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ReTo Eco-Solutions, Inc.

ReTo Eco-Solutions, Inc.RETO決算レポート

Nasdaq · 素材 · 研磨材、アスベスト及びその他の非金属鉱物製品

ReTo Eco-Solutions, Inc. develops and supplies eco-friendly construction materials, environmental remediation services, and solid waste treatment solutions. Its core offerings include recycled construction aggregates, soil improvement products, and ecological restoration systems, primarily serving infrastructure, real estate, and environmental conservation sectors across the Chinese market.

What changed in ReTo Eco-Solutions, Inc.'s 20-F — 2023 vs 2024

Top changes in ReTo Eco-Solutions, Inc.'s 2024 20-F

549 paragraphs added · 681 removed · 339 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

156 edited+42 added−81 removed262 unchanged
These geopolitical issues have resulted in increasing global trading uncertainties and thus could potentially affect our supply chain, even though we do not have any business, operation or assets in Russia, Ukraine, or Israel, nor do we have any direct or indirect business or contracts with any Russian, Ukraine, or Israeli entity as a supplier or customer.
Even though we do not have any business, operation or assets in Russia, Ukraine, or Israel, nor do we have any direct or indirect business or contracts with any Russian, Ukraine, or Israeli entity as a supplier or customer, these geopolitical issues have resulted in increasing global trading uncertainties and thus could potentially affect our supply chain.
If we fail to maintain compatibility of our solutions and products with our customers’ internal networks and infrastructures, our customers may not be able to fully utilize our solutions and products, and we may, among other consequences, lose or fail to increase our market share and experience reduced demand for our products or solutions which would materially harm our business, results of operations, and financial condition.
If we fail to maintain compatibility of our solutions and products with our customers’ internal networks and infrastructures, our customers may not be able to fully utilize our solutions and products, and we may, among other consequences, lose or fail to increase our market share and experience reduced demand for our products which would materially harm our business, results of operations, and financial condition.
Although we have developed systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor or customer, such measures cannot provide absolute security.
Although we have developed systems and processes that are designed to protect the information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor or customer, such measures cannot provide absolute security.
However, Circular 82 did mention that the facts-oriented recognition is more important than format in the case of recognizing “de facto management.” Although we have never been determined by any competent tax authorities to be a “resident enterprise,” and we have not seen any corporations with similar structures to ours to be determined as a “resident enterprise,” whether or not we will be recognized as a “resident enterprise” is subject to the PRC tax authorities’ discretion and their interpretation of the term “de facto management body.” 17 As for our Hong Kong business, we do not believe that we meet some of the conditions outlined.
However, Circular 82 did mention that the facts-oriented recognition is more important than format in the case of recognizing “de facto management.” Although we have never been determined by any competent tax authorities to be a “resident enterprise,” and we have not seen any corporations with similar structures to ours to be determined as a “resident enterprise,” whether or not we will be recognized as a “resident enterprise” is subject to the PRC tax authorities’ discretion and their interpretation of the term “de facto management body.” As for our Hong Kong business, we do not believe that we meet some of the conditions outlined.
Because we process, store, and transmit data, including personal information, failure to prevent or mitigate risks of data loss or other security breaches, including breaches of our vendors’ or customers’ technology and systems, could expose us or our customers to a risk of loss or misuse of such information, adversely affect our operating results, result in litigation or potential liability for us, deter customers from using our products and services, and otherwise harm our business and reputation.
Because we process, store, and transmit data, failure to prevent or mitigate risks of data loss or other security breaches, including breaches of our vendors’ or customers’ technology and systems, could expose us or our customers to a risk of loss or misuse of such information, adversely affect our operating results, result in litigation or potential liability for us, deter customers from using our products and services, and otherwise harm our business and reputation.
Accordingly, a business disruption, litigation or natural disaster may result in substantial costs and divert management’s attention from our business, which would have an adverse effect on our results of operations and financial condition. We may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed.
Accordingly, a business disruption, litigation or natural disaster may result in substantial costs and divert management’s attention from our business, which would have an adverse effect on our results of operations and financial condition. 31 We may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed.
See “– The current tensions in international trade and rising political tensions may adversely impact our business, financial condition, and results of operations .” Our management has analyzed the current and future international and domestic political and economic situations and formulated different development strategies and measures for each of our business segments, with a goal to reduce the existing and potential impact of supply chain disruptions.
See “– The current tensions in international trade and rising political tensions may adversely impact our business, financial condition, and results of operations .” 25 Our management has analyzed the current and future international and domestic political and economic situations and formulated different development strategies and measures for each of our business segments, with a goal to reduce the existing and potential impact of supply chain disruptions.
Our competitors or other vendors may refuse to work with us to allow their products to interoperate with our products and solutions, which could make it difficult for our products and solutions to function properly in customer internal networks and infrastructures that include these third-party products. 37 We may not deliver or maintain interoperability quickly or cost-effectively, or at all.
Our competitors or other vendors may refuse to work with us to allow their products to interoperate with our products and solutions, which could make it difficult for our products and solutions to function properly in customer internal networks and infrastructures that include these third-party products. We may not deliver or maintain interoperability quickly or cost-effectively, or at all.
If we are unable to prevent or adequately respond to such breaches, attacks or other disruptions, our operations could be adversely affected or we may suffer financial or reputational damage. In addition, our ability to effectively implement our business plan in a rapidly evolving market requires effective planning, reporting and analytical processes and systems.
If we are unable to prevent or adequately respond to such breaches, attacks or other disruptions, our operations could be adversely affected or we may suffer financial or reputational damage. 29 In addition, our ability to effectively implement our business plan in a rapidly evolving market requires effective planning, reporting and analytical processes and systems.
This may limit our ability to fulfill orders and we may be unable to satisfy all of the demand for our products and equipment in a timely manner, which may adversely affected our relationships with our customers. As a result, the supply chain disruptions may materially affect our operations and may impact our outlook or business goals.
This may limit our ability to fulfill orders and we may be unable to satisfy all of the demand for our products and equipment in a timely manner, which may adversely affect our relationships with our customers. As a result, the supply chain disruptions may materially affect our operations and may impact our outlook or business goals.
If we are unable to keep up with our customers’ demands, our sales, earnings and operating results may be negatively affected. 30 Our operations are subject to various hazards that may cause personal injury or property damage and increase our operating costs, and which may exceed the coverage of our insurance. There are inherent risks to our operations.
If we are unable to keep up with our customers’ demands, our sales, earnings and operating results may be negatively affected. Our operations are subject to various hazards that may cause personal injury or property damage and increase our operating costs, and which may exceed the coverage of our insurance. There are inherent risks to our operations.
Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties. The current tensions in international trade and rising political tensions may adversely impact our business, financial condition, and results of operations.
Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to overseas parties. 22 The current tensions in international trade and rising political tensions may adversely impact our business, financial condition, and results of operations.
In addition, fluctuations of the RMB against other currencies may increase or decrease the cost of imports and exports, and thus affect the price-competitiveness of our products against products of foreign manufacturers or products relying on foreign inputs. Since July 2005, the RMB is no longer pegged to the U.S. dollar.
In addition, fluctuations of the RMB against other currencies may increase or decrease the cost of imports and exports, and thus affect the price-competitiveness of our products against products of foreign manufacturers or products relying on foreign inputs. 18 Since July 2005, the RMB is no longer pegged to the U.S. dollar.
Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party could cause us to: ● pay damage awards; ● seek licenses from third parties; 28 ● pay ongoing royalties; ● redesign our branded products; or ● be restricted by injunctions.
Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party could cause us to: ● pay damage awards; ● seek licenses from third parties; ● pay ongoing royalties; ● redesign our branded products; or ● be restricted by injunctions.
If we ceased operations, it is likely that all of our investors will lose their investment. 27 We cannot assure you that our growth strategy will be successful, which may result in a negative impact on our growth, financial condition, results of operations and cash flow.
If we ceased operations, it is likely that all of our investors will lose their investment. We cannot assure you that our growth strategy will be successful, which may result in a negative impact on our growth, financial condition, results of operations and cash flow.
In addition, our foreign currency exchange losses may be magnified by China exchange control regulations that restrict our ability to convert RMB into foreign currencies. 18 Besides, Fluctuation of the Renminbi could materially affect our financial condition and results of operations.
In addition, our foreign currency exchange losses may be magnified by China exchange control regulations that restrict our ability to convert RMB into foreign currencies. Besides, Fluctuation of the Renminbi could materially affect our financial condition and results of operations.
Our current and potential competitors may develop and market new products, solutions and services with comparable functionality to ours, and this could force us to decrease prices in order to remain competitive. With the introduction of new products, solutions and services and new market entrants, we expect competition to intensify in the future.
Our current and potential competitors may develop and market new products and services with comparable functionality to ours, and this could force us to decrease prices in order to remain competitive. With the introduction of new products and services and new market entrants, we expect competition to intensify in the future.
In any of these events, we and our customers could be required to seek licenses from third parties in order to continue offering our products and solutions and to re-engineer our products or solutions or discontinue offering our products to customers in the event re-engineering cannot be accomplished on a timely basis.
In any of these events, we and our customers could be required to seek licenses from third parties in order to continue offering our products and to re-engineer our products or discontinue offering our products to customers in the event re-engineering cannot be accomplished on a timely basis.
Courts have interpreted few of the licenses applicable to open source software, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products and solutions.
Courts have interpreted few of the licenses applicable to open source software, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products.
Moreover, although we have implemented policies to regulate the use and incorporation of open source software into our products and solutions, we cannot be certain that we have not incorporated open source software in our products or solutions in a manner that is inconsistent with such policies.
Moreover, although we have implemented policies to regulate the use and incorporation of open source software into our products and solutions, we cannot be certain that we have not incorporated open source software in our products in a manner that is inconsistent with such policies.
On Mach 15, 2019, the National People’s Congress of China promulgated the Foreign Investment Law of the PRC aiming to replace the major existing laws governing foreign investment in China. The Foreign Investment Law became effective on January 1, 2020.
On Mach 15, 2019, the National People’s Congress of China promulgated the Foreign Investment Law of the PRC aiming to replace the major laws governing foreign investment in China. The Foreign Investment Law became effective on January 1, 2020.
In addition, some competitors may offer products, solutions or services that address one or a limited number of functions at lower prices, with greater depth than our products or in different geographies.
In addition, some competitors may offer products or services that address one or a limited number of functions at lower prices, with greater depth than our products or in different geographies.
As a holding company, the key assets and records of REIT Holdings and Sunoro Holdings, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside mainland China.
As a holding company, the key assets and records of Sunoro Holdings, including the resolutions and meeting minutes of our board of directors and the resolutions and meeting minutes of our shareholders, are located and maintained outside mainland China.
Since a significant amount of our PRC revenue is denominated in Renminbi, any existing and future restrictions on currency exchange or outbound capital flows may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of mainland China, make investments, service any debt we may incur outside of mainland China or pay dividends in foreign currencies to our shareholders, including holders of our Common Shares.
Since a significant amount of our PRC revenue is denominated in Renminbi, any existing and future restrictions on currency exchange or outbound capital flows may limit our ability to utilize revenue generated in Renminbi to fund our business activities outside of mainland China, make investments, service any debt we may incur outside of mainland China or pay dividends in foreign currencies to our shareholders, including holders of our Class A Shares.
Furthermore, loans by ReTo to its PRC subsidiaries to finance their activities cannot exceed the difference between their respective total project investment amount and registered capital or 2.5 times of their net worth and capital contributions to its PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System and registration with other governmental authorities in China.
Furthermore, loans by ReTo to its PRC subsidiaries to finance their activities cannot exceed the difference between their respective total project investment amount and registered capital or 3.5 times of their net worth and capital contributions to its PRC subsidiaries are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive Management Information System and registration with other governmental authorities in China.
As a result, our management has concluded that our internal control was not effective as of December 31, 2023. Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures, including (i) hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations; and (ii) implementing regular and continuous U.S.
As a result, our management has concluded that our internal control was not effective as of December 31, 2024. Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures, including (i) hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations; and (ii) implementing regular and continuous U.S.
If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair investors’ ability to sell or purchase our Common Shares when they wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our Common Shares.
If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair investors’ ability to sell or purchase our Class A Shares when they wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our Class A Shares.
However, we cannot assure you that our current operations or any newly-developed business in the future will still deemed to be “permitted” in the “negative list,” which may be promulgated or be amended from time to time by the MOFCOM and the NDRC. 19 Some of our PRC subsidiaries are as FIEs.
However, we cannot assure you that our current operations or any newly-developed business in the future will still deemed to be “permitted” in the “negative list,” which may be promulgated or be amended from time to time by the MOFCOM and the NDRC. Some of our PRC subsidiaries are FIEs.
Our auditor, YCM CPA Inc., has indicated in their report on our financial statements for the fiscal year ended December 31, 2023 that there is a substantial doubt about our ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
Our auditor, YCM CPA INC., has indicated in their report on our financial statements for the fiscal year ended December 31, 2024 that there is a substantial doubt about our ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
Our operations in mainland China are governed by PRC laws and regulations. The PRC government’s significant oversight and discretion over the conduct of our business and may intervene or influence our operations at any time which could result in a material adverse change in our operation and/or the value of our Common Shares.
Our operations in mainland China are governed by PRC laws and regulations. The PRC government’s significant oversight and discretion over the conduct of our business and may intervene or influence our operations at any time which could result in a material adverse change in our operation and/or the value of our Class A Shares.
For the equipment and construction materials businesses, we have made market development efforts to expand sales and have strengthened the management of raw material procurement by adding backup suppliers. Moreover, we have focused on production design and processing processes to improve quality and efficiency as well as reduce costs.
For the equipment businesses, we have made market development efforts to expand sales and have strengthened the management of raw material procurement by adding backup suppliers. Moreover, we have focused on production design and processing processes to improve quality and efficiency as well as reduce costs.
The PRC government’s significant oversight and discretion over the conduct of our business and may intervene or influence our operations at any time which could result in a material adverse change in our operation and/or the value of our Common Shares . We conduct our business in mainland China primarily through our PRC subsidiaries.
The PRC government’s significant oversight and discretion over the conduct of our business and may intervene or influence our operations at any time which could result in a material adverse change in our operation and/or the value of our Class A Shares . We conduct our business in mainland China primarily through our PRC subsidiaries.
If our suppliers are unable or unwilling to provide us with raw materials on terms favorable to us, we may be unable to produce certain products, equipment or complete projects. The inability to produce certain products or projects for customers could result in a decrease in profit and damage to our corporate reputation.
If our suppliers are unable or unwilling to provide us with raw materials on terms favorable to us, we may be unable to produce certain products or equipment. The inability to produce certain products for customers could result in a decrease in profit and damage to our corporate reputation.
Accordingly, we believe that REIT Holdings and Sunoro Holdings should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in Circular 82 were deemed applicable to us.
Accordingly, we believe that Sunoro Holdings should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in Circular 82 were deemed applicable to us.
Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of paying dividends on our Common Shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us.
Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of paying dividends on our Class A Shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us.
The 2022 Share Incentive Plan initially allowed for issuance of up to 50,000 Common Shares to employees, non-employee directors, officers and consultants for services rendered to the Company, with an automatic share reserve increase by a number equal to the lesser of (i) 5% of the total number of Common Shares issued and outstanding on December 31 of the calendar year immediately preceding the date of such increase and (ii) a number of Common Shares determined by the Compensation Committee.
The 2022 Share Incentive Plan initially allowed for issuance of up to 5,000 Class A Shares to employees, non-employee directors, officers and consultants for services rendered to the Company, with an automatic share reserve increase by a number equal to the lesser of (i) 5% of the total number of Class A Shares issued and outstanding on December 31 of the calendar year immediately preceding the date of such increase and (ii) a number of Class A Shares determined by the Compensation Committee.
Any of the foregoing could require us to devote additional research and development resources to re-engineer our products or solutions, could result in customer dissatisfaction and may adversely affect our business, results of operations and financial condition.
Any of the foregoing could require us to devote additional research and development resources to re-engineer our products, could result in customer dissatisfaction and may adversely affect our business, results of operations and financial condition.
If the business environment in China deteriorates from the perspective of domestic or international investment, or if relations between China and the United States or other governments deteriorate, our operations in China as well as the market price of our Common Shares may be adversely affected. 9 There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
If the business environment in China deteriorates from the perspective of domestic or international investment, or if relations between China and the United States or other governments deteriorate, our operations in China as well as the market price of our Class A Shares may be adversely affected. 9 There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Common Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Common Shares to significantly decline in value or become worthless.
Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Class A Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Class A Shares to significantly decline in value or become worthless.
If we do not devote sufficient resources or are otherwise unsuccessful in assisting our customers effectively, it could adversely affect our ability to retain existing customers and could discourage prospective customer from purchasing and using our software solutions. We may be unable to respond quickly enough to accommodate short-term increases in demand for customer support.
If we do not devote sufficient resources or are otherwise unsuccessful in assisting our customers effectively, it could adversely affect our ability to retain existing customers and could discourage prospective customer from purchasing and using our equipment. We may be unable to respond quickly enough to accommodate short-term increases in demand for customer support.
As such, we cannot assure you that we will be able to successfully overcome these potential challenges and establish our business in additional markets. Our inability to implement this growth strategy successfully may have a negative impact on our growth, future financial condition, and results of operations or cash flows.
As such, we cannot assure you that we will be able to successfully overcome these potential challenges and establish our bus iness in additional markets. Our inability to implement this growth strategy successfully may have a negative impact on our growth, future financial condition, and results of operations or cash flows.
Our software products and solutions incorporate open-source software, and we expect to continue to incorporate open source software in our products and solutions in the future.
Our products incorporate open source software, and we expect to continue to incorporate open source software in our products in the future.
See “– We face risks related to natural disasters, health epidemics and other outbreaks, such as the COVID-19 outbreak, which could significantly disrupt our operations. ” As a result of Russia’s military invasion of Ukraine, the United States, the European Union, the United Kingdom and other jurisdictions have imposed sanctions on certain Russian and Ukrainian persons and entities, including certain Russian banks, energy companies and defense companies, and have imposed restrictions on exports of various items to Russian and certain regions of Ukraine.
See “– We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations. ” As a result of Russia’s military invasion of Ukraine, the United States, the European Union, the United Kingdom and other jurisdictions have imposed sanctions on certain Russian and Ukrainian persons and entities, including certain Russian banks, energy companies and defense companies, and have imposed restrictions on exports of various items to Russian and certain regions of Ukraine.
Historically, we have not experienced significant customer complaints concerning our products or projects, and none of our customers have claimed damages for any loss incurred due to quality problems.
Historically, we have not experienced significant customer complaints concerning our products, and none of our customers have claimed damages for any loss incurred due to quality problems.
These developments could add uncertainties to the trading of our securities, which could cause the market price of our Common Shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCAA.
These developments could add uncertainties to the trading of our securities, which could cause the market price of our Class A Shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCAA.
Any failure to offer high quality services and support may adversely affect our relationships with our software solution customers and prospective customers, and adversely affect our business, results of operations and financial condition.
Any failure to offer high quality services and support may adversely affect our relationships with our customers and prospective customers, and adversely affect our business, results of operations and financial condition.
Moreover, if a high-profile security breach occurs with respect to our competitors, people may lose trust in the security of software solutions providers generally, including us, which could damage the reputation of the industry, result in heightened regulation and strengthened regulatory enforcement and adversely affect our business and results of operations.
Moreover, if a high-profile security breach occurs with respect to our competitors, people may lose trust in the security of intelligent equipment providers generally, including us, which could damage the reputation of the industry, result in heightened regulation and strengthened regulatory enforcement and adversely affect our business and results of operations.
We are also vulnerable to natural disasters and other calamities. Our production, sales and delivery and our service operations and capacities could be materially and adversely affected by natural disasters and other calamities in the areas where we operate and where our equipment or products are sold to.
Our production, sales and delivery and our service operations and capacities could be materially and adversely affected by natural disasters and other calamities in the areas where we operate and where our equipment or products are sold.
Our customers use our software products or solutions for important aspects of their businesses, and any errors, defects or disruptions to our products and solutions and any other performance problems with our products or solutions could damage our customers’ businesses and, in turn, hurt our brand and reputation.
Our customers use our equipment for important aspects of their businesses, and any errors, defects or disruptions to our products and any other performance problems with our products could damage our customers’ businesses and, in turn, hurt our brand and reputation.
If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Shares may decline.
If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A Shares may decline.
In practice, we allow our customers to reserve approximately 5-20% of the agreed purchase or installation price as a security retention for a period of one or two years after we deliver or implement a solution. We consider this one or two year term to be a warranty period for our products or projects sold.
In practice, we allow our customers to reserve approximately 5-20% of the agreed purchase or installation price as a security retention for a period of one or two years after we deliver the equipment. We consider this one or two year term to be a warranty period for our products sold.
In addition, we compete for qualified personnel with other industry competitors, and we face competition in attracting skilled personnel and retaining the members of our senior management team. These personnel possess technical and business capabilities, including expertise relevant to the construction materials industry, which are difficult to replace.
In addition, we compete for qualified personnel with other industry competitors, and we face competition in attracting skilled personnel and retaining the members of our senior management team. These personnel possess technical and business capabilities, including expertise relevant to the equipment manufacturing, which are difficult to replace.
Any material revaluation of Renminbi may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, our Common Shares in U.S. dollars.
Any material revaluation of Renminbi may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, our Class A Shares in U.S. dollars.
Our costs could increase if we experience a significant number of claims, which could have a material adverse effect on our business. We generally obtain customers’ acceptance when we deliver products, equipment or projects.
Our costs could increase if we experience a significant number of claims, which could have a material adverse effect on our business. We generally obtain customers’ acceptance when we deliver equipment.
The delisting of our Common Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. The HFCAA was enacted on December 18, 2020.
The delisting of our Class A Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. The HFCAA was enacted on December 18, 2020.
If a foreign investor is found to invest in any prohibited industry set forth under the “negative list,” such foreign investor may be required to, among other aspects, cease its investment activities, dispose of its equity interests in or assets of the “foreign-invested enterprise” (“FIE”) and have its income confiscated.
If a foreign investor is found to invest in any prohibited industry set forth under the “negative list,” such foreign investor may be required to, among other aspects, cease its investment activities, dispose of its equity interests in or assets of the FIE and have its income confiscated.
The process of seeking patent protection on future patents can be lengthy and expensive, our patent applications may fail to result in patents being issued, and our existing and future patents may be insufficient to provide us with meaningful protection or commercial advantage. Our patents and patent applications may also be challenged, invalidated or circumvented.
The process of seeking patent protection on future patents can be lengthy and expensive, our patent applications may fail to result in patents being issued, and our existing and future patents may be insufficient to provide us with meaningful protection or commercial advantage.
There is intense competition for experienced senior management with technical and industry expertise in the construction materials industry, and we may not be able to retain our key personnel. Intense competition for these personnel could cause our compensation costs to increase, which could have a material adverse effect on our results of operations.
There is intense competition for experienced senior management with technical and industry expertise in this field, and we may not be able to retain our key personnel. Intense competition for these personnel could cause our compensation costs to increase, which could have a material adverse effect on our results of operations.
If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected. 24 We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations. Our business could be adversely affected by the effects of epidemics.
If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected. We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations.
This may hinder or delay our deployment of cash into our subsidiaries’ business, which could result in a material and adverse effect on our operations. Our Common Shares may be delisted under the HFCAA if the PCAOB is unable to inspect our auditors.
This may hinder or delay our deployment of cash into our subsidiaries’ business, which could result in a material and adverse effect on our operations. 15 Our Class A Shares may be delisted under the HFCAA if the PCAOB is unable to inspect our auditor.
We reflect the impact of currency translation adjustments in our financial statements under the heading “Foreign currency translation gain (loss).” For the years ended December 31, 2023, 2022 and 2021, we had a positive adjustment of $223,433, negative adjustment of $1,183,819, and a positive adjustment of $493,769, respectively, for foreign currency translations.
We reflect the impact of currency translation adjustments in our financial statements under the heading “Foreign currency translation gain (loss).” For the years ended December 31, 2024, 2023, and 2022, we had a positive adjustment of $1,145,186, positive adjustment of $223,433, and a negative adjustment of $1,183,819, respectively, for foreign currency translations.
We account for compensation costs for certain share awards granted using a fair value-based method and recognize expenses in our consolidated statement of income in accordance with U.S. GAAP. As of December 31, 2023, the maximum aggregate number of Common Shares which may be issued pursuant to all awards under the 2022 Share Incentive Plan is up to 187,260.
We account for compensation costs for certain share awards granted using a fair value-based method and recognize expenses in our consolidated statement of income in accordance with U.S. GAAP. As of December 31, 2024, the maximum aggregate number of Class A Shares which may be issued pursuant to all awards under the 2022 Share Incentive Plan is up to 115,489.
Since the majority of our operations and assets are located in China, shareholders may find it difficult to enforce a U.S. judgment against the assets of our Company, our directors and executive officers. Other than REIT India, our operations and assets are located in China.
Since our operations and assets are located in China, shareholders may find it difficult to enforce a U.S. judgment against the assets of our Company, our directors and executive officers. Our operations and assets are located in China.
The report of our independent registered public accounting firm on our financial statements for the years ended December 31, 2023, 2022 and 2021 includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue it is likely investors will lose all of their investment.
The report of our independent registered public accounting firm on our financial statements includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue it is likely investors will lose all of their investment.
Our construction material manufacturing operations are subject to laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection.
Our ecological environment protection equipment and intelligent equipment manufacturing operations are subject to laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection.
If any of them became unable or unwilling to continue in the present position, or if any of them joined a competitor or formed a competing company in violation of their respective employment agreements, we may not be able to replace such executive easily, our business may be significantly disrupted and our financial condition and results of operations may be materially adversely affected. 31 We do not maintain key man life insurance on any of our senior management or key personnel.
If any of them became unable or unwilling to continue in the present position, or if any of them joined a competitor or formed a competing company in violation of their respective employment agreements, we may not be able to replace such executive easily, our business may be significantly disrupted and our financial condition and results of operations may be materially adversely affected.
However, conversion of currency in some restricted “capital account” (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of SAFE. In particular, if Beijing REIT, REIT Technology, REIT Ordos, or Sunoro Hengda, borrow foreign currency through loans from ReTo or other foreign lenders, these loans must be registered with SAFE.
However, conversion of currency in some restricted “capital account” (e.g. for capital items such as direct investments, loans, securities, etc.) still requires the approval of SAFE. In particular, if any of ReTo Hengda, Dirong or Melody borrows foreign currency through loans from ReTo or other foreign lenders, these loans must be registered with SAFE.
We cannot assure you that relevant governmental authorities will not interpret or implement the laws or regulations in ways that negatively affect the software and information technology service industry, our clients and us.
We cannot assure you that relevant governmental authorities will not interpret or implement the laws or regulations in ways that negatively affect our industries, our clients and us.
Implementation of Chinese intellectual property-related laws have historically been lacking, primarily because of ambiguities in PRC laws and enforcement difficulties. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other western countries.
Our patents and patent applications may also be challenged, invalidated or circumvented. 28 Implementation of Chinese intellectual property-related laws have historically been lacking, primarily because of ambiguities in PRC laws and enforcement difficulties. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other western countries.
Risk Factors — Risks Relating to Doing Business in China — Approval of the CSRC or other PRC government authorities may be required in connection with our future offerings under PRC law, and if required, we cannot predict whether or for how long we will be able to obtain such approval.” Except as disclosed above, in connection with our issuance of securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we and our PRC subsidiaries, (i) are not required to obtain permissions from the PRC authorities, including the CSRC or the CAC, and (ii) have not received or were denied such permissions by any PRC authority.
Risk Factors — Risks Relating to Doing Business in China — Approval of the CSRC or other PRC government authorities may be required in connection with our future offerings under PRC law, and if required, we cannot predict whether or for how long we will be able to obtain such approval.” 6 As of the date of this annual report, except as disclosed above, neither ReTo nor any of our PRC subsidiaries, (i) is required to obtain permissions from the PRC authorities, including the CSRC or the CAC, in connection with our issuance of securities to foreign investors, or (ii) has been denied such permissions by any PRC authority.
With such registration, Beijing REIT, REIT Technology and REIT Ordos are allowed to open foreign currency accounts including the “current account” and the “capital account.” Currently, conversion within the scope of the “current account” and general “capital account” can be effected without requiring the approval of SAFE.
With such registration, each of them is allowed to open foreign currency accounts including the “current account” and the “capital account.” Currently, conversion within the scope of the “current account” and general “capital account” can be effected without requiring the approval of SAFE.
In addition, if any member of our senior management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our Company.
We may be unable to locate a suitable replacement for any senior management or key personnel that we lose. In addition, if any member of our senior management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our Company.
We may be subject to foreign exchange controls in China, which could limit our use of funds that would be raised in future offerings, which could have a material adverse effect on our business. Beijing REIT, REIT Technology, REIT Ordos, and Sunoro Hengda are subject to Chinese rules and regulations on currency conversion.
We may be subject to foreign exchange controls in China, which could limit our use of funds that would be raised in future offerings, which could have a material adverse effect on our business. Each of ReTo Hengda, Dirong and Melody is subject to Chinese rules and regulations on currency conversion.
In order to optimize our product manufacturing, we must manage our supply chain for raw materials and delivery of our products. Supply chain fragmentation and local protectionism within China further increase supply chain disruption risks. Local administrative bodies and physical infrastructure built to protect local interests may pose transportation challenges for raw material transportation as well as product delivery.
Supply chain fragmentation and local protectionism within China further increase supply chain disruption risks. Local administrative bodies and physical infrastructure built to protect local interests may pose transportation challenges for raw material transportation as well as product delivery.
As a result, we believe we can still supply products and equipment at competitive prices amid the COVID-19 impact.
As a result, we believe we can still supply products and equipment at competitive prices.
China passed the EIT Law and implementing rules, both of which became effective on January 1, 2008, EIT Law was subsequently amended by the SCNPC and became effective on February 24, 2017.
China passed the EIT Law and implementing rules, both of which became effective on January 1, 2008, EIT Law was subsequently amended by the SCNPC and became effective on February 24, 2017 and December 29, 2018 and its implementing rules was amended and became effective on April 23, 2019 and December 6, 2024.
Currently, our PRC subsidiaries, a foreign invested enterprise, may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE by complying with certain procedural requirements.
Currently, our PRC subsidiaries, a foreign invested enterprise, may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.
According to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years, the SEC shall prohibit our Common Shares from being traded on a national securities exchange or in the over the counter trading market in the U.S. 15 On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA.
According to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years, the SEC shall prohibit our Class A Shares from being traded on a national securities exchange or in the over the counter trading market in the U.S.
In addition, an overseas offering and listing is prohibited under any of the following circumstances: (1) if the intended securities offering and listing is specifically prohibited by national laws and regulations and relevant provisions; (2) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (3) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (4) if, the domestic enterprise is being investigated according to law due to suspected crimes or major violations of laws and regulations, and there is no clear conclusion; (5) if there are material ownership disputes over the equity of the controlling shareholder or shareholders controlled by controlling shareholders and actual controllers.
The required filing materials for an initial public offering and listing should include at least the following: report, commitment from issuer and securities company, the resolutions, shareholding structure chart and control structure chart, the information of issuer and intermediary project team members, Chinese legal opinion and commitment of Chinese counsel, the Prospectus, approval and other documents issued by competent regulatory authorities of relevant industries (if applicable); and security assessment opinion issued by relevant regulatory authorities (if applicable). 10 In addition, an overseas offering and listing is prohibited under any of the following circumstances: (1) if the intended securities offering and listing is specifically prohibited by national laws and regulations and relevant provisions; (2) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (3) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (4) if, the domestic enterprise is being investigated according to law due to suspected crimes or major violations of laws and regulations, and there is no clear conclusion; (5) if there are material ownership disputes over the equity of the controlling shareholder or shareholders controlled by controlling shareholders and actual controllers.
However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. 13 Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational” overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are: ● investments through enterprises established for only a few months without substantive operation; ● investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements; ● investments in targets that are not related to onshore parent’s main business; and ● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking.
Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational” overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are: ● investments through enterprises established for only a few months without substantive operation; ● investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements; ● investments in targets that are not related to onshore parent’s main business; and ● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking. 13 On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which tightened the authenticity and compliance verification of cross-border transactions and cross-border capital flow.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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M&A Regulations and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, CSRC and SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006 and was amended on June 22, 2009.
Mergers & Acquisitions Regulations and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, CSRC and SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006 and was amended on June 22, 2009.
Business Overview – Regulation — Regulations relating to Foreign Investment — The Guidance Catalogue of Industries for Foreign Investment .” 62 Besides, the PRC government will establish a foreign investment information reporting system, according to which foreign investors or foreign-invested enterprises shall submit investment information to the competent department for commerce concerned through the enterprise registration system and the enterprise credit information publicity system, and a security review system under which the security review shall be conducted for foreign investment affecting or likely affecting the state security.
Business Overview – Regulation — Regulations relating to Foreign Investment — The Guidance Catalogue of Industries for Foreign Investment .” Besides, the PRC government will establish a foreign investment information reporting system, according to which foreign investors or foreign-invested enterprises shall submit investment information to the competent department for commerce concerned through the enterprise registration system and the enterprise credit information publicity system, and a security review system under which the security review shall be conducted for foreign investment affecting or likely affecting the state security.
We have participated, and will continue to participate, in targeted international marketing events, such as seminars, workshops, and trade shows, where we can meet potential customers, promote our products and deepen our network to further expand our sales. We also acquire new customers by word-of-mouth referrals and have found that satisfied customers are loyal customers.
We have participated, and will continue to participate, in targeted international marketing events, such as seminars, workshops, and trade shows, where we can meet potential customers, promote our products and deepen our network to further expand our sales. 49 We also acquire new customers by word-of-mouth referrals and have found that satisfied customers are loyal customers.
Under the Copyright Law, for a company, the term of protection for copyright is 50 years from the first publication of its work. Trademark. Registered trademarks are protected under the Trademark Law of China promulgated by the Standing Committee of the NPC in 1982 and latest amended on April 23, 2019, and its related rules and regulations.
Under the Copyright Law, for a company, the term of protection for copyright is 50 years from the first publication of its work. 59 Trademark. Registered trademarks are protected under the Trademark Law of China promulgated by the Standing Committee of the NPC in 1982 and latest amended on April 23, 2019, and its related rules and regulations.
Although the change of overseas funds raised by overseas SPV, overseas investment exercised by overseas SPV and non-cross-border capital flow are not included in Circular 37, we may be required to make foreign exchange registration if required by SAFE and its branches. Moreover, Circular 37 applies retroactively.
Although the change of overseas funds raised by overseas SPV, overseas investment exercised by overseas SPV and non-cross-border capital flow are not included in Circular 37, we may be required to make foreign exchange registration if required by SAFE and its branches. 56 Moreover, Circular 37 applies retroactively.
Online marketing allows us to efficiently educate prospective customers about the products and services we have to offer and assists us in expanding the reach of our market, both in China and internationally. We will also participate in exhibitions, trade shows, conferences to introduce our equipment and machineries in China and internationally.
Online marketing allows us to efficiently educate prospective customers about the products and services we have to offer and assists us in expanding the reach of our market, both in China and internationally. We also participate in exhibitions, trade shows, conferences to introduce our equipment and machineries in China and internationally.
Pursuant to the Order on Ecosystem by The Ministry of Ecology and Environment, which was issued on July 28, 2017 and most recently amended on December 20, 2019, The Ministry of Ecology and Environment implements a classification-based management on the environmental impact assessment, or EIA, of pollutants according to pollutant amount and the impact of the pollutants on the environment as below: ● For those pollutant discharge units with large amount of pollutants and significant environmental impacts, the key management on a pollutant discharge permit is required; ● For those pollutant discharge units with small amount of pollutants and small environmental impacts, the simplified management on a pollutant discharge permit is required; and ● For those pollutant discharge units with very small amount of pollutants and very small environmental impacts, the pollutant discharge registration form is required. 69 C.
Pursuant to the Order on Ecosystem by The Ministry of Ecology and Environment, which was issued on July 28, 2017 and most recently amended on December 20, 2019, The Ministry of Ecology and Environment implements a classification-based management on the environmental impact assessment, or EIA, of pollutants according to pollutant amount and the impact of the pollutants on the environment as below: ● For those pollutant discharge units with large amount of pollutants and significant environmental impacts, the key management on a pollutant discharge permit is required; ● For those pollutant discharge units with small amount of pollutants and small environmental impacts, the simplified management on a pollutant discharge permit is required; and ● For those pollutant discharge units with very small amount of pollutants and very small environmental impacts, the pollutant discharge registration form is required.
Organizational structure. Please refer to “ Item 4. Information on the Company– A. History and Development of the Company – Corporate Structure .” D. Property, plants and equipment. Our headquarters is located at X-702, Runfengdeshangyuan, 60 Anli Road, Chaoyang District, Beijing City, People’s Republic of China. We own and lease properties for our operations in China.
C. Organizational structure. Please refer to “ Item 4. Information on the Company– A. History and Development of the Company – Corporate Structure .” D. Property, plants and equipment. Our headquarters is located at X-702, 60 Anli Road, Chaoyang District, Beijing City, People’s Republic of China. We own and lease properties for our operations in China.
Company Law Pursuant to the PRC Company Law, promulgated by the SCNPC on December 29, 1993, effective as of July 1, 1994, and as amended on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 October 26, 2018, and December 29, 2023 (the latest amendment will become effective on July 1, 2024), the establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law.
Company Law Pursuant to the PRC Company Law, promulgated by the SCNPC on December 29, 1993, effective as of July 1, 1994, and as amended on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 October 26, 2018, and December 29, 2023 (the latest amendment became effective on July 1, 2024), the establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law.
Furthermore, the total amount of foreign debts that can be borrowed by such PRC subsidiaries, including any shareholder loans, shall not exceed the difference between the total investment amount and the registered capital amount of the PRC subsidiaries, both of which are subject to the governmental approval or three times of the net assets of such subsidiary.
Furthermore, the total amount of foreign debts that can be borrowed by such PRC subsidiaries, including any shareholder loans, shall not exceed the difference between the total investment amount and the registered capital amount of the PRC subsidiaries, both of which are subject to the governmental approval or 3.5 times of the net assets of such subsidiary.
According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests and establishes new projects within China; and (iv) a foreign investor invests through other approaches as stipulated by laws, administrative regulations, or otherwise regulated by the State Council.
According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests and establishes new projects within China; and (iv) a foreign investor invests through other approaches as stipulated by laws, administrative regulations, or otherwise regulated by the State Council. 53 According to the Foreign Investment Law, the State Council will publish or approve to publish the “negative list” for special administrative measures concerning foreign investment.
The Foreign Investment Catalogue which was promulgated jointly by MOFCOM and the NDRC, on June 28, 2017 and became effective on July 28, 2017, classifies industries into three categories with regard to foreign investment: (1) “encouraged,” (2) “restricted,” and (3) “prohibited.” The latter two categories are included in a negative list, which was first introduced into the Foreign Investment Catalog in 2017 and specified the restrictive measures for the entry of foreign investment.
The Foreign Investment Catalogue which was promulgated jointly by MOFCOM and the NDRC, on June 28, 2017 and became effective on July 28, 2017, classifies industries into three categories with regard to foreign investment: (1) “encouraged,” (2) “restricted,” and (3) “prohibited.” The latter two categories are included in a negative list, which was first introduced into the Foreign Investment Catalog in 2017 and specified the restrictive measures for the entry of foreign investment. 54 On June 28, 2018, MOFCOM and NDRC jointly promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access, or the Negative List (Edition 2018), which replaced the negative list attached to the Foreign Investment Catalogue in 2017.
MIIT adopts the “first to file” principle with respect to the registration of domain names. 68 Employee Stock Option Plans In February 2012, SAFE promulgated the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in March 2007, to regulate the foreign exchange administration of PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year, with a few exceptions, who participate in stock incentive plans of overseas publicly-listed companies.
Employee Stock Option Plans In February 2012, SAFE promulgated the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, replacing earlier rules promulgated in March 2007, to regulate the foreign exchange administration of PRC citizens and non-PRC citizens who reside in China for a continuous period of not less than one year, with a few exceptions, who participate in stock incentive plans of overseas publicly-listed companies.
Under the Law of China on Product Quality, our products manufacturing shall be in compliance with five national standards and four industry standards, including but not limited to the GB/T 8533-2008 (national standard) and the JC/T 920-2011 (industry standard) for our manufacturing equipment, and the GB/T 21144-2007 (national standard) and the NY/T 1253-2006 (industry standard) for our construction materials.
Under the Law of China on Product Quality, our products manufacturing shall be in compliance with five national standards and four industry standards, including but not limited to the GB/T 8533-2008 (national standard) and the JC/T 920-2011 (industry standard) for our manufacturing equipment.
In addition, according to the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and which became effective 30 days thereafter, the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the MOFCOM on August 25, 2011 and which became effective on September 1, 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement. 66 On July 6, 2021, the State Council and General Office of the CPC Central Committee issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law.
In addition, according to the Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the General Office of the State Council on February 3, 2011 and which became effective 30 days thereafter, the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the MOFCOM on August 25, 2011 and which became effective on September 1, 2011, mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the MOFCOM, and the regulations prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.
Pursuant to Article 15 of Patent Law of China if there is any agreement between the joint owners of the right to apply for a patent or a patent right regarding the exercise of the relevant right, the agreement shall be followed.
In addition, we own six software copyrights in China. Pursuant to Article 15 of Patent Law of China if there is any agreement between the joint owners of the right to apply for a patent or a patent right regarding the exercise of the relevant right, the agreement shall be followed.
In order to expand our international market share, we plan to add more distributors in America, Southeast Asia, and the Middle East. We plan to change our advertising strategies to reach new customers through new methods, such as digital marketing.
Increase our revenue and market share by expanding our business network internationally . In order to expand our international market share, we plan to add more distributors in Southeast Asia, the Middle East, and Africa. We plan to change our advertising strategies to reach new customers through new methods, such as digital marketing.
At the same time, we plan to increase investment in marketing and promotion in the international market, especially in the Middle East and Africa, such as by participating in various exhibitions, shows, forum or conferences and developing agent relationships, to effectively leverage our established network of agency cooperation there. Take advantage of the Hainan Free Trade Port policy.
At the same time, we plan to increase investment in marketing and promotion in the international market, especially in Southeast Asia, the Middle East and Africa, such as by participating in various exhibitions, shows, forum or conferences and developing agent relationships, to effectively leverage our established network of agency cooperation there. Pursue Strategic Acquisitions .
As a result of the 2024 Share Combination, the par value of the Common Shares was changed from $0.01 per share to $0.1 per share, effective on March 1, 2024.
As a result of the 2025 Share Combination, the par value of the Class A Shares was changed from $0.1 per share to $1.0 per share, effective on March 7, 2025.
On February 1, 2024, our board of directors approved another share combination pursuant to section 40A of the BVI Act, or the 2024 Share Combination, of our Common Shares at a ratio of 10-to-1 so that every 10 shares (or part thereof) are combined into one (1) share (with the fractional shares rounding up to the next whole share).
Share Combination in February 2025 On February 11, 2025, ReTo’s board of directors approved the 2025 Share Combination pursuant to section 40A of the BVI Act of Class A Shares at a ratio of 10-to-1 so that every 10 shares (or part thereof) were combined into one (1) share (with the fractional shares rounding up to the next whole share).
On August 9, 2023, REIT Ordos transferred all of its equity interest of Honghe REIT to Sunoro Hengda for no consideration, after which Sunoro Hengda became a 100% owner of Honghe REIT’s equity interest.
In August 2023, REIT Ordos transferred all of its equity interest of Honghe ReTo to ReTo Hengda for no consideration, after which ReTo Hengda became a 100% owner of Honghe ReTo’s equity interest.
In addition, any loans to an operating subsidiary in China that is a foreign invested enterprise, cannot, in the aggregate, exceed the difference between its respective approved total investment amount and its respective approved registered capital amount or three times of its net assets, at the discretion of such company. 64 Any increase in the amount of the total investment and registered capital must be reported to and filed with the China Ministry of Commerce or its local counterpart and SAMS or its local counterparts.
In addition, any loans to an operating subsidiary in China that is a foreign invested enterprise, cannot, in the aggregate, exceed the difference between its respective approved total investment amount and its respective approved registered capital amount or three times of its net assets, at the discretion of such company.
On December 27, 2021, MOFCOM and NDRC jointly issued the latest version of Negative List (Edition 2021). See “ Item 4. Information on the Company – B.
On December 27, 2021, MOFCOM and NDRC jointly issued the Negative List (Edition 2021) and the latest version of Negative List was issued in September 2024 and took effect on November 1, 2024 (Edition 2024). See “ Item 4. Information on the Company – B.
For the fiscal year ended December 31, 2022, one customer accounted for approximately 21% of the Company’s total revenue. For the fiscal year ended December 31, 2021, one customer accounted for more than 11% of the Company’s total revenue. Sales and Marketing We are increasing our marketing and sales efforts, including a directed focus on online marketing.
For the year ended December 31, 2023, one customer accounted for 79% of the Company’s total revenue. For the year ended December 31, 2022, one customer accounted for 100% of the Company’s total revenue. Sales and Marketing We are increasing our marketing and sales efforts, including a directed focus on online marketing.
We are also striving to expand our international market, aiming to increase our exports to countries such as the United Arab Emirates and Saudi Arabia in the Middle East, Algeria in North Africa, and India in Asia. In 2023, in order to expand our international market, we have appointed a partner as an agent in the Middle East and Africa.
We are also striving to expand our international market, aiming to increase our exports to countries such as the United Arab Emirates and Saudi Arabia in the Middle East, Algeria in North Africa, Uganda in East Africa, India in Asia and so on.
This New M&A Rule, among other things, includes provisions that purport to require that an offshore special purpose vehicle formed for purposes of overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals should obtain the approval of CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.
This New M&A Rule, among other things, includes provisions that purport to require that an offshore special purpose vehicle formed for purposes of overseas listing of equity interests in PRC companies and controlled directly or indirectly by PRC companies or individuals should obtain the approval of CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. 57 On September 21, 2006, CSRC published on its official website the Provisions on Indirect Issuance of Securities Overseas by a Domestic Enterprise or Overseas Listing of Its Securities for Trading, which specify procedures regarding CSRC’s approval for overseas listings by special purpose vehicles.
The MIIT is the major regulatory body responsible for the administration of the PRC Internet domain names, under supervision of which the CNNIC is responsible for the daily administration of .cn domain names and PRC domain names.
The MIIT is the major regulatory body responsible for the administration of the PRC Internet domain names, under supervision of which the CNNIC is responsible for the daily administration of .cn domain names and PRC domain names. MIIT adopts the “first to file” principle with respect to the registration of domain names.
If there is no such agreement, any of the joint owners may exploit the patent independently or license others to exploit the patent by means of ordinary license. In the case of licensing to others to exploit the patent, royalties charged shall be distributed among the joint owners.
If there is no such agreement, any of the joint owners may exploit the patent independently or license others to exploit the patent by means of ordinary license.
Through the adoption of the Environmental Impact Assessment Law of China in 2003 and last amended in 2018 and the Classification Lists for Environmental Impact Assessment of Construction Projects (latest 2021 Version), the PRC government established a system to appraise the environmental impact of construction projects and classify the appraisal based on the degree of environmental impact caused by the construction project.
Enterprises producing environmental contamination and other public hazards must incorporate environmental protection work into their planning and establish environmental protection systems. 60 Through the adoption of the Environmental Impact Assessment Law of China in 2003 and last amended in 2018 and the Classification Lists for Environmental Impact Assessment of Construction Projects (latest 2021 Version), the PRC government established a system to appraise the environmental impact of construction projects and classify the appraisal based on the degree of environmental impact caused by the construction project.
In addition, restricted category projects are subject to higher-level government approvals and certain special requirements. Foreign investors are not allowed to invest in industries in the prohibited category. Industries not listed in the Negative List are generally open to foreign investment unless specifically restricted by other PRC regulations.
Foreign investors are not allowed to invest in industries in the prohibited category. Industries not listed in the Negative List are generally open to foreign investment unless specifically restricted by other PRC regulations.
If we use our equity interest to purchase the assets or equity interest of a PRC company owned by PRC residents in the future, such PRC residents will be subject to the registration procedures described in Circular 37. 65 Circular 19 & Circular 16.
PRC residents who control our Company are required to register with SAFE in connection with their investments in us. If we use our equity interest to purchase the assets or equity interest of a PRC company owned by PRC residents in the future, such PRC residents will be subject to the registration procedures described in Circular 37.
On April 12, 2023, ReTo entered into an instrument of transfer with the original shareholder of Sunoro Holdings for the acquisition of 100% of the equity interests in Sunoro Holdings, for a total consideration of HKD 1. Sunoro Holdings is a holding company with no operation. On April 16, 2023, Inner Mongolia REIT Ecological Environment Management Co., Ltd.
In April 2023, ReTo entered into an instrument of transfer with the original shareholder of Sunoro Holdings for the acquisition of 100% of the equity interests in Sunoro Holdings, for a total consideration of HKD 1, after which ReTo became the 100% owner of Sunoro Holdings’ equity interest. Sunoro Holdings is a holding company with no operation.
However, we do not believe that our business, as a whole, is dependent on, or that its profitability would be materially affected by the revocation, termination, expiration or infringement upon any particular patent. We own an aggregate of 126 PRC patents (ten of which are owned jointly with Luoyang Water-Conservancy Surveying & Design Co., Ltd.
However, we do not believe that our business, as a whole, is dependent on, or that its profitability would be materially affected by the revocation, termination, expiration or infringement upon any particular patent. We own an aggregate of 42 PRC patents, including 13 design patents, 28 utility model patents and one invention patent.
On November 29, 2017, ReTo completed its initial public offering (“IPO”) of 32,200 Common Shares at a public offering price of $500 per share.
In November 2017, ReTo completed its initial public offering (“IPO”) of 3,220 common shares at a public offering price of $5,000 per share.
The Environmental Protection Law requires the Ministry of Environmental Protection (the “MEP”), to implement uniform supervision and administration of environmental protection work nationwide and establishes national environmental quality standards and pollutants discharge standards. Enterprises producing environmental contamination and other public hazards must incorporate environmental protection work into their planning and establish environmental protection systems.
The Environmental Protection Law requires the Ministry of Environmental Protection (the “MEP”), to implement uniform supervision and administration of environmental protection work nationwide and establishes national environmental quality standards and pollutants discharge standards.
In connection with the IPO, the Company’s Common Shares began trading on the Nasdaq Capital Market beginning on November 29, 2017 under the symbol “RETO.” ReTo owns 100% equity interest of REIT Holdings, a limited liability company established in Hong Kong. Beijing REIT was established on May 12, 1999 under the laws of PRC.
In connection with the IPO, the Company’s common shares began trading on the Nasdaq Capital Market beginning on November 29, 2017 under the symbol “RETO.” 42 In January 2016, REIT Holdings was incorporated as a Hong Kong limited liability company wholly owned by ReTo.
In 2024 and future we plan to make efforts to look for more partners to boost our market. We are aiming to adjust our advertising strategies to reach new and existing customers through new methods such as digital marketing.
We are aiming to adjust our advertising strategies to reach new and existing customers through new methods such as digital marketing.
On March 30, 2015, SAFE issued the Circular Concerning the Reform of the Administration of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or Circular 19, which became effective on June 1, 2015. Circular 19 regulates the conversion of foreign currency capital funds into RMB by a foreign-invested enterprise, and limits how the converted RMB may be used.
Circular 19 & Circular 16. On March 30, 2015, SAFE issued the Circular Concerning the Reform of the Administration of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or Circular 19, which became effective on June 1, 2015.
Sample research and development projects from 2021 to 2023 include the following: Year 2021 ● A servo control system for cubing plant V1.0 ● A control system V1.0 for finger cart ● An environmentally friendly permeable concrete PC brick ● A porous sound-absorbing and noise-reducing PC brick ● A production, processing, positioning and cutting device for PC bricks ● A weather-resistant PC brick ● A permeable PC brick surface layer and chamfer grinding device ● A self-compensating shrink PC brick 60 Year 2022 ● A squirrel cage concrete product turning machine ● An extra-thick surface layer bulk concrete product forming device ● A control system and software for 3D printing V1.0 ● REITRT10 Series equipment ● Gravity separator for iron mine Year 2023 ● A multi-purpose concrete trimming cutter ● A lightweight solid-liquid front-end mixture for 3D printing printhead ● A new type of ore gravity separation device ● A power milling coaxial integrated additive and subtractive extrusion nozzle Sources of Raw Materials Our primary raw materials are steel for our manufacturing equipment and iron tailings, fly-ash and cement for our construction materials.
Sample research and development projects from 2022 to 2024 include the following: Year 2022 ● A squirrel cage concrete product turning machine ● An extra-thick surface layer bulk concrete product forming device ● A control system and software for 3D printing V1.0 ● REIT RT10 Series equipment ● Gravity separator for iron mine Year 2023 ● A multi-purpose concrete trimming cutter ● A lightweight solid-liquid front-end mixture for 3D printing printhead ● A new type of ore gravity separation device ● A power milling coaxial integrated additive and subtractive extrusion nozzle Year 2024 ● RTQT #18 Block Forming Machines ● Smart Craft Beer Machines ● Intelligent Mining Equipment ● Block Splitting Machine Control System ● Smart Construction Site Safety Supervision Platform Suppliers and Raw Materials Prior to the December 2024 Divestiture, our primary raw materials were steel for our manufacturing equipment and iron tailings, fly-ash and cement for our construction materials.
With respect to the directly responsible executives and other directly responsible personnel of the domestic enterprises, they are subject to a warning and fine between RMB 500,000 and RMB 5 million, and with respect to the controlling shareholder, actual controllers, and other legally appointed persons of the domestic enterprises, they are subject to a warning and fine between RMB 1 million and RMB 10 million.
With respect to the directly responsible executives and other directly responsible personnel of the domestic enterprises, they are subject to a warning and fine between RMB 500,000 and RMB 5 million, and with respect to the controlling shareholder, actual controllers, and other legally appointed persons of the domestic enterprises, they are subject to a warning and fine between RMB 1 million and RMB 10 million. 58 On February 24, 2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises, or the Confidentiality and Archives Administration, and, which became effective on March 31, 2023.
In addition, the parties will share any fees generated from any licensing of the joint patents. 61 REGULATION Regulations Relating to the Manufacturing Industry Our manufacturing activities are regulated by the Law of China on Work Safety, or the Work Safety Law, which was adopted in 2002 and latest amended in 2021.
In the case of licensing to others to exploit the patent, royalties charged shall be distributed among the joint owners. 52 REGULATION Regulations Relating to the Manufacturing Industry Our manufacturing activities are regulated by the Law of China on Work Safety, or the Work Safety Law, which was adopted in 2002 and latest amended in 2021.
On June 28, 2018, MOFCOM and NDRC jointly promulgated the Special Administrative Measures (Negative List) for Foreign Investment Access, or the Negative List (Edition 2018), which replaced the negative list attached to the Foreign Investment Catalogue in 2017.
On December 27, 2021, MOFCOM and NDRC jointly issued the Special Administrative Measures (Negative List) for Foreign Investment Access, or the Negative List (Edition 2021), which replaced the Negative List (Edition 2020).
A summary description of our leased and owned properties is as follows: Office Address Term Ownership Space (m 2 ) Office of Beijing REIT X-702, Runfengdeshangyuan, No. 60 Anli Road, Chaoyang District, Beijing City January 2024 - December 2025 Leased 322.24 Office for the R&D Department of Beijing REIT Room 2304, 5 Building, Luxury Times City, 168 Jixiang Road, Yanta District, Xi’an City April 2022 - March 2025 Leased 126 Office for the R&D Department of Beijing REIT Units 12001-12002, No. 1 Building, West-side of South 2 nd Ring Road, Beilin District, Xi’an City Owned 245.38 Office of REIT A-301, Yahao City Plaza, No. 1, Zhongguancun Information Valley Innovation Center, Haoyuan Road, Nanhai Boulevard, Jinyu Street, Longhua District, Haikou City, Hainan Province December 2023 - December 2026 Leased 464.44 Land Owned by Xinyi REIT West Area of Jizheng Avenue, North Area of Tanggang Road, Economic and Technical Development Zone, Xinyi City, Jiangsu Province February 2017 - February 2067 Owned 74,254.61 Staff Dormitory of Beijing REIT Unit 601, Unit 1, Floor 6, Building 207, Huizhong Beili, Chaoyang District, Beijing City July 2023 - July 2024 Leased 68.74 Office of Beijing REIT Room 1611, No.A Building, No.208, Second Block, Lize Zhongyuan, Wangjing Xinxing Industrial Area, Chaoyang District, Beijing City January 2024 - January 2025 Leased 42.42 Office of REIT Equipment No. 39, Block A, Pedestrian First Street, Langfang City, Hebei Province March 2023 - February 2028 Leased 208.36 Office of Honghe REIT No. 11 to No. 13, 1st Floor, Building A, Phase III, Tiancheng Garden, Tamsui Road, Wenlan Town, Mengzi City, Honghe Prefecture, Yunnan Province June 2023 - May 2028 Leased 340.29 Office of Honghe REIT No. 201 to No. 202, 2nd Floor, Unit 1, Building A, Phase III, Tiancheng Garden, Tamsui Road, Wenlan Town, Mengzi City, Honghe Prefecture, Yunnan Province June 2023 - May 2028 Leased 269.78 70 Item 4A.
A summary description of our material leased properties is as follows: Office Address Term Ownership Space (m 2 ) Office of REIT Equipment X-702, No. 60 Anli Road, Chaoyang District, Beijing City January 2025 - December 2027 Leased 322.24 Office of REIT Equipment Xi'an Branch Room 2304, 5 Building, Luxury Times City, 168 Jixiang Road, Yanta District, Xi’an City April 2022 - March 2025 Leased 126 Office of REIT Equipment No. 39, Block A, Pedestrian First Street, Langfang City, Hebei Province March 2023 - February 2028 Leased 208.36 Office of Honghe ReTo No. 11 to No. 13, 1st Floor, Building A, Phase III, Tiancheng Garden, Tamsui Road, Wenlan Town, Mengzi City, Honghe Prefecture, Yunnan Province June 2023 - May 2028 Leased 340.29 Office of Honghe ReTo No. 201 to No. 202, 2nd Floor, Unit 1, Building A, Phase III, Tiancheng Garden, Tamsui Road, Wenlan Town, Mengzi City, Honghe Prefecture, Yunnan Province June 2023 - May 2028 Leased 269.78 Staff Dormitory of ReTo Hengda Room 2002, 20th Floor, Building 304, Huizhong Beili, Chaoyang District, Beijing July 2024 - July 2025 Leased 86.84 61 Item 4A.
Combining application research and advanced research, we will not only improve current products, but also develop future strategic products, realizing technology development in line with the market demand. Our research and development activities mainly focus on solid waste utilization and recycling, ecological environmental friendly construction materials, technology and equipment, thermal insulation products and related production equipment.
Combining application research and advanced research, we will not only improve current products, but also develop future strategic products, realizing technology development in line with market demand.
On August 3, 2023, Sunoro Hengda was incorporated as a limited liability company in mainland China and a wholly-owned subsidiary of Sunoro Holdings. Sunoro Hengda is a holding company with no operation. On May 10, 2022, Beijing REIT transferred all of its 100% equity interest of REIT Equipment to REIT Ordos for no consideration.
In November, 2022, Honghe ReTo was incorporated as a limited liability company in mainland China and a wholly-owned subsidiary of REIT Ordos at that time. In August 2023, ReTo Hengda was incorporated as a PRC limited liability company wholly owned by Sunoro Holdings. ReTo Hengda is a holding company with no operation.
The PRC Company Law defines two types of companies: limited liability companies and companies limited by shares. Each of our PRC subsidiaries is a limited liability company. Unless otherwise stipulated in the related laws on foreign investment, foreign invested companies are also required to comply with the provisions of the PRC Company Law. Regulations on Tax See “ Item 10.
Unless otherwise stipulated in the related laws on foreign investment, foreign invested companies are also required to comply with the provisions of the PRC Company Law. 55 Regulations on Tax See “ Item 10. Additional Information —E. Taxation—People’s Republic of China Taxation.” Regulation of Foreign Currency Exchange and Dividend Distribution Foreign Currency Exchange.
Establishment of wholly foreign-owned enterprises is generally allowed for industries outside of the Negative List. For the restricted industries within the Negative List, some are limited to equity or contractual joint ventures, while in some cases PRC partners are required to hold the majority interests in such joint ventures.
For the restricted industries within the Negative List, some are limited to equity or contractual joint ventures, while in some cases PRC partners are required to hold the majority interests in such joint ventures. In addition, restricted category projects are subject to higher-level government approvals and certain special requirements.
Where there is unclear or controversial whether or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative departments for determination. 67 Regulations on Offshore Parent Holding Companies’ Direct Investment in and Loans to Their PRC Subsidiaries An offshore company may invest equity in a PRC company, which will become the PRC subsidiary of the offshore holding company after investment.
Regulations on Offshore Parent Holding Companies’ Direct Investment in and Loans to Their PRC Subsidiaries An offshore company may invest equity in a PRC company, which will become the PRC subsidiary of the offshore holding company after investment.
On December 27, 2021, MOFCOM and NDRC jointly issued the Special Administrative Measures (Negative List) for Foreign Investment Access, or the Negative List (Edition 2021), which replaced the Negative List (Edition 2020). 63 Pursuant to the Negative List (Edition 2021) effective on January 1, 2022, any industry that is not listed in any of the restricted or prohibited categories is classified as a permitted industry for foreign investment.
Pursuant to the Negative List (Edition 2024) effective on November 1, 2024, any industry that is not listed in any of the restricted or prohibited categories is classified as a permitted industry for foreign investment. Establishment of wholly foreign-owned enterprises is generally allowed for industries outside of the Negative List.
On August 7, 2023, REIT Ordos transferred all of its 100% equity interest of REIT Equipment to Sunoro Hengda for no consideration, after which Sunoro Hengda became a 100% owner of REIT Equipment’s equity interest. REIT Equipment manufactures specialized equipment for producing building materials, and develops and constructs municipal engineering projects.
In August 2023, REIT Ordos transferred all of its 100% equity interest of REIT Equipment to ReTo Hengda for no consideration, after which ReTo Hengda became a 100% owner of REIT Equipment’s equity interest. REIT Equipment is mainly engaged in the business of development and manufacturing of ecological environment protection equipment and mining equipment.
We expect to increase our allocation of research and development funds in the future in an effort to enhance our core competence. Quality control is an important aspect of our research and development department’s work and ensuring quality at every stage of the process has been as key driver in maintaining and developing our brand value.
We expect to increase our allocation of research and development funds in the future in an effort to enhance our core competence.
We plan to take advantage of the government resources and support of the Hainan Free Trade Port to further the development of our technologies and our business operations. Pursue Strategic Acquisitions . We intend to continue to pursue expansion opportunities in existing and new markets, as well as in core and adjacent categories through strategic acquisitions.
We intend to continue to pursue expansion opportunities in existing and new markets, as well as in core and adjacent categories through strategic acquisitions. Specifically, we are seeking to acquire companies engaged in manufacturing solar energy facilities in an effort to further diversify our business.
Due to China’s recent emphasis on environmental protection, we believe there is a unique opportunity to grow our company, which we expect will be driven by demand for our eco-friendly construction materials and equipment used to produce these materials as well as our project construction expertise.
We leverage our strengths in R&D, manufacturing and sales of equipment to enhance existing products and develop new solutions that align with market needs and future growth opportunities Due to China’s recent emphasis on environmental protection, we believe there is a unique opportunity to grow our company, which we expect will be driven by demand for our ecological environment protection equipment.
We purchase from a variety of suppliers and believe these raw materials are widely available. We have efficient access to all of the raw materials necessary for the production of our manufacturing equipment and construction materials. We believe our relationships with the suppliers of these raw materials are strong.
We believe our relationships with the suppliers of these raw materials are strong.
We believe that this approach has been crucial in winning and retaining clients and increasing our ability to withstand competition. Our current market for software development and RSA services is Hainan Province. We plan to expand our offering of those services to other provinces in China through client referrals and targeted marketing.
We believe that this approach has been crucial in winning and retaining clients and increasing our ability to withstand competition. Competition We face competition in both domestic and international markets.
We believe scientific and technological innovation will help our Company achieve its long-term strategic objectives. We conduct research and development in the following areas: ● Manufacturing equipment; ● Recycling and utilization of solid wastes; ● New construction materials; and ● Urban ecological construction (sponge cities). We conduct our research and development according to strategic objectives, the market and customer needs.
We believe our ability to offer a diverse range of tailored to different customer needs and application scenarios, combined with the intellectual property right we are applying for this product line, supports our long-term growth in this emerging niche market. Research and Development We believe scientific and technological innovation will help our Company achieve its long-term strategic objectives.
We believe our technological know-how, production capacity, reputation and offerings of products and services will enable us to seize this opportunity. Our clients are located throughout mainland China, and internationally in Middle East, Southeastern Asia, Africa, Europe and North America.
Our clients are located throughout mainland China, and internationally in Middle East, Southeast Asia, and Africa. We are actively pursuing additional clients for our products, equipment, internationally in the Middle East, Southeast Asia, and Africa and in additional provinces of China.
We do not expect the prices of such raw materials to vary greatly from their current prices, as there has traditionally been little price volatility for such materials. For the years ended December 31, 2023, 2022, and 2021, the Company purchased approximately 10%, 19%, and 53%, respectively, of its raw materials from one major supplier.
We do not expect the prices of such raw materials to vary greatly from their current prices, as there has traditionally been little price volatility for such materials. 51 Quality Control We maintain a multi-layered quality control system to ensure that products manufactured by third-party suppliers meet our stringent internal quality standards as well as the specific technical and performance requirements of our customers.
Overview We, through our operating subsidiaries in China, are engaged in the manufacture and distribution of eco-friendly construction materials (aggregates, bricks, pavers and tiles), made from mining waste (iron tailings), as well as equipment used for the production of these eco-friendly construction materials.
Business overview. Overview Prior to the December 2024 Divesture, we were mainly engaged in the manufacture and distribution of eco-friendly construction materials as well as equipment used for the production of these eco-friendly construction materials as well as ecological restoration projects and software development services and solutions utilizing Internet of Things technologies.
Public Offering and Concurrent Private Placement in September 2023 On September 29, 2023, we entered into a securities purchase agreement (the “Original Public Offering SPA”) to sell an aggregate of 1,500,000 Common Shares, at a price of $10.00 per share to certain investors pursuant to the prospectus supplement.
Private Placement in August 2024 On August 30, 2024, ReTo entered into a securities purchase agreement with certain purchasers in connection with the issuance and sale of an aggregate of 1,409,520 Class A Shares, at $13.8 per share for an aggregate of purchase price of $19,451,376 (the “August 2024 Private Placement”).
Removed
Over the years, Beijing REIT established four subsidiaries consisting of: Gu’an REIT Machinery Manufacturing Co., Ltd.
Added
Prior to the December 2024 Divestiture, REIT Holdings had been a holding company of multiple direct or indirect subsidiaries of ReTo in China, including but not limited to Beijing REIT, REIT Ordos, and REIT Technology.
Removed
(“Gu’an REIT”), which was incorporated on May 12, 2008; REIT Equipment (known as Beijing REIT Ecological Engineering Technology Co., Ltd. at that time, which changed its name to Beijing REIT Equipment Technology Co., Ltd. on August 9, 2023), which was incorporated on April 24, 2014; Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd., which was incorporated on May 12, 2014 and was subsequently dissolved in 2021; and REIT Technology Development (America), Inc., a California corporation, which was incorporated on February 27, 2014 and was dissolved in March 2022.
Added
In January 2024, New REIT International Co., Limited was incorporated as a Hong Kong limited liability company wholly owned by ReTo. New REIT International Co., Limited is a holding company with no operation. In June 2024, ReTo Hengye was incorporated as a PRC limited liability company wholly owned by ReTo Hengda.
Removed
On February 7, 2016, Beijing REIT and its individual original shareholders entered into an equity transfer agreement, pursuant to which these shareholders agreed to transfer all of their ownership interests in Beijing REIT with a carrying value of RMB 24 million (or $3,466,260) to REIT Holdings.
Added
ReTo Hengye is mainly engaged in the business of manufacture and sales of smart craft beer machines. In December 2024, ReTo sold all of its shares in REIT Holdings to a certain buyer for a purchase price of US$80,000, after which ReTo ceased to hold any interest in REIT Holdings and its subsidiaries.
Removed
After this equity transfer, Beijing REIT became a wholly foreign-owned enterprise and amended the registration with the State Administration of Market Regulation on March 21, 2016. REIT Changjiang was incorporated in Hainan Province, China, on November 22, 2011 with the original registered capital of RMB 100 million (approximately $15.7 million).
Added
In April 2025, ReTo acquired a 51% equity interest in MeinMalzeBier from certain third-party individuals for a total consideration of $3,978,000 in cash and 4,680,000 Class A Shares. Corporate Structure The diagram below summarizes our corporate structure as of the date of this annual report: (1) The remaining 49% is in the aggregate held by two third-party individuals. 43 B.
Removed
REIT Changjiang was engaged in hauling and processing construction and mining waste, with which it produces recycled aggregates and bricks for environmental-friendly uses prior to the disposition of REIT Changjiang in December 2021. On June 1, 2015, REIT Construction was incorporated as a wholly owned subsidiary of REIT Changjiang.
Added
To navigate the impacts of the pandemic and the evolving economic landscape, we undertook a strategic review and analysis and, in December 2024, completed the December 2024 Divestiture, which involved the divestment of non-performing assets and a capital restructuring aimed to enhance our liquidity and sharpening our strategic focus.
Removed
On October 25, 2021, REIT Changjiang transferred all of its 100% equity interest of REIT Construction to REIT Mingde for no consideration, after which REIT Mingde became a 100% owner of REIT Construction’s equity interest. On February 9, 2023, REIT Construction was dissolved due to the termination of the project for which it was established.
Added
Following the December 2024 Divestiture, we ceased operations in the business of manufacture and distribution of eco-friendly construction materials, ecological restoration projects and software development services and solutions utilizing Internet of Things technologies. We have since transitioned our focus toward the design, research and development, manufacturing, and sale of ecological environmental protection equipment and intelligent equipment.
Removed
On July 15, 2015, Beijing REIT established a joint venture, Xinyi REIT, together with Xinyi City Transportation Investment Co., Ltd. (“Xinyi TI”), a third party. Beijing REIT owns 70% equity interest of Xinyi REIT, with the remaining 30% owned by Xinyi TI.
Added
Our offerings mainly include comprehensive solid waste treatment solutions and equipment, with applications also extending to the research, development, and production of mining equipment and smart craft beer machines.
Removed
On May 23, 2023, Xinyi TI transferred all of its 30% equity interest of Xinyi REIT to Beijing REIT for a total consideration of RMB 18 million (approximately $2.50 million), after which Beijing REIT became a 100% owner of Xinyi REIT’s equity interest.
Added
We currently provide a full spectrum of products and solutions related to ecological environment protection equipment and intelligent equipment, from solid waste treatment equipment, mining equipment, to craft beer smart sales equipment. We differentiate us from our competitors through strong research and development capabilities and advanced technologies and systems.
Removed
On September 20, 2015, Beijing REIT acquired 100% of the equity interest of Nanjing Dingxuan Environment Protection Technology Development Co., Ltd. (“Nanjing Dingxuan”) from a third party for no consideration given the company’s registered capital was not paid and had no assets or operations.
Added
To further expand our equipment business, we conducted research into the mining markets of East African countries, and identified that the area is rich in mineral resources so we believe it will have strong demand for mining equipment.
Removed
Nanjing Dingxuan was engaged in providing technical support and consulting services for environmental protection projects but its operation was suspended in 2021 and the company was further dissolved on August 30, 2022.
Added
Additionally, we have identified significant growth potential in demand for craft beer in China in the coming years, which we expect to drive demand for smart craft beer machines. We believe our technological know-how, production capacity, reputation and offerings of products and services will enable us to seize these opportunities.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

67 edited+17 added−59 removed27 unchanged
The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs. As of December 31, 2023 and 2022, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet.
The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs. 71 As of December 31, 2024 and 2023, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet.
The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the years ended December 31, 2023, 2022 and 2021.
The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the years ended December 31, 2024, 2023 and 2022.
We have historically funded our working capital needs from cash flow from operations, advance payments from customers, bank borrowings, equity and debt offering, capital contributions from shareholders and related-party loans. Presently, our principal sources of liquidity are generated from our operations, proceeds from our shareholders’ contributions, and loans and notes from commercial banks.
We have historically funded our working capital needs from cash flow from operations, advance payments from customers, bank borrowings, equity and debt offering and related-party loans. Presently, our principal sources of liquidity are generated from our operations, proceeds from equity financings, and loans and notes from commercial banks.
Net cash used in operating activities was approximately $10.0 million in the year ended December 31, 2022.
Net cash used in discontinued operating activities was approximately $10.7 million. Net cash used in operating activities was approximately $10.0 million in the year ended December 31, 2022.
The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting. The Company, with the assistance of an independent third-party valuation firm, determined the fair value of the stock options granted to employees.
The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting. The Company, with the assistance of an independent third-party valuation firm, determined the fair value of the stock options granted to employees. Income Taxes The Company accounts for income taxes under ASC 740.
Net cash provided by discontinued financing activities was approximately $4.7 million. Statutory Reserves The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).
Net cash used in discontinued financing activities was approximately $3.0 million. 69 Statutory Reserves The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).
As reflected in the Company’s consolidated financial statements for the year ended December 31, 2023, the Company reported a net loss of approximately $16.1 million. As of December 31, 2023, the Company had a working capital deficit of approximately of $6.8 million. As of December 31, 2023, the Company had cash of approximately $1.4 million.
As reflected in the Company’s consolidated financial statements for the year ended December 31, 2024, the Company reported a net loss of approximately $8.4 million. As of December 31, 2024, the Company had a working capital deficit of approximately of $2.6 million. As of December 31, 2024, the Company had cash of approximately $0.7 million.
As of December 31, 2023, the tax years ended December 31, 2018 through December 31, 2023 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. 86
As of December 31, 2024, the tax years ended December 31, 2019 through December 31, 2023 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. 72
The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions, customer-specific circumstances, recent payment history and other relevant factors.
Accounts receivable was recognized and carried at original invoiced amount less an estimated allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions, customer-specific circumstances, recent payment history and other relevant factors.
For the year ended December 31, 2022, our general and administrative expenses were approximately $8.6 million, representing an increase of approximately $4.0 million compared to approximately $4.6 million in the year ended December 31, 2021.
For the year ended December 31, 2023, our general and administrative expenses from continuing operations were approximately $6.5 million, representing an increase of approximately $0.7 million compared to approximately $5.8 million in the year ended December 31, 2022.
We incurred significant provision for credit losses on uncollectible accounts receivable and advance payments for fiscal 2022 and 2021, however, in fiscal 2022, the impact of COVID-19 on our customers alleviated.
We recorded significant provision for credit losses on uncollectible accounts receivable and advance payments for fiscal 2023 and 2022, however, the impact of COVID-19 on our customers began to ease in fiscal 2023.
Allowance for credit losses amounted to $2,146,679 and $1,771,761 as of December 31, 2023 and 2022, respectively. 84 Impairment of Long-lived Assets The Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Allowance for credit losses amounted to $108,936 and $279 as of December 31, 2024 and 2023, respectively. Impairment of Long-lived Assets The Company reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Sales to customers in China and internationally from our continuing operations accounted for approximately 85% and 15%, respectively, of our total sales for the year ended December 31, 2023, approximately 91% and 9%, respectively, of our total sales for the year ended December31, 2022, and approximately 84% and 16%, respectively, of our total sales for the year ended December 31, 2021.
Sales to customers in China and internationally from our continuing operations accounted for approximately 84% and 16%, respectively, of our total sales for the year ended December 31, 2024, approximately 92% and 8%, respectively, of our total sales for the year ended December31, 2023, and approximately 100% and nil, respectively, of our total sales for the year ended December 31, 2022.
Net cash used in operating activities in the year ended December 31, 2023 mainly consisted of net loss from continuing operation of approximately $16.1 million, adjustments of non-cash items of approximately $6.1 million, an increase of approximately $2.6 million in advance to suppliers, and increase of approximately $0.4 million in accounts payable, and increase of approximately $0.6 million in accrued and other liabilities, partially offset by a decrease of approximately $0.6 million in accounts receivable, and a decrease of approximately $0.4 million in advance from customers.
Net cash provided by continuing operating activities in the year ended December 31, 2024 mainly consisted of adjustments of non-cash items of approximately $6.2 million, decrease in prepaid expenses and other current assets of approximately $4.4 million, increase in advances from customers of approximately $1.2 million, increase in accrued expenses and other liabilities of approximately $0.5 million, offset by net loss from continuing operation of approximately 8.3 million, increase of approximately $0.5 million in advance to suppliers, increase of approximately $0.3 million in accounts receivable.
The increase in our total cost of revenue was in line with the increase in revenue.
The increase in our total cost of revenue was generally in line with the increase in sales of machinery and equipment.
Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations.
We may need dividends and other distributions from our subsidiaries, including our PRC subsidiaries, to satisfy our liquidity requirements. Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations.
The Company recognized a loss from disposal of REIT Changjiang of approximately $6.3 million in the year ended December 31, 2021.
Loss from Disposal of Subsidiaries The Company recognized a loss from disposal of subsidiaries of approximately $3.6 million in the year ended December 31, 2024 in connection with the 2024 Divesture.
In order to fully implement its business plan and sustain operations, the Company may also seek equity financing from outside investors. At the present time, however, the Company does not have commitments of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on favorable terms or at all.
At the present time, however, the Company does not have commitments of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on favorable terms or at all.
Gross profit margin for our continuing operations was 12% for the year ended December 31, 2022, as compared with 11% for the year ended December 31, 2021.
Gross profit margin for our continuing operations was 45% for the year ended December 31, 2024, as compared with 14% for the year ended December 31, 2023.
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 this guidance did not have a material impact on the Company’s consolidated financial statements. Accounts receivable was recognized and carried at original invoiced amount less an estimated allowance for credit losses.
The Company adopted this guidance effective January 1, 2023. 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 this guidance did not have a material impact on the Company’s consolidated financial statements.
The increase in our loss before income taxes for the fiscal year 2023 was primarily attributable to the decrease in revenues, partially offset by increased costs and operating expenses as discussed above.
The increase in our loss before income taxes for the fiscal year 2024 was primarily attributable to the increase in revenues, partially offset by increased costs, operating expenses and loss from disposal of subsidiaries as discussed above. Our loss before income taxes was approximately, $6.5 million and $6.5 million for the year ended December 31, 2023 and 2022, respectively.
Accounts Receivable, net In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023.
Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations. 70 Accounts Receivable, net In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income.
If the Company cannot renew existing loans or borrow additional loans from banks, the Company’s working capital may be further negatively impacted. Based on the reasons above, there is a substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
Based on the reasons above, there is a substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
Research and Development Expenses Our research and development (“R&D”) expenses were approximately $1.2 million, $1.0 million and $0.3 million for the year ended December 31, 2023, 2022 and 2021, respectively. The increase in R&D expenses in the year ended December 31, 2023 was due to more R&D projects conducted by Beijing REIT.
The increase in R&D expenses in the year ended December 31, 2024 was due to more R&D projects conducted by REIT Equipment. 65 Interest Expense, Net Our interest expenses, net, from continuing operations was approximately $2,015, $0.1 million and $0.2 million for the year ended December 31, 2024, 2023 and 2022, respectively.
Financing Activities Net cash provided by financing activities was approximately $12.5 million for the year ended December 31, 2023, including proceeds from bank loans of approximately $5.4 million, proceeds from third-party loans of approximately $2.7 million, proceeds received from a public offering of approximately $6.6 million, and offset by repayment of bank loans of approximately $1.3 million, net loan payment to related parties of approximately $0.1 million, payments to non-controlling shareholders of approximately $0.7 million for purchasing non-controlling interest of a subsidiary, and repayment of third-party loans of approximately $0.1 million.
Net cash provided by financing activities was approximately $12.5 million for the year ended December 31, 2023, including proceeds from private placement $6.6 million, proceeds from related party loans of approximately $0.5 million, proceeds from third-party loans of approximately $0.1 million, partially offset by repayment of loans to related parties of approximately $0.7 million, Net cash provided by discontinued financing activities was approximately $6.0 million.
Net cash provided by discontinued operating activities was approximately $2.7 million. Investing Activities Net cash provided by investing activities was approximately $0.2 million for the year ended December 31, 2023. During the year ended December 31, 2023, the Company paid approximately $0.2 million on addition of property and received proceeds from disposal of subsidiaries of approximately $0.5 million.
These cash outflows were partially offset by proceeds from disposal of subsidiaries of $80,000. Net cash used in discontinued investing activities was approximately $1.0 million. Net cash used in investing activities was approximately $0.4 million for the year ended December 31, 2023. During the year ended December 31, 2023, the Company paid $46,831 on addition of property.
Gross Profit Our gross profit decreased by approximately $0.6 million, or 74%, to approximately $0.2 million for the year ended December 31, 2023 from approximately $0.8 million for the year ended December 31, 2022.
Gross Profit Our gross profit from continuing operations increased by approximately $0.8 million, or 53,450%, to approximately $0.8 million for the year ended December 31, 2024 from $1,541 for the year ended December 31, 2023.
Net cash provided by financing activities was approximately $4.0 million for the year ended December 31, 2021, including proceeds from bank loans of approximately $2.3 million and proceeds of approximately $3.7 million from issuing convertible loans, proceeds from third party loans of approximately $0.8 million, offset by repayment of bank loans of approximately $7.2 million and net loan payment to related parties of approximately $0.3 million.
Financing Activities Net cash provided by financing activities was approximately $29.8 million for the year ended December 31, 2024, including proceeds from private placement approximately $29.4 million, and net proceeds from related party loans of approximately $0.3 million. Net cash provided by discontinued financing activities was $47,457.
Construction Materials Cost of revenues for sales of environmental-friendly construction materials increased by approximately $0.1 million, or 15%, from approximately $0.9 million for the year ended December 31, 2022 to approximately $1.0 million for the year ended December 31, 2023.
Cost of Revenues Our total cost of revenues from continuing operations increased by approximately $1.0 million, or 10,763%, to approximately $1.0 million for the year ended December 31, 2024 from approximately $9,240 for the year ended December 31, 2023.
Our net loss from discontinued operations amounted to approximately nil, nil and $1.6 million for the year ended December 31, 2023, 2022 and 2021, respectively. Total net loss amounted to approximately $16.1 million, $15.4 million and $22.1 million for the year ended December 31, 2023, 2022 and 2021, respectively. B.
Total net loss amounted to approximately $8.4 million, $16.1 million and $15.4 million for the year ended December 31, 2024, 2023 and 2022, respectively. 66 Discontinued Operations The disposition of REIT Holdings was completed on December 31, 2024. The Company recorded a loss from the disposition of $3.6 million for the year ended December 31, 2024.
Loss before Income Taxes Our loss before income taxes was approximately $16.1 million for the year ended December 31, 2023, a increase of approximately $0.7 million as compared to loss before income taxes of approximately $15.4 million for the year ended December 31, 2022.
Loss before Income Taxes Our loss before income taxes from continuing operations was approximately $8.3 million for the year ended December 31, 2024, an increase of approximately $1.8 million as compared to loss before income taxes of approximately $6.5 million for the year ended December 31, 2023.
Net cash used in operating activities in the year ended December 31, 2022 mainly consisted of net loss from continuing operation of approximately $15.4 million, adjustments of non-cash items of approximately $8.3 million, an increase of approximately $2.7 million in accounts receivable, a decrease of approximately $0.1 million in inventories, an increase of approximately $0.7 million in advance from customers, an increase of approximately $0.7 million in accounts payable, a decrease of approximately $0.2 million in accrued expenses and other liabilities, and a decrease of approximately $0.6 million in taxes payable. 82 Net cash used in operating activities was approximately $2.8 million in the year ended December 31, 2021.
Net cash used in continuing operating activities in the year ended December 31, 2022 mainly consisted of net loss from continuing operation of approximately $6.5 million, decrease of $96,091 in advance from customers, partially offset by adjustments of non-cash items of approximately $5.1 million, increase of $36,250 in accounts payable, net cash used in discontinued operating activities was approximately $8.5 million.
Gross profit margin for our continuing operations was 6% for the year ended December 31, 2023, as compared with 12% for the year ended December 31, 2022. Our gross profit increased by approximately $0.4 million, or 109%, to approximately $0.8 million for the year ended December 31, 2022 from approximately $0.4 million for the year ended December 31, 2021.
Our gross profit from machinery and equipment sales increased by $394, or 34%, to $1,541 for the year ended December 31, 2023 from $1,147 for the year ended December 31, 2022. Gross profit margin for our continuing operations was 14% for the year ended December 31, 2023, as compared with 1% for the year ended December 31, 2022.
The decrease is mainly due to less market demand for the construction related machinery and equipment as a result of the slowdown in the real estate market in China and decrease in investment in infrastructure. 74 Revenue from machinery and equipment sales increased by approximately $2.5 million, or 139%, from approximately $1.8 million for the year ended December 31, 2021 to approximately $4.3 million for the year ended December 31, 2022.
The decrease is mainly due to less market demand for the construction related machinery and equipment as a result of the slowdown in the real estate market in China and decrease in investment in infrastructure.
Net cash provided by operating activities in the year ended December 31, 2021 mainly consisted of net loss from continuing operation of approximately $20.5 million, adjustments of non-cash items of approximately $18.2 million, a decrease of approximately $0.7 million in accounts receivable, a decrease of approximately $1.2 million in advance to suppliers, a decrease of approximately $1.4 million in advance from customers, an increase of approximately $1.1 million in accounts payable, an increase of approximately $1.0 million in accrued expenses and other liabilities, and a decrease of approximately $0.2 million in deferred grants.
Net cash used in continuing operating activities in the year ended December 31, 2023 mainly consisted of net loss from continuing operation of approximately $6.5 million, decrease of $42,367 in operating leases payable, partially offset by adjustments of non-cash items of approximately $5.1 million, increase of approximately $0.3 million in accrued and other liabilities, increase of $75,276 in accounts payable, increase of $72,300 in advances from customers.
From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the years ended December 31, 2023, 2022 and 2021. ● Revenue from construction materials sales The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. ● Revenue from municipal construction projects The Company provides municipal construction services, including sponge city projects and ecological restoration projects.
From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the years ended December 31, 2024, 2023 and 2022. ● Revenue from technological consulting and other services The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers.
The restricted amounts as determined pursuant to PRC laws totaled $1,072,895 and $1,066,554 as of December 31, 2023 and 2022, respectively. 83 Capital Expenditures We had capital expenditures of approximately $0.2 million, $1.5 million, and $2.6 million for the year ended December 31, 2023, 2022 and 2021, respectively, for purchases of equipment and intangible assets in connection with our business activities.
Capital Expenditures We had capital expenditures of approximately $33.6 million, $0.4 million, and $4.2 million for the years ended December 31, 2024, 2023 and 2022, respectively, for deposits for equity acquisition, purchases of equipment and intangible assets in connection with our business activities.
Cost of Revenues Our total cost of revenues decreased by approximately $2.6 million, or 47%, to approximately $3.0 million for the year ended December 31, 2023 from approximately $5.7 million for the year ended December 31, 2022.
Our total cost of revenues for machinery and equipment sales decreased by approximately $0.2 million, or 95%, to $9,240 for the year ended December 31, 2023 from approximately $0.2 million for the year ended December 31, 2022. The decrease in our total cost of revenue for machinery and equipment sales was generally in line with the decrease in revenue.
Cost of revenues from third party customers increased by approximately $2.2 million or 71% from approximately $3.0 million in the year ended December 31, 2021 to approximately $5.2 million in the year ended December 31, 2022, while cost of revenues from related party customers increased by approximately $0.3 million or 170% from approximately $0.2 million in the year ended December 31, 2021 to approximately $0.5 million in the year ended December 31, 2022.
Cost of revenues from third party customers increased by approximately $0.9 million, or 9,330%, from approximately $9,240 in the year ended December 31, 2023 to approximately $0.9 million in the year ended December 31, 2024, while cost of revenues from related party customers were approximately $0.1 million and nil for the years ended December 31, 2024 and 2023, respectively.
Net cash provided by financing activities was approximately $4.8 million for the year ended December 31, 2022, including proceeds from bank loans of approximately $0.7 million, proceeds of approximately $3.0 million from issuance of a convertible note, proceeds from third-party loans of approximately $1.8 million, proceeds received from share issuance of approximately $3.6 million, offset by repayment of bank loans of approximately $1.5 million, net loan payment to related parties of approximately $1.3 million, payments to non-controlling shareholders of approximately $1.9 million for purchasing non-controlling interest of a subsidiary, and repayment of third-party loans of approximately $1.0 million.
Net cash provided by financing activities was approximately $4.8 million for the year ended December 31, 2022, including proceeds received from share issuance of approximately $3.6 million, gross proceeds from convertible notes of $3.0 million, proceeds from third-party loans of $10,402, shareholder contribution of approximately $0.8 million.
Liquidity and Going Concern ReTo is a holding company incorporated in the British Virgin Islands. REIT Holdings, our wholly owned subsidiary established in Hong Kong, directly owns Beijing REIT, REIT Ordos, and REIT Technology, which in turn own our assets through their respective subsidiaries in China, India and the United States.
Liquidity and Going Concern ReTo is a holding company incorporated in the British Virgin Islands. New REIT, Sunoro Holdings and MeinMalzeBier Global Limited are our wholly owned subsidiaries established in Hong Kong. Sunoro Holdings directly owns ReTo Hengda, which in turn owns REIT Equipment, Honghe ReTo and ReTo Hengye. MeinMalzeBier Global Limited directly owns Dirong and Melody.
Operating Results Overview Our business consists of four business segments, including machinery and equipment sales, construction materials sales, municipal construction projects and technological consulting and other services, which accounted for 72%, 23%, nil and 5% of our total revenue from our continuing operations for the year ended December 31, 2023, respectively, 67%, 12%, 8% and 13% of our total revenue from our continuing operations for the year ended December 31, 2022, respectively, and 50%, 46%, 4% and 0% of our total revenue from our continuing operations for the year ended December 31, 2021, respectively.
Operating Results Overview Our continuing operation primarily consisted of machinery and equipment sales and technological consulting and other services, which accounted for 64% and 36% of our total revenue from our continuing operations for the year ended December 31, 2024, respectively, 100%, and nil of our total revenue from our continuing operations for the year ended December 31, 2023, respectively, and 100% and nil of our total revenue from our continuing operations for the year ended December 31, 2022, respectively.
Our revenue decreased by 50%, or approximately $3.2 million, from approximately $6.5 million for the year ended December 31, 2022 to approximately $3.2 million for the year ended December 31, 2023.
Revenue from continuing operations in machinery and equipment sales decreased by approximately $0.2 million, or 95%, from approximately $0.2 million for the year ended December 31, 2022 to $10,781 for the year ended December 31, 2023.
Net cash provided by investing activities was approximately $4.2 million for the year ended December 31, 2022. During the year ended December 31, 2022, the Company paid approximately $1.3 million on software and received proceeds from disposal of subsidiaries of approximately $5.7 million. Net cash used in investing activities was approximately $1.7 million for the year ended December 31, 2021.
Net cash provided by discontinued investing activities was approximately $0.4 million. Net cash provided by investing activities was approximately $4.2 million for the year ended December 31, 2022. During the year ended December 31, 2022, the Company has no cash flow used in (provided by) continuing investing activities. Net cash provided by discontinued investing activities was approximately $4.2 million.
The increase in general and administrative expenses was mainly due to an increase of share-based compensation for services and consulting and professional fees of $0.8 million. As a percentage of revenues, general and administrative expenses were 291% and 133% of our total revenues for the year ended December 31, 2023 and 2022, respectively.
The increase in general and administrative expenses was mainly due to an increase of share-based compensation for services by approximately $0.9 million, partially offset by a decrease of consulting and professional fees of $0.2 million.
Technological Consulting and Other Services Gross profit for technological consulting and other services was approximately $0.1 million, $0.5 million and nil for the year ended December 31, 2023, 2022 and 2021, respectively. The gross profit margin for this segment was approximately 75%, 59% and nil for the year ended December 31, 2023, 2022 and 2021, respectively.
Our gross profit for technological consulting and other services increased by approximately $0.6 million to approximately $0.6 million for the year ended December 31, 2024 from nil for the year ended December 31, 2023.
Selling Expenses For the year ended December 31, 2023, our selling expenses were approximately $1.2 million, representing a 68% decrease from approximately $3.8 million in the year ended December 31, 2022. As a percentage of sales, our selling expenses were 37% and 58% for the year ended December 31, 2023 and 2022, respectively.
General and Administrative Expenses For the year ended December 31, 2024, our general and administrative expenses from continuing operations were approximately $3.9 million, representing a decrease of approximately $2.6 million compared to approximately $6.5 million in the year ended December 31, 2023.
The increase was mainly due to more marketing activities and shipping and handling fees associated with increased sales in the year ended December 31, 2022. 78 General and Administrative Expenses For the year ended December 31, 2023, our general and administrative expenses were approximately $9.4 million, representing an increase of approximately $0.8 million compared to approximately $8.6 million in the year ended December 31, 2022.
The increase was mainly due to an increase of $0.2 million in salary and benefit, an increase of $0.1 million in marketing activities fees associated with increased sales in the year ended December 31, 2024.
Among our total revenue, revenue from third party customers decreased by approximately $3.0 million, or 48%, from approximately $6.2 million for the year ended December 31, 2022 to approximately $3.2 million for the year ended December 31, 2023, while revenue from related party customers decreased by $260,550, or 86%, from $304,875 for the year ended December 31, 2022 to $44,325 for the year ended December 31, 2023.
Among our total revenue, revenue from third party customers increased by approximately $1.6 million, or 14,735%, from $10,781 for the year ended December 31, 2023 to approximately $1.6 million for the year ended December 31, 2024, while revenue from related party customers was $229,600 as compared to nil for the year ended December 31, 2023.
Revenue Recognition The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach.
If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. Revenue Recognition The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach.
In addition, the Company had outstanding accounts receivable of approximately $1.2 million (including accounts receivable from third-party customers of $1.1 million and accounts receivable from related party customers of approximately $0.1 million), of which approximately $0.7 million, or 22%, were collected between January and April 2023, and became available for use as working capital. 81 As of December 31, 2023, the Company had outstanding bank loans of approximately $5.4 million from a PRC bank.
In addition, the Company had outstanding accounts receivable of approximately $0.1 million which were fully collected between January and March 2025. As of December 31, 2024, the Company had no outstanding bank loans.
This decrease was primarily due to reduced marketing activities and lower transportation and handling expenses caused by decrease in sales during the year ended December 31, 2023. For the year ended December 31, 2022, our selling expenses were approximately $3.8 million, representing a 357% increase from approximately $0.8 million in the year ended December 31, 2021.
The fluctuation in gross profit margin is due to different products sold in 2023 and 2022. Selling Expenses For the year ended December 31, 2024, our selling expenses from continuing operations were approximately $0.3 million, representing a 5,470% increase from $5,939 in the year ended December 31, 2023.
Our technological consulting and other services include the RSA services and software development services conducted by REIT Mingde which was acquired by us in December 2021. Our domestic customers are throughout China and our international customers are mainly located in Asia, the Middle East, North Africa and North America.
Our domestic customers are throughout China and our international customers are mainly located in Southeast Asia, the Middle East and Africa.
Cost of revenues for machinery and equipment sales increased by approximately $2.4 million, or 162%, from approximately $1.5 million for the year ended December 31, 2021 to approximately $3.9 million for the year ended December 31, 2022.
Our gross profit for machinery and equipment increased by approximately $0.2 million, or 11,081%, to approximately $0.2 million for the year ended December 31, 2024 from $1,541 for the year ended December 31, 2023, which is consistent with the increase in machinery and equipment sales.
Technological Consulting and Other services Cost of revenues for technological consulting and other services amounted to approximately $42,000 for the year ended December 31, 2023. Cost of revenues for technological consulting and other services for the year ended December 31, 2022 and 2021 are $0.3 million and nil, respectively.
Technological Consulting and Other Services We provided one-time technological consulting services to a client related to construction site management during the year ended December 31, 2024. Revenue from technological consulting and other services was approximately $0.7 million, nil and nil for the year ended December 31, 2024, 2023 and 2022, respectively.
The increase in general and administrative expenses was mainly due to an increase of share-based compensation for services and consulting and professional fees of $4.0 million. As a percentage of revenues, general and administrative expenses were 133% and 129% of our total revenues for the year ended December 31, 2022 and 2021, respectively.
The decrease in general and administrative expenses was mainly due to a decrease of professional service fees by approximately $0.2 million and amortization of stock-based compensation for services of approximately $2.6 million partially offset by an increase of other expenses approximately $0.2 million.
In fiscal 2023, our customers financial situation improved after the lifting of COVID-19 control measures . For the year ended December 31, 2022, our provision for credit losses were approximately $1.7 million, representing a decrease of approximately $0.5 million as compared to approximately $2.3 million in the year ended December 31, 2021.
For the year ended December 31, 2023, our recovery of credit from continuing operations were approximately $22,306, representing a decrease of provision for $48,288 as compared to provision for credit losses was $25,982 in the year ended December 31, 2022.
During the year ended December 31, 2021, the Company paid approximately $2.6 million on the construction in progress (“CIP”) and received proceeds from disposal of subsidiaries of approximately $2.6 million. Net cash used in discontinued investing activities was approximately $1.8 million.
Net cash used in discontinued operating activities was approximately $0.2 million. Net cash used in operating activities was approximately $11.6 million in the year ended December 31, 2023.
The significant decrease in our total revenue in the year ended December 31, 2023 compared to the year ended December 31, 2022 was mainly due to the slowdown in the PRC real estate market and decrease in investment in infrastructure in fiscal 2023, which resulted in lower demand for the municipal construction projects, as well as decrease in orders for construction machinery and equipment and materials.
Our total revenues from continuing operations market and decrease in investment in infrastructure in fiscal 2023, which resulted in lower demand for our machinery and equipment. 63 Machinery and Equipment Revenue from continuing operations in machinery and equipment sales increased by approximately $1.2 million, or 10,809%, from $10,781 for the year ended December 31, 2023 to approximately $1.2 million for the year ended December 31, 2024.
Provision for (Recovery of) Credit Losses For the year ended December 31, 2023, our recovery of credit losses was approximately $0.6 million, as compared to a provision of credit loss of approximately $1.7 million for the year ended December 31, 2022. We incurred significant provision for credit losses on uncollectible accounts receivable and advance payments for fiscal 2022 and 2021.
Provision for (Recovery of) Credit Losses For the year ended December 31, 2024, our provision for credit losses from continuing operations were approximately $0.2 million, as compared to recovery of credit losses $22,306 for the year ended December 31, 2023.
Management expects that it would be able to renew all of its existing bank loans upon their maturity based on past experience and the Company’s good credit history. Currently, the Company is working to improve its liquidity and capital source mainly through cash flow from its operations, renewal of bank borrowings, and borrowing from related parties.
Currently, the Company is working to improve its liquidity and capital source mainly through cash flow from its operations, renewal of bank borrowings, and borrowing from related parties. In order to fully implement its business plan and sustain operations, the Company may also seek equity financing from outside investors.
Municipal Construction Gross gain(loss) for the municipal construction project segment was approximately nil and $0.04 million and ($0.1) million for the year ended December 31, 2023, 2022 and 2021, respectively.
Research and Development Expenses Our research and development (“R&D”) expenses from continuing operations were approximately $0.5 million, nil and nil for the year ended December 31, 2024, 2023 and 2022, respectively.
The significant increase in our total revenue in the year ended December 31 2022 compared to the year ended December 31, 2021 was mainly due to higher machinery and equipment sales resulted from large contracts for gravity separators and revenue from RSA services and software development services which were acquired in December 2021.
For the year ended December 31, 2023, our selling expenses from continuing operations were approximately $5,939, compared to approximately nil in the year ended December 31, 2022. The increase was mainly due to increase in salary and benefit in the year ended December 31, 2023.
The decrease in our total cost of revenue was generally in line with the decrease in revenue. As a percentage of revenues, cost of revenues increased to 94% in the year ended December 31, 2023 from 88% in the year ended December 31, 2022, because some fixed costs did not decrease with revenue and labor cost increased in 2023.
As a percentage of revenues, cost of revenues decreased to 55% in the year ended December 31, 2024 from 86% in the year ended December 31, 2023, attributable to high profit margin of our technological consulting and other services in 2024.
The following table reconciles the income tax expense by statutory rate to the Company’s actual income tax expense from our continuing operations: For the Year Ended December 31, 2023 2022 2021 Income tax expense computed based on PRC statutory income tax rate $ (4,021,427 ) $ (3,849,305 ) $ (5,118,519 ) Effect of favorable income tax rate in certain entity in PRC 245,598 181,088 889,716 Non-PRC entities not subject to PRC tax 1,469,346 1,749,333 1,564,644 Research & Development (“R&D”) tax credit (291,511 ) (240,150 ) (260,213 ) Non-deductible expenses – permanent difference 131,500 171,393 588,191 Change in valuation allowance 2,449,855 1,970,079 2,339,650 Income tax expenses $ (16,639 ) $ (17,562 ) $ 3,469 80 Net Loss Our net loss from continuing operations amounted to approximately $16.1 million, $15.4 million and $20.5 million for the year ended December 31, 2023, 2022 and 2021, respectively.
The following table reconciles the income tax expense by statutory rate to the Company’s actual income tax expense from our continuing operations: For the Year Ended December 31, 2024 2023 2022 Income tax benefit computed based on PRC statutory income tax rate $ (2,078,144 ) $ (1,631,581 ) $ (1,621,594 ) Effect of favorable income tax rate in certain entity in PRC - - - Non-PRC entities not subject to PRC tax (1) 1,768,565 1,596,505 1,611,361 Non-deductible expenses - permanent difference (2) 1,393 243 - Change in valuation allowance 308,186 34,833 10,233 Effective tax (benefit) expense $ - $ - $ - (1) Represents the tax losses incurred from operations outside of China.
Share of Losses in Equity Method Investments For the year ended December 31, 2023, 2022 and 2021, share of losses in equity method investments for Shexian Ruibo amounted to approximately $0.1 million, $0.05 million and $0.1 million, respectively.
Our net loss from discontinued operations amounted to $74,347, approximately $9.5 million and $8.9 million for the year ended December 31, 2024, 2023 and 2022, respectively.
Cash Flows for Years Ended December 31, 2023, 2022 and 2021 The following table sets forth summary of our cash flows for the periods indicated: (All amounts in thousands of U.S. dollars) December 31, 2023 December 31, 2022 December 31, 2021 Net cash (used in) provided by operating activities $ (11,591 ) $ (9,962 ) $ (2,764 ) Net cash provided by (used in) investing activities 352 4,243 (1,743 ) Net cash provided by (used in) financing activities 12,465 4,756 4,048 Effect of exchange rate changes on cash and cash equivalents 74 620 (204 ) Net (decrease) increase in cash and cash equivalents 1,300 (344 ) (663 ) Cash and restricted cash, beginning of the year 114 457 1,121 Cash and restricted cash, end of the year 1,414 $ 114 $ 458 Cash and cash equivalents, restricted cash of continued operation, at end of period $ 1,414 $ 114 $ 458 Operating Activities Net cash used in operating activities was approximately $11.6 million in the year ended December 31, 2023.
Cash Flows for Years Ended December 31, 2024, 2023 and 2022 The following table sets forth summary of our cash flows for the periods indicated: December 31, 2024 December 31, 2023 December 31, 2022 Net cash provided by (used in) operating activities from continuing operations $ 3,270,343 $ (918,879 ) $ (1,511,208 ) Net cash used in operating activities from discontinued operations (193,061 ) (10,671,866 ) (8,450,627 ) Net cash provided by (used in) operating activities 3,077,282 (11,590,745 ) (9,961,835 ) Net cash used in investing activities from continuing operations (32,592,778 ) (47,226 ) - Net cash provided by (used in) investing activities from discontinued operations (987,511 ) 398,909 4,242,703 Net cash provided by (used in) investing activities (33,580,289 ) 351,683 4,242,703 Net cash provided by financing activities from continuing operations 29,735,049 6,564,841 7,741,092 Net cash provided by (used in) financing activities from discontinuing operations 47,457 5,900,479 (2,985,277 ) Net cash provided by financing activities 29,782,506 12,465,320 4,755,815 Effect of exchange rate changes on cash and cash equivalents (21,813 ) 73,516 619,717 Net (decrease) increase in cash and cash equivalents (742,314 ) 1,299,774 (343,600 ) Cash and restricted cash, beginning of the year 1,413,669 113,895 457,495 Cash and restricted cash, end of the year 671,355 $ 1,413,669 $ 113,895 Cash and cash equivalents, restricted cash of continued operation, at end of period $ 671,355 $ 1,413,669 $ 113,895 68 Operating Activities Net cash provided by operating activities was approximately $3.1 million in the year ended December 31, 2024.
Removed
As of December 31, 2023, our equipment and machinery were sold in six countries. Impact of COVID-19 In December 2019, a novel strain of coronavirus (COVID-19) surfaced and significantly impacted the global economy. From late January 2020 through March 2020, the Company had to temporarily suspend the manufacturing activities due to government restrictions.
Added
Results of Operations from Our Continuing Operations On December 30, 2024, ReTo entered into a Share Sale Agreement with Zhao Duan Wen, pursuant to which the Company sold all of its shares in REIT Holdings to the buyer for a purchase price of US$80,000.
Removed
The Company experienced difficulty in delivering the products to customers on a timely basis. The Company’s production and sales activities from its continuing operations returned to normal after the spread of COVID-19 was substantially controlled in China in late 2020.
Added
REIT Holdings was the holding company of multiple indirect subsidiaries of ReTo, which were engaged in in the business of manufacture and distribution of eco-friendly construction materials, ecological restoration projects and software development services and solutions utilizing Internet of Things technologies. The disposition was completed on December 31, 2024.
Removed
However, there was a resurgence of COVID-19 cases during 2021 caused by new variants such as Delta and Omicron in multiple cities in China, as well as across the world. Restrictions were re-imposed in certain cities in China to combat such outbreaks and emerging variants of the virus.
Added
The discontinued operations represent a strategic shift that has a major effect on the Company’s operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45. The results of operations related to the discontinued operations for the years ended December 31, 2022, 2023 and 2024 were reported as loss from discontinued operations.
Removed
COVID-19 had a significant impact on the construction sector, which is sensitive to economic cycles. The nature of the impacts and extent of the ramifications are in large part dependent upon the location of the underlying projects. Direct impacts ranged from a slowdown in supply of available materials and labor to, in some instances, deferral and suspension of entire projects.
Added
Comparison of Operation Results for the Years Ended December 31, 2024, 2023 and 2022 The following table summarizes the results of our continuing operations during the fiscal years ended December 31, 2024, 2023 and 2022, and provides information regarding the changes in terms of dollar amounts and percentage during such years. 2024 2023 Amount Percentage Statements of Income Data: Amount As % of Sales Amount As % of Sales Increase (Decrease) Increase (Decrease) Revenues - third party customers $ 1,599,376 87 % $ 10,781 100 % $ 1,588,595 14,735 % Revenue- related party customers 229,600 13 % - - % 229,600 - % Total revenues 1,828,976 100 % 10,781 100 % 1,818,195 16,865 % Cost of revenues - third party 871,329 48 % 9,240 86 % 862,089 9,330 % Cost of revenues - related party customers 132,443 7 % - - % 132,443 - % Total cost of revenues 1,003,772 55 % 9,240 86 % 994,532 10,763 % Gross profit 825,204 45 % 1,541 14 % 823,663 53,450 % Operating expenses: Selling expenses 330,828 18 % 5,939 55 % 324,889 5,470 % General and administrative expenses 3,927,450 215 % 6,499,940 60,291 % (2,572,490 ) (40 )% Provision (recovery) for credit losses 199,812 11 % (22,306 ) (207 )% 222,118 (996 )% Research and development expense 498,168 27 % - - % 498,168 - % Total operating expenses 4,956,258 271 % 6,483,573 60,139 % (1,527,315 ) (24 )% Loss from continuing operations (4,131,054 ) (226 )% (6,482,032 ) (60,125 )% 2,350,978 (36 )% Other income (expenses) Interest expense, net (2,015 ) - % (92,081 ) (854 )% 90,066 (98 )% Other income (expenses) (602,228 ) (33 )% (22 ) - (602,206 ) 2,737,300 % Change in fair value in convertible debt - - % 47,813 443 % (47,813 ) (100 )% Loss from disposal of subsidiaries (3,577,279 ) (196 )% - - % (3,577,279 ) - % Total other expenses, net (4,181,522 ) (229 )% (44,290 ) (411 )% (4,137,232 ) 9,341 % Loss before continuing operating income taxes (8,312,576 ) (455 )% (6,526,322 ) (60,535 )% (1,786,254 ) 27 % Income taxes provision (benefit) - - % - - % - - % Net loss from continuing operations $ (8,312,576 ) (455 )% $ (6,526,322 ) (60,535 )% $ (1786,254 ) 27 % Net loss from discontinued operations, net of taxes (74,347 ) (4 )% (9,542,748 ) (88,514 )% 9,468,401 (99 )% Net loss $ (8,386,923 ) (459 )% $ (16,069,070 ) (149,050 )% $ 7,682,147 (48 )% 62 2023 2022 Amount Percentage Statements of Income Data: Amount As % of Sales Amount As % of Sales Increase (Decrease) Increase (Decrease) Revenues $ 10,781 100 % $ 204,495 100 % $ (193,714 ) (95 )% Cost of revenues 9,240 86 % 203,348 99 % (194,108 ) (95 )% Gross profit 1,541 14 % 1,147 1 % 394 34 % Operating expenses: Selling expenses 5,939 55 % - - % 5,939 - % General and administrative expenses 6,499,940 60,291 % 5,845,392 2,858 % 654,548 11 % (Recovery of) provision for credit losses (22,306 ) (207 )% 25,982 13 % (48,288 ) (186 )% Total operating expenses 6,483,573 60,139 % 5,871,374 2,871 % 612,199 10 % Loss from continuing operations (6,482,032 ) (60,125 )% (5,870,227 ) (2,871 )% (611,805 ) 10 % Other income (expenses) Interest expense, net (92,081 ) (854 )% (195,287 ) (95 )% 103,206 (53 )% Other income (expense), net (22 ) - % 61,942 30 % (61,964 ) (100 )% change in fair value in convertible debt 47,813 443 % (467,383 ) (229 )% 515,196 (110 )% Total other expenses, net (44,290 ) (411 )% (600,728 ) (294 )% 556,438 (93 )% Loss before continuing income taxes (6,526,322 ) (60,535 )% (6,470,955 ) (3,164 )% (55,367 ) 1 % Income taxes provision (benefit) - - % - - % - - % Net loss from continuing operations $ (6,526,322 ) (60,535 )% $ (6,470,955 ) (3, 164) % $ (55,367 ) 1 % Net loss from discontinued operations, net of taxes (9,542,748 ) (88,514 )% (8,908,703 ) (4,356 )% (634,045 ) 7 % Net loss $ (16,069,070 ) (149,050 )% $ (15,379,658 ) (7,521 )% $ (689,412 ) 4 % Revenues The following table summarizes the results of revenues from our continuing operations for the fiscal years ended December 31, 2024, 2023 and 2022: 2024 2023 Variance Amount % of Sales Amount % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Machinery and equipment $ 1,176,070 64 % $ 10,781 100 % $ 1,165,289 10,809 % Technological consulting and other services 652,906 36 % - - % 652,906 - % Total $ 1,828,976 100 % $ 10,781 100 % $ 1,818,195 16,865 % 2023 2022 Variance Amount % of Sales Amount % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Machinery and equipment $ 10,781 100 % $ 204,495 100 % $ (193,714 ) (95 )% Total $ 10,781 100 % $ 204,495 100 % $ (193,714 ) (95 )% Our total revenues from continuing operations increased by approximately $1.8 million, or 16,865%, to approximately $1.8 million for the year ended December 31, 2024 from $10,781 for the year ended December 31, 2023.
Removed
As a result, COVID-19 had a significant impact on the Company’s financial results for the years ended December 31, 2022 and 2021. 71 In December, China lifted almost all of its COVID-19 control measures followed by removal of additional travel restrictions issued by local governments.
Added
The lower revenue for the year ended December 31, 2023 was mainly due to the fact that a significant portion of revenue was generated through disposed subsidiaries and included in the discontinued operations for the year ended December 31, 2023.
Removed
On May 5, 2023, the World Health Organization declared that COVID-19 no longer constitutes a public health emergency of international concern.
Added
The lower revenue for the year ended December 31, 2023 was mainly due to the fact that a significant portion of revenue from machinery and equipment sales was generated through disposed subsidiaries and included in the discontinued operations for the year ended December 31, 2023.
Removed
However, due to the lingering effect of COVID on Chinese economy and resulting weaker demand in the PRC real estate market in 2023, we did not have any revenue from municipal construction business in the fiscal 2023 and our revenue from machinery and equipment and technology consulting and other services decreased by 46% and 80%, respectively, comparing to fiscal 2022.

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Item 6. [Reserved]

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

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Hu worked in Gu’an REIT Machinery Manufacturing Co., Ltd., a former wholly owned subsidiary of the Company, as a procurement specialist, in charge of purchasing accessories needed for production and processing. Ms. Hu received her bachelor’s degree in Accounting from Xi’an Siyuan University. Tonglong Liu. Mr. Liu has served as an independent director of the Company since November 2022. Mr.
Hu worked in Gu’an REIT Machinery Manufacturing Co., Ltd., a former wholly owned subsidiary of the Company, as a procurement specialist, in charge of purchasing accessories needed for production and processing. Ms. Hu received her bachelor’s degree in Accounting from Xi’an Siyuan University. Tonglong Liu. Mr. Liu has served as an independent director of ReTo since November 2022. Mr.
Lidong Liu qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and Nasdaq Capital Market corporate governance requirements. 91 Duties of Directors Under BVI law, our directors have a duty to act honestly, in good faith and with a view to our best interests.
Lidong Liu qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and Nasdaq Capital Market corporate governance requirements. Duties of Directors Under BVI law, our directors have a duty to act honestly, in good faith and with a view to our best interests.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors or officers under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable as a matter of United States law. D. Employees.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors or officers under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable as a matter of United States law. 79 D. Employees.
There are no other arrangements or understandings pursuant to which our directors are selected or nominated. We do not have any service contacts with our directors that provide benefits upon termination of employment. Our board of directors plays a significant role in our risk oversight. The board of directors makes all relevant company decisions.
There are no other arrangements or understandings pursuant to which our directors are selected or nominated. We do not have any service contacts with our directors that provide benefits upon termination of employment. 77 Our board of directors plays a significant role in our risk oversight. The board of directors makes all relevant company decisions.
The option price will be no less than the fair market value of the shares on the option grant date. Participants Employees of the Company, executive officers, non-employee directors and consultants may all be selected by the Compensation Committee to receive awards under the 2022 Share Incentive Plan.
The option price will be no less than the fair market value of the shares on the option grant date. 82 Participants Employees of the Company, executive officers, non-employee directors and consultants may all be selected by the Compensation Committee to receive awards under the 2022 Share Incentive Plan.
The benefits or amounts that may be received by or allocated to participants under the 2022 Share Incentive Plan will be determined at the discretion of the Compensation Committee and are not presently determinable. 95 Termination and Amendment The Compensation Committee may terminate the 2022 Share Incentive Plan at any time.
The benefits or amounts that may be received by or allocated to participants under the 2022 Share Incentive Plan will be determined at the discretion of the Compensation Committee and are not presently determinable. Termination and Amendment The Compensation Committee may terminate the 2022 Share Incentive Plan at any time.
The number of holders of record and the shares they held is based exclusively upon the certified shareholder list provided by our transfer agent and does not address whether a share or shares may be held by the holder of record on behalf of more than one person or institution who may be deemed to be the beneficial owner of a share or shares in the Company. 2022 Share Incentive Plan On December 6, 2022, the Company’s shareholders approved the 2022 Share Incentive Plan, which initially allowed for issuance of up to 50,000 Common Shares to employees, non-employee directors, officers and consultants for services rendered to the Company, with an automatic share reserve increase by a number equal to the lesser of (i) 5% of the total number of Common Shares issued and outstanding on December 31 of the calendar year immediately preceding the date of such increase and (ii) a number of Common Shares determined by the Compensation Committee.
The number of holders of record and the shares they held is based exclusively upon the certified shareholder list provided by our transfer agent and does not address whether a share or shares may be held by the holder of record on behalf of more than one person or institution who may be deemed to be the beneficial owner of a share or shares in the Company. 2022 Share Incentive Plan On December 6, 2022, the Company’s shareholders approved the 2022 Share Incentive Plan, which initially allowed for issuance of up to 5,000 Class A Shares to employees, non-employee directors, officers and consultants for services rendered to the Company, with an automatic share reserve increase by a number equal to the lesser of (i) 5% of the total number of Class A Shares issued and outstanding on December 31 of the calendar year immediately preceding the date of such increase and (ii) a number of Class A Shares determined by the Compensation Committee.
We believe we maintain a good working relationship with our employees, and we have not experienced any material labor disputes or any difficulty in recruiting staff for our operations. 93 E. Share ownership.
We believe we maintain a good working relationship with our employees, and we have not experienced any material labor disputes or any difficulty in recruiting staff for our operations. E. Share ownership.
The 2022 Share Incentive Plan provides for an automatic share reserve increase feature, whereby the share reserve will be increased automatically on the first day of each fiscal year beginning with the 2023 fiscal year, in an amount equal to the lesser of (i) a number equal to 5% of the aggregate number of Common Shares outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as is determined by the compensation committee.
The 2022 Share Incentive Plan provides for an automatic share reserve increase feature, whereby the share reserve will be increased automatically on the first day of each fiscal year beginning with the 2023 fiscal year, in an amount equal to the lesser of (i) a number equal to 5% of the aggregate number of Class A Shares outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as is determined by the compensation committee.
Dai is entitled to annual compensation of RMB 750,000 (approximately $109,000), and other discretionary equity bonus or benefits as determined by the Company from time to time. 89 Employment Agreement with Zhizhong Hu The Company entered into an employment agreement with Mr. Hu on May 11, 2024 (the “Hu Employment Agreement”), pursuant to which Mr.
Dai is entitled to annual compensation of RMB 750,000 (approximately $109,000), and other discretionary equity bonus or benefits as determined by the Company from time to time. 75 Employment Agreement with Zhizhong Hu The Company entered into an employment agreement with Mr. Hu on May 11, 2024 (the “Hu Employment Agreement”), pursuant to which Mr.
Types of Awards Awards under the 2022 Share Incentive Plan may be in the form of incentive stock options, non-statutory stock options or restricted stock awards. An option is the right to purchase the Company’s Common Shares at a price and on a schedule set by the Compensation Committee.
Types of Awards Awards under the 2022 Share Incentive Plan may be in the form of incentive stock options, non-statutory stock options or restricted stock awards. An option is the right to purchase the Company’s Class A Shares at a price and on a schedule set by the Compensation Committee.
Liu received his master’s degree and bachelor’s degree from the Department of Vehicle Engineering of Beijing Institute of Technology. Baoqing Sun. Mr. Sun has served as an independent director of the Company since November 2022. Before retiring in 2014, Mr.
Liu received his master’s degree and bachelor’s degree from the Department of Vehicle Engineering of Beijing Institute of Technology. Baoqing Sun. Mr. Sun has served as an independent director of ReTo since November 2022. Before retiring in 2014, Mr.
Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power or the power to receive the economic benefit with respect to all Common Shares that they beneficially own, subject to applicable community property laws.
Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power or the power to receive the economic benefit with respect to all Class A Shares that they beneficially own, subject to applicable community property laws.
(2) Class C director, whose term will expire at the 2025 annual meeting of shareholders. (3) Class B director, whose term will expire at the 2024 annual meeting of shareholders. (4) Class A director, whose term will expire at the 2026 annual meeting of shareholders. (5) Member of audit committee. (6) Member of compensation committee. (7) Member of nominating committee.
(2) Class C director, whose term will expire at the 2025 annual meeting of shareholders. (3) Class B director, whose term will expire at the 2027 annual meeting of shareholders. (4) Class A director, whose term will expire at the 2026 annual meeting of shareholders. (5) Member of audit committee. (6) Member of compensation committee. (7) Member of nominating committee.
Huang holds a master’s degree and Ph.D. in Geotechnical Engineering from University of Wisconsin. 88 Family Relationship There are no family relations among any of our officers or directors, except that Yue Hu is Zhizhong Hu’s daughter. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.
Huang holds a master’s degree and Ph.D. in Geotechnical Engineering from University of Wisconsin. 74 Family Relationship There are no family relations among any of our officers or directors, except that Yue Hu is Zhizhong Hu’s daughter. There are no other arrangements or understandings pursuant to which our directors are selected or nominated. B. Compensation.
As of the date of this annual report, the automatic share reserve increase will permit the Company to issue up to an additional 187,260 shares under the 2022 Incentive Plan, subject to the approval of the Compensation Committee. The following is a summary of the principal terms of the 2022 Share Incentive Plan.
As of the date of this annual report, the automatic share reserve increase will permit the Company to issue up to an additional 115,489 shares under the 2022 Incentive Plan, subject to the approval of the Compensation Committee. The following is a summary of the principal terms of the 2022 Share Incentive Plan.
Sun obtained a bachelor’s degree in mechanical engineering automotive from Hebei Institute of Technology. Lidong Liu. Ms. Liu has served as the Chief Financial Officer since November 2015 for Jilin Yiyatong Deep Supply Chain Management Co., Ltd, a supply chain management company.
Sun obtained a bachelor’s degree in mechanical engineering automotive from Hebei Institute of Technology. Lidong Liu. Ms. Liu has served as an independent director of ReTo since November 2022. Ms. Liu has served as the Chief Financial Officer since November 2015 for Jilin Yiyatong Deep Supply Chain Management Co., Ltd, a supply chain management company.
The employment agreements also contain customary restrictive covenants relating to confidentiality, non-competition and non-solicitation, as well as indemnification of the executive officer against certain liabilities and expenses incurred by him in connection with claims made by reason of him being an officer of our company. Employment Agreement with Yue Hu The Company entered into an employment agreement with Ms.
The employment agreements also contain customary restrictive covenants relating to confidentiality, non-competition and non-solicitation, as well as indemnification of the executive officer against certain liabilities and expenses incurred by him in connection with claims made by reason of him being an officer of our company. Employment Agreement with Yue Hu ReTo Hengda entered into a standardized labor contract with Ms.
The following tables set forth certain information with respect to the beneficial ownership of our Common Shares as of May 14, 2024, for: ● each of our directors and named executive officers; and ● all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the SEC.
The following tables set forth certain information with respect to the beneficial ownership of our Shares as of May 8, 2025, for: ● each of our directors and named executive officers; and ● all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the SEC.
Hu has served as Beijing REIT’s Chief Technology Officer and Director since 2000. Mr. Hu served as the general manager and executive director of Yichang Hayes Building Materials Co., Ltd. from 1997 through 2000. From 1996 through 1997, Mr. Hu served as the business representative for Hayes Mechanical Engineering Co., Ltd. of Germany. Mr.
Hu served as Beijing REIT’s Chief Technology Officer and Director from February 2000 to November 2024. Mr. Hu served as the general manager and executive director of Yichang Hayes Building Materials Co., Ltd. from 1997 through 2000. From 1996 through 1997, Mr. Hu served as the business representative for Hayes Mechanical Engineering Co., Ltd. of Germany. Mr.
Equity Awards In the fiscal year ended December 31, 2023, an aggregate of 7,250 Common Shares were issued to our senior officers named in this annual report, pursuant to the 2022 Share Incentive Plan. Other than salaries, fees and share incentives, we do not otherwise provide pension, retirement or similar benefits to our officers and directors.
Equity Awards In the fiscal year ended December 31, 2024, an aggregate of 7,726 Class A Shares were issued to our executive officers named in this annual report, pursuant to the 2022 Share Incentive Plan. Other than salaries, fees and share incentives, we do not otherwise provide pension, retirement or similar benefits to our officers and directors.
Limitation on Liability and Other Indemnification Matters Under British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in good faith with a view to our best interests.
Qualification A director is not required to hold shares as a qualification to office. Limitation on Liability and Other Indemnification Matters Under British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in good faith with a view to our best interests.
Subject to compliance with the BVI Act, our board of directors may exercise all the powers of the Company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party. 92 Qualification A director is not required to hold shares as a qualification to office.
Subject to compliance with the BVI Act, our board of directors may exercise all the powers of the Company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.
On March 8, 2023, the Company’s board of directors approved the issuance of an aggregate of 50,000 Common Shares to its employees, officers and directors for their services.
On March 8, 2023, the Company’s board of directors approved the issuance of an aggregate of 5,000 Class A Shares to its employees, officers and directors for their services.
Name (1) Age Position Hengfang Li (2) 61 Chief Executive Officer and Chairman of the Board Guangfeng Dai (2) 63 President, Chief Operating Officer and Director Zhizhong Hu (2) 61 Chief Technology Officer and Director Degang Hou 62 Chief Internal Control Officer Yue Hu 34 Chief Financial Officer Tonglong Liu (3) (5) (6) (7) 60 Director Baoqing Sun (3) (5) (6) (7) 61 Director Lidong Liu (4) (5) 52 Director Austin Huang (4) (6) (7) 66 Director (1) Each individual’s business address is c/o Beijing REIT Technology Development Co., Ltd., Building X-702, 60 Anli Road, Chaoyang District, Beijing China.
Name (1) Age Position Hengfang Li (2) 62 Chief Executive Officer and Chairman of the Board Guangfeng Dai (2) 64 President, Chief Operating Officer and Director Zhizhong Hu (2) 62 Chief Technology Officer and Director Degang Hou 63 Chief Internal Control Officer Yue Hu 35 Chief Financial Officer Tonglong Liu (3) (5) (6) (7) 61 Director Baoqing Sun (3) (5) (6) (7) 62 Director Lidong Liu (4) (5) 53 Director Austin Huang (4) (6) (7) 67 Director (1) Each individual’s business address is Building X-702, 60 Anli Road, Chaoyang District, Beijing China.
Subject to compliance with the BVI Act, a Company director shall not, by reason of that director’s office, be accountable to the Company for any remuneration, profit or other benefit derived, or resulting, from derived from such transaction and no such transaction shall be liable to be avoided on the grounds that a director has an interest in it or derives any remuneration, profit or other benefit from it.
Subject to compliance with the BVI Act, a Company director shall not, by reason of that director’s office, be accountable to the Company for any remuneration, profit or other benefit derived, or resulting, from derived from such transaction and no such transaction shall be liable to be avoided on the grounds that a director has an interest in it or derives any remuneration, profit or other benefit from it. 78 Remuneration and Borrowing The directors may receive such remuneration as our board of directors may determine from time to time.
Subject to the terms of the 2022 Share Incentive Plan, the Compensation Committee has the discretion to determine the terms of each award. Amount of Awards The maximum number of Common Shares as to which awards may be granted under the 2022 Share Incentive Plan is 187,260 shares.
Subject to the terms of the 2022 Share Incentive Plan, the Compensation Committee has the discretion to determine the terms of each award. Amount of Awards The maximum number of Class A Shares as to which awards may be granted under the 2022 Share Incentive Plan is 115,489 shares.
The Board may condition any amendment on the approval of the shareholders if such approval is necessary or deemed advisable with respect to the applicable listing or other requirements of a national securities exchange or other applicable laws, policies or regulations.
The Board may condition any amendment on the approval of the shareholders if such approval is necessary or deemed advisable with respect to the applicable listing or other requirements of a national securities exchange or other applicable laws, policies or regulations. F. Disclosure of a registrant’s action to recover erroneously awarded compensation. None. Item 7.
We had a total of 116 and 115 full-time employees as of December 31, 2022 and 2021, respectively. We did not hire any part-time employees during the fiscal years ended December 31, 2023, 2022 and 2021. All of our employees are located at our facilities in Beijing, Haikou, Xinyi and Honghe, China.
We had a total of 46 and 103 full-time employees as of December 31, 2024 and 2023, respectively. We did not hire any part-time employees during the fiscal years ended December 31, 2024, 2023, and 2022. All of our employees are located at our offices or facilities in Beijing, Xi’an, and Hebei, China.
Mr. Hu holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 39,032 Common Shares held by REIT International. (4) Represents (i) approximately 7,806 Common Shares held through REIT International. Mr.
Hu holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 1,000,000 Class B Shares held by REIT International. (4) Represents (i) approximately 781 Class A Shares held through REIT International. Mr.
From 1988 through 1995, Mr. Li was an engineer, senior engineer and then branch director at China North Vehicle Engine Research Center. Mr. Li holds a master’s degree in Engine Studies from Beijing Institute of Technology. Guangfeng Dai. Mr. Dai became the President of ReTo in 2020. Previously Mr.
Li served as the chief representative in China of the German Hess Group from 1995 until 1999. From 1988 through 1995, Mr. Li was an engineer, senior engineer and then branch director at China North Vehicle Engine Research Center. Mr. Li holds a master’s degree in Engine Studies from Beijing Institute of Technology. Guangfeng Dai. Mr.
Li holds a 40% ownership of REIT International and has the voting and investment power with respect to 40% of the 39,032 Common Shares held by REIT International; (ii) 100 Common Shares held through Soothie Holdings Limited, a British Virgin Islands company, controlled by Mr. Li; and (iii) 4,750 Common Shares held by Mr. Li directly.
Li holds a 40% ownership of REIT International and has the voting and investment power with respect to 40% of the 3,904 Class A Shares held by REIT International; (ii) 10 Class A Shares held through Soothie Holdings Limited, a British Virgin Islands company, controlled by Mr. Li; and (iii) 400,000 Class B Shares held through REIT International. Mr.
As of December 31, 2023, we had a total of 103 full-time employees. Among these employees, we had 30 employees in management, 19 employees in sales and marketing, 38 employees in research and development, 12 employees in manufacturing and installation and 4 employees in administration/finance.
As of December 31, 2024, we had a total of 46 full-time employees. Among these employees, we had nine employees in management, three employees in sales and marketing, 18 employees in research and development, four employees in manufacturing and installation and 12 employees in administration/finance.
She has worked in Beijing REIT Technology Development Co., Ltd., a wholly owned subsidiary of ReTo, as an assistant to the management since May 2019, and has assisted with preparation and filing of periodic reports of the Company to the SEC. From March 2015 to December 2016, Ms.
Previously, she worked in Beijing REIT as an assistant to the management from May 2019 to November 2024, and assisted with preparation and filing of periodic reports of the Company to the SEC. From March 2015 to December 2016, Ms.
From 1999 through 2020 he was the deputy general manager for Beijing REIT. He graduated in Ship Internal Combustion Engine Direction from Dalian University of Technology in 1983. Yue Hu. Ms. Hu has served as Chief Financial Officer of ReTo since August 2022.
He graduated in Ship Internal Combustion Engine Direction from Dalian University of Technology in 1983. Yue Hu. Ms. Hu has served as Chief Financial Officer of ReTo since August 2022. She has served as the Chief Financial Officer of ReTo Hengda since December 2024.
Applicable percentage ownership prior is based on 3,801,608 Common Shares outstanding as of May 14, 2024. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o ReTo Eco-Solutions, Inc., Building X-702, 60 Anli Road, Beijing, People’s Republic of China 100101.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o ReTo Eco-Solutions, Inc., Building X-702, 60 Anli Road, Beijing, People’s Republic of China 100101.
(2) Represents (i) approximately 7,806 Common Shares held through REIT International. Mr. Dai holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 39,032 Common Shares held by REIT International and (ii) 3,960 Common Shares held by Mr. Dai directly. (3) Represents approximately 7,806 Common Shares held through REIT International.
Dai holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 1,000,000 Class B Shares held by REIT International. (3) Represents (i) approximately 781 Class A Shares held through REIT International. Mr.
Class A directors shall face re-election at our 2026 annual general meeting of shareholders and shall face reelection every three years thereafter. Class B directors faced re-election at our 2024 annual general meeting of shareholders and every three years thereafter. Class C directors shall face re-election at our 2025 annual general meeting of shareholders and every three years thereafter.
Officers are elected by and serve at the discretion of the board of directors. Class A directors shall face re-election at our 2026 annual general meeting of shareholders and shall face reelection every three years thereafter. Class B directors shall face re-election at our 2027 annual general meeting of shareholders and every three years thereafter.
Hou holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 39,032 Common Shares held by REIT International and (ii) 175 Common Shares held by Mr. Hou directly. (5) Mr.
Hou holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 3,904 Class A Shares held by REIT International and (ii) 200,000 Class B Shares held through REIT International. Mr.
Hengfang Li. Mr. Li has served as the Chief Executive Officer and Chairman of ReTo since April 2016. Mr. Li founded Beijing REIT in 1999 and has served as Beijing REIT’s Chief Executive Officer and Chairman since 1999. Mr. Li served as the chief representative in China of the German Hess Group from 1995 until 1999.
Hengfang Li. Mr. Li has served as the Chief Executive Officer and Chairman of ReTo since April 2016. Mr. Li founded Beijing REIT in 1999 and served as its Chief Executive Officer and Chairman since then until November 2024. Mr. Li has served as ReTo Hengda’s Chief Executive Officer since December 2024. Mr.
Hu is entitled to an annual compensation of RMB180,000 (approximately $26,500) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with laws in the People’s Republic of China and the Company’s policy. Her employment agreement may be terminated in accordance with the PRC Labor Contract Law and relevant local regulations in Beijing.
Hu is entitled to an annual compensation of RMB204,000 (approximately $28,045) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with laws in the People’s Republic of China and the Company’s policy.
Compensation. Executive Compensation Our board of directors has not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers.
Executive Compensation Our board of directors has not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. Currently, our board of directors determines the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers to our success.
All directors hold office until the next annual meeting of shareholders at which their respective class of directors is re-elected and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of the board of directors.
The directors are divided into three classes, as nearly equal in number as the then total number of directors permits. All directors hold office until the next annual meeting of shareholders at which their respective class of directors is re-elected and until their successors have been duly elected and qualified.
Dai was a senior engineer at Yanxing Corporation of China. From 1992 through 1994, Mr. Dai was a senior engineer at China North Industries Group Corporation. Mr. Dai received his master’s degree in Automobile Engineering from Beijing Institute of Technology. 87 Zhizhong Hu. Mr. Hu has served as the Chief Technology Officer and Director of ReTo since November 2016. Mr.
Dai received his master’s degree in Automobile Engineering from Beijing Institute of Technology. Zhizhong Hu. Mr. Hu has served as the Chief Technology Officer and Director of ReTo since November 2016. Mr. Hu has served as ReTo Hengda’s Chief Technology Officer since December 2024. Previously, Mr.
Hu received his bachelor’s degree in Mechanical Engineering from Nanjing University of Science and Technology. Degang Hou. Mr. Hou has served as the Chief Internal Control Officer of ReTo since February 2020. From 1983 through 1999, he was an engineer and senior engineer of North Vehicle Research Institute, State Weaponry Equipment Corporation.
Hu received his bachelor’s degree in Mechanical Engineering from Nanjing University of Science and Technology. 73 Degang Hou . Mr. Hou has served as the Chief Internal Control Officer of ReTo since February 2020. Mr. Hou has served as the Chief Internal Control Officer of ReTo Hengda since December 2024. Previously, Mr.
If the number of directors changes, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible.
Class C directors shall face re-election at our 2025 annual general meeting of shareholders and every three years thereafter. If the number of directors changes, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible.
In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for each board of directors meeting attended, up to a maximum of $2,000 per meeting and $4,000 per year. Cash Compensation During the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB 0.28 million (approximately $40,000) in cash to our non-employee directors.
Non-employee directors are entitled to receive $10,000 per year for serving as directors and may receive stock grants pursuant to our share incentive plans. In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for each board of directors meeting attended, up to a maximum of $2,000 per meeting and $4,000 per year.
Dai served as the Chief Operating Officer and of ReTo and has served as a Director since November 2016. Mr. Dai has served as Beijing REIT’s Chief Operating Officer and Director since 2000. Mr. Dai served as the deputy representative in China for Hess Mechanical Engineering Co., Ltd. of Germany from 1997 until 2000. From 1995 through 1997, Mr.
Dai served as the deputy representative in China for Hess Mechanical Engineering Co., Ltd. of Germany from 1997 until 2000. From 1995 through 1997, Mr. Dai was a senior engineer at Yanxing Corporation of China. From 1992 through 1994, Mr. Dai was a senior engineer at China North Industries Group Corporation. Mr.
Such criteria are set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance. The board of directors will make an independent evaluation of appropriate compensation to key employees, with input from management. The board of directors has oversight of executive compensation plans, policies and programs.
Each of our named executive officers is measured by a series of performance criteria by the board of directors, or the compensation committee on a yearly basis. Such criteria are set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance.
See information provided in response to Item 6.A. above as to the current directors. 90 Composition of Board Our board of directors currently consists of seven directors. The directors are divided into three classes, as nearly equal in number as the then total number of directors permits.
See Item 6.E for a description of our 2022 Share Incentive Plan. C. Board Practices. See information provided in response to Item 6.A. above as to the current directors. Composition of Board Our board of directors currently consists of seven directors.
Cash Compensation In the fiscal year ended December 31, 2023, we expensed an aggregate of approximately $442,034 as salaries to our senior officers named in this annual report.
The board of directors will make an independent evaluation of appropriate compensation to key employees, with input from management. The board of directors has oversight of executive compensation plans, policies and programs. Cash Compensation In the fiscal year ended December 31, 2024, we expensed an aggregate of approximately $474,982 as salaries to our executive officers named in this annual report.
Equity Awards During the fiscal year ended December 31, 2023, an aggregate of 6,700 Common Shares were issued to our directors pursuant to the 2022 Share Incentive Plan. See Item 6.E for a description of our 2022 Share Incentive Plan. C. Board Practices.
Cash Compensation During the fiscal year ended December 31, 2024, we paid an aggregate of approximately RMB291,559 (approximately $40,000) in cash to our non-employee directors. Equity Awards During the fiscal year ended December 31, 2024, an aggregate of 11,000 Class A Shares were issued to our directors pursuant to the 2022 Share Incentive Plan.
Director Compensation Officers are elected by and serve at the discretion of the board of directors. Employee directors do not receive any compensation for their services on the board of directors. Non-employee directors are entitled to receive $10,000 per year for serving as directors and may receive stock grants pursuant to our share incentive plans.
Her employment agreement may be terminated in accordance with the PRC Labor Contract Law and relevant local regulations in Beijing. 76 Director Compensation Officers are elected by and serve at the discretion of the board of directors. Employee directors do not receive any compensation for their services on the board of directors.
(6) 200,000 5.3 % * Less than 1%. (1) Represents (i) approximately 15,613 Common Shares held through REIT International Development (Group) Co, a Hong Kong limited liability company (“REIT International”). Mr.
Our Class A Shares and Class B Shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. (1) Represents (i) approximately 1,562 Class A Shares held through REIT International Development (Group) Co, a Hong Kong limited liability company (“REIT International”). Mr.
Beneficial Ownership Name of Beneficial Owner Common Shares Percentage Directors and Executive Officers Hengfang Li (1) 20,463 * Guangfeng Dai (2) 11,766 * Zhizhong Hu (3) 7,806 * Degang Hou (4) 9,556 * Yue Hu 140 * Tonglong Liu - - Baoqing Sun - - Lidong Liu - - Austin Huang 400 * All directors and executive officers as a group (nine persons) 50,131 1.3 % Other 5% or greater beneficial owners Merging Holding LTD (5) 350,000 9.2 % SevenBull, Inc.
Beneficial Ownership Name of Beneficial Owner Class A Shares Class B Shares % of beneficial ownership of Class A Shares ** % of beneficial ownership of Class B Shares ** % of aggregate voting power*** Directors and Executive Officers: Hengfang Li (1) 1,572 400,000 * 5.2 % 39.7 % Guangfeng Dai (2) 781 200,000 * 2.6 % 19.9 % Zhizhong Hu (3) 781 200,000 * 2.6 % 19.9 % Degang Hou (4) 781 200,000 * 2.6 % 19.9 % Yue Hu - - - - - Tonglong Liu - - - - - Baoqing Sun - - - - - Lidong Liu - - - - - Austin Huang 40 - * - * All directors and executive officers as a group (nine persons) 3,955 1,000,000 * 13.0 % 99.3 % Other 5% or greater beneficial owner(s) REIT International Development (Group) Co., Limited (1)(2)(3)(4) 3,904 1,000,000 * 13.0 % 99.3 % * Less than 1%. 80 ** For each person and group included in this column, percentage of beneficial ownership is calculated by dividing the number of Class A or Class B Shares, as applicable, beneficially owned by such person or group by the sum of 7,663,879, being the number of Shares, including Class A Shares and Class B Shares, issued and outstanding as of May 8, 2025. *** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Shares as a single class.
Hu on August 15, 2022 providing for Ms. Hu to serve as the Company’s Chief Financial Officer for a term from August 15, 2022 to August 14, 2025. Pursuant to the terms of the Hu Employment Agreement, Ms.
Hu on November 20, 2024, pursuant to which Ms. Hu serves as the Chief Financial Officer for a term from December 1, 2024 to December 31, 2026. Pursuant to the labor contract, Ms.
Removed
Board Diversity The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
Added
Dai became the President of ReTo in 2020. Mr. Dai has served as the Chief Operating Officer and a Director of ReTo since November 2016. In addition, Mr. Dai has served as ReTo Hengda’s Chief Operating Officer since December 2024. Previously, Mr. Dai served as Beijing REIT’s Chief Operating Officer and Director from February 2000 to November 2024. Mr.
Removed
Board Diversity Matrix Country of Principal Executive Offices: China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 7 Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 6 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 B.
Added
Hou served as Beijing REIT’s Chief Internal Control Officer from February 2000 to November 2024. From 1983 through 1999, he was an engineer and senior engineer of North Vehicle Research Institute, State Weaponry Equipment Corporation. From 1999 through 2020, he was the deputy general manager for Beijing REIT.
Removed
Currently, our board of directors determines the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers to our success. Each of our named executive officers is measured by a series of performance criteria by the board of directors, or the compensation committee on a yearly basis.
Added
Each holder of Class A Shares is entitled to one vote per share and each holder of our Class B Shares is entitled to 1,000 votes per share on all matters submitted to them for a vote.
Removed
Remuneration and Borrowing The directors may receive such remuneration as our board of directors may determine from time to time.
Added
Li holds a 40% ownership of REIT International and has the voting and investment power with respect to 40% of the 1,000,000 Class B Shares held by REIT International. (2) Represents (i) approximately 781 Class A Shares held through REIT International. Mr.
Removed
Hailong Chen is the sole shareholder and CEO of Merging Holding LTD, a British Virgin Islands corporation, and exercises voting and dispositive power of the securities held by Merging Holding LTD. The address of Merging Holding LTD is c/o No. 605, Building 4, Yayuan Community, Anhui Beili, Chaoyang District Beijing, China, 100101. (6) Mr.
Added
Dai holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 3,904 Class A Shares held by REIT International and (ii) 200,000 Class B Shares held through REIT International. Mr.
Removed
Qingsong Dong is the sole shareholder and CEO of SevenBull, Inc., a British Virgin Islands corporation, and exercises voting and dispositive power of the securities held by SevenBull, Inc.
Added
Hu holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 3,904 Class A Shares held by REIT International and (ii) 200,000 Class B Shares held through REIT International. Mr.
Removed
The address of SevenBull, Inc. is c/o No.17-1 Wangjia, Michuan Village, Lizhai Township, Dexing City, Jiangxi, China, 334222. 94 Record Holders As of May 14, 2024, to the Company’s knowledge, we had four holders of record of our Common Shares in the United States, which represented 2,339,984 Common Shares, approximately 61.55% of our outstanding Common Shares (including Cede & Co., the nominee of the Depositary Trust Company, holding 2,338,257 Common Shares, representing approximately 61.51% of our outstanding Common Shares).
Added
Dai holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 1,000,000 Class B Shares held by REIT International. 81 Record Holders As of May 8, 2025, to our knowledge, we had nine holders of record of our Class A Shares in the United States, which represented 697,483 Class A Shares, approximately 10.5% of our outstanding Class A Shares (including Cede & Co., the nominee of the Depositary Trust Company, holding 697,246 Class A Shares, representing approximately 10.5% of our outstanding Class A Shares).
Added
Major Shareholders and Related Party Transactions A. Major shareholders. Please refer to “ Item 6. Directors, Senior Management and Employees — E. Share Ownership .” B. Related party transactions. The Company records transactions with various related parties.
Added
These related party balances as of December 31, 2024 and 2023 and transactions for the years ended December 31, 2024, 2023 and 2022 are identified as follows: (1) Related parties Name of Related Party Relationship to the Company Mr.
Added
Hengfang Li Chief Executive Officer and Chairman of the Board of Directors, and shareholder of the Company Q Green Techcon Private Limited Owned by the minority shareholder of REIT Q GREEN Machines Private Limited, a subsidiary of the Company prior to the December 2024 Divestiture (2) Due from related parties As of December 31, 2024 and 2023, the balance of due from related parties was as follows: As of December 31, 2024 As of December 31, 2023 Mr.
Added
Hengfang Li $ 24,048 $ 358,659 83 (3) Sales to related party For the year ended December 31, 2024 For the year ended December 31, 2023 For the year ended December 31, 2022 Q Green Techcon Private Limited $ 229,600 $ - $ -- C. Interests of Experts and Counsel Not applicable.

Item 7. Management's Discussion & Analysis

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

0 edited+56 added−11 removed0 unchanged
Removed
Item 7. Major Shareholders and Related Party Transactions A. Major shareholders. Please refer to “ Item 6. Directors, Senior Management and Employees — E. Share Ownership .” B. Related party transactions.
Added
Major Shareholders and Related Party Transactions .” As a result of the dual-class share structure and the concentration of ownership, holders of our Class B Shares will have control over matters such as decisions regarding (i) mergers, consolidations and the sale of all or substantially all of our assets, (ii) election or removal of directors, (iii) making amendments to our memorandum and articles of association, (iv) whether to issue additional shares, including to them, (v) employment, including compensation arrangements, and (vi) other significant corporate actions.
Removed
Related party balances as of December 31, 2023 and 2022 and transactions for the years ended December 31, 2023, 2022 and 2021 are identified as follows: (1) Related parties Name of Related Party Relationship to the Company Mr. Hengfang Li Chief Executive Officer and Chairman of the Board of Directors, and shareholder of the Company Ms.
Added
They may take actions that are not in the best interest of us or our other shareholders.
Removed
Hong Ma Wife of Chief Executive Officer Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. An entity controlled by Ms. Hong Ma Hunyuan County Baiyang Food Co., Ltd An entity controlled by Mr.
Added
This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our Class A Shares.
Removed
Hengfang Li Q Green Techcon Private Limited Owned by the minority shareholder of REIT India Shexian Ruibo The Company owns 41.67% equity interest in Shexian Ruibo Zhongrong Honghe Eco Construction Materials Co., Ltd. An entity controlled by Ms. Hong Ma Hunyuan Baiyang Food Co., Ltd. An entity controlled by Mr.
Added
This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A Shares may view as beneficial. The dual-class structure of our Shares may adversely affect the trading market for our Class A Shares.
Removed
Hengfang Li Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd. Hainan Yile IoT owns 45% ownership interest in this company Zhongtou REIT Information Service (Beijing) Co., Ltd. An entity controlled by Mr. Xinyang Li and Ms. Xinran Li, children of Mr. Hengfang Li Handan Ruisheng Construction Material Technology Co., Ltd.
Added
We cannot predict whether our dual-class share structure with disproportionate voting rights will result in a lower or more volatile market price of the Class A Shares, adverse publicity, or other adverse consequences. Certain index providers have announced restrictions on including companies with multi-class share structures in certain of their indices.
Removed
An entity controlled by Shexian Ruibo Hainan Yile Huixin Technology Service Center (Limited Partnership) Minority shareholder of IoV Technology Research Shaocheng Li Legal representative of Honghe REIT Ecological Technology Co., Ltd. Zhongrong Honghe Environmental Building Materials Co., Ltd.
Added
For example, S&P Dow Jones and FTSE Russell have changed their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices.
Removed
An entity controlled by Shaocheng Li (2) Due from related parties As of December 31, 2023 and 2022, the balance of due from related parties was as follows: As of December 31, 2023 As of December 31, 2022 Mr.
Added
As a result, our dual-class voting structure may prevent the inclusion of the Class A Shares in such indices, which could adversely affect the trading price and liquidity of the Class A Shares.
Removed
Hengfang Li $ 746,196 $ 208,225 The balance represents advance for business purposes. 96 (3) Accounts receivable from related parties Accounts receivable from related parties consisted of the following: As of December 31, 2023 As of December 31, 2022 Shexian Ruibo $ 26,851 $ - Hunyuan Baiyang Food Co., Ltd. 35,986 37,048 Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd. 45,351 46,688 Total accounts receivable from related parties $ 108,188 $ 83,736 The balance of the accounts receivable as of December 31, 2023 from related parties was outstanding as of the date of issuance of these financial statements.
Added
In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures and our dual-class structure may cause shareholder advisory firms to publish negative commentary about our corporate governance, in which case the market price and liquidity of the Class A Shares could be adversely affected. 39 If we are classified as a passive foreign investment company, United States taxpayers who own our Class A Shares may have adverse United States federal income tax consequences.
Removed
(4) Advance to suppliers, related party Advance to suppliers, related party, consisted of the following: As of December 31, 2023 As of December 31, 2022 Shexian Ruibo* $ 1,796,831 $ 3,769,138 Q Green Techcon Private Limited - 15,310 Handan Ruisheng Construction Material Technology Co., Ltd. 11,134 2,588 Total $ 1,807,965 $ 3,787,036 * The balance represents the Company’s purchase advances for eco-friendly materials and equipment supplied by Shexian Ruibo.
Added
Based on the nature of our business activities, we may be classified as a passive foreign investment company (“PFIC”), by the U.S. Internal Revenue Service (“IRS”), for U.S. federal income tax purposes. Such characterization could result in adverse U.S. tax consequences to you if you are a U.S. investor.
Removed
(5) Accounts payable to related parties Accounts payable to related parties consisted of the following: As of December 31, 2023 As of December 31, 2022 Shexian Ruibo $ 3,080 $ - Total $ 3,080 $ - (6) Sales to related parties Sales to related parties consisted of the following: For the Year Ended December 31, 2023 2022 2021 Changjiang Zhongrong Hengde Environmental Protection Co., LTD $ - $ 215,693 $ - Shexian Ruibo 44,325 82,453 61,177 Q Green Techcon Private Limited - 6,729 220,607 Total $ 44,325 $ 304,875 $ 281,784 Cost of revenue associated with the sales to these related parties amounted to $43,992, $471,849 and $175,053 for the years ended December 31, 2023, 2022, and 2021, respectively. 97 (7) Purchases from related parties Purchases from related parties consisted of the following: For the Year Ended December 31, 2023 2022 2021 Q Green Techcon Private Limited. $ - $ 266,544 $ 228,838 Shexian Ruibo 724,043 1,141,377 235,946 Total $ 724,043 $ 1,407,921 $ 464,784 (7) Equity grants On June 4, 2022, the Company issued an aggregate of 13,800 Common shares to directors under the 2018 Share Incentive Plan and the 2021 Share Incentive Plan.
Added
For example, if we are a PFIC, a U.S. investor will become subject to burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time.
Removed
On March 12, 2023, the Company issued an aggregate of 6,700 Common shares to directors under the 2022 Share Incentive Plan . C. Interests of Experts and Counsel Not applicable.
Added
Specifically, we will be classified as a PFIC for U.S. tax purposes if either: ● 75% or more of our gross income in a taxable year is passive income; or ● the average percentage of our assets by value in a taxable year that produce or are held for the production of passive income (which includes cash) is at least 50%.
Added
The calculation of the value of our assets is based, in part, on the then market value of our Class A Shares, which is subject to change. In addition, the composition of our income and assets will be affected by how, and how quickly, we spend the cash we raised in our prior public offerings.
Added
We cannot assure you that we will not be a PFIC for any taxable year.
Added
See “ Taxation – Material United States Federal Income Tax Considerations – Passive Foreign Investment Company .” Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline.
Added
If a trading market for our Class A Shares develops, the trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts.
Added
As a young public company, we may be slow to attract research coverage and the analysts who publish information about our Class A Shares will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
Added
In the event any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our stock price, our stock price could decline.
Added
If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline and result in the loss of all or a part of your investment in us.
Added
Shares eligible for future sale may adversely affect the market price of our Class A Shares, as the future sale of a substantial amount of outstanding Class A Shares in the public marketplace could cause the price of our Class A Shares to decrease.
Added
The market price of our shares could decline as a result of sales of substantial amounts of our shares in the public market, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of our Class A Shares.
Added
General Risk Factors Our classified board structure may prevent a change in control of our Company. Our board of directors is divided into three classes of directors.
Added
Class C directors hold office for a term expiring at the 2025 annual meeting of shareholders, Class A directors hold office for a term expiring at the 2026 annual meeting of shareholders, and Class B directors hold office for a term expiring at the 2027 annual meeting of shareholders.
Added
Directors of each class are elected for three-year terms upon the expiration of their current terms.
Added
The staggered terms of our directors may reduce the possibility of a tender offer or an attempt at a change in control, even though a tender offer or change in control might be in the best interest of our shareholders. 40 As the rights of stockholders under British Virgin Islands law differ from those under U.S. law, you may have fewer protections as a shareholder .
Added
Our corporate affairs are governed by (among other things) our constitutional documents (consisting of our M&A) and the British Virgin Island’s primary corporate legislation, the British Virgin Islands Business Companies Act, 2004 (as amended) (the “BVI Act”).
Added
The British Virgin Islands has a common law legal system based on the English model, comprising statute law and binding case precedents influenced by the laws of England and other Commonwealth jurisdictions, with a right of final appeal to the Privy Council in London.
Added
The rights of shareholders to take legal action against our directors, actions by minority stockholders and the fiduciary responsibilities and duties of our directors under British Virgin Islands law are to a large extent found under common law and the BVI Act.
Added
While decisions of the BVI courts are treated as precedents in the usual way, reference often needs to be made to decided cases in other jurisdictions. While the common law of England is recognised in the jurisdiction by way of statutory enactment, this is subject to local conditions that give the court a degree of flexibility.
Added
However, in practice, the courts ordinarily treat English judgments as highly persuasive (although in certain cases, the BVI courts have declined to follow English precedents, which is normally justified by distinguishing on the basis that the position is modified in the BVI by statute).
Added
The BVI forms part of the wider jurisdiction of the Eastern Caribbean Supreme Court, so judgments from other courts in the same jurisdiction are normally persuasive, even though they are not technically binding upon the court. Judgments from other leading Commonwealth jurisdictions, particularly Australia and Hong Kong, are also often considered by the BVI courts.
Added
The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law may not be as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States.
Added
In particular, the British Virgin Islands may have a less developed body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law.
Added
British Virgin Islands companies may not be able to initiate shareholder derivative actions in a federal court of the United States and may have to proceed with such action in the British Virgin Islands, thereby limiting shareholders’ ability to protect their interests .
Added
Whether a British Virgin Islands company has standing to initiate a shareholder derivative action in a federal court of the United States is a matter of United States law and in such case, that company may have to proceed with such action in the British Virgin Islands.
Added
Permission is required from the BVI Court in order for a shareholder of a BVI company to bring a derivative action in the BVI.
Added
The circumstances in which any such action may be brought, and the procedures and defenses that may be available with respect to any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company organized in the United States.
Added
Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred.
Added
The British Virgin Islands courts are also unlikely to recognize or enforce against us judgments of courts in the United States based on certain liability provisions of U.S. securities law; and to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain liability provisions of U.S. securities laws that are penal in nature.
Added
There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will generally recognize and enforce the non-penal monetary judgment of a foreign court of competent jurisdiction without retrial on the merits.
Added
The laws of the British Virgin Islands provide little protection for minority shareholders, so minority shareholders will have little or no recourse if the shareholders are dissatisfied with the conduct of our affairs .
Added
Under the law of the British Virgin Islands, there is little statutory law for the protection of minority shareholders other than the provisions of the BVI Act dealing with shareholder remedies. The principal protection under statutory law is that shareholders may bring an action to enforce the constituent documents of the corporation, in our case, our M&A.
Added
Shareholders are entitled to have the affairs of the Company conducted in accordance with the general law and the Memorandum and Articles. 41 We are a “foreign private issuer,” and our disclosure obligations differ from those of U.S. domestic reporting companies.
Added
As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects. We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers.
Added
Under the Exchange Act, we are subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we are not required to issue quarterly reports or proxy statements and we do not intend to file quarterly reports.
Added
We are not required to disclose detailed individual executive compensation information and we do not intend to disclose detailed executive compensation information.
Added
Furthermore, our directors and executive officers are not required to report equity holdings under Section 16 of the Exchange Act and are not subject to the insider short-swing profit disclosure and recovery regime and we do not intend to file Section 16 reports for officers and directors.
Added
As a foreign private issuer, we are also exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. However, we do plan to disclose material information to all investors at this time .
Added
In addition, we are still subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act.
Added
Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.
Added
We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.
Added
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law, including the laws of the BVI.
Added
Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
Added
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.
Added
If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed. Mail addressed to the Company at its registered office may be delayed due to forwarding practice.
Added
Mail addressed to the Company and received at its registered office will be forwarded unopened to the forwarding address supplied by the Company to be dealt with.
Added
None of the Company, its directors, officers, advisors or service providers (including the organization which provides registered office services in the BVI) will bear any responsibility for any delay howsoever caused in mail reaching the forwarding address.

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