Financial Performance - Revenues for the year ended December 31, 2022, were $37.9 million, a decrease of 7.1% from $40.8 million in 2021[309] - Gross profit was $14.0 million, down 23.9% from $18.4 million in the previous year, resulting in a gross profit margin of 37.0% compared to 45.3% in 2021[310] - Net income decreased by 50.0% to $8.7 million from $17.4 million in 2021[310] - Total volume shipped was 1,916,976 units, a slight decrease of 0.3% from 1,922,353 units in 2021[310] - Revenue from domestic sales was $26.4 million, accounting for 69.7% of total revenues, while overseas sales were $11.5 million, representing 30.3%[312] - Revenue from automotive touchscreens decreased by 19.9% to $9.3 million, while POS touchscreens saw a 4.2% increase to $6.6 million[318] - The average selling price of products in RMB decreased by 2.6%, contributing to the overall revenue decline[314] - Operating income declined to $11.4 million in 2022 from $12.6 million in 2021, a decrease of $1.2 million or 9.5%[326] - Net income for 2022 was $8.7 million, down from $17.4 million in 2021, reflecting a decrease of $8.7 million[333] Cost and Expenses - Gross profit decreased to $14.0 million in 2022 from $18.4 million in 2021, a decline of $4.4 million or 23.9%[320] - Gross profit margin fell to 37.0% in 2022 from 45.3% in 2021, primarily due to a 7.1% decrease in sales and a 13.2% increase in material costs[320] - Selling expenses increased to $1.3 million in 2022, up 116.7% from $0.6 million in 2021, driven by increased marketing efforts[321] - General and administrative expenses decreased to $1.3 million in 2022, down 31.6% from $1.9 million in 2021, mainly due to a loss of VAT input credits[322] - Research and development expenses were $85,251 in 2022, a decrease of $4,226 or 4.7% from $89,477 in 2021[323] Cash Flow and Financial Position - Cash and cash equivalents at the end of 2022 were $51.3 million, compared to $46.2 million at the end of 2021[337] - Net cash provided by operating activities was $8.6 million in 2022, down from $14.0 million in 2021, primarily due to decreased net income[338] - Days Sales Outstanding (DSO) decreased to 81 days for the year ended December 31, 2022, compared to 88 days for the year ended December 31, 2021[342] - Total accounts receivable as of December 31, 2022, was $9,057,741, up from $7,991,037 as of December 31, 2021[343] - The company expects cash and cash equivalents from operating and financing activities to meet working capital needs for at least the next 12 months[345] Inventory and Liabilities - The company prepaid RMB15.0 million (approximately $2.2 million) for a facility decoration contract, with a remaining balance of RMB5.0 million (approximately $0.7 million) to be paid by the end of 2023[348] - The company recorded $74,100 in inventory write-offs for the year ended December 31, 2022, compared to nil for the year ended December 31, 2021[362] - The company had common stock purchase warrants liabilities of $256,957 and $1,128,635 as of December 31, 2022, and 2021, respectively[369] Tax and Regulatory Matters - The effective income tax rate increased to 27.7% in 2022 from 20.2% in 2021, primarily due to changes in preferential tax rates[331] - Legal claims have been settled, and the company has been fully discharged from these actions as of the date of the annual report[347] Accounting Policies and Risks - The company adopted ASC 606 for revenue recognition, which did not have a material impact on its consolidated financial statements[353] - The company has not recognized any impairment of long-lived assets for the years presented[375] - The company adopted ASU 2020-06 effective January 1, 2021, which simplifies accounting for convertible instruments[380] - The company adopted ASU 2016-13 utilizing the modified retrospective transition method, with no material impact on its financial statements[381] Economic Environment - The year-over-year percent changes in the consumer price index for December 2022 and 2021 were increases of 2.0% and 0.9%, respectively[390] - On December 31, 2022, the RMB traded at 6.8972 RMB to 1.00 U.S. dollar[388] - The company has not been exposed to material risks due to changes in interest rates[386] - The company faces foreign currency rate translation risks when results are translated to U.S. dollars[387] - The RMB was relatively stable against the U.S. dollar until a 2.1% revaluation on July 21, 2005[388] - There is international pressure on the Chinese government to adopt a more flexible currency policy, affecting the RMB exchange rate[389] - Inflation in China has not materially affected the company's results of operations to date[390]
Wetouch(WETH) - 2022 Q4 - Annual Report