Financial Performance - Net cash used in operating activities decreased to $351,880 in 2022 from $1,612,458 in 2021, primarily due to reduced cash outflow on prepaid expenses by $1,683,855 and increased cash inflow from accrued liabilities by $2,245,459[42]. - Total operating expenses increased to $3,880,433 in 2022, a rise of 380.2% from $808,154 in 2021, mainly driven by increased litigation expenses of $2,281,277 and R&D expenses of $850,000[66]. - Net loss for the year ended December 31, 2022, was $4,457,327, a decrease of $7,772,863 compared to a net loss of $12,230,190 in 2021, attributed to decreased impairment loss on long-term equity investment by $11,625,195[66]. - Net loss for the year was $4,457,327, compared to a net loss of $12,230,190 in the previous year, representing a 63.6% improvement[104]. - Cash at the end of the year was $138,813,673, down from $152,011,887, a decrease of about 8.7%[104]. - Total stockholders' equity decreased from $124,758,185 to $110,793,193, a decline of about 11.2%[100]. - The Company recorded a total income tax expense of $69,652 for the year ended December 31, 2022, compared to a benefit of $(53,140) in 2021[96]. Revenue and Income Recognition - The company has not recognized any income from the Erdos TCH joint venture due to uncertainty of collection, despite receiving monthly compensation of RMB 1 million ($145,460) until operations resume[31]. - The company’s revenue recognition policy states that sales and cost of sales are recognized at the inception of the lease[36]. Assets and Liabilities - Total assets decreased from $153,272,462 to $139,135,705, a decline of approximately 9.2%[100]. - Total current liabilities increased slightly from $23,883,024 to $24,383,887, an increase of approximately 2.1%[100]. - The outstanding principal balance of the Promissory Note as of December 31, 2022, was $5,697,727, with accrued interest of $261,035[86]. - The company’s total contractual obligations amount to $17,361,922, including notes payable and entrusted loans[49]. Investments and Projects - The company entered a Market Research and Project Development Service Agreement for $1,150,000 to assist in market research for the new energy industry[67]. - Xi'an Zhonghong transferred the Xuzhou Huayu Project for RMB 120 million ($17.52 million) and Shenqiu Phase I & II Projects for RMB 127.066 million ($18.55 million) to Mr. Bai as part of a loan repayment[111]. - The total repayment amount for the projects was RMB 247.066 million ($36.07 million), which was settled through the transfer of equity shares of Xi'an Hanneng to HYREF[113]. - The company had an investment of RMB 75 million ($11.63 million) in the HYREF fund, which was fully impaired due to uncertainty regarding collection[118]. Tax and Deferred Tax - The Company has a net operating loss (NOL) carryforward of $2.57 million for U.S. income taxes as of December 31, 2022[94]. - The Company's PRC subsidiaries had $36.47 million in NOL that can be carried forward for five years[95]. - The effective income tax rate for the Company's Chinese subsidiaries was 25% for both 2022 and 2021[92]. - As of December 31, 2022, total deferred tax assets amounted to $17.18 million, a decrease of 13.9% from $19.95 million in 2021[139]. Legal and Litigation - The company accrued $2.20 million in litigation expenses as of December 31, 2022[178]. - Xi'an TCH paid RMB 261 million ($37.58 million) as an out-of-court settlement to Hongyuan[177]. Stock and Financing Activities - The Company sold 3,260,000 shares of common stock at $11.522 per share, raising approximately $38.25 million in proceeds[87]. - The company issued common stock amounting to $37,561,721 during the financing activities[104]. - The Company returned $691,320 in excess proceeds to the CEO in April 2021 after amending the share purchase agreement[87]. - As of December 31, 2022, the Company had 30,411 outstanding warrants with an average exercise price of $14.0[88]. - The company entered into a Note Purchase Agreement on December 4, 2020, issuing a Promissory Note of $3.15 million with an interest rate of 8%[121]. - The company entered an investment banking agreement for a registered securities offering of up to $20 million, with a retainer fee of 15,000 shares[182]. Miscellaneous - The company’s organizational structure includes multiple wholly-owned subsidiaries focused on energy-saving solutions and financial leasing[28]. - The Company believes its R&D efforts are among the best in the waste heat, gas, and pressure to energy industry[172]. - The common welfare fund allows the Company to transfer 5% to 10% of its net income for employee benefits, but the Company does not participate in this fund[175]. - The Company’s sales, purchases, and expenses are denominated in RMB, and the RMB is not freely convertible into foreign currencies under current law[176]. - The present value of lease liabilities is $62,178 as of December 31, 2023[180]. - The CFO's monthly salary is RMB 16,000 ($2,200) with a potential grant of no less than 5,000 shares annually, pending Board approval[181]. - An Exchange Agreement was entered into on January 6, 2023, resulting in the delivery of 63,025 shares for a new Promissory Note of $150,000[183].
Smart Powerr (CREG) - 2022 Q4 - Annual Report