sales to retail customers 8,975 3,902 3,625 (277 ) (7.1 )% Total $ 92,721 $ 87,108 $ 91,251 $ 4,143 4.8 % 85 Gross profit and gross profit margin Gross profit represents our revenue less cost of sales.
For the years ended December 31, Change 2022 2023 2024 Amount % (in USD in thousands) Offline sales to dealers $ 38,894 $ 45,572 $ 54,550 $ 8,978 19.7 % Offline sales to ODM customers 44,312 42,054 38,606 (3,448 ) (8.2 )% Online sales to retail customers 3,902 3,625 4,386 761 21.0 % Total $ 87,108 $ 91,251 $ 97,542 $ 6,291 6.9 % 79 Gross profit and gross profit margin Gross profit represents our revenue less cost of sales.
Operating Results Overview Through the operating subsidiaries, we are a leading export-oriented manufacturer and seller of compatible toner cartridges based in China, the U.S. and Europe with the mission to deliver high-quality and cost-effective printing solutions to consumers around the world with our proprietary technology, research and development capabilities and our integrated and localized sales, logistics and service platform.
Operating Results Overview Through the operating subsidiaries, we are a leading export-oriented manufacturer and seller of compatible toner cartridges based in China, the U.S. and Europe with the mission to deliver high-quality and cost-effective printing solutions to consumers around the world with our proprietary technology, research and development capabilities and our integrated and localized sales, logistics and service platform. 75 Through the operating subsidiaries, we primarily develop and manufacture compatible toner cartridges that can be used for a wide range of commonly available models of laser printers from different manufacturers, on a white-label or third-party brand basis or under our self-owned brands.
For the years ended December 31, Change 2021 2022 2023 Amount % (in USD in thousands) Offline sales to dealers $ 53,087 $ 72,614 $ 84,894 $ 12,280 16.9 % Offline sales to ODM customers 62,736 57,970 53,972 (3,998 ) (6.9 )% Online sales to retail customers 25,682 11,547 11,356 (191 ) (1.7 )% Total $ 141,505 $ 142,131 $ 150,222 $ 8,091 5.7 % The majority of our revenue for the years ended December 31, 2021, 2022 and 2023 was generated from Europe and North America.
For the years ended December 31, Change 2022 2023 2024 Amount % (in USD in thousands) Offline sales to dealers $ 72,614 $ 84,894 $ 85,896 $ 1,002 1.2 % Offline sales to ODM customers 57,970 53,972 51,064 (2,908 ) (5.4 )% Online sales to retail customers 11,547 11,356 12,868 1,512 13.3 % Total $ 142,131 $ 150,222 $ 149,828 $ (394 ) (0.3 )% The majority of our revenue for the years ended December 31, 2022, 2023 and 2024 was generated from Europe and North America.
Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: For the years ended December 31, Change 2021 2022 2023 Amount % Net cash provided by operating activities $ 6,428 $ 7,452 $ 17,895 $ 10,443 140.2 % Net cash used in investing activities (1,851 ) (1,178 ) (987 ) 191 (16.2 )% Net cash (used in) provided by financing activities (1,614 ) 4,387 (4,729 ) (9,116 ) (207.8 )% Effects of exchange rate changes on cash and cash equivalents and restricted cash (182 ) 882 (711 ) (1,593 ) (180.4 )% Net increase in cash and cash equivalents and restricted cash 2,781 11,543 11,468 (75 ) (0.6 )% Cash and restricted cash at the beginning of the periods presented 38,374 41,155 52,698 11,543 28.0 % Cash and cash equivalents and restricted cash at the end of the periods presented $ 41,155 $ 52,698 $ 64,166 $ 11,468 21.8 % Operating activities For the year ended December 31, 2021, our net cash provided by operating activities was US$6.4 million, which was primarily attributable to (i) net income of US$4.9 million; (ii) an adjustment of added non-cash items of a net amount of US$4.4 million, inclusive of amortization and depreciation and other non-cash items; (iii) an increase of accrued expenses and other payables of US$5.2 million due to the increase accrued payroll and accrued freight in 2021; and (iv) deducted by a net amount of $6.7 million due to the decrease in accounts payable and bank acceptance notes payable of $10.5 million as we settled a portion of accounts payable in advance of the payment schedule as a result of negotiation with suppliers that they would provide some preferential terms, offset by a decrease of inventories of $3.8 million. 92 For the year ended December 31, 2022, our net cash provided by operating activities was US$7.5 million, which was primarily attributable to (i) net income of US$7.2 million; (ii) an adjustment of added back non-cash items of a net amount of US$4.2 million, inclusive of unrealized fair value loss, amortization and depreciation and other non-cash items; (iii) deducted by a net amount of US$2.0 million due to the decrease in accounts payable and bank acceptance notes payable of $3.7 million, offset by a decrease of inventories of $1.7 million as a result of our improvement in stock management and inventories turnover.
We believe that our current cash and cash equivalents and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements, capital expenditures and debt repayment obligations for at least the next 12 months. 86 Cash Flows The following table sets forth a summary of our cash flows for the periods indicated: For the years ended December 31, Change 2022 2023 2024 Amount % Net cash provided by (used in) operating activities $ 7,452 $ 17,895 $ (2,146 ) $ (20,041 ) (112.0 )% Net cash used in investing activities (1,178 ) (987 ) (17,883 ) (16,896 ) 1,711.9 % Net cash provided by (used in) financing activities 4,387 (4,729 ) 1,477 6,206 (131.2 )% Effects of exchange rate changes on cash and cash equivalents and restricted cash 882 (711 ) 272 983 (138.3 )% Net increase (decrease) in cash and cash equivalents and restricted cash 11,543 11,468 (18,280 ) (29,748 ) (259.4 )% Cash and restricted cash at the beginning of the years presented 41,155 52,698 64,166 11,468 21.8 % Cash and cash equivalents and restricted cash at the end of the years presented $ 52,698 $ 64,166 $ 45,886 $ (18,280 ) (28.5 )% Operating activities For the year ended December 31, 2022, our net cash provided by operating activities was US$7.5 million, which was primarily attributable to (i) net income of US$7.2 million; (ii) an adjustment of added back non-cash items of a net amount of US$4.2 million, inclusive of unrealized fair value loss, amortization and depreciation and other non-cash items; (iii) deducted by a net amount of US$2.0 million due to the decrease in accounts payable and bank acceptance notes payable of $3.7 million, offset by a decrease of inventories of $1.7 million as a result of our improvement in stock management and inventories turnover.
Income tax expenses Our income tax expenses increased from US$7.0 thousand for the year ended December 31, 2021 to US$0.1 million for the year ended December 31, 2022, which was primarily due to the increase in the taxable income as in the year ended December 31, 2022.
Income tax expenses Our income tax expenses decreased from US$0.8 million for the year ended December 31, 2023 to US$0.4 million for the year ended December 31, 2024, which was primarily due to the decrease in the taxable income for the year ended December 31, 2024.
Advance from customers is our obligation to transfer products to a customer for which we have received consideration from the customer. As of December 31, 2022 and 2023, the balance of advance from customers amounted to US$0.7 million and US$0.5 million, respectively. Income taxes We account for income taxes under ASC 740.
Advance from customers is our obligation to transfer products to a customer for which we have received consideration from the customer. 91 Income taxes We account for income taxes under ASC 740.
Our net cash flow provided by operating activities for the year ended December 31, 2021, 2022 and 2023, was US$6.4 million, US$7.5 million and US$17.9 million, respectively, which was primarily attributable to our net income, offset by our payments to suppliers. Our principal source of cash came from our operational income and bank loans.
Our net cash flow used in operating activities for the year ended December 31, 2024 was US$2.1 million, which was primarily attributable to our payments to suppliers and prepaid freight expenses. Our principal source of cash came from our operational income and bank loans.
For the years ended December 31, Change 2021 2022 2023 Amount % (in USD in thousands) Net revenue $ 141,505 $ 142,131 $ 150,222 $ 8,091 5.7 % Cost of revenue (92,721 ) (87,108 ) (91,251 ) (4,143 ) 4.8 % Gross profit 48,784 55,023 58,971 3,948 7.2 % Operating expenses: Selling expenses (32,775 ) (29,297 ) (30,566 ) (1,269 ) 4.3 % General and administrative expenses (7,463 ) (7,614 ) (9,042 ) (1,428 ) 18.8 % Research and development expenses (5,419 ) (6,780 ) (6,636 ) 144 (2.1 )% Total operating expenses (45,657 ) (43,691 ) (46,244 ) (2,553 ) 5.8 % Income from operations 3,127 11,332 12,727 1,395 12.3 % Other income (expenses): Other non-operating income, net 1,264 1,042 819 (223 ) (21.4 )% Government subsidy 912 1,150 505 (645 ) (56.1 )% Fair value gain (loss) on derivative instruments 3,002 (3,436 ) (5,109 ) (1,673 ) 48.7 % Foreign exchange (loss) gain (2,194 ) (1,513 ) 212 1,725 (114.0 )% Interest expense, net (1,183 ) (1,195 ) (540 ) 655 (54.8 )% Total other expenses 1,801 (3,952 ) (4,113 ) (161 ) 4.1 % Income before income tax expense 4,928 7,380 8,614 1,234 16.7 % Income tax expense (7 ) (139 ) (840 ) (701 ) 504.3 % Net income $ 4,921 $ 7,241 $ 7,774 $ 533 7.4 % Key Components of Results of Operations Net revenue We generate revenue primarily from the sales of compatible toner cartridges and, to a lesser extent, from the sales of certain ancillary components of toner cartridges to customers offline and online.
For the years ended December 31, Change 2022 2023 2024 Amount % (in USD in thousands) Net revenue $ 142,131 $ 150,222 $ 149,828 $ (394 ) (0.3 )% Cost of revenue (87,108 ) (91,251 ) (97,542 ) (6,291 ) 6.9 % Gross profit 55,023 58,971 52,286 (6,685 ) (11.3 )% Operating expenses: Selling expenses (29,297 ) (30,566 ) (30,845 ) (279 ) 0.9 % General and administrative expenses (7,614 ) (9,042 ) (8,324 ) 718 (7.9 )% Research and development expenses (6,780 ) (6,636 ) (6,221 ) 415 (6.3 )% Total operating expenses (43,691 ) (46,244 ) (45,390 ) 854 (1.8 )% Income from operations 11,332 12,727 6,896 (5,831 ) (45.8 )% Other income (expenses): Other non-operating income, net 1,042 819 2,046 1,227 149.8 % Government subsidy 1,150 505 901 396 78.4 % Fair value loss on derivative instruments (3,436 ) (5,109 ) (799 ) 4,310 (84.4 )% Foreign exchange (loss) gain (1,513 ) 212 (1,341 ) (1,553 ) (732.5 )% Interest expense, net (1,195 ) (540 ) (175 ) 365 (67.6 )% Total other expenses (income) (3,952 ) (4,113 ) 632 4,745 (115.4 )% Income before income tax expense 7,380 8,614 7,528 (1,086 ) (12.6 )% Income tax expense (139 ) (840 ) (414 ) 426 (50.7 )% Net income $ 7,241 $ 7,774 $ 7,114 $ (660 ) (8.5 )% 78 Key Components of Results of Operations Net revenue We generate revenue primarily from the sales of compatible toner cartridges and, to a lesser extent, from the sales of certain ancillary components of toner cartridges to customers offline and online.
We will continue to make capital expenditures to support the expected growth of our business. 93 Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2023: Payment Due by Period Total Less than 1 year 1 – 3 years 3 – 5 years (in USD in thousand) Borrowings $ 26,222 $ 26,222 $ — $ — Lease obligations 2,033 1,319 585 129 Total $ 28,255 $ 27,541 $ 585 $ 129 Capital commitments are commitments in relation to the purchase of property and equipment including leasehold improvements.
Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2024: Payment Due by Period Less than Total 1 year 1 – 3 years 3 – 5 years (in USD in thousand) Borrowings $ 23,438 $ 23,438 $ - $ - Lease obligations 3,463 1,133 1,330 1,000 Total $ 26,901 $ 24,571 $ 1,330 $ 1,000 Capital commitments are commitments in relation to the purchase of property and equipment including leasehold improvements.
Other income (expenses) Our other non-operating income decreased by US$0.2 million in the year ended December 31, 2022 compared to the year ended December 31, 2021, which was primarily attributable to less income from selling scrap and waste, and fluctuated demands of packing, labeling and other services provided to our offline dealer customers.
Other income (expenses) Our other non-operating income increased by US$1.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, which was primarily attributable to increased demand for packing, labeling and other services to offline dealer customers.
Financing activities For the year ended December 31, 2021, our net cash used in financing activities was US$1.6 million, which consisted of the proceeds from short-term bank borrowings of US$38.0 million, offset by repayments of short-term bank borrowings of US$38.8 million and payments for the offering costs of US$0.8 million.
For the year ended December 31, 2024, our net cash provided from financing activities was US$1.5 million, which consisted of (i) proceeds from short-term bank borrowings of US$30.7 million, (ii) proceeds from issuance of new shares of US$4.3 million, which was offset by (iii) repayments of short-term bank borrowings of US$33.1 million and (iv) payments for initial public offering costs of US$0.4 million.
As of December 31, 2022, we had US$52.70 million in cash and cash equivalents and restricted cash, which consisted of (i) cash in Mainland China of US$36.07 million; (ii) cash in the BVI of US$13.51 million; (iii) cash in Europe of US$2.46 million; (iv) cash in the U.S. of US$0.37 million; (v) cash in the UK of US$0.25 million; (vi) cash in the Cayman Islands of $0.03 million; and (vii) cash in Hong Kong of US$0.01 million.
Liquidity and Capital Resources Liquidity and Capital Resources As of December 31, 2024, we had US$45.9 million in cash and cash equivalents and restricted cash, which consisted of (i) cash in mainland China of US$17.9 million; (ii) cash in the BVI of US$20.1 million; (iii) cash in the Cayman Islands of $3.6 million; (iv) cash in Europe of US$1.4 million; (v) cash in the U.S. of US$1.3 million; (vi) cash in Hong Kong of US$0.9 million; and (vii) cash in the UK of US$0.7 million.
When these events occur, we measure impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flow expected to result from the use of the assets and their eventual disposition.
When these events occur, we measure impairment by first grouping its long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows was largely independent of the cash flows of other assets and liabilities (the asset group), and secondly comparing the carrying value of the asset group to the estimated undiscounted future cash flows expected to result from the use of the asset group and its eventual disposition.
For research and development expenses that have formed intangible assets, the tax amortization is based on 200% of the costs of the intangible assets, the rate of which was 175% before 2020. 87 Comparison of Results of Operations for the Years Ended December 31, 2022 and 2023 Net revenue Comparison by Sales Channel For our offline sales to dealers, we mainly sell white-label products and self-branded products through our offline channels.
Comparison of Results of Operations for the Years Ended December 31, 2023 and 2024 Net revenue Comparison by Sales Channel For our offline sales to dealers, we mainly sell white-label products and self-branded products through our offline channels.
General and administrative expenses Our general and administrative expenses increased by 18.8% from US$7.6 million for the year ended December 31, 2022 to US$9.0 million for the year ended December 31, 2023, which was primarily attributable to (i) an increase in payroll expenses of US$0.7 million due to an increased average number of, and the increase of salary of, management officers, and (ii) an increase in consulting fees and other professional service fees of US$0.3 million.
General and administrative expenses Our general and administrative expenses decreased by 7.9% from US$9.0 million for the year ended December 31, 2023 to US$8.3 million for the year ended December 31, 2024, which was primarily attributable to (i) a decrease in payroll expenses of US$0.8 million for less bonuses to management officers, and offset by (ii) an increase in consulting fees and other professional service fees of US$0.1 million. 83 Research and development expenses Our research and develop expenses remained relatively stable of US$6.2 million for the year ended December 31, 2024, compared with US$6.6 million for the year ended December 31, 2023, which was primarily attributable to (i) a decrease of US$0.2 million in materials consumed by focusing on research and development activities with less material requirements, and (ii) a decrease of US$0.2 million in staff costs.
Ability to control production and material costs Our cost of inventory sold mainly consists of the raw materials used in production of toner cartridges such as OPC drums, toner and chips which form a major part of our cost of sales. The operating subsidiaries source raw materials predominantly from PRC suppliers.
We believe that the quality and reliability of the operating subsidiaries’ products coupled with their localized customer services are vital in maintaining customer loyalty and upholding their reputation and higher price of products. 77 Ability to control production and material costs Our cost of inventory sold mainly consists of the raw materials used in production of toner cartridges such as OPC drums, toner and chips which form a major part of our cost of sales.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
Results of operations The following table sets forth a summary of our consolidated results of operations for the periods indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
Fair value loss on derivative instruments were US$3.4 million in the year ended December 31, 2022 compared to an income of US$3.0 million in the year ended December 31, 2021, primarily due to the unfavorable exchange rate fluctuations in 2022.
Our government subsidy increased by US$0.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. Fair value loss on derivative instruments was US$0.8 million for the year ended December 31, 2024 compared to US$5.1 million for the year ended December 31, 2023, primarily due to the favorable exchange rate fluctuations in 2024.
Commitments and contingencies In the normal course of business, we are subject to commitments and contingencies, including operating lease commitments and legal proceedings. We recognize a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made.
We recognize a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. We may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter.
During the periods, we derived substantially all of our revenue from sales of compatible toner cartridge products in North America, Europe and other countries primarily including China and Brazil. 84 The following table sets forth our revenue by sales channel for the periods indicated.
For the years ended December 31, 2022, 2023 and 2024, our total revenue was US$142.1 million, US$150.2 million and US$149.8 million, respectively. During the periods, we derived substantially all of our revenue from sales of compatible toner cartridge products in North America, Europe and other countries primarily including China and Brazil.
Investing activities For the years ended December 31, 2021, 2022 and 2023, our net cash used in investing activities was US$1.9 million, US$1.2 million and 1.0 million, respectively, which was primarily attributable to purchase of new product moulds and upgrades of production and research equipment.
For the year ended December 31, 2024, our net cash used in investing activities was US$17.9 million, mainly due to (i) purchase of long-term fixed deposits of US$10.3 million, (ii) purchase of short-term fixed deposits of US$6.5 million and (iii) purchase of new moulds and upgrades of production and research equipment of US$1.1 million.
In addition, wo seek to develop online sales channel of more household products to enrich our product portfolio to mitigate the competition impact.
Such products were manufactured by third parties and procured by the Company for resale in the U.S. and European markets. In addition, we still seek to develop online sales channels of more household products to enrich our product portfolio to mitigate the competition impact.
We may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter. Revenue recognition Our revenues are mainly generated from the sales of compatible toner cartridges through offline and online channels.
Revenue recognition Our revenues are mainly generated from the sales of compatible toner cartridges through offline and online channels.
Inventory impairment is based on inventory obsolescence trends, historical experience, forecasted consumer demand and application of the specific identification method. As of December 31, 2022 and 2023, US$1.9 million and US$1.4 million were written down from the cost of inventories to their net realizable values, respectively.
We write down the cost of obsolete and slow-moving inventories to the estimated net realizable value, based on inventory obsolescence trends, historical experience, forecasted consumer demand and application of the specific identification method.
The balance of accounts receivable, net of allowance for doubtful accounts were US$24.9 million and US$31.3 million as of December 31, 2022 and 2023, respectively. We present the consideration that a customer pays before we transfer products to the customer as a contract liability (advance from customers) when the payment is made.
We present any unconditional rights to consideration separately as a receivable. We do not have any contract asset. We present the consideration that a customer pays before we transfer products to the customer as a contract liability (advance from customers) when the payment is made.
For our direct offline sales to ODM customers, our revenue decreased by 7.6% from US$62.7 million for the year ended December 31, 2021 to US$58.0 million for the year ended December 31, 2022, which was primarily attributable to (i) the decline of sales in Mexico and Eastern European market due to more intense price competition resulting from limited protection of patented products and (ii) a decline of sales to one of our major ODM customers in the U.S. who went bankrupt; and partially mitigated by the increasing sales of our patented products that are favored by the customers in the U.S. and Germany markets who attached importance to patent technology.
For our direct offline sales to ODM customers, our revenue decreased by 5.4% from US$54.0 million for the year ended December 31, 2023 to US$51.1 million for the year ended December 31, 2024, which was primarily attributable to the decline of sales in Russia, Germany, Mexico, and Eastern European markets due to more intense price competition resulting from limited protection of patented products in these markets, as well as that we proactively reduced the scale of our sales in Russia to mitigate potential adverse impacts on our business and operating results caused by the Russia-Ukraine war.
Significant accounting estimates include, but not limited to allowance for doubtful accounts, impairment provision for inventories, useful lives and impairment of long-lived assets, valuation allowance for deferred tax and uncertain tax positions. Changes in facts and circumstances may result in revised estimates.
Significant accounting estimates include but not limited to allowance for credit losses, impairment provision for inventories, useful lives and impairment of long-lived assets, determination of the fair value of derivative instruments and derivative liability arising from foreign exchange forward contracts, accounting for deferred income taxes and valuation allowance for deferred tax assets.
Therefore, there is no material restriction on foreign exchange that impairs our ability to transfer cash between entities and to U.S. investors.
Therefore, there is no material restriction on foreign exchange that impairs our ability to transfer cash between entities and to U.S. investors. Our net cash flow provided by operating activities for the years ended December 31, 2022 and 2023, was US$7.5 million and US$17.9 million respectively, which was primarily attributable to our net income, offset by our payments to suppliers.
General and administrative expenses Our general and administrative expenses slightly increased by 2.0% from US$7.5 million for the year ended December 31, 2021 to US$7.6 million for the year ended December 31, 2022, which was primarily attributable to (i) an increase in payroll expenses of US$1.7 million due to an increased average number and the increase of salary of management officers; (ii) offset by a decrease in consulting fees and other professional service fees of US$1.2 million.
Selling expenses Our selling expenses remained relatively stable from US$30.6 million for the year ended December 31, 2023 to US$30.8 million for the year ended December 31, 2024, primarily driven by (i) the increase of US$1.0 million in freight expenses charged by warehouses of online selling platforms, (ii) the increase of US$0.2 million in sales commissions of the online selling platforms, resulting from the increased sales volume, and offset by the decrease of US$1.1 million in payroll expenses due to the decreased bonus.
Our net income increased by US$2.3 million, or 47.1%, from US$4.9 million for the year ended December 31, 2021 to US$7.2 million for the year ended December 31, 2022, which was mainly due to (i) an increase of gross margin of US$6.2 million as (a) we raised product prices and our patented products were favored by customers compared to those of competitors in the North American and Western European markets, where market demand is increasing; (b) most of our production activities were conducted in China and our related costs were settled in RMB, and the appreciation of USD against RMB in 2022 led to a decrease of US$3.2 million in production costs; (c) a decrease of US$1.4 million in labor costs due to improvement in production line automation; and (ii) a decrease of US$3.5 million in selling expenses mainly in the aspect of freight expense and commission fee charged by the online retail platforms as a result of decreased online sales ; offset by (i) incremental expenditures in research and development activities of US$1.4 million and (ii) an increase of loss on changes in fair value of foreign currency exchange forward contracts that we purchased to manage the volatility of changes in foreign exchange rate, through which we generated an income of US$3.0 million in 2021 but a loss of US$3.4 million in 2022.
Our net income decreased by US$0.7 million, or 8.5%, from US$7.8 million for the year ended December 31, 2023 to US$7.1 million for the year ended December 31, 2024, which was mainly due to (i) a decrease of gross profit of US$6.7 million mainly due to (a) a decrease in revenue from offline sales to ODM customers of US$2.9 million due to the fierce competition in the markets such as Russia, Germany, Mexico, and Eastern Europe; (b) an increase in cost of revenue of US$6.3 million mainly due to the increase in ocean freight charges and increased tariffs resulting from the increased sales volume in the United States, and offset by (ii) a decrease in loss on changes in fair value of foreign currency exchange forward contracts that we purchased to manage the volatility of changes in foreign exchange rates, which led to an increase of loss of US$4.3 million, which was mitigated by an increase in foreign exchange loss of US$1.6 million, and (iii) an increase in other non-operating income of US$1.2 million, mainly due to the increased demands of packing, labeling and other services provided to our offline dealer customers.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all persons listed have sole voting and investment power for all shares shown as beneficially owned by them. 104 Ordinary Shares Beneficially Owned** Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares Percentage of Total Ordinary Shares Percentage of Votes Held Directors and Executive Officers:* Weidong Gu (1) 6,126,300 26,315,800 32,442,100 60.21 % 92.63 % Shaofang Weng 528,900 — 528,900 0.98 % 0.18 % Quanmao Zhou — — — — — Zhisheng Cheng 1,763,200 — 1,763,200 3.27 % 0.61 % Qilong Yang 528,900 — 528,900 0.98 % 0.18 % Yu Xiang — — — — — Fenglei Jiang — — — — — Xinwei Xie — — — — — All directors and executive officers as a group: 8,947,300 26,315,800 35,263,100 65.45 % 93.60 % 5% Shareholders: Aster Excellent Limited (1) 8,947,300 26,315,800 35,263,100 65.45 % 93.60 % Juneng Investment (Hong Kong) Limited (2) 10,526,300 — 10,526,300 19.54 % 3.62 % Eagle Heart Limited (3) 6,315,900 — 6,315,900 11.72 % 2.17 % Notes: * Except as indicated otherwise below, the business address of our directors and executive officers is No. 756 Guangfu Road, Hi-tech Development Zone, Xinyu City, Jiangxi Province, the PRC. ** Beneficial ownership information disclosed herein represents direct and indirect holdings of entities owned, controlled or otherwise affiliated with the applicable holder as determined in accordance with the rules and regulations of the SEC.
Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all persons listed have sole voting and investment power for all shares shown as beneficially owned by them. 99 Ordinary Shares Beneficially Owned** Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares Percentage of Total Ordinary Shares Percentage of Votes Held Directors and Executive Officers:* Weidong Gu (1) 6,126,300 26,315,800 32,442,100 60.21 % 92.63 % Shaofang Weng 528,900 — 528,900 0.98 % 0.18 % Quanmao Zhou — — — — — Zhisheng Cheng 1,763,200 — 1,763,200 3.27 % 0.61 % Qilong Yang 528,900 — 528,900 0.98 % 0.18 % Yu Xiang — — — — — Fenglei Jiang — — — — — Xinwei Xie — — — — — All directors and executive officers as a group: 8,947,300 26,315,800 35,263,100 65.45 % 93.60 % 5% Shareholders: Aster Excellent Limited (1) 8,947,300 26,315,800 35,263,100 65.45 % 93.60 % Juneng Investment (Hong Kong) Limited (2) 10,526,300 — 10,526,300 19.54 % 3.62 % Eagle Heart Limited (3) 6,315,900 — 6,315,900 11.72 % 2.17 % Notes: * Except as indicated otherwise below, the business address of our directors and executive officers is No. 756 Guangfu Road, Hi-tech Development Zone, Xinyu City, Jiangxi Province, the PRC. ** Beneficial ownership information disclosed herein represents direct and indirect holdings of entities owned, controlled or otherwise affiliated with the applicable holder as determined in accordance with the rules and regulations of the SEC.
Qilong Yang is one of our founders and has served as our vice president since April 2020. Mr. Yang has had extensive experience in manufacturing management and operation. Mr. Yang has been with us since 2011 and has since served as the deputy general manager of Jiangxi Yibo. Prior to that, Mr.
Qilong Yang is one of our founders and has served as our vice president since April 2020. Mr. Yang has had extensive experience in manufacturing management and operation. Mr. Yang has been with us since July 2011 and has since served as the deputy general manager of Jiangxi Yibo. Prior to that, Mr.
Cheng has been with us since 2011 and has since served as the director of technology and the deputy general manager of Jiangxi Yibo. Prior to founding our Company, from January 2007 to February 2011, Mr. Cheng worked as the director of the technology department of Zhuhai Seine Technology Co., Ltd. Prior to that, Mr.
Cheng has been with us since March 2011 and has since served as the director of technology and the deputy general manager of Jiangxi Yibo. Prior to founding our Company, from January 2007 to February 2011, Mr. Cheng worked as the director of the technology department of Zhuhai Seine Technology Co., Ltd. Prior to that, Mr.
Xinwei Xie satisfy the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Listing Rules. 102 The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
Xinwei Xie satisfy the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Listing Rules. 97 The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
Our code of business conduct and ethics is publicly available on our website. 103 Compensation Recovery Policy We have adopted a compensation recovery policy to provide for the recovery of erroneously-awarded incentive compensation, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, final SEC rules and applicable listing standards.
Our code of business conduct and ethics is publicly available on our website. 98 Compensation Recovery Policy We have adopted a compensation recovery policy to provide for the recovery of erroneously-awarded incentive compensation, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, final SEC rules and applicable listing standards.
None of our directors has a service contract with us that provides for benefits upon termination of service. 100 Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in good faith in what they consider to be in our best interests.
None of our directors has a service contract with us that provides for benefits upon termination of service. 95 Duties of Directors Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in good faith in what they consider to be in our best interests.
Quanmao Zhou 34 Chief Financial Officer Mr. Zhisheng Cheng 45 Vice President Mr. Qilong Yang 51 Vice President Ms. Yu Xiang 41 Independent Director Ms. Fenglei Jiang 57 Independent Director Mr. Xinwei Xie 50 Independent Director The following is a brief biography of each of our executive officers and directors: Mr.
Quanmao Zhou 34 Chief Financial Officer Mr. Zhisheng Cheng 45 Vice President Mr. Qilong Yang 51 Vice President Ms. Yu Xiang 42 Independent Director Ms. Fenglei Jiang 57 Independent Director Mr. Xinwei Xie 50 Independent Director The following is a brief biography of each of our executive officers and directors: Mr.
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information regarding our directors and executive officers as of the date of this annual report. Directors and Executive Officers Age Position/Title Mr. Weidong Gu 54 Chairman of the Board of Directors Mr. Shaofang Weng 53 Chief Executive Officer and Director Mr.
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth information regarding our directors and executive officers as of the date of this annual report. Directors and Executive Officers Age Position/Title Mr. Weidong Gu 55 Chairman of the Board of Directors Mr. Shaofang Weng 53 Chief Executive Officer and Director Mr.
Certain shareholders of our controlling shareholder serves on our board of directors and, as a result, owes the aforementioned fiduciary duties to us. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association as may be amended from time to time.
Certain shareholders of our controlling shareholder serve on our board of directors and, as a result, owes the aforementioned fiduciary duties to us. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association as may be amended from time to time.
An executive officer may terminate his or her employment at any time with one month’s prior written notice. 101 We have entered into indemnification agreements with each of our directors and executive officers.
An executive officer may terminate his or her employment at any time with one month’s prior written notice. 96 We have entered into indemnification agreements with each of our directors and executive officers.
Weng has served as the executive director of Dongguan Pudao Consulting Co., Ltd., a company that provides tax and financing services for small and medium enterprises. Prior to that, Mr. Weng served as finance manager and deputy general manager of Guangzhou Tianyue Communication Technology Development Co., Ltd. from November 2003 to June 2007. Mr.
From June 2007 to December 2010, Mr. Weng served as the executive director of Dongguan Pudao Consulting Co., Ltd., a company that provides tax and financing services for small and medium enterprises. Prior to that, Mr. Weng served as finance manager and deputy general manager of Guangzhou Tianyue Communication Technology Development Co., Ltd. from November 2003 to June 2007. Mr.
Board Diversity Matrix Country of Principal Executive Offices: China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 5 Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity Directors 2 3 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 99 Family Relationships None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
Board Diversity Matrix Country of Principal Executive Offices: China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 5 Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 1 0 3 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 4 94 Family Relationships None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
A general notice by any director to the effect that he is a member, shareholder, director, partner, officer or employee of any specified company or firm and is to be regarded as interested in any contract or transaction with that company or firm, shall be deemed a sufficient declaration of interest for the purposes of voting on a resolution in respect to a contract or transaction in which he has an interest.
A general notice by any director to the effect that he is a member or officer of a specified company or firm and is to be regarded as interested in any contract or arrangement with that company or firm, shall be deemed a sufficient declaration of interest for the purposes of voting on a resolution in respect to a contract or transaction in which he has an interest.
Quanmao Zhou obtained his bachelor’s degree in finance from Xi’an Jiaotong University in the PRC in 2011. Mr. Zhisheng Cheng is one of our founders and has served as our vice president since April 2020. Mr. Cheng has had extensive experience in product development. Mr.
Quanmao Zhou obtained his bachelor’s degree with dual major in finance and accounting from Xi’an Jiaotong University in the PRC in 2011. Mr. Zhisheng Cheng is one of our founders and has served as our vice president since April 2020. Mr. Cheng has had extensive experience in product development. Mr.
A director will also be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors, (ii) dies or is found to be or becomes of unsound mind, (iii) resigns his office by notice in writing, (iv) without special leave of absence from our board, is absent from meetings of our board for six consecutive months and our board resolved that his office be vacated, or (v) is removed from office pursuant to any other provisions of our amended and restated memorandum and articles of association.
A director will also vacate his office as a director if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors, (ii) dies or becomes of unsound mind, (iii) resigns his office by notice in writing, (iv) without special leave of absence from our board, is absent from meetings of our board for six consecutive months and our board resolved that his office be vacated.
Yu Xiang has served as our independent director since January 2024. From January 2021, Ms. Xiang served as a partner of Guangzhou Jingtian Enterprise management Consulting Services Co., Ltd., providing financial advisory services for China-based companies listed on overseas stock markets. From April 2008 to October 2020, Ms.
Xiang served as a partner of Guangzhou Jingtian Enterprise management Consulting Services Co., Ltd., providing financial advisory services for China-based companies listed on overseas stock markets. From April 2008 to October 2020, Ms.
Yu Xiang served as a managing director of Marcum Bernstein & Pinchuk LLP, responsible for leading audit teams in providing assurance services to Chinese companies listed in the United States and the operation of south China regional office. From October 2005 to April 2008, Ms.
Yu Xiang served as a managing director of Marcum Asia LLP (formerly Marcum Bernstein & Pinchuk LLP), responsible for providing audit and assurance services to clients and leading the operation of south China regional office. From October 2005 to April 2008, Ms.
Xiang served as senior associate of PricewaterhouseCoopers in Guangzhou, China, providing audit assurance services to various PRC companies that were listed on the international stock markets. Ms. Xiang obtained her bachelor’s degree in accounting from Nanjing Audit University in the PRC in 2005 and is a member of American Institute of Certified Public Accountants and Association of Chartered Certified Accountants.
Xiang served as a senior associate of PricewaterhouseCoopers Zhong Tina LLP in Guangzhou, China, providing audit assurance services to clients. Ms. Xiang obtained her bachelor’s degree in accounting from Nanjing Audit University in the PRC in 2005 and is a member of American Institute of Certified Public Accountants and Association of Chartered Certified Accountants. Ms.
If he does so his vote shall be counted and he may be counted in the quorum at any meeting of the directors at which any such contract or proposed contract or arrangement is considered.
If he does so his vote shall be counted, and he may be counted in the quorum at any meeting of the directors at which any such contract or proposed contract or arrangement is considered. Employment Agreements and Indemnification Agreements We have entered into employment agreements with our executive officers.
Yang worked at Zhuhai Ninestar Eletronic Technology Co., Ltd. from October 2001 to August 2009 as the supervisor and manager of quality control department and from September 2009 to July 2011 as the assistant to the general manager. Mr. Yang graduated with a diploma in computer information management from Sichuan Three Gorges College in the PRC in 1996. 98 Ms.
Yang worked at Zhuhai Ninestar Eletronic Technology Co., Ltd. from October 2001 to August 2009 as the supervisor and manager of quality control department and from September 2009 to July 2011 as the assistant to the general manager. Mr.
Our directors are not subject to a term of office and hold office until their resignation, death or incapacity, or until their respective successors have been elected and qualified or until his or her office is otherwise vacated in accordance with our amended and restated articles of association.
Our directors are not subject to a term of office and hold office until their resignation, death or incapacity, or until their respective successors have been elected and qualified or he or she is removed from office pursuant to any other provisions of our amended and restated memorandum and articles of association.
B. Compensation For the year ended December 31, 2023, we paid an aggregate of approximately RMB3.8 million (US$0.53 million) in cash to our executive officers and directors and we did not pay any compensation to our non-executive directors.
B. Compensation For the year ended December 31, 2024, we paid an aggregate of approximately RMB2.07 million (US$0.29 million) in cash to our executive officers and directors and we paid an aggregate of approximately RMB0.28 million (US$0.04 million) in compensation to our non-executive directors.
Ms. Fenglei Jiang has served as our independent director since June 2021. Ms. Fenglei Jiang has had extensive experience in engineering and business management. Since September 2015, Ms. Fenglei Jiang has served as the supervisor of Guangzhou Carbon Asset Management Co., Ltd. From April 2005 to September 2020, Ms.
Fenglei Jiang has served as our independent director since June 2021. Ms. Fenglei Jiang has had extensive experience in engineering and business management. From April 2005 to September 2020, Ms. Fenglei Jiang served as an executive director and the general manager at Zhongshan Wanjing Technology Development Co., Ltd., responsible for overseeing the daily operations of the company. Ms.
Xie served as the chief technology officer of Hainan Yinghai Network Technology Co., Ltd., where he was responsible for the research and development of proprietary medical insurance fraud prevention and costs control digital systems. Since October 2010, Mr.
Since July 2015, Mr. Xie has served as the chief technology officer and director of Hainan Yinghai Network Technology Co., Ltd., where he was responsible for participating and managing the research and development project of the company. Since October 2010, Mr.
Fenglei Jiang served as an executive director and the general manager at Zhongshan Wanjing Technology Development Co., Ltd. Ms. Fenglei Jiang received a bachelor’s degree in metal material and heat treatment from Beihang University in the PRC in 1988. Mr. Xinwei Xie has served as our independent director since June 2021. Mr.
Fenglei Jiang received a bachelor’s degree in metal material and heat treatment from Beihang University in the PRC in 1988 and an MBA degree from Guanghua School of Management, Peking University in the PRC in 2006. Mr. Xinwei Xie has served as our independent director since June 2021. Mr. Xie has extensive experience in information technology and e-commerce.
Gu co-founded our Company, and since then, he has been overseeing our Company’s corporate strategic planning and business development, and managing our day-to-day business operations. Prior to founding our Company, Mr. Gu worked as the manager of the engineering department and deputy general manager of Zhuhai Seine Technology Co., Ltd., responsible for managing the manufacturing and research and development operations.
Gu co-founded our Company, and since then, he has been overseeing our Company’s corporate strategic planning and business development, and managing our day-to-day business operations. Prior to founding our Company, from October 2002 to December 2010, Mr.
Prior to 2002, Mr. Gu was involved in engineering work in several companies. Mr. Gu received a bachelor’s degree in radio engineering from Xiangtan University in the PRC in 1991. He obtained an intermediate engineer qualification in August 1999. Mr. Shaofang Weng is one of our founders and has served as our director and chief executive officer since April 2020.
He obtained an intermediate engineer qualification in August 1999. Mr. Shaofang Weng is one of our founders and has served as our director and chief executive officer since April 2020. Mr. Weng has over 20 years of experience in financial accounting and control. Mr. Weng served as a financial controller of Jiangxi Yibo from February 2012 to April 2020.
Xie received a bachelor’s degree in business information management from Hangzhou College of Commerce of the Zhejiang Gongshang University in the PRC in 1995. Board Diversity The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
Board Diversity The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
Xie has been an executive director at Shanghai Highdata Technology Co., Ltd., a medical information company, where he was responsible for the research and development of an independent intellectual property memory database, supervised projected in connection with big data technology and the development of a quality protection system for drugs. Mr.
Xie has been an executive director at Shanghai Highdata Technology Co., Ltd., a medical information company, where he was responsible for participating in the research and development projects of the company. Mr. Xie received a bachelor’s degree in business information management from Hangzhou College of Commerce of the Zhejiang Gongshang University in the PRC in 1995.
Removed
Mr. Weng has over 20 years of experience in financial accounting and control. Mr. Weng has been with our Company since January 2011 and served as the financial controller of Jiangxi Yibo since February 2012. Since June 2007, Mr.
Added
Gu worked as the manager of the engineering department and deputy general manager of Zhuhai Seine Technology Co., Ltd., responsible for managing the manufacturing and research and development operations. Prior to October 2002, Mr. Gu was involved in engineering work in several companies. Mr. Gu received a bachelor’s degree in radio engineering from Xiangtan University in the PRC in 1991.
Removed
Xie has extensive experience in information technology and e-commerce. Since July 2021, Mr. Xie has served as the supervisor at Hainan Yinghai Network Technology Co., Ltd., where he is mainly responsible for supervising and monitoring the company directors’ and management’s actions as they carry out their responsibilities. From July 2015 to June 2021, Mr.
Added
Yang graduated from Sichuan Three Gorges College in the PRC in 1996 with an area of study in computer information management. 93 Ms. Yu Xiang has served as our independent director since January 2024. Since November 2023, Ms.
Removed
Employment Agreements and Indemnification Agreements We have entered into employment agreements with our executive officers.
Added
Yu Xiang has served as the chief financial officer of Scage International Limited, a company focusing on the development and commercialization of heavy-duty new energy vehicle trucks and e-fuel solutions, where she oversees the financial operations of the company, and coordinates the company’s financing and listing efforts. From January 2021 to February 2025, Ms.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Xingzhi Huang also provided guarantees with their personal property for notes payable credited by Xinyu Rural Commercial Bank Gaoxin Branch, Agricultural Bank of China Xinyu Branch and Bank of China Xinyu Branch. C. Interests of Experts and Counsel Not applicable.
Xingzhi Huang also provided guarantees with their respective personal property for notes payable credited by Xinyu Rural Commercial Bank Gaoxin Branch, Agricultural Bank of China Xinyu Branch and Bank of China Xinyu Branch. C. Interests of Experts and Counsel Not applicable.
Xingzhi Huang – Agricultural Bank of China 4,701 4,317 — Xinyu High-Tech Investment Co., Ltd. – Export-Import Bank of China Jiangxi Branch 7,208 6,619 6,497 Rental income: Xinyu High-Tech Investment Co., Ltd. $ — $ — $ 69 Mr. Weidong Gu, Mr. Zhisheng Cheng and Mr.
Xingzhi Huang – Agricultural Bank of China 4,317 — 3,478 Xinyu High-Tech Investment Co., Ltd. – Export-Import Bank of China Jiangxi Branch 6,619 6,497 6,051 Rental income: Xinyu High-Tech Investment Co., Ltd. $ — $ 69 $ 102 Mr. Weidong Gu, Mr. Zhisheng Cheng and Mr.
Weidong Gu – Xinyu Rural Commercial Bank — 4,317 4,237 Mr. Weidong Gu – Agricultural Bank of China 4,701 4,317 — Mr. Zhisheng Cheng – Bank of China 15,670 14,390 14,124 Mr. Xingzhi Huang – Bank of China 15,670 14,390 14,124 Mr.
Weidong Gu – Bank of China $ 14,390 $ 14,124 $ 9,737 Mr. Weidong Gu – Xinyu Rural Commercial Bank 4,317 4,237 4,173 Mr. Weidong Gu – Agricultural Bank of China 4,317 — 3,478 Mr. Zhisheng Cheng – Bank of China 14,390 14,124 9,737 Mr. Xingzhi Huang – Bank of China 14,390 14,124 9,737 Mr.
Board Practices—Employment Agreements and Indemnification Agreements.” 105 Material Transactions with Related Parties Related party transactions The transactions of related parties are as follows: For the years ended December 31, 2021 2022 2023 Guarantee provided for bank short-term borrowings: Mr. Weidong Gu – Bank of China $ 15,670 $ 14,390 $ 14,124 Mr.
Board Practices—Employment Agreements and Indemnification Agreements.” 100 Material Transactions with Related Parties The table below sets forth the related parties and their relationships with the Group who had transaction with the Group for the years ended December 31, 2022, 2023 and 2024: Name Relationship Mr. Weidong Gu Founder and chairman of the board of directors of the Company Mr.
Added
Zhisheng Cheng Vice president of the Company Mr. Xingzhi Huang Shareholder of the Company Xinyu High-Tech Investment Co., Ltd. Shareholder of the Company Related party transactions The transactions of related parties are as follows: For the years ended December 31, 2022 2023 2024 (in USD in thousands) Guarantee provided for bank short-term borrowings: Mr.

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