omniture

ReTo Eco-Solutions, Inc. Announces First Half 2023 Financial Results

2023-12-28 05:30 5068

BEIJING, Dec. 28, 2023 /PRNewswire/ -- ReTo Eco-Solutions, Inc. (Nasdaq: RETO) (the "Company"), a provider of technology solutions and operation services for intelligent ecological environments and internet of things technology development services in China and other countries, today announced its financial results for the six months ended June 30, 2023.

First Half 2023 Financial Review

  • Revenues decreased by approximately $1.7 million, or 57%, to $1.2 million for the six months ended June 30, 2023 from approximately $2.9 million for the six months ended June 30, 2022.
  • Cost of revenues decreased by approximately $1.4 million, or 55%, to approximately $1.1 million for the six months ended June 30, 2023 from $2.5 million for the six months ended June 30, 2022.
  • Operating expenses increased by approximately $35.1 million, or 582%, to approximately $41.1 million for the six months ended June 30, 2023 from $6.0 million for the six months ended June 30, 2022.
  • Net loss increased by approximately $39.9 million, or 692%, to approximately $45.7 million for the six months ended June 30, 2023 from $5.8 million for the six months ended June 30, 2022.

Financial Results for the First Half 2023

Revenues 

Revenues decreased by approximately $1.7 million, or 57%, to $1.2 million for the six months ended June 30, 2023 from approximately $2.9 million for the six months ended June 30, 2022. Revenue from machinery and equipment sales decreased by approximately $1.0 million, or 49%, to $1.0 million for the six months ended June 30, 2023 from approximately $2.0 million for the six months ended June 30, 2022. The decrease is mainly due to slowdown of the construction industry and less demand for the Company's products. Sales of the Company's environmental-friendly construction materials decreased by approximately $0.2 million, or 72%, to approximately $0.09 million for six months ended June 30, 2023 from approximately $0.3 million for the six months ended June 30, 2022 due to the decrease in demand resulting from the downturn of the national real estate market. Revenue from other services decreased by approximately $0.3 million, or 79%, to approximately $0.09 million for six months ended June 30, 2023 from approximately $0.4 million for the six months ended June 30, 2022 due to less demand for the Company's technological consulting service and roadside assistance service.

Cost of revenues 

Cost of revenues decreased by approximately $1.4 million, or 55%, to approximately $1.1 million for the six months ended June 30, 2023 from $2.5 million for the six months ended June 30, 2022. The decrease in cost of revenues was in line with the decrease in revenues.

Gross profit

Gross profit decreased by approximately $0.3 million, or 75%, to approximately $0.1 million for the six months ended June 30, 2023 from $0.4 million for the six months ended June 30, 2022. Gross margin was 8% for the six months ended June 30, 2023 as compared to 13% for the six months ended June 30, 2022. The decrease in gross profit was primarily attributable to (i) a decrease of approximately $147,000 in gross profit in machinery and equipment business due to the significant decrease in domestic and overseas market demand of machinery and equipment; and (ii) a decrease of approximately $155,000 in gross profit in other services due to decreased customer orders. Because other services with higher gross profit margin accounted for 7% of total revenue in the six months ended June 30, 2023 as compared to 15% of total revenue for the six months ended June 30, 2022, the Company's gross profit margin decreased to 8% for the six months ended June 30, 2023 as compared to 13% of total revenue for the six months ended June 30, 2022.

Operating expenses

For the six months ended June 30, 2023 and 2022, the Company's selling expenses were approximately $0.3 million for both periods.

General and administrative expenses increased by $33.7 million, or 572%, to $39.6 million for the six months ended June 30, 2023 from $5.9 million for the six months ended June 30, 2022. The increase was due to $33.8 million increase in share-based compensation, partially offset by decreased payroll expenses.

Bad debt expenses amounted to approximately $0.5 million for the six months ended June 30, 2023, as compared to a bad debt recovery of approximately $0.7 million for the six months ended June 30, 2022.

Research and development expenses increased by $0.3 million, or 60%, to $0.8 million for the six months ended June 30, 2023 from $0.5 million for the six months ended June 30, 2022. The increase was due to an increase of approximately $0.3 million in expert fees.

Interest expense

The Company's interest expenses were approximately $0.2 million for both six-month periods ended June 30, 2023 and 2022.

Change in fair value in convertible debt

Due to change in fair value of convertible loans, the Company recorded an unrealized loss of $57,985 and $204,331 in other expense for the six months ended June 30, 2023 and 2022, respectively.

Other income (expense), net 

Other expense was $4.4 million for the six months ended June 30, 2023 as compared to $0.3 million for the six months ended June 30, 2022. The increase was due to a one-time charge of $4.7 million from a terminated project.

Loss before income taxes

The Company's loss before income taxes was approximately $45.7 million for the six months ended June 30, 2023, an increase of approximately $39.9 million as compared to loss before income taxes of approximately $5.8 million for the six months ended June 30, 2022. The increase was primarily attributable to decrease in revenue and increase in operating expenses and other expense.

Provision for income taxes

The Company's subsidiaries in the People's Republic of China ("PRC") 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, two subsidiaries of the Company, Beijing REIT Technology Development Co., Ltd. and Hainan Yile IoT Technology Co., Ltd., are recognized as High and New Technology Enterprises by the PRC government and thus subject to a favorable income tax rate of 15%. As the Company had losses before income tax, its income tax expenses amounted to $52 and $28,767 for the six months ended June 30, 2023 and 2022, respectively. 

Net loss 

As a result of the foregoing, net loss amounted to approximately $45.7 million and $5.8 million for the six months ended June 30, 2023 and 2022, respectively.

Cash

Cash was approximately $0.2 million as of June 30, 2023, reflecting an increase of approximately $0.1 million from approximately $0.1 million as of December 31, 2022.

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, through its operating subsidiaries in China, is engaged in the ecological restoration and solid waste treatment, manufacturing and distribution of eco-friendly construction materials (aggregates, bricks, pavers and tiles) made from mining waste (iron tailings), and soil remediation materials transformed from solid waste (iron tailings), as well as equipment used for the production of these eco-friendly construction materials and soil remediation materials. In addition, the Company provides consultation, design, project implementation and construction of urban ecological protection projects and parts, engineering support, consulting, technical advice and service, and other project-related solutions for its manufacturing equipment and environmental protection projects. The Company also offers roadside assistance services and technology development services utilizing Internet of Things technologies. 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. These statements include, among others, statements regarding the Company's plans to regain compliance with the minimum bid price requirement. The Company's actual results may differ materially from those expressed in any forward-looking statements as a result of various factors and uncertainties. The reports filed by the Company with the Securities and Exchange Commission discuss these and other important factors and risks that may affect the Company's business, results of operations and financial conditions. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. 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.
Angela Hu
Tel: +86-010-64827328
Email: ir@retoeco.com or 310@reit.cc 

 

 

 

RETO ECO-SOLUTIONS INC. AND SUBSIDIARIES


UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS






June 30,



December 31,




2023



2022


ASSETS


(Unaudited)





   Current Assets:







Cash and cash equivalents


$

233,839



$

113,895


Accounts receivable, net



475,303




2,150,450


Accounts receivable, net - related party



79,639




83,736


Advances to suppliers, net



707,775




453,894


Advances to suppliers, net - related party



1,598,977




3,787,036


Inventories, net



820,590




337,798


Prepayments and other current assets



114,287




402,151


Due from related parties



483,369




208,225


Due from third parties



678,223




-


Total Current Assets



5,192,002




7,537,185











Property, plant and equipment, net



8,028,957




8,722,435


Intangible assets, net



4,548,402




4,869,654


Long-term investment in equity investee



2,301,850




2,503,944


Right-of-use assets



271,972




424,999


Total Assets


$

20,343,183



$

24,058,217











LIABILITIES AND SHAREHOLDERS' EQUITY


















Current Liabilities:









Short-term loans


$

5,274,916




1,319,490


Convertible debt



3,004,000




3,922,686


Advances from customers



2,072,983




2,551,216


Advances from customers-related party



166,275




-


Due to a minority shareholder



413,719




725,000


Deferred grants - current



264




18,563


Accounts payable



2,934,058




2,624,701


Accrued and other liabilities



2,433,692




2,717,432


Loans from third parties



1,356,113




1,106,233


Taxes payable



1,922,345




2,077,088


Operating lease liabilities, current



150,420




277,036


Deferred tax liability



309,664




325,593


Total Current Liabilities



20,038,449




17,665,038











Loans from third parties-noncurrent



1,048,088




1,160,000


Operating lease liabilities - noncurrent



83,407




158,650


Total Liabilities



21,169,944




18,983,688











Commitments and Contingencies


















Shareholders' Equity:









Common Share, $0.01 par value, 20,000,000 shares authorized, 7,725,848
    shares and 4,339,889 shares issued and outstanding as of June 30, 2023
    and December 31, 2022, respectively



77,259




43,400


Additional paid-in capital



98,689,295




53,331,093


Subscription receivable



(5,887,546)




-


Statutory reserve



1,069,882




1,066,554


Accumulated deficit



(93,056,277)




(47,813,206)


Accumulated other comprehensive loss



(2,220,029)




(2,388,890)


Total Shareholders' Equity Attributable to ReTo Eco-Solutions Inc.



(1,327,416)




4,238,951











Noncontrolling interest



500,655




835,578


Total Shareholders' Equity



(826,761)




5,074,529











Total Liabilities and Shareholders' Equity


$

20,343,183




24,058,217


 

 

 

RETO ECO-SOLUTIONS INC. AND SUBSIDIARIES


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME






For the Six Months Ended June 30,




2023



2022









Revenues – third party customers


$

1,022,919



$

2,882,792


Revenues – related parties



210,864




6,987


Total revenues



1,233,783




2,889,779


Cost of revenues – third party customers



780,794




1,957,829


Cost of revenues – related parties



359,398




557,145


Total Cost



1,140,192




2,514,974


Gross Profit



93,591




374,805











Operating Expenses:









Selling expenses



289,730




288,552


General and administrative expenses



39,559,187




5,888,849


Bad debt expenses (recovery)



460,116




(650,776)


Research and development expenses



809,979




505,847


Total Operating Expenses



41,119,012




6,032,472











Loss from Operations



(41,025,421)




(5,657,667)











Other Income (expenses):









Interest expenses



(180,772)




(189,755)


Interest income



1,509




2,293


Other income (expenses), net



(4,356,224)




348,266


Change in fair value of convertible debt



(57,985)




(204,331)


Gain from disposal of subsidiaries



38,394




-


Share of losses in equity method investments



(83,307)




(38,885)


Total Other Expenses, Net



(4,638,385)




(82,412)











Loss Before Income Taxes



(45,663,806)




(5,740,079)


Provision for Income Taxes



52




28,767


Net Loss



(45,663,858)




(5,768,846)











Less: net loss attributable to noncontrolling interest



(424,115)




(92,866)


Net Loss Attributable to ReTo Eco-Solutions, Inc.


$

(45,239,743)



$

(5,675,980)











Net Loss


$

(45,663,858)



$

(5,768,846)


Other comprehensive gain (loss):









Foreign currency translation adjustment



258,053




(723,421)


Comprehensive Loss



(45,405,805)




(6,492,267)


Less: comprehensive loss attributable to noncontrolling interest



(334,923)




(22,981)


Comprehensive Loss Attributable to ReTo Eco-Solutions, Inc


$

(45,070,882)



$

(6,469,286)











Loss Per Share









Basic and diluted


$

(8.32)



$

(1.65)











Weighted Average Number of Shares









Basic and diluted



5,437,853




3,443,338


 

 

Source: ReTo Eco-Solutions, Inc.
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