Core Viewpoint - Hongli Special Steel (HLP) experienced a 2.02% increase in stock price, reaching $0.676 per share, with a total market capitalization of $49.6446 million as of August 11 [1] Financial Performance - For the fiscal year ending December 31, 2024, Hongli Special Steel reported total revenue of $14.1056 million, reflecting a year-on-year decrease of 11.83% [1] - The company recorded a net profit attributable to shareholders of -$1.8816 million, which represents a significant year-on-year decline of 317.6% [1] Company Overview - Hongli Group Company is a foreign holding company registered in the Cayman Islands, primarily operating through its domestic subsidiary, Shandong Hongli Special Pipe Co., Ltd. [1] - Shandong Hongli Special Pipe Co., Ltd. was established in September 1999 and is located in Weifang, known as the Kite Capital [1] - The company specializes in producing customized open and closed cold-formed profiles, rolled products, steel-aluminum composite pipes, as well as deep processing services like 3D bending, 3D laser cutting, and drilling and milling [1] Product Applications - The high-quality products manufactured by the company are utilized in various sectors, including construction machinery cabins, automotive body components, building products, curtain wall partitions, power plant equipment, conveying devices, solar equipment, communication devices, and furniture [1]

Core Viewpoint - Hongli Steel (HLP) experienced a stock price increase of 3.36% on August 8, closing at $0.676 per share, with a total market capitalization of $49.6446 million [1] Financial Performance - As of December 31, 2024, Hongli Steel reported total revenue of $14.1056 million, representing a year-on-year decrease of 11.83% [1] - The company recorded a net profit attributable to shareholders of -$1.8816 million, reflecting a significant year-on-year decline of 317.6% [1] Company Overview - Hongli Group is a Cayman Islands-registered holding company that primarily operates through its domestic subsidiary, Shandong Hongli Special Steel Pipe Co., Ltd. [1] - Shandong Hongli Special Steel Pipe Co., Ltd. was established in September 1999 and is located in Weifang, known as the Kite Capital [1] - The company specializes in producing customized cold-formed profiles, rolled products, steel-aluminum composite pipes, as well as deep processing services such as 3D bending, 3D laser cutting, and drilling and milling [1] Product Applications - Hongli Steel's high-quality products are utilized in various sectors, including construction machinery cabins, automotive body components, building products, curtain wall partitions, power plant equipment, conveyor systems, solar equipment, communication devices, and furniture [1]

Core Viewpoint - Hongli Special Steel (HLP) experienced a 2.45% increase in stock price, reaching $0.67 per share, with a total market capitalization of $49.204 million as of August 7 [1] Financial Performance - As of December 31, 2024, Hongli Special Steel reported total revenue of $14.1056 million, a year-on-year decrease of 11.83% [1] - The net profit attributable to the parent company was -$1.8816 million, reflecting a significant year-on-year decline of 317.6% [1] Company Overview - Hongli Group is a Cayman Islands-registered holding company primarily operating through its domestic subsidiary, Shandong Hongli Special Pipe Co., Ltd [1] - Shandong Hongli Special Pipe Co., Ltd, established in September 1999, is located in Weifang, known as the Kite Capital [1] - The company produces a variety of customized open and closed cold-formed profiles, rolled products, steel-aluminum composite pipes, as well as deep processing services like 3D bending, 3D laser cutting, and drilling and milling [1] Product Applications - The high-quality products of the company are utilized in various sectors including construction machinery cabins, automotive body components, building products, curtain wall partitions, power plant equipment, conveying devices, solar equipment, communication devices, and furniture [1]

Core Viewpoint - Hongli Steel (HLP) experienced a 2.08% increase in stock price, reaching $0.668 per share, with a total market capitalization of $49.03 million as of August 6 [1] Financial Performance - As of December 31, 2024, Hongli Steel reported total revenue of $14.11 million, a year-on-year decrease of 11.83% [1] - The company recorded a net profit attributable to shareholders of -$1.88 million, reflecting a significant year-on-year decline of 317.6% [1] Company Overview - Hongli Group is a Cayman Islands-registered holding company primarily operating through its domestic subsidiary, Shandong Hongli Special Steel Pipe Co., Ltd [1] - Shandong Hongli Special Steel Pipe Co., Ltd, established in September 1999, is located in Weifang, known as the Kite Capital [1] - The company specializes in producing customized open and closed cold-formed profiles, rolled products, steel-aluminum composite pipes, as well as deep processing services like 3D bending, 3D laser cutting, and drilling [1] Product Applications - Hongli Steel's high-quality products are utilized in various sectors, including construction machinery cabins, automotive body components, building products, curtain wall partitions, power plant equipment, conveying devices, solar equipment, communication devices, and furniture [1]

Core Viewpoint - Hongli Steel (HLP) experienced a stock price increase of 5.14% on August 5, 2023, closing at $0.654 per share with a total market capitalization of $48.03 million [1] Financial Performance - As of December 31, 2024, Hongli Steel reported total revenue of $14.11 million, representing a year-over-year decrease of 11.83% [1] - The company recorded a net profit attributable to shareholders of -$1.88 million, which is a significant decline of 317.6% year-over-year [1] Company Overview - Hongli Group is a Cayman Islands-registered holding company primarily operating through its domestic subsidiary, Shandong Hongli Special Pipe Co., Ltd. [1] - Shandong Hongli Special Pipe Co., Ltd. was established in September 1999 and is located in Weifang, known as the Kite Capital [1] - The company specializes in producing customized cold-formed profiles, rolled products, steel-aluminum composite pipes, as well as deep processing services like 3D bending, 3D laser cutting, and drilling [1] Product Applications - Hongli Steel's high-quality products are utilized in various sectors, including construction machinery cabins, automotive body components, building products, curtain wall partitions, power plant equipment, conveying devices, solar equipment, communication devices, and furniture [1]

Core Viewpoint - Hongli Steel (HLP) experienced a 4.6% increase in stock price, closing at $0.651 per share with a total market capitalization of $47.7793 million as of August 4 [1] Financial Performance - For the fiscal year ending December 31, 2024, Hongli Steel reported total revenue of $14.1056 million, reflecting a year-over-year decrease of 11.83% [1] - The company recorded a net profit attributable to shareholders of -$1.8816 million, which represents a significant decline of 317.6% compared to the previous year [1] Company Overview - Hongli Group is a Cayman Islands-registered holding company that primarily operates through its domestic subsidiary, Shandong Hongli Special Pipe Co., Ltd [1] - Shandong Hongli Special Pipe Co., Ltd, established in September 1999, is located in Weifang, known as the Kite Capital [1] - The company specializes in producing customized open and closed cold-formed profiles, rolled products, steel-aluminum composite pipes, as well as deep processing services like 3D bending, 3D laser cutting, and drilling [1] Product Applications - The high-quality products manufactured by the company are utilized in various sectors, including construction machinery cabins, automotive body components, building products, curtain wall partitions, power plant equipment, conveyor systems, solar equipment, communication devices, and furniture [1]

Core Viewpoint - Hongli Steel (HLP) experienced a significant intraday increase of 7.87%, closing at $0.682 per share, with a total market capitalization of $50.06 million [1] Financial Performance - As of December 31, 2024, Hongli Steel reported total revenue of $14.11 million, reflecting a year-on-year decrease of 11.83% [1] - The company recorded a net profit attributable to shareholders of -$1.88 million, which represents a substantial year-on-year decline of 317.6% [1] Company Overview - Hongli Group is a Cayman Islands-registered holding company primarily operating through its domestic subsidiary, Shandong Hongli Special Steel Pipe Co., Ltd. [1] - Shandong Hongli Special Steel Pipe Co., Ltd. was established in September 1999 and is located in Weifang, known as the Kite Capital [1] - The company specializes in producing customized cold-formed profiles, rolled products, steel-aluminum composite pipes, as well as deep processing services such as 3D bending, 3D laser cutting, and drilling [1] Product Applications - Hongli Steel's high-quality products are utilized in various sectors, including construction machinery cabins, automotive body components, building products, curtain wall partitions, power plant equipment, conveying devices, solar equipment, communication devices, and furniture [1]

Core Viewpoint - Hongli Group Inc. has received a deficiency letter from Nasdaq regarding non-compliance with the minimum bid price requirement for its ordinary shares, which must be at least $1.00 per share for continued listing on The Nasdaq Capital Market [1][2]. Compliance Status - The deficiency notice does not immediately affect the listing status of the ordinary shares, and the company has a compliance period of 180 calendar days, until January 6, 2026, to regain compliance [2][3]. - If the closing bid price reaches or exceeds $1.00 for at least 10 consecutive business days before the deadline, the company will be notified of compliance [2]. - The company may consider a reverse stock split to regain compliance, which must be completed no later than ten business days prior to January 6, 2026 [2][3]. Company Overview - Hongli Group Inc. is a Cayman Islands holding company that consolidates the financial results of Shandong Hongli Special Section Tube Co., Ltd. and its subsidiaries, which are leading manufacturers of cold roll formed steel profiles in China [4]. - The company has over 20 years of operating history and serves customers in more than 30 major cities in China, as well as internationally in South Korea, Japan, the U.S., and Sweden [4]. - Hongli Operating Group operates 11 cold roll forming production lines and produces a variety of profile products across different materials, sizes, and shapes [4].

[Introduction](index=7&type=section&id=INTRODUCTION) This annual report on Form 20-F presents audited consolidated financial statements for fiscal years ended December 31, 2024, and 2023 - The company's reporting currency is the U.S. dollar, with Renminbi as its functional currency, and translations are based on specified year-end and average rates[24](index=24&type=chunk) - Key terms are defined, including "Hongli" for Hongli Group Inc. and its subsidiaries, and "PRC operating entities" for the VIE and its subsidiaries[22](index=22&type=chunk)[26](index=26&type=chunk) [PART I](index=9&type=section&id=PART%20I) [Key Information](index=9&type=section&id=Item%203.%20KEY%20INFORMATION) This section details the company's VIE structure, regulatory compliance, financial consolidation, and comprehensive risk factors [VIE Structure and Regulatory Disclosures](index=9&type=section&id=VIE%20Structure%20and%20Regulatory%20Disclosures) The company consolidates its PRC operating entity through a VIE structure, navigating regulatory filings, cybersecurity assessments, and restrictions on fund transfers - Hongli Group Inc. consolidates its PRC operating entity, Hongli Shandong, via a Variable Interest Entity (VIE) structure established through contractual arrangements in April 2021, without direct equity ownership[30](index=30&type=chunk)[31](index=31&type=chunk) - A formal filing was submitted to the China Securities Regulatory Commission (CSRC) on January 2, 2025, following a private placement on December 5, 2024, and remains under review[37](index=37&type=chunk)[190](index=190&type=chunk) - The company believes it is not subject to cybersecurity review by the Cyberspace Administration of China (CAC) as its operations do not involve collecting personal data of at least **1,000,000** users or other sensitive data[40](index=40&type=chunk)[220](index=220&type=chunk) - Hongli Cayman relies on subsidiary dividends, with fund transfers from PRC entities subject to foreign exchange controls and a **10%** statutory reserve requirement until it reaches **50%** of registered capital[42](index=42&type=chunk)[44](index=44&type=chunk)[47](index=47&type=chunk) [Financial Information Related to the VIE](index=16&type=section&id=Financial%20Information%20Related%20to%20the%20VIE) This section presents condensed consolidating financial statements for 2022-2024, detailing operations, balance sheets, and cash flows across the parent, subsidiaries, and VIE Condensed Consolidating Statement of Operations (2024) | | Hongli Cayman | Subsidiary (Hong Kong) | Hongli WFOE (Mainland China) | VIE and Its Subsidiaries | Consolidated Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues (USD)** | - | - | - | $(14,105,620) | $(14,105,620) | | **Net Income (Loss) (USD)** | $(1,761,351) | $146,528 | $26,244 | - | $(1,881,635) | | **Comprehensive Income (Loss) (USD)** | $(1,761,351) | $146,528 | $299,572 | $(381,527) | $(2,582,258) | Condensed Consolidating Balance Sheet (As of Dec 31, 2024) | | Hongli Cayman | Subsidiary (Hong Kong) | Hongli WFOE (Mainland China) | VIE and Its Subsidiaries | Consolidated Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets (USD)** | $53,493,295 | $22,027,418 | $54,473,563 | $32,947,379 | $65,010,421 | | **Total Liabilities (USD)** | $1 | $22,027,418 | $54,473,563 | $32,947,379 | $11,517,126 | | **Total Shareholders' Equity (USD)** | $53,493,294 | - | - | - | $53,493,295 | Condensed Consolidating Statement of Cash Flows (2024) | | Hongli Cayman | Subsidiary (Hong Kong) | Hongli WFOE (Mainland China) | VIE and Its Subsidiaries | Consolidated Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities (USD)** | $(33,000,022) | $1 | $33,317,754 | $(381,391) | $(414,034) | | **Net Cash Used in Investing Activities (USD)** | - | - | $(33,350,376) | $38,567 | $(33,311,809) | | **Net Cash Provided by Financing Activities (USD)** | $33,000,000 | - | $5,559 | $503,018 | $33,508,577 | [Risk Factors](index=20&type=section&id=D.%20Risk%20Factors) The company faces diverse risks, including geopolitical tensions, customer concentration, VIE enforceability, China's regulatory environment, and share price volatility - **Business Risks:** The company faces risks from geopolitical tensions, potential tariffs, substantial customer concentration, with **3** major customers accounting for **67%** of sales in FY2024, and reliance on key raw material suppliers[63](index=63&type=chunk)[81](index=81&type=chunk) - **Corporate Structure Risks:** Reliance on contractual arrangements with its VIE may be less effective than direct ownership and costly to enforce under PRC law, with potential conflicts of interest with VIE shareholders[65](index=65&type=chunk)[123](index=123&type=chunk)[128](index=128&type=chunk) - **China-Related Risks:** The company is subject to uncertainties in the PRC legal system, substantial government influence, currency exchange controls, and potential delisting risks under the Holding Foreign Companies Accountable Act (HFCA Act)[65](index=65&type=chunk)[149](index=149&type=chunk)[159](index=159&type=chunk) - **Share-Related Risks:** As a foreign private issuer, the company has different and potentially less frequent disclosure obligations, and investors may face difficulties enforcing legal judgments against the company due to its Cayman Islands incorporation and PRC operations[67](index=67&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) - The company identified material weaknesses in internal control over financial reporting, including a lack of key monitoring mechanisms and insufficient accounting personnel with U.S. GAAP and SEC reporting knowledge[139](index=139&type=chunk)[142](index=142&type=chunk) [Information on the Company](index=68&type=section&id=Item%204.%20INFORMATION%20ON%20THE%20COMPANY) This section provides a comprehensive overview of Hongli Group, detailing its history, VIE structure, core business operations, and strategic expansion plans [History and Development of the Company](index=68&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Hongli Cayman, incorporated in February 2021, operates through a VIE structure with Hongli Shandong, completed its Nasdaq IPO in March 2023, and a **$33 million** private placement in December 2024 - The company operates through a VIE structure, consolidating the financial results of Shandong Hongli Special Section Tube Co., Ltd. (Hongli Shandong), incorporated in **1999**[254](index=254&type=chunk)[270](index=270&type=chunk) - The company consummated its Initial Public Offering (IPO) on March 31, 2023, selling **2,062,500** Ordinary Shares at **$4.00** per share[264](index=264&type=chunk) - On December 5, 2024, the company closed a private placement, issuing **60,000,000** Ordinary Shares at **$0.55** per share for aggregate gross proceeds of **$33,000,000**[266](index=266&type=chunk) - As of May 5, 2025, the company had **73,438,750** Ordinary Shares issued and outstanding[267](index=267&type=chunk) [Business Overview](index=77&type=section&id=B.%20Business%20Overview) The company's PRC operating entities specialize in custom cold roll formed (CRF) steel profiles, holding **62** patents, and are executing an Expansion Plan, with **86.5%** of 2024 sales concentrated in the PRC market - The company's main business is the design and production of custom-made cold roll formed (CRF) steel profiles for machinery in sectors like mining, construction, and agriculture[295](index=295&type=chunk) Revenue by Geography (FY 2024 vs. FY 2023) | Region | 2024 Revenue (USD) | % of Total | 2023 Revenue (USD) | % of Total | | :--- | :--- | :--- | :--- | :--- | | PRC | $12,196,548 | 86.5% | $12,117,240 | 75.7% | | International | $1,909,072 | 13.5% | $3,880,714 | 24.3% | | **Total** | **$14,105,620** | **100%** | **$15,997,954** | **100%** | Top Customer Sales Concentration | Customer | 2024 Sales (USD) | % of Total | 2023 Sales (USD) | % of Total | | :--- | :--- | :--- | :--- | :--- | | LOVOL | $6,056,622 | 43% | $7,707,045 | 48% | | South Korean VOLVO | $1,654,578 | 12% | $3,441,899 | 22% | | XCMG Group | $1,750,970 | 12% | N/A | N/A | | **Total (Top 3)** | **$9,462,170** | **67%** | **$11,148,944** | **70%** | - The company is executing an Expansion Plan, including purchasing an industrial park and new production facilities for approximately **$21.9 million** (RMB **151.4 million**)[339](index=339&type=chunk)[340](index=340&type=chunk) - As of the report date, the company owns **62** patents, including **55** utility patents and **7** invention patents, critical to its operations[367](index=367&type=chunk) [Regulations](index=102&type=section&id=Regulations) This section outlines key PRC regulations impacting the company, including foreign investment, intellectual property, foreign exchange controls, dividend distribution, CSRC overseas listing rules, and taxation - The company's operations are subject to China's Foreign Investment Law, utilizing a pre-entry national treatment and negative list management system, with its business not in a restricted or prohibited industry[393](index=393&type=chunk)[394](index=394&type=chunk)[397](index=397&type=chunk) - New CSRC regulations effective March 31, 2023, require domestic companies seeking overseas listings to file with the CSRC, which Hongli did after its December 2024 offering[420](index=420&type=chunk)[422](index=422&type=chunk) - Foreign exchange is strictly regulated in China, with current account payments permissible with compliance, while capital account transactions require SAFE approval or registration[402](index=402&type=chunk) - Dividend distributions from PRC subsidiaries are restricted, payable only from after-tax profits, with at least **10%** allocated to a statutory reserve fund until it reaches **50%** of registered capital[410](index=410&type=chunk) [Operating and Financial Review and Prospects](index=114&type=section&id=Item%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance, detailing revenue and profitability declines in FY2024, liquidity management, and key accounting policies [Operating Results](index=114&type=section&id=A.%20Operating%20results) Total revenues decreased by **11.8%** to **$14.1 million** in FY2024, resulting in a **$1.9 million** net loss, primarily due to a **50.8%** decline in international sales and a **$2.0 million** share-based compensation expense Key Financial Results (FY 2024 vs. FY 2023) | Metric | FY 2024 | FY 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues, Net (USD)** | $14,105,620 | $15,997,954 | $(1,892,334) | -11.8% | | **Gross Profit (USD)** | $4,519,747 | $5,245,840 | $(726,093) | -13.8% | | **(Loss) Income from Operation (USD)** | $(1,583,296) | $1,020,435 | $(2,603,731) | -255.2% | | **Net (Loss) Income (USD)** | $(1,881,635) | $864,722 | $(2,746,357) | -317.6% | | **Gross Margin** | 32.0% | 32.8% | -0.8pp | -2.4% | - The revenue decline in FY2024 was primarily due to a **$2.0 million** (**50.8%**) decrease in international sales, while domestic sales remained stable[473](index=473&type=chunk)[474](index=474&type=chunk) - SG&A expenses increased by **44%** in FY2024, mainly due to a **$2.0 million** share-based compensation expense from issuing **1,200,000** Ordinary Shares to employees[478](index=478&type=chunk) Key Financial Results (FY 2023 vs. FY 2022) | Metric | FY 2023 | FY 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues, Net (USD)** | $15,997,954 | $20,283,245 | $(4,285,291) | -21.1% | | **Gross Profit (USD)** | $5,245,840 | $7,008,493 | $(1,762,653) | -25.2% | | **Net Income (USD)** | $864,722 | $2,932,363 | $(2,067,641) | -70.5% | [Liquidity and Capital Resources](index=129&type=section&id=B.%20Liquidity%20and%20capital%20resources) As of December 31, 2024, the company had **$0.9 million** in cash, with liquidity supported by its **$8.3 million** IPO proceeds and **$33.0 million** private placement, primarily for expansion and debt repayment Summary of Cash Flows | | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Net Cash (Used in) Provided by Operating Activities (USD)** | $(414,034) | $884,917 | $2,493,024 | | **Net Cash Used in Investing Activities (USD)** | $(33,311,809) | $(2,253,634) | $(11,670,592) | | **Net Cash Provided by Financing Activities (USD)** | $33,508,577 | $382,094 | $10,841,222 | - Net cash used in investing activities in 2024 was **$33.3 million**, primarily due to a **$33.4 million** deposit for a joint venture investment[550](index=550&type=chunk) - Net cash provided by financing activities in 2024 was **$33.5 million**, mainly from **$33.0 million** in proceeds from a private placement[553](index=553&type=chunk) - As of December 31, 2024, total short-term and long-term loans were approximately **$9.4 million**, with substantially all guaranteed by the CEO and his family members[556](index=556&type=chunk)[557](index=557&type=chunk) [Critical Accounting Policies](index=126&type=section&id=Critical%20Accounting%20Policies) The company's financial statements adhere to U.S. GAAP, with key policies including VIE consolidation, ASC 606 revenue recognition, and ASC 842 lease accounting - The company consolidates its VIE, Hongli Shandong, as it is deemed the primary beneficiary under U.S. GAAP[514](index=514&type=chunk) - Revenue is recognized when control of products is transferred to customers, typically upon shipment for overseas sales and acceptance for domestic sales[515](index=515&type=chunk)[516](index=516&type=chunk) - The company adopted ASC 842 for leases and accounts for failed sale and leaseback transactions as financing when a bargain purchase option is reasonably certain to be exercised[521](index=521&type=chunk)[523](index=523&type=chunk) [Directors, Senior Management and Employees](index=139&type=section&id=Item%206.%20DIRECTORS,%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's leadership, including CEO Jie Liu and CFO Xiangmei Zeng, executive compensation, board structure with three independent directors, and its **167** full-time employees as of May 2025 - The company's leadership includes **Jie Liu** as CEO and Chairman, and **Xiangmei Zeng** as CFO[572](index=572&type=chunk)[573](index=573&type=chunk)[574](index=574&type=chunk) Executive Compensation Summary | Name and Principal Position | Year | Salary (USD) | Total (USD) | | :--- | :--- | :--- | :--- | | **Jie Liu** | 2024 | $50,030 | $50,030 | | CEO and Chairman | 2023 | $27,115 | $27,115 | | **Xiangmei Zeng** | 2024 | $16,677 | $16,677 | | CFO | 2023 | $12,498 | $12,498 | - The Board of Directors consists of **four** members, with **three** independent directors (Chenlong Yang, Qian (Hebe) Xu, Yizhao Zhang), and Yizhao Zhang serving as the audit committee financial expert[597](index=597&type=chunk)[600](index=600&type=chunk)[603](index=603&type=chunk) - As of May 5, 2025, the company had **167** full-time employees, with **99** in manufacturing, **29** in R&D, and **39** in administration[612](index=612&type=chunk) [Major Shareholders and Related Party Transactions](index=147&type=section&id=Item%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's ownership structure, with CEO Jie Liu holding **9.242%**, and outlines related party transactions including monetary advances and personal guarantees for loans Major Shareholders (as of May 5, 2025) | Shareholder | Ordinary Shares Beneficially Owned | Percentage | | :--- | :--- | :--- | | Hongli Development Limited (Jie Liu) | 6,787,517 | 9.242% | | BETTY CHEN LIMITED | 7,200,000 | 9.804% | | WELL FANCY DEVELOPMENT LTD. | 6,050,000 | 8.238% | - Balances with related parties primarily consist of monetary advances and repayments; in 2023, the company advanced **$351,924** to CEO Jie Liu, fully repaid in 2024[625](index=625&type=chunk)[880](index=880&type=chunk) - Substantially all outstanding short-term and long-term loans as of December 31, 2024, were guaranteed by the CEO, his family members, and their owned companies[556](index=556&type=chunk)[626](index=626&type=chunk) [Financial Information](index=151&type=section&id=Item%208.%20FINANCIAL%20INFORMATION) This section confirms the inclusion of audited consolidated financial statements, details a settled lawsuit from November 2023, and states the company's policy to retain earnings for expansion without anticipating future dividends - In November 2023, the company filed a lawsuit regarding a share ownership dispute with entities controlled by a former financial advisor, which was settled and dismissed with prejudice in December 2023[631](index=631&type=chunk) - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain earnings for business expansion[634](index=634&type=chunk) [Additional Information](index=153&type=section&id=Item%2010.%20ADDITIONAL%20INFORMATION) This section provides supplementary details on governance, material contracts, Cayman Islands exchange controls, and a comprehensive taxation summary, including the significant risk of PFIC classification for U.S. holders - The company's PRC subsidiaries are subject to a standard Enterprise Income Tax (EIT) rate of **25%**, though Hongli Shandong, as an HNTE, is eligible for a reduced rate of **15%**[650](index=650&type=chunk)[651](index=651&type=chunk)[865](index=865&type=chunk) - The Cayman Islands and the British Virgin Islands do not levy taxes on profits, income, or gains, and there are no withholding taxes on dividend payments[653](index=653&type=chunk)[656](index=656&type=chunk)[657](index=657&type=chunk) - There is a significant risk that the company could be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, potentially resulting in adverse tax consequences for U.S. shareholders[672](index=672&type=chunk)[673](index=673&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=163&type=section&id=Item%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to liquidity, inflation, and primarily interest rate risk, with a sensitivity analysis illustrating the potential impact of rate hikes on annual interest expense - The company is exposed to liquidity risk, inflation risk, and interest rate risk[691](index=691&type=chunk)[692](index=692&type=chunk)[693](index=693&type=chunk) Interest Rate Risk Sensitivity (as of Dec 31, 2024) | Total Loans Outstanding | Impact of 1% Rate Increase (USD) | Impact of 3% Rate Increase (USD) | Impact of 5% Rate Increase (USD) | | :--- | :--- | :--- | :--- | | $9,384,461 | $93,845 | $281,534 | $469,225 | [PART II](index=164&type=section&id=PART%20II) [Controls and Procedures](index=164&type=section&id=Item%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of December 31, 2024, due to material weaknesses in internal control over financial reporting, with remediation efforts underway - Management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2024[701](index=701&type=chunk) - Material weaknesses in internal control over financial reporting were identified, including a lack of key monitoring mechanisms, inadequately designed management review controls, and insufficient accounting personnel with U.S. GAAP and SEC reporting knowledge[703](index=703&type=chunk)[705](index=705&type=chunk) - Remediation efforts include hiring an experienced outside consultant, providing ongoing U.S. GAAP training to personnel, and establishing an internal audit department[705](index=705&type=chunk) [Corporate Governance and Other Disclosures](index=166&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Disclosures) This section details corporate governance, including the audit committee financial expert, principal accountant fees totaling **$488,000** in 2024, foreign private issuer practices, insider trading policies, and cybersecurity risk management - The Board of Directors has determined that **Yizhao Zhang** qualifies as an audit committee financial expert[709](index=709&type=chunk) Principal Accountant Fees (RBSM LLP) | | 2024 | 2023 | | :--- | :--- | :--- | | **Audit Fees (USD)** | $488,000 | $355,000 | | **Total Fees (USD)** | **$488,000** | **$355,000** | - As a foreign private issuer, the company follows certain Cayman Islands corporate governance practices instead of Nasdaq rules, such as not being required to hold annual shareholder meetings or obtain shareholder approval for certain security issuances[719](index=719&type=chunk)[721](index=721&type=chunk) - The company has adopted insider trading policies and processes for managing cybersecurity risks, with oversight from executive officers and the Board of Directors, and no material cybersecurity incidents have been reported[723](index=723&type=chunk)[724](index=724&type=chunk)[725](index=725&type=chunk) [PART III](index=170&type=section&id=PART%20III) [Financial Statements](index=170&type=section&id=Item%2018.%20FINANCIAL%20STATEMENTS) This section presents the company's audited consolidated financial statements for FY2022-2024, prepared under U.S. GAAP, including balance sheets, income statements, cash flows, and detailed notes on accounting policies and commitments Consolidated Balance Sheet Highlights | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets (USD)** | $65,010,421 | $32,128,670 | | **Total Liabilities (USD)** | $11,517,126 | $11,021,117 | | **Total Shareholders' Equity (USD)** | $53,493,295 | $21,107,553 | Consolidated Statement of Operations Highlights | | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | **Revenues, Net (USD)** | $14,105,620 | $15,997,954 | $20,283,245 | | **Net Income (Loss) (USD)** | $(1,881,635) | $864,722 | $2,932,363 | | **Comprehensive Income (Loss) (USD)** | $(2,582,258) | $205,561 | $1,986,097 | - The notes to the financial statements confirm the company operates as a single reportable segment and provide detailed breakdowns of revenue by geographic region (PRC vs Overseas)[804](index=804&type=chunk)[819](index=819&type=chunk) - Subsequent events include the execution of a joint venture agreement with Zhongke Hongyuan on March 10, 2025, for which the company deposited its **$32.9 million** capital contribution in December 2024[905](index=905&type=chunk)

[Financial Statements](index=1&type=section&id=Financial%20Statements) This section presents the company's consolidated financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, for the periods ended June 30, 2024 [Condensed Consolidated Balance Sheets](index=1&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2024, Hongli Group's total assets increased slightly to $32.70 million from $32.13 million at year-end 2023, driven by a rise in total liabilities to $12.01 million, primarily from increased short-term and long-term loans, consequently decreasing total shareholders' equity to $20.69 million from $21.11 million due to retained earnings reduction Balance Sheet Highlights (as of June 30, 2024 vs. Dec 31, 2023) | Balance Sheet Item | June 30, 2024 (Unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$32,697,652** | **$32,128,670** | | Cash and cash equivalents | $930,419 | $775,686 | | Accounts receivable | $6,411,049 | $6,013,536 | | Property, plant and equipment, net | $10,771,835 | $10,752,745 | | **Total Liabilities** | **$12,010,684** | **$11,021,117** | | Short-term loans | $6,613,276 | $5,726,841 | | Long-term loans | $3,677,777 | $3,338,075 | | **Total Shareholders' Equity** | **$20,686,968** | **$21,107,553** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=2&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME%20%28LOSS%29) For the six months ended June 30, 2024, the company reported a significant net loss of $1.90 million, a stark reversal from a net income of $0.80 million in the same period of 2023, primarily due to a 21.9% decrease in revenues and a 76.8% surge in selling, general, and administrative expenses, leading to an operating loss of $1.69 million Statement of Operations Summary (For the Six Months Ended June 30) | Financial Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues, net | $6,962,241 | $8,915,111 | -21.9% | | Gross Profit | $2,302,472 | $3,045,801 | -24.4% | | (Loss) income from operations | ($1,694,242) | $784,995 | Negative Swing | | Net (loss) income | ($1,902,348) | $796,354 | Negative Swing | | Basic and diluted (loss) earnings per share | ($0.15) | $0.07 | Negative Swing | - Selling, general and administrative expenses increased significantly to **$3,996,714** in H1 2024 from **$2,260,806** in H1 2023, contributing heavily to the operating loss[2](index=2&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=3&type=section&id=UNAUDITIED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREHOLDERS%27%20EQUITY) Shareholders' equity decreased from $21.11 million at the end of 2023 to $20.69 million as of June 30, 2024, primarily driven by a net loss of $1.90 million and a negative foreign currency translation adjustment of $0.49 million, partially offset by $1.97 million in share-based compensation Reconciliation of Shareholders' Equity (For the Six Months Ended June 30, 2024) | Item | Amount | | :--- | :--- | | Balance, December 31, 2023 | $21,107,553 | | Share-based compensation | $1,968,000 | | Net loss for the six months | ($1,902,348) | | Foreign currency translation adjustment | ($486,237) | | **Balance, June 30, 2024** | **$20,686,968** | [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the first six months of 2024, the company's net cash used in operating activities increased to $1.22 million, investing activities used $0.38 million, a reversal from providing cash in the prior year, while financing activities provided a significant inflow of $1.74 million, mainly from new borrowings and advances from related parties, resulting in a net increase in cash and cash equivalents of $0.11 million, ending the period with $0.93 million Cash Flow Summary (For the Six Months Ended June 30) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,218,353) | ($1,042,104) | | Net cash (used in) provided by investing activities | ($383,749) | $303,312 | | Net cash provided by (used in) financing activities | $1,736,444 | ($365,338) | | **Net change in cash, cash equivalents and restricted cash** | **$114,750** | **($1,247,293)** | | **Cash, cash equivalents and restricted cash, end of period** | **$930,419** | **$866,746** | - The positive cash flow from financing activities in H1 2024 was primarily driven by advances from related parties (**$1.41M**) and net new borrowings, contrasting with H1 2023 which included proceeds from the IPO (**$9.49M**) but also significant loan repayments[4](index=4&type=chunk)