Core Viewpoint - Euro Tech Holdings Company Limited's subsidiary, Yixing PACT Environmental Technology Company Ltd., has secured a contract valued at approximately US$2.1 million for sewage and potable water treatment solutions at a uranium mining site in Mongolia [1]. Group 1: Contract Details - The awarded contract involves providing sewage treatment with a capacity of 300 tons per day and potable water treatment with a capacity of 360 tons per day [1]. - The scope of the contract includes design, supply, fabrication, and commissioning of the treatment solutions [1]. - The project is expected to be completed by August 2026 [1].

Core Viewpoint - Euro Tech Holdings Company Limited reported a decline in net income and revenues for Fiscal 2024, primarily due to decreased sales of high-value analytical instruments, while gross profits increased due to higher margins from Ballast Water Treatment Systems (BWTS) [2][3][4]. Financial Performance - The company had a net income of US$734,000 in Fiscal 2024, down from US$1,828,000 in Fiscal 2023, largely due to a one-time profit from the disposal of desulfurization treatment plants in the previous year [2]. - Revenues for Fiscal 2024 were US$15,383,000, representing a 14.3% decrease from US$17,940,000 in Fiscal 2023 [3]. - Gross profits increased by 15.4% to US$4,454,000 in Fiscal 2024 compared to approximately US$3,861,000 in Fiscal 2023 [4]. - Selling and administrative expenses slightly decreased by 0.9% to approximately US$4,067,000 in Fiscal 2024 [4]. Business Segments - The BWTS segment showed stable growth, while the Wastewater Treatment (WWT) business faced challenges due to declines in foreign investment in the industrial sector [5]. - The company sees potential in mobile port BWTS systems and shore-based water solutions, driven by increasing maritime traffic and stricter environmental regulations [6]. Market Context - The International Maritime Organization (IMO) mandates BWTS to prevent ecological imbalances caused by ballast water, with compliance requirements affecting vessels built after December 2013 [7]. - The company has obtained type approval for its BWTS in compliance with revised G8 requirements [8]. Selected Financial Data - As of December 31, 2024, cash and cash equivalents were US$5,805,000, total current assets were US$9,229,000, and total assets were US$20,708,000 [12]. - Total liabilities decreased to US$4,014,000 from US$5,640,000 in the previous year, while total shareholders' equity remained relatively stable at US$15,743,000 [12].

Dividends and Financial Contributions - Euro Tech made cash dividends of US$463,928 in 2022, nil in 2023, and US$617,303.92 in 2024 to its shareholders[57]. - Far East made cash dividends to Euro Tech of US$628,205 in 2022, nil in 2023, and US$974,359 in 2024[58]. - Far East transferred cash for working capital purposes to its subsidiaries in Shanghai amounting to US$277,445 in 2022, US$129,200 in 2023, and US$26,455 in 2024[59]. - Far East has made a total capital contribution of US$200,000 to Euro Tech Trading (Shanghai) Limited and US$350,000 to Shanghai Euro Tech Limited[61]. - Euro Tech's subsidiaries do not require loans or capital contributions from Euro Tech to fund their operations[56]. - Euro Tech's cash dividends will be paid in U.S. dollars, but the PRC government imposes controls on the convertibility of Renminbi into foreign currencies[63]. - The majority of Euro Tech's income is received in Renminbi, which may restrict its ability to pay dividends in foreign currencies[63]. - Euro Tech Global was incorporated in 2025 and has not made any cash dividends to Euro Tech as of the date of the annual report[58]. Regulatory and Compliance Risks - The PRC government imposes significant restrictions on cash transfers from PRC entities, which may limit the company's ability to fund operations outside of China[68]. - The company faces risks related to the enforcement of PRC laws, which can change quickly and may affect its operations and compliance[70]. - The PRC Cybersecurity Law and Data Security Law impose various obligations on companies, including the requirement to store personal information within China and conduct risk assessments for data activities[89]. - The company must comply with evolving regulations regarding cybersecurity and data protection, which could lead to penalties if not adhered to[85]. - The PRC government has enhanced its regulatory oversight of companies listed overseas, which may impact the company's ability to operate and raise capital in foreign markets[80]. - Changes in PRC government policies could materially and adversely affect the company's business and operating results, including potential nationalization of private enterprises[95]. - The company is subject to uncertainties in the interpretation and implementation of the Cyber Security Law and Data Security Law, which could increase operational costs and limit service adoption[93]. - The company cannot assure compliance with new laws and regulations regarding data protection, which may lead to government sanctions and adversely affect financial conditions[93]. Economic Conditions and Market Risks - Economic and political developments in China significantly affect the company's financial condition and operational prospects[83]. - The company is subject to risks from geopolitical tensions and global events, such as the COVID-19 pandemic and the Russia-Ukraine conflict, which could disrupt business operations[84]. - Future inflation in China could lead to increased costs and decreased consumer spending, adversely affecting the company's financial results[84]. - The PRC's real GDP growth rates were 2.3%, 8.1%, 2.9%, 5.2%, and 5.0% for the years 2020, 2021, 2022, 2023, and 2024, respectively, indicating a slowdown in economic growth[100]. - The inflation rates in China were recorded at 2.42%, 0.99%, 1.96%, 0.24%, and 0.24% for the years 2020, 2021, 2022, 2023, and 2024, respectively, with potential implications for future operations[101]. - Economic downturns in China could significantly reduce domestic commerce, impacting the company's revenue and operational results[100]. Financial Performance - For Fiscal 2024, the company reported revenues of US$15,383,000, an operating income of US$386,000, and a net income of US$845,000[127]. - In Fiscal 2023, the company had revenues of US$17,940,000, an operating loss of US$249,000, and a net income of US$1,650,000[128]. - The company experienced a decrease in gross profit margin in its engineering-related operations during Fiscal 2023, contributing to the operating loss[128]. - In Fiscal 2022, the company reported revenues of US$14,949,000, an operating income of US$114,000, and a net income of US$539,000[129]. - The company’s comprehensive income attributable to the Company for Fiscal 2024 was US$715,000, compared to US$1,836,000 in Fiscal 2023[127][128]. Foreign Exchange and Capital Restrictions - The RMB/USD exchange rate started around 6.9 RMB per USD in 2023 and depreciated to around 7.25 by mid-year, ending the year around 7.1 RMB per USD[117]. - The company is exposed to foreign exchange risk due to operations in multiple currencies, including RMB, USD, and Euro[116]. - The company has not entered into any hedging transactions to mitigate foreign currency exchange risk, which may lead to significant currency exchange losses[119]. - The PRC government imposes controls on the convertibility of RMB into foreign currencies, affecting the company's ability to remit funds out of China[111]. - The company’s PRC subsidiaries are restricted from transferring a portion of their cash or assets to the Company due to PRC laws and regulations[114]. Operational Challenges and Strategic Initiatives - The company has streamlined operations by reducing the number of employees and consolidating offices due to declining profitability[136]. - The company faces risks from natural disasters and health epidemics that could disrupt operations and adversely affect financial results[133]. - The Chinese government has lifted pandemic-related restrictions, reducing operational uncertainties, but future outbreaks could lead to similar actions[135]. - The company may face increased competition from both foreign and domestic distributors, impacting pricing and profit margins[159]. - The company has limited general business insurance coverage, which may expose it to significant costs from unforeseen losses[155]. - The company’s operations could be materially affected by the loss of key vendors, as sales revenue from trading activities is significantly dependent on them[160]. - The company aims to enhance operational efficiency by focusing trading activities in Hong Kong, Macau, and Guangdong, China[229]. Product Development and Market Position - The ballast water port solution prototype has been successfully completed, with the first order received from Shanghai Yanshan port in 2020[138][140]. - Pact-Yixing developed and launched a ballast water port solution system in 2020, positioning itself as a leader in the commercial port and harbor sector in Asia[208]. - The company plans to gradually transform into a technology-driven company, focusing on developing new markets for ballast water treatment systems[222]. - The company will continue to promote BWTS products capable of treating ballast water at rates of 200 to 1,250 cubic meters per hour[233]. - There is a growing market for mobile ballast water port reception and treatment solutions to meet stricter local environmental regulations[234]. - The company plans to enhance after-sales services for BWTS and maximize core value in turnkey water-related treatment solutions for the maritime industry[233]. - The company aims to assemble and/or manufacture additional products and seek opportunities with suppliers for product assembly[233]. Shareholder and Governance Issues - The rights of shareholders under BVI law are less extensive than those under U.S. law, potentially complicating the protection of shareholder interests[183]. - The company is a foreign private issuer, exempt from certain SEC and NASDAQ requirements, which may limit investor protections[190]. - The company was notified by NASDAQ for failing to maintain a bid price of at least $1.00 per share for thirty trading days, leading to a reverse stock split in January 2012 to regain compliance[192]. - The company has faced challenges in meeting NASDAQ's corporate governance criteria, which may increase costs and complicate the recruitment of independent directors[196]. - The company has a history of compliance issues with NASDAQ listing standards, which could lead to potential delisting and reduced liquidity for its shares[193]. Investments and Joint Ventures - The company holds a 19.4% equity interest in Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (Blue Sky), which has shown fluctuating revenue and net income over the fiscal years[209]. - In Fiscal 2024, Blue Sky made an income contribution of US$398,000, a decrease from US$1,927,000 in Fiscal 2023, primarily due to non-recurrent income from the disposal of desulfurization treatment plants[210]. - Revenue from Pact-Yixing in Fiscal 2024 was US$5,834,000, with an operating income of US$273,000 from engineering activities, marking a slight increase from US$5,797,000 in Fiscal 2023[226]. - Pact-Yixing sold 45 sets of BWTS for ship vessels in Fiscal 2024, an increase from 34 sets sold in Fiscal 2023, indicating growth in product sales[232]. - The company has obtained 5 utility model patents and is applying for 1 invention patent for its ballast water port solution system in China[231]. - The company recognized a net gain of US$1,522,000 from the disposal of a 20% equity interest in Zhejiang Jia Huan Electronic Co. Ltd.[211]. - The company dissolved several subsidiaries to avoid duplication of costs, including Shanghai Environmental in 2021[212].

Core Viewpoint - Euro Tech Holdings Company Limited has announced a share repurchase program for up to 350,000 shares at an aggregate price of up to $500,000, indicating confidence in the company's future and undervaluation in the current stock price [1][2]. Group 1 - The Board of Directors has approved a program to repurchase up to 350,000 shares of its ordinary shares [1]. - The total purchase price for the repurchase program is set at up to $500,000 [1]. - The company plans to execute the repurchase in the open market or through negotiated transactions over the next 12 months based on market conditions [1]. Group 2 - The Board expresses a high degree of confidence in the company's future, believing that this expectation is not reflected in the current stock price [2]. - The current stock price is reported to be significantly lower than the company's net asset value on a per share basis [2].

Core Viewpoint - Euro Tech Holdings Company Limited reported a decrease in revenue for the first half of 2024, primarily due to a decline in engineering activities, but showed an increase in gross profit and a return to net income compared to the previous year [1][2]. Financial Performance - Revenue for the first half of 2024 was US$7,259,000, an 8.8% decrease from US$7,957,000 in the first half of 2023 [1]. - Gross profit increased by 19.5% to US$1,790,000 in 1H 2024, up from US$1,498,000 in 1H 2023, attributed to improved gross profit margins in engineering activities [2]. - General and administrative expenses slightly decreased by US$46,000 to US$2,167,000 in 1H 2024 compared to US$2,213,000 in 1H 2023 [2]. - The company achieved a net income of US$44,000 in 1H 2024, a significant improvement from a net loss of US$255,000 in 1H 2023 [2]. Business Segments - The industrial wastewater treatment (WWT) business faced challenges due to a slowdown in China's economy, impacting foreign investments and exports [3]. - Conversely, the Ballast Water Treatment Systems (BWTS) business experienced steady growth in China and overseas, particularly in Turkey, driven by the maritime industry's expansion [4]. - The company anticipates capturing more sales orders for BWTS due to a trend among shipowners acquiring smaller vessels and stricter compliance with environmental regulations [5]. Strategic Developments - The company has established a majority-owned entity in Singapore, PACT Environmental Technology PTE Ltd, to enhance support for international clients and increase bidding opportunities [6]. - Upcoming trade shows for BWTS will also serve to promote the industrial WWT business to the maritime sector, aligning with the green transformation initiatives driven by stringent environmental regulations [6]. Regulatory Context - The International Maritime Organization (IMO) mandates ballast water treatment to prevent ecological imbalances caused by ballast water from ocean-going vessels [7]. - Compliance with revised G8 requirements for BWTS has been achieved, with type approval certificates obtained for various capacities [8].

Financial Performance - The company reported a net income of US$1,828,000 for Fiscal 2023, a significant increase from US$369,000 in Fiscal 2022, primarily due to a non-recurrent gain from the disposal of two desulfurization treatment plants [1] - Revenues for Fiscal 2023 were US$17,940,000, reflecting a 20.0% increase compared to US$14,949,000 in Fiscal 2022, driven by recovery in trading activities post-COVID-19 [1] - Gross profits decreased by 16.4% to US$3,861,000 in Fiscal 2023 from approximately US$4,618,000 in Fiscal 2022, attributed to a decline in gross margin percentage in engineering activities due to economic slowdown in Mainland China [2] Expenses and Operations - Selling and administrative expenses decreased by 8.6% to approximately US$4,103,000 in Fiscal 2023 from approximately US$4,490,000 in Fiscal 2022, mainly due to the cessation of operations of Shanghai Euro Tech Limited since September 2022 [2] - The CEO noted that while COVID-19 related policies were lifted, the pace of economic recovery in China remains slow and below expectations [2] Market Opportunities - The company has seen an increase in sales orders for Ballast Water Treatment Systems (BWTS) from the maritime industry and is expanding its sales regions in Dubai, Singapore, Thailand, and Turkey [3] - Anticipation of a surge in demand for smaller-sized BWTS retrofits, particularly in countries with small and medium-sized ships, is expected, supported by a new agreement with ERMA FIRST from Greece for exclusive distribution across 20 European countries [4] - The company aims to develop sales channels for industrial wastewater treatment in high-growth regions of Southeast Asia, such as the Philippines and Vietnam [5] Compliance and Regulations - BWTS are mandated by the International Maritime Organization (IMO) to prevent biological imbalance caused by ballast water, with compliance requirements established for vessels constructed after December 2013 [6] - The company has obtained type approval certificates for various BWTS capacities and is compliant with revised G8 requirements for systems installed after October 28, 2020 [7][8]

Financial Performance - Pact-Yixing's revenue in Fiscal 2023 was $5,797,000, an increase from $5,617,000 in Fiscal 2022[202]. - Blue Sky contributed $1,927,000 to the Company in Fiscal 2023, primarily from the disposal of two desulfurization treatment plants[191]. - The Company's revenue from customers in mainland China was 40% and in Hong Kong was 55% in Fiscal 2023[204]. - Pact-Yixing had an operating loss of $438,000 from engineering activities in Fiscal 2023, compared to an operating income of $590,000 in Fiscal 2022[202]. - Total revenue increased by 20.0% to US$17,940,000 in fiscal year 2023 from US$14,949,000 in fiscal year 2022[282]. - Net income surged by 395.3% to US$1,828,000 in fiscal year 2023 compared to US$369,000 in fiscal year 2022[282]. - Cost of revenue as a percentage of revenue increased to 78.5% in fiscal year 2023 from 69.1% in fiscal year 2022[289]. - Gross profit decreased by 16.4% to US$3,861,000 in fiscal year 2023 from US$4,618,000 in fiscal year 2022[289]. - Selling and administrative expenses decreased by 8.6% to US$4,103,000 in fiscal year 2023 from US$4,490,000 in fiscal year 2022[290]. Market and Business Strategy - The Company shifted its focus from distribution to engineering and manufacturing activities, particularly in ballast water treatment technology[199]. - The company has found a strategic OEM partner in Greece to exclusively distribute its products in 20 European countries starting in 2024[210]. - The company is applying for type approval certificates for its BWTS from various European and Asian Classification Societies to expand market coverage[209]. - The company has received type approval certificates from Lloyds and RINA for its BWTS[209]. - The BWTS business thrived in fiscal year 2023, driven by increased demand in the maritime industry[284]. - The Company plans to seek additional capital to fund the development of new technologies and expand into new markets[200]. Customer and Sales Information - The company distributed products to approximately 380 customers in Fiscal 2023, with sales to the three largest customers accounting for approximately 31% of total revenue[218]. - Sales to the three largest customers accounted for approximately 31% of total revenue in 2023, down from 33% in 2022 and 41% in 2021, showing a trend of decreasing reliance on major customers[229]. - The company registered 6 patents and has 6 patents in application in mainland China as of December 31, 2023, indicating ongoing investment in intellectual property[236]. - The company registered 8 trademarks and has 6 trademarks in application in mainland China as of December 31, 2023, highlighting its focus on brand protection[237]. Operational Changes - The Company dissolved several subsidiaries, including Shanghai Environmental, to streamline operations and reduce costs[193]. - The company had a marketing and sales force of 7 individuals in Fiscal 2023, down from 11 in Fiscal 2021, reflecting a reduction in sales personnel[228]. - The company occupies approximately 7,000 square feet of office and warehouse space in Hong Kong, with a monthly rental payment of approximately US$8,910[278]. - Euro Tech Trading (Shanghai) Limited occupies approximately 55 square meters of office space in Shanghai, with a monthly rent of approximately US$322[278]. Regulatory and Compliance - The Amended PRC Company Law, effective July 1, 2024, introduces significant changes in corporate governance, including the elimination of the upper limit on the number of directors[234]. - The company is not currently involved in any legal proceedings or investigations that could materially affect its business or financial condition[231]. - The CAC has not conducted any cybersecurity investigations against the company, indicating compliance with existing laws and regulations[249]. - The company has not received any inquiries or sanctions from PRC regulatory authorities related to cybersecurity or data protection, affirming its adherence to current regulations[249]. Financial Position and Cash Flow - Net cash used in operating activities was US$80,000 for the year ended December 31, 2023, compared to US$461,000 provided in 2022[296]. - Working capital at the end of fiscal year 2023 was US$4,949,000, slightly down from US$4,980,000 in fiscal year 2022[294]. - Cash decreased from US$5,628,000 at the end of Fiscal 2022 to US$5,453,000 at the end of Fiscal 2023, mainly due to increased cash collaterals for bank guarantees[300]. - Accounts receivable, net increased from US$1,586,000 at the end of Fiscal 2022 to US$2,864,000 at the end of Fiscal 2023[301]. - Inventories increased from US$603,000 at the end of Fiscal 2022 to US$723,000 at the end of Fiscal 2023[301]. - The Company expects to continue funding its working capital and capital expenditures from operations and available bank credit facilities[305]. Shareholder Information - Major shareholder T.C. Leung owns 3,994,647 shares, representing 51.8% of ordinary shares[378]. - The company declared a special cash dividend of $1,030,951.80 on June 17, 2021, and $463,927.92 on May 31, 2022, but did not declare any dividends in fiscal year 2023[381]. - The company intends to retain all earnings for business operations and does not plan to declare cash dividends in the foreseeable future[381]. - The company's ordinary shares are traded on NASDAQ under the symbol "CLWT"[384]. - Holders of ordinary shares are entitled to one vote per share, with no cumulative voting rights[387].

Core Insights - Euro Tech Holdings Company Limited has formed a new "White Label" BWTS business partnership in Greece with ERMA FIRST, enhancing its market presence in Europe [1] - The partnership leverages PACT's UV-based BWTS technology alongside ERMA FIRST's electrolysis technology, targeting sales distribution in 20 European countries [1] Company Overview - Euro Tech Holdings' subsidiary, Yixing PACT Environmental Technology Co., Ltd., specializes in UV-based BWTS technology and has received type approval from the China Classification Society for various capacities [3] - ERMA FIRST, founded in 2009, is a leading provider of sustainable maritime solutions, offering a range of services including BWTS, alternative maritime power, energy-saving devices, and carbon capture [4] Industry Context - The International Maritime Organization mandates BWTS to address the ecological impact of ballast water, with an estimated 12 billion tons transported annually by vessels [2] - The IMO's Ballast Water Management Convention, effective since September 2017, requires compliance for new-built vessels and retrofitting for existing vessels starting September 2019 [2]

Acquisitions and Investments - The company acquired a 58% equity interest in Pact and Yixing, which are engaged in water and waste-water treatment solutions, and launched a ballast water port solution system in 2020[190]. - Blue Sky, in which the company holds a 19.4% equity interest, contributed US$413,000 in income in Fiscal 2022, up from US$355,000 in Fiscal 2021[193]. - The company is exploring strategic partnerships and funding opportunities to support product development and acquisitions[223]. Revenue and Financial Performance - For the fiscal year 2022, the company's total revenue decreased by 30.1% to approximately US$14,949,000, following a 60.1% increase to US$21,388,000 in fiscal year 2021[248]. - The company's net income for fiscal year 2022 was US$369,000, a decrease of 62.6% from US$989,000 in fiscal year 2021[248]. - Revenue from scientific instruments accounted for approximately 52.6%, 65.9%, and 58.8% of total revenues in Fiscal 2022, 2021, and 2020 respectively[225]. - Revenue decreased by $6,439,000 or 30.1% to $14,949,000 in Fiscal 2022 from $21,388,000 in Fiscal 2021, primarily due to the adverse impacts of the COVID-19 pandemic and Shanghai's lockdown[253]. - Gross profit decreased by $1,077,000 or 18.9% to $4,618,000 for Fiscal 2022 compared to $5,695,000 for Fiscal 2021, with cost of revenues at $10,331,000 or 69.1% of revenues[254]. COVID-19 Impact - The company faced significant revenue impacts due to COVID-19, with operations materially affected in 2020, but reported no significant disruptions in 2021[198]. - The company experienced a significant impact from COVID-19, particularly in fiscal year 2022, but has seen a gradual recovery since January 2023[249]. - The Chinese government has lifted COVID-19 restrictions starting January 2023, which is expected to reduce operational risks moving forward[200]. Regulatory and Compliance - The company is closely monitoring regulatory developments regarding potential CSRC approvals for overseas listings, with no current inquiries or sanctions received[204]. - The company has not been involved in any cybersecurity reviews or investigations as of the date of the report, indicating compliance with current regulations[207]. - The company is subject to various regulatory changes in China, which could materially affect its operations and demand for services[250]. Research and Development - The company incurred research and development costs of $493,000 in 2020 and $61,000 in 2021 related to the Ballast Water Treatment System (BWTS) compliance[213]. - The company incurred research and development costs of $61,000 in 2021 and $497,000 in 2020, while no costs were reported for 2022[277]. Market and Product Development - The company plans to promote its ballast water port solution system in Southeast Asia, targeting markets participating in the Belt and Road Initiative[211][220]. - The company has developed a handheld ballast water checker, the first of its kind made in China, and is promoting it to ship owners and service providers[233]. - The company has received type approval certificates for its BWTS from Lloyds and RINA, expanding its market coverage[222]. Employee and Executive Compensation - T.C. Leung, the Chairman of the Board, received a yearly salary of US$236,000 for Fiscal 2022[310]. - David YL Leung, the Chief Executive Officer, received an annual salary of US$300,000 for Fiscal 2022[310]. - Jerry Wong, the Chief Financial Officer, received a yearly salary of US$135,000 for Fiscal 2022[310]. - The total contributions of the Group to pension plans and retirement benefit schemes during the year ended December 31, 2022, amounted to US$302,000[314]. Shareholder and Dividend Information - The company's Board of Directors does not currently intend to declare any cash dividends in the foreseeable future, opting instead to retain earnings for business operations[8]. - The company declared a special cash dividend of US$1,299,000.78 on March 6, 2020, and subsequent dividends of US$1,030,951.80 on June 17, 2021, and US$463,927.92 on May 31, 2022[8]. - As of May 10, 2023, the company has 18 shareholders of record and 363 beneficial owners of its Ordinary Shares held in nominee names[9]. Taxation and Financial Obligations - The company's subsidiary in Hong Kong is subject to a profits tax rate of 8.25% on assessable profits up to US$256,000 and 16.5% on profits exceeding that amount[368]. - Euro Tech Trading (Shanghai) Limited, a subsidiary, had an assessable loss carried forward of US$103,000 as of December 31, 2022, which can offset future profits[369]. - The company has not experienced any significant changes since the date of its audited consolidated financial statements[348].

Financial Performance - The company reported an income contribution from Blue Sky of US$355,000 in Fiscal 2021, down from US$435,000 in Fiscal 2020 and up from US$137,000 in Fiscal 2019[145]. - Pact-Yixing's revenue for Fiscal 2021 was US$12,161,000, showing a significant increase from US$4,246,000 in Fiscal 2020[163]. - Total revenue decreased by 23.2% from US$17,399,000 in fiscal year 2019 to US$13,357,000 in fiscal year 2020, then increased by 60.1% to US$21,388,000 in fiscal year 2021[198]. - Net income increased by US$915,000 from a net loss of US$(146,000) in fiscal year 2019 to net income of US$769,000 in fiscal year 2020, and further increased by 28.6% to US$989,000 in fiscal year 2021[198]. - Revenue from the PRC increased by 24% in Fiscal 2021 compared to Fiscal 2020, while revenue from Hong Kong decreased by 23% during the same period[166][169]. - Revenue increased by US$8,031,000 or 60.1% to US$21,388,000 in Fiscal 2021 from US$13,357,000 in Fiscal 2020[203]. - Gross profit increased by US$2,010,000 or 54.5% to US$5,695,000 for Fiscal 2021 compared to US$3,685,000 for Fiscal 2020[204]. - Selling and administrative expenses decreased by US$463,000 or 8.6% to US$4,911,000 in Fiscal 2021 from US$5,374,000 in Fiscal 2020[204]. - Net income from continuing operations was US$989,000 in Fiscal 2021 compared to US$769,000 in Fiscal 2020[206]. Business Operations - The company primarily distributes advanced water treatment equipment and related supplies, acting as an exclusive and non-exclusive distributor for well-known manufacturers[156]. - The company has a 19.4% equity interest in Zhejiang Tianlan Environmental Protection Technology Co. Ltd. (Blue Sky), which provides services for industrial waste gas purification[143]. - Pact-Yixing is focusing on the chemical reagent business, which is believed to be more profitable, and these reagents are manufactured in Shanghai[170]. - Pact-Yixing's clients span various industries, including semiconductor, pharmaceutical, petrochemicals, and food and beverage[159]. - The company has developed a handheld ballast water checker, the first of its kind made in China, and has received patent approval and environmental testing certification[180]. - The company has developed and upgraded various environmental monitoring instruments, although sales of some products have been nominal to date[180]. - The company has closed several subsidiaries, reducing its marketing and sales force from 15 in fiscal 2019 to 11 in fiscal 2021[187]. Regulatory Environment - The company has been closely monitoring regulatory developments in China regarding necessary approvals from the CSRC for overseas listings, with no inquiries or objections received as of the report date[151]. - The company operates in a regulatory environment with increased budget allocations for environmental regulation and monitoring, indicating a growing market for environmental protection products[182]. - The company has not been involved in any investigations or cybersecurity reviews initiated by the CAC as of the report date[155]. Research and Development - The company incurred research and development costs of US$493,000 in Fiscal 2020 and plans to spend up to an additional US$120,000 in Fiscal 2022 on similar projects[163][171]. - Research and development expenses were US$61,000, US$497,000, and US$35,000 for Fiscal 2021, 2020, and 2019, respectively, focusing on BWTS[226]. Management and Governance - T.C. Leung served as Chairman and CEO until February 1, 2022, with a background in engineering and management[245]. - David YL Leung became CEO on February 1, 2022, and has been General Manager of Yixing since 2011, focusing on engineering, sales, and marketing[246]. - Jerry Wong has been CFO since inception, with extensive experience in finance and accounting, including roles at Price Waterhouse[247]. - The total compensation for key executives in Fiscal 2021 included US$197,000 for T.C. Leung, US$147,000 for David YL Leung, and US$111,000 for Jerry Wong[254]. - The Audit Committee had 3 meetings during Fiscal 2021, ensuring oversight of financial accounting and reporting processes[271]. - The company has no material legal proceedings involving any directors or officers[252]. Financial Position - Cash and cash equivalents increased to US$5,269,000 at the end of Fiscal 2021 from US$3,519,000 at the end of Fiscal 2020[213]. - Working capital at the end of Fiscal 2021 was US$5,099,000, compared to US$4,915,000 in Fiscal 2020[212]. - Accounts receivable, net decreased from US$3,586,000 at the end of Fiscal 2019 to US$3,199,000 at the end of Fiscal 2020, then increased to US$3,631,000 at the end of Fiscal 2021[216]. - Inventories decreased from US$586,000 at the end of Fiscal 2019 to US$342,000 at the end of Fiscal 2020, then increased to US$547,000 at the end of Fiscal 2021[216]. - The company expects to fund future cash requirements through operations and available bank credit facilities, but no assurances can be made regarding sufficiency[219]. Taxation - The Company reported a profit before income taxes of US$1,276,000 for 2021, compared to US$498,000 in 2020 and a loss of US$173,000 in 2019[308]. - The computed tax using statutory tax rates for 2021 was US$158,000, with a change in valuation allowances amounting to US$349,000[308]. - The effective tax rate resulted in an income tax credit of US$90,000 for 2021, contrasting with an expense of US$96,000 in 2020[308]. - The PRC Enterprise Income Tax rate applicable to the Company’s subsidiaries is 25% for 2021, with certain subsidiaries carrying forward assessable losses[304][306]. Shareholder Information - The Company declared a special cash dividend of US$1,299,000.78 on March 6, 2020, and US$1,030,951.80 on June 17, 2021[282]. - The Company does not currently intend to declare any cash dividends in the foreseeable future, opting to retain earnings for business operations[282]. - The beneficial ownership of ordinary shares as of March 31, 2022, shows T.C. Leung owning 51.7% of the shares, while all executive officers and directors collectively own 56.3%[280]. - The Company has 21 shareholders of record and 361 beneficial owners of its ordinary shares held in nominee names as of May 12, 2022[285]. Risks and Challenges - The company is exposed to foreign currency risks, with sales primarily in HK dollars and RMB, while expenses are also in multiple currencies including U.S. dollars and Japanese yen[325]. - The company does not currently hedge its foreign exchange positions, which could adversely affect its financial condition if foreign currencies appreciate against the U.S. dollar[325]. - Inflation has not materially affected revenues or operations in recent years, but sustained inflation in the PRC could negatively impact the company's business[326]. - The company had no material bank indebtedness in Fiscal 2021, indicating no exposure to interest rate changes[327].