Business Segments - The company discontinued its petfood manufacturing segment in Q1 2023 due to increased raw material costs, decreased demand, and operational challenges[227] - Petfood revenue declined from approximately $0.8 million in 2020 to $0.02 million in 2022, prompting the focus shift to the restaurant segment[228] - The company terminated the lease of the Jiaozhou plant in 2021, resulting in no remaining petfood production facilities[230] - The company plans to discontinue its petfood manufacturing segment in the first quarter of 2023 to focus on its restaurant business[249] - The company suspended its petfood manufacturing business segment in Q1 2023 due to operational challenges and bankruptcy proceedings[266] Financial Performance - The company reported a net income of approximately $0.86 million in fiscal year 2022, compared to a net loss of $6.7 million in 2021 and a net loss of $0.87 million in 2020[228] - Total revenue from continuing operations increased by $2,017,638 or 186.63% from 2021 to 2022, reaching $3,098,733[267] - Revenue from the restaurant business segment increased by $2,467,544 or 407% in 2022 compared to 2021, primarily due to the acquisition of Far Ling's Inc. and Bo Ling's Chinese Restaurant, Inc.[272] - Gross profit for 2022 was $1,052,533, representing a gross margin of 33.97%, an increase from 28.78% in 2021[267] - Net income for 2022 was $855,013, a significant recovery from a net loss of $6,715,958 in 2021[6] Legal and Bankruptcy Issues - As of December 31, 2022, the company faced 57 pending lawsuits related to non-payment of invoices, with total claims amounting to RMB13.86 million (USD$2.12 million)[234] - The company has been involved in bankruptcy proceedings since March 2022, with expectations for completion by the end of 2023[234] - The company faced 98 labor arbitration claims totaling RMB3.68 million (USD0.56 million) from former employees, with bankruptcy proceedings affecting these claims[242] - The company faced 57 lawsuits from suppliers and vendors since November 2019, impacting its credit and cost of revenues[262] Operational Challenges - Future growth will depend on the company's ability to effectively manage and acquire new restaurants, as well as resolve ongoing legal issues[232] - The company is currently facing challenges related to debt burden and limited production capacity, which may hinder future revenue growth[254] - The ongoing COVID-19 pandemic continues to pose risks to the company's operations and financial results, despite achieving 100% indoor dining capacity at Bo Lings[253] - The company has not guaranteed future profitability and may continue to incur operating losses in the near term[229] Capital and Financing - The company needs to raise substantial capital and improve operational efficiencies to sustain future growth[233] - The company completed a private placement on July 26, 2022, raising gross proceeds of $6.04 million by selling 4,000,000 common shares at $1.50 each[247] - The company expects to incur additional costs associated with being a reporting company in the U.S., which may require seeking additional financing sources[318] - The company may need to raise capital from outside investors to fully implement its business plan and sustain growth[302] - The company is currently exploring additional debt or equity financing possibilities to improve liquidity and capital sources[302] Assets and Liabilities - As of December 31, 2022, the company had cash and cash equivalents of approximately $23.1 million and short-term investments of about $9.92 million[8] - Total assets decreased by 4%, totaling $36,513,397 compared to $37,868,760 in 2021[328] - Total liabilities decreased by 37%, amounting to $15,359,494 compared to $24,498,693 in the previous year[328] - The company had $4,980,334 in short-term loans outstanding, a decrease from $5,440,350 as of December 31, 2021[317] Revenue Recognition and Accounting - The company recognizes revenue from product sales upon transfer of control, with restaurant revenue recognized at the point of service[362] - The company measures certain financial instruments at fair value, including cash equivalents and accounts receivable, due to their short maturities[376] - The fair value measurement for certain financial assets is based on observable inputs, categorized into three levels, with Level 1 being the most reliable[374] Market and Economic Conditions - The RMB depreciated against the U.S. dollar by 9.23% in 2022, impacting financial results reported in U.S. dollar terms[481] - The company experienced inflation rates in China of 3.7% in 2022, 1.1% in 2021, and 2.6% in 2020, which were considered not material[378] - The company has generally been able to pass on cost increases from raw material price fluctuations through price adjustments[379]
TDH(PETZ) - 2022 Q4 - Annual Report