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CDT Environmental Technology Investment Holdings Ltd

CDT Environmental Technology Investment Holdings LtdCDTG财报

Nasdaq · 卫生服务

What changed in CDT Environmental Technology Investment Holdings Ltd's 20-F — 2023 vs 2024

Top changes in CDT Environmental Technology Investment Holdings Ltd's 2024 20-F

416 paragraphs added · 467 removed · 320 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

108 edited+40 added−80 removed311 unchanged
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; ● any of our pending patent applications will be issued as patents; ● we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; ● we were the first to make the inventions covered by each of our patents and pending patent applications; ● we were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; ● any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; 9 ● we will develop additional proprietary technologies or products that are separately patentable; or ● our commercial activities or products will not infringe upon the patents of others.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; 9 ● any of our pending patent applications will be issued as patents; ● we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; ● we were the first to make the inventions covered by each of our patents and pending patent applications; ● we were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; ● any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; ● we will develop additional proprietary technologies or products that are separately patentable; or ● our commercial activities or products will not infringe upon the patents of others.
Any potential intellectual property litigation also could force us to do one or more of the following: ● stop making, selling or using products or technologies that allegedly infringe the asserted intellectual property; ● lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; ● pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; ● pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; 10 ● redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and infeasible; and ● attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have.
Any potential intellectual property litigation also could force us to do one or more of the following: 10 ● stop making, selling or using products or technologies that allegedly infringe the asserted intellectual property; ● lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; ● pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; ● pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; ● redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and infeasible; and ● attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have.
All of our operations are located in China through our subsidiaries. Our ability to operate in China may be impaired by changes in Chinese laws and regulations, including those relating to taxation, environmental regulation, restrictions on foreign investment, and other matters. We, CDT Cayman, are a Cayman Islands holding company.
Our ability to operate in China may be impaired by changes in Chinese laws and regulations, including those relating to taxation, environmental regulation, restrictions on foreign investment, and other matters. We, CDT Cayman, are a Cayman Islands holding company. All of our operations are located in China through our subsidiaries.
These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing standards. 30 As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq rules that allow us to follow our home country law for certain governance matters.
These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing standards. As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq rules that allow us to follow our home country law for certain governance matters.
These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors. As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards.
These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors. 29 As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from Nasdaq corporate governance listing standards.
We may be required to make up the contributions for these plans as well as to pay late fees and fines. If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. 7 We do not have business insurance coverage.
We may be required to make up the contributions for these plans as well as to pay late fees and fines. If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. We do not have business insurance coverage.
In addition, if we fail to satisfy exchange listing standards, we could be delisted, which would have a negative effect on the price of our ordinary shares. 25 We expect that the price of our ordinary shares will fluctuate substantially and you may not be able to sell your shares at or above the price you purchased your shares at.
In addition, if we fail to satisfy exchange listing standards, we could be delisted, which would have a negative effect on the price of our ordinary shares. We expect that the price of our ordinary shares will fluctuate substantially and you may not be able to sell your shares at or above the price you purchased your shares at.
Further, such evolving laws and regulations and the inconsistent enforcement thereof could also lead to failure to obtain or maintain licenses and permits to do business in China, which would adversely affect us. It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
Further, such evolving laws and regulations and the inconsistent enforcement thereof could also lead to failure to obtain or maintain licenses and permits to do business in China, which would adversely affect us. 14 It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
To the extent that we cannot achieve our plans and generate revenues which exceed expenses on a consistent basis, our business, results of operations, financial condition and prospects will be materially adversely affected. Our management team has limited public company experience.
To the extent that we cannot achieve our plans and generate revenues which exceed expenses on a consistent basis, our business, results of operations, financial condition and prospects will be materially adversely affected. 1 Our management team has limited public company experience.
Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, 13 a substantial portion of productive assets in China is still owned by the government.
Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government.
PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us. 19 In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37.
PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us. 18 In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37.
Governmental actions in China, including any decision to intervene or influence our operations at any time or to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to our operations, may limit or completely hinder our ability to offer or continue to offer securities to investors, and/or may cause the value of such securities to significantly decline or be worthless. 24 Risks Related to our Ordinary Shares If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations or prevent fraud.
Governmental actions in China, including any decision to intervene or influence our operations at any time or to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to our operations, may limit or completely hinder our ability to offer or continue to offer securities to investors, and/or may cause the value of such securities to significantly decline or be worthless. 23 Risks Related to our Ordinary Shares If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations or prevent fraud.
In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, 16 if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital.
In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital.
We may not be able to effectively manage the expansion of our operations, 6 which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees.
We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees.
The Cybersecurity Review Measures further requires that an online platform operator that possess personal data of more than one million users shall declare to the Office of Cybersecurity Review for cybersecurity review before listing in a foreign country.
The Cybersecurity Review Measures further 12 requires that an online platform operator that possess personal data of more than one million users shall declare to the Office of Cybersecurity Review for cybersecurity review before listing in a foreign country.
Such delays could significantly reduce our revenues and profitability and harm our business while alternative sources of supply are secured. 3 Our dependence on a limited number of customers could adversely affect our business and results of operations.
Such delays could significantly reduce our revenues and profitability and harm our business while alternative sources of supply are secured. Our dependence on a limited number of customers could adversely affect our business and results of operations.
The SOP, together with two protocol agreements governing inspections and investigation, establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in China and Hong Kong, as required under U.S. law. 22 On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022.
The SOP, together with two protocol agreements governing inspections and investigation, establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in China and Hong Kong, as required under U.S. law. 21 On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong completely in 2022.
For example, for the year ended December 31, 2023, two customers accounted for 23.4% and 10.2%, respectively, of our total revenues , and two customers accounted for 13.0%, 12.3%, respectively, of our accounts receivable.
For the year ended December 31, 2023, two customers accounted for 23.4% and 10.2%, respectively, of our total revenues, and two customers accounted for 13.0% and 12.3%, respectively, of our accounts receivable.
Additional Information—E. Taxation— PRC Taxation” for further information. Failure to make adequate contributions to various employee benefits plans as required by PRC regulations may subject us to penalties.
Additional Information-E. Taxation- PRC Taxation” for further information. 7 Failure to make adequate contributions to various employee benefits plans as required by PRC regulations may subject us to penalties.
Such regulation requires, among other things, that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2008, are triggered.
Such regulation requires, among other things, that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2024, are triggered.
According to the Cybersecurity Review Measures, 12 a cybersecurity review assesses potential national security risks that may arise in connection with any procurement of data processing.
According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may arise in connection with any procurement of data processing.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 29 We are an emerging growth company within the meaning of the Securities Act and will take advantage of certain reduced reporting requirements.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. 28 We are an emerging growth company within the meaning of the Securities Act and will take advantage of certain reduced reporting requirements.
However, should China alter its environmental policies towards less regulation, we believe demand for our products could decrease, adversely impacting our results of operations, cash flows and financial position. 18 Governmental control of currency conversion may limit our ability to utilize our earnings effectively and affect the value of your investment.
However, should China alter its environmental policies towards less regulation, we believe demand for our products could decrease, adversely impacting our results of operations, cash flows and financial position. 17 Governmental control of currency conversion may limit our ability to utilize our earnings effectively and affect the value of your investment.
Issues or defects with products may lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities that could divert resources, affect business operations, decrease sales, increase costs, and put us at a competitive disadvantage, any of which could have a significant adverse effect on our financial condition.
Issues or defects with products may lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities that could divert resources, affect business operations, decrease sales, increase costs, and put us at a competitive disadvantage, any of which could have a significant adverse effect on our financial condition. 5 We may experience issues or defects with products that may lead to product liability, personal injury or property damage claims, recalls, withdrawals, replacements of products, or regulatory actions by governmental authorities.
If we fail to comply with the applicable listing standards and Nasdaq delists our ordinary shares, we and our shareholder s could face significant material adverse consequences, including: ● a limited availability of market quotations for our ordinary shares; ● reduced liquidity for our ordinary shares; ● a determination that our ordinary shares are “penny stock”, which would require brokers trading in our ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our ordinary shares; ● a limited amount of news about us and analyst coverage of us; and ● a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
If we fail to comply with the applicable listing standards and Nasdaq delists our ordinary shares, we and our shareholders could face significant material adverse consequences, including: 24 ● a limited availability of market quotations for our ordinary shares; ● reduced liquidity for our ordinary shares; ● a determination that our ordinary shares are “penny stock”, which would require brokers trading in our ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our ordinary shares; ● a limited amount of news about us and analyst coverage of us; and ● a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 20 We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 19 We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
In the course of auditing our consolidated financial statements as of and for the year ended December 31, 2023, we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting as well as other control deficiencies.
In the course of auditing our consolidated financial statements as of and for the year ended December 31, 2024, we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting as well as other control deficiencies.
As a result, our days sales outstanding rose from 171 days at December 31, 2017 to 180 days at December 31, 2018 to 306 days at December 31, 2019 to 615 days at December 31, 2020, decreased to 204 days at December 21, 2021, then increased to 220 days at December 31, 2022, then increased to 262 days at December 31, 2023.
As a result, our days sales outstanding rose from 171 days at December 31, 2017 to 180 days at December 31, 2018 to 306 days at December 31, 2019 to 615 days at December 31, 2020, decreased to 204 days at December 21, 2021, then increased to 220 days at December 31, 2022, then increased to 262 days at December 31, 2023, then to 455 days at December 31, 2024.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association) or to obtain copies of lists of shareholders of these companies.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and register of mortgages) or to obtain copies of lists of shareholders of these companies.
Our ordinary shares have been listed on Nasdaq only since April 18, 2024, and we cannot assure you that an active trading market for our ordinary shares will be sustained or maintained.
An active trading market for our ordinary shares may not be sustained. Our ordinary shares have been listed on Nasdaq only since April 18, 2024, and we cannot assure you that an active trading market for our ordinary shares will be sustained or maintained.
We cannot be certain that any particular challenge will be successful in limiting or eliminating the challenged patent rights of the third party. Any lawsuits resulting from such allegations could subject us to significant liability for damages and invalidate our propriet ary rights.
We cannot be certain that any particular challenge will be successful in limiting or eliminating the challenged patent rights of the third party. Any lawsuits resulting from such allegations could subject us to significant liability for damages and invalidate our proprietary rights.
Our directors, officers and principal shareholders have significant voting power and may take actions that may not be in the best interests of our other shareholders. As of the date of this annual report, our directors, officers and principal shareholders holding 5% or more of our ordinary shares, collectively, control approximately 69% of our outstanding ordinary shares.
Our directors, officers and principal shareholders have significant voting power and may take actions that may not be in the best interests of our other shareholders. As of the date of this annual report, our directors, officers and principal shareholders holding 5% or more of our ordinary shares, collectively, control approximately 51.526% of our outstanding ordinary shares.
In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year.
In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are non-accelerated filers are required to file their annual report on Form 10-K within 90 days after the end of each fiscal year.
See the condensed consolidated statements of change in shareholders’ equity on page F-4 and Notes 10 and 11 on pages F-25 through F-28 of the notes to the condensed consolidated financial statements included elsewhere in this annual report. We may in the future also rely on dividends and other distributions on equity from our PRC subsidiaries.
See the consolidated statements of change in shareholders’ equity on page F-6 and Notes 10 and 11 on pages F-25 through F-27 of the notes to the condensed consolidated financial statements included elsewhere in this annual report. We may in the future also rely on dividends and other distributions on equity from our PRC subsidiaries.
See the condensed consolidated statements of change in shareholders’ equity on page F-4 and Notes 10 and 11 on pages F-25 through F-28 of the notes to the consolidated financial statements included elsewhere in this annual report.
See the condensed consolidated statements of change in shareholders’ equity on page F-6 and Notes 10 and 11 on pages F-25 through F-27 of the notes to the consolidated financial statements included elsewhere in this annual report.
As of the date of this annual report, to our knowledge, Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT, had completed the foreign exchange registration, but had not completed the change registration and was in the process of registration.
As of the date of this annual report, to our knowledge, Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT, had completed the foreign exchange registration, but had not completed the related change registration and remains in the process of completing such registration.
If we are prevented or delayed in obtaining products, or components for products, due to political, civil, labor or other factors beyond our control that affect our vendors, including natural disasters or pandemics, our operations may be substantially disrupted, potentially for a significant period of time.
Any difficulty in replacing such vendors could negatively affect our performance. If we are prevented or delayed in obtaining products, or components for products, due to political, civil, labor or other factors beyond our control that affect our vendors, including natural disasters or pandemics, our operations may be substantially disrupted, potentially for a significant period of time.
The core of our business is our proprietary systems and technology, together with our experience and expertise in waste treatment services, particularly in rural sewage treatment and septic tank treatment. As of December 31, 2023, we had 2 invention patents, 38 utility model patents, 3 trademarks and 2 computer software copyrights.
The core of our business is our proprietary systems and technology, together with our experience and expertise in waste treatment services, particularly in rural sewage treatment and septic tank treatment. As of December 31, 2024, we had 2 invention patents, 34 utility model patents and 3 trademarks.
We, CDT Cayman, through our subsidiaries, conduct all of our operations in China and all of our assets are located in China. In addition, all our senior employees reside within China for a significant portion of the time and most are PRC residents.
We, CDT Cayman, are a holding company incorporated under the laws of the Cayman Islands. We, CDT Cayman, through our subsidiaries, conduct all of our operations in China and all of our assets are located in China. In addition, all our senior employees reside within China for a significant portion of the time and most are PRC residents.
However, we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements.
However, we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. 22 All of our operations are located in China through our subsidiaries.
The PRC government recently promulgated a series of new statements and actions to regulate business operations in China. 23 According to the Circular, since the date of effectiveness of the Trial Measures on March 31, 2023, PRC domestic enterprises falling within the scope of filing that have been listed overseas or met the following circumstances are “existing enterprises”: before the effectiveness of the Trial Measures on March 31, 2023, the application for indirect overseas issuance and listing had been approved by the overseas regulators or overseas stock exchanges (such as the registration statement has become effective on the U.S. market), it would not have been required to perform issuance and listing supervision procedures of the overseas regulators or overseas stock exchanges, and the overseas issuance and listing would have been completed by September 30, 2023.
According to the Circular, since the date of effectiveness of the Trial Measures on March 31, 2023, PRC domestic enterprises falling within the scope of filing that have been listed overseas or met the following circumstances are “existing enterprises”: before the effectiveness of the Trial Measures on March 31, 2023, the application for indirect overseas issuance and listing had been approved by the overseas regulators or overseas stock exchanges (such as the registration statement has become effective on the U.S. market), it would not have been required to perform issuance and listing supervision procedures of the overseas regulators or overseas stock exchanges, and the overseas issuance and listing would have been completed by September 30, 2023.
As of December 31, 2023, these consisted of shareholder capital contributions of $7.5 million, which are reflected as par value and additional paid-in capital in the condensed consolidated financial statements included elsewhere in this annual report, bank loans of $2.8 million, third party loans of $0.3 million and related party loans of $5.4 million.
As of December 31, 2024, these consisted of shareholder capital contributions of $11.2 million, which are reflected as par value and additional paid-in capital in the condensed consolidated financial statements included elsewhere in this annual report, bank loans of $1.8 million, third party loans of $0.8 million and related party loans of $2.8 million.
As of December 31, 2023, these consisted of shareholder capital contributions of $7.5 million, which are reflected as par value and additional paid-in capital in the condensed consolidated financial statements included elsewhere in this annual report, bank loans of $2.8 million, third party loans of $0.3 million and related party loans of $5.4 million.
As of December 31, 2024, these consisted of shareholder capital contributions of $11.2 million, which are reflected as par value and additional paid-in capital in the condensed consolidated financial statements included elsewhere in this annual report, bank loans of $1.8 million, third party loans of $0.8 million and related party loans of $2.8 million.
The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. 21 On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D.
The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.
Our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.
In addition, once we cease to be an “emerging growth company” as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective.
Once we cease to be an “emerging growth company” as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting.
Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (2023 Revision) of the Cayman Islands and the common law of the Cayman Islands.
Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (as revised) of the Cayman Islands and the common law of the Cayman Islands.
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.
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. 27 The economic substance legislation of the Cayman Islands may impact us and our operations.
Either outcome could harm our business and competitive position. 11 Third parties may assert that our employees or contractors have wrongfully used or disclosed confidential information or misappropriated trade secrets, which could result in litigation. We may employ individuals who previously worked with other companies, including our competitors or potential competitors.
Third parties may assert that our employees or contractors have wrongfully used or disclosed confidential information or misappropriated trade secrets, which could result in litigation. We may employ individuals who previously worked with other companies, including our competitors or potential competitors.
For the year ended December 31, 2022, three customers accounted for 48.5%, 15.2%, and 14.6%, respectively, of our total revenues, and four customers accounted for 18.2%, 15.1%, 12.9% and 11.2%, respectively, of our accounts receivable.
For the year ended December 31, 2022, three customers accounted for 48.5%, 15.2%, and 14.6%, respectively, of our total revenues, and four customers accounted for 18.2%, 15.1%, 12.9% and 11.2%, respectively, of our accounts receivable. Our accounts receivable increased by approximately $23.1 million during the year ended December 31, 2024.
Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property or may lose our exclusive rights in that intellectual property.
Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property or may lose our exclusive rights in that intellectual property. Either outcome could harm our business and competitive position.
Such results could divert development and management resources, adversely affect our business operations, decrease sales, increase legal fees and other costs, and put us at a competitive disadvantage compared to other companies not affected by similar issues with products, any of which could have a significant adverse effect on our financial condition and results of operations. 5 Our future growth depends in part on new products and new technology innovation, and failure to invent and innovate could adversely impact our business prospects.
Such results could divert development and management resources, adversely affect our business operations, decrease sales, increase legal fees and other costs, and put us at a competitive disadvantage compared to other companies not affected by similar issues with products, any of which could have a significant adverse effect on our financial condition and results of operations.
For the year ended December 31, 2022, two vendors accounted for 19.7% and 10.0%, respectively, of our total purchases, and two vendors accounted for 12.6% and 10.9%, respectively, of our accounts payable.
For the year ended December 31, 2023, one vendor accounted for 27.3% of our total purchases, and no vendors accounted for more than 10.0% of our accounts payable. For the year ended December 31, 2022, two vendors accounted for 19.7% and 10.0%, respectively, of our total purchases, and two vendors accounted for 12.6% and 10.9%, respectively, of our accounts payable.
Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. An active trading market for our ordinary shares may not be sustained.
Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.
On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.
The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets. 20 On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditors.
All of our operations are located in China through our subsidiaries. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be impaired by changes in laws and regulations in the PRC.
The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be impaired by changes in laws and regulations in the PRC. The PRC government recently promulgated a series of new statements and actions to regulate business operations in China.
Our current sewage treatment system customers are primarily state-owned companies in China and the end users of our system are primarily local governments in China, and the payment approval process from local governments is complex, which may increase our days sales outstanding and could impact our liquidity should any major delay of payment from our major customers occur.
Delays in policy implementation, subsidies, or project approvals may adversely affect the Company’s revenue recognition and cash flow.” Our current sewage treatment system customers are primarily state-owned companies in China and the end users of our system are primarily local governments in China, and the payment approval process from local governments is complex, which may increase our days sales outstanding and could impact our liquidity should any major delay of payment from our major customers occur.
Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China.
On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China.
In addition, problems with transitioning these services and systems to or operating failures with these vendors and outsourcers could cause delays in product sales, and reduce efficiency of our operations, and significant capital investments could be required to remediate the problem.
In addition, problems with transitioning these services and systems to or operating failures with these vendors and outsourcers could cause delays in product sales, and reduce efficiency of our operations, and significant capital investments could be required to remediate the problem. 3 We primarily rely on a limited number of vendors, and the loss of any such vendor could harm our business.
Any shortcoming of a vendor or an outsourcer, particularly an issue affecting the quality of these services or systems, may be attributed by customers to us, thus damaging our reputation and brand value, and potentially affecting our results of operations.
We outsource manufacturing of our integrated rural sewage treatment system primarily to three vendors in the Jiangsu and Fujian provinces. Any shortcoming of a vendor or an outsourcer, particularly an issue affecting the quality of these services or systems, may be attributed by customers to us, thus damaging our reputation and brand value, and potentially affecting our results of operations.
In recent years , the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may significantly affect the market price of our ordinary shares, regardless of our actual operating performance.
In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. Currently, we do not plan to rely on home country practices with respect to any corporate governance matter.
Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States.
Our decision in choosing vendors is typically based on the compressive consideration of multiple factors including, among others, pricing, location, delivery terms and line of credit. Our vendors generally provide us with standard parts used in sewage treatment and integrated sewage treatment equipment. Any difficulty in replacing such vendors could negatively affect our performance.
We generally do not have long term agreements or arrangements with our vendors. Our decision in choosing vendors is typically based on the compressive consideration of multiple factors including, among others, pricing, location, delivery terms and line of credit. Our vendors generally provide us with standard parts used in sewage treatment and integrated sewage treatment equipment.
Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares. 31 In addition, if the trading volumes of our ordinary shares are low, persons buying or selling in relatively small quantities may easily influence prices of our ordinary shares.
Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our ordinary shares.
If we fail to protect our proprietary intellectual property and information, including with respect to any successful challenge to our ownership of intellectual property or material infringements of our intellectual property, this failure could have a significant adverse effect on our business, financial condition, and results of operations.
If we fail to protect our proprietary intellectual property and information, including with respect to any successful challenge to our ownership of intellectual property or material infringements of our intellectual property, this failure could have a significant adverse effect on our business, financial condition, and results of operations. 8 If we are unable to adequately protect our intellectual property rights, or if we are accused of infringing on the intellectual property rights of others, our competitive position could be harmed or we could be required to incur significant expenses to enforce or defend our rights.
Section 404 of the Sarbanes-Oxley Act of 2002 will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2024.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include a report of management on our internal control over financial reporting in our annual reports on Form 20-F.
Based on our current and expected income and assets (taking into account the expected cash proceeds and our anticipated market capitalization following our initial public offering), we do not presently expect to be a PFIC for the current taxable year or the foreseeable future.
Based on our current and expected income and assets, we do not presently expect to be a PFIC for the current taxable year or the foreseeable future.
A decline in the market price of our ordinary shares also could adversely affect our ability to issue additional ordinary shares and our ability to obtain additional financing in the future.
As a result of this volatility, investors may experience losses on their investment in our ordinary shares. A decline in the market price of our ordinary shares also could adversely affect our ability to issue additional ordinary shares and our ability to obtain additional financing in the future.
In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are incorporated.
Any limitation on the ability of our PRC subsidiaries to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business. 16 In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are incorporated.
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.
We may not be able to attract and retain personnel on acceptable terms given the competition among numerous companies for individuals with similar skill sets. The inability to recruit or loss of the services of any executive or key employee could adversely affect our business.
We may not be able to attract and retain personnel on acceptable terms given the competition among numerous companies for individuals with similar skill sets.
Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to. 26 If we fail to meet applicable listing requirements, Nasdaq may delist our ordinary shares from trading, in which case the liquidity and market price of our ordinary shares could decline.
If we fail to meet applicable listing requirements, Nasdaq may delist our ordinary shares from trading, in which case the liquidity and market price of our ordinary shares could decline. We cannot assure you that we will be able to meet the continued listing standards of Nasdaq in the future.
The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in our initial public offering. If we were to be or become a PFIC for any taxable year during which a U.S.
The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets. If we were to be or become a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See “Item 10.
Additional debt financing may impose affirmative and negative covenants that restrict our freedom to operate our business. We cannot guaranty that we will be able to obtain additional financing on terms that are acceptable to us, or any financing at all, and the failure to obtain sufficient financing could adversely affect our business operations.
We cannot guaranty that we will be able to obtain additional financing on terms that are acceptable to us, or any financing at all, and the failure to obtain sufficient financing could adversely affect our business operations. We have a limited operating history. There is no assurance that our future operations will be profitable operations.
In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price.
Broad market and industry factors may significantly affect the market price of our ordinary shares, regardless of our actual operating performance. 25 In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price.
Our future growth depends in part on maintaining our current products in new and existing markets, as well as our ability to develop new products and technologies to serve such markets. To the extent that competitors develop competitive products and technologies, or new products or technologies that achieve higher customer satisfaction, our business prospects could be adversely impacted.
Our future growth depends in part on new products and new technology innovation, and failure to invent and innovate could adversely impact our business prospects. Our future growth depends in part on maintaining our current products in new and existing markets, as well as our ability to develop new products and technologies to serve such markets.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual arrangements and rights or tort claims.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual arrangements and rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.
In addition, we may face claims by third parties that our agreements with employees, contractors or third parties obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such intellectual property.
Any infringement claims or lawsuits, even if not meritorious, could be expensive and time consuming to defend, divert management’s attention and resources, require us to redesign our products and services, if feasible, require us to pay royalties or enter into licensing agreements in order to obtain the right to use necessary technologies, and/or may materially disrupt the conduct of our business. 11 In addition, we may face claims by third parties that our agreements with employees, contractors or third parties obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such intellectual property.
Additionally, the failure of a key employee to perform in his or her current position could result in our inability to continue to grow our business or to implement our business strategy. 1 We face risks related to natural disasters, health epidemics and other outbreaks, particularly the coronavirus, which could significantly disrupt our operations.
Additionally, the failure of a key employee to perform in his or her current position could result in our inability to continue to grow our business or to implement our business strategy.
We are continually working to upgrade our quick separation technology and septic tank treatment systems through independent research and development and partnerships with third-party institutions to further develop our mobile septic tank treatment system. 8 We cannot provide any assurances that any of our patents have, or that any of our pending patent applications that mature into issued patents will include, claims with a scope sufficient to protect our products, any additional features we develop for our products or any new products.
We cannot provide any assurances that any of our patents have, or that any of our pending patent applications that mature into issued patents will include, claims with a scope sufficient to protect our products, any additional features we develop for our products or any new products.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

76 edited+6 added−20 removed226 unchanged
Legal Regulations on Intellectual Property in the PRC 46 Copyright Pursuant to the Copyright Law of the PRC, which was first promulgated by the Standing Committee of the National People’s Congress on September 7, 1990 and became effective from June 1, 1991, and was last amended on November 11, 2020 and became effective on June 1, 2021, copyrights include personal rights such as the right of publication and that of authorship as well as property rights such as the right of reproduction and that of distribution.
Legal Regulations on Intellectual Property in the PRC Copyright Pursuant to the Copyright Law of the PRC, which was first promulgated by the Standing Committee of the National People’s Congress on September 7, 1990 and became effective from June 1, 1991, and was last amended on November 11, 2020 and became effective on June 1, 2021, copyrights include personal rights such as the right of publication and that of authorship as well as property rights such as the right of reproduction and that of distribution.
As of the date of this annual report, none of CDT Cayman or its subsidiaries has written cash management policies or procedures in place that dictate how funds are transferred. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. 4. Our PRC subsidiaries’ ability to distribute dividends is based upon their distributable earnings.
As of the date of this annual report, none of CDT Cayman or its subsidiaries has written cash management policies or procedures in place that dictate how funds are transferred. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. 33 4. Our PRC subsidiaries’ ability to distribute dividends is based upon their distributable earnings.
The Chinese government aims to promote the full coverage of urban sewage pipe network, carry out differential and accurate upgrading of sewage treatment, and promote the centralized incineration of sludge for harmless treatment. China’s five-year plans are blueprints containing the country’s social, economic, and political goals. They encompass and intertwine with existing policies, regional plans, and strategic initiatives.
The Chinese government aims to promote the full coverage of urban sewage pipe network, carry out differential and accurate upgrading of sewage treatment, and promote the centralized incineration of sludge for harmless treatment. 43 China’s five-year plans are blueprints containing the country’s social, economic, and political goals. They encompass and intertwine with existing policies, regional plans, and strategic initiatives.
Under the Guidance Catalogue, our main business, the water treatment equipment manufacturing business is in an industry that foreign investors are encouraged to invest in. 45 Regulations Relating to Environmental Protection The Environmental Protection Law, which was adopted in 1989, last amended in 2014 and became effective in 2015, effectively established the legal framework for environment protection in China.
Under the Guidance Catalogue, our main business, the water treatment equipment manufacturing business is in an industry that foreign investors are encouraged to invest in. Regulations Relating to Environmental Protection The Environmental Protection Law, which was adopted in 1989, last amended in 2014 and became effective in 2015, effectively established the legal framework for environment protection in China.
The Measures for the Security Review of Foreign Investment, as deliberated and adopted at the 13th executive meeting of the NDRC on November 27, 2020, with the approval of the State Council, are hereby issued, and entered into force on January 18, 2021. Security review shall be conducted only for foreign investments that affect or may affect national security.
The Measures for the Security Review of Foreign Investment, as deliberated and adopted at the 13th executive meeting of the NDRC on November 27, 2020, with the approval of the State Council, are hereby issued, and entered into force on January 18, 2021. 52 Security review shall be conducted only for foreign investments that affect or may affect national security.
In April 2019, the Ministry of Housing and Urban-Rural Development of China, the Ministry of Ecology and Environment of China, 35 and the NDRC jointly published the Three-Year Action Plan for Improving the Quality and Efficiency of Urban Sewage Treatment (2019-2021), which states that the government should increase capital investment and raise funds through multiple channels to support sewage treatment.
In April 2019, the Ministry of Housing and Urban-Rural Development of China, the Ministry of Ecology and Environment of China, and the NDRC jointly published the Three-Year Action Plan for Improving the Quality and Efficiency of Urban Sewage Treatment (2019-2021), which states that the government should increase capital investment and raise funds through multiple channels to support sewage treatment.
Throughout our years of experience in rural sewage treatment, we have improved our quick separation technology and processes to have the following unique advantages: ● automated and precise control of the sewage inflow and timing in the quick separation tank with flowmeter and back-flow devices in the regulating tank; ● reduced energy consumption; ● anti-corrosion coatings; ● grease separation tank inside regulating tank, which we believe increases efficiency of the quick separation process in subsequent stages; and ● modified quick separation balls with proprietary substances that benefit the microorganisms necessary for the aerobic and anaerobic processes. 38 The process flow of our integrated rural sewage treatment system is as follows: We have completed more than 60 plants in the Fujian, Jiangxi, and Liaoning provinces in China and have established long-term relationships with our customers through our operation and maintenance services.
Throughout our years of experience in rural sewage treatment, we have improved our quick separation technology and processes to have the following unique advantages: ● automated and precise control of the sewage inflow and timing in the quick separation tank with flowmeter and back-flow devices in the regulating tank; ● reduced energy consumption; ● anti-corrosion coatings; ● grease separation tank inside regulating tank, which we believe increases efficiency of the quick separation process in subsequent stages; and ● modified quick separation balls with proprietary substances that benefit the microorganisms necessary for the aerobic and anaerobic processes. 37 The process flow of our integrated rural sewage treatment system is as follows: We have completed more than 60 plants in the Fujian, Jiangxi, and Liaoning provinces in China and have established long-term relationships with our customers through our operation and maintenance services.
An employer must provide workers with the necessary labor protection gear that complies with labor safety and health conditions stipulated under national regulations, 47 as well as provide regular health checks for workers that are engaged in operations with occupational hazards. Laborers engaged in special operations shall have received specialized training and have obtained the pertinent qualifications.
An employer must provide workers with the necessary labor protection gear that complies with labor safety and health conditions stipulated under national regulations, as well as provide regular health checks for workers that are engaged in operations with occupational hazards. Laborers engaged in special operations shall have received specialized training and have obtained the pertinent qualifications.
Regulations on Foreign Exchange 50 Foreign Currency Exchange Pursuant to the Regulations on Foreign Exchange System of the People’s Republic of China, as amended in 2008, and various regulations issued by SAFE and other relevant PRC government authorities, Renminbi is freely convertible to the extent of current account items, such as trade related receipts and payments, interest and dividends.
Regulations on Foreign Exchange Foreign Currency Exchange Pursuant to the Regulations on Foreign Exchange System of the People’s Republic of China, as amended in 2008, and various regulations issued by SAFE and other relevant PRC government authorities, Renminbi is freely convertible to the extent of current account items, such as trade related receipts and payments, interest and dividends.
Intellectual Property Our success and future revenue growth may depend, in part, on our ability to protect our intellectual property as products that are material to our operating results incorporate patented technology. 42 We have pursued protections for our intellectual property rights since our founding in 2012 and we focus our intellectual property efforts in China.
Intellectual Property Our success and future revenue growth may depend, in part, on our ability to protect our intellectual property as products that are material to our operating results incorporate patented technology. We have pursued protections for our intellectual property rights since our founding in 2012 and we focus our intellectual property efforts in China.
With respect to companies who violate the above regulations and fail to process housing provident fund payment and deposit registrations or open housing provident fund accounts for their employees, 48 such companies shall be ordered by the housing provident fund administration center to complete such procedures within a designated period.
With respect to companies who violate the above regulations and fail to process housing provident fund payment and deposit registrations or open housing provident fund accounts for their employees, such companies shall be ordered by the housing provident fund administration center to complete such procedures within a designated period.
Our quick separation technology has the following advantages, which we believe outweigh the disadva ntages, such as the need to use additional chemicals to reduce sulfur in wastewater and the low level, at times, of the biochemical oxygen demand level in the quick separation tank, which can make it difficult to sustain the microorganisms in the quick separation balls without additional carbon sources: ● high quality of outflowing water (Grade IA) – combines aerobic and anaerobic process inside quick separation balls and thus is more efficient in decomposition of organic matter and nitrogen; ● efficient construction and startup - microorganisms are fixed inside the quick separation balls with no additional time for cultivation and domestication of microorganisms; ● compact structure; ● high degree of automation; ● low operating cost; ● lifespan of more than 10 year without replacement of key components; ● customized design for each plant ● prevent abrupt increase of sewage inflows and contamination; ● reduced odor; and ● reduced waste by-products.
Our quick separation technology has the following advantages, which we believe outweigh the disadvantages, such as the need to use additional chemicals to reduce sulfur in wastewater and the low level, at times, of the biochemical oxygen demand level in the quick separation tank, which can make it difficult to sustain the microorganisms in the quick separation balls without additional carbon sources: ● high quality of outflowing water (Grade IA) - combines aerobic and anaerobic process inside quick separation balls and thus is more efficient in decomposition of organic matter and nitrogen; ● efficient construction and startup - microorganisms are fixed inside the quick separation balls with no additional time for cultivation and domestication of microorganisms; ● compact structure; ● high degree of automation; ● low operating cost; ● lifespan of more than 10 year without replacement of key components; ● customized design for each plant ● prevent abrupt increase of sewage inflows and contamination; ● reduced odor; and ● reduced waste by-products.
We, through Ultra HK and CDT HK, hold 100% of the outstanding equity of Shenzhen CDT. Shenzhen CDT holds equity interests in the PRC subsidiaries noted in the charts below. We, through our subsidiaries, including Shenzhen CDT, engage in developing, producing, selling and installing sewage treatment systems and providing sewage treatment services.
We, through Ultra HK and CDT HK, hold 100% of the outstanding equity of Shenzhen CDT. Shenzhen CDT holds equity interests in the PRC subsidiaries noted in the charts below. 31 We, through our subsidiaries, including Shenzhen CDT, engage in developing, producing, selling and installing sewage treatment systems and providing sewage treatment services.
We intend to increase our sales and marketing efforts via advertisement in magazines in the waste treatment industry and attending relevant exhibitions. Manufacturing 41 Rural Sewage Treatment We outsource manufacturing of our integrated rural sewage treatment system primarily to three suppliers in the Jiangsu and Fujian provinces.
We intend to increase our sales and marketing efforts via advertisement in magazines in the waste treatment industry and attending relevant exhibitions. Manufacturing Rural Sewage Treatment We outsource manufacturing of our integrated rural sewage treatment system primarily to three suppliers in the Jiangsu and Fujian provinces.
(4) The enterprise shall have a good financial status, the financial data shall be authentic and credible, and shall be audited by an accounting firm registered in the PRC who can issue third-party financial audit reports for the past three years.
(4) The enterprise shall have a good 44 financial status, the financial data shall be authentic and credible, and shall be audited by an accounting firm registered in the PRC who can issue third-party financial audit reports for the past three years.
Organizational Structure The charts below summarize our corporate legal structure and identify our subsidiaries as of the date of this annual report: Name Background Ownership Chao Qiang Holdings Limited ● A British Virgin Islands company ● Incorporated on December 14, 2015 ● A holding company 100% owned by CDT Environmental Technology Investment Holdings Limited CDT Environmental Technology Group Limited ● A British Virgin Islands company ● Incorporated on June 26, 2015 ● A holding company 100% owned by CDT Environmental Technology Investment Holdings Limited Ultra Leader Investments Limited ● A Hong Kong company ● Incorporated on February 27, 2015 ● A holding company 100% owned by Chao Qiang Holdings Limited CDT Environmental Technology (Hong Kong) Limited ● A Hong Kong company ● Incorporated on July 30, 2015 ● A holding company 100% owned by CDT Environmental Technology Group Limited 56 Shenzhen CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on August 27, 2012 ● Registered capital of RMB 60,000,000 (approximately $9.0 million) ● Developing, producing, selling and installing sewage treatment systems and providing sewage treatment services 100% collectively owned by Ultra Leader Investments Limited (15%) and CDT Environmental Technology (Hong Kong) Limited (85%) Beijing CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on April 25, 2016 ● Registered capital of RMB 20,000,000 (approximately $3.0 million) ● Providing sewage treatment services 100% owned by Shenzhen CDT Environmental Technology Co., Ltd.
Organizational Structure The charts below summarize our corporate legal structure and identify our subsidiaries as of the date of this annual report: 54 Name Background Ownership Chao Qiang Holdings Limited ● A British Virgin Islands company ● Incorporated on December 14, 2015 ● A holding company 100% owned by CDT Environmental Technology Investment Holdings Limited CDT Environmental Technology Group Limited ● A British Virgin Islands company ● Incorporated on June 26, 2015 ● A holding company 100% owned by CDT Environmental Technology Investment Holdings Limited Ultra Leader Investments Limited ● A Hong Kong company ● Incorporated on February 27, 2015 ● A holding company 100% owned by Chao Qiang Holdings Limited CDT Environmental Technology (Hong Kong) Limited ● A Hong Kong company ● Incorporated on July 30, 2015 ● A holding company 100% owned by CDT Environmental Technology Group Limited 55 Shenzhen CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on August 27, 2012 ● Registered capital of RMB 60,000,000 (approximately $9.0 million) ● Developing, producing, selling and installing sewage treatment systems and providing sewage treatment services 100% collectively owned by Ultra Leader Investments Limited (15%) and CDT Environmental Technology (Hong Kong) Limited (85%) Beijing CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on April 25, 2016 ● Registered capital of RMB 20,000,000 (approximately $3.0 million) ● Providing sewage treatment services 100% owned by Shenzhen CDT Environmental Technology Co., Ltd.
The disposal of Guangxi CWT Environmental Technology Co., Ltd. did not have a material impact on the Company’s consolidated financial statements. 58 D. Property, Plant and Equipment Our principal executive office is located at C1, 4th Floor, Building 1, Financial Base, No. 8 Kefa Road, Nanshan District, Shenzhen, China, 518057, where we lease approximately 3,440 square feet of office space.
The disposal of Guangxi CWT Environmental Technology Co., Ltd. did not have a material impact on the Company’s consolidated financial statements. 57 D. Property, Plant and Equipment Our principal executive office is located at C1, 4th Floor, Building 1, Financial Base, No. 8 Kefa Road, Nanshan District, Shenzhen, China, 518057, where we lease approximately 3,440 square feet of office space.
In 2016, the Ministry of Housing and Urban-Rural Development of China set a goal of establishing sewers and sewage treatment facilities and service systems in 90% of the villages and towns in China within 30 years.
In 2016, the Ministry of Housing and Urban-Rural Development of China set a goal of establishing sewers and sewage treatment facilities and service 34 systems in 90% of the villages and towns in China within 30 years.
This regulation is formulated for the purposes of standardizing certification and accreditation, improving the quality of products and services and management standard. This regulation applies to all certification agencies, certification services and accreditation services in the PRC. 55 C.
This regulation is formulated for the purposes of standardizing certification and accreditation, improving the quality of products and services and management standard. This regulation applies to all certification agencies, certification services and accreditation services in the PRC. C.
We are continually working to upgrade our quick separation technology and septic tank treatment systems through independent research and development and partnerships with third-party institutions to further develop our mobile septic tank treatment system. 36 We intend to expand our sales and marketing efforts for our rural sewage treatment systems to further penetrate the market in Fujian and Zhejiang provinces.
We are continually working to upgrade our quick separation technology and septic tank treatment systems through independent research and development and partnerships with third-party institutions to further develop our mobile septic tank treatment system. 35 We intend to expand our sales and marketing efforts for our rural sewage treatment systems to further penetrate the market in Fujian and Zhejiang provinces.
Our mobile system is highly automated and requires only two or three workers per system during operation. One mobile system is typically able to treat one 400-cubic-meter septic tank per day. 39 Our fixed system is an integrated and stand-alone waste treatment system designed for public toilets in cities.
Our mobile system is highly automated and requires only two or three workers per system during operation. One mobile system is typically able to treat one 400-cubic-meter septic tank per day. 38 Our fixed system is an integrated and stand-alone waste treatment system designed for public toilets in cities.
Beijing Innovation CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on September 7, 2016 ● Registered capital of RMB 5,000,000 (approximately $0.8 million) ● Providing sewage treatment services 51% owned by Shenzhen CDT Environmental Technology Co., Ltd. 57 Baoding CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on October 21, 2015 ● Registered capital of RMB 5,000,000 (approximately $0.8 million) ● Providing sewage treatment services 51% owned by Shenzhen CDT Environmental Technology Co., Ltd.
Beijing Innovation CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on September 7, 2016 ● Registered capital of RMB 5,000,000 (approximately $0.8 million) ● Providing sewage treatment services 51% owned by Shenzhen CDT Environmental Technology Co., Ltd. 56 Baoding CDT Environmental Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on October 21, 2015 ● Registered capital of RMB 5,000,000 (approximately $0.8 million) ● Providing sewage treatment services 51% owned by Shenzhen CDT Environmental Technology Co., Ltd.
Our quick separation technology innovatively creates a varied, aerobic and anaerobic environment in one tank while traditional biochemical methodologies, such as A/O methodology, maintain only one environment in one tank. 37 We believe our quick separation technology is effective in treating sewage at small scales. Other methodologies include MBR, A2/O and A/O.
Our quick separation technology innovatively creates a varied, aerobic and anaerobic environment in one tank while traditional biochemical methodologies, such as A/O methodology, maintain only one environment in one tank. 36 We believe our quick separation technology is effective in treating sewage at small scales. Other methodologies include MBR, A2/O and A/O.
However, the net proceeds from our initial public offering which must be remitted to China will not be affected since Shenzhen CDT previously completed the foreign direct investment foreign exchange registration in 2016. See “Item 3. Key Information—D.
However, the net proceeds from our initial public offering which must be remitted to China were not affected since Shenzhen CDT previously completed the foreign direct investment foreign exchange registration in 2016. See “Item 3. Key Information-D.
The Negative List (2021 Edition) and the Encouraging Catalogue (2022 Edition) contain specific provisions guiding market access of foreign capital, stipulating in detail the rules of entry according to the categories of encouraged industries, restricted industries and prohibited industries.
The Negative List (2024 Edition) and the Encouraging Catalogue (2022 Edition) contain specific provisions guiding market access of foreign capital, stipulating in detail the rules of entry according to the categories of encouraged industries, restricted industries and prohibited industries.
Industries not listed in the Negative List (2021 Edition) are generally open to foreign investment unless specifically prohibited or restricted by other PRC laws and regulations.
Industries not listed in the Negative List (2024 Edition) are generally open to foreign investment unless specifically prohibited or restricted by other PRC laws and regulations.
After foreign investors’ funds enter CDT Cayman at the close of our initial public offering, the funds can be directly transferred to CDT BVI, then transferred to CDT HK, and then to subordinate PRC entities through Shenzhen CDT, subject to applicable PRC regulations, as noted below.
After foreign investors’ funds enter CDT Cayman at the close of an equity offering, including our initial public offering, the funds can be directly transferred to CDT BVI, then transferred to CDT HK, and then to subordinate PRC entities through Shenzhen CDT, subject to applicable PRC regulations, as noted below.
Key Information—D. Risk Factors—Risks Related to Intellectual Property.” Competition We face competition from several regional competitors in the rural sewage treatment industry and the septic tank treatment industry. We may also face competition from new and emerging companies. Rural sewage treatment and septic tank treatment are emerging industries in China.
Risk Factors-Risks Related to Intellectual Property.” Competition We face competition from several regional competitors in the rural sewage treatment industry and the septic tank treatment industry. We may also face competition from new and emerging companies. Rural sewage treatment and septic tank treatment are emerging industries in China.
The pr incipal competitive factors in our markets include: ● ability to provide projects with advanced technology and equipment; ● construction quality and standards; ● ability to find projects; ● reputation in the market; ● unified management; and ● ability to address unique client needs.
The principal competitive factors in our markets include: ● ability to provide projects with advanced technology and equipment; ● construction quality and standards; ● ability to find projects; ● reputation in the market; ● unified management; and ● ability to address unique client needs.
As of the date of this annual report, there are 10,700,000 issued and outstanding ordinary shares with a par value of $0.0025 each. The structure of cash flows within our organization, and a summary of the applicable regulations, is as follows: 1. Our equity structure is a direct holding structure.
As of the date of this annual report, there are 12,325,000 issued and outstanding ordinary shares with a par value of $0.0025 each. The structure of cash flows within our organization, and a summary of the applicable regulations, is as follows: 1. Our equity structure is a direct holding structure.
We believe we compete favorably with respect to the factors mentioned above. 43 Seasonali ty Our business is affected by seasonality. Construction of our treatment systems is typically slow during winter seasons due to inclement weather and around Chinese holidays due to government and other and closures.
We believe we compete favorably with respect to the factors mentioned above. 42 Seasonality Our business is affected by seasonality. Construction of our treatment systems is typically slow during winter seasons due to inclement weather and around Chinese holidays due to government and other and closures.
If Shenzhen CDT fails to pay such overdue fine, they may be further fined. As of December 31, 2023, Shenzhen CDT and its subsidiaries failed to pay the housing provident fund for 87 employees.
If Shenzhen CDT fails to pay such overdue fine, they may be further fined. As of December 31, 2024, Shenzhen CDT and its subsidiaries failed to pay the housing provident fund for 62 employees.
See the condensed consolidated statements of change in shareholders’ equity on page F-4 and Notes 10 and 11 on pages F-25 through F-28 of the notes to the condensed consolidated financial statements included elsewhere in this annual report.
See the condensed consolidated statements of change in shareholders’ equity on page F-6 and Notes 10 and 12 on pages F-25 through F-28 of the notes to the condensed consolidated financial statements included elsewhere in this annual report.
As of the date of this annual report, to our knowledge, Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT, had completed the foreign exchange registration, but had not completed the change registration and was in the process of registration.
As of the date of this annual report, to our knowledge, Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT, had completed the foreign exchange registration, but had not completed the related change registration and remains in the process of completing such registration.
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 in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council.
The Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition. 51 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 in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, or the State Council.
As of December 31, 2023, Shenzhen CDT and its subsidiaries failed to pay social insurance premiums in full and on time for 39 employees.
As of December 31, 2024, Shenzhen CDT and its subsidiaries failed to pay social insurance premiums in full and on time for 76 employees.
These reserves are not distributable as cash dividends. 34 To address persistent capital outflows and the RMB’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China and SAFE have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments.
To address persistent capital outflows and the RMB’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China and SAFE have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments.
The core of our business is our proprietary systems and technology, together with our experience and expertise in waste treatment services, particularly in rural sewage treatment and septic tank treatment. As of December 31, 2023, we had 2 invention patents, 38 utility model patents, 3 trademarks and 2 computer software copyrights.
The core of our business is our proprietary systems and technology, together with our experience and expertise in waste treatment services, particularly in rural sewage treatment and septic tank treatment. As of December 31, 2024, we had 2 invention patents, 34 utility model patents and 3 trademarks.
The net proceeds from our initial public offering must be remitted to China before we will be able to use the funds to grow the business in China. The procedure to remit funds may take several months after completion of our initial public offering, and we will be unable to use the offering proceeds in China until remittance is completed.
The net proceeds from our initial public offering must be remitted to China before we will be able to use the funds to grow the business in China. The procedure to remit funds has taken several months and may take several more months, and we will be unable to use any offering proceeds in China until remittance is completed.
See the condensed consolidated statements of change in shareholders’ equity on page F-4 and Notes 10, and 11 on pages F-25 through F-28 of the notes to the condensed consolidated financial statements included elsewhere in this annual report.
See the condensed consolidated statements of change in shareholders’ equity on page F-6 and Notes 10 and 12 on pages F-25 through F-27 of the notes to the condensed consolidated financial statements included elsewhere in this annual report.
As of December 31, 2023, these consisted of shareholder capital contributions of $7.5 million, which are reflected as par value and additional paid-in capital in the condensed consolidated financial statements included elsewhere in this annual report (see the condensed consolidated statements of change in shareholders’ equity on page F-4 of the condensed consolidated financial statements included elsewhere in this annual report), bank loans of $2.8 million (see pages F-26 to F-27 of Note 11 of the notes to the condensed consolidated financial statements included elsewhere in this annual report), third party loans of $0.3 million (see page F-27 of Note 11 of the notes to the condensed consolidated financial statements included elsewhere in this annual report) and related party loans of $5.4 million (see page F-25 of Note 10 of the notes to the condensed consolidated financial statements included elsewhere in this annual report).
As of December 31, 2024, these consisted of shareholder capital contributions of $11.1 million, which are reflected as par value and additional paid-in capital in the condensed consolidated financial statements included elsewhere in this annual report (see the condensed consolidated statements of change in shareholders’ equity on page F-6 of the condensed consolidated financial statements included elsewhere in this annual report), bank loans of $1.8 million (see Note 10 on pages F-27 and F-28 of the notes to the condensed consolidated financial statements included elsewhere in this annual report), third party loans of $0.8 million (see page F-27 of Note 11 of the notes to the condensed consolidated financial statements included elsewhere in this annual report) and related party loans of $2.8 million (see page F-28 of Note 12 of the notes to the condensed consolidated financial statements included elsewhere in this annual report).
In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of each of their respective registered capital.
In addition, each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of each of their respective registered capital. These reserves are not distributable as cash dividends.
Regulations Relating to Foreign Exchange Registration of Overseas Investment by PRC Residents SAFE Circular 37, issued by SAFE and effective on July 4, 2014, regulates foreign exchange matters in relation to the use of SPVs by PRC residents or entities to seek offshore investment and financing and conduct round trip investment in China.
These reserves are not distributable as cash dividends. 49 Regulations Relating to Foreign Exchange Registration of Overseas Investment by PRC Residents SAFE Circular 37, issued by SAFE and effective on July 4, 2014, regulates foreign exchange matters in relation to the use of SPVs by PRC residents or entities to seek offshore investment and financing and conduct round trip investment in China.
Any funds we transfer to our PRC subsidiaries, including those received from our initial public offering, must be transferred either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China, which may take several months.
The net proceeds from our initial public offering must be remitted to China before we will be able to use the funds to grow our business in China. 32 Any funds we transfer to our PRC subsidiaries, including those received from our initial public offering, must be transferred either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China, which may take several months.
Employees and Human Capital As of December 31, 2023, we had 114 employees, of whom 107 were full-time employees, 7 were part-time employees and all were located in China. Our success depends on our ability to attract, motivate, train and retain qualified personnel.
Employees and Human Capital As of December 31, 2024, we had 76 employees, of whom 73. were full-time employees, 3 were part-time employees and all were located in China. Our success depends on our ability to attract, motivate, train and retain qualified personnel.
In addition, these companies also may allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.
In addition, these companies also may allocate a portion of their after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion.
Where any person produces or sells products that do not comply with the relevant national or industrial standards for safeguarding human health or constitute unreasonable threats to the safety of human life or property, the relevant authority will order the specific manufacturer or distributor to suspend the production or sale of defective products, confiscate the products produced or for sale, and impose a fine in an amount of up to three times the value of the defective products.
Where a defective product causes physical injury to a person or damage to his/her property, the injured party may claim compensation against the manufacturer or the distributor of such product. 53 Where any person produces or sells products that do not comply with the relevant national or industrial standards for safeguarding human health or constitute unreasonable threats to the safety of human life or property, the relevant authority will order the specific manufacturer or distributor to suspend the production or sale of defective products, confiscate the products produced or for sale, and impose a fine in an amount of up to three times the value of the defective products.
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. 54 Laws and Regulations on the Protection of Consumer Rights and Interests Business operators in the business of supplying and selling manufactured goods or services to consumers, shall comply with the Law of the PRC on the Protection of Consumer Rights and Interests, or the Consumer Rights Protection Law, promulgated by the SCNPC on October 31, 1993, and effective as of January 1, 1994, and last amended on October 25, 2013 and took effect on March 15, 2014.
Laws and Regulations on the Protection of Consumer Rights and Interests Business operators in the business of supplying and selling manufactured goods or services to consumers, shall comply with the Law of the PRC on the Protection of Consumer Rights and Interests, or the Consumer Rights Protection Law, promulgated by the SCNPC on October 31, 1993, and effective as of January 1, 1994, and last amended on October 25, 2013 and took effect on March 15, 2014.
We lease this space under a lease that terminates on September 30, 2024. We also lease a facility located at No.2, Shangping Road, Shangchen Industrial Park, Jianyang District, Nanping City, Fujian Province, China, consisting of approximately 5,382 square feet of factory space. We lease this space under a lease that terminates on July 31, 2025.
We lease this space under a lease that terminates on September 30, 2025. We previously leased a facility located at No.2, Shangping Road, Shangchen Industrial Park, Jianyang District, Nanping City, Fujian Province, China, consisting of approximately 5,382 square feet of factory space, which has been terminated prior to the original lease expiration date of July 31, 2024.
Our research and development expense was $80,948 during the year ended December 31, 2023, $112,668 during the year ended December 31, 2022 and $136,690 during the year ended December 31, 2021.
Our research and development expense was $61,786 during the year ended December 31, 2024, $80,948 during the year ended December 31, 2023, and $112,668 during the year ended December 31, 2022.
Although the results of litigation and claims cannot be predicted with certainty, we believe that the final outcome of ordinary course matters will not have a material adverse effect on our business, operating results, financial condition or cash flows.
Although the results of litigation and claims cannot be predicted with certainty, we believe that the final outcome of ordinary course matters will not have a material adverse effect on our business, operating results, financial condition or cash flows. Regulations The following sets forth a summary of the most significant rules and regulations that affect our business activities in China.
The Special Administrative Measures (Negative List) for the Access of Foreign Investment (2021 Edition), or the Negative List (2021 Edition), was jointly promulgated by the NDRC and the MOFCOM on December 27, 2021, which came into effect on January1, 2022.
The Special Administrative Measures (Negative List) for the Access of Foreign Investment (2024 Edition), or the Negative List (2024 Edition), was jointly promulgated by the NDRC and the MOFCOM on September 6, 2024, which came into effect on November 1, 2024.
We also intend to vertically expand into organic fertilizer production using dehydrated solid waste from our mobile septic tank treatment system. In addition, we intend to cooperate with a U.S. based technology company to develop a cloud-based monitoring system using the “Internet of Things”, or IoT. Rural sewage treatment stations are geographically scattered, driving high operational and maintenance costs.
In addition, we intend to cooperate with a U.S. based technology company to develop a cloud-based monitoring system using the “Internet of Things”, or IoT. Rural sewage treatment stations are geographically scattered, driving high operational and maintenance costs.
We have built a stable customer base that typically renews our septic tank service contracts annually or biennially. 40 Our Customers Our current customers are primarily local governments, state-owned companies and residential and business property management companies in China. We determine a particular customer’s credit limits based on its size, creditworthiness and financial strength to limit the likelihood of nonpayment.
Our Customers Our current customers are primarily local governments, state-owned companies and residential and business property management companies in China. We determine a particular customer’s credit limits based on its size, creditworthiness and financial strength to limit the likelihood of nonpayment.
We may in the future initiate claims or litigation against third parties to determine the validity and scope of proprietary rights of others. In addition, we may in the future initiate litigation to enforce our intellectual property rights or to protect our trade secrets. Additional information about the risks relating to our intellectual property is provided under “Item 3.
In addition, we may in the future initiate litigation to enforce our intellectual property rights or to protect our trade secrets. Additional information about the risks relating to our intellectual property is provided under “Item 3. Key Information-D.
We primarily procure outsourcing contracts from local governments and residential and business property management companies. We have established twelve subsidiaries in several provinces in China with local partners to expand our geographic market coverage.
We primarily procure outsourcing contracts from local governments and residential and business property management companies. We have established twelve subsidiaries in several provinces in China with local partners to expand our geographic market coverage. We have built a stable customer base that typically renews our septic tank service contracts annually or biennially.
Sales and Marketing We have established sales and marketing networks in many cities across nine provinces in China, with twelve majority-owned subsidiaries and two branch offices, and we are in the process of penetrating the market in Fujian and Zhejiang provinces and expanding our sales and marketing efforts in northern China.
Our largest customer in the year ended December 31, 2022 accounted for 48.5% of our total revenues in such period. 39 Sales and Marketing We have established sales and marketing networks in many cities across nine provinces in China, with twelve majority-owned subsidiaries and two branch offices, and we are in the process of penetrating the market in Fujian and Zhejiang provinces and expanding our sales and marketing efforts in northern China.
Our largest customer in the year ended December 31, 2023 accounted for 23.4% of our total revenues in such period. Our largest customer in the year ended December 31, 2022 accounted for 48.5% of our total revenues in such period. Our largest customer in the year ended December 31, 2021 accounted for 48.9% of our total revenues in such period.
Our largest customer in the year ended December 31, 2024 accounts for 22.1% of our total revenues in such period. Our largest customer in the year ended December 31, 2023 accounted for 23.4% of our total revenues in such period.
Regulations on loans to and direct investment in the PRC entities by offshore holding companies According to the Provisional Regulations on the Statistical Monitoring of Foreign Debt (Revised in 2020) promulgated by the State Council on November 29, 2020, which came into effect on the same date, and the Interim Provisions on the Management of Foreign Debts promulgated by SAFE, the NDRC and the MOF which became effective from March 1, 2003, and was amended on July 26, 2022 and took effect on September 1, 2022, loans by foreign companies to their subsidiaries in China, which accordingly are FIEs, are considered foreign debt, and such loans must be registered with the local branches of the SAFE.
Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its non-affiliated entities. 50 Regulations on loans to and direct investment in the PRC entities by offshore holding companies According to the Provisional Regulations on the Statistical Monitoring of Foreign Debt (Revised in 2020) promulgated by the State Council on November 29, 2020, which came into effect on the same date, and the Interim Provisions on the Management of Foreign Debts promulgated by SAFE, the NDRC and the MOF which became effective from March 1, 2003, and was amended on July 26, 2022 and took effect on September 1, 2022, loans by foreign companies to their subsidiaries in China, which accordingly are FIEs, are considered foreign debt, and such loans must be registered with the local branches of the SAFE.
In addition, if Shenzhen CDT does not make the housing accumulation fund deposit registration or does not establish the housing provident fund account for the employees, the housing provident fund management center will order a deadline for payment, and if Shenzhen CDT fails to pay the housing provident fund within the deadline, it will be imposed a fine of not less than RMB 10,000 (approximately $1,500) and not more than RMB 50,000 (approximately $7,500).
In addition, if Shenzhen CDT does not make the housing accumulation fund deposit registration or does not establish the housing provident fund account for the employees, the housing provident fund management center will order a deadline for payment, and if Shenzhen CDT fails to pay the housing provident fund within the deadline, it will be imposed a fine of not less than RMB 10,000 (approximately $1,500) and not more than RMB 50,000 (approximately $7,500). 47 Legal Regulations on Tax in the PRC Income Tax In January 2008, the PRC Enterprise Income Tax Law took effect, which was last amended by the Standing Committee of the National People’s Congress on December 29, 2018.
SAFE Circular 8 provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of income relating to capital account, enterprises are allowed to use income under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment. 51 As of December 31, 2023, to our knowledge, Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT, had not completed the change registration and was in the process of registration.
SAFE Circular 8 provides that under the condition that the use of the funds is genuine and compliant with current administrative provisions on use of income relating to capital account, enterprises are allowed to use income under capital account such as capital funds, foreign debts and overseas listings for domestic payment, without submission to the bank prior to each transaction of materials evidencing the veracity of such payment.
Septic Tank Treatment We assemble the components of our mobile septic tank treatment system and install such equipment on our vehicles at our factory in Nanping, China, which we operate under a lease that expires in July 2025.
In addition, we appraise our suppliers annually to ensure that they continue to meet our expectations regarding quality, timing of delivery, and post-sale services. 40 Septic Tank Treatment We assemble the components of our mobile septic tank treatment system and install such equipment on our vehicles at our factory in Nanping, China, which we operate under a lease that expires in July 2025.
The Law on Social Insurance of the PRC, which was promulgated by the Standing Committee of the National People’s Congress on October 28, 2010, and became effective on July 1, 2011, and was most recently updated on December 29, 2018, has consolidated pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations on social insurance.
The Law on Social Insurance of the PRC, which was promulgated by the Standing Committee of the National People’s Congress on October 28, 2010, and became effective on July 1, 2011, and was most recently updated on December 29, 2018, has consolidated pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations on social insurance. 46 According to the Interim Measures for Participation in the Social Insurance System by Foreigners Working within the Territory of China, which was promulgated by the Ministry of Human Resources and Social Security of China on September 6, 2011, and was amended on December 13, 2024, employers who employ foreigners shall participate in the basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, and maternity leave insurance in accordance with the relevant law, with the social insurance premiums to be contributed respectively by the employers and foreigner employees as required.
Domain Name Pursuant to the Administrative Measures on Internet Domain Names, which was recently amended by the Ministry of Industry and Information Technology of China on August 24, 2017 and became effective on November 1, 2017, “domain name” shall refer to the character mark of hierarchical structure, which identifies and locates a computer on the internet and corresponds to the internet protocol (IP) address of that computer.
Following the grant of design patent rights, no organization or individual shall implement the patent without licensing from the patentee, i.e. shall not manufacture, offer to sell, sell or import the design patented products for manufacturing and business purposes. 45 Domain Name Pursuant to the Administrative Measures on Internet Domain Names, which was recently amended by the Ministry of Industry and Information Technology of China on August 24, 2017 and became effective on November 1, 2017, “domain name” shall refer to the character mark of hierarchical structure, which identifies and locates a computer on the internet and corresponds to the internet protocol (IP) address of that computer.
All share and per share amounts used herein and in the consolidated financial statements have been retroactively adjusted to reflect the share split, unless otherwise indicated. 32 As a result, immediately prior to our initial public offering, our authorized ordinary share capital was 20,000,000 ordinary shares with a par value of $0.0025 each and there were 9,200,000 issued and outstanding ordinary shares with a par value of $0.0025 each.
As a result, immediately prior to our initial public offering, our authorized ordinary share capital was 20,000,000 ordinary shares with a par value of $0.0025 each and there were 9,200,000 issued and outstanding ordinary shares with a par value of $0.0025 each.
Where the taxpayer fails to pay tax pursuant to law, the tax authorities may demand payment of the tax amount payable, from a payer of the taxpayer with payable tax amounts from other taxable income items in China. 49 On April 30, 2009, the MOF and the SAT jointly issued the Circular on Issues Concerning Treatment of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59, which became effective retroactively as of January 1, 2008 and was partially revised on January 1, 2014.
On April 30, 2009, the MOF and the SAT jointly issued the Circular on Issues Concerning Treatment of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59, which became effective retroactively as of January 1, 2008 and was partially revised on January 1, 2014.
If the investment activity of a foreign investor is in breach of any special administrative measure for restrictive access provided for in the “negative list”, the relevant competent department shall order the foreign investor to make corrections and take necessary measures to meet the requirements of the special administrative measure for restrictive access. 53 Besides, the PRC government established 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.
Besides, the PRC government established 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.
If non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under SAT Bulletin 7.
If non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under SAT Bulletin 7. 48 Value-Added Tax According to the Provisional Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Provisional Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay value-added tax.
CQ BVI is a holding company holding all of the outstanding equity of Ultra Leader Investments Limited, or Ultra HK, which was established in Hong Kong on February 27, 2015.
All of the SEC filings made electronically by CDT Cayman are available to the public on the SEC website at www.sec.gov (commission file number 1-42007). CQ BVI is a holding company holding all of the outstanding equity of Ultra Leader Investments Limited, or Ultra HK, which was established in Hong Kong on February 27, 2015.
Further, any medium-or long- term loan to be provided by us to our PRC subsidiaries must be approved by the NDRC and the SAFE or its local branches.
Further, any medium-or long- term loan to be provided by us to our PRC subsidiaries must be approved by the NDRC and the SAFE or its local branches. Further, SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities.
After the end of the transition period, the cross-border financing management mode for FIEs will be determined by the People’s Bank of China and SAFE after assessment based on the overall implementation of this PBOC Circular 9. 52 According to applicable PRC regulations on FIEs, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered FIEs, may only be made when approval by or registration with the MOFCOM or its local counterpart is obtained.
According to applicable PRC regulations on FIEs, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered FIEs, may only be made when approval by or registration with the MOFCOM or its local counterpart is obtained.
We believe it is appropriate to reflect the above transactions on a retroactive basis similar to a stock split or dividend pursuant to FASB ASC 260.
We believe it is appropriate to reflect the above transactions on a retroactive basis similar to a stock split or dividend pursuant to FASB ASC 260. All share and per share amounts used herein and in the consolidated financial statements have been retroactively adjusted to reflect the share split, unless otherwise indicated.
In addition, any rights granted under any of our existing or future patents may not provide meaningful protection or any commercial advantage to us. With respect to our other proprietary rights, it may be possible for third parties to copy or otherwise obtain and use our proprietary technology without authorization or to develop similar technology independently.
With respect to our other proprietary rights, it may be possible for third parties to copy or otherwise obtain and use our proprietary technology without authorization or to develop similar technology independently. We may in the future initiate claims or litigation against third parties to determine the validity and scope of proprietary rights of others.
The PRC Company Law defines two types of companies: limited liability companies and limited stock companies. Our PRC operating subsidiary is a limited liability company.
The PRC Company Law defines two types of companies: limited liability companies and limited stock companies. Our PRC operating subsidiary 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.
As of December 31, 2023, we had 2 invention patents, 35 utility model patents, 3 trademarks and 2 computer software copyrights. We cannot assure you that any patents will be issued from any of our pending applications.
As of December 31, 2024, we had 2 invention patents, 34 utility model patents and 3 trademarks. 41 We cannot assure you that any patents will be issued from any of our pending applications. In addition, any rights granted under any of our existing or future patents may not provide meaningful protection or any commercial advantage to us.
We also typically perform several test runs before we accept products from our suppliers. In addition, we appraise our suppliers annually to ensure that they continue to meet our expectations regarding quality, timing of delivery, and post-sale services.
We also typically perform several test runs before we accept products from our suppliers.
Removed
The net proceeds from our initial public offering must be remitted to China before we will be able to use the funds to grow our business in China.
Added
Our registered office in the Cayman Islands is located at the office of Campbells Corporate Services Limited, Floor 4, Willow House, Cricket Square, Grand Cayman KY1-9010, Cayman Islands. Our registered office is located at C1, 4th Floor, Building 1, Financial Base, No. 8 Kefa Road, Nanshan District, Shenzhen, telephone no. +86-0755-86667996. Our website may be found at https://www.cdthb.cn/en/index.ph].
Removed
Further, regulations on the control of currency conversions, including SAFE Circular 19 may significantly limit our ability to use Renminbi converted from the net proceeds of our initial public offering to fund the establishment of new entities in China by our subsidiaries, to invest in or acquire any other PRC companies through our PRC subsidiaries, or to establish consolidated variable interest entities in the PRC, which may adversely affect our business, financial condition and results of operations.
Added
The information on our website is not a part of, and is not incorporated into, this document. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

88 edited+43 added−36 removed70 unchanged
Financing activities Net cash provided by financing activities was approximately $3.0 million for the year ended December 31, 2023 and was primarily attributable to approximately $2.4 million proceeds received from short-term and long-term bank loans, and approximately $1.2 million proceeds received from other payables-related parties, and short-term loans- related parties, offset by approximately $0.6 million of repayments of short-term and long-term bank loans, and repayments of short-term loan third parties, net.
Net cash provided by financing activities was approximately $3.0 million for the year ended December 31, 2023 and was primarily attributable to approximately $2.4 million proceeds received from short-term and long-term bank loans, and approximately $1.2 million proceeds received from other payables-related parties, and short-term loans- related parties, offset by approximately $0.6 million of repayments of short-term and long-term bank loans, and repayments of short-term loan third parties, net.
Gross Profit Our gross profit from our major revenue categories are summarized as follows: 62 For the Year Ended December 31, 2023 For the Year Ended December 31, 2022 Change Change (%) Sewage treatment systems Gross profit margin $ 10,637,377 $ 9,381,812 $ 1,255,565 13.4 % Gross profit percentage 33.0 % 35.3 % (2.4 )% Sewage treatment services Gross profit margin $ 747,509 $ 871,343 $ (123,834 ) (14.2 )% Gross profit percentage 38.5 % 37.9 % 0.5 % Total Gross profit margin $ 11,384,886 $ 10,253,155 $ 1,131,731 11.0 % Gross profit percentage 33.3 % 35.5 % (2.3 )% Our gross profit increased by approximately $1.1 million, or 11.0 %, to approximately $11.4 million for the year ended December 31, 2023 from approximately $10.3 million for the same period in 2022.
Gross Profit Our gross profit from our major revenue categories are summarized as follows: For the Year Ended December 31, 2023 For the Year Ended December 31, 2022 Change Change (%) Sewage treatment systems Gross profit margin $ 10,637,377 $ 9,381,812 $ 1,255,565 13.4 % Gross profit percentage 33.0 % 35.3 % (2.4 )% Sewage treatment services Gross profit margin $ 747,509 $ 871,343 $ (123,834 ) (14.2 )% Gross profit percentage 38.5 % 37.9 % 0.5 % Total Gross profit margin $ 11,384,886 $ 10,253,155 $ 1,131,731 11.0 % Gross profit percentage 33.3 % 35.5 % (2.3 )% Our gross profit increased by approximately $1.1 million, or 11.0 %, to approximately $11.4 million for the year ended December 31, 2023 from approximately $10.3 million for the same period in 2022.
Our revenues from our revenue categories are summarized as follows: For the Year Ended For the Year Ended December 31, 2023 December 31, 2022 Change Change (%) Revenues Sewage treatment systems $ 32,267,593 $ 26,552,481 $ 5,715,112 21.5 % Sewage treatment services 1,942,326 2,296,881 (354,555 ) (15.4 )% Total revenues $ 34,209,919 $ 28,849,362 $ 5,360,557 18.6 % 61 Sewage treatment systems revenues Revenues from sewage treatment system installations increased by approximately $5.7 million, or 21.5%, to approximately $32.3 million for the year ended December 31, 2023, from approximately $26.6 million for the same period in 2022.
Our revenues from our revenue categories are summarized as follows: For the Year Ended For the Year Ended December 31, 2023 December 31, 2022 Change Change (%) Revenues Sewage treatment systems $ 32,267,593 $ 26,552,481 $ 5,715,112 21.5 % Sewage treatment services 1,942,326 2,296,881 (354,555 ) (15.4 )% Total revenues $ 34,209,919 $ 28,849,362 $ 5,360,557 18.6 % Sewage treatment systems revenues Revenues from sewage treatment system installations increased by approximately $5.7 million, or 21.5%, to approximately $32.3 million for the year ended December 31, 2023, from approximately $26.6 million for the same period in 2022.
In accordance with FASB ASC No. 450-20, “Loss Contingencies”, we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. For the years ended December 31, 2023, 2023 and 2022, we did not record any accruals for loss contingencies.
In accordance with FASB ASC No. 450-20, “Loss Contingencies”, we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. For the years ended December 31, 2024, 2023 and 2022, we did not record any accruals for loss contingencies.
In accordance with FASB ASC No. 450-20, “Loss Contingencies”, we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. For the years ended December 31, 2023, 2023 and 2022, we did not record any accruals for loss contingencies.
In accordance with FASB ASC No. 450-20, “Loss Contingencies”, we will record accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. For the years ended December 31, 2024, 2023 and 2022, we did not record any accruals for loss contingencies.
Although actual losses have not differed materially from our previous estimates, future losses could differ from our current estimates. 74 Contract assets and contract liabilities Projects with performance obligations recognized over time that have revenue recognized to date in excess of cumulative billings are reported on our consolidated balance sheets as “Contract assets”.
Although actual losses have not differed materially from our previous estimates, future losses could differ from our current estimates. Contract assets and contract liabilities Projects with performance obligations recognized over time that have revenue recognized to date in excess of cumulative billings are reported on our consolidated balance sheets as “Contract assets”.
Critical Accounting Estimates Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
E. Critical Accounting Estimates Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
Net income Our net income was increased by approximately $1.8 million, or 34.0%, to net income of approximately $7.0 million for the year ended December 31, 2023, from approximately $5.2 million net income for the same period in 2022. Such change was due to the reasons as discussed above.
Net income Our net income was increased by approximately $1.8 million, or 34.0%, to net income of approximately $7.0 million for the year ended December 31, 2023, from approximately $5.2 million net income for the same period in 2022. Such change was due to the reasons as discussed above. B.
Our patent strategy is designed to provide a balance between the need for coverage in our strategic market and the need to maintain reasonable costs. We believe our patents and other intellectual property rights serve to distinguish and protect our products from infringement and contribute to our competitive advantages.
Our patent strategy is designed to provide a balance between the need for coverage in our strategic market and the need to maintain reasonable costs. 75 We believe our patents and other intellectual property rights serve to distinguish and protect our products from infringement and contribute to our competitive advantages.
The increase in gross profit is primarily due to the increase of sewage treatment systems revenue as discussed above. For the years ended December 31, 2023 and 2022, our overall gross profit percentage was 33.3% and 35.5%, respectively.
The increase in gross profit is primarily due to the increase of sewage treatment systems revenue as discussed above. 64 For the years ended December 31, 2023 and 2022, our overall gross profit percentage was 33.3% and 35.5%, respectively.
Under the labor cost measure of progress method, the extent of progress towards completion is measured based on the ratio of total labor cost incurred to date to the total estimated labor cost at completion of the performance obligation. Revenue, including estimated fees or profits, are recorded proportionally as labor costs are incurred.
Under the labor cost measure of progress method, the extent of progress towards completion is measured 73 based on the ratio of total labor cost incurred to date to the total estimated labor cost at completion of the performance obligation. Revenue, including estimated fees or profits, are recorded proportionally as labor costs are incurred.
We are continually working to upgrade our quick separation technology and septic tank treatment systems through independent research and development and partnerships with third-party institutions to further develop our mobile septic tank treatment system. We have grown rapidly since our inception.
We are continually working to upgrade our quick separation technology and septic tank treatment systems through independent research and development and partnerships with third-party institutions to further develop our mobile septic tank treatment system. 58 We have grown rapidly since our inception.
Our total revenues gained upward momentum by increasing approximately $5.4 million, or 18.6%, to approximately $34.2 million for the year ended December 31, 2023 as compared to approximately $28.8 million for the same period in 2022.
In contrast, our total revenues gained upward momentum by increasing approximately $5.4 million, or 18.6%, to approximately $34.2 million for the year ended December 31, 2023 as compared to approximately $28.8 million for the same period in 2022.
Trend information Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operation results or financial condition. 76 E.
Trend information Other than as described elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenue, income from continuing operations, profitability, liquidity or capital resources, or that would cause our reported financial information not necessarily to be indicative of future operation results or financial condition.
Accounts receivable Our accounts receivable increased by approximately $9 million for the year ended December 31, 2023. The increase was mainly due to the increase of revenue during the year ended December 31, 2023. Our accounts receivable increased by approximately $7.4 million for the year ended December 31, 2022.
The increase was mainly due to the increase of revenue during the year ended December 31, 2023. Our accounts receivable increased by approximately $7.4 million for the year ended December 31, 2022. The increase was mainly due to the increase of revenue during the year ended December 31, 2022.
We are also in the process of acquiring three projects for our sewage treatment systems, which are expected to be signed and commenced by the third quarter of 2024. There can be no guarantee that these remaining projects will be acquired, or that, even if they are acquired, that they will be completed in a timely manner or at all.
We are also in the process of acquiring three projects for our sewage treatment systems, which are expected to be signed and commenced by the third quarter of 2025. There can be no guarantee that these remaining projects will be acquired, or that, even if they are acquired, that they will be completed in a timely manner or at all.
We believe our current allowance policy is reasonable because we have never experienced any significant losses on collections from our past experience. Since our sewage treatment systems customers are mainly state-owned companies, which are backed by the local governments, we believe our current allowance policy is reasonable as of December 31, 2023.
We believe our current allowance policy is reasonable because we have never experienced any significant losses on collections from our past experience. Since our sewage treatment systems customers are mainly state-owned companies, which are backed by the local governments, we believe our current allowance policy is reasonable as of December 31, 2024.
W e intend to use the net proceeds raised from our initial public offering to grow our business primarily by: ● investing working capital for rural sewage treatments, including building our sewage treatment equipment; ● implementing new systems and services and potential mergers and acquisitions, although no definitive merger or acquisition targets have been identified; and ● investing in our research and development and sales and marketing capabilities.
We intend to use the net proceeds raised from our initial public offering to grow our business primarily by: ● investing working capital for rural sewage treatments, including building our sewage treatment equipment; ● implementing new systems and services and potential mergers and acquisitions, although no definitive merger or acquisition targets have been identified; and ● investing in our research and development and sales and marketing capabilities.
We expect our days sales outstanding to be between 300 days to 365 days in future periods, mainly because the payment approval process from local governments is complex as it requires us to go through several procedures and typically takes a longer period of time as all of the proper inspection documents must be provided in order for funds to be released.
We expect our DSO to be between 300 days to 365 days in future periods, mainly because the payment approval process from local governments is complex as it requires us to go through several procedures and typically takes a longer period of time as all of the proper inspection documents must be provided in order for funds to be released.
Approximately $0.5 million decrease in general and administrative expenses was primarily attributable to $0.5 million decrease in audit expenses as we did not incur additional audit fees for the year ended December 31, 2023 compare to the same period in 2022.
Approximately $0.5 million decrease in general and administrative expenses was primarily attributable to $0.5 million decrease in audit expenses as we did not incur additional audit fees for the year ended December 31, 2023 compared to the same period in 2022.
Safe harbor See “Forward-Looking Statements” on page iii of this annual report.
Safe harbor See “Forward-Looking Statements” beginning on page iii of this annual report.
Subsequent to December 31, 2023 and as of the date of this annual report, we did not purchase any material equipment for operational use.
Subsequent to December 31, 2024 and as of the date of this annual report, we did not purchase any material equipment for operational use.
Key terms of the agreements for the two projects include: ● the project name and location; ● duration, price and payment terms; ● quality, safety and construction requirements; and ● breach of contract terms.
Key terms of the agreements for the four projects include: ● the project name and location; ● duration, price and payment terms; ● quality, safety and construction requirements; and ● breach of contract terms.
Research and development, patents and licenses, etc. 75 Research and Development We are committed to researching and developing our sewage treatment technologies and septic tank treatment systems in order to meet the demands of our customers in the waste treatment market. We collect feedback from our completed projects and modify our integrated equipment and technologies based on previous experiences.
Research and Development We are committed to researching and developing our sewage treatment technologies and septic tank treatment systems in order to meet the demands of our customers in the waste treatment market. We collect feedback from our completed projects and modify our integrated equipment and technologies based on previous experiences.
We do not have any other material commitments for capital expenditures as of December 31, 2023. 73 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
We do not have any other material commitments for capital expenditures as of December 31, 2024. 72 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
As of December 31, 2023, our contract costs aging is as follows: 1- 90 91- 180 181- 270 271-360 361-720 Over 720 Balance days days days days days days Contract costs $ — $ — $ — $ — $ — $ — $ — As of December 31, 2022, our contract costs aging is as follows: 1- 90 91- 180 181- 270 271-360 361-720 Over 720 Balance days days days days days days Contract costs $ 899,662 $ — $ — $ 899,662 $ — $ — $ — As of December 31, 2021, our contract costs aging is as follows: 1- 90 91- 180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract costs $ 1,764,109 $ 1,764,109 $ — $ — $ — $ — $ — Accounts payable Our accounts payable increased by approximately $9.2 million, $5.6 million and $5.9 million for the year ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2024, our contract costs aging is as follows: 1- 90 91- 180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract costs $ — $ — $ — $ — $ — $ — $ — As of December 31, 2023, our contract costs aging is as follows: 1- 90 91- 180 181- 270 271-360 361-720 Over 720 Balance days days days days days days Contract costs $ — $ — $ — $ — $ — $ — $ — As of December 31, 2022, our contract costs aging is as follows: 1- 90 91- 180 181- 270 271-360 361-720 Over 720 Balance days days days days days days Contract costs $ 899,662 $ — $ — $ 899,662 $ — $ — $ — Accounts payable Our accounts payable increased by approximately $13.0 million, $9.2 million and $5.6 million for the year ended December 31, 2024, 2023 and 2022, respectively.
We believe our current allowance for doubtful accounts is a reasonable estimate of our expected losses of our accounts receivable. Our management will continue to evaluate the reasonableness of our allowance policy and will update it as necessary. As of April 30, 2024, we collected approximately 10.8% from our four major customers’ outstanding balances as of December 31, 2023.
We believe our current allowance for doubtful accounts is a reasonable estimate of our expected losses of our accounts receivable. Our management will continue to evaluate the reasonableness of our allowance policy and will update it as necessary. As of April 30, 2025, we collected approximately 0.5% from our four major customers’ outstanding balances as of December 31, 2024.
The liquidity of our operations highly depends on the timing of payments from our major customers, and should any delay of payment from them occur, our operations and liquidity may be impacted. Contract assets Our contract assets increased by approximately $13.6 million, $12.2 million, and $10.9 million for the year ended December 31, 2023, 2022 and 2021, respectively.
The liquidity of our operations highly depends on the timing of payments from our major customers, and should any delay of payment from them occur, our operations and liquidity may be impacted. Contract assets Our contract assets increased by approximately $1.4 million, $13.6 million, and $12.2 million for the year ended December 31, 2024, 2023 and 2022, respectively.
The carrying amount of the asset is compared to the remaining amount of consideration we expect to receive for the services to which the asset relates, less the costs that relate directly to providing those services that have not yet been recognized. If the carrying amount is not recoverable, an impairment loss is recognized.
The carrying amount of the asset is compared to the remaining amount of consideration we expect to receive for the services to which the asset relates, less the costs that relate directly to providing those services that have not yet been recognized.
The core of our business is our proprietary systems and technology, together with our experience and expertise in waste treatment services, particularly in rural sewage treatment and septic tank treatment. As of December 31, 2023, we had 2 invention patents, 38 utility model patents, 3 trademarks and 2 computer software copyrights.
The core of our business is our proprietary systems and technology, together with our experience and expertise in waste treatment services, particularly in rural sewage treatment and septic tank treatment. As of December 31, 2024, we had 2 invention patents, 34 utility model patents and 3 trademarks.
Recent Accounting Pronouncements See Note 3 of the notes to the consolidated financial statements included elsewhere in this annual report on Form 20-F for a discussion of recently issued accounting standards. C.
Recent Accounting Pronouncements See Note 3 of the notes to the consolidated financial statements included elsewhere in this annual report on Form 20-F for a discussion of recently issued accounting standards. C. Research and development, patents and licenses, etc.
Actual results could differ from these estimates. F. Tabular disclosure of contractual obligations In the normal course of business, we are subject to loss contingencies, such as legal proceedings and claims arising out of our business, that cover a wide range of matters, including, among others, government investigations and tax matters.
Tabular disclosure of contractual obligations In the normal course of business, we are subject to loss contingencies, such as legal proceedings and claims arising out of our business, that cover a wide range of matters, including, among others, government investigations and tax matters.
Risk Factors—Risks Related to Our Business—We face risks related to natural disasters, health epidemics and other outbreaks, particularly the coronavirus, which could significantly disrupt our operations .” Results of Operations Comparison of the years ended December 31, 2023 and 2022 For the Years Ended December 31, Percentage 2023 2022 Change Change Revenues $ 34,209,919 $ 28,849,362 $ 5,360,557 18.6 % Cost of revenues 22,825,033 18,596,207 4,228,826 22.7 % Gross profit 11,384,886 10,253,155 1,131,731 11.0 % Selling expenses 106,147 164,583 (58,436 ) (35.5 )% General and administrative expenses 2,674,519 3,150,512 (475,993 ) (15.1 )% Research and development expenses 80,948 112,668 (31,720 ) (28.2 )% (Recovery from) provision for doubtful accounts (88,221 ) 471,454 (559,675 ) (118.7 )% Income from operations 8,611,493 6,353,938 2,257,555 35.5 % Other (expense) income, net (183,559 ) 41,814 (225,373 ) (539.0 )% Income tax expense 1,403,880 1,152,963 250,917 (21.8 )% Net income $ 7,024,054 $ 5,242,789 $ 1,781,265 34.0 % Revenues Our revenues are derived from sewage treatment systems and sewage treatment services in both urban and rural areas.
Such change was due to the reasons as discussed above. 62 Comparison of Years Ended December 31, 2023 and 2022 For the Years Ended December 31, Percentage 2023 2022 Change Change Revenues $ 34,209,919 $ 28,849,362 $ 5,360,557 18.6 % Cost of revenues 22,825,033 18,596,207 4,228,826 22.7 % Gross profit 11,384,886 10,253,155 1,131,731 11.0 % Selling expenses 106,147 164,583 (58,436 ) (35.5 )% General and administrative expenses 2,674,519 3,150,512 (475,993 ) (15.1 )% Research and development expenses 80,948 112,668 (31,720 ) (28.2 )% (Recovery from) provision for credit loss and doubtful accounts (88,221 ) 471,454 (559,675 ) (118.7 )% Income from operations 8,611,493 6,353,938 2,257,555 35.5 % Other (expense) income, net (183,559 ) 41,814 (225,373 ) (539.0 )% Income tax expense 1,403,880 1,152,963 250,917 (21.8 )% Net income $ 7,024,054 $ 5,242,789 $ 1,781,265 34.0 % Revenues Our revenues are derived from sewage treatment systems and sewage treatment services in both urban and rural areas.
As of December 31, 2023, approximately $0.2 million and $18,000 were deposited with financial institutions located in the PRC and Hong Kong, respectively.
As of December 31, 2024, approximately $0.1 million and $22,000 were deposited with financial institutions located in the PRC and Hong Kong, respectively.
Our allowance for credit loss against our account receivable were $3,009,363, $3,189,642 and $3,004,435 as of December 31, 2023, 2022 and 2021, respectively, representing 9.4%, 13.7% and 17.0% of our gross accounts receivable, respectively. Our allowance for credit loss for other receivables, were $500,857, $646,044 and $1,632,616 as of December 31, 2023, 2022 and 2021, respectively.
Our allowance for credit loss against our account receivable were $9,267,851, $3,009,363 and $3,189,642 as of December 31, 2024, 2023 and 2022, respectively, representing 17.0%, 9.4% and 13.7% of our gross accounts receivable, respectively. Our allowance for credit loss for other receivables were $468,219, $500,857 and $646,044 as of December 31, 2024, 2023 and 2022, respectively.
Although we have generally benefited from China’s economic growth and the policies to encourage the improvement of reducing of sewage waste discharge, we are also affected by the complexity, uncertainties and changes in the Chinese economic conditions and regulations governing the sewage industry.
Although we have generally benefited from China’s economic growth and the policies to encourage the improvement of reducing of sewage waste discharge, we are also affected by the complexity, uncertainties and changes in the Chinese economic conditions and regulations governing the sewage industry. Impact of Foreign Currency Fluctuation See “Item 3. Key Information-D.
The increase was mainly due to an increase in current income tax, as we incurred more taxable income from our PRC subsidiaries. Additionally, the increase was attributed to an increase in deferred tax, as we recovered more accounts receivable and other receivables that were previously allowances, resulting in fewer deferred tax assets recognized for the year ended December 31, 2023.
Additionally, the increase was attributed to an increase in deferred tax, as we recovered more accounts receivable and other receivables that were previously allowances, resulting in fewer deferred tax assets recognized for the year ended December 31, 2023.
Deferred Income taxes Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences.
If the carrying amount is not recoverable, an impairment loss is recognized. 74 Deferred Income taxes Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit.
Contract assets balance as of December 31, 2023 were mainly attributable to the Zhongshan, Guankou, Wuyishan, and Lianjiang projects, which amounted to approximately $10.9 million, $11.9 million, $2.0 million and $1.8 million, respectively, while contract assets balance from the aforementioned projects amounted to approximately $10.7 million, $11.3 million, $3.2 million, and $0 as of December 31, 2022, respectively.
Contract assets balance as of December 31, 2024 were mainly attributable to the Zhongshan, Guankou, Wuyishan, Lianjiang, Jianyang, Xinjiang, and Sichuan Anya projects, which amounted to approximately $9.2 million, $13.9 million, $1.5 million, $4.5 million, $3.8 million, $3.7 million, and $2.9 million, respectively, while contract assets balance were mainly attributable to the Zhongshan, Guankou, Wuyishan, and Lianjiang projects, which amounted to approximately $10.9 million, $11.9 million, $2.0 million, and $1.8 million as of December 31, 2023, respectively.
Such a change was mainly attributable to our recognition of approximately $0.1 million in losses from the disposal of several malfunctioning sewage cleaning equipment units from our sewage treatment service.
Such a change was mainly attributable to our recognition of approximately $0.1 million in losses from the disposal of several malfunctioning sewage cleaning equipment units from our sewage treatment service. Additionally, the changes were also attributable to receiving fewer grants from the local government.
On April 22, 2024, we completed our initial public offering (“IPO”) of 1,500,000 ordinary shares at an initial public offering price of $4.00 per share, resulting in net proceeds of approximately $4.3 million after deducting underwriting discounts and commissions and other expenses, and including net proceeds in the amount of $600,000 that were placed in an escrow account for 24-months following the closing of our IPO.
We believe our current working capital and cash position is sufficient to support our operations for the next twelve months from the issuance of the financial statements. 65 On April 22, 2024, we completed our initial public offering (“IPO”) of 1,500,000 ordinary shares at an initial public offering price of $4.00 per share, resulting in net proceeds of approximately $4.3 million after deducting underwriting discounts and commissions and other expenses, and including net proceeds in the amount of $600,000 that were placed in an escrow account for 24-months following the closing of our IPO.
Our days sales outstanding are as follows: Period Days Sales Outstanding Year Ended December 31, 2018 180 Year Ended December 31, 2019 306 Year Ended December 31, 2020 615 Year Ended December 31, 2021 204 Year Ended December 31, 2022 220 Year Ended December 31, 2023 262 Our days sales outstanding increased from 180 days to 306 days to 615 days, decreased to 204 days, increased to 220 days, and increased to 262 days from December 31, 2018 to December 31, 2019 to December 31, 2020 to December 31, 2021 to December 31, 2022, and to December 31, 2023, respectively.
Our days sales outstanding are as follows: Period Days Sales Outstanding Year Ended December 31, 2018 180 Year Ended December 31, 2019 306 Year Ended December 31, 2020 615 Year Ended December 31, 2021 204 Year Ended December 31, 2022 220 Year Ended December 31, 2023 262 Year Ended December 31, 2024 455 Our days sales outstanding (“DSO”) increased from 180 days at December 31, 2018 to 306 days at December 31, 2019, further rising to 615 days at December 31, 2020.
Our research and development expense was $80,948 during the year ended December 31, 2023, $112,668 during the year ended December 31, 2022 and $136,690 during the year ended December 31, 2021.
Our research and development expense was $61,786 during the year ended December 31, 2024, $80,948 during the year ended December 31, 2023, and $112,668 during the year ended December 31, 2022.
As of April 30, 2024, five projects outstanding from the year ended December 31, 2022 had been completed, and the rest are expected to be completed within the next twelve months. Our revenue from sewage treatment systems will continue to grow in the remaining of 2024 and beyond.
As of April 30, 2024 , five projects outstanding from the year ended December 31, 2022 had been completed, and the rest are expected to be completed within the next twelve months.
As of December 31, 2023, our working capital was approximately $24.2 million, our cash was amounted to approximately $0.3 million, our current assets were approximately $64.7 million and our current liabilities were approximately $40.5 million. We had net income of approximately $7.4 million and $5.8 million for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2024, our working capital was approximately $26.0 million, our cash was amounted to approximately $0.1 million, our current assets were approximately $77.7 million and our current liabilities were approximately $51.6 million. We had net income of approximately $1.5 million and $7.4 million for the years ended December 31, 2024 and 2023, respectively.
However, based on our historical collection patterns, we believe the collectability of our accounts receivable are probable as we have had a collection rate of 99.3%, 99.8%, 96.2%, 67.8%, 56.4%, and 18.8% in our 2018, 2019, 2020, 2021, 2022, and 2023’s progress billings of our sewage treatment systems revenues, respectively.
However, based on our historical collection patterns, we believe the collectability of our accounts receivable are probable as we have had a collection rate of 99.3%, 99.8%, 98.4%, 72.8%, 59.7%, 29.9%, 0.1% in our 2018, 2019, 2020, 2021, 2022, 2023 and 2024’s progress billings of our sewage treatment systems revenues, respectively.
Due to the delay of construction inspection which involved multi-government departments approval, the billing process pertained to aforementioned projects has fallen behind.
Due to the delay of construction inspection which involved multi-government departments approval, the billing process pertained to aforementioned projects has fallen behind. As a result, the unbilled portion of these projects remained as contract assets.
The aging method of providing our allowance policy is based upon a combination of our historical collection pattern of our sewage treatment service revenues and progress billings of our sewage treatment system revenues from prior periods and the probable uncollectable rate of our aged accounts receivable as of our latest balance sheet date.
The liquidity of our operations highly depends on the timing of payments from our major customers, and should there be any delay of payment, our operations and liquidity may be impacted. 68 The aging method of providing our allowance policy is based upon a combination of our historical collection pattern of our sewage treatment service revenues and progress billings of our sewage treatment system revenues from prior periods and the probable uncollectable rate of our aged accounts receivable as of our latest balance sheet date.
Investing activities Net cash provided by investing activities was approximately $0.2 million for the year ended December 31, 2023 was mainly attributable to approximately $57,000 repayments received from loan to third party, approximately $170,000 repayments received from loan to related parties. 72 Net cash used in investing activities was approximately $94,000 for the year ended December 31, 2022 and was mainly attributable to approximately $53,000 and $34,000 of equipment and intangible assets purchases, respectively.
Net cash used in investing activities was approximately $94,000 for the year ended December 31, 2022 and was mainly attributable to approximately $53,000 and $34,000 of equipment and intangible assets purchases, respectively. Financing activities Net cash provided by financing activities was approximately $1.0 million for the year ended December 31, 2024.
Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
The major reason for the significant increase in such balance is mainly due to the fact that we had purchased raw materials on account to support our significant growth of sewage treatment system projects.
The major reason for the significant increase in such balance is mainly due to the fact that we had purchased raw materials on account to support our growth of sewage treatment system projects. Investing activities Net cash provided by investing activities was approximately $0.5 million for the year ended December 31, 2024.
Historically, it took us approximately 417 days to collect 99.3% of our 2018 progress billings of our sewage treatment systems revenue, approximately 442 days to collect 99.8% of our 2019 progress billings of our sewage treatment system revenues, approximately 585 days to collect 96.2% of our 2020 progress billing of our sewage treatment systems revenue, approximately 543 days to collect 67.8% of our 2021 progress billing, approximately 132 days to collect 56.4% of our 2022 progress billing, and approximately 166 days to collect 18.8% of our 2023 progress billing from our sewage treatment system revenue which we believe proves that we are able to collect substantially all of our receivables.
Historically, it took us approximately 417 days to collect 99.3% of our 2018 progress billings of our sewage treatment systems revenue, approximately 442 days to collect 99.8% of our 2019 progress billings of our sewage treatment system revenues, approximately 612 days to collect 98.4% of our 2020 progress billing of our sewage treatment systems revenue, approximately 586 days to collect 72.8% of our 2021 progress billing, approximately 164 days to collect 59.7% of our 2022 progress billing, approximately 223 days to collect 29.9% of our 2023 progress billing, and approximately 60 days to collect 0.1% of our 2024 progress billing of our sewage treatment systems revenue from our sewage treatment system revenue which we believe proves that we are able to collect substantially all of our receivables.
As of December 31, 2023, our accounts receivable aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Accounts receivable $ 32,085,912 $ 18,126,057 $ 3,953 $ 3,680,109 $ 568,851 $ 3,314,884 $ 6,392,058 Allowance for doubtful accounts (7,306,107 ) — — — (85,328 ) (828,721 ) (6,392,058 ) Specific account adjustments 4,296,744 — — — — 21,178 4,275,566 Accounts receivable, net $ 29,076,549 $ 18,126,057 $ 3,953 $ 3,680,109 $ 483,523 $ 2,507,341 $ 4,275,566 70 As of December 31, 2022, our accounts receivable aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Accounts receivable $ 23,280,416 $ 11,278,444 $ 2,698,640 $ 365,873 $ 127,095 $ 4,908,249 $ 3,902,115 Allowance for doubtful accounts (5,148,241 ) — — — (19,064 ) (1,227,062 ) (3,902,115 ) Specific account adjustments 1,958,600 — — — 16,398 37,173 1,905,029 Accounts receivable, net $ 20,090,775 $ 11,278,444 $ 2,698,640 $ 365,873 $ 124,429 $ 3,718,360 $ 1,905,029 As of December 31, 2021, our accounts receivable aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Accounts receivable $ 17,675,746 $ 6,437,736 $ 434,299 $ 2,952,062 $ 66,567 $ 4,588,133 $ 3,196,949 Allowance for doubtful accounts (4,357,166 ) — — — (9,986 ) (1,150,231 ) (3,196,949 ) Specific account adjustments 1,352,730 — — — 4,939 416,191 931,600 Accounts receivable, net $ 14,671,310 $ 6,437,736 $ 434,299 $ 2,952,062 $ 61,520 $ 3,854,093 $ 931,600 As of April 30, 2024, we have collected approximately $5.6 million, which represented 17.6%, of our December 31, 2023 accounts receivable or 19.4% excluding the allowance of doubtful accounts.
As of December 31, 2024, our accounts receivable aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Accounts receivable $ 54,456,082 $ 28,275,522 $ 2,026,987 $ 9,698,204 $ 236,757 $ 9,794,560 $ 4,424,052 Allowance for doubtful accounts (6,908,206 ) — — — (35,514 ) (2,448,640 ) (4,424,052 ) Specific account adjustments (2,359,644 ) — — — 8,464 (2,451,480 ) 83,372 Accounts receivable, net $ 45,188,232 $ 28,275,522 $ 2,026,987 $ 9,698,204 $ 209,707 $ 4,894,440 $ 83,372 As of December 31, 2023, our accounts receivable aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Accounts receivable $ 32,085,912 $ 18,126,057 $ 3,953 $ 3,680,109 $ 568,851 $ 3,314,884 $ 6,392,058 Allowance for doubtful accounts (7,306,107 ) — — — (85,328 ) (828,721 ) (6,392,058 ) Specific account adjustments 4,296,744 — — — — 21,178 4,275,566 Accounts receivable, net $ 29,076,549 $ 18,126,057 $ 3,953 $ 3,680,109 $ 483,523 $ 2,507,341 $ 4,275,566 69 As of December 31, 2022, our accounts receivable aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Accounts receivable $ 23,280,416 $ 11,278,444 $ 2,698,640 $ 365,873 $ 127,095 $ 4,908,249 $ 3,902,115 Allowance for doubtful accounts (5,148,241 ) — — — (19,064 ) (1,227,062 ) (3,902,115 ) Specific account adjustments 1,958,600 — — — 16,398 37,173 1,905,029 Accounts receivable, net $ 20,090,775 $ 11,278,444 $ 2,698,640 $ 365,873 $ 124,429 $ 3,718,360 $ 1,905,029 As of April 30, 2025, we have collected approximately $1.5 million, which represented 2.8%, of our December 31, 2024 accounts receivable or 3.4% excluding the allowance of doubtful accounts.
These restrictions also have no impact on our ability to meet our cash obligations as all of our current cash obligations are in the PRC. 67 The following summarizes the key components of our cash flows for the years ended December 31, 2023, 2022 and 2021: For the Years Ended December 31, 2023 2022 Net cash used in operating activities $ (3,132,666 ) $ (4,472,780 ) Net cash provided by (used in) investing activities 243,586 (94,452 ) Net cash provided by financing activities 2,990,160 3,732,742 Effect of exchange rate change on cash and restricted cash (32,842 ) (100,608 ) Net change in cash and restricted cash $ 68,238 $ (935,098 ) For the Years Ended December 31, 2022 2021 Net cash used in operating activities $ (4,472,780 ) $ (129,639 ) Net cash (used in) provided by investing activities (94,452 ) 1,832,837 Net cash provided by (used in) financing activities 3,732,742 (927,826 ) Effect of exchange rate change on cash and restricted cash (100,608 ) (4,106 ) Net change in cash and restricted cash $ (935,098 ) $ 771,266 Operating activities Net cash used in operating activities was approximately $3.1 million for the year ended December 31, 2023 and was primarily attributable to (i) an approximately $12.7 million net increase in contract assets and contract costs, which was due to the reasons discussed below under the section “contract assets” and “contract costs”, and (ii) approximately $9.2 million increase in accounts receivable which was due to the reason discussed below under the section “accounts receivable”, (iii) approximately $0.2 million increase in other receivables for additional service deposits with our third party service provider and advances to our employee for operational purposes, offset by (i) net income of approximately $7.0 million, (ii) approximately $0.6 million in non-cash items such as depreciation and amortization, loss on disposal of equipment, and deferred tax expense, (iii) an approximately $9.2 million increase in accounts payable, which was due to the reasons discussed below under the section “accounts payable”, (iv) an approximately $1.7 million decrease in prepayments and other current assets as we utilized prepayment made in prior period for contractor labor, material in current sewage treatment systems projects, and (v) approximately $0.6 million increase in taxes payable which was attributable to increase in income taxes payable due to increase of our current taxable income.
Net cash used in operating activities was approximately $3.1 million for the year ended December 31, 2023 and was primarily attributable to (i) an approximately $12.7 million net increase in contract assets and contract costs, which was due to the reasons discussed below under the section “contract assets” and “contract costs”, (ii) approximately $9.2 million increase in accounts receivable which was due to the reason discussed below under the section “accounts receivable”, (iii) approximately $0.2 million increase in other receivables for additional service deposits with our third party service provider and advances to our employee for operational purposes, offset by (i) net income of approximately $7.0 million, (ii) approximately $0.6 million in non-cash items such as depreciation and amortization, loss on disposal of equipment, and deferred tax expense, (iii) an approximately $9.2 million increase in accounts payable, which was due to the reasons discussed below under the section “accounts payable”, (iv) an approximately $1.7 million decrease in prepayments and other current assets as we utilized prepayment made in prior period for contractor labor, material in current sewage treatment systems projects, and (v) approximately $0.6 million increase in taxes payable which was attributable to increase in income taxes payable due to increase of our current taxable income.
As a result, the unbilled portion of these projects remained as contract assets. 71 As of December 31, 2023, our contract assets aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract assets $ 39,165,839 $ 20,503,410 $ — $ 3,065,821 $ 15,596,608 $ — $ — As of December 31, 2022, our contract assets aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract assets $ 26,090,390 $ 7,539,116 $ — $ 7,302,403 $ 10,711,665 $ 537,206 $ — As of December 31, 2021, our contract assets aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract assets $ 15,677,452 $ 11,437,596 $ 10,078 $ 1,931,250 $ 604,485 $ 1,694,043 $ — Contract costs Our contract cost balance was decrease to nil as of December 31, 2023 from approximately $0.9 million as of December 31, 2022.
As of December 31, 2024, our contract assets aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract assets $ 39,989,358 $ 8,594,751 $ — $ 2,139,831 $ — $ 29,254,776 $ — 70 As of December 31, 2023, our contract assets aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract assets $ 39,165,839 $ 20,503,410 $ — $ 3,065,821 $ 15,596,608 $ — $ — As of December 31, 2022, our contract assets aging is as follows: 1-90 91-180 181-270 271-360 361-720 Over 720 Balance days days days days days days Contract assets $ 26,090,390 $ 7,539,116 $ — $ 7,302,403 $ 10,711,665 $ 537,206 $ — Contract costs Our contract cost balance was decrease to nil as of December 31, 2023 and 2024 from approximately $0.9 million as of December 31, 2022.
Income tax expense Our provision for income taxes decreased by approximately $50,000 to approximately $1.1 million for the year ended December 31, 2022, from approximately $1.2 million for the year ended December 31, 2021.
Income tax expense Our provision for income taxes decreased by approximately $0.9 million to approximately $0.5 million for the year ended December 31, 2024, from approximately $1.4 million for the year ended December 31, 2023.
We may in the future initiate claims or litigation against third parties to determine the validity and scope of proprietary rights of others. In addition, we may in the future initiate litigation to enforce our intellectual property rights or to protect our trade secrets. Additional information about the risks relating to our intellectual property is provided under “Item 3.
In addition, we may in the future initiate litigation to enforce our intellectual property rights or to protect our trade secrets. Additional information about the risks relating to our intellectual property is provided under “Item 3. Key Information-D. Risk Factors-Risks Related to Intellectual Property.” D.
Our cost of revenues from sewage treatment services decreased by approximately $0.8 million, or 36.5%, to approximately $1.4 million for the year ended December 31, 2022, down from approximately $2.2 million for the year ended December 31, 2021.
Our cost of revenues from sewage treatment services decreased by approximately $0.5 million, or 38.1%, to approximately $0.7 million for the year ended December 31, 2024, from approximately $1.2 million for the year ended December 31, 2023. The decrease in the cost of revenues from sewage treatment services was in line for the decrease in revenue from sewage treatment services.
All four of our major customers are projects being funded by local governments and are awaiting inspection reports and payment approvals from the local government and this is the main reason that we were not able to collect the remaining balances from these major customers.
All four of our major customers are projects being funded by local governments and are awaiting inspection reports and payment approvals from the local government.
The increase in gross profit is primarily due to the increase of sewage treatment systems revenue as discussed above. For the years ended December 31, 2022 and 2021, our overall gross profit percentage was 35.5% and 36.1%, respectively.
The decrease in gross profit is primarily due to the decrease of sewage treatment systems services revenue as discussed above. For the years ended December 31, 2024 and 2023, our overall gross profit margin was 37.4% and 33.0%, respectively.
Our contract cost balance was decrease to approximately $0.9 million as of December 31, 2022 from approximately $1.8 million as of December 31, 2021. The decrease of contract costs for both periods was due to the utilization of the contract costs which were recognized in prior period from a project.
The decrease of contract costs for both periods was due to the utilization of the contract costs which were recognized in prior period from a project.
Currently, we provide a provision of 15% for accounts receivable past due more than 270 days but less than one year, 25% for accounts receivable past due more than one year but less than two years, 100% for accounts receivable past due beyond two years, and we add or subtract additional amounts as deemed necessary using the specific account method as discussed below. 69 We provided a 17.0% , 13.7%, and 9.4% allowance for doubtful accounts of our total accounts receivable as of December 31, 2021, 2022, and 2023, respectively.
After reviewing the historical collection data from 2019 to 2024, we provide a provision of 15% for accounts receivable past due more than 270 days but less than one year, 25% for accounts receivable past due more than one year but less than two years, 100% for accounts receivable past due beyond two years, and we add or subtract additional amounts as deemed necessary using the specific account method as discussed below.
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled.
In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.
Cost of Revenues Total cost of revenues increased by approximately $4.2 million, or 22.7% to approximately $22.8 million for the year ended December 31, 2023 as compared to approximately $18.6 million for the same period in 2022. The increase in cost of revenues is a direct result of our increase of revenues and increase in labor and material cost.
The decrease was mainly due to our shift in focus to sewage treatment systems operation and dedicated more capital resources for its business development. 63 Cost of Revenues Total cost of revenues increased by approximately $4.2 million, or 22.7% to approximately $22.8 million for the year ended December 31, 2023 as compared to approximately $18.6 million for the same period in 2022.
In addition, any rights granted under any of our existing or future patents may not provide meaningful protection or any commercial advantage to us. With respect to our other proprietary rights, it may be possible for third parties to copy or otherwise obtain and use our proprietary technology without authorization or to develop similar technology independently.
With respect to our other proprietary rights, it may be possible for third parties to copy or otherwise obtain and use our proprietary technology without authorization or to develop similar technology independently. We may in the future initiate claims or litigation against third parties to determine the validity and scope of proprietary rights of others.
Net cash used in operating activities was approximately $0.1 million for the year ended December 31, 2021 and was primarily attributable to (i) an approximately $11.0 million increase in contract assets and contract costs, which was due to the reasons discussed below under the section “contract assets” and “contract costs”, (ii) an approximately $1.2 million increase in prepayments and other current assets as we prepaid third party contractor labor and materials which we expect to utilize in our sewage treatment systems projects and consulting fees related to obtaining future contracts with customers, 68 (iii) approximately $0.4 million increase in accounts receivable which was due to the reason discussed below under the section “accounts receivable”, and (iv) approximately $1.9 million increase in recovery from doubtful accounts, offset by (i) a net income of approximately $6.6 million, (ii) approximately $0.6 million in non-cash items such as depreciation and amortization, provision for doubtful accounts and deferred tax expense, (iii) an approximately $ 5.8 million increase in accounts payable, which was due to the reasons discussed below under the section “accounts payable”, (iv) an approximately $0.5 million increase in other payables we incurred more accrued expense, and (v) approximately $0.9 million increase in taxes payable due to VAT taxes and an increase in income taxes payable due to our net income.
Any equity capital raised may result in substantial dilution in the number of outstanding shares of our Common Stock. 66 Operating activities Net cash used in operating activities was approximately $2.0 million for the year ended December 31, 2024 and was primarily attributable to (i) an approximately $1.4 million net increase in contract assets and contract costs, which was due to the reasons discussed below under the section “contract assets” and “contract costs”, (ii) approximately $23.1 million increase in accounts receivable which was due to the reason discussed below under the section “accounts receivable”, (iii) approximately $0.6 million increase in other receivables for additional service deposits with our third party service provider and advances to our employee for operational purposes, and (iv) approximately $1.1 million in non-cash items such as defer tax benefit, and gain on disposal of subsidiaries, offset by (i) a net income of approximately $1.4 million, (ii) approximately $7.3 million in non-cash items such as depreciation and amortization, loss on disposal of equipment, provision for (recovery from) credit loss, net, and stock-based compensation, (iii) an approximately $13.0 million increase in accounts payable, which was due to the reasons discussed below under the section “accounts payable”, (iv) an approximately $50,000 decrease in prepayments and other current assets as we utilized prepayment made in prior period for contractor labor, material in current sewage treatment systems projects , (v) approximately $0.4 million increase in other payables and accrued liabilities as we incurred more accrued expense related to our operation, and (vi) approximately $2.1 million increase in taxes payable which was attributable to increase in income taxes payable.
The decrease was primarily due to a decrease in deferred tax expense as we reserved more allowance for doubtful account for the year ended December 31, 2022 resulting in increase of deferred tax assets. The decrease was offset by an increase of approximately $0.2 million increase in current income tax expenses resulting from an increase of our taxable income.
Income tax expense Our provision for income taxes increased by approximately $0.2 million to approximately $1.4 million for the year ended December 31, 2023, from approximately $1.2 million for the year ended December 31, 2022. The increase was mainly due to an increase in current income tax, as we incurred more taxable income from our PRC subsidiaries.
As of December 31, 2023, we had 2 invention patents, 35 utility model patents, 3 trademarks and 2 computer software copyrights. We cannot assure you that any patents will be issued from any of our pending applications.
As of December 31, 2024, we had 2 invention patents, 34 utility model patents and 3 trademarks. We cannot assure you that any patents will be issued from any of our pending applications. In addition, any rights granted under any of our existing or future patents may not provide meaningful protection or any commercial advantage to us.
Per the agreements for the projects, the total tentative contracted amount of the two projects is approximately RMB 170 million ($23.2 million), consisting of the tentatively fixed amount of RMB 140 million (approximately $19.1 million) for the Lianjiang Project, and the tentatively fixed amount of RMB 30 million (approximately $4.1 million) fo r the Wuyishan Project - Phase 2, per the terms of the agreements.
Per the agreements for the projects, the total tentative contracted amount of the two projects is approximately RMB 110.0 million ($15.4 million), consisting of the tentatively fixed amount of RMB 66.0 million (approximately $9.20 million) for the Xinjiang Project, and the tentatively fixed amount of RMB 44.0 million (approximately $6.1 million) for the Sichuan Anya Project, per the terms of the agreements.
Net income Our net income decreased by approximately $1.3 million, or 20.3%, to net income of approximately $5.6 million for the year ended December 31, 2022, from approximately $6.6 million net income for the year ended December 31, 2021. Such change was due to the reasons as discussed above. B.
Net income Our net income was decreased by approximately $5.6 million, or 80.0%, to net income of approximately $1.4 million for the year ended December 31, 2024, from approximately $7.0 million net income for the same period in 2023.
Net cash provided by investing activities was approximately $1.8 million for the year ended December 31, 2021 was mainly attributable to approximately $1.6 million of loan repayments from third parties, and approximately $0.4 million repayment from related parties, which was offset by approximately $0.1 million of equipment purchases.
This was primarily attributable to approximately $0.6 million of IPO proceeds deposited into escrow, partially offset by approximately $9,600 of loans to related parties, approximately $3,900 of equipment purchases, and approximately $41,000 of cash released from the disposal of subsidiaries. 71 Net cash provided by investing activities was approximately $0.2 million for the year ended December 31, 2023 was mainly attributable to approximately $57,000 repayments received from loan to third party, approximately $170,000 repayments received from loan to related parties.
Our revenue from sewage treatment systems will continue to grow in the remaining of 2023 and beyond. Sewage treatment services revenues Revenues from sewage treatment services decreased by approximately $1.0 million, or 30.1%, to approximately $2.3 million for the year ended December 31, 2022, from approximately $3.3 million for the year ended December 31, 2021.
Our cost of revenues from sewage treatment system decreased by approximately $3.9 million, or 17.8%, to approximately $17.8 million for the year ended December 31, 2024, from approximately $21.6 million for the year ended December 31, 2023. The decrease in the cost of revenues from sewage treatment systems was primary attributable to decrease in revenue from sewage treatment systems.
The following table summarizes our contractual obligations as of December 31, 2023: Payments due by period Contractual obligations Total Less than 1 year 1 – 3 years 3 – 5 years Short-term loans - banks $ 2,728,385 $ 2,728,385 $ — $ — Long-term loans - banks 79,463 — 79,463 — Short-term loans - third parties 312,028 312,028 — — Short-term loans – related parties 5,386,156 5,386,156 — — Operating lease obligations 224,813 127,669 75,841 21,303 Total $ 8,730,845 $ 8,554,238 $ 155,304 $ 21,303 The total future minimum property management expenses from operating lease commitments with respect to the office as of December 31, 2023 are payable as follows: Twelve months ending December 31, Management fee commitment 2024 $ 4,134 Capital Expenditures We purchased equipment of approximately $22,000, $53,000, and $0.1 million for the year ended December 31, 2023, 2022 and 2021, respectively, mainly for the use in our septic tank treatment operations.
The following table summarizes our contractual obligations as of December 31, 2024: Payments due by period Contractual obligations Total Less than 1 year 1 – 3 years 3 – 5 years Short-term loans - banks $ 1,814,551 $ 1,814,551 $ — $ — Long-term loans - banks 213,969 — 213,969 — Short-term loans - third parties 836,765 836,765 — — Short-term loans – related parties 2,794,894 2,794,894 — — Total $ 5,660,179 $ 5,446,210 $ 299,014 $ — Capital Expenditures We purchased equipment of approximately $4,000, $22,000, and $53,000 for the year ended December 31, 2024, 2023 and 2022, respectively, mainly for the use in our septic tank treatment operations.
Cost of Revenues Total cost of revenues increased by approximately $3.5 million, or 23.5% to approximately $18.6 million for the year ended December 31, 2022 as compared to approximately $15.1 million for the year ended December 31, 2021. The increase in cost of revenues is a direct result of our increase of revenues.
The decrease was primarily due to reduced demand for our services as a result of the ongoing economic downturn in the PRC. Cost of Revenues Total cost of revenues decreased by approximately $4.3 million, or 18.9% to approximately $18.5 million for the year ended December 31, 2024 as compared to approximately $22.8 million for the year ended December 31, 2023.
The following table summarizes our contractual obligations as of December 31, 2023: Payments due by period Contractual obligations Total Less than 1 year 1 – 3 years 3 – 5 years Short-term loans - banks $ 2,728,385 $ 2,728,385 $ — $ — Long-term loans - banks 79,463 — 79,463 — Short-term loans - third parties 312,028 312,028 — — Short-term loans – related parties 5,386,156 $ 5,386,156 — — Operating lease obligations 224,813 127,669 75,841 21,303 Total $ 8,730,845 $ 8,554,238 $ 155,304 $ 21,303 G.
The following table summarizes our contractual obligations as of December 31, 2024: Payments due by period Contractual obligations Total Less than 1 year 1 – 3 years 3 – 5 years Short-term loans - banks $ 1,814,551 $ 1,814,551 $ — $ — Long-term loans - banks 213,969 — 213,969 — Short-term loans - third parties 836,765 836,765 — — Short-term loans – related parties 2,794,894 2,794,894 — — Total $ 5,660,179 $ 5,446,210 $ 299,014 $ — G.
The increase was mainly due to the increase of revenue during the year ended December 31, 2022. Our accounts receivable increased by approximately $0.5 million during the year ended December 31, 2021. The major reason for the increase is due to increase of revenue during the year ended December 31, 2021.
Accounts receivable Our accounts receivable increased by approximately $23.1 million during the year ended December 31, 2024.
Gross Profit Our gross profit from our major revenue categories are summarized as follows: 65 For the Year Ended December 31, 2022 For the Year Ended December 31, 2021 Change Change (%) Sewage treatment systems Gross profit margin $ 9,381,812 $ 7,456,114 $ 1,925,698 25.8 % Gross profit percentage 35.3 % 36.8 % (1.5 )% Sewage treatment services Gross profit margin $ 871,343 $ 1,038,216 $ (166,873 ) (16.1 )% Gross profit percentage 37.9 % 31.6 % 6.3 % Total Gross profit margin $ 10,253,155 $ 8,494,330 $ 1,758,825 20.7 % Gross profit percentage 35.5 % 36.1 % (0.5 )% Our gross profit increased by approximately $1.8 million, or 20.7 %, to approximately $10.3 million for the year ended December 31, 2022 from approximately $8.5 million for the year ended December 31, 2021.
Gross Profit Our gross profit from our major revenue categories are summarized as follows: For the Year Ended December 31, 2024 For the Year Ended December 31, 2023 Change Change (%) Sewage treatment systems Gross profit margin $ 10,620,375 $ 10,637,377 $ 547 0.0 % Gross profit percentage 37.4 % 33.0 % 4.4 % Sewage treatment services Gross profit margin $ 608,553 $ 747,509 $ (138,956 ) (18.6 )% Gross profit percentage 45.1 % 38.5 % 6.7 % Total Gross profit margin $ 11,246,477 $ 11,384,886 $ (138,409 ) (1.2 )% Gross profit percentage 37.8 % 33.3 % 4.5 % 61 Our gross profit decreased by approximately $0.1 million, or 1.2 %, to approximately $11.2 million for the year ended December 31, 2024 from approximately $11.4 million for the year ended December 31, 2023.
Our current sewage treatment system projects are primarily funded by local governments while the end users of our system are also primarily local governments.
DSO then decreased to 204 days at December 31, 2021, followed by an increase to 220 days at December 31, 2022, 262 days at December 31, 2023, and further to 455 days at December 31, 2024. Our current sewage treatment system projects are primarily funded by local governments, who are also the primary end users of our systems.
We have experienced significant increase of our days sales outstanding during the year ended December 31, 2020 from 306 days at December 31, 2019 to 615 days at December 31, 2020 due to the impact of the COVID-19 pandemic.
Our DSO increased to 306 days in 2019 as we began recognizing revenue from sewage treatment systems in late 2018. In 2020, the impact of the COVID-19 pandemic led to a significant increase in DSO to 615 days.
We generate revenues primarily from establishment and setup of sewage treatment systems installation with government and non-government contracts and providing sewage treatment services for sewage systems. However, we were negatively impacted by the COVID-19 pandemic throughout 2020 and our business started to gradually recover in 2021 and beyond.
We generate revenues primarily from establishment and setup of sewage treatment systems installation with government and non-government contracts and providing sewage treatment services for sewage systems. Our total revenues decrease by approximately $4.4 million, or 13.0%, to approximately $29.8 million for the year ended December 31, 2024 as compared to approximately $34.2 million for the year ended December 31, 2023.

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Item 6. [Reserved]

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

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Liu received a Bachelor’s Degree in Automotive Design from Xi’an Highway Communication University. Jianfei Yu has served as our vice president since September 2019 and as the vice president of rural sewage treatment of Shenzhen CDT Environmental Technology Co., Ltd. since November 2017. Mr. Yu has over 10 years of experience serving in various roles at environmental protection companies.
Liu received a Bachelor’s Degree in Automotive Design from Xi’an Highway Communication University. 78 Jianfei Yu has served as our vice president since September 2019 and as the vice president of rural sewage treatment of Shenzhen CDT Environmental Technology Co., Ltd. since November 2017. Mr. Yu has over 10 years of experience serving in various roles at environmental protection companies.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; 81 ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
From April 2018 to November 2018, he also served as a director of Q.E.P. Co., Inc., a worldwide manufacturer, marketer and distributor of a broad line of flooring tools and accessories for the home improvement market. Since January 2008, 79 he has also served as President of HDS Consulting, LLC.
From April 2018 to November 2018, he also served as a director of Q.E.P. Co., Inc., a worldwide manufacturer, marketer and distributor of a broad line of flooring tools and accessories for the home improvement market. Since January 2008, he has also served as President of HDS Consulting, LLC.
The audit committee will be responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and 82 ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; 82 ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Zhang’s extensive experience qualifies him to serve on our board of directors. Harry D. Schulman , a U.S. citizen, has served as a member of our board of directors since March 2020. Mr.
Zhang’s extensive experience qualifies him to serve on our board of directors. 79 Harry D. Schulman , a U.S. citizen, has served as a member of our board of directors since March 2020. Mr.
The employment agreements also contain other customary terms and provisions. We have also entered into indemnification agreements with each of our executive officers and directors.
The employment agreements also contain other customary terms and provisions. 80 We have also entered into indemnification agreements with each of our executive officers and directors.
Compensati on Committee Dongming Zhang and Yaohui Wang serve as members of the compensation committee. Dongming Zhang serves as the chair of the compensation committee. The compensation committee members satisfy the independence requirements of the Nasdaq rules and the independence standards of Rule 10A-3 under the Exchange Act.
Compensation Committee Dongming Zhang and Yaohui Wang serve as members of the compensation committee. Dongming Zhang serves as the chair of the compensation committee. The compensation committee members satisfy the independence requirements of the Nasdaq rules and the independence standards of Rule 10A-3 under the Exchange Act.
The compensation committee will be responsible for overseeing and making recommendations to our board of our directors regarding the salaries and other compensation of our executive officers and general employees and providing assistance and recommendations with respect to our compensation policies and practices. Nomination and Governance Committee Yaohui Wang and Harry D.
The compensation committee is responsible for overseeing and making recommendations to our board of our directors regarding the salaries and other compensation of our executive officers and general employees and providing assistance and recommendations with respect to our compensation policies and practices. Nomination and Governance Committee Yaohui Wang and Harry D.
(6) Represents 4,574,562 ordinary shares held directly by CDT Environmental Technology Holdings Limited. Mr. Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd., is the sole director of CDT Environmental Technology Holdings Limited.
(4) Represents 4,574,562.0 ordinary shares held directly by CDT Environmental Technology Holdings Limited. Mr. Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd., is the sole director of CDT Environmental Technology Holdings Limited. See footnote (1) above.
Schulman — — All current directors and executive officers as a group (9 persons) 4,574,562 42.75 % *Less than 1% (1) The registered address of CDT Environmental Technology Holdings Limited, a Cayman Islands company, is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. Mr.
Schulman — — All current directors and executive officers as a group (9 persons) 4,574,562.0 37.116 % 84 (1) The registered address of CDT Environmental Technology Holdings Limited, a Cayman Islands company, is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. Mr.
Share ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this annual report for: · each beneficial owner of 5% or more of our outstanding ordinary shares; · each of our directors and executive officers; and · all of our directors and executive officers as a group.
Share ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of the date of this annual report for: ● each beneficial owner of 5% or more of our outstanding ordinary shares; ● each of our directors and executive officers; and ● all of our directors and executive officers as a group. 83 Beneficial ownership is determined in accordance with the rules of the SEC.
Schulman(1)(3) 72 Independent Director 77 (1) Member of audit committee. (2) Member of compensation committee. (3) Member of nomination and governance committee.
Schulman(1)(3) 73 Independent Director (1) Member of audit committee. (2) Member of compensation committee. (3) Member of nomination and governance committee.
Schulman — — — Yuntao Guan — — — Yaohui Wang — — — C. Board practices Board of Directors Duties of Directors Und er Cayman Islands law, our board of directors has the powers necessary for managing, and for directing and supervising, our business affairs.
Schulman $ 13,576 — $ 13,576 Yuntao Guan — — — Yaohui Wang — — — 81 C. Board practices Board of Directors Duties of Directors Under Cayman Islands law, our board of directors has the powers necessary for managing, and for directing and supervising, our business affairs.
Except as otherwise indicated in the table below, addresses of our directors, executive officers and named beneficial owners are in care of CDT Environmental Technology Investment Holdings Limited, C1, 4th Floor, Building 1, Financial Base, No. 8 Kefa Road, Nanshan District, Shenzhen, China 518057.
The information is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise indicated in the table below, addresses of our directors, executive officers and named beneficial owners are in care of CDT Environmental Technology Investment Holdings Limited, C1, 4th Floor, Building 1, Financial Base, No. 8 Kefa Road, Nanshan District, Shenzhen, China 518057.
Yu has extensive experience in project management and implementation, including early-stage negotiation, composition of project proposals, design of construction drawing, design of non-standard equipment, instruction of manufacture and installation of equipment, and testing and commissioning of equipment. Mr.
Yu has extensive experience in project management and implementation, including early-stage negotiation, composition of project proposals, design of construction drawing, design of non-standard equipment, instruction of manufacture and installation of equipment, and testing and commissioning of equipment. Mr. Yu received a Bachelor’s Degree in Environmental Engineering from Sanxia University.
Name of Beneficial Owners Number of Shares Beneficially Owned Percentage of Shares Beneficially Owned 5% or Greater Shareholders: CDT Environmental Technology Holdings Limited (1) 4,574,562 42.75 % Venture Million Limited (2) 1,030,832 9.63 % Luo Jia Holdings Limited (3) 745,200 6.96 % Wisdom Latch Limited (4) 534,511 5.00 % Juncheng International Corporation (5) 521,640 4.88 % Directors and Executive Officers: Yunwu Li (6) 4,574,562 42.75 % Tiefeng Wang — — Zijiang Liu — — Jianfei Yu — — Yuntao Guan — — Lijun Cui — — Yaohui Wang — — Dongming Zhang — — Harry D.
Name of Beneficial Owners Number of Shares Beneficially Owned Percentage of Shares Beneficially Owned 5% or Greater Shareholders: CDT Environmental Technology Holdings Limited (1) 4,574,562.0 37.116 % Venture Million Limited (2) 1,030,832.4 8.364 % Luo Jia Holdings Limited (3) 745,200.0 6.046 % Directors and Executive Officers: Yunwu Li (4) 4,574,562.0 37.116 % Tiefeng Wang — — Zijiang Liu — — Jianfei Yu — — Yuntao Guan — — Lijun Cui — — Yaohui Wang — — Dongming Zhang — — Harry D.
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.
Our subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. Equity Awards We have not granted any equity awards to our directors or executive officers during the fiscal year ended December 31, 2024.
The audit committee will oversee our accounting and financial repo rting processes and the audits of our financial statements.
The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements.
Equity Awards We have not granted any equity awards to our directors or executive officers during the fiscal year ended December 31, 2023. Incentive Compensation We do not maintain any cash incentive or bonus programs and did not maintain any such programs during the fiscal year ended December 31, 2023.
Incentive Compensation We do not maintain any cash incentive or bonus programs and did not maintain any such programs during the fiscal year ended December 31, 2024. Director and Executive Officer Compensation Table The following table sets forth information regarding the compensation paid to our directors and our executive officers during the year ended December 31, 2024.
Employees As of December 31, 2023, we had 114 employees, of whom 107 were full-time employees, 7 were part-time employees and all were located in China. Our success depends on our ability to attract, motivate, train and retain qualified personnel.
We intend to comply with future requirements as they become applicable to us. D. Employees As of December 31, 2024, we had 76 employees, of whom 73. were full-time employees, 3 were part-time employees and all were located in China. Our success depends on our ability to attract, motivate, train and retain qualified personnel.
Percentage ownership calculations are based on 10,700,000 ordinary shares, par value $0.0025 per share, outstanding as of May 9, 2024. 83 Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws.
Except as otherwise indicated, all of the shares reflected in the table are ordinary shares and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. Fractional shares are rounded to the nearest whole share herein.
See footnote (1) above. 84 As of May 9, 2024, approximately 20.04% of our issued and outstanding ordinary shares are held in the United States by one record holder (CEDE & CO). F. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable.
As of May 5, 2025, approximately 30.582% of our issued and outstanding ordinary shares are held in the United States by one record holder (CEDE & CO). F. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable. Effective as of January 17, 2024, our board of directors adopted an incentive-based compensation recovery policy, or the Clawback Policy.
Guan has also served as professor, doctoral supervisor and director of the Institute of Environment of Shenzhen Graduate School of Tsinghua University since December 2010. Mr. Guan has not only accomplished breakthroughs in quick separation technology, but has also conducted research of other water treatment technologies, such as MBR. Mr.
Guan has not only accomplished breakthroughs in quick separation technology, but has also conducted research of other water treatment technologies, such as MBR. Mr.
The nomination and governance committee will be responsible for identifying and proposing new potential director nominees to the board of directors for consideration and for reviewing our corporate governance policies.
The nomination and governance committee is responsible for identifying and proposing new potential director nominees to the board of directors for consideration and for reviewing our corporate governance policies. The composition of these committees meets the criteria for independence under, and the functioning of these committees comply with the applicable requirements of, the Nasdaq and SEC rules and regulations.
Yu received a Bachelor’s Degree in Environmental Engineering from Sanxia University. 78 Yuntao Guan has served as our chief scientist since September 2019 and as a consultant to Shenzhen CDT Environmental Technology Co., Ltd. since January 2019. Mr.
Yuntao Guan has served as our chief scientist since September 2019 and as a consultant to Shenzhen CDT Environmental Technology Co., Ltd. since January 2019. Mr. Guan has also served as professor, doctoral supervisor and director of the Institute of Environment of Shenzhen Graduate School of Tsinghua University since December 2010. Mr.
We have also entered into director agreements with each of our directors which agreements set forth the terms and provisions of their engagement. 80 Compensation of Directors and Executive Officers For the year ended December 31, 2023, we paid an aggregate of RMB 725,645 ($100,072) in cash to our directors and executive officers.
We have also entered into director agreements with each of our directors which agreements set forth the terms and provisions of their engagement.
Name Fees Earned in Cash All Other Compensation Total Yunwu Li RMB 324,495 ($44,750) — RMB 324,495 ($44,750) Tiefeng Wang RMB 98,100 ($13,529) — RMB 98,100 ($13,529) Zijiang Liu RMB 36,000 ($4,965) — RMB 36,000 ($4,965) Jianfei Yu RMB 36,000 ($4,965) — RMB 36,000 ($4,965) Lijun Cui RMB 231,050 ($31,863) — RMB 231,050 ($31,863) Dongming Zhang — — — Harry D.
Name Fees Earned in Cash All Other Compensation Total Yunwu Li RMB 325,267 ($45,249) — RMB 325,267 ($45,249) Tiefeng Wang RMB 117,370 ($16,328) — RMB 117,3740 ($16,328) Zijiang Liu RMB 36,000 ($5,008) — RMB 36,000 ($5,008) Jianfei Yu RMB 36,000 ($5,008) — RMB 36,000 ($5,008) Lijun Cui RMB 225,446 ($31,363) — RMB 225,446 ($31,363) Dongming Zhang — — — Harry D.
Name Age Position Yunwu Li 64 Chief Executive Officer and Chairman of the Board of Directors Tiefeng Wang 44 Chief Financial Officer Zijiang Liu 47 Chief Technology Officer and Vice President Jianfei Yu 41 Vice President Yuntao Guan 53 Chief Scientist Lijun Cui 51 Director Yaohui Wang(1)(2)(3) 54 Independent Director Dongming Zhang(1)(2) 57 Independent Director Harry D.
Unless otherwise stated, the business address for our directors and executive officers is that of our principal executive offices located at C1, 4th Floor, Building 1, Financial Base, No. 8 Kefa Road, Nanshan District, Shenzhen, China 518057. 77 Name Age Position Yunwu Li 65 Chief Executive Officer and Chairman of the Board of Directors Tiefeng Wang 45 Chief Financial Officer Zijiang Liu 48 Chief Technology Officer and Vice President Jianfei Yu 42 Vice President Yuntao Guan 54 Chief Scientist Lijun Cui 52 Director Yaohui Wang(1)(2)(3) 55 Independent Director Dongming Zhang(1)(2) 58 Independent Director Harry D.
Effective as of January 17, 2024, our board of directors adopted an incentive-based compensation recovery policy, or the Clawback Policy. A copy of the Clawback Policy is filed herewith as Exhibit 97.1.
A copy of the Clawback Policy is filed herewith as Exhibit 97.1.
We have never experienced any employment related work stoppages, and we consider our relations with our employees to be good. E.
We have never experienced any employment related work stoppages, and we consider our relations with our employees to be good. On February 13, 2025, the Board of Directors of the Company adopted the 2025 Equity Incentive Plan (the “2025 Plan”), which became effective on the same date.
Removed
Unless otherwise stated, the business address for our directors and executive officers is that of our principal executive offices located at C1, 4th Floor, Building 1, Financial Base, No. 8 Kefa Road, Nanshan District, Shenzhen, China 518057.
Added
Pursuant to the terms of each director agreement, our directors shall continue to serve until such director’s respective successor is duly elected or appointed and qualified or until such director’s earlier death, disqualification, resignation or removal from office. The director agreements do not provide for benefits upon termination of employment.
Removed
Director and Executive Officer Compensation Table The following table sets forth information regarding the compensation paid to our directors and our executive officers during the year ended December 31, 2023.
Added
Compensation of Directors and Executive Officers For the year ended December 31, 2024, we paid an aggregate of RMB 837,673 ($116,532) in cash to our directors and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
Removed
The composition of these committees meets the criteria for independence under, and the functioning of these committees will comply with the applicable requirements of, the Nasdaq and SEC rules and regulations. We intend to comply with future requirements as they become applicable to us. D.
Added
The 2025 Plan authorizes the issuance of up to 1,500,000 Class A ordinary shares and is intended to provide equity-based compensation to employees, directors, and consultants of the Company and its affiliates. Awards under the 2025 Plan may include non-qualified stock options, incentive stock options, restricted stock awards, and unrestricted stock awards.
Removed
Beneficial ownership is determined in accordance with the rules of the SEC.
Added
As of the date of the issuance of these consolidated financial statements 1,500,000 Class A ordinary shares have been issued to one employee and two consultants as equity-based compensation. E.
Removed
Fractional shares are rounded to the nearest whole share herein. The information is not necessarily indicative of beneficial ownership for any other purpose.
Added
Percentage ownership calculations are based on 12,325,000 ordinary shares, par value $0.0025 per share, outstanding as of May 7, 2025.
Removed
(4) The registered address of Wisdom Latch Limited, a British Virgin Islands company, is Vistra Corporate Services Center, Wickhams Cay II, Road Town, Tortola VG 1110, British Virgin Islands. Tung Fai is the sole director and shareholder of Wisdom Latch Limited and may be deemed to hold voting and dispositive power over the ordinary shares held by Wisdom Latch Limited.
Removed
(5) The registered address of Juncheng International Corporation, a British Virgin Islands company, is OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands. Ruiping Lin is the sole director and shareholder of Juncheng International Corporation and may be deemed to hold voting and dispositive power over the ordinary shares held by Juncheng International Corporation.

Item 7. Management's Discussion & Analysis

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

18 edited+2 added−4 removed6 unchanged
See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and capital resources” and Note 11 of the notes to the consolidated financial statements included elsewhere in this annual report. Policies and Procedures for Related Party Transactions Our board of directors has created an audit committee which is tasked with review and approval of all related party transactions.
See “Item 5. Operating and Financial Review and Prospects-B. Liquidity and capital resources” and Note 9 of the notes to the consolidated financial statements included elsewhere in this annual report. Policies and Procedures for Related Party Transactions Our board of directors has created an audit committee which is tasked with review and approval of all related party transactions.
As of December 31, 2023, 2022, and 2021, we owed certain related parties the following amounts as a result of advance payments. Name of Related Party Relationship Nature December 31, 2023 December 31, 2022 December 31, 2021 Changfu Ma Legal representative and general manager of Beijing CDT Environmental Technology Co., Ltd.
As of December 31, 2024, 2023, and 2022, we owed certain related parties the following amounts as a result of advance payments. Name of Related Party Relationship Nature December 31, 2024 December 31, 2023 December 31, 2022 Changfu Ma Legal representative and general manager of Beijing CDT Environmental Technology Co., Ltd.
The disposal of Guangxi CWT Environmental Technology Co., Ltd. did not have a material impact on the Company’s consolidated financial statements. Interest expense pertaining to the above loans for the years ended December 31, 2023, 2022, and 2021 amounted to $0, $0, and $3,348, respectively. These amounts are included in the consolidated financial statements as short-term loans - related parties.
The disposal of Guangxi CWT Environmental Technology Co., Ltd. did not have a material impact on the Company’s consolidated financial statements. Interest expense pertaining to the above loans for the years ended December 31, 2024, 2023, and 2022, amounted to $0, $0, and $0, respectively. These amounts are included in the consolidated financial statements as short-term loans - related parties.
Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd., is the director of this entity Interest-free loans due on demand 1,064,566 1,082,617 6,273 Jianzhong Zhao Legal representative, general manager and director of Hohhot CDT Environmental Technology Co., Ltd.
Ltd. Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd., is the director of this entity Interest-free loans due on demand 1,048,912 1,064,566 1,082,617 Jianzhong Zhao Legal representative, general manager and director of Hohhot CDT Environmental Technology Co., Ltd.
Interest-free loans, due on December 31, 2020 (extended to December 31, 2024) 117,279 86,516 87,901 Yunwu Li Our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd.
Interest-free loans, due on December 31, 2020 (extended to December 31, 2024) 95,264 117,279 86,516 Yunwu Li Our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd.
Related Party Transactions During the last three years and up to the date of this annual report, we have engaged in the following transactions with our directors, officers, holders of more than 5% of our outstanding shares and other affiliates, which we refer to as our related parties: As of December 31, 2023, December 31, 2022, and 2021, certain related parties owed us the following amounts as a result of loans receivable.
Related Party Transactions During the last fiscal year and up to the date of this annual report, we have engaged in the following transactions with our directors, officers, holders of more than 5% of our outstanding shares and other affiliates, which we refer to as our related parties: As of December 31, 2024, 2023, and 2022, certain related parties owed us the following amounts as a result of loans receivable.
See Note 10 of the notes to the consolidated financial statements included elsewhere in this annual report.
See Note 9 of the notes to the consolidated financial statements included elsewhere in this annual report.
(1) Interest-free loans, due on August 22, 2024 14,119 — — Xingsheng Pan General manager of Shenzhen CDT Environmental Technology Co., Ltd Interest-free loans, due on demand — 374,369 — Yunfang Li Sibling of Yunwu Li, the Company’s Chief Executive Officer and Chairman of the Board of Directors and Chairman of the Board of Directors and General Manager of Shenzhen CDT Environmental Technology Co., Ltd is the director of this entity Interest-free loans, due on demand — 14,358 — Guangqing Shi General manager of Tianjin CDT Environmental Technology Co., Ltd Interest-free loans, due on demand — 6,277 — Zhaozhao Xu General Manager of Chengde CDT Environmental Technology Co., Ltd.
(1) Interest-free loans, due on August 22, 2024 — 14,119 — Xingsheng Pan General manager of Shenzhen CDT Environmental Technology Co., Ltd Interest-free loans, due on demand — — 274,369 Yunfang Li Sibling of Yunwu Li, the Company’s Chief Executive Officer and Chairman of the Board of Directors and Chairman of the Board of Directors and General Manager of Shenzhen CDT Environmental Technology Co., Ltd is the director of this entity Interest-free loans, due on demand — — 14,358 Guangqing Shi General manager of Tianjin CDT Environmental Technology Co., Ltd Interest-free loans, due on demand — — 6,277 Xushao ZHao Project manager of Shenzhen CDT Environmental Technology Co., Ltd Interest-free loans due on demand 310,639 Zhaozhao Xu General Manager of Chengde CDT Environmental Technology Co., Ltd.
Interest-free loans, due on December 31, 2020 (extended to December 31, 2024) 299,772 286,749 201,828 Jianshan Ma Director and general manager of Chengde CDT Environmental Technology Co., Ltd.
Interest-free loans, due on December 31, 2020 (extended to December 31, 2024) 237,868 299,772 286,749 Jianshan Ma Director and general manager of Chengde CDT Environmental Technology Co., Ltd.
Interest-free loans, due on December 31, 2024 32,473 — — Total $ 5,386,156 $ 4,231,368 $ 542,492 86 (1) In March 2024, the Company disposed of its entire 51% ownership in Guangxi CWT Environmental Technology Co., Ltd. and transferred its ownership to Chun’E Zhao, the legal representative of Guangxi CWT Environmental Technology Co., Ltd. for consideration of RMB 500.
Interest-free loans, due on December 31, 2024 — 32,473 — Total $ 2,794,894 $ 5,386,156 $ 4,231,368 88 (1) In March 2024, the Company disposed of its entire 51% ownership in Guangxi CWT Environmental Technology Co., Ltd. and transferred its ownership to Chun’E Zhao, the legal representative of Guangxi CWT Environmental Technology Co., Ltd. for consideration of RMB 500.
Advance payment for operational expenses of the Company pending for reimbursement $ — $ — $ 7,924 Wanqiang Lin Director of Ultra HK Advance payment for operational expenses of the Company pending for reimbursement 270,806 271,132 271,198 Zhenhong Zhang Director and manager of Xiamen YDT Environmental Technology Co., Ltd.(1) Advance payment for operational expenses of the Company pending for reimbursement — — 10,707 Total $ 270,806 $ 271,132 $ 289,829 (1) In January 2022, the Company disposed of its entire 51% ownership in Xiamen YDT Environmental Technology Co., Ltd. and transferred its ownership to a third party for consideration of approximately $5,000.
Advance payment for operational expenses of the Company pending for reimbursement $ — $ — $ 7,924 Wanqiang Lin Director of Ultra HK Advance payment for operational expenses of the Company pending for reimbursement 256,863 270,806 271,132 Total $ 256,863 $ 270,806 $ 271,132 (1) In January 2022, the Company disposed of its entire 51% ownership in Xiamen YDT Environmental Technology Co., Ltd. and transferred its ownership to a third party for consideration of approximately $5,000.
The disposal of Xiamen YDT Environmental Technology Co., Ltd. did not have a material impact on the Company’s consolidated financial statements. These amounts are included in the consolidated financial statements as other payables – related parties. See Note 10 of the notes to the consolidated financial statements included elsewhere in this annual report.
The disposal of Xiamen YDT Environmental Technology Co., Ltd. did not have a material impact on the Company’s consolidated financial statements. These amounts are included in the consolidated financial statements as other payables - related parties.
Interest-free loans, due on demand 3,446,578 2,260,144 128,206 Yan Wang Relative of Ying Wang, supervisor of Huzhou CDT Environmental Technology Co., Ltd. Interest-free loans, due on December 31, 2020 (extended to December 31, 2024) 160,052 57,161 10,211 Zhaozhao Xu General manager of Shenzhen CDT Environmental Technology Co., Ltd.
Interest-free loans, due on demand 846,854 3,446,578 2,260,144 Yan Wang Relative of Ying Wang, supervisor of Huzhou CDT Environmental Technology Co., Ltd. Interest-free loans, due on December 31, 2020 (extended to February 28, 2025) 157,978 160,052 57,161 Zhaozhao Xu General manager of Shenzhen CDT Environmental Technology Co., Ltd.
Name of Related Party Relationship Nature December 31, 2023 December 31, 2022 December 31, 2021 Shenzhen Li Yaxin Industrial Co., Ltd Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd., is the sole shareholder of this entity Interest-free loans due on demand $ 96,009 $ 50,254 $ 62,738 Guangxi Qianwang IOT Technology Co., Ltd. 49% shareholder of Guangxi CWT Environmental Technology Co., Ltd.
Name of Related Party Relationship Nature December 31, 2024 December 31, 2024 December 31, 2022 Shenzhen Li Yaxin Industrial Co., Ltd Yunwu Li, our chief executive officer and chairman of our board of directors and chairman of the board of directors and general manager of Shenzhen CDT Environmental Technology Co., Ltd., is the sole shareholder of this entity Interest-free loans due on demand $ 97,379 $ 96,009 $ 50,254 Beijing Minhongyun Energy Supply Co.
Interest free, due December 14, 2023 (extended to June 16, 2024) 111,259 251,271 — *Fuzhou Jinhui Environmental service Co, Ltd Fujian Jinshun environmental Co, Ltd (“Jinshun”) is the major shareholder of FZ Jinhui. Weihao Chen is the Major shareholder of Jinshun, and the legal representative of FZ LSY.
Fujian Hongfa is the shareholder of FJ LSY. Interest free, due December 14, 2023 (extended to June 16, 2025) $ 109,621 $ 111,259 $ 251,271 Fuzhou Jinhui Environmental service Co, Ltd Fujian Jinshun environmental Co, Ltd ( “ Jinshun ” ) is the major shareholder of FZ Jinhui.
Interest free, due on August 31, 2023 (extended to August 31, 2024) 4,459 38,405 — Total $ 115,718 $ 289,676 $ 274,480 85 *As of the date of this annual report, these receivables have been repaid by the related parties.
Interest free, due on August 31, 2023 (extended to August 31, 2024) — 4,459 38,405 Yueyu Qi* Spouse of Wang who is a supervisor of Huzhou CDT Interest free, due on December 31, 2025 13,911 — — Total $ 123,532 $ 115,718 $ 289,676 86 *As of the date of this annual report, these receivables have been repaid by the related parties.
As of December 31, 2023, 2022, and 2021, we owed certain related parties the following amounts as a result of loans payable.
See Note 10 of the notes to the consolidated financial statements included elsewhere in this annual report. 87 As of December 31, 2024, 2023, 2022, we owed certain related parties the following amounts as a result of loans payable.
As of the date of this annual report, these amounts have been repaid in full. These amounts are included in the consolidated financial statements as other receivables - related parties. See Note 10 of the notes to the consolidated financial statements included elsewhere in this annual report.
These amounts are included in the consolidated financial statements as other receivables - related parties.
Removed
Name of Related Party Relationship Nature December 31, 2023 December 31, 2022 December 31, 2021 *Fujian Province Qicheng Investment Management Co., Ltd Fujian Hongfa Industrial Group Co., Ltd holds 51% of the total shares and Mr.
Added
See Note 9 of the notes to the consolidated financial statements included elsewhere in this annual report. 85 Name of Related Party Relationship Nature December 31, 2024 December 31, 2023 December 31, 2022 Fujian Tantan Technology Co, Ltd ( “ FJ Tantan ” )* FJ Tantan ’ s legal representative is the secretary of Fujian Hongfa Group Ltd ( “ Fujian Hongfa ” ).
Removed
Weihao Chen who is the general manager and director of FJLSY is also the legal representative and is also the legal representative, executive director and manager of Fujian Hongfa Industrial Group Co., Ltd.
Added
Weihao Chen is the Major shareholder of Jinshun, and the legal representative of FZ LSY.
Removed
Advances, due on demand $ — $ — $ 274,480 *Fujian Tantan Technology Co, Ltd (“FJ Tantan”)* FJ Tantan’s legal representative is the secretary of Fujian Hongfa Group Ltd (“Fujian Hongfa”). Fujian Hongfa is the shareholder of FJ LSY.
Removed
(1) 14.4% annual interest, due on July 19, 2021 (extended to July 19, 2022, and repaid in June 2022) — — 45,335 Beijing Minhongyun Energy Supply Co. Ltd.