PART I [Key Information](index=11&type=section&id=Item%203.%20Key%20Information) This section details the company's holding structure, cash transfer policies, and significant risks, particularly those related to PRC operations and regulatory compliance [Holding Company Structure and Cash Transfers](index=11&type=section&id=Holding%20Company%20Structure%20and%20Cash%20Transfers) The company operates as a BVI holding company with all business conducted through PRC subsidiaries, facing regulatory restrictions on cash transfers and dividend distributions - The company operates as a BVI holding company with all substantial operations conducted through its subsidiaries in mainland China[32](index=32&type=chunk) - As of the report date, no dividends or distributions have been made from the PRC subsidiaries to the offshore holding companies. Future dividends from PRC subsidiaries would be subject to a **10% withholding tax**, potentially reducible to **5%** under the mainland China-Hong Kong tax agreement[35](index=35&type=chunk)[38](index=38&type=chunk) - PRC regulations require subsidiaries to set aside at least **10% of after-tax profits** into a statutory reserve fund until it reaches **50% of registered capital**, which restricts the amount of cash available for dividends[42](index=42&type=chunk) Shareholder Loans to PRC Subsidiaries | Fiscal Year | Amount Provided | | :--- | :--- | | 2022 | ~$4.2 million | | 2023 | ~$0.1 million | | 2024 | ~$29.4 million | [Regulatory Environment and HFCAA](index=14&type=section&id=Regulatory%20Environment%20and%20HFCAA) The company navigates evolving PRC regulations, including CSRC filing requirements and cybersecurity reviews, while facing delisting risks under the amended HFCAA due to auditor inspection rules - The company's current auditor, YCM CPA INC., is registered with the PCAOB and was not on the list of firms the PCAOB was unable to inspect in 2021. However, the HFCAA has been amended to shorten the non-inspection period for delisting from three years to two[46](index=46&type=chunk)[47](index=47&type=chunk) - The company believes it is not required to apply for a cybersecurity review under the Measures for Cybersecurity Review (2021 Version) as it does not process personal information of over one million users and its data does not have a bearing on national security[55](index=55&type=chunk) - The company is subject to the CSRC's Trial Measures, effective March 31, 2023, which require filings for overseas listings and offerings. The company is currently in the process of completing filings for its fiscal 2024 financings and the April 2025 MeinMalzeBier acquisition[59](index=59&type=chunk) [Risk Factors](index=17&type=section&id=D.%20Risk%20factors.) This section outlines significant risks, including PRC government intervention, HFCAA delisting threats, business operational challenges, and governance issues from the dual-class share structure - The company faces significant risks from the PRC government's oversight and potential intervention, which could materially change operations and share value[74](index=74&type=chunk) - The company's independent auditor's report includes an explanatory paragraph expressing substantial doubt about its ability to continue as a going concern due to significant operating losses and a decrease in working capital[66](index=66&type=chunk)[169](index=169&type=chunk) - A dual-class share structure grants holders of Class B shares **1,000 votes per share**, giving a small group of executives approximately **99.3% of the total voting power**, which limits the influence of Class A shareholders[227](index=227&type=chunk)[228](index=228&type=chunk) - Material weaknesses in internal control over financial reporting have been identified, including a lack of personnel with U.S. GAAP/SEC expertise and inadequate management review processes[219](index=219&type=chunk) - The company faces customer and supplier concentration risk. In FY2024, two customers accounted for **36%** and **13% of total revenue**, while two suppliers accounted for **68%** and **13% of raw material purchases**[164](index=164&type=chunk)[284](index=284&type=chunk) [Information on the Company](index=54&type=section&id=Item%204.%20Information%20on%20the%20Company) This section details the company's history, corporate structure, and strategic shift towards ecological protection, intelligent mining, and smart craft beer machines after its 2024 divestiture [History and Development of the Company](index=54&type=section&id=A.%20History%20and%20development%20of%20the%20company.) ReTo, established in 2015, underwent a major restructuring in December 2024 by divesting its legacy business and acquiring MeinMalzeBier in April 2025, shifting its strategic focus - In December 2024, ReTo sold all its shares in REIT Holdings for **US$80,000**, ceasing its business in eco-friendly construction materials and ecological restoration to focus on new ventures[250](index=250&type=chunk)[263](index=263&type=chunk) - In April 2025, ReTo acquired a **51% equity interest** in MeinMalzeBier for **$3.978 million** in cash and **4.68 million Class A Shares**, expanding into the craft beer machine and sales market[250](index=250&type=chunk)[268](index=268&type=chunk) - On August 8, 2024, the company implemented a dual-class share structure, redesignating common shares as Class A Shares (**1 vote**) and creating new Class B Shares (**1,000 votes**)[259](index=259&type=chunk) [Business Overview](index=56&type=section&id=B.%20Business%20overview.) The company's business now focuses on ecological protection, intelligent mining, and smart craft beer machines, pursuing international expansion and strategic acquisitions amid competitive markets - The company's strategic focus has shifted to three core product lines: ecological environment protection equipment, intelligent mining equipment, and smart craft beer machines[256](index=256&type=chunk) - Key growth strategies include upgrading existing products, expanding its international business network in Southeast Asia, the Middle East, and Africa, and pursuing strategic acquisitions in sectors like solar energy and wellness[274](index=274&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) - The company holds **42 patents** and **6 software copyrights** in China, relying on intellectual property law and confidentiality agreements to protect its proprietary technologies[172](index=172&type=chunk)[311](index=311&type=chunk) Sales of Machinery and Equipment by Geographic Market (Continuing Operations) | Region | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Middle East | $29,965 | $0 | $0 | | India | $236,907 | $0 | $0 | | China | $887,018 | $9,873 | $204,495 | | **Total** | **$1,176,070** | **$10,781** | **$204,495** | [Property, Plants and Equipment](index=73&type=section&id=D.%20Property,%20plants%20and%20equipment.) The company leases all its operational properties, including its Beijing headquarters and other offices across China, with lease terms extending to 2028 - The company leases all its properties for operations in China, including its headquarters in Beijing and other offices in Xi'an, Hebei, and Yunnan[361](index=361&type=chunk) [Operating and Financial Review and Prospects](index=74&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes the company's financial performance, highlighting significant 2024 revenue growth from continuing operations, substantial net losses, liquidity challenges, and critical accounting estimates [Operating Results](index=74&type=section&id=A.%20Operating%20Results) FY2024 saw a surge in continuing operations revenue to $1.8 million, but a net loss of $8.3 million, influenced by a $3.6 million disposal loss and reclassified discontinued operations - The significant increase in 2024 revenue was primarily because a large portion of 2023 revenue was generated by disposed subsidiaries and thus reclassified to discontinued operations, creating a low comparison base for continuing operations[372](index=372&type=chunk) - The company recognized a loss from the disposal of subsidiaries of approximately **$3.6 million** in FY2024 related to the December 2024 Divestiture[391](index=391&type=chunk) Key Financials from Continuing Operations (2024 vs. 2023) | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $1,828,976 | $10,781 | 16,865% | | Gross Profit | $825,204 | $1,541 | 53,450% | | Gross Margin | 45% | 14% | N/A | | Total Operating Expenses | $4,956,258 | $6,483,573 | (24)% | | Net Loss from Continuing Operations | ($8,312,576) | ($6,526,322) | 27% | Results of Discontinued Operations | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Revenues | $2,429,726 | $3,225,505 | $6,269,178 | | Net Loss from Discontinued Operations | ($74,347) | ($9,542,748) | ($8,908,703) | [Liquidity and Capital Resources](index=83&type=section&id=B.%20Liquidity%20and%20Going%20Concern) The company faces significant liquidity challenges with a $8.4 million net loss and $2.6 million working capital deficit, raising going concern doubts, despite $29.8 million from 2024 financing activities - The company reported a net loss of approximately **$8.4 million** and a working capital deficit of approximately **$2.6 million** for the year ended December 31, 2024, raising substantial doubt about its ability to continue as a going concern[408](index=408&type=chunk) - Management plans to improve liquidity through operational cash flow, bank borrowings, related-party loans, and potential equity financing, though no commitments for new financing are in place[409](index=409&type=chunk) - Capital expenditures were approximately **$33.6 million** in 2024, primarily for deposits for equity acquisition and the purchase of intangible assets[422](index=422&type=chunk) Summary of Cash Flows (in millions) | Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $3.1 | ($11.6) | ($10.0) | | Net Cash from Investing Activities | ($33.6) | $0.4 | $4.2 | | Net Cash from Financing Activities | $29.8 | $12.5 | $4.8 | [Critical Accounting Estimates](index=86&type=section&id=E.%20Critical%20Accounting%20Estimates.) The company's financial statements rely on critical accounting estimates for accounts receivable, asset impairment, revenue recognition, share-based compensation, and deferred tax assets - The company's critical accounting policies involve significant judgments and estimates, particularly in the areas of accounts receivable valuation, impairment of long-lived assets, revenue recognition, share-based compensation, and income taxes[425](index=425&type=chunk)[426](index=426&type=chunk) - Revenue from machinery and equipment sales is recognized upon delivery and transfer of control. Revenue from technological consulting services is recognized when services are rendered and accepted by customers[431](index=431&type=chunk) - The company accounts for share-based compensation using the fair value-based method in accordance with ASC 718, recognizing expenses over the service period[434](index=434&type=chunk) [Directors, Senior Management and Employees](index=89&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) This section details the company's leadership, compensation, board structure, and employee base, highlighting the dual-class share structure's impact on voting power [Directors and Senior Management](index=89&type=section&id=A.%20Directors%20and%20senior%20management.) The company's leadership includes CEO Hengfang Li and a seven-member board with four independent directors, structured into three staggered classes - The senior executive team is led by founder Hengfang Li (CEO & Chairman), with key roles held by Guangfeng Dai (President & COO) and Zhizhong Hu (CTO)[441](index=441&type=chunk)[447](index=447&type=chunk)[448](index=448&type=chunk)[449](index=449&type=chunk) - The Board of Directors consists of seven members, with four independent directors, and is divided into three classes with staggered three-year terms[441](index=441&type=chunk)[473](index=473&type=chunk) [Compensation](index=91&type=section&id=B.%20Compensation.) FY2024 compensation included $474,982 in executive salaries and $40,000 for non-employee directors, alongside Class A share awards and employment agreements - The company has entered into employment agreements with its executive officers, which include details on salary, termination conditions, severance payments, and restrictive covenants[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk)[464](index=464&type=chunk) FY2024 Compensation Summary | Recipient Group | Cash Compensation | Equity Awards (Class A Shares) | | :--- | :--- | :--- | | Executive Officers | ~$474,982 | 7,726 | | Non-Employee Directors | ~$40,000 | 11,000 | [Share Ownership](index=96&type=section&id=E.%20Share%20ownership.) The dual-class share structure grants executive management 99.3% of voting power through Class B shares, significantly limiting Class A shareholder influence - Due to the dual-class share structure, all directors and executive officers as a group hold approximately **99.3% of the aggregate voting power**, primarily through their ownership of all **1,000,000 outstanding Class B shares**[496](index=496&type=chunk)[498](index=498&type=chunk) - The 2022 Share Incentive Plan allows for the issuance of up to **115,489 Class A Shares** to employees, directors, and consultants, with an automatic annual share reserve increase feature[500](index=500&type=chunk)[504](index=504&type=chunk) [Major Shareholders and Related Party Transactions](index=99&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details major shareholders, highlighting executive voting control, and outlines FY2024 related party transactions including sales and balances due from the CEO - Major shareholders are detailed in Item 6.E, highlighting the concentration of voting power with the executive team[510](index=510&type=chunk) Related Party Balances and Transactions (FY2024) | Transaction/Balance | Related Party | Amount (USD) | | :--- | :--- | :--- | | Sales | Q Green Techcon Private Limited | $229,600 | | Due from Related Party (as of Dec 31, 2024) | Mr. Hengfang Li | $24,048 | [Financial Information](index=100&type=section&id=Item%208.%20Financial%20Information) This section covers the company's financial statements, absence of material legal proceedings, and its dividend policy, which prioritizes retaining earnings subject to BVI and PRC regulations - The company has never declared or paid cash dividends on its Class A Shares and does not expect to in the foreseeable future, planning to retain earnings for operations and growth[517](index=517&type=chunk) - Any future dividend payments would be subject to BVI solvency tests and PRC regulations, which require payments to come from accumulated profits and mandate setting aside funds for a statutory reserve[518](index=518&type=chunk)[520](index=520&type=chunk) - The company is not currently a party to any material legal or administrative proceedings[516](index=516&type=chunk) [Additional Information](index=101&type=section&id=Item%2010.%20Additional%20Information) This section details material contracts, PRC foreign exchange controls, and taxation, including potential PFIC classification for U.S. shareholders - On December 3, 2024, the company entered into a Forest Rights Transfer Agreement to acquire rights to approximately **3,000 acres of forest land** for **RMB 56 million (approx. $8.4 million)** to develop a cultural tourism project[530](index=530&type=chunk) - The company's operations are subject to PRC foreign exchange controls, which restrict the conversion of RMB and the movement of capital, potentially impacting its ability to fund offshore activities or pay dividends[535](index=535&type=chunk) - The company may be classified as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, which could result in adverse tax consequences for U.S. shareholders[579](index=579&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=114&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks including foreign exchange fluctuations between RMB and USD, credit risk from cash deposits, inflation, and commodity price volatility - The company's primary market risk is foreign exchange risk, as its operations are in RMB but financial statements are presented in USD. Fluctuations in the RMB/USD exchange rate can significantly impact reported results[599](index=599&type=chunk)[600](index=600&type=chunk) - Other market risks include credit risk from cash deposits, inflation risk affecting operating costs, and commodity price risk for raw materials such as steel[601](index=601&type=chunk)[602](index=602&type=chunk)[603](index=603&type=chunk) PART II [Controls and Procedures](index=115&type=section&id=Item%2015.%20Controls%20and%20Procedures) As of December 31, 2024, disclosure controls were ineffective due to material weaknesses in U.S. GAAP/SEC expertise and financial review processes, prompting remediation efforts - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were not effective[612](index=612&type=chunk) - Material weaknesses in internal control were identified, including: (i) a lack of personnel with appropriate knowledge of U.S. GAAP and SEC reporting, and (ii) a lack of an effective management review for year-end accounting and reporting[614](index=614&type=chunk) - Remediation plans include hiring external financial consultants and implementing regular U.S. GAAP and SEC reporting training for accounting personnel[615](index=615&type=chunk) [Corporate Governance](index=117&type=section&id=Item%2016G.%20Corporate%20Governance) As a foreign private issuer, the company can follow BVI corporate governance but intends to comply with Nasdaq practices despite electing certain exemptions - As a foreign private issuer, the company is permitted to follow its home country (BVI) practices instead of certain Nasdaq corporate governance rules[626](index=626&type=chunk) - The company has elected exemptions from Nasdaq rules concerning the timing of annual shareholder meetings and shareholder approval for certain security issuances, but states it currently intends to comply with Nasdaq practices[627](index=627&type=chunk)[628](index=628&type=chunk) [Cybersecurity](index=118&type=section&id=Item%2016K.%20Cybersecurity) The company maintains a cybersecurity risk management policy overseen by leadership and the audit committee, with no significant threats identified as of the report date - The company has a cybersecurity risk management policy, with oversight provided by the CEO, CTO, and the audit committee[634](index=634&type=chunk)[636](index=636&type=chunk) - As of the report date, the company has not identified any significant cybersecurity threats that are reasonably likely to have a material impact on its business or financial results[637](index=637&type=chunk) PART III [Financial Statements](index=119&type=section&id=Item%2018.%20Financial%20Statements) This section presents the company's audited consolidated financial statements for FY2022-2024, including the auditor's report, balance sheets, income statements, equity changes, and cash flows [Report of Independent Registered Public Accounting Firm](index=123&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor's report expresses a 'Going Concern' doubt due to net losses and working capital deficit, and identifies a Critical Audit Matter regarding forest land concession valuation - The auditor's report contains a "Going Concern" paragraph, citing the company's net losses of approximately **$8.4 million** in 2024 and a working capital deficit of **$2.6 million** as conditions that raise substantial doubt about its ability to continue operations[651](index=651&type=chunk) - A Critical Audit Matter was identified concerning the valuation of the concession right on forest land acquired in December 2024 for **$7.67 million**. The valuation involved significant and challenging auditor judgment regarding management's estimates and assumptions[657](index=657&type=chunk)[658](index=658&type=chunk) [Consolidated Financial Statements](index=125&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $34.3 million and a net loss of $8.4 million in FY2024, reflecting the impact of divestitures and significant financing activities - Note 4 details the discontinued operations of REIT Holdings, which were sold on December 31, 2024, resulting in a recorded loss on disposition of **$3,577,279**[749](index=749&type=chunk) - Note 16 details the company's share combinations, redesignation into Class A and Class B shares, and significant equity issuances through private placements, which raised net proceeds of **$29.4 million** in 2024[795](index=795&type=chunk)[818](index=818&type=chunk) Consolidated Balance Sheet Highlights (As of Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets | $1,368,648 | $10,464,678 | | Total Assets | $34,256,918 | $25,245,248 | | Total Current Liabilities | $3,948,634 | $17,313,078 | | Total Liabilities | $4,332,232 | $20,394,074 | | Total Shareholders' Equity | $29,924,686 | $4,851,174 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenues (Continuing) | $1,828,976 | $10,781 | $204,495 | | Net Loss from Continuing Operations | ($8,312,576) | ($6,526,322) | ($6,470,955) | | Net Loss from Discontinued Operations | ($74,347) | ($9,542,748) | ($8,908,703) | | **Total Net Loss** | **($8,386,923)** | **($16,069,070)** | **($15,379,658)** |

Core Insights - The stock price of Retu Eco (RETO) increased by 3.53% to $3.52 per share, with a total market capitalization of $26.9769 million as of April 29 [1] - For the fiscal year ending June 30, 2024, Retu Eco reported total revenue of $1.8386 million, representing a year-over-year growth of 49.02%, while the net profit attributable to shareholders was -$678,500, showing a significant year-over-year improvement of 93.95% [1] Company Overview - Retu Eco specializes in the production and sale of eco-friendly building materials made from solid waste, as well as equipment for producing these materials [2] - The company provides consulting, design, and project implementation services for urban ecological environment construction, including sponge city projects [2] - Retu Eco offers comprehensive solutions such as engineering support, technical consulting, and after-sales service for manufacturers of eco-friendly building materials and environmental projects [2] Product and Market Position - The eco-friendly building materials developed by Retu Eco can replace over 70% of aggregates with fly ash or iron tailings, and they consume less energy compared to traditional building materials [2] - The company's focus on recycling solid waste contributes to environmental protection by reducing land occupation and aiding in the ecological restoration of polluted sites and abandoned mines [2] - There is a growing demand for Retu Eco's eco-friendly building materials, driven by increasing governmental and public emphasis on environmental protection, with advantages in permeability and price competitiveness over traditional materials [2] Global Reach - Retu Eco has established a global sales and service network, with customers across mainland China and exports to countries including Canada, the United States, Mongolia, the Middle East, India, South Asia, North Africa, and Brazil [2]

Core Viewpoint - ReTo Eco-Solutions, Inc. has successfully acquired a 51% equity interest in MeinMalzeBier Holdings Limited, enhancing its position in the craft beer market in China [1][2][3] Company Overview - ReTo Eco-Solutions, Inc. specializes in ecological environment protection equipment and intelligent equipment, with operations primarily in China [4] - The company was founded in 1999 and offers a range of services including consultation, design, implementation, and installation of its equipment [4] Acquisition Details - The acquisition of MeinMalzeBier is expected to create synergies with ReTo's new product line of smart craft beer machines, facilitating market penetration and product adoption [2][3] - MeinMalzeBier has an established sales network and market experience that will enhance ReTo's market reach and improve cash flow [2][3] Strategic Importance - The CEO of ReTo highlighted that integrating MeinMalzeBier's business is a significant step in diversifying and strengthening the company's portfolio [3] - The acquisition is anticipated to bolster ReTo's long-term financial health and market competitiveness through meaningful synergies [3]

Market Overview - US stock indices experienced a significant rise for the third consecutive trading day, with the Dow Jones up 486.83 points (1.23%), Nasdaq up 457.99 points (2.74%), and S&P 500 up 108.91 points (2.03%) on April 24 [1] Technology Sector Performance - Major tech stocks saw substantial gains, with Tesla, Amazon, and Microsoft rising over 3%, while Google and Meta increased by more than 2%, and Apple rose nearly 2% [2] - The semiconductor sector led the gains, with Micron Technology and Broadcom up over 6%, Intel and AMD rising over 4%, and Nvidia increasing by more than 3% [2] - Nvidia's market capitalization increased by $90.8 billion (approximately ¥661.8 billion) in one night [2] Company Earnings Reports - Alphabet (Google's parent company) reported Q1 revenue of $90.23 billion, a 12% year-over-year increase, exceeding the expected $89.1 billion. Earnings per share were $2.81, up from $1.89 a year ago, and also above the forecast of $2.01. The operating profit was $30.61 billion, a 20% increase year-over-year, surpassing the expected $28.86 billion. The board authorized a stock buyback of up to $70 billion [6] - Intel reported Q1 revenue of $12.67 billion, a slight decline of 0.4% year-over-year, but above the expected $12.31 billion. Adjusted earnings per share were $0.13, down from $0.18 a year ago, but above the forecast of $0.01. The data center and AI revenue was $4.13 billion, exceeding the analyst expectation of $2.96 billion. Intel projected Q2 revenue between $11.2 billion and $12.4 billion, below the market estimate of $12.88 billion. The company reduced its total capital expenditure target for 2025 from $20 billion to $18 billion, leading to a post-earnings drop of over 7% in its stock [7] Chinese Stocks Performance - The Nasdaq Golden Dragon China Index rose by 0.68%, with notable gains in popular Chinese stocks such as NIO and Futu Holdings, which increased by over 6%, and Pinduoduo, Baidu, NetEase, and Bilibili rising over 2%. Xpeng Motors surged by 39.41%, and ZYBT rose by 34.91% [7][8] Commodity Market - International precious metals futures saw a general increase, with COMEX gold futures rising by 2.04% to $3,361.30 per ounce, and WTI crude oil futures up by 0.84% to $62.79 per barrel [9]

Core Points - ReTo Eco-Solutions, Inc. has regained compliance with Nasdaq's minimum bid price requirement as per the notification received from Nasdaq on March 28, 2025 [1] - The company will remain under a Discretionary Panel Monitor for one year following the notification [1] Company Overview - ReTo Eco-Solutions, Inc. was founded in 1999 and operates in China, focusing on the research, development, manufacture, and sales of ecological environment protection equipment and intelligent equipment [2] - The company offers consultation, design, implementation, installation of its equipment, and provides engineering support and technical advice [2]

BEIJING, April 3, 2025 /PRNewswire/ -- ReTo Eco-Solutions, Inc. (Nasdaq: RETO) ("ReTo" or the "Company"), a manufacturer of ecological environment protection equipment and intelligent equipment in China, today announced that it received a letter, dated March 28, 2025 (the "Letter"), from The Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that the Nasdaq Hearings Panel has concluded that the Company has regained compliance with Nasdaq's minimum bid price requirement under Nasdaq Listing Rule 5550(a ...

Core Viewpoint - ReTo Eco-Solutions, Inc. has received a delisting determination notice from Nasdaq due to its Class A shares trading below the minimum bid price requirement for 30 consecutive business days, with a closing bid price of less than $1 [1] Company Summary - ReTo Eco-Solutions, Inc. is a manufacturer of equipment for the production of eco-friendly materials in China, engaged in research and development, manufacturing, and sales of such equipment [3] - The company provides consultation, design, implementation, installation, engineering support, and technical advice related to its products [3] Delisting Process - The company intends to request a hearing before a Nasdaq hearings panel, which will temporarily stay the delisting process while the appeal is pending [2] - The Class A shares will continue to trade on Nasdaq under the symbol "RETO" during the appeal [2] - There is no assurance that the panel will grant an extension or that the company will regain compliance with Nasdaq's listing requirements [2]

[Financial Statements](index=2&type=section&id=Financial%20Statements) This section provides the company's condensed consolidated financial statements, detailing its financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, the company's total assets and shareholders' equity significantly increased, primarily driven by capital raises and supplier advances, while liabilities slightly decreased Condensed Consolidated Balance Sheet Summary (in USD) | Account | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | **$19,604,814** | **$10,464,678** | | Total Assets | $33,671,537 | $25,245,248 | | **Total Current Liabilities** | **$19,287,009** | **$17,313,078** | | Total Liabilities | $19,894,564 | $20,394,074 | | Total Shareholders' Equity | $13,776,973 | $4,851,174 | | **Total Liabilities and Shareholders' Equity** | **$33,671,537** | **$25,245,248** | - Key drivers for the increase in current assets were 'Advances to suppliers' which more than doubled to **$10.9 million** and a new 'Deposits for equity acquisition' of **$4.1 million**[5](index=5&type=chunk) - The number of issued and outstanding Class A shares increased from **1,205,188** to **3,828,868**, contributing to a significant rise in Additional paid-in capital from **$68.9 million** to **$78.7 million**[5](index=5&type=chunk) [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the six months ended June 30, 2024, the company significantly improved its financial performance, reporting increased revenues and gross profit, alongside a substantial reduction in net loss due to lower operating expenses Statement of Operations Summary (in USD) | Metric | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenues | $1,838,639 | $1,233,783 | | Gross Profit | $567,481 | $93,591 | | Total Operating Expenses | $1,641,581 | $7,099,012 | | Loss from Operations | $(1,074,100) | $(7,005,421) | | Net Loss | $(716,633) | $(11,643,858) | | Net Loss Attributable to ReTo | $(678,459) | $(11,219,743) | | Loss Per Share (Basic and diluted) | $(0.25) | $(20.63) | - General and administrative expenses were significantly reduced to **$1.37 million** from **$5.54 million** in the prior year period, which was a major contributor to the reduced net loss[9](index=9&type=chunk) [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity significantly increased from $4.85 million to $13.78 million, primarily driven by capital raising activities through private placements and public offerings Shareholders' Equity Movement (in USD) | Description | Amount | | :--- | :--- | | Balance at December 31, 2023 | $4,851,174 | | Net Loss | $(716,633) | | Issuance of common shares in private placements, net | $3,969,063 | | Issuance of common shares, net (public offering) | $6,000,000 | | Share-based compensation | $162,769 | | Foreign currency translation adjustment | $(489,400) | | **Balance at June 30, 2024** | **$13,776,973** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2024, cash used in operating and investing activities was largely offset by significant cash provided by financing activities, resulting in a net increase in cash and cash equivalents Cash Flow Summary (in USD) | Cash Flow Category | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,755,332) | $(4,540,270) | | Net cash (used in) provided by investing activities | $(3,951,146) | $407,004 | | Net cash provided by financing activities | $9,322,724 | $4,173,282 | | **Net increase in cash** | **$138,786** | **$119,944** | - Financing activities were the primary source of cash, with **$3.97 million** from a private placement and **$6.0 million** from a public offering[14](index=14&type=chunk) - A significant use of cash in operating activities was a **$5.7 million** increase in 'Advances to suppliers' Investing activities included a **$4.1 million** 'Deposits for equity acquisition'[14](index=14&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, offering further context and breakdowns of accounting policies, significant balances, and transactions [Note 1 – Organization and Description of Business](index=7&type=section&id=NOTE%201%20%E2%80%93%20Organization%20and%20Description%20of%20Business) ReTo Eco-Solutions, Inc. is a BVI holding company primarily operating in the PRC, engaged in eco-friendly construction materials, urban ecological projects, roadside assistance, and software development - The company operates through its subsidiaries primarily in the PRC[17](index=17&type=chunk) - Business activities include: (i) eco-friendly construction materials & equipment, (ii) urban ecological projects, (iii) roadside assistance, and (iv) software development[17](index=17&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=8&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's significant accounting policies, including revenue recognition, consolidation, and estimates, while also disclosing material customer and supplier concentration risks - Revenue is recognized from four primary sources: machinery and equipment sales (upon delivery), construction materials sales (upon transfer of control), municipal construction projects (over time using cost-to-cost method), and technological consulting (when rendered)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)[60](index=60&type=chunk) - The company faces significant customer concentration risk For the six months ended June 30, 2024, two customers accounted for **16%** and **12%** of total revenue[81](index=81&type=chunk) - There is also a significant supplier concentration risk For the six months ended June 30, 2024, the company purchased approximately **30%**, **22%**, and **10%** of its raw materials from three major suppliers[84](index=84&type=chunk) [Note 3 – Going Concern](index=16&type=section&id=NOTE%203%20%E2%80%93%20GOING%20CONCERN) The company's going concern ability is in substantial doubt due to low working capital and operating losses, though management anticipates sufficient funds from a recent $19.5 million private placement - Factors raising substantial doubt about the company's ability to continue as a going concern include a working capital of approximately **$0.3 million**, a net loss of **$0.7 million**, and cash used in operations of **$4.8 million** in H1 2024[94](index=94&type=chunk) - Management's mitigation plan relies on a private placement completed on August 30, 2024, which raised **$19,451,376** These proceeds are intended for future M&A and working capital[96](index=96&type=chunk) [Note 10 – Short-term Loans](index=19&type=section&id=NOTE%2010%20%E2%80%93%20SHORT-TERM%20LOANS) As of June 30, 2024, the company held $5.26 million in short-term loans, primarily a working capital loan from Shanxi Hunyuan Rural Commercial Bank at a 6.55% interest rate Short-Term Loans Breakdown (in USD) | Lender | As of June 30, 2024 (Unaudited) | As of December 31, 2023 | | :--- | :--- | :--- | | Shanxi Hunyuan Rural Commercial Bank Co., Ltd | $5,228,800 | $5,352,188 | | Bank of China | $34,328 | $35,212 | | **Total** | **$5,263,128** | **$5,387,400** | - A new loan agreement was signed on April 10, 2024, with Shanxi Hunyuan Rural Commercial Bank for approximately **$5.2 million** (RMB 38 million) with a maturity date of March 28, 2025, and a fixed interest rate of **6.55%**[116](index=116&type=chunk) [Note 12 – Taxes](index=22&type=section&id=NOTE%2012%20%E2%80%93%20TAXES) This note details the company's tax structure, including PRC corporate income tax rates and a full valuation allowance on deferred tax assets due to continuous losses, with $2.0 million in total taxes payable Taxes Payable Breakdown (in USD) | Tax Type | As of June 30, 2024 (Unaudited) | As of December 31, 2023 | | :--- | :--- | :--- | | VAT tax payable | $377,992 | $320,946 | | Corporate income tax payable | $1,615,700 | $1,653,827 | | Land use tax and other taxes payable | $16,009 | $12,162 | | **Total** | **$2,009,701** | **$1,986,935** | - Due to continuous losses, the company has a full valuation allowance of **$11,131,961** on its deferred tax assets as of June 30, 2024[151](index=151&type=chunk) [Note 14 – Related Party Transactions](index=24&type=section&id=NOTE%2014%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) The company conducts various transactions with related parties, including its CEO and an equity investee, involving significant advances to suppliers, accounts receivable, sales, and purchases Key Related Party Balances (in USD) | Balance Type | Related Party | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | :--- | | Due from related parties | Mr. Hengfang Li | $72,082 | $358,659 | | Accounts receivable | Multiple | $105,694 | $108,188 | | Advance to suppliers | Shexian Ruibo & others | $1,500,983 | $1,807,965 | Key Related Party Transactions (in USD) | Transaction Type | Related Party | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | | Sales to | Q Green Techcon | $218,631 | $210,864 | | Purchases from | Shexian Ruibo | $232,016 | $359,398 | [Note 15 – Shareholders' Equity](index=26&type=section&id=NOTE%2015%20%E2%80%93%20Shareholders%27%20Equity) This note details significant changes in shareholders' equity, including share combinations, the creation of Class B shares, and capital raises through public and private offerings - The company implemented a **10-for-1** share combination effective March 1, 2024, following a similar combination in May 2023[169](index=169&type=chunk)[171](index=171&type=chunk) - In March 2024, the company closed a public offering of **1,500,000** shares at **$4.00** per share, for gross proceeds of **$6,000,000**[182](index=182&type=chunk) - Concurrently, a private placement of **1,000,000** shares at **$4.00** per share was closed, yielding net proceeds of **$3,969,063**[183](index=183&type=chunk) [Note 16 – Segment Reporting](index=28&type=section&id=NOTE%2016%20%E2%80%93%20Segment%20Reporting) The company reports across four operating segments, with Machinery and Equipment sales being the primary revenue and gross profit driver, while the Construction Materials segment incurred a gross loss Segment Performance for Six Months Ended June 30, 2024 (in USD) | Segment | Revenues | Gross Profit / (Loss) | Segment Loss | | :--- | :--- | :--- | :--- | | Machinery and Equipment sales | $1,661,336 | $701,886 | $136,408 | | Construction materials sales | $146,293 | $(157,545) | $(244,481) | | Technological consulting and other services | $31,010 | $23,140 | $(608,560) | | **Total** | **$1,838,639** | **$567,481** | **$(716,633)** | - The Machinery and Equipment sales segment is the company's largest and most profitable segment, contributing the vast majority of total revenue and all of the gross profit[189](index=189&type=chunk) [Note 17 – Subsequent Events](index=29&type=section&id=NOTE%2017%20%E2%80%93%20Subsequent%20Events) Significant subsequent events include an August 2024 private placement raising $19.45 million for M&A and working capital, alongside share issuances to advisors and directors - On August 30, 2024, the company closed a private placement, raising approximately **$19.5 million** in gross proceeds[194](index=194&type=chunk) - As part of the private placement, the company issued **1,268,568** Class A Shares to a financial advisor as consideration for services[195](index=195&type=chunk)

Company Overview - ReTo Eco-Solutions, Inc. is focused on providing technology solutions and operation services for intelligent ecological environments and Internet of Things technology development services in China and other countries [1] - The company aims to bring clean water and fertile soil to communities worldwide through its proprietary technologies, systems, and solutions [2] - ReTo is engaged in ecological restoration, solid waste treatment, and the manufacturing and distribution of eco-friendly construction materials made from mining waste [2] Upcoming Shareholder Meeting - ReTo plans to hold its 2024 Annual Meeting of Shareholders on August 5, 2024, with shareholders entitled to vote if they are on record as of June 20, 2024 [1] - Details regarding the meeting time, location, and proposals for shareholders will be provided in the company's proxy statement to be filed with the SEC [1]

BEIJING, May 15, 2024 /PRNewswire/ -- ReTo Eco-Solutions, Inc. (Nasdaq: RETO) ("ReTo" or 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 the filing of its annual report on Form 20-F, containing audited consolidated financial statements for the fiscal year ended December 31, 2023, with the Securities and Exchange Commission on May 15, 2024. A c ...