TDH(PETZ) - 2023 Q4 - Annual Report

Financial Performance - The company reported a net loss of approximately $23.63 million in fiscal year 2023, compared to a net income of$0.86 million in 2022 and a net loss of $6.7 million in 2021[215]. - Revenue from continuing operations for 2023 was$3,175,809, representing a 2.49% increase from $3,098,733 in 2022, and a significant increase of 186.63$1,081,095 in 2021[235]. - Gross profit for 2023 was $1,029,594, a decrease of 2.18$1,052,533 in 2022, with a gross margin of 32.42%[235]. - Total revenue from continuing operations for 2023 was $3,175,809, an increase of$77,076 or 2% compared to 2022[237]. - Loss from operations for the year ended December 31, 2023, was $6,370,157, representing an increase from a loss of$3,048,016 in 2022, with operating loss as a percentage of total revenues at negative 200.58%[258]. - Total net loss for the year ended December 31, 2023, was $23,631,516, a significant decline from a net income of$855,013 in 2022[262]. Revenue Sources - The company generated revenue from two sources: sales of pet food products and restaurant operations, with revenue recognized upon transfer of control of goods or services rendered[318][319]. - Revenue from the restaurant business segment increased by $101,048 or 3$3.2 million in food service revenue for 2023[215]. Cost and Expenses - The cost of revenues from continuing operations increased to $2,146,215 in 2023, up 4.89$2,046,200 in 2022, and a 165.75% increase from $769,967 in 2021[235]. - General and administrative expenses rose to$4,269,092 in 2023, a 6.66% increase from $4,002,346 in 2022[235]. - Operating expenses for 2023 were$7,399,751, an increase of $3,299,202 or 80.46$3,040,000 in 2023, reflecting a 100% increase from previous periods[235]. - General and administrative expenses rose by $3,306,746 or 82.62$25,095 or 97% in 2023, with no e-commerce or overseas sales recorded[238]. - The company discontinued its pet food manufacturing business segment in Q1 2023, leading to significant declines in pet food sales[240]. - Net loss from discontinued operations amounted to $15,095,547 for the year ended December 31, 2023, compared to$339,054 in 2022[260]. Cash Flow and Assets - Cash used in operating activities for the year ended December 31, 2023, totaled $2,492,725, compared to$2,072,715 in 2022[270]. - Cash used in investing activities for the year ended December 31, 2023, was $6,067,051, primarily from the purchase of short-term investments[274]. - Cash provided by financing activities for the year ended December 31, 2023, was$1,921,554, with borrowing from related parties amounting to $1,928,329[275]. - As of December 31, 2023, the company had cash and cash equivalents of approximately$13.66 million and short-term investments of approximately $13.32 million[265]. - The total current assets decreased to$27,221,277 as of December 31, 2023, down from $33,781,754, representing a decline of$6,560,477 or 19%[286]. - Total assets decreased to $28,901,397 as of December 31, 2023, down from$36,513,397, a reduction of $7,612,000 or 21$3,852,240 as of December 31, 2023, down from $15,359,494, a decline of$11,507,254 or 75%[286]. - Due to related parties increased to $1,983,430 as of December 31, 2023, an increase of$1,927,683 or 3457% compared to $55,747 on December 31, 2022[295]. - The Company has total contractual obligations of$683,113, with $240,000 due in less than one year and$443,113 due in 1-3 years[301]. Accounting and Regulatory Matters - The Company has adopted ASC Topic 842 for lease accounting, recognizing lease expenses on a straight-line basis over the lease term[313][314]. - The Company is evaluating the impact of ASU 2020-04 on its consolidated financial statements, which provides optional expedients for reference rate reform[330]. - The updated guidance on Disclosures for Income Taxes will require additional disclosure and is effective January 1, 2025, with early adoption permitted[335]. - The Company does not have any off-balance sheet arrangements that require disclosure under SEC regulations[304]. Market Conditions - The RMB depreciated against the U.S. dollar by 1.69% in 2023 and by 9.23% in 2022, which may affect the Company's financial results reported in U.S. dollar terms[433]. - The inflation rates in China were 2.6% in 2023, 3.7% in 2022, and 1.1% in 2021, with the Company not believing the impact of inflation is material[336]. - The Company has generally been able to pass on cost increases through price adjustments, depending on market conditions influenced by the overall economic conditions in China[337].