BEIJING, Oct. 14,
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 unaudited financial results for the six
months ended June 30, 2022.
Financial Highlights for the First Half of the Fiscal Year
2022
- Total revenue for the first half of 2022 increased by 64.7% to
approximately $2.9 million, primarily
due to higher machinery and equipment sales and revenue from
roadside assistance and software development businesses which were
acquired in December 2021.
- Gross profit for the first half of 2022 increased by 217.8% to
approximately $0.4 million. Gross
profit margin was 13% for the six months ended June 30, 2022, as compared with 6.7% for the six
months ended June 30, 2021.
- Net loss from continuing operations was approximately
$5.8 million and $7.3 million for the six months ended
June 30, 2022 and 2021, respectively.
Total net loss was approximately $5.8
million and $8.9 million for
the six months ended June 30, 2022
and 2021, respectively.
Mr. Hengfang Li, ReTo's Chairman and
Chief Executive Officer, commented, " Despite the challenging
market conditions and operating environment resulting from the
on-going impact of COVID-19, our total revenue increased by 64.7%,
or approximately $1.1 million, from
approximately $1.8 million in the six
months ended June 30, 2021 to
approximately $2.9 million in the six
months ended June 30, 2022, due to
higher machinery and equipment sales, primarily contributable to
the sales of newly developed jigging machine with a high sales
price and revenue from roadside assistance and software development
businesses which were acquired in December
2021. Looking ahead, as the near-term challenges across the
COVID-19 pandemic and construction sector remain, we will focus on
growing our ecological and environmental protection business by
adopting advanced technologies and explore the opportunities
in the ecological oriented development projects by
leveraging our experience and expertise from existing ecological
engineering service and equipment business as well as newly
acquired the IoT technologies."
Financial Results for the Six Months Ended June 30, 2022
Revenues
The Company's total revenues increased by approximately
$1.1 million, or 64.7%, to
approximately $2.9 million for the
six months ended June 30, 2022 from
approximately $1.8 million for the
six months ended June 30, 2021. Among
its total revenue, revenue from third-party customers increased by
approximately $1.2 million, or 74.8%,
from approximately $1.6 million in
the six months ended June 30, 2021 to
approximately $2.9 million in the six
months ended June 30, 2022, while
revenue from related party customers decreased by approximately
$0.1 million, or 93.4%, from
$105,868 in the six months ended
June 30, 2021 to $6,987 in the six months ended June 30, 2022. The increase in the Company's
total revenue was mainly due to higher machinery and equipment
sales and revenue from roadside assistance and software development
businesses which were acquired in December
2021.
Revenue from machinery and equipment sales increased by
approximately $0.9 million, or 77%,
from approximately $1.1 million for
the six months ended June 30, 2021 to
approximately $2.0 million for the
six months ended June 30, 2022. The
increase is mainly due to sales of newly developed jigging machine
amounting to approximately $1.0
million.
Sales of the Company's environmental-friendly construction
materials decreased by approximately $0.3
million, or 47%, from approximately $0.6 million for the six months ended
June 30, 2021 to approximately
$0.3 million for the six months ended
June 30, 2022. The decrease was due
to a decrease in demand resulting from the downturn of the national
construction market under the impact of COVID-19.
Municipal construction includes projects known as sponge city
projects. The Company's environmental-friendly construction
materials, such as brick and block, may be used in these municipal
construction projects. Revenue from municipal construction projects
in the Company's continuing operations increased by $111,014, or 100%, for the six months ended
June 30, 2022, as compared to nil for
the six months ended June 30,
2021.
Revenue from other services was approximately $0.4 million for the six months ended
June 30, 2022, which was generated by
the Company's newly acquired subsidiary, Hainan Yile IoT Technology
Co., Ltd., a PRC limited liability company ("Hainan Yile IoT").
Hainan Yile IoT provides roadside services to drivers within
Hainan Province, China, through the Company's network of
roadside services providers of tow providers and automotive repair
services. Through Hainan Yile IoT, the Company is also
engaged in the design, development and sales of customized software
solutions based on client specifications.
Cost of Revenues
The Company's total cost of revenues increased by approximately
$0.9 million, or 53.6%, to
approximately $2.5 million for the
six months ended June 30, 2022 from
approximately $1.6 million for the
six months ended June 30, 2021. Cost
of revenues from third-party customers increased by approximately
$0.4 million, or 26.2%, from
approximately $1.6 million in the six
months ended June 30, 2021 to
approximately $2.0 million in the six
months ended June 30, 2022, while
cost of revenues from related party customers increased by
approximately $0.5 million, or 550%,
from $85,710 in the six months ended
June 30, 2021 to approximately
$0.6 million in the six months ended
June 30, 2022. The increase in the
Company's total cost of revenue was in line with revenue increase.
As a percentage of revenues, the cost of revenues decreased by 6.2%
to 87.0% in the six months ended June 30,
2022 from 93.3% in the six months ended June 30, 2021.
Cost of machinery and equipment sales increased by approximately
$0.9 million, or 92%, from
approximately $0.9 million for the
six months ended June 30, 2021 to
approximately $1.8 million for the
six months ended June 30, 2022. The
increase was primarily due to the increase in revenue, as well as
increase in costs of raw material and labor in 2022.
Cost of the Company's environmental-friendly construction
materials decreased by approximately $0.2
million, or 34%, from approximately $0.7 million for the six months ended
June 30, 2021 to approximately
$0.5 million for the six months ended
June 30, 2022. The decrease was due
to less construction materials sold in downturn of the national
construction market. Since the Company had fixed cost which did not
change as a result of the change in sales, the decrease in its cost
of sales is not as significant as the decrease in the sales of
construction materials.
Cost of municipal construction projects in the Company's
continuing operations amounted to approximately $45,000. There was no cost of sales for
municipal construction projects for the six months ended
June 30, 2021, because the Company
did not have any revenue from this segment.
Cost of other services amounted to approximately $215,000. There was no cost of other services for
the six months ended June 30, 2021,
because this business segment was acquired in December 2021.
Gross Profit
The Company's gross profit increased by approximately
$0.3 million, or 217.8%, to
approximately $0.4 million for the
six months ended June 30, 2022 from
approximately $0.1 million for the
six months ended June 30, 2021. Gross
profit margin was 13.0% for the six months ended June 30, 2022, as compared with 6.7% for the six
months ended June 30, 2021. The
increase in gross profit margin by 6.2% was primarily attributable
to high gross profit margin of other services.
Gross profit for machinery and equipment products in the
Company's continuing operations increased by approximately
$21,000 to approximately $235,000 for the six months ended June 30, 2022, as compared to approximately
$214,000 for the six months ended
June 30, 2021. Gross profit margin
for this segment was 12% and 19% for the six months ended
June 30, 2022 and 2021, respectively.
Gross profit margin decreased due to increase in purchase price of
raw materials for equipment, such as steel and certain electronic
parts.
Gross loss for construction materials was approximately
$141,000 for the six months ended
June 30, 2022, compared to a gross
loss of approximately $95,000 for the
six months ended June 30, 2021. The
gross loss margin for this segment was approximately 44% for the
six months ended June 30, 2022, as
compared to 16% for the six months ended June 30, 2021. The decrease in gross margin was
mainly due to (i) higher fixed production costs, such as
depreciation, and (ii) increase in raw materials costs as a result
of compliance with more rigorous environmental procedures
implemented by Chinese government which raised the quality standard
of construction materials used in the municipal project
construction.
Gross profit for the municipal construction project segment was
approximately $66,000 for the six
months ended June 30, 2022. There was
no municipal construction revenue for the six months ended
June 30, 2021.
Gross profit for other services was $215,000 for the six months ended June 30, 2022. There was no other services
revenue for the six months ended June 30,
2021.
Selling Expenses
For the six months ended June 30,
2022 and 2021, the Company's selling expenses were
approximately $0.3 million for both
periods.
General and Administrative Expenses
For the six months ended June 30,
2022, the Company's general and administrative expenses were
approximately $5.9 million,
representing an increase of approximately $3.7 million, or 173.3%, compared to
approximately $2.2 million for the
six months ended June 30, 2021. The
increase in general and administrative expenses was mainly due to
(a) share-based compensation amounted to approximately $3.3 million related to the 4,025,000 shares
issued to employees under the 2018 and 2021 Share Incentive Plans,
and (b) approximately $0.7 million
consulting fees related to the 500,000 shares issued to
Geniusland International Capital Ltd. As a percentage of revenues,
general and administrative expenses were 203.8% and 122.8% of the
Company's total revenues for the six months ended June 30, 2022 and 2021, respectively.
Bad Debt Expenses
For the six months ended June 30,
2022, the Company's bad debt expenses were approximately
negative $0.7 million, representing a
decrease of approximately $3.8
million, or 120.7%, as compared to approximately
$3.2 million for the six months ended
June 30, 2021. The decrease was due
to an approximately $0.4 million
recovery of allowance for doubtful accounts of advances to
suppliers and an approximately $0.2
million recovery of allowance for doubtful accounts of
accounts receivable. As a percentage of revenues, bad debt expenses
were (22.5%) and 179.5% of the Company's total revenues for the six
months ended June 30, 2022 and 2021,
respectively.
Research and Development Expenses
The Company's research and development expenses were
approximately $0.5 million and
$0.2 million for the six months ended
June 30, 2022 and 2021, respectively.
The increase in the research and development expenses was due to a
newly initiated Resources Comprehensive Utilization Project with
Tsinghua University.
Interest Expenses
The Company's interest expenses were approximately $0.2 million and $0.3
million for the six months ended June
30, 2022 and 2021, respectively. The decreased interest
expenses was because of lower weighted average loan balance in
current period.
Change in Fair Value in Convertible Debt
Due to change in fair value of convertible loans, the Company
recorded an unrealized loss of $204,331 and $1,311,852 in other expense for the six months
ended June 30, 2022 and 2021,
respectively.
Other Income (Expense)
Other income was approximately $0.3
million for the six months ended June
30, 2022, mainly representing government subsidy. Other
expense was $48,626 for the six
months ended June 30, 2021, mainly
consisting of fines and other miscellaneous expenses.
Loss before Income Taxes
The Company's loss before income taxes was approximately
$5.7 million for the six months ended
June 30, 2022, a decrease of
approximately $1.6 million as
compared to loss before income taxes of approximately $7.3 million for the six months ended
June 30, 2021. The decrease in the
Company's loss before income taxes was primarily attributable to
the decrease in net loss.
Provision for income taxes
The Company's PRC subsidiaries are subject to PRC income tax,
which is computed according to the relevant laws and regulations in
the PRC. Under the Enterprise Income Tax Law, the corporate income
tax rate applicable to all companies, including both domestic and
foreign-invested companies, is 25%. However, each of Beijing REIT
Technology Development Co., Ltd., a PRC limited liability company
("Beijing REIT") and the Company's subsidiary, and Hainan Yile IoT
is recognized as a High and New Technology Enterprise by PRC
government and subject to a favorable income tax rate of 15%. As
the Company had loss before income tax, the Company's income tax
expense amounted to $28,767 and nil
for the six months ended June 30,
2022 and 2021, respectively.
Net Loss
As a result of the foregoing, net loss from continuing
operations amounted to approximately $5.8
million and $7.3 million for
the six months ended June 30, 2022
and 2021, respectively. Total net loss amounted to approximately
$5.8 million and $8.9 million for the six months ended
June 30, 2022 and 2021,
respectively.
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 Hainan
REIT Mingde Investment Holding Co., Ltd. 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 (the "SEC'). 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 SEC, 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.
Ms. Angela Hu
Beijing Phone: +86-010-64827328
ir@retoeco.com or 310@reit.cc
RETO ECO-SOLUTIONS INC. AND
SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
ASSETS
|
|
(Unaudited)
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
832,389
|
|
|
$
|
457,495
|
|
Accounts receivable,
net – third parties
|
|
|
2,778,727
|
|
|
|
441,703
|
|
Accounts receivable,
net – related parties
|
|
|
86,219
|
|
|
|
93,589
|
|
Advances to suppliers,
net – third parties
|
|
|
4,024,808
|
|
|
|
281,600
|
|
Advances to suppliers,
net – related parties
|
|
|
3,937,567
|
|
|
|
3,842,620
|
|
Due from related
parties
|
|
|
171,334
|
|
|
|
-
|
|
Loans to third
parties
|
|
|
516,410
|
|
|
|
-
|
|
Inventories,
net
|
|
|
782,543
|
|
|
|
463,731
|
|
Prepayments and other
current assets
|
|
|
1,473,195
|
|
|
|
389,864
|
|
Receivable from
disposition of REITChangjiang
|
|
|
2,310,074
|
|
|
|
7,059,559
|
|
Total Current
Assets
|
|
|
16,913,266
|
|
|
|
13,030,161
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
8,964,560
|
|
|
|
9,707,602
|
|
Intangible assets,
net
|
|
|
3,829,294
|
|
|
|
4,111,029
|
|
Long-term investment in
equity investee
|
|
|
2,586,999
|
|
|
|
2,758,228
|
|
Right-of-use
assets
|
|
|
580,135
|
|
|
|
278,269
|
|
Goodwill
|
|
|
1,023,669
|
|
|
|
1,075,778
|
|
Total
Assets
|
|
$
|
33,897,923
|
|
|
$
|
30,961,067
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Convertible
debt
|
|
$
|
3,279,000
|
|
|
$
|
1,645,000
|
|
Short term
loans
|
|
|
2,239,500
|
|
|
|
2,353,500
|
|
Advances from customers
– third parties
|
|
|
2,563,151
|
|
|
|
2,061,203
|
|
Advances from customers
– related party
|
|
|
192,830
|
|
|
|
|
|
Deferred
grants
|
|
|
120,148
|
|
|
|
269,061
|
|
Accounts payable –
third parties
|
|
|
2,633,057
|
|
|
|
2,121,313
|
|
Accounts payable –
related party
|
|
|
|
|
|
|
10,199
|
|
Accrued expenses and
other liabilities
|
|
|
1,867,545
|
|
|
|
3,103,056
|
|
Loans from third
parties
|
|
|
511,082
|
|
|
|
1,593,977
|
|
Taxes
payable
|
|
|
2,598,904
|
|
|
|
2,599,770
|
|
Due to related
parties
|
|
|
|
|
|
|
472,439
|
|
Deferred tax
liability
|
|
|
344,070
|
|
|
|
370,856
|
|
Payable to
non-controlling shareholders
|
|
|
2,090,200
|
|
|
|
-
|
|
Operating lease
liabilities – current
|
|
|
264,396
|
|
|
|
155,857
|
|
Total Current
Liabilities
|
|
|
18,703,883
|
|
|
|
16,756,231
|
|
|
|
|
|
|
|
|
|
|
Operating lease
liabilities – noncurrent
|
|
|
240,752
|
|
|
|
120,558
|
|
Total
Liabilities
|
|
|
18,944,635
|
|
|
|
16,876,789
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Common Stock, $0.001
par value, 200,000,000 shares
authorized,43,108,112 and
28,965,034 shares issued
and outstanding as of June 30, 2022 and December 31,
2021, respectively
|
|
|
43,109
|
|
|
|
28,966
|
|
Additional paid-in
capital
|
|
|
53,189,508
|
|
|
|
46,776,170
|
|
Statutory
reserve
|
|
|
1,263,125
|
|
|
|
1,230,387
|
|
Accumulated
deficit
|
|
|
(39,056,702)
|
|
|
|
(33,347,984)
|
|
Accumulated other
comprehensive loss
|
|
|
(1,928,692)
|
|
|
|
(1,135,386)
|
|
Total RETO Eco
Solutions Inc. Stockholders' Equity
|
|
|
13,510,346
|
|
|
|
13,552,153
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest
|
|
|
1,442,942
|
|
|
|
532,125
|
|
Total
Equity
|
|
|
14,953,288
|
|
|
|
14,084,278
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
$
|
33,897,923
|
|
|
$
|
30,961,067
|
|
RETO ECO-SOLUTIONS INC. AND
SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
|
|
|
|
For the Six Months
Ended June 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
|
|
Revenues – third party
customers
|
|
$
|
2,882,792
|
|
|
$
|
1,648,964
|
|
Revenues – related
parties
|
|
|
6,987
|
|
|
|
105,868
|
|
Total
revenues
|
|
|
2,889,779
|
|
|
|
1,754,832
|
|
Cost of revenues –
third party customers
|
|
|
1,957,829
|
|
|
|
1,550,989
|
|
Cost of revenues –
related parties
|
|
|
557,145
|
|
|
|
85,710
|
|
Total
Cost
|
|
|
2,514,974
|
|
|
|
1,636,699
|
|
Gross
Profit
|
|
|
374,805
|
|
|
|
118,133
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
288,552
|
|
|
|
314,273
|
|
General and
administrative expenses
|
|
|
5,888,849
|
|
|
|
2,154,645
|
|
Bad debt
expenses
|
|
|
(650,776)
|
|
|
|
3,150,105
|
|
Research and
development expenses
|
|
|
505,847
|
|
|
|
160,472
|
|
Total Operating
Expenses
|
|
|
6,032,472
|
|
|
|
5,779,495
|
|
|
|
|
|
|
|
|
|
|
Loss From
Operations
|
|
|
(5,657,667)
|
|
|
|
(5,661,362)
|
|
|
|
|
|
|
|
|
|
|
Other Income
(expenses):
|
|
|
|
|
|
|
|
|
Interest
expenses
|
|
|
(189,755)
|
|
|
|
(295,545)
|
|
Interest
income
|
|
|
2,293
|
|
|
|
1,466
|
|
Other income
(expenses), net
|
|
|
348,266
|
|
|
|
(48,626)
|
|
Investment
loss
|
|
|
(38,885)
|
|
|
|
-
|
|
Change in fair value of
convertible debt
|
|
|
(204,331)
|
|
|
|
(1,311,852)
|
|
Total Other
Expenses, Net
|
|
|
(82,412)
|
|
|
|
(1,654,557)
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income
Taxes
|
|
|
(5,740,079)
|
|
|
|
(7,315,919)
|
|
Provision For Income
Taxes
|
|
|
28,767
|
|
|
|
-
|
|
Net Loss from
Continuing Operations
|
|
|
(5,768,846)
|
|
|
|
(7,315,919)
|
|
Net Loss from
Discontinued Operations
|
|
|
-
|
|
|
|
(1,549,302)
|
|
Net
Loss
|
|
|
(5,768,846)
|
|
|
|
(8,865,221)
|
|
|
|
|
|
|
|
|
|
|
Less: net loss
attributable to noncontrolling interest
|
|
|
(92,866)
|
|
|
|
(489,876)
|
|
Net Loss
Attributable to ReTo Eco-Solutions, Inc.
|
|
$
|
(5,675,980)
|
|
|
$
|
(8,375,345)
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(5,768,846)
|
|
|
$
|
(8,865,221)
|
|
Other comprehensive
loss:
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment:
|
|
|
(723,421)
|
|
|
|
298,065
|
|
Comprehensive
Loss
|
|
|
(6,492,267)
|
|
|
|
(8,567,156)
|
|
Less: comprehensive
loss attributable to noncontrolling
interest
|
|
|
(22,981)
|
|
|
|
(470,570)
|
|
Comprehensive Loss
Attributable to ReTo Eco-
Solutions, Inc.
|
|
$
|
(6,469,286)
|
|
|
$
|
(8,096,586)
|
|
|
|
|
|
|
|
|
|
|
Loss Per
Share
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.16)
|
|
|
$
|
(0.34)
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Number of Shares
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
34,433,381
|
|
|
|
24,753,947
|
|
View original
content:https://www.prnewswire.com/news-releases/reto-eco-solutions-reports-unaudited-first-half-of-2022-financial-results-301649888.html
SOURCE ReTo Eco-Solutions, Inc.