Financial Performance - The company experienced a significant revenue decline of 93.6%, amounting to 11.8millionin2020comparedto2019duetoCOVID−19andoperationalchallenges[225].−Revenueinfiscalyear2020decreasedbyapproximately93.611.8 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,adecreaseof11,833,030 or 93.55% compared to 2019 [267]. - The company's revenue decreased by approximately 11.83millionfromapproximately12.65 million in 2019 to approximately 0.82millionin2020,representingadeclineof93.55574,921, a decline of 79% from 2,711,445in2019[268].−SalestoChinain2020were713,257, down 73% from 2,662,247in2019[275].−E−commercesalesin2020were16,708, 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 2.12million)[231].−Thecompanyfaced57lawsuitsfromsuppliersandvendorssinceNovember2019,impactingitscreditandoperationalcosts[261].−ThecompanyhasnotmadeloanrepaymentstotalingRMB20million(approximately3.18 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 3.08million)toChinaConstructionBank,withpropertyauctionedfor5,098,461 (RMB33.14 million) to partially settle this debt [233]. - The company has not repaid RMB4.85 million (approximately 0.75million)toShanghaiPudongDevelopmentBank,withpotentialbankruptcyrisksifobligationsremainunsettled[235].−LaborarbitrationclaimsfromformeremployeestotalRMB3.68million(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 8.55millionasofDecember31,2020,comparedto7.3 million as of December 31, 2019 [290]. - Cash used in operating activities for the year ended December 31, 2020, totaled 2,628,255,primarilyduetoanetlossandchangesinworkingcapital[296].−Thecompanyrecordedanetcashinflowof244,486 for the year ended December 31, 2020, compared to a net cash inflow of 3,804,073in2019[8].−Thecompanywasindefaultonsubstantiallyalloutstandingloans,withtotalcontractualobligationsof9,917,382 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 19,070,896from14,461,900 as of December 31, 2019 [1]. Investment and Financing - The company raised approximately 2.73millionfromthesaleof9,100,000commonsharesat0.30 per share to accredited investors [241]. - The company entered into subscription agreements for the sale of 9,100,000 common shares at 0.30pershare,raisingapproximately2.73 million [294]. - Net cash provided by investing activities for the year ended December 31, 2020 was 3,355,189,includingproceedsfromthesaleofshort−terminvestmentsof42,146,183 [297]. - Net cash used in financing activities for the year ended December 31, 2020 was 589,358,withrepaymentsofshort−termloanstotaling746,437 [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,down93.8713,992,499 in 2019 [266]. - General and administrative expenses were 1,766,109in2020,areductionof52.293,702,035 in 2019 [266]. - Operating expenses decreased by 3,551,514or65.345,435,616 in 2019 to 1,884,102in2020,buttheratioofoperatingexpensesasapercentageofrevenueincreasedto231.110 in 2020, compared to 1,062,582in2018,indicatingashiftinstrategy[265].AssetsandLiabilities−Totalcurrentassetsincreasedby467,192,890 in 2019 to 10,516,955in2020[314].−Cashandcashequivalentsroseby285,114,175 in 2019 to 6,566,549in2020[314].−Accountsreceivable,netincreasedsignificantlyby67821,657 in 2019 to 168,499in2020[314].−Totalassetsincreasedby2215,087,210 in 2019 to 18,452,910in2020[314].−Short−termloansoutstandingincreasedfrom7,624,061 as of December 31, 2019 to 8,391,323asofDecember31,2020[306].−Inventorydecreasedby47.75247,245 from 473,216asofDecember31,2019duetoreducedsalesordersandrisingrawmaterialprices[4].−Accountspayabledecreasedby227,176 to $3,209,763 as of December 31, 2020, reflecting a reduction in material purchases due to a shortage of sales orders [7].
