Financial Performance - Total revenue for fiscal year 2021 decreased by 57% to approximately $3.6 million from $8.3 million in fiscal year 2020[2] - Gross profit for fiscal year 2021 decreased by 81% to approximately $0.4 million, with a gross margin of 11% compared to 24% in the prior year[2] - Loss from operations was $12.0 million for fiscal year 2021, compared to a loss of $6.6 million in the prior year[2] - Total net loss attributable to ReTo was $21.1 million, compared to a net loss of $11.8 million for the prior year[2] - Revenue from machinery and equipment sales decreased by 72% to approximately $1.8 million in fiscal year 2021[6] - Revenue from third-party customers decreased by 59% to approximately $3.3 million in fiscal year 2021[5] - Total revenues for 2021 were $3,600,078, a decrease of 56.8% from $8,339,215 in 2020[24] - Gross profit for 2021 was $385,729, down 80.7% from $1,997,676 in 2020[24] - The net loss attributable to ReTo Eco-Solutions, Inc. for 2021 was $21,104,826, compared to a net loss of $11,773,763 in 2020, representing an increase of 79.5%[24] Expenses and Liabilities - General and administrative expenses increased to approximately $4.7 million, representing 128% of total revenues in fiscal year 2021[12] - Bad debt expenses increased to approximately $2.3 million in fiscal year 2021, up from $0.9 million in fiscal year 2020[13] - Total operating expenses increased to $12,386,718 in 2021, up 44.5% from $8,569,418 in 2020[24] - Cash and cash equivalents decreased to $457,495 as of December 31, 2021, from $1,058,138 at the end of 2020, a decline of 56.7%[20] - Total current liabilities decreased to $16,756,231 in 2021, down 27.0% from $22,994,786 in 2020[20] - The accumulated deficit increased to $(33,347,984) as of December 31, 2021, from $(17,245,453) in 2020[20] - Total assets decreased to $30,961,067 in 2021, down 46.6% from $57,974,073 in 2020[21] Strategic Direction - The company plans to transform its strategy to focus on ecological and environmental protection business driven by science and technologies[4] - The company aims to integrate IoT technologies and ecological restoration technologies into its environmental business chain to improve performance in 2022[4] Share Information - The company had 26,160,750 weighted average shares outstanding for basic and diluted loss per share in 2021[25]

Revenue Performance - Total revenue for the year ended December 31, 2021, was $3.6 million, a decrease of 57% from $8.34 million in 2020[448] - Revenue from third-party customers was $3.32 million, accounting for 92% of total sales in 2021, down from 97% in 2020[448] - The company’s international sales accounted for 16% of total sales in 2021, compared to 33% in 2020[438] - Total revenue decreased by approximately $8.7 million, or 51%, to approximately $8.3 million for the year ended December 31, 2020, compared to $17.0 million for 2019[452] - Revenue from third-party customers decreased by approximately $8.8 million, or 52%, from approximately $16.9 million in 2019 to approximately $8.1 million in 2020[452] - The company's revenue decreased by approximately $4.7 million, or 56.8%, from approximately $8.3 million in 2020 to approximately $3.6 million in 2021[496] Profitability and Loss - Gross profit for 2021 was $386, down 81% from $1.998 million in 2020[448] - Gross profit decreased by approximately $3.2 million, or 62%, to approximately $2.0 million for the year ended December 31, 2020, with a gross profit margin of 24% compared to 31% in 2019[462] - Gross profit for machinery and equipment decreased by approximately $1.7 million to $0.3 million in 2021, with a gross profit margin of 17% compared to 31% in 2020[466] - Gross profit for construction materials improved to approximately $0.1 million in 2021 from a gross loss of approximately $0.1 million in 2020, with a gross profit margin of 6%[469] - The net loss from continuing operations for 2021 was $20.48 million, a 287% increase from a loss of $5.29 million in 2020[448] - The net loss from continuing operations was approximately $20.5 million in 2021, an increase of $15.8 million from a loss of $4.7 million in 2020[486] - Total net loss amounted to approximately $22.1 million in 2021, compared to $12.9 million in 2020[490] Operating Expenses - Total operating expenses increased to $12.39 million in 2021, a 45% increase from $8.57 million in 2020[448] - General and administrative expenses increased to approximately $4.7 million in 2021, representing 129% of total revenues, up from 48% in 2020[473] - Bad debt expenses rose to approximately $2.3 million in 2021, accounting for 63% of total revenues, compared to 11% in 2020[475] - Selling expenses decreased by 24% to approximately $0.8 million in 2021, representing 23% of sales[472] - Operating expenses totaled $8.569 million, representing 103% of sales for the year ended December 31, 2020[1] Financial Position - As of December 31, 2021, the company had a working capital deficit of approximately $3.7 million and cash of approximately $0.5 million[496][498] - Net cash used in operating activities was approximately $2.8 million in fiscal year 2021, primarily due to a net loss from continuing operations of approximately $20.5 million[504] - The company had outstanding bank loans of approximately $2.4 million as of December 31, 2021, with significant repayments due within the next 12 months[497][498] - The company expects to renew all existing bank loans based on past experience and good credit history, but there is substantial doubt about its ability to continue as a going concern for the next 12 months[500] Business Operations and Challenges - The ongoing COVID-19 pandemic has significantly impacted the company's operations and financial results, with uncertainties regarding future revenue and cash flows for fiscal year 2022[444] - The construction industry faced significant challenges due to financial tightness and the impact of COVID-19, leading to project delays and reduced demand[451] - The company discontinued its machinery and equipment manufacturing business on January 2, 2020, and the solid waste processing business on November 12, 2021, which are classified as discontinued operations[519] Shareholder Information - Common Shares have been listed on the Nasdaq Capital Market under the symbol "RETO" since November 29, 2017[633] - The beneficial ownership of Common Shares as of April 29, 2022, shows that directors and executive officers collectively own 6,208,160 shares, representing 18.7% of the total[584] - Hengfang Li, a director, holds 2,396,264 Common Shares, which is 7.2% of the total shares outstanding[584] - REIT International Development (Group) Co., Limited is a major shareholder with 3,903,161 Common Shares, accounting for 11.8% of the total[584] Management and Compensation - The company’s directors and senior management include Hengfang Li as CEO and Chairman, Guangfeng Dai as President and COO, and Xingchun Wang as CFO[540] - The company reported an aggregate of approximately $501,233 in salaries, bonuses, and fees for senior officers in 2021[554] - Mr. Li, the Chairman and CEO, has an annual compensation of RMB 800,000 (approximately $117,000) under his employment agreement[555] - Mr. Dai, the President, is entitled to an annual compensation of RMB 750,000 (approximately $109,000) as per his employment agreement[556] - Mr. Hu, the Chief Technology Officer, receives an annual compensation of RMB 700,000 (approximately $102,000) under his employment agreement[558] Legal and Regulatory Matters - The company is involved in ongoing legal proceedings but believes that any potential liabilities will not materially affect its financial position[622] - The company has not experienced any significant changes since the date of its audited consolidated financial statements[631] Related Party Transactions - Total sales to related parties for the year 2021 amounted to $281,784, an increase from $228,814 in 2020 and $83,972 in 2019, reflecting a growth trend in related party transactions[616] - The company made purchases from related parties totaling $464,784 in 2021, down from $2,876,993 in 2020 and $2,021,934 in 2019, suggesting a reduction in reliance on related party suppliers[617] - The company reported accounts payable to related parties of $10,199 as of December 31, 2021, a decrease from $153,344 in 2020 and $1,485,049 in 2019, indicating improved cash flow management[612] - The company fully collected accounts receivable from related parties as of December 31, 2021, demonstrating effective credit management[608]

Company Overview - ReTo Eco-Solutions was incorporated on August 7, 2015, as a holding company to develop business opportunities in China [241]. - The company completed its IPO on November 29, 2017, offering 3,220,000 shares at $5.00 per share, with trading commencing on NASDAQ under the symbol "RETO" [242]. - The company has established multiple subsidiaries in China, including Beijing REIT, which was founded in 1999 and has since developed five other subsidiaries [243]. - REIT Changjiang, a subsidiary, was established with a registered capital of RMB 100 million (approximately $16 million) and focuses on processing construction and mining waste [245]. - REIT India, a joint venture with Q Green Techon Private Limited, is 51% owned by Beijing REIT and aims to expand into the Indian market [234]. - The company sold its 100% ownership interest in Gu'an REIT for RMB 39.9 million (approximately $5.7 million) to Hebei Huishitong Technology Inc. on January 2, 2020 [253]. - The company aims to enhance its ecological technology solutions and expand its market presence through various subsidiaries and joint ventures [240]. Financial Performance - In 2019, the company generated total revenue from continuing operations of approximately $XX million, with machinery and equipment production accounting for 48% and construction materials production for 52% [380]. - Total revenue from continuing operations increased by approximately $0.3 million, or 1%, to approximately $29.6 million for the year ended December 31, 2019, compared to approximately $29.3 million for the year ended December 31, 2018 [398]. - Revenue from third-party customers increased by $2.1 million or 8% from approximately $27.4 million in 2018 to approximately $29.5 million in 2019, while revenue from related party customers decreased by $1.9 million or 96% [398]. - Gross profit decreased to $7.4 million, representing 25% of total revenue, down from $14.0 million or 48% in the previous year [396]. - Total operating expenses increased by 68% to $15.5 million, up from $9.3 million in the previous year [396]. - Net loss from continuing operations was $12.3 million, a decrease of 563% compared to a net income of $2.7 million in the previous year [396]. - Revenue from machinery and equipment sales increased by approximately $4.9 million, or 53%, from approximately $9.2 million in 2018 to approximately $14.0 million in 2019 [400]. - Sales of environmental-friendly construction materials decreased by $3.5 million or 19% for the year ended December 31, 2019, compared to the previous year [403]. - Bad debt expenses increased significantly by 383% to $8.3 million, up from $1.7 million in the previous year [396]. Research and Development - The company spent $438,371 and $656,563 on research and development for the years ended December 31, 2019, and 2018, respectively, with plans to increase this allocation in the future [313]. - The company is researching new products, including mineral wool, and has introduced permeable floor tiles for sponge city construction [304]. - The company collaborates with various universities to develop innovative construction materials and disposal techniques for fly ash and iron tailings [317][318]. - The company has developed several research and development projects from 2017 to 2019, including an automated palletizing system and a fully automatic pigment metering feeding device [319]. Market and Industry Trends - The Chinese construction market is expected to maintain a 26% share of the global market by 2025, driven by urbanization and government focus on green building [265]. - The Chinese government allocated between 400 to 600 million RMB (approximately $85 million to $128 million) for each of the 30 pilot sponge cities to enhance water management [271]. - Eco-friendly construction materials contain about 70% reclaimed fly-ash and iron tailings, reducing environmental waste and energy consumption during manufacturing [256]. - The company aims to expand remediation projects in former mining regions, addressing environmental concerns associated with abandoned mines [282]. - The company is actively pursuing additional international markets, including the Philippines, Laos, and Morocco, to expand its product reach [257]. Compliance and Regulations - The Foreign Investment Law, effective January 1, 2020, provides a framework for foreign investments in China, allowing for national treatment of foreign-invested entities [329]. - The Encouraging Catalogue (Edition 2019) lists 415 industry sectors that encourage foreign investments, indicating a favorable environment for investment [340]. - The company operates within the permitted category for foreign investment, allowing for the establishment of wholly foreign-owned enterprises [342]. - The company is subject to regulations governing foreign currency exchange, which may impact its ability to repatriate profits and manage foreign investments [345]. - The dividends paid by the subsidiary to its shareholder are taxable in China [346]. Production and Supply Chain - The company’s production facilities include factories operated by REIT Changjiang, Gu'an REIT, and REIT Xingyi, focusing on eco-friendly construction materials [381]. - The primary raw materials for construction materials production are sourced from iron ore refining, concrete, and steel [385]. - Approximately 25% of the company's raw materials were sourced from one major supplier in 2019, down from 28% in 2018 [322]. - The company has established strong relationships with suppliers, ensuring efficient access to necessary raw materials with little expected price volatility [321]. Strategic Plans - The company plans to expand its international market by adding four to five distributors in South America and the Middle East [284][302]. - The company aims to pursue strategic acquisitions in construction material or manufacturing equipment companies in established economies in China [285]. - The company plans to build new manufacturing plants for REIT Yancheng and REIT Lingqiu, and has 67 registered patents and 14 ongoing R&D projects [383]. Impact of COVID-19 - The company experienced a significant impact from COVID-19, with revenues for the first ten months of fiscal 2020 expected to be approximately 80% lower compared to the same period in the previous year [388].

Financial Performance - Revenues for the year ended December 31, 2018, were $37,569,862, an increase of 5.7% from $35,551,016 in 2017[16] - Net income attributable to ReTo Eco-Solutions, Inc. for 2018 was $4,480,618, a decrease of 25.1% from $5,978,389 in 2017[16] - Comprehensive income attributable to ReTo Eco-Solutions, Inc. for 2018 was $1,591,846, a significant decrease from $7,490,071 in 2017[16] - Total revenues increased from $35.6 million in 2017 to $37.6 million in 2018, representing a growth of approximately 5.62%[42] Assets and Liabilities - Total assets as of December 31, 2018, were $82,004,922, compared to $81,131,829 in 2017, indicating stable asset growth[17] - Current liabilities decreased to $20,681,667 in 2018 from $26,552,039 in 2017, showing improved liquidity[17] - As of December 31, 2018, the company had approximately $17.4 million in outstanding bank loans, which could negatively affect its financial condition if not managed properly[61] Research and Development - Research and development expenses increased to $799,604 in 2018, up from $647,754 in 2017, reflecting a focus on innovation[16] Inventory and Receivables - Accounts receivable at the end of 2018 were $15,175,547, representing 40% of total revenues, down from 57% in 2017[36] - Inventory as of December 31, 2018, was $4,630,312, with an inventory turnover of 57 days, indicating efficient inventory management[28] Competition and Market Challenges - The company intends to grow by expanding its business and increasing market penetration, but faces challenges such as increased competition and the need for product improvement[45] - The company is exposed to risks related to the economy of the Hainan Province, which could lead to a material decline in its business[40] Legal and Regulatory Risks - The company faces potential legal claims related to investment funds acquired by a financial intermediary, which could adversely affect its financial condition[64] - The company may incur penalties ranging from 500,000 RMB (approximately $72,000) to 1.0 million RMB (approximately $144,000) for subcontracting to unqualified individual contractors[54] - The company operates under substantial liabilities to comply with environmental laws, which could require significant expenditures for compliance[77] Human Resources and Management - The company faces intense competition for qualified personnel, which may increase compensation costs and impact financial results[80] - The future success of the company heavily relies on key personnel, particularly the founder and CEO, Hengfang Li, whose absence could disrupt operations[78] - The company does not maintain key man life insurance for senior management, and the loss of any key personnel could materially affect operations[79] Financial and Operational Risks - The company may require additional financing for future capital expenditures, which could lead to dilution of existing shares or operational restrictions[87] - The company’s bank accounts in China are not insured, posing a risk of loss if any bank becomes insolvent[92] - The fluctuation of the Renminbi against the U.S. dollar may materially affect the company's cash flows, revenues, and financial position[145] Taxation and Compliance - The company benefits from a preferential income tax rate of 15% for 2015 and 2016 due to its Hi-Tech Enterprise certificate, compared to the standard 25% income tax rate in China[151] - Estimated tax savings from the company's tax benefits amounted to $86,898 for the year ended December 31, 2018, and $266,125 for 2017[151] - Under Chinese law, foreign-invested companies must allocate a portion of after-tax profits to statutory reserve and staff welfare funds, potentially impacting cash flow and solvency if dividends cannot be repatriated[106] Shareholder and Market Considerations - The trading price of the company's common shares has fluctuated between $12.75 and $1.07 since listing on NASDAQ, with the last reported price at $1.75 on May 13, 2019[181] - Employees, officers, and directors collectively own approximately 34.2% of the outstanding shares, which may reduce the influence of other shareholders on corporate decisions[207] - The company incurs increased costs associated with being a public entity, which could adversely affect profitability[195] Government and Economic Environment - The company’s operations are significantly influenced by the political and economic environment in China, which may affect financial conditions and results[166] - China's annual GDP growth rate declined from approximately 10.3% in 2010 to 6.6% in 2018, potentially impacting the construction industry and related business operations[179] Miscellaneous Risks - The company may face significant liabilities under China's Labor Contract Law, which could adversely affect workforce reduction decisions and increase labor costs[156] - The company has received government subsidies contingent on meeting specific conditions, which, if reduced or eliminated, could negatively impact its operations[149] - The company is subject to foreign exchange controls in China, which could limit its use of funds raised in its initial public offering[141]