Financial Performance - The company reported net losses of $874,668 in 2020 and $6,715,958 in 2021[318]. - Total revenue for the year ended December 31, 2021, was $1,091,889, an increase of $276,664 or 34% compared to 2020, but a decrease of $11,833,030 or 93.55% compared to 2019[367]. - Gross loss for 2021 was $(20,574), with a gross margin of -1.88%, an improvement from -5.13% in 2020[365]. - Net loss for the year ended December 31, 2021, was $6,715,958, compared to a net loss of $874,668 in 2020[390]. - Cash used in operating activities amounted to approximately $3.45 million in 2021, raising concerns about the company's ability to continue as a going concern[391]. - The company recorded a net cash inflow of $12,766,911 for the year ended December 31, 2021, compared to $244,486 in 2020[423]. Revenue Sources - Revenue from the restaurant business increased by $606,463 or 100% in 2021, primarily due to the acquisition of 51% equity interests in Far Ling's Inc. and 100% in Bo Ling's Chinese Restaurant[369]. - E-commerce sales in 2021 were $34,590, accounting for 3% of total revenue, with a 107% increase from 2020, although it was down 80% from 2019[368]. - Revenue from pet chews decreased by $12,984 or 22%, while wet canned pet food revenue decreased by $73,357 or 87% in 2021 compared to 2020[374]. Legal and Bankruptcy Issues - As of December 31, 2021, the company faced pending legal claims totaling RMB13.86 million (approximately $2.12 million) related to non-payment of invoices[324]. - The company is subject to 57 lawsuits from vendors and lenders since November 2019, with 44 cases reaching civil conciliation[324]. - The company is in bankruptcy proceedings as of March 16, 2022, affecting its ability to resolve legal claims and continue operations[324]. - The company has not made loan repayments totaling RMB20 million (approximately $3.18 million) to Qingdao Lingang Real Estate Co., Ltd. as of December 31, 2021[325]. Production and Operational Challenges - The total production capacity decreased by 14.81% from 5.4 tons per day in 2020 to 4.6 tons per day as of December 31, 2021[319]. - The company’s ability to recover operations is hindered by the COVID-19 pandemic and rising raw material prices[318]. - The company’s daily production capacity is currently limited to 4.6 tons due to operational challenges and legal proceedings[319]. - The company faced significant challenges due to competitive pressures in the pet food market, including pricing pressure and the presence of larger competitors[351]. Financial Position and Assets - Total assets as of December 31, 2021, were $32,047,957, reflecting a 74% increase from $18,452,910 in 2020[418]. - As of December 31, 2021, cash and cash equivalents increased to $18,027,322, a 175% increase from $6,566,549 in 2020[422]. - Inventory balance decreased to $51,423, a 79% decrease from $247,245 in 2020, attributed to rising raw material prices and decreased sales orders[427]. - Accounts receivable, net as of December 31, 2021, was $39,512, a decrease of 77% compared to $168,499 in 2020[426]. Financing Activities - The company completed a registered direct offering on September 30, 2021, raising approximately $8.2 million from the sale of 10,000,000 common shares[336]. - A second registered direct offering on November 3, 2021, raised approximately $8.9 million from the sale of 15,000,000 common shares[337]. - The company reported net cash provided by financing activities of $18,098,314 for the year ended December 31, 2021, primarily from the issuance of common shares[402]. Cost and Expenses - Cost of revenues for 2021 was $1,112,463, a 29.80% increase from 2020, reflecting rising raw material costs and operational challenges[365]. - General and administrative expenses surged by 123.36% to $3,944,709 in 2021, reflecting increased operational costs[365]. - Operating expenses rose by $2,709,378 or 143.80% in 2021, with a ratio of operating expenses to revenue increasing from 231.11% in 2020 to 420.69% in 2021[382]. Impairments and Liabilities - The company recognized an impairment of goodwill of $355,570 for the year ended December 31, 2021, due to significant net loss[387]. - The company recorded an impairment loss on long-lived assets of $217,257 for the year ended December 31, 2021[447]. - Total contractual obligations as of December 31, 2021, amounted to $10,555,513, with $5,440,350 due within one year[436]. Market and Economic Conditions - The company considers commodity price risks arising from fluctuations in raw material prices but has generally been able to pass on cost increases through price adjustments[471]. - The RMB appreciated against the U.S. dollar by 2.7% in 2021 and 6.5% in 2020, which may affect the financial results reported in U.S. dollar terms[585]. - The company does not believe the impact of inflation is material, with inflation rates in China being 1.1% in 2021, 2.6% in 2020, and 2.3% in 2019[470].
TDH(PETZ) - 2021 Q4 - Annual Report