Financial Performance - The company experienced a significant revenue decline of 93.6%, amounting to $11.8 million in 2020 compared to 2019 due to COVID-19 and operational challenges [225]. - Revenue in fiscal year 2020 decreased by approximately 93.6%, or $11.8 million, compared to fiscal year 2019, primarily due to COVID-19 impacts [250]. - Total revenue for the year ended December 31, 2020, was $815,225, a decrease of $11,833,030 or 93.55% compared to 2019 [267]. - The company's revenue decreased by approximately $11.83 million from approximately $12.65 million in 2019 to approximately $0.82 million in 2020, representing a decline of 93.55% [290]. - Domestic sales in 2020 were $574,921, a decline of 79% from $2,711,445 in 2019 [268]. - Sales to China in 2020 were $713,257, down 73% from $2,662,247 in 2019 [275]. - E-commerce sales in 2020 were $16,708, accounting for 2% of total revenue, a significant drop from 16% in 2018, indicating a need for market expansion [254]. Operational Challenges - Total production capacity decreased by 32.5%, from 8.0 tons per day in 2019 to 5.4 tons per day as of December 31, 2020 [226]. - The COVID-19 pandemic significantly disrupted supply chains and sales activities, contributing to decreased revenue [269]. - The company is facing 57 pending lawsuits related to non-payment of invoices, with total claims amounting to RMB13.86 million (approximately $2.12 million) [231]. - The company faced 57 lawsuits from suppliers and vendors since November 2019, impacting its credit and operational costs [261]. - The company has not made loan repayments totaling RMB20 million (approximately $3.18 million) to Qingdao Lingang Real Estate Co., Ltd. and anticipates potential bankruptcy proceedings if obligations are not settled [232]. - A court ruling mandated the company to repay RMB19.93 million (approximately $3.08 million) to China Construction Bank, with property auctioned for $5,098,461 (RMB33.14 million) to partially settle this debt [233]. - The company has not repaid RMB4.85 million (approximately $0.75 million) to Shanghai Pudong Development Bank, with potential bankruptcy risks if obligations remain unsettled [235]. - Labor arbitration claims from former employees total RMB 3.68 million ($0.56 million), with 98 cases initiated, of which 6 have been settled [239]. Financial Position - The company reported a working capital deficit of approximately $8.55 million as of December 31, 2020, compared to $7.3 million as of December 31, 2019 [290]. - Cash used in operating activities for the year ended December 31, 2020, totaled $2,628,255, primarily due to a net loss and changes in working capital [296]. - The company recorded a net cash inflow of $244,486 for the year ended December 31, 2020, compared to a net cash inflow of $3,804,073 in 2019 [8]. - The company was in default on substantially all outstanding loans, with total contractual obligations of $9,917,382 due by the end of 2025 [9]. - The company anticipates incurring additional costs related to compliance with the Sarbanes-Oxley Act, which may require seeking additional financing [307]. - As of December 31, 2020, total current liabilities increased by 32% to $19,070,896 from $14,461,900 as of December 31, 2019 [1]. Investment and Financing - The company raised approximately $2.73 million from the sale of 9,100,000 common shares at $0.30 per share to accredited investors [241]. - The company entered into subscription agreements for the sale of 9,100,000 common shares at $0.30 per share, raising approximately $2.73 million [294]. - Net cash provided by investing activities for the year ended December 31, 2020 was $3,355,189, including proceeds from the sale of short-term investments of $42,146,183 [297]. - Net cash used in financing activities for the year ended December 31, 2020 was $589,358, with repayments of short-term loans totaling $746,437 [300]. Future Outlook - The company is committed to developing new products and expanding its customer base to recover from operational challenges and improve financial performance [227]. - Future growth will require significant capital investments and effective management of operational challenges to ensure sustainability [230]. - The company plans to improve profitability and generate sufficient cash flow while exploring strategic acquisition opportunities to enhance operations [294]. - The company is closely monitoring COVID-19 developments and expects the negative impact to gradually mitigate as the outbreak is controlled in China [225]. - There is substantial doubt about the company's ability to continue as a going concern for the next 12 months due to ongoing financial challenges [295]. Cost and Expenses - Cost of revenues for 2020 was $857,060, down 93.87% from $13,992,499 in 2019 [266]. - General and administrative expenses were $1,766,109 in 2020, a reduction of 52.29% from $3,702,035 in 2019 [266]. - Operating expenses decreased by $3,551,514 or 65.34% from $5,435,616 in 2019 to $1,884,102 in 2020, but the ratio of operating expenses as a percentage of revenue increased to 231.11% [280]. - Research and Development expenses were $0 in 2020, compared to $1,062,582 in 2018, indicating a shift in strategy [265]. Assets and Liabilities - Total current assets increased by 46% from $7,192,890 in 2019 to $10,516,955 in 2020 [314]. - Cash and cash equivalents rose by 28% from $5,114,175 in 2019 to $6,566,549 in 2020 [314]. - Accounts receivable, net increased significantly by 678% from $21,657 in 2019 to $168,499 in 2020 [314]. - Total assets increased by 22% from $15,087,210 in 2019 to $18,452,910 in 2020 [314]. - Short-term loans outstanding increased from $7,624,061 as of December 31, 2019 to $8,391,323 as of December 31, 2020 [306]. - Inventory decreased by 47.75% to $247,245 from $473,216 as of December 31, 2019 due to reduced sales orders and rising raw material prices [4]. - Accounts payable decreased by $227,176 to $3,209,763 as of December 31, 2020, reflecting a reduction in material purchases due to a shortage of sales orders [7].
TDH(PETZ) - 2020 Q4 - Annual Report