BEIJING, May 2, 2022
/PRNewswire/ -- ReTo Eco-Solutions, Inc. (NASDAQ: RETO)
("ReTo" or the "Company") a provider of technology solutions and
operation services for intelligent ecological environments and
roadside assistance services and software development services
in China, today announced its audited financial results for
the fiscal year ended December 31,
2021.
Financial Highlights for the Fiscal Year 2021
- Total revenue for the fiscal year 2021 decreased by 57% to
$3.6 million, primarily due to
slowdown of construction industry, and disruption in the supply
chains and reduced demand for the products caused by continuous
impact of COVID-19.
- Gross profit for the fiscal year 2021 decreased by 81% to
$0.4 million. Gross margin was 11%
for the fiscal year 2021, as compared with 24% for the prior
year.
- Loss from operations was $12.0
million for the fiscal year 2021, compared to loss from
operations of $6.6 million for the
prior year.
- Total net loss attributable to ReTo was $21.1 million, compared to net loss of
$11.8 million for the prior
year.
Mr. Hengfang Li, ReTo's Chairman and Chief Executive Officer,
said, " With decreases in both revenues and margins, our 2021
results reflected continued challenges facing our business. Since
2021, there has been resurgences of COVID-19 cases caused by new
variants such as Delta and Omicron in multiple cities in
China, as well as across the
world. The COVID-19 pandemic has had a significant impact on the
construction sector, which is sensitive to economic cycles.
Furthermore, there was a wave of financially less sound real estate
companies in China facing
challenges with their financing. Construction investments were also
cut or delayed due to financial tightness and market pessimism in
the sector. As such, our revenue from machinery and equipment sales
decreased by 54% from fiscal 2019 to fiscal 2020, and further
decreased by 72% in fiscal 2021. Sales of our
environmental-friendly construction materials decreased by 37% from
fiscal 2019 to fiscal 2020, and further decreased by 7% in fiscal
2021.
"Looking ahead, as the near-term challenges across the
construction sector remain, we will be actively transforming our
strategy and accelerating upgrade of our business model to focus on
ecological and environmental protection business driven by science
and technologies. Leveraging the newly acquired IoT technologies,
as well as our experience and expertise in existing ecological
engineering service and equipment business, we will continue to
integrate the IoT technologies, ecological restoration technologies
and new ecological materials into our environmental business chain
with an aim to deliver quality services and projects. We believe
this will enable us to improve the company's performance in 2022
and thereby strengthen our own business operations and market
position. "
Financial Results for the Fiscal Year 2021
Revenues
Our total revenues from continuing operations decreased by
approximately $4.7 million, or 57%,
to approximately $3.6 million for the
year ended December 31, 2021 from
approximately $8.3 million for the
year ended December 31, 2020. Among
our total revenues, revenue from third party customers decreased by
approximately $4.8 million or 59%
from approximately $8.1 million in
2020 to approximately $3.3 million in
2021, while revenue from related party customers increased by
$52,970 or 23% from $228,814 in 2020 to $281,784 in 2021. The significant decrease in our
total revenue from continuing operations in fiscal 2021 as compared
to fiscal 2020 was mainly due to slowdown of construction industry
due to financial tightness, and continuous impact of COVID-19 also
caused disruption in our supply chains and less demand for our
products.
Revenue from machinery and equipment sales in our continuing
operations decreased by approximately $4.7
million, or 72%, from approximately $6.5 million for the year ended December 31, 2020 to approximately $1.8 million for the year ended December 31, 2021.
Sales of our environmental-friendly construction materials in
our continuing operations decreased by approximately $0.1 million or 7% for the year ended
December 31, 2021 as compared to the
year ended December 31, 2020.
Municipal construction includes such projects known as sponge
city projects. Our environmental-friendly construction materials
such as brick and block may be used in these municipal construction
projects as required by local governments. Revenue from municipal
construction projects in our continuing operations increased by
approximately $35,000 in fiscal 2021
as compared to fiscal 2020.
Cost of Revenues
Our total cost of revenues from our continuing operations
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 from third party customers
decreased by approximately $3.2
million or 51% from approximately $6.2 million in 2020 to approximately
$3.0 million in 2021, while cost of
revenues from related party customers increased by $27,019 or 18% from $148,034 in 2020 to $175,053 million in 2021. The decrease in our
total cost of revenue was in line with revenue decrease. As a
percentage of revenues, the cost of revenues increased to 89% in
fiscal 2021 from 76% in fiscal 2020 due to increase in purchase
price of raw materials and labor costs.
Gross Profit (Loss)
Our gross profit from our continuing operations 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 11% for fiscal
2021, as compared with 24% for fiscal 2020. The decrease in gross
profit margin from our continuing operations was primarily
attributable to significant decrease in gross profit in machinery
and equipment segment due to the deteriorated market
environment.
Gross profit for machinery and equipment products in our
continuing operations 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 margins for this
segment were 17% and 31%, for fiscal 2021 and 2020, respectively.
The decrease in gross profit was mainly due to the fact that we had
to offer more competitive prices for our products in light of 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.
Gross profit for construction materials in our continuing
operations 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
negative 7% for the year ended December 31,
2020. The increase in gross margin was mainly due to the
reverse of approximately $0.1 million
in inventory valuation, which caused decrease in our cost of
revenue.
Gross profit (loss) for the municipal construction project
segment for our continuing operations was approximately
($0.01) million and $0.1 million for the years ended December 31, 2021 and 2020, respectively.
Selling Expenses
For fiscal 2021, our selling expenses for our continuing
operations were approximately $0.8
million, representing a 24% decrease from approximately
$1.1 million in fiscal 2020. As a
percentage of sales, our selling expenses were 23% and 13% for the
years ended December 31, 2021 and
2020, respectively. The decrease was mainly due to less marketing
activities and shipping and handling fees associated with decreased
sales in fiscal 2021.
General and Administrative Expenses
For fiscal 2021, our general and administrative expenses from
our continuing operations were approximately $4.7 million, representing an increase of
approximately $0.7 million compared
to approximately $4.0 million in
fiscal 2020. The increase in general and administrative expenses
was mainly due to increased share-based compensation for services
and consulting and professional fees. As a percentage of revenues,
general and administrative expenses were 128% and 48% of our total
revenues for the years ended December 31,
2021 and 2020, respectively.
Bad Debt Expenses
For fiscal 2021, our bad debt expenses from our continuing
operations were approximately $2.3
million, representing an increase of approximately
$1.4 million as compared to
approximately $0.9 million in fiscal
2020. We incurred significant bad debt expenses on uncollectible
accounts receivable and advance payments due to slower or delayed
payments from customers and delayed fulfillment of suppliers who
were adversely affected by the COVID-19 pandemic and faced shortage
in working capital.
Research and Development Expenses
Our research and development expenses from our continuing
operations were approximately $0.3
million and $0.3 million for
the years ended December 31, 2021 and
2020, respectively.
Change in Fair Value in Convertible Debt
During the year ended December 31,
3021, loss from change in fair value in convertible debt
amounted to approximately $1.9
million. There were no changes in fair value of convertible
debt in the fiscal years 2020.
Net Loss
Our net loss from continuing operations attributable to ReTo
Eco-Solutions was $19.5 million in
fiscal 2021, compared with net loss of $4.2
million in fiscal 2020.
About ReTo Eco-Solutions, Inc.
Founded in 1999, ReTo Eco-Solutions, Inc., through its
proprietary technologies, systems and solutions, is striving to
bring clean water and fertile soil to communities worldwide. The
Company offers a full range of products and services, ranging from
the production of environmentally-friendly construction materials,
environmental protection equipment, and manufacturing equipment
used to produce environmentally-friendly construction materials, to
project consulting, design, and installation for the improvement of
ecological environments, such as ecological soil restoration
through solid waste treatment. Through its subsidiary REIT
Mingde and Hainan Yile IoT, a high-tech enterprise
in Hainan Province, the Company provides roadside
assistance services to drivers within Hainan Province through its network of tow
providers automotive repair services and other service providers,
and is also engaged in the design, development and sales of
customized software solutions. For more information, please
visit: http://en.retoeco.com
Forward-Looking Statements
This press release contains forward-looking statements.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements that are other than
statements of historical facts. When the Company uses words such as
"may," "will," "intend," "should," "believe," "expect,"
"anticipate," "project," "estimate," or similar expressions that do
not relate solely to historical matters, it is making
forward-looking statements. Specifically, the Company's statements
regarding: ReTo's goal and strategies; ReTo's future business
development, financial condition and results of operations;
expected changes in ReTo's revenues, costs or expenses; industry
landscape of, and trends in, the construction industry; ReTo's
expectations regarding demand for, and market acceptance of, its
services; the impact of COVID-19 pandemic, extreme weather
conditions and production constraints brought by electricity
rationing measures; general economic and business condition; and
assumptions underlying or related to any of the foregoing
Forward-looking statements are not guarantees of future performance
and involve risks and uncertainties that may cause the actual
results to differ materially from the Company's expectations
discussed in the forward-looking statements. These statements are
subject to uncertainties and risks including, but not limited to,
the following: the Company's goals and strategies; the Company's
future business development; product and service demand and
acceptance; changes in technology; economic conditions; the growth
of the construction industry in China; reputation and brand; the impact of
competition and pricing; government regulations; fluctuations in
general economic and business conditions in China and assumptions underlying or related to
any of the foregoing and other risks contained in reports filed by
the Company with the Securities and Exchange Commission. For these
reasons, among others, investors are cautioned not to place undue
reliance upon any forward-looking statements in this press release.
Additional factors are discussed in the Company's filings with the
U.S. Securities and Exchange Commission, which are available for
review at www.sec.gov. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof.
For more information, please contact:
ReTo Eco-Solutions, Inc.
Giorgio Zhao
Beijing Phone: +86-010-64827328
ir@retoeco.com or 310@reit.cc
RETO ECO-SOLUTIONS INC. AND
SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
457,495
|
|
|
$
|
1,058,138
|
|
Accounts receivable,
net – third parties
|
|
|
441,703
|
|
|
|
2,856,105
|
|
Accounts receivable,
net - related party
|
|
|
93,589
|
|
|
|
199,999
|
|
Advances to suppliers,
net – third parties
|
|
|
281,600
|
|
|
|
987,756
|
|
Advances to suppliers,
net - related party
|
|
|
3,842,620
|
|
|
|
4,034,124
|
|
Inventories,
net
|
|
|
463,731
|
|
|
|
420,017
|
|
Prepayments and other
current assets
|
|
|
389,864
|
|
|
|
1,297,344
|
|
Receivable from
disposition - current
|
|
|
7,059,559
|
|
|
|
-
|
|
Prepayment for
construction of properties
|
|
|
-
|
|
|
|
1,073,100
|
|
Current assets held for
sale associated with discontinued operation
|
|
|
-
|
|
|
|
1,352,927
|
|
Total Current
Assets
|
|
|
13,030,161
|
|
|
|
13,279,510
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
9,707,602
|
|
|
|
11,384,447
|
|
Intangible assets,
net
|
|
|
4,111,029
|
|
|
|
1,531,512
|
|
Long-term investment in
equity investee
|
|
|
2,758,228
|
|
|
|
2,836,050
|
|
Right-of-use
assets
|
|
|
278,269
|
|
|
|
364,226
|
|
Good will
|
|
|
1,075,778
|
|
|
|
-
|
|
Non-current assets held
for sale associated with discontinued operation
|
|
|
-
|
|
|
|
28,578,328
|
|
Total
Assets
|
|
$
|
30,961,067
|
|
|
|
57,974,073
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Short term
loans
|
|
$
|
2,353,500
|
|
|
|
6,478,088
|
|
Long term bank loans -
current portion
|
|
|
-
|
|
|
|
613,055
|
|
Convertible
debt
|
|
|
1,645,000
|
|
|
|
-
|
|
Advances from
customers
|
|
|
2,061,203
|
|
|
|
3,253,527
|
|
Advances from
customers-related party
|
|
|
-
|
|
|
|
2,177
|
|
Deferred
revenue
|
|
|
-
|
|
|
|
30,660
|
|
Deferred grants -
current
|
|
|
269,061
|
|
|
|
|
|
Accounts
payable
|
|
|
2,121,313
|
|
|
|
502,043
|
|
Accounts payable -
related party
|
|
|
10,199
|
|
|
|
153,344
|
|
Accrued and other
liabilities
|
|
|
3,103,056
|
|
|
|
913,352
|
|
Loans from
third-parties
|
|
|
1,593,977
|
|
|
|
766,500
|
|
Taxes
payable
|
|
|
2,599,770
|
|
|
|
2,493,685
|
|
Due to related
parties
|
|
|
472,439
|
|
|
|
1,019,469
|
|
Operating lease
liabilities, current
|
|
|
155,857
|
|
|
|
114,161
|
|
Deferred tax
liability
|
|
|
370,856
|
|
|
|
-
|
|
Current liabilities
held for sale associated with discontinued operation
|
|
|
-
|
|
|
|
6,654,725
|
|
Total Current
Liabilities
|
|
|
16,756,231
|
|
|
|
22,994,786
|
|
|
|
|
|
|
|
|
|
|
Deferred grants -
noncurrent
|
|
|
-
|
|
|
|
490,560
|
|
Operating lease
liabilities - noncurrent
|
|
|
120,558
|
|
|
|
241,606
|
|
Noncurrent liabilities
held for sale associated with discontinued operation
|
|
|
-
|
|
|
|
6,285,300
|
|
Total
Liabilities
|
|
|
16,876,789
|
|
|
|
30,012,252
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Common Share, $0.001
par value, 200,000,000 shares authorized, 28,965,034 shares
and 24,135,000 shares issued and outstanding as of December 31,
2021 and 2020,
respectively
|
|
|
28,966
|
|
|
|
24,135
|
|
Additional paid-in
capital
|
|
|
46,776,170
|
|
|
|
43,709,127
|
|
Statutory
reserve
|
|
|
1,230,387
|
|
|
|
2,386,119
|
|
Accumulated
deficit
|
|
|
(33,347,984)
|
|
|
|
(17,245,453)
|
|
Accumulated other
comprehensive loss
|
|
|
(1,137,386)
|
|
|
|
(1,598,819)
|
|
Total ReTo
Eco-Solutions Inc. Shareholders' Equity
|
|
|
13,552,153
|
|
|
|
27,275,109
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
|
|
532,125
|
|
|
|
686,712
|
|
Total
Equity
|
|
|
14,084,278
|
|
|
|
27,961,821
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
|
30,961,067
|
|
|
|
57,974,073
|
|
RETO
ECO-SOLUTIONS INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues – third party
customers
|
|
$
|
3,318,294
|
|
|
$
|
8,110,401
|
|
|
|
Revenues – related
parties
|
|
|
281,784
|
|
|
|
228,814
|
|
|
|
Total
Revenues
|
|
|
3,600,078
|
|
|
|
8,339,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues –
third party customers
|
|
|
3,039,296
|
|
|
|
6,193,505
|
|
|
|
Cost of revenues –
related parties
|
|
|
175,053
|
|
|
|
148,034
|
|
|
|
Total cost of
revenues
|
|
|
3,214,349
|
|
|
|
6,341,539
|
|
|
|
Gross
Profit
|
|
|
385,729
|
|
|
|
1,997,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
826,242
|
|
|
|
1,085,602
|
|
|
|
General and
administrative expenses
|
|
|
4,619,058
|
|
|
|
3,971,496
|
|
|
|
Bad debt
expenses
|
|
|
2,250,334
|
|
|
|
909,931
|
|
|
|
Impairment of fixed
assets
|
|
|
4,344,133
|
|
|
|
2,267,485
|
|
|
|
Research and
development expenses
|
|
|
346,951
|
|
|
|
334,904
|
|
|
|
Total Operating
Expenses
|
|
|
12,386,718
|
|
|
|
8,569,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
Operations
|
|
|
(12,000,989)
|
|
|
|
(6,571,742)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expenses):
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(103,340)
|
|
|
|
(857,551)
|
|
|
|
Interest
income
|
|
|
1,898
|
|
|
|
(64)
|
|
|
|
Other income
(expenses), net
|
|
|
(26,991)
|
|
|
|
480,054
|
|
|
|
Loss from disposal of
REIT Changjiang
|
|
|
(6,293,149)
|
|
|
|
-
|
|
|
|
Gain from disposal of
Gu'an REIT
|
|
|
-
|
|
|
|
2,231,270
|
|
|
|
Share of losses in
equity method investments
|
|
|
(142,673)
|
|
|
|
-
|
|
|
|
Change in fair value
convertible debt
|
|
|
(1,908,830)
|
|
|
|
-
|
|
|
|
Total Other Income
(Expenses), net
|
|
|
(8,473,085)
|
|
|
|
1,853,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before
provision for income taxes
|
|
|
(20,474,074)
|
|
|
|
(4,718,033)
|
|
|
|
Provision for income
taxes
|
|
|
3,469
|
|
|
|
569,974
|
|
|
|
Net loss from
continuing operations
|
|
|
(20,477,543)
|
|
|
|
(5,288,007)
|
|
|
|
Net loss from
discontinued operations, net of taxes
|
|
|
(1,596,390)
|
|
|
|
(7,612,601)
|
|
|
|
Net
Loss
|
|
|
(22,073,933)
|
|
|
|
(12,900,608)
|
|
|
|
Less: net loss
attributable to noncontrolling interest
|
|
|
(969,107)
|
|
|
|
(1,126,845)
|
|
|
|
Net loss
attributable to ReTo Eco-Solutions, Inc.
|
|
$
|
(21,104,826)
|
|
|
$
|
(11,773,763)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss:
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(22,073,933)
|
|
|
|
(12,900,608)
|
|
|
|
Other Comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
493,769
|
|
|
|
1,923,316
|
|
|
|
Comprehensive
Loss
|
|
|
(21,580,164)
|
|
|
|
(10,977,292)
|
|
|
|
Less: comprehensive
loss attributable to noncontrolling interest
|
|
|
(936,771)
|
|
|
|
(1,132,148)
|
|
|
|
Comprehensive loss
attributable to ReTo Eco-Solutions, Inc.
|
|
$
|
(20,641,393)
|
|
|
$
|
(9,845,144)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to ReTo Eco-Solutions, Inc.
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
(19,508,436)
|
|
|
|
(4,161,162)
|
|
|
|
Discontinued
operations
|
|
|
(1,596,390)
|
|
|
|
(7,612,601)
|
|
|
|
Total
|
|
$
|
(21,104,826)
|
|
|
$
|
(11,773,763)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
Loss Per Share Attributable to ReTo Eco-Solutions,
Inc.
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
|
(0.75)
|
|
|
|
(0.17)
|
|
|
|
Discontinued
operations
|
|
|
(0.06)
|
|
|
|
(0.32)
|
|
|
|
Total
|
|
$
|
(0.81)
|
|
|
$
|
(0.49)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
26,160,750
|
|
|
|
24,124,884
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/reto-eco-solutions-reports-fiscal-year-2021-financial-results-301537459.html
SOURCE ReTo Eco-Solutions, Inc.