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ReTo Eco-Solutions, Inc.

ReTo Eco-Solutions, Inc.RETO财报

Nasdaq · 材料 · 磨料、石棉及其他非金属矿物制品

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

What changed in ReTo Eco-Solutions, Inc.'s 20-F — 2022 vs 2023

Top changes in ReTo Eco-Solutions, Inc.'s 2023 20-F

605 paragraphs added · 644 removed · 407 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

160 edited+45 added−130 removed294 unchanged
As discussed in Note 3 to the consolidated financial statements to this annual report, we have suffered significant losses from operations and has a significant decrease in working capital that raises substantial doubt about our ability to continue as a going concern.
As discussed in Note 3 to the consolidated financial statements in this annual report, we have suffered significant losses from operations and has a significant decrease in working capital that raises substantial doubt about our ability to continue as a going concern.
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. 32 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 require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed.
This list does not include, YCM CPA Inc. Our independent registered public accounting firm, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
This list does not include YCM CPA Inc., our current independent registered public accounting firm, which, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
However, if we experience significant increases in claims or customers’ failure to pay the final 5-20% of a purchase/installation price as a result of quality concerns, our financial results could be adversely affected. We face certain risks in collecting our accounts receivable, the failure to collect could have a material adverse effect on our business.
However, if we experience significant increases in claims or customers’ failure to pay the final 5-20% of a purchase/installation price as a result of quality concerns, our financial results could be adversely affected. 26 We face certain risks in collecting our accounts receivable, the failure to collect could have a material adverse effect on our business.
We have access to certain information of our customers in providing services and may be required to further adjust our business practice to comply with new regulatory requirements. Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation or changes in enforcement.
We have access to certain information of our customers in providing services and may be required to further adjust our business practice to comply with new regulatory requirements. 12 Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation or changes in enforcement.
Our competitors or other vendors may refuse to work with us to allow their products to interoperate with our products and solutions, which could make it difficult for our products and solutions to function properly in customer internal networks and infrastructures that include these third-party products. We may not deliver or maintain interoperability quickly or cost-effectively, or at all.
Our competitors or other vendors may refuse to work with us to allow their products to interoperate with our products and solutions, which could make it difficult for our products and solutions to function properly in customer internal networks and infrastructures that include these third-party products. 37 We may not deliver or maintain interoperability quickly or cost-effectively, or at all.
If we are unable to prevent or adequately respond to such breaches, attacks or other disruptions, our operations could be adversely affected or we may suffer financial or reputational damage. 29 In addition, our ability to effectively implement our business plan in a rapidly evolving market requires effective planning, reporting and analytical processes and systems.
If we are unable to prevent or adequately respond to such breaches, attacks or other disruptions, our operations could be adversely affected or we may suffer financial or reputational damage. In addition, our ability to effectively implement our business plan in a rapidly evolving market requires effective planning, reporting and analytical processes and systems.
If a significant product-related claim or claims are made and resolved against us in the future, such resolution may have a material adverse effect on our business, financial condition, results of operations and cash flows. 31 Our operations may incur substantial liabilities to comply with environmental laws and regulations.
If a significant product-related claim or claims are made and resolved against us in the future, such resolution may have a material adverse effect on our business, financial condition, results of operations and cash flows. Our operations may incur substantial liabilities to comply with environmental laws and regulations.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. 22 Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. Shareholder claims that are common in the United States, including securities law class actions and fraud claims, generally are difficult to pursue as a matter of law or practicality in China.
In such an event, we may be required, or may choose, for customer relations or other reasons, to expend additional resources in order to help correct the problem. In addition, we do not carry insurance to compensate us for any losses that may result from claims arising from defects or disruptions in our products.
In such an event, we may be required, or may choose, for customer relations or other reasons, to expend additional resources in order to help correct the problem. In addition, we do not carry insurance to compensate us for any losses that may result from claims arising from defects or disruptions in our solutions or products.
Substantially all of our operations are conducted in mainland China and substantially all of our revenues is sourced from mainland China. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC or changes in government relations between China and the United States or other governments.
Substantially all of our operations are conducted in mainland China and substantially all of our revenues are sourced from mainland China. Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC or changes in government relations between China and the United States or other governments.
In addition, fluctuations of the RMB against other currencies may increase or decrease the cost of imports and exports, and thus affect the price-competitiveness of our products against products of foreign manufacturers or products relying on foreign inputs. 19 Since July 2005, the RMB is no longer pegged to the U.S. dollar.
In addition, fluctuations of the RMB against other currencies may increase or decrease the cost of imports and exports, and thus affect the price-competitiveness of our products against products of foreign manufacturers or products relying on foreign inputs. Since July 2005, the RMB is no longer pegged to the U.S. dollar.
It is also possible that security breaches sustained by our competitors could result in negative publicity for our entire industry that indirectly harms our reputation and diminishes demand for our platform. A significant portion of our RSA service revenues were derived from customers in the insurance industry.
It is also possible that security breaches sustained by our competitors could result in negative publicity for our entire industry that indirectly harms our reputation and diminishes demand for our platform. 36 A significant portion of our RSA service revenues were derived from customers in the insurance industry.
Changes in these laws or regulations could require us to modify our products and solutions in order to comply with these changes. In addition, government agencies or private organizations have imposed and may impose additional taxes, fees or other charges for accessing the internet or commerce conducted via the internet.
Changes in these laws or regulations could require us to modify our software products and solutions in order to comply with these changes. In addition, government agencies or private organizations have imposed and may impose additional taxes, fees or other charges for accessing the internet or commerce conducted via the internet.
Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party could cause us to: ● pay damage awards; ● seek licenses from third parties; ● pay ongoing royalties; ● redesign our branded products; or ● be restricted by injunctions.
Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party could cause us to: ● pay damage awards; ● seek licenses from third parties; 28 ● pay ongoing royalties; ● redesign our branded products; or ● be restricted by injunctions.
If we ceased operations, it is likely that all of our investors will lose their investment. We cannot assure you that our growth strategy will be successful, which may result in a negative impact on our growth, financial condition, results of operations and cash flow.
If we ceased operations, it is likely that all of our investors will lose their investment. 27 We cannot assure you that our growth strategy will be successful, which may result in a negative impact on our growth, financial condition, results of operations and cash flow.
Any of the foregoing events may give rise to server interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to operate or provide services to our customers.
Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to operate or provide services to our customers.
These foreign exchange restrictions and limitations could prevent the cash maintained from leaving mainland China, and restrict our ability to pay dividends to ReTo and the U.S. investors. 16 There are limitations on our PRC subsidiaries’ ability to distribute earnings to their respective shareholders.
These foreign exchange restrictions and limitations could prevent the cash maintained from leaving mainland China, and restrict our ability to pay dividends to ReTo and the U.S. investors. There are limitations on our PRC subsidiaries’ ability to distribute earnings to their respective shareholders.
In addition, our foreign currency exchange losses may be magnified by China exchange control regulations that restrict our ability to convert RMB into foreign currencies. Besides, Fluctuation of the Renminbi could materially affect our financial condition and results of operations.
In addition, our foreign currency exchange losses may be magnified by China exchange control regulations that restrict our ability to convert RMB into foreign currencies. 18 Besides, Fluctuation of the Renminbi could materially affect our financial condition and results of operations.
Our customers use our products or solutions for important aspects of their businesses, and any errors, defects or disruptions to our products and solutions and any other performance problems with our products or solutions could damage our customers’ businesses and, in turn, hurt our brand and reputation.
Our customers use our software products or solutions for important aspects of their businesses, and any errors, defects or disruptions to our products and solutions and any other performance problems with our products or solutions could damage our customers’ businesses and, in turn, hurt our brand and reputation.
We provide regular updates to our products or solutions, which have in the past contained, and may in the future contain, undetected errors, failures, vulnerabilities and bugs when first introduced or released.
We provide regular updates to our software products or solutions, which have in the past contained, and may in the future contain, undetected errors, failures, vulnerabilities and bugs when first introduced or released.
The report of our independent registered public accounting firm on our financial statements for the years ended December 31, 2022, 2021 and 2020 includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue it is likely investors will lose all of their investment.
The report of our independent registered public accounting firm on our financial statements for the years ended December 31, 2023, 2022 and 2021 includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue it is likely investors will lose all of their investment.
If we fail to protect our intellectual property rights, it could harm our business and competitive position. We own an aggregate of 123 patents (ten of which are owned jointly with Luoyang Water-Conservancy Surveying & Design Co., Ltd. (“Luoyang”), an independent third party), three of which were awarded Gold and Silver Prize of International Exhibition of Inventions of Geneva.
If we fail to protect our intellectual property rights, it could harm our business and competitive position. We own an aggregate of 126 patents (ten of which are owned jointly with Luoyang Water-Conservancy Surveying & Design Co., Ltd. (“Luoyang”), an independent third party), three of which were awarded Gold and Silver Prize of International Exhibition of Inventions of Geneva.
As a result, our management has concluded that our internal control was not effective as of December 31, 2022. Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures, including (i) hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations; and (ii) implementing regular and continuous U.S.
As a result, our management has concluded that our internal control was not effective as of December 31, 2023. Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures, including (i) hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations; and (ii) implementing regular and continuous U.S.
Our construction materials manufacturing operations are subject to laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection.
Our construction material manufacturing operations are subject to laws and regulations relating to the release or disposal of materials into the environment or otherwise relating to environmental protection.
As advised our PRC legal counsel , because (i) none of our PRC subsidiaries collecting personal information or processing data in actual operation, and (ii) none of our PRC subsidiaries is an “online platform operator holding more than one million users’ personal information”, we believe the cybersecurity review requirement is not applicable us.
As advised our PRC legal counsel , because (i) none of our PRC subsidiaries collecting personal information or processing data in actual operation, and (ii) none of our PRC subsidiaries is an “online platform operator holding more than one million users’ personal information,” we believe the cybersecurity review requirement is not applicable us.
Defects or errors in our products or solutions could diminish demand for our products or solutions, harm our business and results of operations and subject us to liability.
Defects or errors in our software products or solutions could diminish demand for our products or solutions, harm our business and results of operations and subject us to liability.
These geopolitical issues have resulted in increasing global trading uncertainties and thus could potentially affect our supply chain, even though we do not have any business, operation or assets in Russia or Ukraine, nor do we have any direct or indirect business or contracts with any Russian or Ukraine entity as a supplier or customer.
These geopolitical issues have resulted in increasing global trading uncertainties and thus could potentially affect our supply chain, even though we do not have any business, operation or assets in Russia, Ukraine, or Israel, nor do we have any direct or indirect business or contracts with any Russian, Ukraine, or Israeli entity as a supplier or customer.
We may be subject to foreign exchange controls in China, which could limit our use of funds that would be raised in future offerings, which could have a material adverse effect on our business. Beijing REIT, REIT Technology and REIT Ordos are subject to Chinese rules and regulations on currency conversion.
We may be subject to foreign exchange controls in China, which could limit our use of funds that would be raised in future offerings, which could have a material adverse effect on our business. Beijing REIT, REIT Technology, REIT Ordos, and Sunoro Hengda are subject to Chinese rules and regulations on currency conversion.
Our auditor, YCM CPA Inc., has indicated in their report on our financial statements for the fiscal year ended December 31, 2022 that there is a substantial doubt about our ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
Our auditor, YCM CPA Inc., has indicated in their report on our financial statements for the fiscal year ended December 31, 2023 that there is a substantial doubt about our ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
ReTo is a company incorporated in the BVI structured as a holding company conducting its operations in mainland China through its PRC subsidiaries.
ReTo is a BVI business company incorporated in the BVI structured as a holding company conducting its operations in mainland China through its PRC subsidiaries.
The future success of our business depends upon the continued use of the internet as a primary medium for commerce, communications and business applications. PRC or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium.
The future success of our software solution business depends upon the continued use of the internet as a primary medium for commerce, communications and business applications. PRC or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium.
Accordingly, we believe that REIT Holdings should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in Circular 82 were deemed applicable to us.
Accordingly, we believe that REIT Holdings and Sunoro Holdings should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as set forth in Circular 82 were deemed applicable to us.
If Beijing REIT, REIT Technology or REIT Ordos are financed by means of additional capital contributions, reporting to or filings with certain Chinese government authorities, including MOFCOM, or the local counterparts of SAFE and SAMR or its local counterparts, in respect of these capital contributions.
If Beijing REIT, REIT Technology, REIT Ordos, or Sunoro Hengda are financed by means of additional capital contributions, reporting to or filings with certain Chinese government authorities, including MOFCOM, or the local counterparts of SAFE and SAMR or its local counterparts, in respect of these capital contributions.
A foreign investor may be permitted to invest in a FIE that is in a restricted industry set forth in the “negative list”, provided that relevant conditions are satisfied and certain approvals are acquired from relevant PRC governmental authorities. With respect to industries in which foreign investment is not prohibited or restricted, domestic and foreign investors will be equally treated.
A foreign investor may be permitted to invest in a FIE that is in a restricted industry set forth in the “negative list,” provided that relevant conditions are satisfied and certain approvals are acquired from relevant PRC governmental authorities. With respect to industries in which foreign investment is not prohibited or restricted, domestic and foreign investors will be equally treated.
Once an entity is determined to be a FIE and its business operations fall within a restricted industry under the “negative list”, in order for a foreign investor to invest in the FIE, such entity will be required to obtain entry clearance and approvals from the MOFCOM or its local counterparts and other relevant PRC government agencies.
Once an entity is determined to be a FIE and its business operations fall within a restricted industry under the “negative list,” in order for a foreign investor to invest in the FIE, such entity will be required to obtain entry clearance and approvals from the MOFCOM or its local counterparts and other relevant PRC government agencies.
In particular, because these laws, rules and regulations, especially those relating to the internet, are relatively new, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable.
In particular, because these laws, rules and regulations, especially those relating to overseas listing and offering and the internet, are relatively new, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable.
If a foreign investor is found to invest in any prohibited industry set forth under the “negative list”, such foreign investor may be required to, among other aspects, cease its investment activities, dispose of its equity interests in or assets of the “foreign-invested enterprise” (“FIE”) and have its income confiscated.
If a foreign investor is found to invest in any prohibited industry set forth under the “negative list,” such foreign investor may be required to, among other aspects, cease its investment activities, dispose of its equity interests in or assets of the “foreign-invested enterprise” (“FIE”) and have its income confiscated.
Any failure to offer high quality services and support may adversely affect our relationships with our customers and prospective customers, and adversely affect our business, results of operations and financial condition.
Any failure to offer high quality services and support may adversely affect our relationships with our software solution customers and prospective customers, and adversely affect our business, results of operations and financial condition.
As of the date of this annual report, we have not been involved in any investigations on cybersecurity review made by the CAC on such basis, and we have not received any inquiry, notice, warning, or sanctions in such respect.
As of the date of this annual report, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review made by the CAC on such basis, and we and our PRC subsidiaries have not received any inquiry, notice, warning, or sanctions in such respect.
If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our Common Shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our Common Shares.
If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair investors’ ability to sell or purchase our Common Shares when they wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our Common Shares.
In the event any of Beijing REIT, Hainan Yile IoT or IoV Technology Research is unable to renew its HNTE status, its applicable tax rate will increase from 15% to 25%, the standard business income tax rate in China.
In the event any of Beijing REIT or IoV Technology Research is unable to renew its HNTE status, its applicable tax rate will increase from 15% to 25%, the standard business income tax rate in China.
These plans include developing new products and services. These investments could contribute to losses, and we cannot guarantee whether or when any of the new products and services will become operational, be successful with customers, or whether they will be profitable.
These investments could contribute to losses, and we cannot guarantee whether or when any of the new products and services will become operational, be successful with customers, or whether they will be profitable.
However, we cannot assure you that our current operations or any newly-developed business in the future will still deemed to be “permitted” in the “negative list”, which may be promulgated or be amended from time to time by the MOFCOM and the NDRC. 34 Some of our PRC subsidiaries are as FIEs.
However, we cannot assure you that our current operations or any newly-developed business in the future will still deemed to be “permitted” in the “negative list,” which may be promulgated or be amended from time to time by the MOFCOM and the NDRC. 19 Some of our PRC subsidiaries are as FIEs.
As of the date of this annual report, we have registered 123 patents, 73 pending patent applications, 39 trademarks, 25 software copyrights, and 10 domain names in China related to our newly acquired businesses.
As of the date of this annual report, we have registered 126 patents, 70 pending patent applications, 39 trademarks, 25 software copyrights, and 10 domain names in China related to our newly acquired businesses.
Any uninsured occurrence of loss or damage to property, or litigation or business disruption may also materially and adversely affect our ability to operate. We may incur material costs and losses as a result of claims our products do not meet regulatory requirements or contractual specifications.
Any uninsured occurrence of loss or damage to property, or litigation or business disruption may also materially and adversely affect our ability to operate. We may incur material costs and losses as a result of claims based on failure of our products to meet regulatory requirements or contractual specifications.
Product and equipment recalls, removals and liability claims can lead to significant costs, as well as negative publicity and damage to our reputation that could reduce demand for our products and equipment. Outstanding bank loans may reduce our available funds. We had approximately $1.3 million in bank loans loan outstanding as of December 31, 2022 (all short-term bank loans).
Product and equipment recalls, removals and liability claims can lead to significant costs, as well as negative publicity and damage to our reputation that could reduce demand for our products and equipment. Outstanding bank loans may reduce our available funds. We had approximately $5.4 million in bank loans loan outstanding as of December 31, 2023 (all short-term bank loans).
Wage costs for our employees form a significant part of our costs. For instance, for the years ended December 31, 2022, 2021 and 2020, our compensation and benefit costs for our employees were approximately $2.9 million, $3.3 million and $3.4 million, respectively.
Wage costs for our employees form a significant part of our costs. For instance, for the years ended December 31, 2023, 2022 and 2021, our compensation and benefit costs for our employees were approximately $2.5 million, $2.9 million and $3.3 million, respectively.
We also have 73 pending patent applications in China. In addition, we own 25 software copyrights in China. We rely on a combination of patent, trademark and trade secret laws and non-disclosure agreements and other methods to protect our intellectual property rights.
We also have 70 pending patent applications in China. In addition, we own 25 software copyrights in China and one pending software copyright application in China. We rely on a combination of patent, trademark and trade secret laws and non-disclosure agreements and other methods to protect our intellectual property rights.
We reflect the impact of currency translation adjustments in our financial statements under the heading “Foreign currency translation gain (loss).” For the years ended December 31, 2022, 2021 and 2020, we had a negative adjustment of $1,183,819, a positive adjustment of $493,769 and a positive adjustment of $1,923,316, respectively, for foreign currency translations.
We reflect the impact of currency translation adjustments in our financial statements under the heading “Foreign currency translation gain (loss).” For the years ended December 31, 2023, 2022 and 2021, we had a positive adjustment of $223,433, negative adjustment of $1,183,819, and a positive adjustment of $493,769, respectively, for foreign currency translations.
Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals. We have limited business insurance coverage.
Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals. We do not purchase business insurance.
We are also vulnerable to natural disasters and other calamities. Although we have servers that are hosted in an offsite location and our backup system is able to capture data on a real-time basis, we may still be unable to recover certain data in the event of a server failure.
Although we have servers that are hosted in an offsite location and our backup system is able to capture data on a real-time basis, we may still be unable to recover certain data in the event of a server failure.
Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational” overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are: ● investments through enterprises established for only a few months without substantive operation; ● investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements; ● investments in targets that are not related to onshore parent’s main business; and ● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking.
However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. 13 Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational” overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are: ● investments through enterprises established for only a few months without substantive operation; ● investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements; ● investments in targets that are not related to onshore parent’s main business; and ● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking.
The PRC government’s significant oversight and discretion over the conduct of our business and may intervene or influence our operations at any time which could result in a material adverse change in our operation and/or the value of our Common Shares.
The PRC government’s significant oversight and discretion over the conduct of our business and may intervene or influence our operations at any time which could result in a material adverse change in our operation and/or the value of our Common Shares . We conduct our business in mainland China primarily through our PRC subsidiaries.
These amounts represented 35%, 15% and 37% of our total revenues from continuing operations in 2022, 2021 and 2020, respectively. For the years ended December 31, 2022, 2021 and 2020, our accounts receivable turnover associated with our continuing operations was 154 days, 182 days and 222 days, respectively.
These amounts represented 36%, 35% and 15% of our total revenues from continuing operations in 2023, 2022 and 2021, respectively. For the years ended December 31, 2023, 2022 and 2021, our accounts receivable turnover associated with our continuing operations was 173 days, 154 days and 182 days, respectively.
If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected. 24 We face risks related to natural disasters, health epidemics and other outbreaks, such as the COVID-19 pandemic, which could significantly disrupt our operations.
If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected. 24 We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations. Our business could be adversely affected by the effects of epidemics.
However, should China alter its environmental policies towards less regulation, we believe demand for our eco-friendly construction materials and equipment will decrease, adversely impacting our results of operations, cash flows and financial position. Our business benefits from certain government subsidies and incentives.
However, should China alter its environmental policies towards less regulation, we believe demand for our eco-friendly construction materials and equipment will decrease, adversely impacting our results of operations, cash flows and financial position.
According to the Cybersecurity Review Measures (2021 Version), cybersecurity review will be required when (i) operators of critical information infrastructure purchasing network products and services or online platform operators carry out data processing activities which do or may affect national security; and (ii) any online platform operator controlling personal information of more than one million users which seeks to list in a foreign stock exchange.
An operator that violates these measures shall be dealt with in accordance with the provisions of the PRC Cybersecurity Law and the PRC Data Security Law. 11 According to the Cybersecurity Review Measures (2021 Version), cybersecurity review will be required when (i) operators of critical information infrastructure purchasing network products and services or online platform operators carry out data processing activities which do or may affect national security; and (ii) any online platform operator controlling personal information of more than one million users which seeks to list in a foreign stock exchange.
(“IoV Technology Research”) obtained an HNTE Certificate and is entitled to a preferential income tax rate of 15% for the three years from October 2022 to October 2025. The 15% tax rate is less than the standard 25% income tax rate in China.
(“IoV Technology Research”) obtained an HNTE Certificate and is entitled to a preferential income tax rate of 15% for the three years from October 2022 to October 2025.
China passed an Enterprise Income Tax Law (the “EIT Law”) and implementing rules, both of which became effective on January 1, 2008, EIT Law was subsequently amended by the SCNPC and became effective on February 24, 2017.
China passed the EIT Law and implementing rules, both of which became effective on January 1, 2008, EIT Law was subsequently amended by the SCNPC and became effective on February 24, 2017.
If there is a decline in economic activity in China or the other markets in which we operate, or there is a protracted slowdown in industries upon which we rely for our sales, demand for our projects and products and our revenue would likewise decrease, which could have a materially adverse effect on our business. 25 Any decline in the availability or increase in the cost of raw materials could materially impact our earnings.
If there is a decline in economic activity in China or the other markets in which we operate, or there is a protracted slowdown in industries upon which we rely for our sales, demand for our projects and products and our revenue would likewise decrease, which could have a materially adverse effect on our business.
Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Common Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Common Shares to significantly decline in value or become worthless. 14 Restrictions on currency exchange or outbound capital flows may limit our ability to utilize our PRC revenue effectively.
Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Common Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Common Shares to significantly decline in value or become worthless.
Such uncertainty could cause the market price of our Common Shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCAA.
These developments could add uncertainties to the trading of our securities, which could cause the market price of our Common Shares to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCAA.
See ” – The war in Ukraine could materially and adversely affect our business and results of operations .” Our management has analyzed the current and future international and domestic political and economic situations and formulated different development strategies and measures for each of our business segments, with a goal to reduce the existing and potential impact of supply chain disruptions.
See “– The current tensions in international trade and rising political tensions may adversely impact our business, financial condition, and results of operations .” Our management has analyzed the current and future international and domestic political and economic situations and formulated different development strategies and measures for each of our business segments, with a goal to reduce the existing and potential impact of supply chain disruptions.
Such HNTE Certificate has been renewed for another three years from December 2022 to December 2025. Hainan Yile IoT obtained an HNTE Certificate and is entitled to a preferential income tax rate of 15% for the three years from October 2020 to October 2023. Hainan Yile IoV Technology Research Institute Co., Ltd.
Beijing REIT obtained the High-New Technology Enterprise (“HNTE”) Certificate and is entitled to a preferential income tax rate of 15% for the three years from December 2020 to December 2022. Such HNTE Certificate has been renewed for another three years from December 2022 to December 2025. Hainan Yile IoV Technology Research Institute Co., Ltd.
We may be unable to locate a suitable replacement for any senior management or key personnel that we lose. In addition, if any member of our senior management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our Company.
In addition, if any member of our senior management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our Company.
A “going concern” opinion could impair our ability to finance our operations through the sale of equity, incurring debt, or other financing alternatives. 27 Management’s plan to alleviate the substantial doubt about our ability to continue as a going concern include working to improve our liquidity and capital sources mainly through cash flow from its operations, renewal of bank borrowings, equity or debt offering and borrowing from related parties.
Management’s plan to alleviate the substantial doubt about our ability to continue as a going concern include working to improve our liquidity and capital sources mainly through cash flow from its operations, renewal of bank borrowings, equity or debt offering and borrowing from related parties.
The Tentative Measures lay out the filing regulation arrangement for both direct and indirect overseas listing by PRC domestic companies, and clarify the determination criteria for indirect overseas listing in overseas markets.
The Trial Measures lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas markets.
We rely on his industry expertise and experience in our business operations, and in particular, his business vision, management skills, and working relationship with our employees, our other major shareholders, the regulatory authorities, and many of our clients.
We rely on their industry expertise and experiences in our business operations, and in particular, their business visions, management skills, and working relationships with our employees, our other major shareholders, the regulatory authorities, and many of our clients.
Moreover, in the event of a major system disruption, hardware malfunction or damages to data centers and servers caused by technologies failures, natural disasters or man-made problems, we may experience significant loss of data which would materially and adversely affect our business, financial condition and results of operations. 40 Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our products and solutions, and could adversely affect our business, results of operations and financial condition.
Moreover, in the event of a major system disruption, hardware malfunction or damages to data centers and servers caused by technologies failures, natural disasters or man-made problems, we may experience significant loss of data which would materially and adversely affect our business, financial condition and results of operations.
If we are unable to respond to these changes in a cost-effective manner, our products and solutions may become less marketable and less competitive or obsolete, and our business, results of operations and financial condition could be adversely affected. 37 Security incidents and attacks on our products or solutions could lead to significant costs and disruptions that could harm our business, financial results, and reputation.
If we are unable to respond to these changes in a cost-effective manner, our products and solutions may become less marketable and less competitive or obsolete, and our business, results of operations and financial condition could be adversely affected.
While all of our major suppliers are currently fully operational, any future disruption in their operations would impact our ability to produce and deliver our products to customers.
Our operations, in particular sales of construction materials and equipment, are subject to supply chain disruptions. While all of our major suppliers are currently fully operational, any future disruption in their operations would impact our ability to produce and deliver our products to customers.
Currently, our PRC subsidiaries, a foreign invested enterprise, may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions.
Currently, our PRC subsidiaries, a foreign invested enterprise, may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE by complying with certain procedural requirements.
The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years, the SEC shall prohibit our Common Shares from being traded on a national securities exchange or in the over the counter trading market in the U.S.
According to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years, the SEC shall prohibit our Common Shares from being traded on a national securities exchange or in the over the counter trading market in the U.S. 15 On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA.
The delisting of our Common Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.
The delisting of our Common Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. The HFCAA was enacted on December 18, 2020.
Our business is dependent on providing our customers with safe, reliable and high-quality software solutions. Maintaining the security and availability of our systems, network, and the security of information we hold is a critical issue for us and our customers. Attacks on our customers and our own network are frequent and take a variety of forms.
Maintaining the security and availability of our systems, network, and the security of information we hold is a critical issue for us and our customers. Attacks on our customers and our own network are frequent and take a variety of forms.
Our construction material products, manufacturing equipment and projects depend heavily on the ready availability of various raw materials. The availability of raw materials may decline, and their prices may fluctuate greatly.
Any decline in the availability or increase in the cost of raw materials could materially impact our earnings. Our construction material products, manufacturing equipment and projects depend heavily on the ready availability of various raw materials. The availability of raw materials may decline, and their prices may fluctuate greatly.
Any of the foregoing could require us to devote additional research and development resources to re-engineer our products or solutions, could result in customer dissatisfaction and may adversely affect our business, results of operations and financial condition. 41 We could incur substantial costs in protecting or defending our intellectual property rights, and any failure to protect our intellectual property could adversely affect our business, results of operations and financial condition.
Any of the foregoing could require us to devote additional research and development resources to re-engineer our products or solutions, could result in customer dissatisfaction and may adversely affect our business, results of operations and financial condition.
In addition, reductions in commercial airline and cargo flights, disruptions to ports and other shipping infrastructure resulting from the COVID-19 pandemic are resulting in increased transport times to deliver our products to customers.
In addition, reductions in commercial airline and cargo flights, disruptions to ports and other shipping infrastructure may result in increased transport times to deliver our products to customers.
We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services. Our future success depends heavily upon the continued service of our key executives. In particular, we rely on the expertise and experience of Hengfang Li, our founder, Chairman and Chief Executive Officer.
We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services. Our future success depends heavily upon the continued service of our key executives.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Beijing REIT made cash payment of $2.7 million (RMB 18.5 million) on October 20, 2020 and the six patents had been transferred to Shexian Ruibo prior to September 15, 2020. In December 2020, we incorporated Guangling REIT Ecological Cultural Tourism Co., Ltd. (“Guangling REIT”) in mainland China as a wholly owned subsidiary of REIT Ordos.
Beijing REIT made a cash payment of $2.7 million (RMB 18.5 million) on October 20, 2020 and the six patents had been transferred to Shexian Ruibo prior to September 15, 2020. In December 2020, we incorporated Guangling REIT Ecological Cultural Tourism Co., Ltd. (“Guangling REIT”) in mainland China as a wholly owned subsidiary of REIT Ordos.
The government is promoting the establishment of the Haikou City Research and Development Center for Internet of Things Digitalization Application Engineering and Technology” and gathers resources for and renovation and development of high technologies. The government offers subsidies, tax incentives as well as support for introducing talents to the province, such as housing subsidies and bonuses.
The government is promoting the establishment of the Haikou City Research and Development Center for Internet of Things Digitalization Application Engineering and Technology” and gathers resources for renovation and development of high technologies. The government offers subsidies, tax incentives as well as support for introducing talents to the province, such as housing subsidies and bonuses.
Our RSA services are available to insured drivers and uninsured drivers. Our services to insured drivers are based on the type of insurance policy they have with their insurance company as well as the terms of our service contract with their insurance companies. Uninsured drivers pay our services fee based our prevailing rates at the time of services.
Our RSA services are available to insured drivers and uninsured drivers. Our services to insured drivers are based on the type of insurance policy they have with their insurance company as well as the terms of our service contract with their insurance companies. Uninsured drivers pay our services fee based on our prevailing rates at the time of services.
The government commitment and related policies to support green buildings development will create growth opportunities for eco-friendly construction materials, including the concrete blocks (bricks) which are one of our main products. 53 As a result of the above government initiatives and market trends, we expect the demand for equipment for manufacturing eco-friendly building materials to recover and increase.
The government commitment and related policies to support green buildings development will create growth opportunities for eco-friendly construction materials, including the concrete blocks (bricks) which are one of our main products. As a result of the above government initiatives and market trends, we expect the demand for equipment for manufacturing eco-friendly building materials to recover and increase.
To improve the appearance of our equipment, we have collaborated with Tsinghua University and have jointly developed an aesthetic one-piece soundproof cover on our equipment and obtained patents for the design. Our construction materials are manufactured by Xinyi REIT, which is located in Xuzhou City, the transportation hub connecting five neighboring provinces.
To improve the appearance of our equipment, we have collaborated with Tsinghua University and have jointly developed an aesthetic one-piece soundproof cover on our equipment and obtained patents for the design. 58 Our construction materials are manufactured by Xinyi REIT, which is located in Xuzhou City, the transportation hub connecting five neighboring provinces.
On January 1, 2020, the Foreign-invested Information Reporting Measures or FIE Reporting Measures came into force which replaced the FIE Record-filing Interim Measures. Pursuant to FIE Reporting Measures, foreign investors or FIEs are required to submit initial report, change report, deregistration report and annual report through enterprises registration system. Currently, our business falls within the permitted category.
On January 1, 2020, the Foreign-invested Information Reporting Measures or FIE Reporting Measures came into force which replaced the FIE Record-filing Interim Measures. Pursuant to FIE Reporting Measures, foreign investors or FIEs are required to submit an initial report, change report, deregistration report and annual report through the enterprises registration system. Currently, our business falls within the permitted category.
In addition, because we use iron tailings or construction and demolition waste in the manufacturing process, we believe our construction materials are consistent with China’s recent environmental protection policies, such as energy conservation included in the 2016 China’s 14th Five-Year Plan (2021-2025). In addition to iron tailings and construction and demolition waste, our construction materials contain river sand and granite.
In addition, because we use iron tailings or construction and demolition waste in the manufacturing process, we believe our construction materials are consistent with China’s recent environmental protection policies, such as energy conservation included in the 2016 China’s 14th Five-Year Plan (2021-2025). 54 In addition to iron tailings and construction and demolition waste, our construction materials contain river sand and granite.
However, we believe our eco-friendly construction materials will be in greater demand than traditional materials as the PRC construction market continues to grow and the PRC government increases its focus on reducing the environmental impact of construction activities, which includes, among other things, recent environmental initiatives. 52 Sponge city .
However, we believe our eco-friendly construction materials will be in greater demand than traditional materials as the PRC construction market continues to grow and the PRC government increases its focus on reducing the environmental impact of construction activities, which includes, among other things, recent environmental initiatives. Sponge city .
In connection with the sales of software solutions, we also include hardware sales and/or service subscriptions based on the clients’ requirements, which are charged separately. Our Projects We have acted as general contractor and consultant for the construction of sponge cities since 2014 And as general contractor for ecological restoration projects since 2019.
In connection with the sales of software solutions, we also include hardware sales and/or service subscriptions based on the clients’ requirements, which are charged separately. 56 Our Projects We have acted as general contractor and consultant for the construction of sponge cities since 2014 and as general contractor for ecological restoration projects since 2019.
Pursuant to these agreements, we agree to provide RSA services to the insured drivers of these insurance companies upon requests and receive fees based on the services provided. 58 Software Solutions Through Hainan Yile IoT, we are also engaged in the design, development and sales of customized software solutions based on the client specifications.
Pursuant to these agreements, we agree to provide RSA services to the insured drivers of these insurance companies upon requests and receive fees based on the services provided. Software Solutions Through Hainan Yile IoT, we are also engaged in the design, development and sales of customized software solutions based on the client specifications.
We believe that our patented technologies, focus on segments with high demand as well as dedication to customers in Hainan province enable us to compete effectively in Hainan province. Research and Development Soon after its establishment, we set up a research and development center in Xi’an.
We believe that our patented technologies, focus on segments with high demand as well as dedication to customers in Hainan province enable us to compete effectively in Hainan province. 59 Research and Development Soon after its establishment, we set up a research and development center in Xi’an.
Construction material for sponge city construction, they can be used for hydraulic ecological projects such as slope protection and river transformation. ● Wall materials . These construction materials are used for insulation, decoration, and for building walls. 57 Eco-friendly Construction Materials Manufacturing Equipment We produce manufacturing equipment used to create eco-friendly construction materials.
Construction material for sponge city construction, they can be used for hydraulic ecological projects such as slope protection and river transformation. ● Wall materials . These construction materials are used for insulation, decoration, and for building walls. Eco-friendly Construction Materials Manufacturing Equipment We produce manufacturing equipment used to create eco-friendly construction materials.
We also maintain a well-trained workforce that is highly skilled and capable to address complex and individualized client issues. 55 Our Strategies Our objective is to become the leading provider of eco-friendly construction materials and equipment.
We also maintain a well-trained workforce that is highly skilled and capable to address complex and individualized client issues. Our Strategies Our objective is to become the leading provider of eco-friendly construction materials and equipment.
We have developed the following software solutions for our clients during the fiscal years ended December 31, 2022, 2021 and 2020: - Logistics management system – comprehensive software solutions for the management of multimodal logistics, encompassing functions including customer management, supplier management, order management, and vehicle management. - Retail management system - comprehensive software solutions for retail management, including functions such as invoicing, reporting, data statistics, online marketing. - Fleet management system – comprehensive software solutions providing client with capabilities to manage its fleet including functions such as vehicle management, vehicle application, vehicle alarm, and location control. - Vehicle rental management system - comprehensive software solutions providing client with capabilities to manage its car rental services, including functions such as vehicle management, vehicle rental (rental renewal), and remote fuel and electricity disconnection.
We have developed the following software solutions for our clients during the fiscal years ended December 31, 2023, 2022 and 2021: - Logistics management system – comprehensive software solutions for the management of multimodal logistics, encompassing functions including customer management, supplier management, order management, and vehicle management. - Retail management system – comprehensive software solutions for retail management, including functions such as invoicing, reporting, data statistics, online marketing. - Fleet management system – comprehensive software solutions providing client with capabilities to manage its fleet including functions such as vehicle management, vehicle application, vehicle alarm, and location control. - Vehicle rental management system – comprehensive software solutions providing client with capabilities to manage its car rental services, including functions such as vehicle management, vehicle rental (rental renewal), and remote fuel and electricity disconnection.
However, we do not believe that our business, as a whole, is dependent on, or that its profitability would be materially affected by the revocation, termination, expiration or infringement upon any particular patent. We own an aggregate of 123 PRC patents (ten of which are owned jointly with Luoyang Water-Conservancy Surveying & Design Co., Ltd.
However, we do not believe that our business, as a whole, is dependent on, or that its profitability would be materially affected by the revocation, termination, expiration or infringement upon any particular patent. We own an aggregate of 126 PRC patents (ten of which are owned jointly with Luoyang Water-Conservancy Surveying & Design Co., Ltd.
Business Overview – Regulation — Regulations relating to Foreign Investment — The Guidance Catalogue of Industries for Foreign Investment .” 64 Besides, the PRC government will establish a foreign investment information reporting system, according to which foreign investors or foreign-invested enterprises shall submit investment information to the competent department for commerce concerned through the enterprise registration system and the enterprise credit information publicity system, and a security review system under which the security review shall be conducted for foreign investment affecting or likely affecting the state security.
Business Overview – Regulation — Regulations relating to Foreign Investment — The Guidance Catalogue of Industries for Foreign Investment .” 62 Besides, the PRC government will establish a foreign investment information reporting system, according to which foreign investors or foreign-invested enterprises shall submit investment information to the competent department for commerce concerned through the enterprise registration system and the enterprise credit information publicity system, and a security review system under which the security review shall be conducted for foreign investment affecting or likely affecting the state security.
On December 27, 2021, MOFCOM and NDRC jointly issued the Special Administrative Measures (Negative List) for Foreign Investment Access, or the Negative List (Edition 2021), which replaced the Negative List (Edition 2020). 65 Pursuant to the Negative List (Edition 2021) effective on January 1, 2022, any industry that is not listed in any of the restricted or prohibited categories is classified as a permitted industry for foreign investment.
On December 27, 2021, MOFCOM and NDRC jointly issued the Special Administrative Measures (Negative List) for Foreign Investment Access, or the Negative List (Edition 2021), which replaced the Negative List (Edition 2020). 63 Pursuant to the Negative List (Edition 2021) effective on January 1, 2022, any industry that is not listed in any of the restricted or prohibited categories is classified as a permitted industry for foreign investment.
In September 2020, the China Banking and Insurance Regulatory Commission formulated and issued the Guiding Opinions on Implementing Comprehensive Reform of Auto Insurance , requiring insurance companies to achieve the reform goals of “reducing prices, increasing coverage and improving quality” of auto insurance. The Guiding Opinion also call for development of new insurance products, including the vehicle mileage insurance.
In September 2020, the China Banking and Insurance Regulatory Commission formulated and issued the Guiding Opinions on Implementing Comprehensive Reform of Auto Insurance , requiring insurance companies to achieve the reform goals of “reducing prices, increasing coverage and improving quality” of auto insurance. The Guiding Opinion also calls for development of new insurance products, including the vehicle mileage insurance.
The PRC Company Law defines two types of companies: limited liability companies and companies limited by shares. Each of our PRC subsidiaries is a limited liability company. Unless otherwise stipulated in the related laws on foreign investment, foreign invested companies are also required to comply with the provisions of the PRC Company Law. Regulations on Tax See “
The PRC Company Law defines two types of companies: limited liability companies and companies limited by shares. Each of our PRC subsidiaries is a limited liability company. Unless otherwise stipulated in the related laws on foreign investment, foreign invested companies are also required to comply with the provisions of the PRC Company Law. Regulations on Tax See “ Item 10.
In addition, the parties will share any fees generated from any licensing of the joint patents. 63 REGULATION Regulations Relating to the Manufacturing Industry Our manufacturing activities are regulated by the Law of China on Work Safety, or the Work Safety Law, which was adopted in 2002 and latest amended in 2021.
In addition, the parties will share any fees generated from any licensing of the joint patents. 61 REGULATION Regulations Relating to the Manufacturing Industry Our manufacturing activities are regulated by the Law of China on Work Safety, or the Work Safety Law, which was adopted in 2002 and latest amended in 2021.
Through vibration technology, with these raw materials inputted, the finished products can come out with different shape and types. Since the whole production is cured without fire, this process has the benefits of less space required for production and less pollution generated to the environment.
Through vibration technology, with these raw materials input, the finished products can come out with different shape and types. Since the whole production is cured without fire, this process has the benefits of less space required for production and less pollution generated to the environment.
(“Luoyang”), an independent third party), including 31 design patents, 82 utility model patents and ten invention patents. Three of our patents were awarded Gold and Silver Prize of International Exhibition of Inventions of Geneva. In addition, we own 25 software copyrights in China.
(“Luoyang”), an independent third party), including 31 design patents, 85 utility model patents and ten invention patents. Three of our patents were awarded Gold and Silver Prize of International Exhibition of Inventions of Geneva. In addition, we own 25 software copyrights in China.
REIT Ordos owned 55% of the ownership interest in Yangbi Litu, with the remaining 45% equity interest owned by Yunnan Litu. Because the Company’s ownership interest in Yunnan Litu was 55%, the Company held an aggregate 79.75% equity interest in Yangbi Litu, directly and indirectly.
(“Yunnan Litu”). REIT Ordos owned 55% of the ownership interest in Yangbi Litu, with the remaining 45% equity interest owned by Yunnan Litu. Because the Company’s ownership interest in Yunnan Litu was 55%, the Company held an aggregate 79.75% equity interest in Yangbi Litu, directly and indirectly.
Experienced management team and work force . Our management team, led by Hengfang Li, our Chief Executive Officer, who has extensive industry experience, deep knowledge of our business and a demonstrated track record of managing costs, adapting to changing market conditions, and developing new products. In addition, Mr. Li has a vast network and understating of the market.
Our management team, led by Hengfang Li, our Chief Executive Officer, who has extensive industry experience, deep knowledge of our business and a demonstrated track record of managing costs, adapting to changing market conditions, and developing new products. In addition, Mr. Li has a vast network and understating of the market.
If a foreign investor is found to invest in any prohibited industry in the “negative list”, such foreign investor may be required to, among other aspects, cease its investment activities, dispose of its equity interests or assets within a prescribed time limit and have its income confiscated.
If a foreign investor is found to invest in any prohibited industry in the “negative list,” such foreign investor may be required to, among other aspects, cease its investment activities, dispose of its equity interests or assets within a prescribed time limit and have its income confiscated.
We plan to take advantages of the government resources and support of the Hainan Free Trade Port to further the development of our technologies and our business operations. 56 Pursue Strategic Acquisitions . We intend to continue to pursue expansion opportunities in existing and new markets, as well as in core and adjacent categories through strategic acquisitions.
We plan to take advantage of the government resources and support of the Hainan Free Trade Port to further the development of our technologies and our business operations. Pursue Strategic Acquisitions . We intend to continue to pursue expansion opportunities in existing and new markets, as well as in core and adjacent categories through strategic acquisitions.
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.
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.
We do not expect the prices of such raw materials to vary greatly from their current prices, as there has traditionally been little price volatility for such materials. For the years ended December 31, 2022, 2021, and 2020, the Company purchased approximately 19%, 53%, and 43%, respectively, of its raw materials from one major supplier.
We do not expect the prices of such raw materials to vary greatly from their current prices, as there has traditionally been little price volatility for such materials. For the years ended December 31, 2023, 2022, and 2021, the Company purchased approximately 10%, 19%, and 53%, respectively, of its raw materials from one major supplier.
We believe this will create higher demands for construction projects such as ecological slope protection (retaining walls), dry barrier walls (SRWs), and drainage trenches and thereby bring us new market from molding equipment and small precast concrete products. “Rural revitalization” and “urban renewal”.
We believe this will create higher demands for construction projects such as ecological slope protection (retaining walls), dry barrier walls (SRWs), and drainage trenches and thereby bring us new market from molding equipment and small precast concrete products.
We have set up a separate research and development division to account for our investment in research and development. As of December 31, 2022, we employed 41 professionals in research and technology development. We expect to increase our allocation of research and development funds in an effort to enhance its core competence.
We have set up a separate research and development division to account for our investment in research and development. As of December 31, 2023, we employed 38 professionals in research and technology development. We expect to increase our allocation of research and development funds in an effort to enhance its core competence.
We also plan to participate in targeted international marketing events, such as seminars, workshops, and trade shows, where we can meet potential customers, promote our products and deepen our network to further expand our sales. We have obtained new customers by word-of-mouth referrals and have found that satisfied customers are loyal customers.
We have participated, and will continue to participate, in targeted international marketing events, such as seminars, workshops, and trade shows, where we can meet potential customers, promote our products and deepen our network to further expand our sales. We also acquire new customers by word-of-mouth referrals and have found that satisfied customers are loyal customers.
According to the s data released by the Hainan Insurance Industry Association, there was a total of approximately 108,100 and 120,500 car accidents (involving solely the mandatory liability insurance cases that occurred and closed during the relevant year, excluding single-vehicle accidents) in Hainan province, representing an average of approximately 296 and 330 accident per day, respectively.
According to the data released by the Hainan Insurance Industry Association, during 2021, there was a total of approximately 108,100 car accidents (involving solely the mandatory liability insurance cases that occurred and closed during the year, excluding single-vehicle accidents) in Hainan province, representing an average of approximately 296 accident per day.
In January 2022, the Opinions of the Central Committee of the Communist Party of China and the State Council on Doing a Good Job in Comprehensively Promoting the Key Work of Rural Revitalization in 2022 was issued by the Central Committee of the Communist Party of China and the State Council.
“Rural revitalization” and “urban renewal.” In January 2022, the Opinions of the Central Committee of the Communist Party of China and the State Council on Doing a Good Job in Comprehensively Promoting the Key Work of Rural Revitalization in 2022 was issued by the Central Committee of the Communist Party of China and the State Council.
We accounted for the payments as research and development expenses in accordance with ASC 730-20 for the related periods. For the years ended December 31, 2022, 2021, and 2020, we spent $960,598, $346,951 and $334,904, respectively, on research and development associated with our continuing operations.
We accounted for the payments as research and development expenses in accordance with ASC 730-20 for the related periods. For the years ended December 31, 2023, 2022, and 2021, we spent $1,166,044, $960,598 and $346,951, respectively, on research and development associated with our continuing operations.
Company Law Pursuant to the PRC Company Law, promulgated by the SCNPC on December 29, 1993, effective as of July 1, 1994, and as revised on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 and October 26, 2018, the establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law.
Company Law Pursuant to the PRC Company Law, promulgated by the SCNPC on December 29, 1993, effective as of July 1, 1994, and as amended on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 October 26, 2018, and December 29, 2023 (the latest amendment will become effective on July 1, 2024), the establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law.
In the international market for our manufacturing equipment our main competition is from German made manufacturing equipment. We believe our competitive strength against these competitors is the lower cost of our equipment with the same technical standards and high-quality service. Our disadvantage is that the German-made equipment has a better aesthetic appearance as compared to the equipment we manufacture.
We believe our competitive strength against these competitors is the lower cost of our equipment with the same technical standards and high-quality service. Our disadvantage is that the German-made equipment has a better aesthetic appearance as compared to the equipment we manufacture.
It is believed that “Urban renewal” is fundamentally different from the previous “old city renovation” and includes the renovation of the old city, with a higher level and a wider scope, including house renovation (demolition) and road renovation, as well as preservation of urban culture and customs, and division of functional areas.
The connotation of “urban renewal” is to “promote the optimization of urban structure, function improvement and quality improvement.” It is believed that “Urban renewal” is fundamentally different from the previous “old city renovation” and includes the renovation of the old city, with a higher level and a wider scope, including house renovation (demolition) and road renovation, as well as preservation of urban culture and customs, and division of functional areas.
For the year ended December 31, 2021, one customer accounted for 11% of the Company’s total revenue. For the year ended December 31, 2020, no single customer accounted for more than 10% of the Company’s total revenue. Sales and Marketing We are increasing our marketing and sales efforts, including a directed focus on online marketing.
For the fiscal year ended December 31, 2022, one customer accounted for approximately 21% of the Company’s total revenue. For the fiscal year ended December 31, 2021, one customer accounted for more than 11% of the Company’s total revenue. Sales and Marketing We are increasing our marketing and sales efforts, including a directed focus on online marketing.
In addition, we believe less energy is consumed when manufacturing our eco-friendly construction materials as compared with other traditional building materials. We believe our eco-friendly construction materials, with superior water permeability and competitive prices, are in greater demand than traditional materials as governments and others increase their focus on reducing the environmental impact of their activities.
We believe our eco-friendly construction materials, with superior water permeability and competitive prices, are in greater demand than traditional materials as governments and others increase their focus on reducing the environmental impact of their activities.
However, after years of expansion, China’s auto insurance market has started to experience a significant slowdown in the increase in premiums, as a result of the reform and saturation of the auto insurance market and the resulting decrease in average premium per policy and increase marketization of auto insurance.
New energy vehicle insurance market in China is therefore expected to expand further. 51 However, after years of expansion, China’s auto insurance market has started to experience a significant slowdown in the increase in premiums, as a result of the reform and saturation of the auto insurance market and the resulting decrease in average premium per policy and increase marketization of auto insurance.
Increase our revenue and market share by expanding our business network internationally . In order to expand our international market share, we plan to add four to five distributors in America, Southeast Asia, and the Middle East. We plan to change our advertising strategies to reach new customers through new methods, such as digital marketing.
In order to expand our international market share, we plan to add more distributors in America, Southeast Asia, and the Middle East. We plan to change our advertising strategies to reach new customers through new methods, such as digital marketing.
(“Gu’an REIT”), which was incorporated on May 12, 2008; Beijing REIT Ecological, which was incorporated on April 24, 2014; Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd., which was incorporated on May 12, 2014 and was subsequently dissolved in 2021; and REIT Technology Development (America), Inc., a California corporation, which was incorporated on February 27, 2014 and was dissolved in March 2022.
(“Gu’an REIT”), which was incorporated on May 12, 2008; REIT Equipment (known as Beijing REIT Ecological Engineering Technology Co., Ltd. at that time, which changed its name to Beijing REIT Equipment Technology Co., Ltd. on August 9, 2023), which was incorporated on April 24, 2014; Langfang Ruirong Mechanical and Electrical Equipment Co., Ltd., which was incorporated on May 12, 2014 and was subsequently dissolved in 2021; and REIT Technology Development (America), Inc., a California corporation, which was incorporated on February 27, 2014 and was dissolved in March 2022.
Sample research and development projects from 2020 to 2022 include the following: Year 2020 ● A automatic palletizing system 62 Year 2021 ● A servo control system for cubing plant V1.0 ● A control system V1.0 for finger cart ● An environmentally friendly permeable concrete PC brick ● A porous sound-absorbing and noise-reducing PC brick ● A production, processing, positioning and cutting device for PC bricks ● A weather-resistant PC brick ● A permeable PC brick surface layer and chamfer grinding device ● A self-compensating shrink PC brick Year 2022 ● A squirrel cage concrete product turning machine ● An extra-thick surface layer bulk concrete product forming device ● A control system and software for 3D printing V1.0 ● REITRT10 Series equipment ● Gravity separator for iron mine Sources of Raw Materials Our primary raw materials are steel for our manufacturing equipment and iron tailings, fly-ash and cement for our construction materials.
Sample research and development projects from 2021 to 2023 include the following: Year 2021 ● A servo control system for cubing plant V1.0 ● A control system V1.0 for finger cart ● An environmentally friendly permeable concrete PC brick ● A porous sound-absorbing and noise-reducing PC brick ● A production, processing, positioning and cutting device for PC bricks ● A weather-resistant PC brick ● A permeable PC brick surface layer and chamfer grinding device ● A self-compensating shrink PC brick 60 Year 2022 ● A squirrel cage concrete product turning machine ● An extra-thick surface layer bulk concrete product forming device ● A control system and software for 3D printing V1.0 ● REITRT10 Series equipment ● Gravity separator for iron mine Year 2023 ● A multi-purpose concrete trimming cutter ● A lightweight solid-liquid front-end mixture for 3D printing printhead ● A new type of ore gravity separation device ● A power milling coaxial integrated additive and subtractive extrusion nozzle Sources of Raw Materials Our primary raw materials are steel for our manufacturing equipment and iron tailings, fly-ash and cement for our construction materials.
We believe we effectively compete with other RSA service providers in the following aspects: ● Proprietary platform that can be customized and offered to different customers, enabling broader outreach to potential customers; ● Streamlined service process fully supported by our operation, technology and customer support teams; ● Efficiency and responsiveness of service requests; and ● Province wide service coverage. 61 The rapidly evolving market for our software solutions is competitive and highly fragmented in certain of our regions, particularly by geography and customer segment.
We believe we effectively compete with other RSA service providers in the following aspects: ● Proprietary platform that can be customized and offered to different customers, enabling broader outreach to potential customers; ● Streamlined service process fully supported by our operation, technology and customer support teams; ● Efficiency and responsiveness of service requests; and ● Province wide service coverage.
The 14th Five-Year Plan for Software and Information Technology Service Industry Development Plan sets out the development goals, i.e., the software business revenue of enterprises above designated size will exceed RMB14 trillion (approximately $220 billion), with an average annual growth rate of more than 12%. 54 Our Competitive Strengths We believe the following competitive strengths differentiate us from our competitors and contribute to our ongoing success.
The 14th Five-Year Plan for Software and Information Technology Service Industry Development Plan sets out the development goals, i.e., the software business revenue of enterprises above designated size will exceed RMB14 trillion (approximately $220 billion), with an average annual growth rate of more than 12%.
On October 22, 2018, REIT Ordos was incorporated as a wholly owned subsidiary of REIT Holdings. On August 29, 2019, Datong Ruisheng Environmental Engineering Co., Ltd. (“Datong Ruisheng”) was incorporated as a wholly owned subsidiary of Beijing REIT.
On October 22, 2018, REIT Ordos was incorporated as a wholly owned subsidiary of REIT Holdings. 45 On August 29, 2019, Datong Ruisheng Environmental Engineering Co., Ltd. (“Datong Ruisheng”) was incorporated as a wholly owned subsidiary of Beijing REIT. Datong Ruisheng is engaged in potential ecological restoration projects in Datong, Shanxi Province.
As of December 31, 2022, we received a total of RMB 53.5 million (approximately US$7.76 million) from the purchasers with the remaining RMB 7.4 million (approximately US$1.1 million) expected to be paid by the purchasers by June 30, 2024. In December 2021, we completed the disposition of REIT Changjiang following the approval of our shareholders and board of directors.
As of December 31, 2023, we received a total of RMB 57.0 million (approximately US$8.26 million) from the purchasers with the remaining RMB 3.9 million (approximately US$0.6 million) expected to be paid by the purchasers by June 30, 2024. In December 2021, we completed the disposition of REIT Changjiang following the approval of our shareholders and board of directors.
We are committed to the research and development of new products for specific customer needs. We plan to develop advanced technologies and devices for our equipment and innovate the new type of the construction products for sponge cities, water ecological restoration and high-standard farmland construction. We believe scientific and technological innovations will help our Company achieve its long-term strategic objectives.
We plan to develop advanced technologies and devices for our equipment and innovate the new type of the construction products for sponge cities, water ecological restoration and high-standard farmland construction. We believe scientific and technological innovations will help our Company achieve its long-term strategic objectives. Increase our revenue and market share by expanding our business network internationally .
It was dissolved on March 7, 2023. On November 29, 2022, Honghe REIT Ecological Technology Co., Ltd. was incorporated as an operating limited liability company in mainland China and a wholly-owned subsidiary of REIT Ordos. Its business scope includes EOD projects and related ecological restoration projects. On February 9, 2023, REIT Construction was dissolved.
On November 29, 2022, Honghe REIT was incorporated as a limited liability company in mainland China and a wholly-owned subsidiary of REIT Ordos. Its business scope includes EOD projects and related ecological restoration projects.
We currently provide a full spectrum of products and services related to recycling and reuse of solid wastes, from producing eco-friendly construction materials and manufacturing equipment used to produce construction materials, to project installation. We differentiate us from our competitors through strong research and development capabilities and advanced technologies and systems.
We currently provide a full spectrum of products and services related to recycling and reuse of solid wastes, from producing eco-friendly construction materials and manufacturing equipment used to produce construction materials, to project installation.
As of the date of this annual report, Hainan Coconut has not commenced its operations. On September 30, 2022, Gansu Ruishi Tongda Ecological Management Co., Ltd. was incorporated as a limited liability company in mainland China and REIT Ecological owns 70% of its equity interest. Its business scope includes project management, project investment and financing, and other ecological management projects.
On September 30, 2022, Gansu Ruishi Tongda Ecological Management Co., Ltd. was incorporated as a limited liability company in mainland China and REIT Ecological owns 70% of its equity interest. Its business scope includes project management, project investment and financing, and other ecological management projects. It was dissolved on March 7, 2023.
We believe that this approach has been crucial in winning and retaining clients and increasing our ability to withstand competition. Our current market for software development and RSA services is Hainan Province.
We believe that this approach has been crucial in winning and retaining clients and increasing our ability to withstand competition. Our current market for software development and RSA services is Hainan Province. We plan to expand our offering of those services to other provinces in China through client referrals and targeted marketing.
By gradually increasing our efforts, and expanding the scale in the planning, design and construction of sponge cities, we aim to become a key enterprise in sponge city construction. 59 Ecological Restoration Projects – Datong City, Shanxi Province Pursuant to a strategic cooperation agreement entered into with Hunyuan County People’s Government, we have acted as the general contractor in connection with the restoration of abandoned coal mines and disposal of solid wastes in Hunyuan County, Datong City, Shanxi Province.
Ecological Restoration Projects – Datong City, Shanxi Province Pursuant to a strategic cooperation agreement entered into with Hunyuan County People’s Government, we have acted as the general contractor in connection with the restoration of abandoned coal mines and disposal of solid wastes in Hunyuan County, Datong City, Shanxi Province.
For example, in 2015, we completed a sponge city project in Hainan Province where a village located in a former mining area was built with our eco-friendly construction materials made from iron tailings. We will continue to focus on using iron tailings in our eco-friendly construction materials and seek reclamation projects in former mining areas. Continue to develop new products.
For example, in 2015, we completed a sponge city project in Hainan Province where a village located in a former mining area was built with our eco-friendly construction materials made from iron tailings.
In addition, we have a committed and qualified management team who fully understand our corporate culture and effectively implement our business strategy. Proprietary technologies and strong research and development capabilities . We have developed key technologies and knowhow in the manufacture of various types of construction materials and manufacturing equipment.
In every step, we have fully trained, experienced and skilled employees to ensure the quality of our construction materials and manufacturing equipment. In addition, we have a committed and qualified management team who fully understand our corporate culture and effectively implement our business strategy. Proprietary technologies and strong research and development capabilities .
In addition, in November 2021, the General Office of the Ministry of Housing and Urban-Rural Development of the PRC issued the Notice on Launching the First Batch of Urban Renewal Pilot Work , and decided to carry out the first batch of urban renewal pilot work in a two-year period in 21 cities (districts) including Beijing.
Rural revitalization calls for high standard farmland construction, advancement of agricultural infrastructure, and improvement of the implementation of rural conduction system, among other things. 50 In addition, in November 2021, the General Office of the Ministry of Housing and Urban-Rural Development of the PRC issued the Notice on Launching the First Batch of Urban Renewal Pilot Work , and decided to carry out the first batch of urban renewal pilot work in a two-year period in 21 cities (districts) including Beijing.
Yangpu Fangyuyuan is engaged in facilitating logistic services through its cloud based platform in China. IoV Technology Research provides RSA services in Hainan Province, China.
Hainan Fangyuyuan is engaged in facilitating logistic services through its cloud based platform in China.
We also plan to participate in targeted international marketing events, such as seminars, workshops, and trade shows, where we can meet potential customers, promote our products and deepen our network to further expand our sales. Take advantage of the Hainan Free Trade Port policy.
We have participated, and will continue to participate, in targeted international marketing events, such as seminars, workshops, and trade shows, where we can meet potential customers, promote our products and deepen our network to further expand our sales.
Region 2022 2021 2020 Middle East $ 556,867 $ 50,573 $ - India 261,922 491,192 2,120,381 Pakistan 837 12,457 - China 3,458,528 1,212,824 3,603,587 Malaysia - 20,656 - Maldives 20,495 - 804,112 Total $ 4,298,649 $ 1,787,702 $ 6,528,080 For the year ended December 31, 2022, one customer accounted for 21% of the Company’s total revenue.
Region 2023 2022 2021 Middle East $ 36,998 $ 556,867 $ 50,573 India 427,801 261,922 491,192 Pakistan 7,208 837 12,457 China 2,750,064 3,458,528 1,212,824 Malaysia 7,898 - 20,656 Maldives 6,317 20,495 - Total $ 3,236,286 $ 4,298,649 $ 1,787,702 For the fiscal year ended December 31, 2023, one customer accounted for approximately 16% of the Company’s total revenue.
On December 27, 2021, Yangpu Fangyuyuan and Shanghai Ruida Fenghe Management Consulting Partnership (Limited Partnership) incorporated Hainan Kunneng as a limited liability company to engage in the development of an international commodity trading platform for the Hainan International Trade Zone, using digital supply chain technologies.
IoV Technology Research provides RSA services in Hainan Province, China. 46 On December 27, 2021, Hainan Fangyuyuan and Shanghai Ruida Fenghe Management Consulting Partnership (Limited Partnership) incorporated Hainan Kunneng as a limited liability company to engage in the development of an international commodity trading platform (as of the date of this annual report, the platform is still under development and has not launched) for the Hainan International Trade Zone, using digital supply chain technologies.
We have international customers located in Asia, India, the Middle East, North Africa and North America for our manufacturing equipment. The following is a summary of our total revenues from our continuing operations by geographic market for each of the last three years for our manufacturing equipment used to produce construction materials.
The following is a summary of our total revenues from our continuing operations by geographic market for each of the last three years for our manufacturing equipment used to produce construction materials.
In Hainan, our primary competitors for providing RSA services are the tow providers and other RSA service providers who may also be our contracted service providers.
We believe these developments will increase our competitive capacity in brick-production equipment. In Hainan, our primary competitors for providing RSA services are the tow providers and other RSA service providers who may also be our contracted service providers.
As a result of this acquisition, the Company also acquired, indirectly through RETI Mingde, 100% of the equity interest of Yangpu Fangyuyuan and 61.548% of the equity interest of Hainan Yile IoT, which, in turn, owns 90% of the equity interest of IoV Technology Research, 85% of the equity interest of Shanxi Global Travel Co., Ltd. and 45% of the equity interest of Hainan Beiqi Yinjian Yile Smart Travel Technology Co., Ltd.
As a result of this acquisition, the Company also acquired, indirectly through RETI Mingde, 100% of the equity interest of Hainan Fangyuyuan (known as Yangpu Fangyuyuan United Logistics Co., Ltd. at that time, which changed its name to Hainan Fangyuyuan United Logistics Co., Ltd. on December 7, 2023) and 61.548% of the equity interest of Hainan Yile IoT, which, in turn, owned 90% of the equity interest of IoV Technology Research (which was transferred to REIT Mingde on April 3, 2023 for no consideration), 85% of the equity interest of Shanxi Global Travel Co., Ltd. and 45% of the equity interest of Hainan Beiqi Yinjian Yile Smart Travel Technology Co., Ltd.
On November 29, 2017, ReTo completed its IPO of 3,220,000 Common Shares at a public offering price of $5.00 per share.
On November 29, 2017, ReTo completed its initial public offering (“IPO”) of 32,200 Common Shares at a public offering price of $500 per share.
Our products are eco-friendly, as they contain approximately 70% of reclaimed iron tailings in place of traditional cement. The use of reclaimed iron tailings assists in the protection of the environment by saving space in landfills used for the disposal of these materials, and assisting in the remediation and reclamation of abandoned or closed mining sites.
The use of reclaimed iron tailings assists in the protection of the environment by saving space in landfills used for the disposal of these materials, and assisting in the remediation and reclamation of abandoned or closed mining sites. In addition, we believe less energy is consumed when manufacturing our eco-friendly construction materials as compared with other traditional building materials.
We are able to provide consultation, design and implementation of projects such as sponge city and hydraulic ecological projects for customers, in addition to manufacturing and sales of eco-friendly construction materials and equipment. Our one-stop solution allows us to capture revenue from all stages of a project and serve more types of customers, such as municipalities and governments.
Full range of eco-friendly project solutions. We are able to provide consultation, design and implementation of projects such as sponge city and hydraulic ecological projects for customers, in addition to manufacturing and sales of eco-friendly construction materials and equipment.
The Foreign Investment Law provides that FIEs operating in foreign restricted or prohibited industries will require market entry clearance and other approvals from relevant PRC governmental authorities.
The Foreign Investment Law grants national treatment to foreign-invested entities, or FIEs, except for those FIEs that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list.” The Foreign Investment Law provides that FIEs operating in foreign restricted or prohibited industries will require market entry clearance and other approvals from relevant PRC governmental authorities.
The parties have agreed to extend the Note and are in the process of negotiating the terms of the extension as of the date of this annual report. Industry and Market Opportunities Construction and Construction Materials Markets From 2011 to 2020, the total output value of China’s construction industry showed an upward trend year by year.
Industry and Market Opportunities Construction and Construction Materials Markets From 2011 to 2020, the total output value of China’s construction industry showed an upward trend year by year.
Yangpu Fangyuyuan owns 51% of Hainan Kunneng’s equity interest while Shanghai Ruida Fenghe Management Consulting Partnership (Limited Partnership) owns 49%. Hainan Kunneng commenced operations in January 2022.
Hainan Fangyuyuan owns 51% of Hainan Kunneng’s equity interest while Shanghai Ruida Fenghe Management Consulting Partnership (Limited Partnership) owns 49%. Hainan Kunneng commenced operations in January 2022. On August 24, 2022, due to the addition of a new shareholder, REIT Mingde became a 90% owner of Hainan Fangyuyuan’s equity interest.
We compete with other developers of software solutions and services locally in Hainan and nationwide in China, such as Digital Hainan Co., Ltd., Inspur Group Co., Ltd., and Neusoft Group Co., Ltd.
The rapidly evolving market for our software solutions is competitive and highly fragmented in certain of our regions, particularly by geography and customer segment. We compete with other developers of software solutions and services locally in Hainan and nationwide in China, such as Digital Hainan Co., Ltd., Inspur Group Co., Ltd., and Neusoft Group Co., Ltd.
The Foreign Investment Catalogue which was promulgated jointly by MOFCOM and the NDRC, on June 28, 2017 and became effective on July 28, 2017, classifies industries into three categories with regard to foreign investment: (1) “encouraged”, (2) “restricted”, and (3) “prohibited”.
The Foreign Investment Catalogue which was promulgated jointly by MOFCOM and the NDRC, on June 28, 2017 and became effective on July 28, 2017, classifies industries into three categories with regard to foreign investment: (1) “encouraged,” (2) “restricted,” and (3) “prohibited.” The latter two categories are included in a negative list, which was first introduced into the Foreign Investment Catalog in 2017 and specified the restrictive measures for the entry of foreign investment.
Eco-friendly products . Unlike many of our competitors, who still use traditional materials, we use reclaimed iron tailings to manufacture our construction materials. In doing so, we help reduce environmental waste. In addition, the equipment we used to produce construction materials can recycle disposed building materials, including, without limitation, waste clay bricks and waste concrete, to manufacture construction materials.
Our Competitive Strengths We believe the following competitive strengths differentiate us from our competitors and contribute to our ongoing success. Eco-friendly products . Unlike many of our competitors, who still use traditional materials, we use reclaimed iron tailings to manufacture our construction materials. In doing so, we help reduce environmental waste.
Effective operational management . The consistent quality of our products and manufacturing equipment is achievable only through effective management in all aspects of our operations, from purchasing to production and sales. In every step, we have fully trained, experienced and skilled employees to ensure the quality of our construction materials and manufacturing equipment.
In addition, the equipment we used to produce construction materials can recycle disposed building materials, including, without limitation, waste clay bricks and waste concrete, to manufacture construction materials. Effective operational management . The consistent quality of our products and manufacturing equipment is achievable only through effective management in all aspects of our operations, from purchasing to production and sales.
Of all our research and development staff, 25 hold bachelor’s degree or higher degrees. Our team has an average of five years of experience in research and development in relevant industries. Full range of eco-friendly project solutions.
As of the date of this annual report, our research and development team consists of an aggregate of 41 staff, accounting for approximately 40% of our total employees. Of all our research and development staff, 25 hold bachelor’s degree or higher degrees. Our team has an average of five years of experience in research and development in relevant industries.
Specifically, we are seeking to acquire construction material or construction material manufacturing equipment companies in areas of China with more established economies. We believe the demand for eco-friendly construction materials and manufacturing equipment used to produce these materials are and will continue to be in greater demand in these established economies.
Specifically, we are seeking to acquire companies engaged in manufacturing solar energy equipment or energy management devices in order to enhance our business. We believe the demand for such eco-friendly equipment and devices are and will continue to be in greater demand in the established economies.
According to the Foreign Investment Law, the State Council will publish or approve to publish the “negative list” for special administrative measures concerning foreign investment. The Foreign Investment Law grants national treatment to foreign-invested entities, or FIEs, except for those FIEs that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list”.
According to the Foreign Investment Law, the State Council will publish or approve to publish the “negative list” for special administrative measures concerning foreign investment.
On December 27, 2021, REIT Technology acquired 100% equity interest of REIT Mingde, as more fully described under the heading “ Recent Developments ” below.
On December 27, 2021, REIT Technology acquired 100% equity interest of REIT Mingde.
We own an aggregate of 123 PRC patents (ten of which are owned jointly with Luoyang Water-Conservancy Surveying & Design Co., Ltd. (“Luoyang”), an independent third party), including 31 design patents, 82 utility model patents and ten invention patents. Three of our patents were awarded Gold and Silver Prize of International Exhibition of Inventions of Geneva.
We have developed key technologies and knowhow in the manufacture of various types of construction materials and manufacturing equipment. We own an aggregate of 126 PRC patents (ten of which are owned jointly with Luoyang Water-Conservancy Surveying & Design Co., Ltd. (“Luoyang”), an independent third party), including 31 design patents, 85 utility model patents and ten invention patents.
We commenced the project in November 2019 and are in charge of the project feasibility study, design, implementation and supervision of the project. This project covers several affected villages and has an aggregate area of approximately 386 acres. We expect to complete this project by the end of 2023.
We were in charge of the project feasibility study, design, implementation and supervision of the project. This project covered several affected villages and had an aggregate area of approximately 386 acres. Customers Our eco-friendly construction materials are sold only in China.
Our primary customers for software development services are state-owned petroleum companies and telecommunications companies. The primary customers for RSA services are insurance companies with the rest being individual customers. The majority of our customers for software development services and RSA services are located in Hainan Province.
Sales of construction materials accounted for $0.7 million, $0.8 million and $1.7 million of our total revenues for the years ended December 31, 2023, 2022 and 2021, respectively. Our primary customers for software development services are state-owned petroleum companies and telecommunications companies. The primary customers for RSA services are insurance companies with the rest being individual customers.

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Construction Materials Sales of our environmental-friendly construction materials decreased by approximately $0.9 million or 51% to approximately $0.8 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021 due to the decrease in demand resulting from the downturn of the national construction market under the impact of COVID-19.
Sales of our environmental-friendly construction materials decreased by approximately $0.9 million, or 51%, to approximately $0.8 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021 due to the decrease in demand resulting from the downturn of the national construction market under the impact of COVID-19.
Cost of Revenues Our total cost of revenues increased by approximately $2.5 million or 76% to approximately $5.7 million for the year ended December 31, 2022 from approximately $3.2 million for the year ended December 31, 2021.
Our total cost of revenues increased by approximately $2.5 million or 76% to approximately $5.7 million for the year ended December 31, 2022 from approximately $3.2 million for the year ended December 31, 2021.
General and Administrative Expenses For the year ended December 31, 2022, our general and administrative expenses were approximately $8.6 million, representing an increase of approximately $4.0 million compared to approximately $4.6 million in the year ended December 31, 2021.
For the year ended December 31, 2022, our general and administrative expenses were approximately $8.6 million, representing an increase of approximately $4.0 million compared to approximately $4.6 million in the year ended December 31, 2021.
Loss before Income Taxes Our loss before income taxes was approximately $15.4 million for the year ended December 31, 2022, a decrease of approximately $5.1 million as compared to loss before income taxes of approximately $20.5 million for the year ended December 31, 2021.
Our loss before income taxes was approximately $15.4 million for the year ended December 31, 2022, a decrease of approximately $5.1 million as compared to loss before income taxes of approximately $20.5 million for the year ended December 31, 2021.
Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred. Stock-based Compensation The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”).
Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred. Share-based Compensation The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”).
Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. 86 We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates.
Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates.
The decrease in gross profit margin was mainly due to the fact that we had to offer more competitive prices for our products in the challenging market environment resulting from the COVID-19 pandemic which resulted in financial tightness and slowdown of the construction industry and thereby reduced demand for our products.
The decrease in gross profit margin was mainly due to the fact that we had to offer more competitive prices for our products in the challenging market environment resulting from COVID-19 which resulted in financial tightness and slowdown of the construction industry and thereby reduced demand for our products.
The gross profit (loss) margin for this segment was approximately (12)% for the year ended December 31, 2022 as compared to 6% for the year ended December 31, 2021.We had fixed costs which did not decrease proportionately with the revenue decrease, and thus resulted in a gross loss.
The gross loss margin for this segment was approximately 12% for the year ended December 31, 2022 as compared to the gross profit margin of approximately 6% for the year ended December 31, 2021.We had fixed costs which did not decrease proportionately with the revenue decrease, and thus resulted in a gross loss.
Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. ● Revenue from technological consulting and other services The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers.
Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. 85 ● Revenue from technological consulting and other services The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers.
Net cash provided by discontinued financing activities was approximately $0.4 million. Statutory Reserves The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).
Net cash provided by discontinued financing activities was approximately $4.7 million. Statutory Reserves The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”).
The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs. As of December 31, 2022 and 2021, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet.
The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs. As of December 31, 2023 and 2022, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet.
The increase in general and administrative expenses was mainly due to an increase of share-based compensation for services and consulting and professional fees of $4.0 million. As a percentage of revenues, general and administrative expenses were 133% and 129% of our total revenues for the years ended December 31, 2022 and 2021, respectively.
The increase in general and administrative expenses was mainly due to an increase of share-based compensation for services and consulting and professional fees of $4.0 million. As a percentage of revenues, general and administrative expenses were 133% and 129% of our total revenues for the year ended December 31, 2022 and 2021, respectively.
Impairment of Long-lived Assets During the years ended December 31, 2022, 2021 and 2020, due to the Company’s reoccurring loss, the Company further assessed that the expected future cash flows may not cover the carrying value of the Company’s fixed asset equipment and machinery.
Impairment of Long-lived Assets During the years ended December 31, 2023, 2022 and 2021, due to the Company’s reoccurring loss, the Company further assessed that the expected future cash flows may not cover the carrying value of the Company’s fixed asset equipment and machinery.
Net cash used in investing activities was approximately $1.7 million for the year ended December 31, 2021. During the year ended December 31, 2021, the Company paid approximately $2.6 million on the construction in progress (“CIP”) and received proceeds from disposal of subsidiaries of approximately $2.6 million. Net cash used in discontinued investing activities was approximately $1.8 million.
During the year ended December 31, 2021, the Company paid approximately $2.6 million on the construction in progress (“CIP”) and received proceeds from disposal of subsidiaries of approximately $2.6 million. Net cash used in discontinued investing activities was approximately $1.8 million.
Net cash used in operating activities in the year ended December 31, 2022 mainly consisted of net loss from continuing operation of approximately $15.4 million, adjustments of non-cash items of approximately $8.3 million, an increase of approximately $2.7 million in accounts receivable, a decrease of approximately $0.1 million in inventories, an increase of approximately $0.7 million in advance from customers, an increase of approximately $0.7 million in accounts payable, a decrease of approximately $0.2 million in accrued expenses and other liabilities, and a decrease of approximately $0.6 million in taxes payable.
Net cash used in operating activities in the year ended December 31, 2022 mainly consisted of net loss from continuing operation of approximately $15.4 million, adjustments of non-cash items of approximately $8.3 million, an increase of approximately $2.7 million in accounts receivable, a decrease of approximately $0.1 million in inventories, an increase of approximately $0.7 million in advance from customers, an increase of approximately $0.7 million in accounts payable, a decrease of approximately $0.2 million in accrued expenses and other liabilities, and a decrease of approximately $0.6 million in taxes payable. 82 Net cash used in operating activities was approximately $2.8 million in the year ended December 31, 2021.
The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the years ended December 31, 2022, 2021 and 2020.
The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the years ended December 31, 2023, 2022 and 2021.
Financing Activities Net cash provided by financing activities was approximately $4.8 million for the year ended December 31, 2022, including proceeds from bank loans of approximately $0.7 million, proceeds of approximately $3.0 million from issuance of a convertible note, proceeds from third-party loans of approximately $1.8 million, proceeds received from share issuance of approximately $3.6 million, offset by repayment of bank loans of approximately $1.5 million, net loan payment to related parties of approximately $1.3 million, payments to non-controlling shareholders of approximately $1.9 million for purchasing non-controlling interest of a subsidiary, and repayment of third-party loans of approximately $1.0 million. 85 Net cash provided by financing activities was approximately $4.0 million for the year ended December 31, 2021, including proceeds from bank loans of approximately $2.3 million and proceeds of approximately $3.7 million from issuing convertible loans, proceeds from third party loans of approximately $0.8 million, offset by repayment of bank loans of approximately $7.2 million and net loan payment to related parties of approximately $0.3 million.
Net cash provided by financing activities was approximately $4.8 million for the year ended December 31, 2022, including proceeds from bank loans of approximately $0.7 million, proceeds of approximately $3.0 million from issuance of a convertible note, proceeds from third-party loans of approximately $1.8 million, proceeds received from share issuance of approximately $3.6 million, offset by repayment of bank loans of approximately $1.5 million, net loan payment to related parties of approximately $1.3 million, payments to non-controlling shareholders of approximately $1.9 million for purchasing non-controlling interest of a subsidiary, and repayment of third-party loans of approximately $1.0 million.
Given the Company’s net loss position in fiscal 2022, 2021 and 2020, the Company further assessed that the expected future cash flow generated from its machinery, equipment, and other long-lived assets would not recover their carrying value and as a result, the Company recorded an impairment of approximately $nil, $4.3 million and $2.3 million on these fixed assets for the year ended December 31, 2022, 2021 and 2020, respectively, based on the fair value assessment provided by the third party valuation firm using the significant unobservable inputs.
Given the Company’s net loss position in fiscal 2023, 2022 and 2021, the Company further assessed that the expected future cash flow generated from its machinery, equipment, and other long-lived assets would not recover their carrying value and as a result, the Company recorded an impairment of approximately $0.4, $nil million and $4.3 million on these fixed assets for the year ended December31, 2023, 2022 and 2021, respectively, based on the fair value assessment provided by the third party valuation firm using the significant unobservable inputs.
Liquidity and Going Concern We are a holding company incorporated in the British Virgin Islands. REIT Holdings, our wholly owned subsidiary established in Hong Kong, directly owns Beijing REIT, REIT Technology and REIT Technology, which in turn own our assets through their respective subsidiaries in China, India and the United States.
Liquidity and Going Concern ReTo is a holding company incorporated in the British Virgin Islands. REIT Holdings, our wholly owned subsidiary established in Hong Kong, directly owns Beijing REIT, REIT Ordos, and REIT Technology, which in turn own our assets through their respective subsidiaries in China, India and the United States.
As of December 31, 2022, the tax years ended December 31, 2018 through December 31, 2022 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities.
As of December 31, 2023, the tax years ended December 31, 2018 through December 31, 2023 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities. 86
From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the years ended December 31, 2022, 2021 and 2020. 87 ● Revenue from construction materials sales The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. ● Revenue from municipal construction projects The Company provides municipal construction services, also known as sponge city projects.
From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the years ended December 31, 2023, 2022 and 2021. ● Revenue from construction materials sales The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. ● Revenue from municipal construction projects The Company provides municipal construction services, including sponge city projects and ecological restoration projects.
Operating Results Overview Our business consists of four business segments, including machinery and equipment sales, construction materials sales, municipal construction projects and technological consulting and other services, which accounted for 67%, 12%, 8% and 13% of our total revenue from our continuing operations for the year ended December 31, 2022, respectively, for 50%, 46%, 4% and 0% of our total revenue from our continuing operations for the year ended December 31, 2021, respectively, and 77%, 21%, 1% and 0% of our total revenue from our continuing operations for the year ended December 31, 2020, respectively.
Operating Results Overview Our business consists of four business segments, including machinery and equipment sales, construction materials sales, municipal construction projects and technological consulting and other services, which accounted for 72%, 23%, nil and 5% of our total revenue from our continuing operations for the year ended December 31, 2023, respectively, 67%, 12%, 8% and 13% of our total revenue from our continuing operations for the year ended December 31, 2022, respectively, and 50%, 46%, 4% and 0% of our total revenue from our continuing operations for the year ended December 31, 2021, respectively.
However, since 2021, there has been a resurgence of COVID-19 cases caused by new variants such as Delta and Omicron in multiple cities in China, as well as across the world. Restrictions have been re-imposed in certain cities to combat such outbreaks and emerging variants of the virus.
However, there was a resurgence of COVID-19 cases during 2021 caused by new variants such as Delta and Omicron in multiple cities in China, as well as across the world. Restrictions were re-imposed in certain cities in China to combat such outbreaks and emerging variants of the virus.
Therefore, the Company is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity and results of operations if the current situation continues.
Given this uncertainty, the Company is currently unable to quantify the expected impact of COVID-19 on its future operations, financial condition, liquidity and results of operations if the current situation continues.
The decrease in our total cost of revenue was in line with the decrease in revenue.
The increase in our total cost of revenue was in line with the increase in revenue.
Net cash provided by discontinued operating activities was $6,990. Investing Activities Net cash provided by investing activities was approximately $4.2 million for the year ended December 31, 2022. During the year ended December 31, 2022, the Company paid approximately $1.3 million on software and received proceeds from disposal of subsidiaries of approximately $5.7 million.
Net cash provided by investing activities was approximately $4.2 million for the year ended December 31, 2022. During the year ended December 31, 2022, the Company paid approximately $1.3 million on software and received proceeds from disposal of subsidiaries of approximately $5.7 million. Net cash used in investing activities was approximately $1.7 million for the year ended December 31, 2021.
Sales to customers in China and internationally from our continuing operations accounted for approximately 91% and 9%, respectively, of our total sales for the year ended December 31, 2022, approximately 84% and 16%, respectively, of our total sales for the year ended December31, 2021, and approximately 67% and 33%, respectively, of our total sales for the year ended December 31, 2020.
Sales to customers in China and internationally from our continuing operations accounted for approximately 85% and 15%, respectively, of our total sales for the year ended December 31, 2023, approximately 91% and 9%, respectively, of our total sales for the year ended December31, 2022, and approximately 84% and 16%, respectively, of our total sales for the year ended December 31, 2021.
Share of Losses in Equity Method Investments For the years ended December 31, 2022 and 2021, share of losses in equity method investments for Shexian Ruibo amounted to approximately $0.05 million and $0.1 million, respectively. There was no share of losses in equity method investments in the year ended December 31, 2020.
Share of Losses in Equity Method Investments For the year ended December 31, 2023, 2022 and 2021, share of losses in equity method investments for Shexian Ruibo amounted to approximately $0.1 million, $0.05 million and $0.1 million, respectively.
In addition, the COVID-19 pandemic caused disruption in our supply chain, impacted our ability to timely fulfill our customer orders and led to higher fulfilment expenses. Construction Materials Gross loss for construction materials was approximately $0.1 million for the year ended December 31, 2022 compared to a gross profit of approximately $0.1 million for the year ended December 31, 2021.
In addition, COVID-19 caused disruption in our supply chain, impacted our ability to timely fulfill our customer orders and led to higher fulfilment expenses. Construction Materials Gross loss for construction materials was approximately $0.3 million and $0.1 million for the year ended December 31, 2023 and 2022, respectively.
We had other expense of approximately $26,991 in the year ended December 31, 2021, mainly representing acquired inventory loss related to Hainan Yile IoT.
We have approximately $0.2 million in the year ended December 31, 2022, mainly representing government subsidy. We had other expense of approximately $26,991 in the year ended December 31, 2021, mainly representing acquired inventory loss related to Hainan Yile IoT.
The increase is due to overall economy recover in 2022. Revenue from municipal construction projects in our continuing operations increased by approximately $35,000 in the year ended December 31 2021 as compared to the year ended December 31 2020 .
Revenue from municipal construction projects in our continuing operations increased by approximately $0.4 million or 271% in the year ended December 31, 2022 as compared to the year ended December 31, 2021. The increase is due to overall economy recover in 2022.
Our net loss from discontinued operations amounted to approximately $nil, $1.6 million and $7.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Total net loss amounted to approximately $15.4 million, $22.1 million and $12.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. B.
Our net loss from discontinued operations amounted to approximately nil, nil and $1.6 million for the year ended December 31, 2023, 2022 and 2021, respectively. Total net loss amounted to approximately $16.1 million, $15.4 million and $22.1 million for the year ended December 31, 2023, 2022 and 2021, respectively. B.
As reflected in the Company’s consolidated financial statements for the year ended December 31, 2022, the Company reported a net loss of approximately $15.4 million. As of December 31, 2022, the Company had a working capital deficit of approximately of $10.1 million.
As reflected in the Company’s consolidated financial statements for the year ended December 31, 2023, the Company reported a net loss of approximately $16.1 million. As of December 31, 2023, the Company had a working capital deficit of approximately of $6.8 million. As of December 31, 2023, the Company had cash of approximately $1.4 million.
The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation. Under PRC law, RMB is currently convertible into U.S.
The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.
The following table summarizes the results of revenues from our continuing operations by business segments for the fiscal years ended December 31, 2022, 2021 and 2020: Revenue by Business Segment (All amounts, other than percentages, in thousands of U.S. dollars) December 31, 2022 December 31, 2021 Variance Amount % of Sales Amount % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Machinery and equipment $ 4,299 67 % $ 1,800 50 % $ 2,499 139 % Construction materials 806 12 % 1,658 46 % (852 ) (51 )% Municipal construction 527 8 % 142 4 % 385 271 % Technological consulting and other services 842 13 % - - 842 - % Total $ 6,474 100 % $ 3,600 100 % $ 2,874 80 % December 31, 2021 December 31, 2020 Variance Amount % of Sales Amount % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Machinery and equipment $ 1,800 50 % $ 6,456 77 % $ (4,656 ) (72 )% Construction materials 1,658 46 % 1,777 21 % (119 ) (7 )% Municipal construction 142 4 % 107 1 % 35 33 % Total $ 3,600 100 % $ 8,340 100 % $ (4,740 ) (57 )% 76 Machinery and Equipment Revenue from machinery and equipment sales increased by approximately $2.5 million, or 139%, from approximately $1.8 million for the year ended December 31, 2021 to approximately $4.3 million for the year ended December 31, 2022.
The following table summarizes the results of revenues from our continuing operations by business segments for the fiscal years ended December 31, 2023, 2022 and 2021: Revenue by Business Segment (All amounts, other than percentages, in thousands of U.S. dollars) 2023 2022 Variance Amount % of Sales Amount % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Machinery and equipment $ 2,325 72 % $ 4,299 67 % $ (1,974 ) (46 )% Construction materials 740 23 % 806 12 % (66 ) (10 )% Municipal construction - - % 527 8 % (527 ) (100 )% Technological consulting and other services 171 5 % 842 13 % (671 ) (80 )% Total $ 3,236 100 % $ 6,474 100 % $ (3,238 ) (50 )% 2022 2021 Variance Amount % of Sales Amount % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Machinery and equipment $ 4,299 67 % $ 1,800 50 % $ 2,499 139 % Construction materials 806 12 % 1,658 46 % (852 ) (51 )% Municipal construction 527 8 % 142 4 % 385 271 % Technological consulting and other services 842 13 % - - 842 - % Total $ 6,474 100 % $ 3,600 100 % $ 2,874 80 % Machinery and Equipment Revenue from machinery and equipment sales decreased by approximately $2.0 million, or 46%, from approximately $4.3 million for the year ended December 31, 2022 to approximately $2.3 million for the year ended December 31, 2023.
Results of Operations from Our Continuing Operations Comparison of Operation Results for the Years Ended December 31, 2022, 2021 and 2020 The following table summarizes the results of our continuing operations during the fiscal years ended December 31, 2022, 2021 and 2020, and provides information regarding the dollar and percentage increase or (decrease) during such years.
Results of Operations from Our Continuing Operations Comparison of Operation Results for the Years Ended December 31, 2023, 2022 and 2021 The following table summarizes the results of our continuing operations during the fiscal years ended December 31, 2023, 2022 and 2021, and provides information regarding the changes in terms of dollar amounts and percentage during such years.
Cash Flows for Years Ended December 31, 2022, 2021 and 2020 The following table sets forth summary of our cash flows for the periods indicated: (All amounts in thousands of U.S. dollars) December 31, 2022 December 31, 2021 December 31, 2020 Net cash (used in) provided by operating activities $ (9,962 ) $ (2,764 ) $ 248 Net cash provided by (used in) investing activities 4,243 (1,743 ) 944 Net cash provided by (used in) financing activities 4,756 4,048 (1,178 ) Effect of exchange rate changes on cash and cash equivalents 620 (204 ) 121 Net (decrease) increase in cash and cash equivalents (344 ) (663 ) 135 Cash and restricted cash, beginning of the year 457 1,121 986 Cash and restricted cash, end of the year 114 $ 458 $ 1,121 Less: cash and cash equivalents, restricted cash of discounted operations at end of period - - 63 Cash and cash equivalents, restricted cash of continued operation, at end of period $ 114 $ 458 $ 1,058 84 Operating Activities Net cash used in operating activities was approximately $10.0 million in the year ended December 31, 2022.
Cash Flows for Years Ended December 31, 2023, 2022 and 2021 The following table sets forth summary of our cash flows for the periods indicated: (All amounts in thousands of U.S. dollars) December 31, 2023 December 31, 2022 December 31, 2021 Net cash (used in) provided by operating activities $ (11,591 ) $ (9,962 ) $ (2,764 ) Net cash provided by (used in) investing activities 352 4,243 (1,743 ) Net cash provided by (used in) financing activities 12,465 4,756 4,048 Effect of exchange rate changes on cash and cash equivalents 74 620 (204 ) Net (decrease) increase in cash and cash equivalents 1,300 (344 ) (663 ) Cash and restricted cash, beginning of the year 114 457 1,121 Cash and restricted cash, end of the year 1,414 $ 114 $ 458 Cash and cash equivalents, restricted cash of continued operation, at end of period $ 1,414 $ 114 $ 458 Operating Activities Net cash used in operating activities was approximately $11.6 million in the year ended December 31, 2023.
The Company, with the assistance of an independent third-party valuation firm, determined the fair value of the stock options granted to employees. The binomial option pricing model and Black-Scholes Model were applied in determining the estimated fair value of the options granted to employees and non-employees. Income Taxes The Company accounts for income taxes under ASC 740.
The binomial option pricing model and Black-Scholes Model were applied in determining the estimated fair value of the options granted to employees and non-employees. Income Taxes The Company accounts for income taxes under ASC 740.
Gain (loss) from Disposal and Dissolution of Subsidiaries The Company recognized a gain from dissolving subsidiaries of approximately $0.5 million in the year ended December 31, 2022. The Company recognized a loss from disposal of REIT Changjiang of approximately $6.3 million in the year ended December 31, 2021.
Gain (loss) from Disposal and Dissolution of Subsidiaries The Company recognized a gain from dissolving subsidiaries of approximately $37,569 in the year ended December 31, 2023.The Company recognized a gain from dissolving subsidiaries of approximately $0.5 million in the year ended December 31, 2022.
The following table reconciles the income tax expense by statutory rate to the Company’s actual income tax expense from our continuing operations: For the Years Ended December 31, 2022 2021 2020 Income tax expense computed based on PRC statutory income tax rate $ (3,849,305 ) $ (5,118,519 ) $ (1,179,508 ) Effect of favorable income tax rate in certain entity in PRC 181,088 889,716 (164,071 ) Non-PRC entities not subject to PRC tax 1,749,333 1,564,644 401,488 Research & Development (“R&D”) tax credit (240,150 ) (260,213 ) (251,178 ) Non-deductible expenses - permanent difference 171,393 588,191 826,034 Change in valuation allowance 1,970,079 2,339,650 937,209 Income tax expenses $ (17,562 ) $ 3,469 $ 569,974 Net Loss Our net loss from continuing operations amounted to approximately $15.4 million, $20.5 million and $5.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.
The following table reconciles the income tax expense by statutory rate to the Company’s actual income tax expense from our continuing operations: For the Year Ended December 31, 2023 2022 2021 Income tax expense computed based on PRC statutory income tax rate $ (4,021,427 ) $ (3,849,305 ) $ (5,118,519 ) Effect of favorable income tax rate in certain entity in PRC 245,598 181,088 889,716 Non-PRC entities not subject to PRC tax 1,469,346 1,749,333 1,564,644 Research & Development (“R&D”) tax credit (291,511 ) (240,150 ) (260,213 ) Non-deductible expenses – permanent difference 131,500 171,393 588,191 Change in valuation allowance 2,449,855 1,970,079 2,339,650 Income tax expenses $ (16,639 ) $ (17,562 ) $ 3,469 80 Net Loss Our net loss from continuing operations amounted to approximately $16.1 million, $15.4 million and $20.5 million for the year ended December 31, 2023, 2022 and 2021, respectively.
Gross profit margin for our continuing operations was 12% for the year ended December 31, 2022, as compared with 11% for the year ended December 31, 2021. Our gross profit decreased by approximately $1.6 million, or 81%, to approximately $0.4 million for the year ended December 31, 2021 from approximately $2.0 million for the year ended December 31, 2020.
Gross profit margin for our continuing operations was 6% for the year ended December 31, 2023, as compared with 12% for the year ended December 31, 2022. Our gross profit increased by approximately $0.4 million, or 109%, to approximately $0.8 million for the year ended December 31, 2022 from approximately $0.4 million for the year ended December 31, 2021.
Construction Materials Cost of revenues for sales of our environmental-friendly construction materials decreased by approximately $0.7 million, or 42%, from approximately $1.6 million for the year ended December 31, 2021 to approximately $0.9 million for the year ended December 31, 2022.
Construction Materials Cost of revenues for sales of environmental-friendly construction materials increased by approximately $0.1 million, or 15%, from approximately $0.9 million for the year ended December 31, 2022 to approximately $1.0 million for the year ended December 31, 2023.
Gross profit for construction materials was approximately $0.1 million for the year ended December 31, 2021 compared to a gross loss of approximately $0.1 million for the year ended December 31, 2020. The gross profit margin for this segment was approximately 6% for the year ended December 31, 2021 as compared to (7%) for the year ended December 31, 2020.
Gross loss for construction materials was approximately $0.1 million for the year ended December 31, 2022 compared to a gross profit of approximately $0.1 million for the year ended December 31, 2021.
Our gross profit and gross margin by segments are as follows: (All amounts, other than percentages, in thousands of U.S. dollars) 2022 2021 Variance Gross Profit Gross Profit% Gross Profit Gross Profit% Gross Profit Increase (Decrease) Gross Profit% Increase (Decrease) Machinery and equipment $ 368 9 % $ 298 17 % $ 70 23 % Construction materials (99 ) (12 )% 96 6 % (194 ) (204 )% Municipal construction 41 8 % (8 ) (6 )% 49 (612 )% Technological consulting and other services 497 59 % - - 497 - % Total $ 807 12 % $ 386 11 % $ 422 109 % 2021 2020 Variance Gross Profit Gross Profit% Gross Profit Gross Profit% Gross Profit Increase (Decrease) Gross Profit% Increase (Decrease) Machinery and equipment $ 298 17 % $ 2,026 31 % $ (1,728 ) (85 )% Construction materials 96 6 % (124 ) (7 )% 220 (177 )% Municipal construction (8 ) (6 )% 96 90 % (104 ) (108 )% Total $ 386 11 % $ 1,998 24 % $ (1,612 ) (81 )% 79 Machinery and Equipment Gross profit for sales of machinery and equipment products increased by approximately $70,000 to approximately $0.4 million for the year ended December 31, 2022 as compared to approximately $0.3 million for the year ended December 31, 2021.
Our gross profit and gross margin by segments are as follows: (All amounts, other than percentages, in thousands of U.S. dollars) 2023 2022 Variance Gross Profit Gross Profit% Gross Profit Gross Profit% Gross Profit Increase (Decrease) Gross Profit% Increase (Decrease) Machinery and equipment $ 394 17 % $ 368 9 % $ 26 7 % Construction materials (304 ) (41 )% (99 ) (12 )% (205 ) 207 % Municipal construction (9 ) - % 41 8 % (50 ) (122 )% Technological consulting and other services 129 75 % 497 59 (367 ) (74 )% Total $ 210 6 % $ 807 12 % $ (597 ) (74 )% 2022 2021 Variance Gross Profit Gross Profit% Gross Profit Gross Profit% Gross Profit Increase (Decrease) Gross Profit% Increase (Decrease) Machinery and equipment $ 368 9 % $ 298 17 % $ 70 23 % Construction materials (99 ) (12 )% 96 6 % (194 ) (204 )% Municipal construction 41 8 % (8 ) (6 )% 49 (612 )% Technological consulting and other services 497 59 % - - 497 - % Total $ 807 12 % $ 386 11 % $ 422 109 % 77 Machinery and Equipment Gross profit for sales of machinery and equipment products increased by approximately $26,000 to approximately $0.4 million for the year ended December 31, 2023 as compared to approximately $0.4 million for the year ended December 31, 2022.
Net cash used in operating activities was approximately $2.8 million in the year ended December 31, 2021.
Net cash used in operating activities was approximately $10.0 million in the year ended December 31, 2022.
Net cash provided by operating activities in the year ended December 31, 2020 mainly consisted of net loss of approximately $5.3 million, adjustments of non-cash items of approximately $3.0 million, a decrease of approximately $3.9 million in accounts receivable, an increase of approximately $0.4 million in advance from customers, an increase of approximately $1.1 million in accrued expenses and other liabilities, an increase of approximately $0.7 million in tax payable, offset by an increase of approximately $1.2 million in advance to suppliers, a decrease of approximately $1.8 million in accounts payable and, and an increase of approximately $0.7 million in prepayments and other assets.
Net cash used in operating activities in the year ended December 31, 2023 mainly consisted of net loss from continuing operation of approximately $16.1 million, adjustments of non-cash items of approximately $6.1 million, an increase of approximately $2.6 million in advance to suppliers, and increase of approximately $0.4 million in accounts payable, and increase of approximately $0.6 million in accrued and other liabilities, partially offset by a decrease of approximately $0.6 million in accounts receivable, and a decrease of approximately $0.4 million in advance from customers.
In addition, the Company had outstanding accounts receivable of approximately $2.2 million (including accounts receivable from third-party customers of $2.1 million and accounts receivable from related party customers of approximately $0.1 million), of which approximately $0.3 million, or 7.7%, had been subsequently collected between January and April 2022, and became available for use as working capital.
In addition, the Company had outstanding accounts receivable of approximately $1.2 million (including accounts receivable from third-party customers of $1.1 million and accounts receivable from related party customers of approximately $0.1 million), of which approximately $0.7 million, or 22%, were collected between January and April 2023, and became available for use as working capital. 81 As of December 31, 2023, the Company had outstanding bank loans of approximately $5.4 million from a PRC bank.
Technological Consulting and Other Services Gross profit for technological consulting and other services was approximately $0.5 million for the year ended December 31, 2022. The gross profit margin for this segment was approximately 59% for the year ended December 31, 2022. There was no technological consulting and other services offered during the years ended December 31, 2021 and 2020.
Technological Consulting and Other Services Gross profit for technological consulting and other services was approximately $0.1 million, $0.5 million and nil for the year ended December 31, 2023, 2022 and 2021, respectively. The gross profit margin for this segment was approximately 75%, 59% and nil for the year ended December 31, 2023, 2022 and 2021, respectively.
Selling Expenses For the year ended December 31, 2022, our selling expenses were approximately $3.8 million, representing a 357% increase from approximately $0.8 million in the year ended December 31, 2021. As a percentage of sales, our selling expenses were 58% and 23% for the years ended December 31, 2022 and 2021, respectively.
Selling Expenses For the year ended December 31, 2023, our selling expenses were approximately $1.2 million, representing a 68% decrease from approximately $3.8 million in the year ended December 31, 2022. As a percentage of sales, our selling expenses were 37% and 58% for the year ended December 31, 2023 and 2022, respectively.
Our total cost of revenues decreased by approximately $3.1 million or 49% to approximately $3.2 million for the year ended December 31, 2021 from approximately $6.3 million for the year ended December 31, 2020.
Cost of Revenues Our total cost of revenues decreased by approximately $2.6 million, or 47%, to approximately $3.0 million for the year ended December 31, 2023 from approximately $5.7 million for the year ended December 31, 2022.
As a percentage of revenues, the cost of revenues increased to 89% in the year ended December 31, 2021 from 76% in the year ended December 31, 2020 due to increase in purchase price of raw materials and labor costs. 77 Cost of Revenues by Business Segment (All amounts, other than percentages, in thousands of U.S. dollars) For the Year Ended December 31, Variance 2022 2021 Amount Percentage Amount % of Costs Amount % of Costs Increase (Decrease) Increase (Decrease) Machinery and Equipment $ 3,931 69 % $ 1,501 47 % $ 2,430 162 % Construction materials 905 16 % 1,563 49 % (658 ) (42 )% Municipal construction 486 9 % 150 4 % 336 224 % Other services 346 6 % - - % 346 - % Total $ 5,668 100 % $ 3,214 100 % $ 2,454 76 % For the Year Ended December 31, Variance 2021 2020 Amount Percentage Amount % of Costs Amount % of Costs Increase (Decrease) Increase (Decrease) Machinery and Equipment $ 1,501 47 % $ 4,430 70 % $ (2,929 ) (66 )% Construction materials 1,563 49 % 1,901 30 % (338 ) (18 )% Municipal construction 150 4 % 11 - % 139 1,264 % Total $ 3,214 100 % $ 6,342 100 % $ (3,128 ) (49 )% Machinery and Equipment Cost of revenues for machinery and equipment sales increased by approximately $2.4 million, or 162%, from approximately $1.5 million for the year ended December 31, 2021 to approximately $3.9 million for the year ended December 31, 2022.
As a percentage of revenues, the cost of revenues decreased to 88% in the year ended December 31, 2022 from 89% in the year ended December 31, 2021. 75 Cost of Revenues by Business Segment (All amounts, other than percentages, in thousands of U.S. dollars) For the Year Ended December 31, Variance 2023 2022 Amount Percentage Amount % of Costs Amount % of Costs Increase (Decrease) Increase (Decrease) Machinery and Equipment $ 1,931 64 % $ 3,931 69 % $ (2,000 ) (51 )% Construction materials 1,044 35 % 905 16 % 139 15 % Municipal construction 9 - % 486 9 % (477 ) (98 )% Technological consulting and other services 42 1 % 346 6 % (304 ) (88 )% Total $ 3,026 100 % $ 5,668 100 % $ (2,642 ) (47 )% For the Year Ended December 31, Variance 2022 2021 Amount Percentage Amount % of Costs Amount % of Costs Increase (Decrease) Increase (Decrease) Machinery and Equipment $ 3,931 69 % $ 1,501 47 % $ 2,430 162 % Construction materials 905 16 % 1,563 49 % (658 ) (42 )% Municipal construction 486 9 % 150 4 % 336 224 % Other services 346 6 % - - % 346 - % Total $ 5,668 100 % $ 3,214 100 % $ 2,454 76 % Machinery and Equipment Cost of revenues for machinery and equipment sales decreased by approximately $2.0 million, or 51%, from approximately $3.9 million for the year ended December 31, 2022 to approximately $1.9 million for the year ended December 31, 2023.
The COVID-19 pandemic has had a significant impact on the construction sector, which is sensitive to economic cycles. The nature of the impacts and extent of the ramifications are in large part dependent upon the location of the underlying projects.
COVID-19 had a significant impact on the construction sector, which is sensitive to economic cycles. The nature of the impacts and extent of the ramifications are in large part dependent upon the location of the underlying projects. Direct impacts ranged from a slowdown in supply of available materials and labor to, in some instances, deferral and suspension of entire projects.
At the present time, however, the Company does not have commitments of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on favorable terms or at all.
In order to fully implement its business plan and sustain operations, the Company may also seek equity financing from outside investors. At the present time, however, the Company does not have commitments of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on favorable terms or at all.
Technological Consulting and Other services Cost of revenues for technological consulting and other services amounted to approximately $0.3 million for the year ended December 31, 2022. There was no cost of technological consulting and other services for the years ended December 31, 2021 and 2020.
Technological Consulting and Other services Cost of revenues for technological consulting and other services amounted to approximately $42,000 for the year ended December 31, 2023. Cost of revenues for technological consulting and other services for the year ended December 31, 2022 and 2021 are $0.3 million and nil, respectively.
Gross Profit Our gross profit increased by approximately $0.4 million, or 109%, to approximately $0.8 million for the year ended December 31, 2022 from approximately $0.4 million for the year ended December 31, 2021.
Gross Profit Our gross profit decreased by approximately $0.6 million, or 74%, to approximately $0.2 million for the year ended December 31, 2023 from approximately $0.8 million for the year ended December 31, 2022.
Presently, our principal sources of liquidity are generated from our operations, proceeds from our shareholders’ contributions, and loans and notes from commercial banks. Our working capital requirements are influenced by the level of our operations, the numerical volume and dollar value of our sales contracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections.
Our working capital requirements are influenced by the level of our operations, the numerical volume and dollar value of our sales contracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections.
Gross profit for machinery and equipment products decreased by approximately $1.7 million to approximately $0.3 million for the year ended December 31, 2021 as compared to $2.0 million for the year ended December 31, 2020. Gross profit margin for this segment was 17% and 31%, respectively, for the years ended December 31, 2021 and 2020.
Gross profit for sales of machinery and equipment products increased by approximately $70,000 to approximately $0.4 million for the year ended December 31, 2022 as compared to approximately $0.3 million for the year ended December 31, 2021. Gross profit margin for this segment was 9% and 17%, respectively, for the year ended December 31, 2022 and 2021.
(All amounts, other than percentages, in thousands of U.S. dollars) 2022 2021 Statements of Income Data: Amount As % of Sales Amount As % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Revenues- third party customers $ 6,169 95 % $ 3,318 92 % $ 2,851 86 % Revenue- related party customers 305 5 % 282 8 % 23 8 % Total revenues 6,474 100 % 3,600 100 % 2,874 80 % Cost of revenues- third party customers 5,195 80 % 3,039 84 % 2,156 71 % Cost of revenues – related parties 472 7 % 175 5 % 297 170 % Total cost of revenues 5,667 88 % 3,214 89 % 2,453 76 % Gross profit 807 12 % 386 11 % 421 109 % Operating expenses: Selling expenses 3,775 58 % 826 23 % 2,949 357 % General and administrative expenses 8,593 133 % 4,619 128 % 3,974 86 % Bad debt expenses 1,711 26 % 2,250 63 % (539 ) (24 )% Impairment of long-lived assets - - % 4,344 121 % (4,344 ) (100 )% Impairment of goodwill 1,019 16 % - - 1,091 - Research and development expense 961 15 % 347 10 % 614 177 % Total operating expenses 16,059 248 % 12,387 344 % 3,672 30 % Loss from operations (15,252 ) (236 )% (12,001 ) (333 )% (3,251 ) 27 % Other income (expenses) Interest expense, net (322 ) (5 )% (103 ) (3 )% (219 ) 211 % Interest income 3 - % 2 - % 1 70 % Other income (expense), net 178 3 % (27 ) (1 )% 205 (759 )% change in fair value in convertible debt (467 ) (7.2 )% (1,909 ) 53 % 1,441 (76 )% Loss from disposal of REIT Changjiang - - % (6,293 ) (175 )% 6,293 (100 )% Gain from dissolution of subsidiaries 508 8 % - - 508 - % Share of losses in equity method investments (46 ) (1 )% (143 ) (4 )% 97 (68 )% Total other expenses, net (146 ) (2 )% (8,473 ) (235 )% 8,327 (98 )% Loss before income taxes (15,398 ) (238 )% (20,474 ) (569 )% 5,076 (25 )% Income taxes provision (benefit) (18 ) - % 3 - % (21 ) (606 )% Net loss from continuing operations $ (15,380 ) (238 )% $ (20,478 ) (569 )% $ 5,098 (25 )% Net loss from discontinued operations, net of taxes - - (1,596 ) (44 )% 1,596 (100 )% Net loss $ (15,380 ) (238 )% $ (22,074 ) (613 )% $ 6,694 (30 )% 74 2021 2020 Statements of Income Data: Amount As % of Sales Amount As % of Sales Amount Increase (Decrease) Percentage Increase (Decrease) Revenues- third party customers $ 3,318 92 % $ 8,111 97 % $ (4,793 ) (59 )% Revenue- related party customers 282 8 % 228 3 % 54 24 % Total revenues 3,600 100 % 8,339 100 % (4,739 ) (57 )% Cost of revenues- third party customers 3,039 84 % 6,194 74 % (3,154 ) (51 )% Cost of revenues – related parties 175 5 % 148 2 % 27 18 % Total cost of revenues 3,214 89 % 6,342 76 % (3,127 ) (49 )% Gross profit 386 11 % 1,998 24 % (1,612 ) (81 )% Operating expenses: Selling expenses 826 23 % 1,086 13 % (259 ) (24 )% General and administrative expenses 4,619 128 % 3,971 48 % 647 16 % Bad debt expenses 2,250 63 % 910 11 % 1,340 147 % Impairment of long-lived assets 4,344 121 % 2,267 27 % 2,077 92 % Research and development expense 347 10 % 335 4 % 12 4 % Total operating expenses 12,387 344 % 8,569 103 % 3,818 45 % Loss from operations (12,001 ) (333 )% (6,572 ) (79 )% (5,429 ) 83 % Other income (expenses) Interest expense, net (103 ) (3 )% (858 ) (10 )% 754 (88 )% Interest income 2 - % 1 - % 1 100 % Other income (expense), net (27 ) (1 )% 480 6 % (507 ) (106 )% change in fair value in convertible debt (1,909 ) (53 )% - - % (1,909 ) - % Loss from disposal of REIT Changjiang (6,293 ) (175 )% - - % (6,293 ) - % Gain from disposal of Gu’an REIT - - 2,231 27 % (2,231 ) (100 )% Share of losses in equity method investments (143 ) (4 )% - - % (143 ) - % Total other Income (expenses), net (8,473 ) (235 )% 1,854 22 % (10,327 ) (557 )% Loss before income taxes (20,474 ) (569 )% (4,718 ) (57 )% (15,756 ) 334 % Provision for income taxes 3 - % 570 7 % (567 ) (99 )% Net loss from continuing operations $ (20,478 ) (569 )% $ (5,288 ) (63 )% $ (15,190 ) 287 % Net loss from discontinued operations (1,596 ) (44 )% (7,613 ) (91 )% 6,016 (79 )% Net loss $ (22,074 ) (613 )% $ (12,901 ) (155 )% $ (9,173 ) 71 % (All amounts, other than percentages, in thousands of U.S. dollars) 75 Revenues Our total revenues from continuing operations increased by approximately $2.9 million, or 80%, to approximately $6.5 million for the year ended December 31, 2022 from approximately $3.6 million for the year ended December 31, 2021.
(All amounts, other than percentages, in thousands of U.S. dollars) 2023 2022 Amount Percentage Amount As % of Sales Amount As % of Sales Increase (Decrease) Increase (Decrease) Revenues- third party customers $ 3,192 99 % $ 6,169 95 % $ (2,977 ) (48 )% Revenue- related party customers 44 1 % 305 5 % (261 ) (86 )% Total revenues 3,236 100 % 6,474 100 % (3,238 ) (50 )% Cost of revenues- third party customers 2,982 92 % 5,195 80 % (2,213 ) (43 )% Cost of revenues – related parties 44 1 % 472 7 % (428 ) (91 )% Total cost of revenues 3,026 94 % 5,667 88 % (2,641 ) (47 )% Gross profit 210 6 % 807 12 % (597 ) (74 )% Operating expenses: Selling expenses 1,194 37 % 3,775 58 % (2,581 ) (68 )% General and administrative expenses 9,406 291 % 8,593 133 % 813 9 % (Recovery of) provision for credit losses (611 ) (19 )% 1,711 26 % (2,322 ) (136 )% Impairment of long-lived assets 399 12 % - - % 399 - % Impairment of goodwill - - % 1,019 16 (1,019 ) (100 )% Research and development expense 1,166 36 % 961 15 % 205 21 % Total operating expenses 11,554 357 % 16,059 248 % (4,505 ) (28 )% Loss from operations (11,344 ) (351 )% (15,252 ) (236 )% 3,908 (26 )% Other income (expenses) Interest expense, net (397 ) (12 )% (319 ) (5 )% (78 ) 24 % Other income (expense), net (4,336 ) (134 )% 178 3 % (4,514 ) (2,536 )% change in fair value in convertible debt 48 1 % (467 ) (7.2 )% 515 (110 )% Gain from dissolution of subsidiaries 38 1 % 508 8 (470 ) (93 )% Share of losses in equity method investments (95 ) (3 )% (46 ) (1 )% (49 ) 107 % Total other expenses, net (4,742 ) (147 )% (146 ) (2 )% (4,596 ) 3,148 % Loss before income taxes (16,086 ) (497 )% (15,398 ) (238 )% (688 ) 4 % Income taxes provision (benefit) (17 ) (1 )% (18 ) - % 1 (6 )% Net loss from continuing operations $ (16,069 ) (497 )% $ (15,380 ) (238 )% $ (689 ) 4 % Net loss $ (16,069 ) (497 )% $ (15,380 ) (238 )% $ (689 ) 4 % 72 (All amounts, other than percentages, in thousands of U.S. dollars) 2022 2021 Amount Percentage Statements of Income Data: Amount As % of Sales Amount As % of Sales Increase (Decrease) Increase (Decrease) Revenues- third party customers $ 6,169 95 % $ 3,318 92 % $ 2,851 86 % Revenue- related party customers 305 5 % 282 8 % 23 8 % Total revenues 6,474 100 % 3,600 100 % 2,874 80 % Cost of revenues- third party customers 5,195 80 % 3,039 84 % 2,156 71 % Cost of revenues – related parties 472 7 % 175 5 % 297 170 % Total cost of revenues 5,667 88 % 3,214 89 % 2,453 76 % Gross profit 807 12 % 386 11 % 421 109 % Operating expenses: Selling expenses 3,775 58 % 826 23 % 2,949 357 % General and administrative expenses 8,593 133 % 4,619 128 % 3,974 86 % (Recovery of) provision for credit losses 1,711 26 % 2,250 63 % (539 ) (24 )% Impairment of long-lived assets - - % 4,344 121 % (4,344 ) (100 )% Impairment of goodwill 1,019 16 % - - 1,091 - Research and development expense 961 15 % 347 10 % 614 177 % Total operating expenses 16,059 248 % 12,387 344 % 3,672 30 % Loss from operations (15,252 ) (236 )% (12,001 ) (333 )% (3,251 ) 27 % Other income (expenses) Interest expense, net (319 )) (5 )% (101 ) (3 )% (218 ) 216 % Other income (expense), net 178 3 % (27 ) (1 )% 205 (759 )% change in fair value in convertible debt (467 ) (7.2 )% (1,909 ) 53 % 1,441 (76 )% Loss from disposal of REIT Changjiang - - % (6,293 ) (175 )% 6,293 (100 )% Gain from dissolution of subsidiaries 508 8 % - - 508 - % Share of losses in equity method investments (46 ) (1 )% (143 ) (4 )% 97 (68 )% Total other expenses, net (146 ) (2 )% (8,473 ) (235 )% 8,327 (98 )% Loss before income taxes (15,398 ) (238 )% (20,474 ) (569 )% 5,076 (25 )% Income taxes provision (benefit) (18 ) - % 3 - % (21 ) (606 )% Net loss from continuing operations $ (15,380 ) (238 )% $ (20,478 ) (569 )% $ 5,098 (25 )% Net loss from discontinued operations, net of taxes - - (1,596 ) (44 )% 1,596 (100 )% Net loss $ (15,380 ) (238 )% $ (22,074 ) (613 )% $ 6,694 (30 )% Revenues Our total revenues from continuing operations decreased by approximately $3.2 million, or 50%, to approximately $3.2 million for the year ended December 31, 2023 from approximately $6.5 million for the year ended December 31, 2022.
Our loss before income taxes was approximately $20.5 million for the year ended December 31, 2021, an increase of approximately $15.8 million as compared to loss before income taxes of approximately $4.7 million for the year ended December 31, 2020.
Loss before Income Taxes Our loss before income taxes was approximately $16.1 million for the year ended December 31, 2023, a increase of approximately $0.7 million as compared to loss before income taxes of approximately $15.4 million for the year ended December 31, 2022.
Cost of revenues for machinery and equipment sales decreased by approximately $2.9 million, or 66%, from approximately $4.4 million for the year ended December 31, 2020 to approximately $1.5 million for the year ended December 31, 2021. The decrease was primarily due to the decrease in production volume .
Cost of revenues for machinery and equipment sales increased by approximately $2.4 million, or 162%, from approximately $1.5 million for the year ended December 31, 2021 to approximately $3.9 million for the year ended December 31, 2022.
Capital Expenditures We had capital expenditures of approximately $1.5 million, $2.6 million, and $0.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, for purchases of equipment and intangible assets in connection with our business activities.
The restricted amounts as determined pursuant to PRC laws totaled $1,072,895 and $1,066,554 as of December 31, 2023 and 2022, respectively. 83 Capital Expenditures We had capital expenditures of approximately $0.2 million, $1.5 million, and $2.6 million for the year ended December 31, 2023, 2022 and 2021, respectively, for purchases of equipment and intangible assets in connection with our business activities.
The Company recognized a gain from disposal of Gu’an REIT of approximately $2.2 million in the year ended December 31, 2020.
The Company recognized a loss from disposal of REIT Changjiang of approximately $6.3 million in the year ended December 31, 2021.
As a result, the Company recorded an additional impairment of approximately $nil, $4.3 million and $2.3 million on its fixed assets for the year ended December 31, 2022, 2021 and 2020, respectively. 81 Impairment of Goodwill For the year ended December 31, 2022, due to the slow development of REIT Mingde and its subsidiaries, the Company performed the two-step test for the REIT Mingde and its subsidiaries.
As a result, the Company recorded an additional impairment of approximately $0.4 million, nil and $4.3 million on its fixed assets for the year ended December 31, 2023, 2022 and 2021, respectively.
Based on the reasons above, there is a substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
If the Company cannot renew existing loans or borrow additional loans from banks, the Company’s working capital may be further negatively impacted. Based on the reasons above, there is a substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the issuance of the consolidated financial statements.
The impact of the COVID-19 pandemic on the Company’s future financial results will depend on various factors, such as the length and severity of the crisis, potential resurgences, future government responses and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among others, all of which remain highly uncertain and unpredictable.
Further, the extent of the impact of COVID-19 on the Company’s future financial results will be dependent on future developments such as the length and severity of COVID-19, the potential resurgence of COVID-19, future government actions in response to COVID-19 and the overall impact of COVID-19 on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.
Net cash provided by discontinued financing activities was approximately $4.7 million. Net cash used in financing activities was approximately $1.9 million for the year ended December 31, 2020, including proceeds from bank loans of approximately $11.0 million, offset by repayment of bank loans of approximately $13.2 million and net repayment to related parties of $38,835.
Net cash provided by financing activities was approximately $4.0 million for the year ended December 31, 2021, including proceeds from bank loans of approximately $2.3 million and proceeds of approximately $3.7 million from issuing convertible loans, proceeds from third party loans of approximately $0.8 million, offset by repayment of bank loans of approximately $7.2 million and net loan payment to related parties of approximately $0.3 million.
The increase was mainly due to more marketing activities and shipping and handling fees associated with increased sales in the year ended December 31, 2022. 80 For fiscal 2021, our selling expenses were approximately $0.8 million, representing a 24% decrease from approximately $1.1 million in the year ended December 31, 2020.
The increase was mainly due to more marketing activities and shipping and handling fees associated with increased sales in the year ended December 31, 2022. 78 General and Administrative Expenses For the year ended December 31, 2023, our general and administrative expenses were approximately $9.4 million, representing an increase of approximately $0.8 million compared to approximately $8.6 million in the year ended December 31, 2022.
Impairment of Long-lived Assets The Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Allowance for credit losses amounted to $2,146,679 and $1,771,761 as of December 31, 2023 and 2022, respectively. 84 Impairment of Long-lived Assets The Company reviews long-lived assets, including definitive-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Bad Debt Expenses For the year ended December 31, 2022, our bad debt expenses were approximately $1.7 million, representing a decrease of approximately $0.5 million as compared to approximately $2.3 million in the year ended December 31, 2021.
In fiscal 2023, our customers financial situation improved after the lifting of COVID-19 control measures . For the year ended December 31, 2022, our provision for credit losses were approximately $1.7 million, representing a decrease of approximately $0.5 million as compared to approximately $2.3 million in the year ended December 31, 2021.
The Company uses the accelerated method for all awards granted with graded vesting. The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting.
The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting. The Company, with the assistance of an independent third-party valuation firm, determined the fair value of the stock options granted to employees.
Municipal Construction Cost of revenues for sales of municipal construction projects increased by approximately $0.3 million, or 224%, from approximately $0.2 million for the year ended December 31, 2021 to approximately $0.5 million for the year ended December 31, 2022. 78 Cost of revenues for sales of municipal construction projects in our continuing operations amounted to approximately $150,000 and approximately $11,000 for the years ended December 31, 2021 and 2020, respectively.
Municipal Construction Cost of revenues for sales of municipal construction projects decreased by approximately $0.5 million, or 98%, from approximately $0.5 million for the year ended December 31, 2022 to approximately $9,000 for the year ended December 31, 2023, because we did not engage in projection construction in 2023. 76 Cost of revenues for sales of municipal construction projects increased by approximately $0.3 million, or 224%, from approximately $0.2 million for the year ended December 31, 2021 to approximately $0.5 million for the year ended December 31, 2022.
Gross profit margin for our continuing operations was 11% for fiscal 2021, as compared with 24% for fiscal 2020.
Gross profit margin for our continuing operations was 12% for the year ended December 31, 2022, as compared with 11% for the year ended December 31, 2021.
The increase in our total cost of revenue was in line with the increase in revenue. As a percentage of revenues, the cost of revenues decreased to 88% in the year ended December 31, 2022 from 89% in the year ended December 31, 2021.
The decrease in our total cost of revenue was generally in line with the decrease in revenue. As a percentage of revenues, cost of revenues increased to 94% in the year ended December 31, 2023 from 88% in the year ended December 31, 2022, because some fixed costs did not decrease with revenue and labor cost increased in 2023.
In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award.
In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award. All the Company’s share-based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values.
Cost of revenues from third party customers decreased by approximately $3.2 million or 51% from approximately $6.2 million in the year ended December 31, 2020 to approximately $3.0 million in the year ended December 31, 2021, while cost of revenues from related party customers increased by $27,019 or 18% from $148,034 in the year ended December 31, 2020 to $175,053 in the year ended December 31, 2021.
Cost of revenues from third party customers decreased by approximately $2.2 million, or 43%, from approximately $5.2 million in the year ended December 31, 2022 to approximately $3.0 million in the year ended December 31, 2023, while cost of revenues from related party customers decreased by approximately $0.4 million, or 91%, from approximately $0.5 million in the year ended December 31, 2022 to approximately $43,992 in the year ended December 31, 2023.
We incurred significant bad debt expenses on uncollectible accounts receivable and advance payments for fiscal 2022 and 2021, however, in fiscal 2022, the impact of COVID-19 on our customers alleviated. As a percentage of revenues, bad debt expenses were 26% and 63% of our total revenues for the years ended December 31, 2022 and 2021, respectively.
We incurred significant provision for credit losses on uncollectible accounts receivable and advance payments for fiscal 2022 and 2021, however, in fiscal 2022, the impact of COVID-19 on our customers alleviated.
Cost of revenues for sales of our environmental-friendly construction materials decreased by approximately $0.3 million, or 18%, from approximately $1.9 million for the year ended December 31, 2020 to approximately $1.6 million for the year ended December 31, 2021. The decrease was due to decrease in sales volume for construction materials sold in downturn of the national construction market.
The increase was due to the increase in costs of labor in fiscal 2023, as well as increased fixed cost allocation. Cost of revenues for sales of environmental-friendly construction materials decreased by approximately $0.7 million, or 42%, from approximately $1.6 million for the year ended December 31, 2021 to approximately $0.9 million for the year ended December 31, 2022.
Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations. Accounts Receivable, Net Accounts receivable is recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts.
Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations.
The increase in R&D expenses in the year ended December 31, 2022 was due to more R&D projects conducted by Beijing REIT.
Research and Development Expenses Our research and development (“R&D”) expenses were approximately $1.2 million, $1.0 million and $0.3 million for the year ended December 31, 2023, 2022 and 2021, respectively. The increase in R&D expenses in the year ended December 31, 2023 was due to more R&D projects conducted by Beijing REIT.
The increase in interest expenses for fiscal 2022 as compared to fiscal 2021 was because of a higher loan balance in 2022 as compared to that in 2021.
Interest Expense, Net Our interest expenses, net were approximately $0.4 million, $0.3 million and $0.1 million for the year ended December 31, 2023, 2022 and 2021, respectively. The increase in interest expenses for fiscal 2023 as compared to fiscal 2022 was because of a higher loan balance in 2023 as compared to that in 2022.

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Item 6. [Reserved]

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

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Mr. Liu has also served as the Chief Executive Officer and Chairman of Beike Huizhi Software Technology Co., Ltd., a private company, since June 2018. From December 2012 to June 2018, he served as the Vice President of Great China of Dassault Systèmes S.A., a software solutions provider. Mr. Liu was with PTC, Inc.
Liu has also served as the Chief Executive Officer and Chairman of Beike Huizhi Software Technology Co., Ltd., a private company, since June 2018. From December 2012 to June 2018, he served as the Vice President of Great China of Dassault Systèmes S.A., a software solutions provider. Mr. Liu was with PTC, Inc.
Types of Awards Awards under the 2022 Share Incentive Plan may be in the form of incentive stock options, non-statutory stock options or restricted stock awards. An option is the right to purchase shares of the Company’s Common Shares at a price and on a schedule set by the Compensation Committee.
Types of Awards Awards under the 2022 Share Incentive Plan may be in the form of incentive stock options, non-statutory stock options or restricted stock awards. An option is the right to purchase the Company’s Common Shares at a price and on a schedule set by the Compensation Committee.
The functions and powers of our board of directors include, among others: ● having all the powers necessary for managing and for directing and supervising, the business and affairs for the Company ● appointing officers and determining the term of office of the officers; 94 ● fixing the emoluments of officers; ● exercising all powers of the Company to incur indebtedness, liabilities or obligations and to secure indebtedness, liabilities or obligations whether of the Company or of any third party; ● designating committees of directors; ● executing checks, promissory notes, drafts, bills of exchange and other negotiable instruments on behalf of the Company; and ● determining that any sale, transfer, lease, exchange, or other disposition is in the usual or regular course of the business carried on by the Company and such determination is, in the absence of fraud, conclusive.
The functions and powers of our board of directors include, among others: ● having all the powers necessary for managing and for directing and supervising, the business and affairs for the Company ● appointing officers and determining the term of office of the officers; ● fixing the emoluments of officers; ● exercising all powers of the Company to incur indebtedness, liabilities or obligations and to secure indebtedness, liabilities or obligations whether of the Company or of any third party; ● designating committees of directors; ● executing checks, promissory notes, drafts, bills of exchange and other negotiable instruments on behalf of the Company; and ● determining that any sale, transfer, lease, exchange, or other disposition is in the usual or regular course of the business carried on by the Company and such determination is, in the absence of fraud, conclusive.
Hu worked in Gu’an REIT Machinery Manufacturing Co., Ltd., a former wholly owned subsidiary of the Company, as a procurement specialist, in charge of purchasing accessories needed for production and processing. Ms. Hu received her Bachelor’s degree in Accounting from Xi’an Siyuan University. 90 Tonglong Liu. Mr. Liu has served as an independent director of the Company since November 2022.
Hu worked in Gu’an REIT Machinery Manufacturing Co., Ltd., a former wholly owned subsidiary of the Company, as a procurement specialist, in charge of purchasing accessories needed for production and processing. Ms. Hu received her bachelor’s degree in Accounting from Xi’an Siyuan University. Tonglong Liu. Mr. Liu has served as an independent director of the Company since November 2022. Mr.
Lidong Liu qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and Nasdaq Capital Market corporate governance requirements. Duties of Directors Under BVI law, our directors have a duty to act honestly, in good faith and with a view to our best interests.
Lidong Liu qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and Nasdaq Capital Market corporate governance requirements. 91 Duties of Directors Under BVI law, our directors have a duty to act honestly, in good faith and with a view to our best interests.
The benefits or amounts that may be received by or allocated to participants under the 2022 Share Incentive Plan will be determined at the discretion of the Compensation Committee and are not presently determinable. Termination and Amendment The Compensation Committee may terminate the 2022 Share Incentive Plan at any time.
The benefits or amounts that may be received by or allocated to participants under the 2022 Share Incentive Plan will be determined at the discretion of the Compensation Committee and are not presently determinable. 95 Termination and Amendment The Compensation Committee may terminate the 2022 Share Incentive Plan at any time.
See information provided in response to Item 6.A. above as to the current directors. Composition of Board Our board of directors currently consists of seven directors. The directors are divided into three classes, as nearly equal in number as the then total number of directors permits.
See information provided in response to Item 6.A. above as to the current directors. 90 Composition of Board Our board of directors currently consists of seven directors. The directors are divided into three classes, as nearly equal in number as the then total number of directors permits.
The Board may condition any amendment on the approval of the shareholders if such approval is necessary or deemed advisable with respect to the applicable listing or other requirements of a national securities exchange or other applicable laws, policies or regulations. 100
The Board may condition any amendment on the approval of the shareholders if such approval is necessary or deemed advisable with respect to the applicable listing or other requirements of a national securities exchange or other applicable laws, policies or regulations.
We believe we maintain a good working relationship with our employees, and we have not experienced any material labor disputes or any difficulty in recruiting staff for our operations. E. Share ownership.
We believe we maintain a good working relationship with our employees, and we have not experienced any material labor disputes or any difficulty in recruiting staff for our operations. 93 E. Share ownership.
Huang holds a Master’s Degree and Ph.D. in Geotechnical Engineering from University of Wisconsin. 91 Family Relationship There are no family relations among any of our officers or directors, except that Yue Hu is Zhizhong Hu’s daughter. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.
Huang holds a master’s degree and Ph.D. in Geotechnical Engineering from University of Wisconsin. 88 Family Relationship There are no family relations among any of our officers or directors, except that Yue Hu is Zhizhong Hu’s daughter. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.
She has worked in Beijing REIT Technology Development Co., Ltd., a wholly owned subsidiary of ReTo, as an assistant to the management since May 2019, and has assisted with preparation and filing of periodic reports of the Company to the Securities and Exchange Commission. From March 2015 to December 2016, Ms.
She has worked in Beijing REIT Technology Development Co., Ltd., a wholly owned subsidiary of ReTo, as an assistant to the management since May 2019, and has assisted with preparation and filing of periodic reports of the Company to the SEC. From March 2015 to December 2016, Ms.
Name (1) Age Position Hengfang Li (2) 60 Chief Executive Officer and Chairman of the Board Guangfeng Dai (2) 62 President, Chief Operating Officer and Director Zhizhong Hu (2) 60 Chief Technology Officer and Director Degang Hou 61 Chief Internal Control Officer Yue Hu 33 Chief Financial Officer Tonglong Liu (3) (5) (6) (7) 59 Director Baoqing Sun (3) (5) (6) (7) 60 Director Lidong Liu (4) (5) 51 Director Austin Huang (4) (6) (7) 65 Director (1) Each individual’s business address is c/o Beijing REIT Technology Development Co., Ltd., Building X-702, 60 Anli Road, Chaoyang District, Beijing China.
Name (1) Age Position Hengfang Li (2) 61 Chief Executive Officer and Chairman of the Board Guangfeng Dai (2) 63 President, Chief Operating Officer and Director Zhizhong Hu (2) 61 Chief Technology Officer and Director Degang Hou 62 Chief Internal Control Officer Yue Hu 34 Chief Financial Officer Tonglong Liu (3) (5) (6) (7) 60 Director Baoqing Sun (3) (5) (6) (7) 61 Director Lidong Liu (4) (5) 52 Director Austin Huang (4) (6) (7) 66 Director (1) Each individual’s business address is c/o Beijing REIT Technology Development Co., Ltd., Building X-702, 60 Anli Road, Chaoyang District, Beijing China.
Subject to the terms of the 2022 Share Incentive Plan, the Compensation Committee has the discretion to determine the terms of each award. Amount of Awards The maximum number of Common Shares as to which awards may be granted under the 2022 Share Incentive Plan is 5,000,000 shares.
Subject to the terms of the 2022 Share Incentive Plan, the Compensation Committee has the discretion to determine the terms of each award. Amount of Awards The maximum number of Common Shares as to which awards may be granted under the 2022 Share Incentive Plan is 187,260 shares.
Hu to serve as the Company’s Chief Financial Officer (the “Hu Employment Agreement”) for a term from August 15, 2022 to August 14, 2025. Pursuant to the terms of the Hu Employment Agreement, Ms.
Hu on August 15, 2022 providing for Ms. Hu to serve as the Company’s Chief Financial Officer for a term from August 15, 2022 to August 14, 2025. Pursuant to the terms of the Hu Employment Agreement, Ms.
Class A directors shall face re-election at our 2023 annual general meeting of shareholders and shall face reelection every three years thereafter. Class B directors faced re-election at our 2024 annual general meeting of shareholders and every three years thereafter.
Class A directors shall face re-election at our 2026 annual general meeting of shareholders and shall face reelection every three years thereafter. Class B directors faced re-election at our 2024 annual general meeting of shareholders and every three years thereafter. Class C directors shall face re-election at our 2025 annual general meeting of shareholders and every three years thereafter.
The following tables set forth certain information with respect to the beneficial ownership of our Common Shares as of April 28, 2023, for: ● each of our directors and named executive officers; and ● all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the SEC.
The following tables set forth certain information with respect to the beneficial ownership of our Common Shares as of May 14, 2024, for: ● each of our directors and named executive officers; and ● all of our directors and executive officers as a group. We have determined beneficial ownership in accordance with the rules of the SEC.
(2) Class C director, whose term will expire at the 2025 annual meeting of shareholders. 89 (3) Class B director, whose term will expire at the 2024 annual meeting of shareholders. (4) Class A director, whose term will expire at the 2023 annual meeting of shareholders. (5) Member of audit committee. (6) Member of compensation committee.
(2) Class C director, whose term will expire at the 2025 annual meeting of shareholders. (3) Class B director, whose term will expire at the 2024 annual meeting of shareholders. (4) Class A director, whose term will expire at the 2026 annual meeting of shareholders. (5) Member of audit committee. (6) Member of compensation committee. (7) Member of nominating committee.
Qualification A director is not required to hold shares as a qualification to office. Limitation on Liability and Other Indemnification Matters Under British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in good faith with a view to our best interests.
Limitation on Liability and Other Indemnification Matters Under British Virgin Islands law, each of our directors and officers, in performing his or her functions, is required to act honestly and in good faith with a view to our best interests.
Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power or the power to receive the economic benefit with respect to all Common Shares that they beneficially own, subject to applicable community property laws. 96 Applicable percentage ownership prior is based on 53,787,689 Common Shares outstanding as of the date of this annual report.
Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power or the power to receive the economic benefit with respect to all Common Shares that they beneficially own, subject to applicable community property laws.
Our board of directors may exercise all the powers of the Company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.
Subject to compliance with the BVI Act, our board of directors may exercise all the powers of the Company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party. 92 Qualification A director is not required to hold shares as a qualification to office.
Li holds a 40% ownership of REIT International and has the voting and investment power with respect to 40% of the 3,903,161 Common Shares held by REIT International; (ii) 10,000 Common Shares held through Soothie Holdings Limited, a British Virgin Islands company, controlled by Mr. Li; (iii) 225,000 Common Shares held by Mr.
Li holds a 40% ownership of REIT International and has the voting and investment power with respect to 40% of the 39,032 Common Shares held by REIT International; (ii) 100 Common Shares held through Soothie Holdings Limited, a British Virgin Islands company, controlled by Mr. Li; and (iii) 4,750 Common Shares held by Mr. Li directly.
These provisions will not limit the liability of directors under United States federal securities laws. 95 We may indemnify any of our directors or anyone serving at our request as a director of another entity against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings.
We may indemnify any of our directors or anyone serving at our request as a director of another entity against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings.
He graduated in Ship Internal Combustion Engine Direction from Dalian University of Technology in 1983. Yue Hu. Ms. Hu has served as Chief Financial Officer of ReTo since August 2022.
From 1999 through 2020 he was the deputy general manager for Beijing REIT. He graduated in Ship Internal Combustion Engine Direction from Dalian University of Technology in 1983. Yue Hu. Ms. Hu has served as Chief Financial Officer of ReTo since August 2022.
Hu will be entitled to an annual compensation of RMB180,000 (approximately $26,500) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with laws in the People’s Republic of China and the Company’s policy.
Hu is entitled to an annual compensation of RMB180,000 (approximately $26,500) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with laws in the People’s Republic of China and the Company’s policy. Her employment agreement may be terminated in accordance with the PRC Labor Contract Law and relevant local regulations in Beijing.
We participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance, as required by laws and regulations in China.
Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We participate in various employee social security plans that are organized by municipal and provincial governments, including housing, pension, medical insurance and unemployment insurance, as required by laws and regulations in China.
During the fiscal year ended December 31, 2022, 1,025,000 Common Shares were issued pursuant to the 2018 Share Incentive Plan, and 3,000,000 Common Shares were issued pursuant to the 2021 Share Incentive Plan. See Item 6.E for a description of our 2018 Share Incentive Plan, 2021 Share Incentive Plan and the 2022 Share Incentive Plan. C. Board Practices.
Equity Awards During the fiscal year ended December 31, 2023, an aggregate of 6,700 Common Shares were issued to our directors pursuant to the 2022 Share Incentive Plan. See Item 6.E for a description of our 2022 Share Incentive Plan. C. Board Practices.
Li served as the chief representative in China of the German Hess Group from 1995 until 1999. From 1988 through 1995, Mr. Li was an engineer, senior engineer and then branch director at China North Vehicle Engine Research Center. Mr. Li holds a Master degree in Engine Studies from Beijing Institute of Technology. Guangfeng Dai. Mr.
From 1988 through 1995, Mr. Li was an engineer, senior engineer and then branch director at China North Vehicle Engine Research Center. Mr. Li holds a master’s degree in Engine Studies from Beijing Institute of Technology. Guangfeng Dai. Mr. Dai became the President of ReTo in 2020. Previously Mr.
(1) Represents (i) approximately 1,561,264 Common Shares held through REIT International Development (Group) Co, a Hong Kong limited liability company (“REIT International”). Mr.
(6) 200,000 5.3 % * Less than 1%. (1) Represents (i) approximately 15,613 Common Shares held through REIT International Development (Group) Co, a Hong Kong limited liability company (“REIT International”). Mr.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o ReTo Eco-Solutions, Inc., Building X-702, 60 Anli Road, Beijing, People’s Republic of China 100101.
Applicable percentage ownership prior is based on 3,801,608 Common Shares outstanding as of May 14, 2024. Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o ReTo Eco-Solutions, Inc., Building X-702, 60 Anli Road, Beijing, People’s Republic of China 100101.
(7) Member of nominating committee. Hengfang Li. Mr. Li has served as the Chief Executive Officer and Chairman of ReTo since April 2016. Mr. Li founded Beijing REIT in 1999 and has served as Beijing REIT’s Chief Executive Officer and Chairman since 1999. Mr.
Hengfang Li. Mr. Li has served as the Chief Executive Officer and Chairman of ReTo since April 2016. Mr. Li founded Beijing REIT in 1999 and has served as Beijing REIT’s Chief Executive Officer and Chairman since 1999. Mr. Li served as the chief representative in China of the German Hess Group from 1995 until 1999.
A director must promptly disclose the interest to all other directors after becoming aware of the fact that he or she is interested in a transaction we have entered into or are to enter into.
A director must immediately disclose the interest to all other directors after becoming aware of the fact that they are interested in a transaction entered into or to be entered into by the Company.
Hu served as the general manager and executive director of Yichang Hayes Building Materials Co., Ltd. from 1997 through 2000. From 1996 through 1997, Mr. Hu served as the business representative for Hayes Mechanical Engineering Co., Ltd. of Germany. Mr. Hu received his Bachelor’s Degree in Mechanical Engineering from Nanjing University of Science and Technology. Degang Hou. Mr.
Hu has served as Beijing REIT’s Chief Technology Officer and Director since 2000. Mr. Hu served as the general manager and executive director of Yichang Hayes Building Materials Co., Ltd. from 1997 through 2000. From 1996 through 1997, Mr. Hu served as the business representative for Hayes Mechanical Engineering Co., Ltd. of Germany. Mr.
These board provisions could make it more difficult for third parties to gain control of our Company by making it difficult to replace members of the board of directors. There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting.
These board provisions could make it more difficult for third parties to gain control of our Company by making it difficult to replace members of the board of directors. Save as required under the BVI Act, there are no membership qualifications for directors.
Hou has served as the Chief Internal Control Officer of ReTo since February 2020. From 1983 through 1999, he was an engineer and senior engineer of North Vehicle Research Institute, State Weaponry Equipment Corporation. From 1999 through 2020 he was the deputy general manager for Beijing REIT.
Hu received his bachelor’s degree in Mechanical Engineering from Nanjing University of Science and Technology. Degang Hou. Mr. Hou has served as the Chief Internal Control Officer of ReTo since February 2020. From 1983 through 1999, he was an engineer and senior engineer of North Vehicle Research Institute, State Weaponry Equipment Corporation.
Dai under the 2022 Share Incentive Plan. (3) Represents (i) approximately 780,632 Common Shares held through REIT International. Mr. Hu holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 3,903,161 Common Shares held by REIT International; (ii) 125,000 Common Shares held by Mr.
(2) Represents (i) approximately 7,806 Common Shares held through REIT International. Mr. Dai holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 39,032 Common Shares held by REIT International and (ii) 3,960 Common Shares held by Mr. Dai directly. (3) Represents approximately 7,806 Common Shares held through REIT International.
Dai received his Master degree in Automobile Engineering from Beijing Institute of Technology. Zhizhong Hu. Mr. Hu has served as the Chief Technology Officer and Director of ReTo since November 2016. Mr. Hu has served as Beijing REIT’s Chief Technology Officer and Director since 2000. Mr.
Dai was a senior engineer at Yanxing Corporation of China. From 1992 through 1994, Mr. Dai was a senior engineer at China North Industries Group Corporation. Mr. Dai received his master’s degree in Automobile Engineering from Beijing Institute of Technology. 87 Zhizhong Hu. Mr. Hu has served as the Chief Technology Officer and Director of ReTo since November 2016. Mr.
Class C directors shall face re-election at our 2025 annual general meeting of shareholders and every three years thereafter. 93 If the number of directors changes, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible.
If the number of directors changes, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible.
Hou holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 3,903,161 Common Shares held by REIT International; (ii) 125,000 Common Shares held by Mr. Hou directly; and (iii) 200,000 Common Shares granted to Mr. Hou under the 2021 Share Incentive Plan; and (iv) 50,000 Common Shares granted to Mr.
Hou holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 39,032 Common Shares held by REIT International and (ii) 175 Common Shares held by Mr. Hou directly. (5) Mr.
We had a total of 115 and 139 full-time employees as of December 31, 2021 and 2020, respectively. We did not hire any part-time employees during the fiscal years ended December 31, 2022, 2021 and 2020. Our employees are not represented by a labor organization or covered by a collective bargaining agreement.
We had a total of 116 and 115 full-time employees as of December 31, 2022 and 2021, respectively. We did not hire any part-time employees during the fiscal years ended December 31, 2023, 2022 and 2021. All of our employees are located at our facilities in Beijing, Haikou, Xinyi and Honghe, China.
Beneficial Ownership Name of Beneficial Owner Common Shares Percentage Directors and Executive Officers Hengfang Li (1) 2,646,264 4.9 % Guangfeng Dai (2) 1,620,632 3.0 % Zhizhong Hu (3) 1,355,632 2.5 % Degang Hou (4) 1,155,632 2.1 % Yue Hu (5) 25,000 * Tonglong Liu - - Baoqing Sun - - Lidong Liu (5) 10,000 * Austin Huang (6) 40,000 * All directors and executive officers as a group (nine persons) 6,853,161 12.7 % Other 5% or greater beneficial owners REIT International Development (Group) Co., Limited 3,903,161 7.3 % * Less than 1%.
Beneficial Ownership Name of Beneficial Owner Common Shares Percentage Directors and Executive Officers Hengfang Li (1) 20,463 * Guangfeng Dai (2) 11,766 * Zhizhong Hu (3) 7,806 * Degang Hou (4) 9,556 * Yue Hu 140 * Tonglong Liu - - Baoqing Sun - - Lidong Liu - - Austin Huang 400 * All directors and executive officers as a group (nine persons) 50,131 1.3 % Other 5% or greater beneficial owners Merging Holding LTD (5) 350,000 9.2 % SevenBull, Inc.
The Board may condition any amendment on the approval of the shareholders if such approval is necessary or deemed advisable with respect to the applicable listing or other requirements of a national securities exchange or other applicable laws, policies or regulations. 2022 Share Incentive Plan On December 6, 2022, the Company’s shareholders approved the 2022 Share Incentive Plan, which initially allowed for issuance of up to 5,000,000 Common Shares to employees, non-employee directors, officers and consultants for services rendered to the Company, with an automatic share reserve increase by a number equal to the lesser of (i) 5% of the total number of Common Shares issued and outstanding on December 31 of the calendar year immediately preceding the date of such increase and (ii) a number of = Common Shares determined by the Compensation Committee. 99 The Company did not issue any Common Shares under the 2022 Share Incentive Plan as of December 31, 2022.
The number of holders of record and the shares they held is based exclusively upon the certified shareholder list provided by our transfer agent and does not address whether a share or shares may be held by the holder of record on behalf of more than one person or institution who may be deemed to be the beneficial owner of a share or shares in the Company. 2022 Share Incentive Plan On December 6, 2022, the Company’s shareholders approved the 2022 Share Incentive Plan, which initially allowed for issuance of up to 50,000 Common Shares to employees, non-employee directors, officers and consultants for services rendered to the Company, with an automatic share reserve increase by a number equal to the lesser of (i) 5% of the total number of Common Shares issued and outstanding on December 31 of the calendar year immediately preceding the date of such increase and (ii) a number of Common Shares determined by the Compensation Committee.
Dai became the President of ReTo in 2020. Previously Mr. Dai served as the Chief Operating Officer and of ReTo and has served as a Director since November 2016. Mr. Dai has served as Beijing REIT’s Chief Operating Officer and Director since 2000. Mr.
Dai served as the Chief Operating Officer and of ReTo and has served as a Director since November 2016. Mr. Dai has served as Beijing REIT’s Chief Operating Officer and Director since 2000. Mr. Dai served as the deputy representative in China for Hess Mechanical Engineering Co., Ltd. of Germany from 1997 until 2000. From 1995 through 1997, Mr.
Interested Transactions A director may vote, attend a board meeting or sign a document on our behalf with respect to any contract or transaction in which he or she is interested.
Interested Transactions A director may vote, attend a board meeting and be included for the purposes of a quorum, sign a document on behalf of the Company, or do any other thing in their capacity as a director with respect to any transaction in which that director is interested.
On March 8, 2023, the Company’s board of directors approved the issuance of an aggregate of 5,000,000 Common Shares to its employees, officers and directors for their services. As of April 28, 2023, there were 2,169,944 shares available for issuance under the 2022 Incentive Plan. The following is a summary of the principal terms of the 2022 Share Incentive Plan.
On March 8, 2023, the Company’s board of directors approved the issuance of an aggregate of 50,000 Common Shares to its employees, officers and directors for their services.
Non-employee directors are entitled to receive $10,000 per year for serving as directors and may receive stock grants pursuant to our share incentive plans. In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for each Board of Directors meeting attended, up to a maximum of $2,000 per meeting and $4,000 per year.
In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for each board of directors meeting attended, up to a maximum of $2,000 per meeting and $4,000 per year. Cash Compensation During the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB 0.28 million (approximately $40,000) in cash to our non-employee directors.
In 2022, we expensed an aggregate of approximately $479,235 as salaries to our senior officers named in this annual report. Other than salaries, fees and share incentives, we do not otherwise provide pension, retirement or similar benefits to our officers and directors. Employment Agreements Employment Agreement of Hengfang Li The Company entered into an employment agreement with Mr.
Equity Awards In the fiscal year ended December 31, 2023, an aggregate of 7,250 Common Shares were issued to our senior officers named in this annual report, pursuant to the 2022 Share Incentive Plan. Other than salaries, fees and share incentives, we do not otherwise provide pension, retirement or similar benefits to our officers and directors.
As of December 31, 2022, we had a total of 116 full-time employees. Among these employees, we had 35 employees in management, 22 employees in sales and marketing, 41 employees in research and development, 14 employees in manufacturing and installation and four employees in administration. All of these employees were located at our facilities in Beijing, Hainan and Xinyi, China.
As of December 31, 2023, we had a total of 103 full-time employees. Among these employees, we had 30 employees in management, 19 employees in sales and marketing, 38 employees in research and development, 12 employees in manufacturing and installation and 4 employees in administration/finance.
Li is entitled to an annual compensation of RMB 800,000 (approximately $117,000) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with PRC law and the Company’s policies. Employment Agreement of Guangfeng Dai The Company entered into an employment agreement with Mr.
Li is entitled to an annual compensation of RMB 800,000 (approximately $117,000) and other discretionary equity bonus or benefits as determined by the Company from time to time. Employment Agreement with Guangfeng Dai The Company entered into an employment agreement with Mr. Dai on May 11, 2024 (the “Dai Employment Agreement”) pursuant to which Mr.
Hu is entitled to annual compensation of RMB 700,000 (approximately $102,000) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with PRC law and the Company’s policy. Employment Agreement of Degang Hou The Company entered into an employment agreement with Mr.
Hu is entitled to annual compensation of RMB 700,000 (approximately $102,000), and other discretionary equity bonus or benefits as determined by the Company from time to time. Employment Agreement with Degang Hou The Company entered into an employment agreement with Mr. Hou on May 11, 2024 (the “Hou Employment Agreement”), pursuant to which Mr.
Dai is entitled to annual compensation of RMB 750,000 (approximately $109,000) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with PRC law and the Company’s policy. 92 Employment Agreement of Zhizhong Hu The Company entered into an employment agreement with Mr.
Dai is entitled to annual compensation of RMB 750,000 (approximately $109,000), and other discretionary equity bonus or benefits as determined by the Company from time to time. 89 Employment Agreement with Zhizhong Hu The Company entered into an employment agreement with Mr. Hu on May 11, 2024 (the “Hu Employment Agreement”), pursuant to which Mr.
The Hu Employment Agreement may be terminated in accordance with the PRC Labor Contract Law and relevant local regulations in Beijing. Director Compensation Officers are elected by and serve at the discretion of the Board of Directors. Employee directors do not receive any compensation for their services on the Board of Directors.
Director Compensation Officers are elected by and serve at the discretion of the board of directors. Employee directors do not receive any compensation for their services on the board of directors. Non-employee directors are entitled to receive $10,000 per year for serving as directors and may receive stock grants pursuant to our share incentive plans.
Dai holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 3,903,161 Common Shares held by REIT International; (ii) 150,000 Common Shares held by Mr. Dai directly; (iii) 440,000 Common Shares granted to Mr. Dai under the 2021 Share Incentive Plan; and (iv) 250,000 shares granted to Mr.
Mr. Hu holds a 20% ownership of REIT International and has the voting and investment power with respect to 20% of the 39,032 Common Shares held by REIT International. (4) Represents (i) approximately 7,806 Common Shares held through REIT International. Mr.
A director may be counted for a quorum upon a motion in respect of any contract or arrangement which he shall make with our Company, or in which he is so interested and may vote on such motion. Remuneration and Borrowing The directors may receive such remuneration as our board of directors may determine from time to time.
Remuneration and Borrowing The directors may receive such remuneration as our board of directors may determine from time to time.
Hou on December 31, 2021 (the “Hou Employment Agreement”), pursuant to which Mr. Hou serves as the Chief Internal Control Officer of the Company and Beijing REIT for a term from January 1, 2022 and shall terminate on December 31, 2023. Pursuant to the Hou Employment Agreement, Mr.
Hou serves as the Chief Internal Control Officer of the Company for a term from May 11, 2024 to December 31, 2025, subject to successive, automatic one-year extensions unless either party gives notice of non-extension to the other party at least 30 days prior to the expiration of the applicable term. Pursuant to the Hou Employment Agreement, Mr.
Removed
Dai served as the deputy representative in China for Hess Mechanical Engineering Co., Ltd. of Germany from 1997 until 2000. From 1995 through 1997, Mr. Dai was a senior engineer at Yanxing Corporation of China. From 1992 through 1994, Mr. Dai was a senior engineer at China North Industries Group Corporation. Mr.
Added
Cash Compensation In the fiscal year ended December 31, 2023, we expensed an aggregate of approximately $442,034 as salaries to our senior officers named in this annual report.
Removed
Li on December 31, 2021 (the “Li Employment Agreement”), pursuant to which Mr. Li serves as Chairman and Chief Executive Officer of the Company and Beijing REIT for a term from January 1, 2022 and shall terminate on December 31, 2023. Pursuant to the Li Employment Agreement, Mr.
Added
Employment Agreements We have entered into employment agreements with each of our executive officers. Employment Agreement with Hengfang Li The Company entered into an employment agreement with Mr. Li on May 11, 2024 (the “Li Employment Agreement”), pursuant to which Mr.
Removed
Dai on December 31, 2021, (the “Dai Employment Agreement”) pursuant to which Mr. Dai serves as the President of the Company and Beijing REIT for a term from January 1, 2022 and shall terminate on December 31, 2023. Pursuant to the Dai Employment Agreement, Mr.
Added
Li serves as Chairman and Chief Executive Officer of the Company for an initial term from May 11, 2024 to December 31, 2025, subject to successive, automatic one-year extensions unless either party gives notice of non-extension to the other party at least 30 days prior to the expiration of the applicable term. Pursuant to the Li Employment Agreement, Mr.
Removed
Hu on December 31, 2021 (the “Hu Employment Agreement”), pursuant to which Mr. Hu serves as the Chief Technology Officer of the Company and Beijing REIT for a term from January 1, 2022 and shall terminate on December 31, 2023. Pursuant to the Hu Employment Agreement, Mr.
Added
Dai serves as the President of the Company for a term from May 11, 2024 to December 31, 2025, subject to successive, automatic one-year extensions unless either party gives notice of non-extension to the other party at least 30 days prior to the expiration of the applicable term. Pursuant to the Dai Employment Agreement, Mr.
Removed
Hou is entitled to annual compensation of RMB 700,000 (approximately $102,000) and social insurance and other employee benefits (including health insurance, vacation and expense reimbursement), each in accordance with PRC law and the Company’s policy. Employment Agreement with Yue Hu The Company entered into an employment agreement with Ms. Hu on August 15, 2022 providing for Ms.
Added
Hu serves as the Chief Technology Officer of the Company for a term from May 11, 2024 to December 31, 2025, subject to successive, automatic one-year extensions unless either party gives notice of non-extension to the other party at least 30 days prior to the expiration of the applicable term. Pursuant to the Hu Employment Agreement, Mr.
Removed
A general notice or disclosure to the board or otherwise contained in the minutes of a meeting or a written resolution of the board or any committee of the board that a director is a shareholder, director, officer or trustee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company will be sufficient disclosure, and, after such general notice, it will not be necessary to give special notice relating to any particular transaction.
Added
Hou is entitled to annual compensation of RMB 700,000 (approximately $102,000), and other discretionary equity bonus or benefits as determined by the Company from time to time.
Removed
Li directly; (iv) 600,000 Common Shares granted to Mr. Li under the 2021 Share Incentive Plan; and (v) 250,000 shares granted to Mr. Li under the 2022 Share Incentive Plan. (2) Represents (i) approximately 780,632 Common Shares held through REIT International. Mr.
Added
Under each of the Li Employment Agreement, the Dai Employment Agreement, the Hu Employment Agreement, and the Hou Employment Agreement, we may terminate their employment for cause, at any time, without notice or remuneration, for certain acts, such as conviction or plea of guilty to a felony or grossly negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties.
Removed
Hu directly; (iii) 300,000 Common Shares granted to Mr. Hu under the 2021 Share Incentive Plan; and (iv) 150,000 Common Shares granted to Mr. Hu under the 2022 Share Incentive Plan. (4) Represents (i) approximately 780,632 Common Shares held through REIT International. Mr.
Added
In such case, the executive officer will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and his right to all other benefits will terminate, except as required by any applicable law.
Removed
Hou under the 2022 Share Incentive Plan. (5) Represents Common Shares granted under the 2022 Share Incentive Plan. (6) Represents (i) 30,000 Common Shares held by Mr. Huang directly; and (ii) 10,000 Common Shares granted to Mr.
Added
We may also terminate the executive officer’s employment without cause immediately and without prior written notice upon the removal of the executive officer pursuant to the exercise of any power contained in the memorandum and articles of association of the Company or upon 30 days’ advance written notice.
Removed
Huang under the 2022 Share Incentive Plan. 97 2018 Share Incentive Plan On November 6, 2018, the Company’s shareholders approved the 2018 Share Incentive Plan, which allows for issuance of up to 2,000,000 Common Shares to employees, non-employee directors, officers and consultants for services rendered to the Company.
Added
In such case of termination by us, we are required to pay the executive officer a cash payment of three months of base salary as of the date of such termination.
Removed
On April 22, 2022, the Company’s board of directors approved the issuance of an aggregate of 1,025,000 Common Shares to its employees for their services. The Company issued an aggregate of 975,000 Common Shares under the 2018 Share Incentive Plan as of December 31, 2021.
Added
The executive officer may terminate his employment at any time with 30 days’ advance written notice if there is a material reduction in his authority, duties and responsibilities, without his consent, or a material reduction in his annual salary. In such case, the executive officer will be entitled to receive compensation equivalent to three months of his base salary.
Removed
The Company issued an aggregate of 2,000,000 Common Shares under the 2018 Share Incentive Plan as of December 31, 2022. As of April 28, 2023, there were no shares available for issuance under the 2018 Incentive Plan. The following is a summary of the principal terms of the 2018 Share Incentive Plan.
Added
In addition, if we or our successor terminates the employment agreements upon a merger, consolidation, or transfer or sale of all or substantially all of our assets with or to any other individual(s) or entity, the executive officer shall be entitled to the following severance payments and benefits upon such termination: (1) a lump sum cash payment equal to three months of base salary at a rate equal to the greater of his annual salary in effect immediately prior to the termination, or his then current annual salary as of the date of such termination; (2) payment of premiums for continued health benefits under our health plans for three months following the termination; and (3) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held by the executive officer, if any.
Removed
Administration The 2018 Share Incentive Plan is administered by the Compensation Committee of the Board of Directors. The 2018 Share Incentive Plan provides the Compensation Committee with flexibility to design compensatory awards that are responsive to the company’s needs.
Added
The employment agreements also contain customary restrictive covenants relating to confidentiality, non-competition and non-solicitation, as well as indemnification of the executive officer against certain liabilities and expenses incurred by him in connection with claims made by reason of him being an officer of our company. Employment Agreement with Yue Hu The Company entered into an employment agreement with Ms.

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Item 7. Management's Discussion & Analysis

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

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Hengfang Li Chief Executive Officer and Chairman of the Board of Directors Q Green Techcon Private Limited Owned by the minority shareholder of REIT India Shexian Ruibo The Company owns 41.67% ownership interest in Shexian Ruibo Zhongrong Honghe Eco Construction Materials Co., Ltd An entity controlled by Ms. Hong Ma Hunyuan Baiyang Food Co., Ltd. An entity controlled by Mr.
Hengfang Li Q Green Techcon Private Limited Owned by the minority shareholder of REIT India Shexian Ruibo The Company owns 41.67% equity interest in Shexian Ruibo Zhongrong Honghe Eco Construction Materials Co., Ltd. An entity controlled by Ms. Hong Ma Hunyuan Baiyang Food Co., Ltd. An entity controlled by Mr.
An entity controlled by Shexian Ruibo (2) Due to related parties The balance of due to related parties were as follows: December 31, 2022 December 31, 2021 December 31, 2020 Mr.
An entity controlled by Shaocheng Li (2) Due from related parties As of December 31, 2023 and 2022, the balance of due from related parties was as follows: As of December 31, 2023 As of December 31, 2022 Mr.
Item 7. Major Shareholders and Related Party Transactions A. Major shareholders. Please refer to “ Item 6. Directors, Senior Management and Employees—E. Share Ownership .” B. Related party transactions. The related party transactions for the years ended December 31, 2022, 2021 and 2020 are identified as follows: (1) Related parties relationships Name of Related Party Relationship to the Company Mr.
Item 7. Major Shareholders and Related Party Transactions A. Major shareholders. Please refer to “ Item 6. Directors, Senior Management and Employees — E. Share Ownership .” B. Related party transactions.
(5) Accounts payable to related parties Accounts payables to related parties consisted of the following: December 31, 2022 December 31, 2021 December 31, 2020 Shexian Ruibo Environmental Science and Technology Co., Ltd. $ - $ - $ 153,344 Zhongtou REIT Information Service (Beijing) Co., Ltd - 10,199 - Total $ - $ 10,199 $ 153,344 (6) Sales to related parties Sales to related parties consisted of the following: For the Years Ended December 31, 2022 2021 2020 Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. $ 215,693 $ - $ - Shexian Ruibo 82,453 61,177 228,814 Q Green Techcon Private Limited 6,729 220,607 - Total $ 304,875 $ 281,784 $ 228,814 Cost of revenue associated with the sales to these related parties amounted to $471,849, $175,053 and $148,034 for the years ended December 31, 2022, 2021 and 2020, respectively. 102 (7) Purchases from related parties Purchases from related parties consisted of the following: For the Years Ended December 31, 2022 2021 2020 Q Green Techcon Private Limited $ 266,544 $ 228,838 $ 1,039,152 Shexian Ruibo 1,141,377 235,946 1,837,841 Total $ 1,407,921 $ 464,784 $ 2,876,993 (8) Other related party transactions On September 7, 2020, Beijing REIT entered into a share transfer agreement with the original shareholder of Shexian Ruibo for the acquisition of a 41.67% ownership interest in Shexian Ruibo for a total consideration of $3.6 million (RMB 25 million), including a cash payment of $2.8 million (RMB 18.5 million) and a non-cash contribution of six patents valued at $0.9 million (RMB 6.5 million).
(5) Accounts payable to related parties Accounts payable to related parties consisted of the following: As of December 31, 2023 As of December 31, 2022 Shexian Ruibo $ 3,080 $ - Total $ 3,080 $ - (6) Sales to related parties Sales to related parties consisted of the following: For the Year Ended December 31, 2023 2022 2021 Changjiang Zhongrong Hengde Environmental Protection Co., LTD $ - $ 215,693 $ - Shexian Ruibo 44,325 82,453 61,177 Q Green Techcon Private Limited - 6,729 220,607 Total $ 44,325 $ 304,875 $ 281,784 Cost of revenue associated with the sales to these related parties amounted to $43,992, $471,849 and $175,053 for the years ended December 31, 2023, 2022, and 2021, respectively. 97 (7) Purchases from related parties Purchases from related parties consisted of the following: For the Year Ended December 31, 2023 2022 2021 Q Green Techcon Private Limited. $ - $ 266,544 $ 228,838 Shexian Ruibo 724,043 1,141,377 235,946 Total $ 724,043 $ 1,407,921 $ 464,784 (7) Equity grants On June 4, 2022, the Company issued an aggregate of 13,800 Common shares to directors under the 2018 Share Incentive Plan and the 2021 Share Incentive Plan.
Ltd $ - $ - $ 199,999 Q Green Techcon Private Limited - 2,981 - Hunyuan Baiyang Food Co., Ltd. 37,048 40,088 - Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd. 46,688 50,520 - Total accounts receivable from related party $ 83,736 $ 93,589 $ 199,999 The Company fully collected the accounts receivable as of December 31, 2022 from related parties as of the date of this annual report. 101 (4) Advance to suppliers, related party Advance to suppliers, related party, consisted of the following: December 31, 2022 December 31, 2021 December 31, 2020 Q Green Techcon Private Limited $ 15,310 $ 174,099 $ 162,014 Shexian Ruibo Environmental Science and Technology Co., Ltd.* 3,769,138 3,656,118 3,872,110 Handan Ruisheng Construction Material Technology Co., Ltd. 2,588 12,403 - Total $ 3,787,036 $ 3,832,421 $ 4,034,124 * The balance represents the Company’s purchase advances for eco-friendly materials and equipment supplied by Shexian Ruibo.
(4) Advance to suppliers, related party Advance to suppliers, related party, consisted of the following: As of December 31, 2023 As of December 31, 2022 Shexian Ruibo* $ 1,796,831 $ 3,769,138 Q Green Techcon Private Limited - 15,310 Handan Ruisheng Construction Material Technology Co., Ltd. 11,134 2,588 Total $ 1,807,965 $ 3,787,036 * The balance represents the Company’s purchase advances for eco-friendly materials and equipment supplied by Shexian Ruibo.
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Hengfang Li $ 208,225 $ 472,439 $ 1,019,469 (3) Accounts receivable from related parties Accounts receivable from related parties consisted of the following: December 31, 2022 December 31, 2021 December 31, 2020 Accounts receivable – related party REIT International Trading Co.
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Related party balances as of December 31, 2023 and 2022 and transactions for the years ended December 31, 2023, 2022 and 2021 are identified as follows: (1) Related parties Name of Related Party Relationship to the Company Mr. Hengfang Li Chief Executive Officer and Chairman of the Board of Directors, and shareholder of the Company Ms.
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The cash consideration was fully paid for the year ended December 31, 2020. C. Interests of Experts and Counsel Not applicable. Item 8. Financial Information A. Consolidated Statements and Other Financial Information. The financial statements required by this item may be found at the end of this report on 20-F, beginning on page F-1.
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Hong Ma Wife of Chief Executive Officer Changjiang Zhongrong Hengde Environmental Protection Co., Ltd. An entity controlled by Ms. Hong Ma Hunyuan County Baiyang Food Co., Ltd An entity controlled by Mr.
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Legal and Administrative Proceedings In the ordinary course of business, the Company is from time to time involved in legal proceedings and litigation that are generally contractual in nature. In 2018, a financial intermediary and Xinyi REIT began negotiations towards a potential cooperation where the financial intermediary would introduce potential investors to facilitate investment in Xinyi REIT’s business.
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An entity controlled by Shexian Ruibo Hainan Yile Huixin Technology Service Center (Limited Partnership) Minority shareholder of IoV Technology Research Shaocheng Li Legal representative of Honghe REIT Ecological Technology Co., Ltd. Zhongrong Honghe Environmental Building Materials Co., Ltd.
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In December 2018, an investor invested RMB 1,000,000 (approximately $0.15 million) in Xinyi REIT through this financial intermediary. Xinyi REIT rejected this investment and returned the total investment funds it received to the investor and informed the financial intermediary to cease facilitating investments from other investors.
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Hengfang Li $ 746,196 $ 208,225 The balance represents advance for business purposes. 96 (3) Accounts receivable from related parties Accounts receivable from related parties consisted of the following: As of December 31, 2023 As of December 31, 2022 Shexian Ruibo $ 26,851 $ - Hunyuan Baiyang Food Co., Ltd. 35,986 37,048 Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd. 45,351 46,688 Total accounts receivable from related parties $ 108,188 $ 83,736 The balance of the accounts receivable as of December 31, 2023 from related parties was outstanding as of the date of issuance of these financial statements.
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In addition, despite there not being a final mutual agreement between the parties, it appears the financial intermediary may have acquired investment funds in the aggregate amount of RMB 15,450,000 (approximately $2.15 million) from certain investors, and Xinyi REIT did not receive any funds from these investments. Mr.
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On March 12, 2023, the Company issued an aggregate of 6,700 Common shares to directors under the 2022 Share Incentive Plan . C. Interests of Experts and Counsel Not applicable.
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Hengfang Li, the Company’s Chief Executive Officer and Chairman, has agreed to assume full responsibility for liabilities, if any, and assume the creditor’s rights for these claims on behalf of the Company for any legal claims or lawsuits against the Company due to these investments. In May 2020, Mr.
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Li paid RMB 300,000 (approximately $44,000) to an investor in a lawsuit against Xinyi REIT to return the investment funds. In 2022 and 2023, a few other investors brought legal actions against Xinyi REIT for the same claim and judgments were rendered in their favor.
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Subsequently, Xinyi REIT appealed these judgments, and the appeals are still pending in higher courts as of the date of this annual report. The Company does not believes that any liability resulting from the outcome of such proceedings, if any, will have a material adverse effect on the Company’s consolidated financial position or results of operations or liquidity.
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On April 8, 2022, Beijing REIT reached a settlement with the minority shareholder of Xinyi REIT for the lawsuit filed by the minority shareholder of Xinyi REIT in respect of the buy-back of the 30% equity interest of Xinyi REIT held by the minority shareholder.
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Pursuant to the settlement, Beijing REIT agreed to pay an aggregate amount of RMB18 million to purchase the 30% equity interest. The purchase price is payable in four installments of RMB 4 million, RMB 4 million, RMB 5 million, and RMB 5 million, due by April 19, 2022, June 30, 2022, September 30, 2022, and December 31, 2022, respectively.
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The Company had paid RMB 13 million (approximately $1.9 million) as of December 31, 2022. As of December 31, 2022, the balance amounted to RMB 5 million (approximately $0.7 million) . The Company further paid RMB 3 million (approximately $0.4 million) in 2023.
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However, as of the date of this annual report, the remaining balance of RMB 2 million ( approximately $0.3 million ) is due by Beijing REIT. 103 On April 11, 2023, a local court order was issued to Beijing REIT and its legal representative to restrict them from frivolous spending.
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We are actively negotiating the settlement with the party who initiated the court order and we do not believe this matter will have a material adverse effect on the Company’s consolidated financial position or results of operations.
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Except as disclosed above, we are currently not a party to any material legal or administrative proceedings and we are not aware of any material legal or administrative proceedings threatened against us. We may from time to time be subject to various legal or administrative proceedings arising in the ordinary course of business.
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Dividend Policy We have never declared or paid any cash dividends on our Common Shares. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future.
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Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors the board of directors may deem relevant.
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Under British Virgin Islands law, we may only pay dividends from surplus (the excess, if any, at the time of the determination of the total assets of our company over the sum of our liabilities, as shown in our books of account, plus our capital), and we must be solvent before and after the dividend payment in the sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business; and the realizable value of assets of our company will not be less than the sum of our total liabilities, other than deferred taxes as shown on our books of account, and our capital.
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If we determine to pay dividends on any of our Common Shares in the future, as a holding company, we will be dependent on receipt of funds from our PRC subsidiaries.
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Current PRC regulations permit our PRC subsidiaries to pay dividends to REIT Holdings only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations.
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Further, loan governing part of the current debts incurred by Beijing REIT has restrictions on its ability to pay dividends, and any future financing arrangements may impose such restrictions as well.
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In addition, each of our subsidiaries in China 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.
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Our PRC subsidiaries are also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors.
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Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. Our subsidiaries in China are required to set aside statutory reserves and have done so.
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In addition, pursuant to the EIT Law and its implementation rules, dividends generated after January 1, 2008 and distributed to us by Beijing REIT, REIT Technology and REIT Ordos are subject to withholding tax at a rate of 10% 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.
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Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements.
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Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations in China may be used to pay dividends to our company. See “Item 4. Information on the Company – B. Business Overview – Regulation – Regulation of Foreign Currency Exchange and Dividend Distribution.” 104 B. Significant Changes.
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Except as otherwise disclosed in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included herein.

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