UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2024

 

Commission file number: 001-38307

 

RETO ECO-SOLUTIONS, INC.

(Registrant’s name)

 

c/o Beijing REIT Technology Development Co., Ltd.

X-702, 60 Anli Road, Chaoyang District, Beijing

People’s Republic of China 100101

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒         Form 40-F ☐

 

 

 

 

 

 

INCORPORATION BY REFERENCE

 

This Report on Form 6-K and the exhibits thereto, including any amendment and report filed for the purpose of updating such documents, shall be deemed to be incorporated by reference into each of (i) the registration statement on Form F-3, as amended (File No. 333-267101), of ReTo Eco-Solutions, Inc. (the “Company”), (ii) the registration statement on Form S-8, as amended (File No. 333-270355), of the Company, (iii) the registration statement on Form S-8, as amended (File No. 333-264499), and (iv) the registration statement on Form S-8 (File No. 333-280119), of the Company and to be a part thereof from the date on which this Report on Form 6-K is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended June 30, 2024 and 2023
99.2   Unaudited Interim Consolidated Financial Statements for the Six Months Ended June 30, 2024 and 2023
101.INS   Inline XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH   Inline XBRL Taxonomy Extension Schema
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase
104   Cover Page Interactive Data File (embedded within the Inline IXBRL document)

 

1

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: October 28, 2024 RETO ECO-SOLUTIONS, INC.
     
  By: /s/ Hengfang Li
  Name:  Hengfang Li
  Title: Chief Executive Officer

 

 

2

 

Exhibit 99.1

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors. This discussion contains forward-looking statements that involve risks and uncertainties. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements include statements relating to:

 

  ● the potential impact on our business of the economic, political and social conditions of the People’s Republic of China;
     
  ● any changes in the laws of the People’s Republic of China or local province that may affect our operations;
     
  ● the liquidity of our securities;
     
  ● inflation and fluctuations in foreign currency exchange rates;
     
  ● the ability to navigate geographic market risks of our eco-friendly constructions materials;
     
  ● the ability to maintain a reserve for warranty or defective products and installation claims;
     
  ● our on-going ability to obtain all mandatory and voluntary government and other industry certifications, approvals, and/or licenses to conduct our business;
     
  ● our ability to maintain effective supply chain of raw materials and our products;
     
  ● slowdown or contraction in industries in China in which we operate;
     
  ● our ability to maintain or increase our market share in the competitive markets in which we do business;
     
  ● our ability to diversify our product and service offerings and capture new market opportunities;
     
  ● our estimates of expenses, capital requirements and needs for additional financing and our ability to fund our current and future operations;
     
  ● the costs we may incur in the future from complying with current and future laws and regulations and the impact of any changes in the regulations on our operations; and
     
  ● the loss of key members of our senior management.

 

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Item 3. Key Information — D. Risk Factors,” “Item 5. Operating and Financial Review and Prospects,” in our annual report for the fiscal year ended December 31, 2023 filed with the SEC on May 15, 2024 (the “2023 Annual Report”). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

 

 

 

 

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of these forward-looking statements after the date of this report or to conform these statements to actual results or revised expectations.

 

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we refer to in this report and exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

 

Overview

 

ReTo Eco-Solutions, Inc. (“ReTo”) is a business company established under the laws of the British Virgin Islands on August 7, 2015 as a holding company to develop business opportunities in the People’s Republic of China (the “PRC” or “China”). ReTo and its subsidiaries are collectively referred to as the Company or we. We, through our operating subsidiaries in China, are engaged in the manufacture and distribution of eco-friendly construction materials (aggregates, bricks, pavers and tiles), made from mining waste (iron tailings), as well as equipment used for the production of these eco-friendly construction materials. In addition, we provide consultation, design, project implementation and construction of urban ecological protection projects through our operating subsidiaries in China. We also provide parts, engineering support, consulting, technical advice and service, and other project-related solutions for our manufacturing equipment and environmental protection projects. Furthermore, through the newly acquired subsidiaries, we expand our product and service offerings to include Roadside Assistance services, and software development services and solutions utilizing Internet of Things (“IoT”) technologies.

 

Our business consists of three business segments, including machinery and equipment sales, construction materials sales and technological consulting and other services, which accounted for 61%, 8% and 31% of our total revenue for the six months ended June 30, 2024, respectively, and 85%, 8%, and 6% of our total revenue for the six months ended June 30, 2023, respectively. Our technological consulting and other services include the RSA services and software development services conducted by REIT Mingde, which was acquired by us in December 2021.

 

Our domestic customers are throughout China and our international customers are mainly located in Asia, the Middle East, North Africa and North America. Sales to customers in China and internationally from our operations accounted for approximately 84% and 16%, respectively, of our total sales for the six months ended June 30, 2024, approximately 83% and 17%, respectively, of our total sales for the six months ended June 30, 2023.

 

2

 

 

Results of Operations for Six Months Ended June 30, 2024 and 2023

 

The following table summarizes the results of our continuing operations during for the six months ended June 30, 2024 and 2023, and provides information regarding the changes in terms of dollar amounts and percentage during such years.

 

(All amounts, other than percentages, in thousands of U.S. dollars)

 

   For The Six Months Ended
June 30,		   Amount   Percentage 
   2024   2023   Increase   Increase 
Statements of Income Data:  Amount   Amount   (Decrease)   (Decrease) 
Revenues- third party customers  $1,620   $1,023   $597    58%
Revenues- related party customers   219    211    8    4%
Total revenues   1,839    1,234    605    49%
Cost of revenues- third party customers   1,129    781    348    45%
Cost of revenues – related party customers   142    359    (217)   (60)%
Total cost of revenues   1,271    1,140    131    11%
Gross profit   568    94    474    506%
Operating expenses:   -    -    -    - 
Selling expenses   134    290    (156)   (54)%
General and administrative expenses   1,369    5,539    (4,171)   (75)%
Bad debt expenses   63    460    (397)   (86)%
Research and development expenses   76    810    (734)   (91)%
Total operating expenses   1,641    7,099    (5,458)   (77)%
Loss from operations   (1,073)   (7,005)   5,932    (85)%
Other income (expenses):   -    -    -    -　 
Interest expenses   (255)   (181)   (74)   41%
Interest income   24    2    22    1,516%
Other income (expenses), net   630    (4,356)   4,986    (114)%
Change in fair value of convertible debt   -    (58)   58    (100)%
Gain from disposal of subsidiaries   -    38    (38)   (100)%
Share of losses in equity method investments   (58)   (83)   25    (30)%
Total other expenses, net   341    (4,638)   4,979    (107)%
Loss before income taxes   (732)   (11,643)   10,910    (94)%
Provision for income taxes   (16)   -    (16)   -%
Net loss  $(716)  $(11,643)  $10,926    (94)%

 

Revenues

 

Our total revenues increased by approximately $0.6 million, or 49%, to approximately $1.8 million for the six months ended June 30, 2024 from approximately $1.2 million for the six months ended June 30, 2023. Among our total revenue, revenue from third party customers increased by approximately $0.6 million, or 58%, from approximately $1.0 million for the six months ended June 30, 2023 to approximately $1.6 million for the six months ended June 30, 2024, while revenue from related party customers increased by $7,767, or 4%, from $210,864 for the six months ended June 30, 2023 to $218,631 for the six months ended June 30, 2024. Increase in total revenue for the six months ended June 30, 2024 was mainly attributable to the increase in service revenue. 

 

3

 

 

The following table shows revenues by business segments for the six months ended June 30, 2024 and 2023:

 

Revenue by Business Segment

(All amounts, other than percentages, in thousands of U.S. dollars)

 

   For the Six Months Ended June 30,   Variance 
   2024   2023   Amount   Percentage 
   Amount   % of
Sales		   Amount   % of
Sales		   Increase
(Decrease)		   Increase
(Decrease)		 
   ($’000)       ($’000)       ($’000)     
Machinery and equipment  $1,114    61%  $1,029    85%  $60    6%
Construction materials   146    8%   103    8%   43    42%
Technological consulting and other services   579    31%   77    6%   502    650%
Total  $1,839    100%  $1,234    100%  $605    49%

 

Machinery and Equipment

 

Revenue from machinery and equipment sales was approximately $1.1 million for the six months ended June 30, 2024, consistent with approximately $1.0 million for the six months ended June 30, 2023.

 

Construction Materials

 

Sales of the Company’s environmental-friendly construction materials remained stable and was approximately $146,000 and $103,000 for the six months ended June 30, 2024 and 2023, respectively.

  

Technological Consulting and Other Services

 

Revenue from technological consulting and other services increased by approximately $0.5 million, or 650%, to approximately $0.6 million for six months ended June 30, 2024 from approximately $0.1 million for the six months ended June 30, 2023 due to the completion of a one-time software development contract worth $0.6 million in the six months ended June 30, 2024.

 

Cost of Revenues

 

Our total cost of revenues increased by approximately $0.1 million, or 11%, to approximately $1.3 million for the six months ended June 30, 2024 from approximately $1.1 million for the six months ended June 30, 2023. Cost of revenues from third party customers increased by $0.3 million, or 45%, from approximately $0.8 million for the six months ended June 30, 2023 to approximately $1.1 million for the six months ended June 30, 2024, while cost of revenues from related party customers decreased by approximately $0.2 million, or 61%, from approximately $0.4 million for the six months ended June 30, 2023 to approximately $0.1 million for the six months ended June 30, 2024. The increase in our total cost of revenues was not as significant as the increase in revenue, because cost of revenues for our technological consulting and other services is lower than that of sales of products, and our service revenues accounted for a greater percentage of our total revenue for the six months ended June 30, 2024 compared to the same period in 2023. For the same reason, our cost of revenues as a percentage of revenues decreased to 69% for the six months ended June 30, 2024 from 92% for the six months ended June 30, 2023.

 

Cost of Revenues by Business Segment

 

(All amounts, other than percentages, in thousands of U.S. dollars)

 

   For the Six Months Ended June 30,   Variance 
   2024   2023   Amount   Percentage 
   Amount   % of
Costs		   Amount   % of
Costs		   Increase
(Decrease)		   Increase
(Decrease)		 
Machinery and Equipment  $923    73%  $941    83%  $(18)   (2)%
Construction materials   304    24%   169    15%   135    80%
Technological consulting and other services   44    3%   31    3%   13    43%
Total  $1,271    100%  $1,140    100%  $131    11%

 

4

 

 

Machinery and Equipment

 

Cost of revenues for machinery and equipment sales was approximately $0.9 million for the six months ended June 30, 2024, consistent from approximately $0.9 million for the six months ended June 30, 2023. 

 

Construction Materials

 

Cost of revenues for sales of environmental-friendly construction materials was approximately $304,000 and $169,000 for the six months ended June 30, 2024 and 2023, respectively.

 

Technological Consulting and Other services

 

Cost of revenues for technological consulting and other services increased by approximately $13,000, or 43%, from approximately $31,000 for the six months ended June 30, 2023 to approximately $44,000 for the six months ended June 30, 2024. The increase was primarily due to software development costs incurred in fulfilment of a software development contract in the six months ended June 30, 2024.

 

Gross Profit

 

Our gross profit increased by approximately $0.5 million, or 506%, to approximately $0.6 million for the six months ended June 30, 2024 from approximately $0.1 million for the six months ended June 30, 2023. Gross profit margin was 31% for the six months ended June 30, 2024, as compared with 8% for the six months ended June 30, 2023, due to higher gross profit margin for our software development services.

 

Our gross profit and gross margin by segments are as follows:

 

(All amounts, other than percentages, in thousands of U.S. dollars)

 

   For the Six Months Ended June 30,   Variance 
   2024   2023   Gross    Gross 
   Gross
Profit		   Gross
Profit
%		   Gross
Profit		   Gross
Profit
%		   Profit
Increase
(Decrease)		   Profit%
Increase
(Decrease)		 
Machinery and equipment  $191    17%  $114    11%  $77    69%
Construction materials   (158)   (108)%   (66)   (64)%   (92)   (140)%
Technological consulting and other services   535    92%   46    60%   489    1,053%
Total  $568    31%  $94    8%  $474    13%

 

Machinery and Equipment

 

Gross profit for sales of machinery and equipment increased by approximately $0.1 million to $0.2 million for the six months ended June 30, 2024 as compared to approximately $0.1 million for the six months ended June 30, 2023. Gross profit margin for this segment was 17% and 11%, respectively, for the six months ended June 30, 2024 and 2023. The increase in gross profit margin was mainly due to increase in purchase price of machinery and equipment on the market.

 

Construction Materials

 

Gross loss for sales of construction materials was approximately $158,000 and $66,000 for the six months ended June 30, 2024 and 2023, respectively. Gross loss margin for this segment was 108% and 64% for the six months ended June 30, 2024 and 2023, respectively. The increase in gross loss was due to a decrease in sales prices, which reduced revenue for this segment while its fixed costs remained the same.

 

5

 

 

Technological Consulting and Other Services

 

Gross profit for technological consulting and other services increased by approximately $0.5 million to approximately $0.5 million for the six months ended June 30, 2024 as compared to approximately $46,000 for the six months ended June 30, 2023. Gross profit margin for this segment was approximately 92% and 60% for the six months ended June 30, 2024 and 2023, respectively. Increase in gross profit margin was due to higher gross profit margin of the software development services.

 

Selling Expenses

 

For the six months ended June 30, 2024, our selling expenses were approximately $0.1 million, representing a 54% decrease from approximately $0.3 million for the six months ended June 30, 2023. As a percentage of sales, our selling expenses were 7% and 24% for the six months ended June 30, 2024 and 2023, respectively. This decrease was primarily due to reduced spending on marketing activities and lower transportation and handling expenses incurred for the six months ended June 30, 2024.

 

General and Administrative Expenses

 

General and administrative expenses decreased by approximately $4.2 million, or 75%, to approximately $1.4 million for the six months ended June 30, 2024 from approximately $5.5 million for the six months ended June 30, 2023. The decrease was due to a decrease of approximately $3.6 million in share-based compensation, a decrease of approximately $0.3 million in payroll expenses as a result of the reduction in headcount and a decrease of approximately $0.3 million in professional service incurred.

 

Provision for Credit Losses  

 

Provision for credit losses amounted to approximately $0.1 million and $0.5 million for the six months ended June 30, 2024 and 2023, respectively. 

 

Research and Development Expenses

 

Research and development expenses decreased to approximately $0.1 million for the six months ended June 30, 2024 from approximately $0.8 million for the six months ended June 30, 2023 due to less research and development activities in the current period. 

  

Interest Expense

 

The Company’s interest expenses were approximately $0.3 million and $0.2 million for the six months ended June 30, 2024 and 2023, respectively. 

 

Other Income (Expense)

 

Other income was approximately $0.6 million for the six months ended June 30, 2024 as compared to other expense of approximately $4.4 million for the six months ended June 30, 2023. The other income in the six months ended June 30, 2024 was due to a one-time sale of software copyright for approximately $0.6 million. The other expense in the six months ended June 30, 2023 was a one-time charge of approximately $4.7 million from a terminated project.

 

Change in Fair Value in Convertible Debt 

 

Due to change in fair value of convertible debentures and note, the Company recorded an unrealized loss of nil and $57,985 for the six months ended June 30, 2024 and 2023, respectively.

 

Share of Losses in Equity Method Investments

 

For the six months ended June 30, 2024 and 2023, share of losses in equity method investments for Shexian Ruibo amounted to $57,960 and $83,307, respectively.

 

6

 

 

Loss before Income Taxes

 

The Company’s loss before income taxes was approximately $0.7 million for the six months ended June 30, 2024, a decrease of approximately $10.9 million as compared to loss before income taxes of approximately $11.6 million for the six months ended June 30, 2023. The decrease was primarily attributable to increase in revenue and decrease in operating expenses and other expense.

 

Provision for Income Taxes

 

The Company’s subsidiaries in the PRC are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the Enterprise Income Tax Law, the corporate income tax rate applicable to all companies, including both domestic and foreign-invested companies, is 25%. However, two subsidiaries of the Company, Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”) and Hainan Yile IoT Technology Co., Ltd., are recognized as High and New Technology Enterprises by the PRC government and thus subject to a favorable income tax rate of 15%. As the Company had losses before income tax, its income tax expenses (benefit) amounted to ($16,380) and $52 for the six months ended June 30, 2024 and 2023, respectively. 

 

The following table reconciles the income tax expense by statutory rate to the Company’s actual income tax expense from our continuing operations:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
Income tax expense computed based on PRC statutory income tax rate  $(183,253)   (2,910,952)
Effect of favorable income tax rate in certain entity in PRC   1,815    254,500 
Non-PRC entities not subject to PRC tax   57,880    960,376 
Research & development tax credit   (19,064)   (202,495)
Non-deductible expenses – permanent difference   17,592    (136,966)
Change in valuation allowance   108,650    2,035,588 
Income tax expenses  $(16,380)   52 

 

Net Loss

 

As a result of the foregoing, net loss amounted to approximately $0.7 million and $11.6 million for the six months ended June 30, 2024 and 2023, respectively.

 

Liquidity and Capital Resources

 

ReTo is a holding company incorporated in the British Virgin Islands. REIT Holdings (China) Limited, our wholly owned subsidiary established in Hong Kong, directly owns Beijing REIT, REIT Ecological Technology Co., Ltd., and REIT Technology Development Co., Ltd., which in turn own our assets through their respective subsidiaries in China, India and the United States. Sunoro Holdings Limited, our wholly owned subsidiary established in Hong Kong, directly owns Sunoro Hengda (Beijing) Technology Co., Ltd., which in turn owns our assets through its respective subsidiaries in China. We may depend on dividends and other distributions from our subsidiaries, including our PRC subsidiaries, to satisfy our liquidity requirements.

 

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reaches 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

 

7

 

 

Substantially all of our operations are conducted in China and are denominated in RMB, which is subject to the exchange control regulation in China, and, as a result, we may have difficulty distributing any dividends outside of China due to PRC exchange control regulations that restrict the ability to convert RMB into U.S. Dollars. 

 

Under PRC law, RMB is currently convertible into U.S. Dollars under a company’s “current account,” which includes dividends, trade and service-related foreign exchange transactions, without prior approval of China’s State Administration of Foreign Exchange (“SAFE”), not from a company’s “capital account,” which includes foreign direct investments and loans, without the prior approval of SAFE.

 

We have historically funded our working capital needs from cash flow from operations, advance payments from customers, bank borrowings, equity and debt offering, capital contributions from shareholders and related-party loans. Presently, our principal sources of liquidity are generated from our operations, proceeds from our shareholders’ contributions, and loans and notes from commercial banks. Our working capital requirements are influenced by the level of our operations, the numerical volume and dollar value of our sales contracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections. 

 

The Company reported a net loss of approximately $0.7 million for the six months ended June 30, 2024. As of June 30, 2024, the Company had a working capital of approximately of $0.3 million. As of June 30, 2024, the Company had cash of approximately $1.6 million. In addition, the Company had outstanding accounts receivable of approximately $0.7 million (including accounts receivable from third-party customers of $0.6 million and accounts receivable from related party customers of approximately $0.1 million), which has not been collected as of the date of this report.

  

As of June 30, 2024, the Company had outstanding bank loans of approximately $5.3 million and outstanding loans of approximately $3.1 million from third parties. If the Company cannot renew existing loans or borrow additional loans from banks, the Company’s working capital may be further negatively impacted.

 

Based on the reasons above, there is a substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the issuance of the unaudited consolidated financial statements. 

 

Management believes that the Company would be able to renew all of its existing bank loans upon their maturity based on past experience and the Company’s credit history. Currently, the Company is working to improve its liquidity and capital source mainly through cash flow from its operations, renewal of bank borrowings and borrowing from related parties. In order to fully implement its business plan and sustain operations, the Company may also seek equity financing from outside investors. At the present time, however, the Company does not have commitments of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on favorable terms or at all.

 

Cash Flows for the six months ended June 30, 2024 and 2023

 

The following table sets forth summary of our cash flows for the periods indicated:

 

(All amounts in thousands of U.S. dollars)

 

   For The Six Months Ended
June 30,		 
   2024   2023 
Net cash used in operating activities  $(4,755)  $(4,540)
Net cash provided by (used in) investing activities   (3,951)   407 
Net cash provided by financing activities   9,323    4,173 
Effect of exchange rate changes on cash and cash equivalents   (478)   80 
Net increase in cash and cash equivalents   139    120 
Cash and cash equivalents, beginning of period   1,414    114 
Cash and cash equivalents, end of period   1,553    234 

 

8

 

 

Operating Activities

 

Net cash used in operating activities was approximately $4.8 million for the six months ended June 30, 2024. Net cash used in operating activities for the six months ended June 30, 2024 mainly consisted of net loss from approximately $0.7 million, adjustments of non-cash items of approximately $0.7 million, an increase of approximately $0.5 million in accounts payable, an increase of approximately $0.4 million in advance from customers, a decrease of approximately $0.4 million in accounts receivable, a decrease of approximately $0.1 million in prepaid expenses and other current assets, partially offset by, an increase of approximately $5.5 million in advance to suppliers, and an increase of approximately $0.2 million in inventory, a decrease of approximately $0.1 million in accrued and other liabilities.

 

Net cash used in operating activities was approximately $4.5 million for the six months ended June 30, 2023. Net cash used in operating activities for the six months ended June 30, 2023 mainly consisted of net loss approximately $11.6 million, adjustments of non-cash items of approximately $5.1 million, an increase of approximately $0.5 million in accounts payable, a decrease of approximately $0.4 million in accounts receivable, a decrease of approximately $2.2 million in advance to customers, and a decrease of approximately $0.2 million in prepaid expenses and other current assets, offset by an increase of approximately $0.5 million in inventories, a decrease of approximately $0.2 million in advance from customers, and a decrease of approximately $0.2 million in accrued expenses and other liabilities.

 

Investing Activities

 

Net cash used in investing activities was approximately $4.0 million for the six months ended June 30, 2024. During the six months ended June 30, 2024, proceeds from disposal of subsidiaries amounted to approximately $0.2 million. The Company paid approximately $4.1 million as a deposit pursuant to a letter of intent executed in March 2024 in connection with a potential equity acquisition.

 

Net cash provided by investing activities was approximately $0.4 million for the six months ended June 30, 2023. During the six months ended June 30, 2023, proceeds from disposal of subsidiaries of approximately $0.5 million, the Company paid approximately $0.1 million on addition of property.

 

Financing Activities

 

Net cash provided by financing activities was approximately $9.3 million for the six months ended June 30, 2024, including proceeds from bank loans of approximately $5.3 million, proceeds from third-party loans of approximately $0.4 million, proceeds from a private placement of approximately $4.0 million, proceeds from a public offering of approximately $6.0 million, and net loan receivable from related parties of approximately $0.3 million, partially offset by repayment of bank loans of approximately $5.3 million, and loans to third parties approximately $0.4 million, repayment of third-party loans of approximately $1.0 million.

 

Net cash provided by financing activities was approximately $4.2 million for the six months ended June 30, 2023, including proceeds from bank loans of approximately $5.5 million, proceeds from third-party loans of approximately $0.9 million, and proceeds from private placement of approximately $0.7 million, partially offset by repayment of bank loans of approximately $1.3 million, repayment of convertible debt of approximately $0.2 million, net loan payment to related parties of approximately $0.3 million, payments to non-controlling shareholders of approximately $0.3 million for purchasing non-controlling interest of a subsidiary, repayment to third party loans of approximately $0.2 million and loans to third-party of approximately $0.7 million.

 

Statutory Reserves 

 

The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The restricted amounts as determined pursuant to PRC laws totaled $1,128,674 and $1,072,895 as of June 30, 2024 and December 31, 2023, respectively.

 

9

 

 

Capital Expenditures

 

We had capital expenditures of approximately nil and $0.1 million for the six months ended June 30, 2024 and 2023, respectively, for purchases of equipment and intangible assets in connection with our business activities.

 

Research and Development, Patent and Licenses, etc. 

 

Please refer to “Item 4. Information on the Company—B. Business Overview—Research and Development” and “—Intellectual Property” in our 2023 Annual Report.

 

Trend Information

 

Other than as disclosed elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

 

Critical Accounting Estimates

 

We prepare our financial statements in conformity with accounting principles generally accepted by the United States of America (“U.S. GAAP”), which requires us to make judgments, estimates and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and assumptions in the past years, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.

  

We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations.

 

Accounts Receivable, Net

 

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Accounts receivable was recognized and carried at original invoiced amount less an estimated allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions, customer-specific circumstances, recent payment history and other relevant factors. Allowance for credit losses amounted to $2,105,670 and $2,146,679 as of June 30, 2024 and December 31, 2023, respectively. 

 

Revenue Recognition 

 

The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services.

 

10

 

 

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

 

The Company’s revenues are primarily derived from the following sources:

 

  ● Revenue from machinery and equipment sales

 

The Company recognizes revenue when the machinery and equipment is delivered and control is transferred. The Company generally provide a warranty for a period of 12 months after the customers receive the equipment. The Company determines that such product warranty is not a separated performance obligation because the nature of warranty is to provide assurance that a product will function as expected and in accordance with customer’s specification and the Company has not sold the warranty separately. From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the six months ended June 30, 2024 and 2023.

 

  ● Revenue from construction materials sales

 

The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. 

 

  ● Revenue from municipal construction projects

 

The Company provides municipal construction services, including sponge city projects and ecological restoration projects. The Company recognizes revenue associated with these contracts over time as service is performed and the transfer of control occurs, based on a percentage-of-completion method using cost-to-cost input methods as a measure of progress. When the percentage-of-completion method is used, the Company estimates the costs to complete individual contracts and records as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach). 

 

Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

 

  ● Revenue from technological consulting and other services

 

The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers.

 

Contract Assets and Liabilities

 

Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contact assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs.

 

For the six months ended June 30, 2024 and 2023, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred.

 

11

 

 

Share-based Compensation

 

The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award. All the Company’s share-based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values.

  

The Company has elected to recognize share-based compensation using the straight-line method for all share-based awards granted with graded vesting based on service conditions. The Company uses the accelerated method for all awards granted with graded vesting. The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting. The Company, with the assistance of an independent third-party valuation firm, determined the fair value of the stock options granted to employees. The binomial option pricing model and Black-Scholes Model were applied in determining the estimated fair value of the options granted to employees and non-employees.

 

Income Taxes

 

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 

 

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated.

 

To the extent applicable, the Company records interest and penalties as a general and administrative expense. The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the six months ended June 30, 2024 and 2023. As of June 30, 2024, the tax years ended December 31, 2018 through December 31, 2023 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities.

 

Recent Accounting Pronouncements 

 

A list of recent relevant accounting pronouncements is included in Note 2 “Summary of Principal Accounting Policies” of our unaudited condensed consolidated financial statements included elsewhere in this report.

 

 

12

 

Exhibit 99.2

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

 

Unaudited Condensed Consolidated Financial Statements  
Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023 F-2
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Six Months Ended June 30, 2024 and 2023 F-3
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2024 and 2023 F-4
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 F-5
Notes to Unaudited Condensed Consolidated Financial Statements F-6 – 28

 

F-1

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,   December 31, 
   2024   2023 
ASSETS  (Unaudited)     
Current Assets:        
Cash and cash equivalents  $1,552,455   $1,413,669 
Accounts receivable, net   636,733    1,062,237 
Accounts receivable, net - related party   105,694    108,188 
Advances to suppliers, net   10,867,426    5,292,114 
Advances to suppliers, net - related party   1,500,983    1,807,965 
Inventories, net   281,653    136,191 
Prepayments and other current assets   112,966    285,655 
Due from third parties   346,822    
-
 
Deposits for equity acquisition   4,128,000    
-
 
Due from related parties   72,082    358,659 
Total Current Assets   19,604,814    10,464,678 
           
Property, plant and equipment, net   7,389,114    7,761,328 
Intangible assets, net   4,156,564    4,449,989 
Long-term investment in equity investee   2,226,023    2,337,451 
Right-of-use assets   295,022    231,802 
Total Assets  $33,671,537   $25,245,248 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
Current Liabilities:          
Short-term loans  $5,263,128   $5,387,400 
Advances from customers   2,107,745    1,712,320 
Advances from customers-related party   340,381    344,051 
Deferred grants - current   187    191 
Accounts payable   2,956,208    2,974,650 
Accounts payable - related party   
-
    3,080 
Accrued and other liabilities   3,089,936    3,240,663 
Loans from third parties   3,116,433    1,274,666 
Taxes payable   2,009,701    1,986,935 
Operating lease liabilities, current   126,838    89,500 
Deferred tax liability   276,452    299,622 
Total Current Liabilities   19,287,009    17,313,078 
           
Loans from third parties-noncurrent   475,546    2,977,166 
Operating lease liabilities - noncurrent   132,009    103,830 
Total Liabilities   19,894,564    20,394,074 
           
Commitments and Contingencies   
 
    
 
 
           
Shareholders’ Equity:          
Class A Shares, $0.1 par value, 20,000,000 shares authorized, 3,828,868 shares and 1,205,188 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively   382,887    120,518 
Class B Shares, $0.01 par value, 2,000,000 shares authorized, nil shares issued and outstanding as of June 30, 2024   
-
    
-
 
Additional paid-in capital   78,745,720    68,876,257 
Statutory reserve   1,128,674    1,072,895 
Accumulated deficit   (64,195,520)   (63,461,282)
Accumulated other comprehensive loss   (2,734,390)   (2,253,561)
Total Shareholders’ Equity Attributable to ReTo Eco-Solutions, Inc.  $13,327,371   $4,354,827 
           
Noncontrolling interest   449,602    496,347 
Total Shareholders’ Equity  $13,776,973   $4,851,174 
           
Total Liabilities and Shareholders’ Equity  $33,671,537   $25,245,248 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-2

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

   For the Six Months Ended
June 30,		 
   2024   2023 
     
Revenues – third party customers  $1,620,008   $1,022,919 
Revenues – related parties   218,631    210,864 
Total revenues   1,838,639    1,233,783 
Cost of revenues – third party customers   1,129,534    780,794 
Cost of revenues – related parties   141,624    359,398 
Total Cost   1,271,158    1,140,192 
Gross Profit   567,481    93,591 
           
Operating Expenses:          
Selling expenses   133,455    289,730 
General and administrative expenses   1,368,407    5,539,187 
Bad debt expenses   63,462    460,116 
Research and development expenses   76,257    809,979 
Total Operating Expenses   1,641,581    7,099,012 
           
Loss from Operations   (1,074,100)   (7,005,421)
           
Other Income (expenses):          
Interest expenses   (255,240)   (180,772)
Interest income   24,385    1,509 
Other income (expenses), net   629,902    (4,356,224)
Change in fair value of convertible debt   
-
    (57,985)
Gain from disposal of subsidiaries   
-
    38,394 
Share of losses in equity method investments   (57,960)   (83,307)
Total Other Income (expenses), Net   341,087    (4,638,385)
           
Loss Before Income Taxes   (733,013)   (11,643,806)
Income Taxes Expense (Benefit)   (16,380)   52 
Net Loss   (716,633)   (11,643,858)
           
Less: net loss attributable to noncontrolling interest   (38,174)   (424,115)
Net Loss Attributable to ReTo Eco-Solutions, Inc.  $(678,459)  $(11,219,743)
           
Net Loss  $(716,633)  $(11,643,858)
Other comprehensive loss:          
Foreign currency translation adjustment   (489,400)   258,053 
Comprehensive Loss   (1,206,033)   (11,385,805)
Less: comprehensive loss attributable to noncontrolling interest   (46,745)   (334,923)
Comprehensive Loss Attributable to ReTo Eco-Solutions, Inc  $(1,159,288)  $(11,050,882)
           
Loss Per Share          
Basic and diluted  $(0.25)  $(20.63)
           
Weighted Average Number of Shares          
Basic and diluted   2,745,361    543,785 

 

*The share number and share-related data in the financial statements have been adjusted to reflect the two share combinations on May 12, 2023 and March 1, 2024.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-3

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

 

   Class A
Common Shares		   Class B
Common Shares		   Additional
Paid-in		   Subscription   Statutory   Retained
Earnings
(Accumulated		   Accumulated
Other
Comprehensive		   Noncontrolling   Total 
   Number   Amount   Number   Amount   Capital   receivable   Reserve   Deficit)   Income (Loss)   Interest   Equity 
Balance at December 31, 2022   433,989   $43,400    
     -
    
     -
   $53,331,093   $
-
   $1,066,554   $(47,813,206)  $(2,388,890)  $835,578   $5,074,529 
Net income   -    
-
    -    
-
    
-
    
-
    
-
    (11,219,743)        (424,115)   (11,643,858)
Fractional share issued for reverse share split   1,539    154    -    
-
    -154    
-
    
-
    
-
    
-
    
-
    
-
 
Issuance of common shares   200,000    20,000    -    
-
    6,580,000    (5,887,546)   
-
    
-
    
-
    
-
    712,454 
Conversion of convertible debt   47,057    4,705    -    
-
    987,356    
-
    
-
    
-
    
-
    
-
    992,061 
Issuance of common shares   40,000    4,000    -    
-
    1,676,000    
-
    
-
    
-
    
-
    
-
    1,680,000 
Issuance of common shares   50,000    5,000    -    
-
    2,095,000    
-
    
-
    
-
    
-
    
-
    2,100,000 
Appropriation to statutory reserve   -    
-
    -    
-
    
-
    
-
    3,328    (3,328)   
-
    
-
    
-
 
Foreign currency translation adjustment
   -    
-
    -    
-
    
-
    
-
    
-
    
-
    168,861    89,192    258,053 
Balance at June 30, 2023   772,585   $77,259   $-   $-   $64,669,295   $(5,887,546)  $1,069,882   $(59,036,277)  $(2,220,029)  $500,655   $(826,761)
                                                        
Balance at December 31, 2023   1,205,188   $120,518   $
-
   $
-
   $68,876,257   $
-
   $1,072,895   $(63,461,282)  $(2,253,561)  $496,347   $4,851,174 
Net income   -    
-
    -    
-
    
-
    
-
    
-
    (678,459)   
-
    (38,174)   (716,633)
Fractional share issued for reverse shares split
   56,420   $5,643    -    
-
    (5,643)   
-
    
-
    
-
    
-
    
-
    
-
 
Issuance of common shares in private placements, net
   1,000,000    100,000    -    
-
    3,869,063    
-
    
-
    
-
    
-
    
-
    3,969,063 
Share-based compensation   67,260    6,726    -    
-
    156,043    
-
    
-
    -    
-
    
-
    162,769 
Issuance of common shares, net
   1,500,000    150,000    -    
-
    5,850,000    
-
    
-
    
-
    
-
    
-
    6,000,000 
Appropriation to statutory reserve   -    
-
    -    
-
    
-
    
-
    55,779    (55,779)   
-
    
-
    
-
 
Foreign currency translation adjustment   -    
-
    -    
-
    
-
    
-
    
-
    
-
    (480,829)   (8,571)   (489,400)
Balance at June 30, 2024   3,828,868   $382,887   $-   $-   $78,745,720   $-   $1,128,674   $(64,195,520)  $(2,734,390)  $449,602   $13,776,973 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-4

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   For the Six Months Ended
June 30,		 
   2024   2023 
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss  $(716,633)  $(11,643,858)
Adjustments to reconcile net loss to net cash used in operating activities:          
Deferred tax benefit   (16,380)   - 
Depreciation and amortization   396,377    470,882 
Change in fair value of convertible debt   -    57,985 
Convertible debt issuance cost   -    145,569 
Accrued interest for convertible debt   -    69,821 
Amortization of share-based compensation for services   162,769    3,780,000 
Change in bad debt allowances   63,462    460,116 
Gain from disposal of subsidiary   -    (38,394)
Shares of losses in equity method investments   57,960    83,307 
Amortization of operating lease right-of-use assets   65,310    93,991 
Changes in operating assets:          
Accounts receivable   395,388    373,948 
Accounts receivable - related party   -    - 
Advances to suppliers   (5,738,720)   111,149 
Advances to suppliers - related party   267,230    2,096,160 
Inventories   (149,681)   (522,597)
Prepayments and other current assets   79,163    179,672 
Changes in operating liabilities:          
Advances from customers   438,061    (369,899)
Advances from customers - related party   4,292    174,027 
Accounts payable   50,499    458,172 
Deferred grant - current portion   -    (18,202)
Accounts payable - related party   (3,031)   - 
Accrued and other liabilities   (116,494)   (224,020)
Taxes payable   69,071    (55,605)
Operating lease liability   (63,975)   (222,494)
Net cash used in operating activities from operations   (4,755,332)   (4,540,270)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Addition of property and equipment   -    (104,392)
Addition of intangible assets   -    (404)
Proceeds from disposal of subsidiary   176,854    511,800 
Deposits for equity acquisition   (4,128,000)   - 
Net cash used in investing activities from operations   (3,951,146)   407,004 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from short-term bank loans   5,266,800    5,520,835 
Repayment of short-term bank loans   (5,266,800)   (1,313,444)
Repayment of convertible debt   -    (200,000)
Repayment of third-party loans   (970,463)   (154,439)
Proceeds from third-party loans   404,548    865,108 
Loan to third parties   (379,343)   (709,842)
Proceeds from private placement, net   3,969,063    712,454 
Proceeds from public offering   6,000,000    - 
Proceeds from related party loans   328,116    302,873 
Repayment to related party loans   (29,197)   (561,592)
Payments to non-controlling shareholders   -    (288,671)
Net cash provided by financing activities from operations   9,322,724    4,173,282 
           
EFFECT OF EXCHANGE RATE CHANGES ON CASH   (477,460)   79,928 
           
NET INCREASE IN CASH   138,786    119,944 
           
CASH, BEGINNING OF THE PERIOD   1,413,669    113,895 
CASH, END OF THE PERIOD  $1,552,455   $233,839 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Interest paid  $174,137   $180,772 
Income tax paid  $-   $- 
           
Non-Cash Investing Activities          
Right-of-use assets obtained in exchange for operating lease obligations  $281,001   $58,977 
Right-of-use assets offset with operating lease obligations due to lease cancellation  $146,630   $77,941 
Non-Cash Financing Activities          
Conversion of investor loans to equity  $-   $992,060 
Subscription receivable  $-   $(5,887,546)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-5

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

ReTo Eco-Solutions, Inc. (“ReTo”) is a business company established under the laws of the British Virgin Islands (“BVI”) on August 7, 2015 as a holding company to develop business opportunities in the People’s Republic of China (the “PRC” or “China”). ReTo and its subsidiaries are collectively referred to as the Company. ReTo, through its subsidiaries, is engaged in (i) manufacture and distribution of eco-friendly construction materials and equipment used for the production of eco-friendly construction materials and related consultation and technological services; (ii) consultation, design, project implementation and construction of urban ecological protection projects; (iii) roadside assistance services; and (iv) software development services.

 

As of June 30, 2024, the consolidated financial statements of the Company reflected the principal activities of the entities listed below. All inter-company balances and transactions have been eliminated upon consolidation. 

 

Name of the Entity   Place of
Incorporation		   Ownership
Percentage		  
ReTo Eco-Solutions, Inc.   British Virgin Islands     Parent  
REIT Holdings (China) Limited (“REIT Holdings”)   Hong Kong, China     100 %
Sunoro Holdings Limited (“Sunoro Holdings”)   Hong Kong, China     100 %
Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”)   Beijing, China     100 %
Beijing REIT Equipment Technology Co., Ltd. (“REIT Equipment”)*   Beijing, China     100 %
REIT New Materials Xinyi Co., Ltd. (“Xinyi REIT”)   Xinyi, China     100 %
REIT Q GREEN Machines Private Ltd (“REIT India”)   India     51 %
REIT Ecological Technology Co., Ltd. (“REIT Ordos”)   Ordos, China     100 %
Datong Ruisheng Environmental Engineering Co., Ltd. (“Datong Ruisheng”)   Datong, China     100 %
Guangling REIT Ecological Cultural Tourism Co., Ltd.   Datong, China     100 %
REIT Technology Development Co., Ltd (“REIT Technology”)   Haikou, China     100 %
Hainan REIT Mingde Investment Holding Co., Ltd. (“REIT Mingde”)   Haikou, China     100 %
Hainan Fangyuyuan United Logistics Co., Ltd. (“Hainan Fangyuyuan”)*   Haikou, China     90 %
Hainan Kunneng Direct Supply Chain Management Co., Ltd.   Haikou, China     51 %
Hainan Yile IoT Technology Co., Ltd. (“Hainan Yile IoT”)   Haikou, China     61.6 %
Hainan Yile IoV Technology Research Institute Co., Ltd, (“IoV Technology Research”)   Haikou, China     90 %
Honghe Reit Ecological Technology Co., Ltd. (“Honghe REIT”)   Yunnan, China     100 %
Inner Mongolia GuoRui Daojing Information Technology Co., Ltd.   Ordos, China     51 %
Sunoro Hengda (Beijing) Technology Co., Ltd.   Beijing, China     100 %
Inner Mongolia Reit Echological Environment Management Co., Ltd. (“Mongolia Reit”)   Ordos, China     100 %
Senrui Bochuang (Beijing) Technology Co., LTD   Beijing, China     100 %

 

*REIT Equipment was previously known as “Beijing REIT Ecological Engineering Technology Co., Ltd.” and Hainan Fangyuyuan was previously known as “Yangpu Fangyuyuan United Logistics Co., Ltd.”

 

F-6

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year.

 

Principles of consolidation

 

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation.

 

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than 50% of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

 

Non-controlling interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements.

 

Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition under the input method, and realization of deferred tax assets. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents represent cash on hand and cash deposited in major third-party payment processing platforms such as Alipay. In addition, highly liquid investments which have original maturities of three months or less when purchased are classified as cash equivalents.

 

Accounts Receivable, Net

 

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions, customer-specific circumstances, recent payment history and other relevant factors. Allowance for credit losses amounted to $2,105,670 and $2,146,679 as of June 30, 2024 and December 31, 2023, respectively.

 

F-7

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Inventories

 

Inventories are stated at the lower of cost or net realizable value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories.

 

Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. The Company evaluates inventories on a quarterly basis for its net realizable value adjustments, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and future demand of each type of inventories. The Company recorded an inventory reserve of $253,635 and $259,621 as of June 30, 2024 and December 31, 2023, respectively. 

 

Advances to Suppliers, Net

 

Advances to suppliers consist of balances paid to suppliers for services and materials that have not been provided or received. Advances to suppliers for service and material are short-term in nature. Advances to Suppliers are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance for uncollectible balances from the operations amounted to $3,066 and $3,138 as of June 30, 2024 and December 31, 2023, respectively.

 

Long-term Investment in Equity Investee

 

The Company’s long-term investments include equity method investments and equity investments without readily determinable fair values.

 

Investments in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investment at cost and the difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is accounted for as if the investee were a consolidated subsidiary. The share of earnings or losses of the investee are recognized in the consolidated statements of comprehensive loss. Equity method adjustments include the Company’s proportionate share of investee income or loss, adjustments to recognize certain differences between the Company’s carrying value and its equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. The Company assesses its equity investment for other-than-temporary impairment by considering factors as well as all relevant and available information including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and cash burn rate and other company-specific information.

 

Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive loss equal to the amount by which the carrying value exceeds the fair value of the investment. Prior to the adoption of ASU 2016-01 on January 1, 2019, these investments were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment.

 

F-8

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Long-term Investment in Equity Investee (continued)

 

As of June 30, 2024 and December 31, 2023, the Company’s long-term investment in equity investee balance represents its $2,226,021 and $2,337,451, or 41.67% equity investment in Shexian Ruibo Environmental Science and Technology Co., Ltd. (“Shexian Ruibo”). On September 7, 2020, the Company acquired such equity interest from an original shareholder of Shexian Ruibo and the original shareholder of Shexian Ruibo. Shexian Ruibo manufactures and sells eco-friendly construction materials in the PRC. The Company accounted for the investments using equity method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity investee. Under the equity method, the Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings or loss of the investee after the date of investment. When the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee. For the six months ended June 30, 2024 and 2023, the investment loss from Shexian Ruibo was $57,960 and $83,307, respectively.

 

The Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value. For the six months ended June 30, 2024 and 2023, the Company did not recognize any impairment on its equity investment. 

 

Leases

 

The Company adopted ASU No. 2016-02—Leases (Topic 842) on January 1, 2019 using the modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The standard did not materially impact the Company’s consolidated net earnings and cash flows.

 

Fair Value of Financial Instruments

 

ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

 

● Level 1 - Quoted prices in active markets for identical assets and liabilities.
   
● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
   
● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

 

The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advance to suppliers, accounts payable, accrued and other liabilities, advances from customers, deferred revenue, taxes payable and due to related parties to approximate the fair value of the respective assets and liabilities as of June 30, 2024 and December 31, 2023, based upon the short-term nature of the assets and liabilities.

 

The Company believes that the carrying amount of the short-term and long-term borrowings approximates fair value as of June 30, 2024 and December 31, 2023 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.

 

F-9

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Fair Value of Financial Instruments (continued)

 

The Company elected the fair value option to account for its convertible loans. The Company engaged an independent valuation firm to perform the valuation. The convertible loans are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of the convertible loans include time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion. Refer to Note 9 for additional information.

 

As the inputs used in developing the fair value for level 3 instruments are unobservable, and require significant management estimate, a change in these inputs could result in a significant change in the fair value measurement.

 

Revenue Recognition

 

The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services.

 

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

 

The Company’s revenues are primarily derived from the following sources:

 

● Revenue from machinery and equipment sales

 

The Company recognizes revenue when the machinery and equipment is delivered and control is transferred. The Company generally provide a warranty for a period of 12 months after the customers receive the equipment. The Company determines that such product warranty is not a separated performance obligation because the nature of warranty is to provide assurance that a product will function as expected and in accordance with customer’s specification and the Company has not sold the warranty separately. From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the six months ended June 30, 2024 and 2023.

 

● Revenue from construction materials sales

 

The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. 

 

● Revenue from municipal construction projects

 

The Company provides municipal construction services, including sponge city projects and ecological restoration projects. The Company recognizes revenue associated with these contracts over time as service is performed and the transfer of control occurs, based on a percentage-of-completion method using cost-to-cost input methods as a measure of progress. When the percentage-of-completion method is used, the Company estimates the costs to complete individual contracts and records as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach).

 

F-10

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Revenue Recognition (continued)

 

Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

 

● Revenue from technological consulting and other services

 

The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers.

 

Contract Assets and Liabilities

 

Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contact assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs.

 

As of June 30, 2024 and December 31, 2023, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred.

 

Disaggregation of Revenues

 

The Company disaggregates its revenue from contracts by products and services, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the six months ended June 30, 2024 and 2023 is disclosed in Note 16.

 

Government Grants

 

Government grants represent cash subsidies received from PRC government or related institutions. Cash subsidies which have no defined rules and regulations to govern the criteria necessary for companies to enjoy the benefits are recognized as other income, net when received. Specific subsidies that local government has provided for a specific purpose, such as research and development are recorded as other non-current liabilities when received and recognized as other income or reduction of related expense when the specific performance is meet. As of December 31, 2020, the Company received related grants of $490,560 for a specific research and development project to be conducted during the period from 2021 to 2022. The Company recorded such grants as deferred grants on its consolidated balance sheet. As of June 30, 2024 and December 31, 2023, the remaining balance was $187 and $191, respectively.

 

F-11

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Share-based Compensation

 

The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award. All the Company’s share-based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values. 

 

Income Taxes

 

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

 

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated.

 

To the extent applicable, the Company records interest and penalties as a general and administrative expense. The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the six months ended June 30, 2024 and 2023. As of June 30, 2024, the tax years ended December 31, 2019 through December 31, 2023 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities.

 

Value Added Tax (“VAT”)

 

Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13%, starting from April 1, 2019, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying consolidated financial statements. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing.

 

Earnings (Loss) per Share

 

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of June 30, 2024 and June 30, 2023, the Company had no dilutive security outstanding that could potentially dilute EPS in the future.

 

F-12

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Foreign Currency Translation

 

The Company’s principal country of operations is the PRC. The financial position and results of its operations located in PRC are determined using RMB, the local currency, as the functional currency. ReTo and REIT Holdings use U.S. Dollars as their functional currency, while REIT India uses Indian rupee as the functional currency. The Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in the results of operations.

 

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

 

    June 30,
2024		   December 31,
2023		   June 30,
2023
             
Year-end spot rate   US$1=RMB 7.2672   US$1=RMB 7.0999   US$1=RMB 7.2513
 Year-end spot rate   US$1=INR 83.33   US$1=INR 83.19   US$1=INR 82.06 
Average rate   US$1=RMB 7.2150   US$1=RMB 7.0809   US$1=RMB 6.9283
Average rate   US$1=INR 83.20   US$1=INR 82.57   US$1=INR 82.20

 

Risks and Uncertainties

 

The main operation of the Company is located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.

  

Concentrations and Credit Risk 

 

A majority of the Company’s transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

 

As of June 30, 2024 and December 31, 2023, $1,519,456 and $1,314,636 of the Company’s cash and cash equivalents was deposited at financial institutions in the PRC. These deposits were insured per PRC’s new Deposit Insurance Regulation for up to RMB500,000 for one bank. In addition, as of June 30, 2024 and December 31, 2023, $5,663 and $4,161 of the Company’s cash and cash equivalents was deposited at financial institutions in the Republic of India (“India”) which is insured under the Deposit Insurance and Credit Guarantee Corporation for up to 100,000 Indian Rupee (approximately $1,200).

 

For the six months ended June 30, 2024, two customers accounted for more than 16% and 12% of the Company’s total revenue. For the six months ended June 30, 2023, two customers accounted for more than 22% and 17% of the Company’s total revenue.

 

As of June 30, 2024, three customers accounted for 33%, 24% and 13% of the Company’s consolidated accounts receivable. As of December 31, 2023, three customers accounted for 29%, 21% and 12% of the Company’s consolidated accounts receivable, respectively.

 

F-13

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Concentrations and Credit Risk (continued)

 

For the six months ended June 30, 2024, the Company purchased approximately 30%, 22% and 10% of its raw materials from three major suppliers. For the six months ended June 30, 2023, the Company purchased approximately 21%, 17% and 13% of its raw materials from three major suppliers.

 

As of June 30, 2024 and December 31, 2023, three suppliers accounted for 30%, 22% and 10% of the total accounts payable balance, respectively.

 

Recent Accounting Pronouncements

 

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. 

 

In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The adoption does not have a material effect on the consolidated financial statements.

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). This ASU requires that public business entities must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. The adoption does not have a material effect on the consolidated financial statements.

 

In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.

 

Except for the above-mentioned pronouncements, there are no recently issued accounting standards that will have a material impact on the audited consolidated financial position, statements of operations, and cash flows of the Company.

 

F-14

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 3 – GOING CONCERN

 

The Company’s unaudited condensed consolidated financial statements have been prepared assuming that it will continue as a going concern. As of June 30, 2024, the Company had a working capital of approximately $0.3 million, and approximately $0.7 million net loss and approximately $4.8 million cash used in operating activities during the six months ended June 30, 2024. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

As of June 30, 2024, the Company had cash of approximately $1.6 million. Management believes that it would be able to renew all of its existing bank loans upon their maturity based on past experience and the Company’s credit history. Currently, the Company is working to improve its liquidity and capital source mainly through cash flow from its operations, renewal of bank borrowings and borrowing from related parties. In order to fully implement its business plan and sustain operations, the Company may also seek equity financing from outside investors. At the present time, however, the Company does not have commitments of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on favorable terms or at all.

 

On August 30, 2024, the Company entered into a securities purchase agreement with certain purchasers, in connection with the issuance and sale (the “Private Placement”) of an aggregate of 14,095,200 Class A shares, par value US$0.10 per share (the “Class A Shares”), of the Company at $1.38 per share for an aggregate of purchase price of $19,451,376. On the same day, the parties closed the Private Placement. The Company intends to use the net proceeds from the Private Placement for future mergers and acquisitions and working capital purposes.

 

Based on above reasons, the Company believe it has the ability to continue as a going concern for the next 12 months from the issuance of these consolidated financial statements.

 

NOTE 4 – ACCOUNTS RECEIVABLE, NET

 

Accounts receivable consisted of the following:

 

   June 30,
2024		   December 31,
2023		 
   (Unaudited)     
Trade accounts receivable from third-part customers  $2,742,403   $3,208,916 
Less: allowances for doubtful accounts   (2,105,670)   (2,146,679)
Total accounts receivable from third-party customers, net   636,733    1,062,237 
Add: accounts receivable, net, related parties   105,694    108,188 
Accounts receivable, net  $742,427   $1,170,425 

 

As of June 30, 2024, the remaining balance is expected to be substantially collected from customers before December 31, 2024.

 

Allowance for credit losses movement is as follows: 

 

   For the
Six Months Ended
June 30,
2024		   For the
Six Months Ended
June 30,
2023		   For the
Year Ended
December 31,
2023		 
   (Unaudited)   (Unaudited)     
Beginning balance  $2,146,679   $2,460,037   $1,771,761 
Provision for credit losses   150,732    1,193,688    433,867 
Recovery   
-
    (423,898)   (7,061)
Written off   (142,191    
-
    
-
 
Foreign exchange translation   (49,551    (332,092)   (51,888)
Ending balance  $2,105,670   $2,897,735   $2,146,679 

 

F-15

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 5 – ADVANCES TO SUPPLIERS, NET

 

Advances to suppliers include prepayments for raw materials used for production of construction materials for the Company’s construction projects, which consisted of the following:

 

   June 30,
2024		   December 31,
2023		 
   (Unaudited)     
Raw material prepayments for equipment production  $572,365   $309,121 
Advances to construction subcontractors   10,298,127    4,986,131 
Total:   10,870,492    5,295,252 
Less: allowances for credit losses   (3,066)   (3,138)
Advances to suppliers, net, third parties  $10,867,426   $5,292,114 

 

Our suppliers generally require refundable prepayments from us before delivery of goods or services. It usually takes 3 to 6 months for the suppliers to deliver raw materials for our equipment production and takes up to 6 to 12 months for the suppliers to deliver the construction materials. The prepayment is necessary to secure the supply in the market or secure a favorable price.

 

The changes of allowance for doubtful accounts as of June 30, 2024 and December 31, 2023 are as follows: 

 

   June 30,
2024		   June 30,
2023		   December 31,
2023		 
   (Unaudited)   (Unaudited)     
Beginning balance  $3,138   $449,517   $449,517 
Provision for credit losses   
-
    
-
    (434,668)
Recovery   
-
    (400,107)   
-
 
Foreign exchange translation   (72)   (4,169)   (11,711)
Ending balance  $3,066   $45,241   $3,138 

 

NOTE 6 – INVENTORIES, NET

 

Inventories, net, consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Raw materials  $289,437   $119,405 
Finished goods   234,711    276,407 
Transfer finished goods   11,140    - 
Subtotal   535,288    395,812 
Less: Inventory allowance   (253,635)   (259,621)
Inventories, net  $281,653   $136,191 

 

Inventories include raw material and finished goods. Finished goods include direct material costs, direct labor costs and manufacturing overhead.  

 

F-16

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 7 – PREPAYMENTS AND OTHER CURRENT ASSETS

 

The Company’s prepaid expenses and other current assets are as follows:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Other receivable, net (1)  $68,800   $242,151 
Value added tax receivable   44,166    43,504 
Total  $112,966   $285,655 

 

(1) Other receivables mainly consisted of advances to employees for business development purposes and prepaid employee insurance and welfare benefits which will be subsequently deducted from the employee’s payroll.

 

NOTE 8– LEASE

 

The Company has several operating leases for manufacturing facilities, dormitories and offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense for the six months ended June 30, 2024 and 2023 was $85,630, and $116,791, respectively.

 

The Company’s operating leases primarily include leases for office space and manufacturing facilities. The current portion of operating lease liabilities and the non-current portion of operating lease liabilities are presented on the consolidated balance sheet. Total lease expense related to right-of-use assets amounted to $75,470 which included $10,160 of interest and $65,310 of amortization expense of right-of-use assets. Total cash paid for operating leases amounted to $63,975 and $22,494 for the six months ended June 30, 2024 and 2023. Supplemental balance sheet information related to operating leases is as follows:

 

   As of
June 30,
2024		 
   (Unaudited) 
Right-of-use assets  $295,022 
      
Operating lease liabilities – current  $126,838 
Operating lease liabilities - non-current   132,009 
Total operating lease liabilities  $258,847 

 

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2024:

 

Remaining lease term and discount rate:    
Weighted average remaining lease term (years)   2.38 
Weighted average discount rate   7.42%

 

The following is a schedule of maturities of lease liabilities as of June 30, 2024:

 

For the period ending December 31,    
2024  $68,097 
For the years ending December 31,     
2025   137,634 
2026   64,706 
2027   7,568 
Total lease payments   278,005 
Less: imputed interest   19,158 
Present value of lease liabilities  $258,847 

 

F-17

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 9 – CONVERTIBLE LOANS

 

March 2022 Note

 

On March 10, 2022, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a Convertible Promissory Note (the “Note”) in the aggregate principal amount of $3,105,000 with a maturity date of twelve months after the payment of the purchase price for the Note, which will be converted into Company’s common shares. The Note carries an original issue discount of $90,000. In addition, the Company paid $15,000 to the investor to cover legal fees, accounting fees, due diligence etc. On October 13, 2022, the Company entered into a standstill agreement with the investor. Pursuant to the standstill agreement, the investor will not seek to convert any portion of the Note for a period beginning as of the date of the agreement and ending on December 10, 2022 (the “Standstill Period”). Balance of the Note were increased by $310,500.00 (the “Standstill Fee”) as of the date of the agreement. The fair value of the Note was $3,922,686 as of December 31, 2022.On May 26, 2023, the Company entered into an extension agreement with the investor to extend the maturity date until March 10, 2024. Balance of the Note were increased by $145,569 as of the date of the agreement.

 

The principal balance of $100,000 of the March 2022 Note was converted into 2,908 common shares of the Company on December 20, 2022. The remaining balance of $3,461,069 was converted into 279,660 common shares of the Company during the year ended December 31, 2023. 

 

For the six months ended June 30, 2023, due to change in fair value of convertible debentures, the Company recorded a change in fair value of convertible loan of $57,985 in other expense. Interest expense recognized for these convertible debentures were $69,821 for the six months ended June 30, 2023.

 

NOTE 10 – SHORT-TERM LOANS

 

Short-term loans consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shanxi Hunyuan Rural Commercial Bank Co., Ltd (1)  $5,228,800   $5,352,188 
Bank of China (2)   34,328    35,212 
Total  $5,263,128   $5,387,400 

 

(1)

 On April 28, 2023, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.4 million (RMB38 million) as working capital loan from April 28, 2023 to April 13, 2024. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan. The loans were fully repaid on April 10, 2024.

 

On April 10, 2024, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.2 million (RMB38 million) as working capital loan from April 10, 2024 to March 28, 2025. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan.

   
(2) On March 3, 2023, IoV Technology Research entered into a line of credit agreement with Bank of China. The agreement allows IoV Technology Research to obtain loans up to approximately $35,212 (RMB250,000) for use as working capital between March 3, 2023 and March 2, 2024 for a term of one year. The loan bears a fixed interest rate of 4.35% per annum. Subsequently, the loan was extended to December 2, 2024.

 

For the six months ended June 30, 2024 and 2023, interest expense on all short-term loans amounted to $174,137, and $180,772, respectively.

 

F-18

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11 – LOANS FROM THIRD PARTIES

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Jiangsu Yuantong Municipal Projects Construction Co., Ltd. (1)  $1,315,093   $1,549,317 
Changshu Tongjiang Machinery Co., Ltd. (2)   199,520    140,847 
Tu and Lei Creative Design (Beijing) Co., Ltd. (3)   
-
    14,080 
Zhang Miao (4)   847,235    725,140 
Zhang Lei Studio (5)   13,760    14,085 
Xinyi Xinshuo Concrete Co., Ltd.(6)   
-
    70,424 
Xinyi Xinnan Real Estate Co., Ltd. (7)   
-
    84,508 
Bai Shu Tong (8)   275,200    281,694 
Hainan Boxinda Technology Partnership (Limited partnership) (9)   197,325    206,482 
Chen Guo (10)   58,231    59,605 
Honghe County Yisa Hengtong Decoration Company (11)   110,080    112,678 
Ordos Ruitu Rural Development Promotion Center (12)   
-
    7,042 
Yu Zhanfeng (13)   68,800    
-
 
Shexian Ruibo hardware tools factory (14)   16,512    
-
 
Jinyue Kelley Trading (Beijing) Co., LTD (15)   19,264    
-
 
Qihang Hongye Technology (Inner Mongolia) Co., Ltd. (16)   470,959    985,930 
Total  $3,591,979   $4,251,832 
Less: Loans from third parties-non current  $(475,546)  $(2,977,166)
Loans from third parties-current  $3,116,433   $1,274,666 

 

(1)

On October 11, 2022, Beijing REIT entered into a loan agreement with Jiangsu Yuantong Municipal Projects Construction Co., Ltd. to borrow approximately $1.2 million (RMB 8 million) as working capital loan for two years. The loan was from October 11, 2022 to October 10, 2024 and interest-free. On January 18, 2023, the parties revised the loan agreement to increase the principal amount to approximately $1.2 million (RMB9 million) with a new maturity date of January 17, 2025.

 

On January 1, 2023, Xinyi REIT obtained a working capital loan of $281,694 (RMB2 million) from Jiangsu Yuantong Municipal Projects Construction Co., Ltd. The loan was from January 1, 2023 to December 15, 2024 and interest-free. After partial repayment, the outstanding loans were $76,693 (RMB 0.6 million) as of June 30, 2024.

   
(2)

On January 1, 2023, Beijing REIT entered into a loan agreement with Changshu Tongjiang Machinery Co., Ltd. to borrow $140,847 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free.

 

On April 9, 2024, Beijing REIT obtained a working capital loan of $61,920 (RMB 0.5 million) from Changshu Tongjiang Engineering Co., Ltd. The loan is from April 9, 2024 to April 8, 2025 and interest-free. 

   
(3) On January 1, 2023, Beijing REIT entered into a loan agreement with Tu and Lei Creative Design (Beijing) Co., Ltd. to borrow $138,812 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free. The loan was fully repaid in June 2024.

 

F-19

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11 – LOANS FROM THIRD PARTIES (continued)

 

(4)

On February 8, 2023, Beijing REIT and Xinyi REIT entered into a loan agreement with Zhang Miao to borrow $598,377 (RMB4.2 million) as working capital loan for two years. The loan was from February 8, 2023 to February 7, 2025 and interest-free. During from January 1  to June 30, 2024, Xinyi REIT further obtained a loan of $138,812 (RMB 1.0 million) from Zhang Miao. After partial repayment, the outstanding balance of the loan was $723,395 (RMB 5.3 million) as of June 30, 2024.

 

On February 8, 2021, Beijing REIT obtained a working capital loan of $156,900 from Zhang Miao. The loan is from February 8, 2021 to February 7, 2022 and interest-free. After partial repayment, the loan balance was $123,840 (RMB 0.9 million) as of June 30, 2024. The loan was renewed upon maturity with a new maturity date of February 7, 2025.

   
(5) On November 20, 2023, Beijing REIT entered into a loan agreement Zhang Lei Studio to borrow $14,085 (RMB0.1 million) as working capital loan for two years. The loan was from November 20, 2023 to November 19, 2025 and interest-free.  
   
(6) On September 17, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinshuo Concrete Co., Ltd. to borrow $70,424 (RMB0.5 million) as working capital loan for two years. The loan was from September 17, 2023 and September 16, 2025 and interest-free. The loan was fully repaid in June 2024.
   
(7) On May 27, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinnan to borrow $84,508 (RMB0.6 million) as working capital loan for two years. The loan was from May 27, 2023 to on May 26, 2025 and interest-free. The loan was fully repaid in June 2024.
   
(8) On December 27, 2023, REIT Ecological Technology Co., Ltd entered into a loan agreement with Bai Shu Tong to borrow $281,694 (RMB2.0 million) as working capital loan for two years. The loan was from December 27, 2023 and December 26, 2025 and interest-free.
   
(9) In 2023, REIT Technology, Hainan Yile IoT and IoV Technology Research obtained working capital loans of $207,036 (RMB1.5 million) from Hainan Boxinda Science Technology Partnership. The loan was from January 30, 2023 to July 3, 2025 and interest-free. After partially repaid, the outstanding loans were $197,325 (RMB 1.4 million) as of June 30, 2024.
   
(10) On January 20, 2023, the Company entered into a loan agreement with Chen Guo to borrow $59,605 (RMB0.42 million) as working capital loan for two years. The loan is from January 20, 2023 to January 19, 2025 and bears an annual interest of 1%.  
   
(11) On May 26, 2023, the Company entered into a loan agreement with Honghe County Yisa Hengtong Decoration Company to borrow $112,678 (RMB0.8 million) as working capital loan for two years. The loan is from May 26, 2023 to May 5, 2025 and bears an annual interest of 1%. The loan was fully repaid in June 2024.
   
(12) On July 7, 2023, REIT Ecological Technology obtained a working capital loan of $7,042 from Ordos Ruitu Rural Development Promotion Center. The loan is from July 7, 2023 to July 6, 2024 and interest-free. The loan was fully repaid in January 2024.
   
(13) On March 13, 2024, REIT Ecological Technology obtained a working capital loan of $68,800 (RMB 0.5 million) from Yu Zhanfeng. The loan is from March 13, 2024 to July 12, 2024 and interest-free. The loan was fully repaid in July12, 2024.
   
(14) One January 1, 2024, Beijin RETO obtained a working capital loan of $16,512 (RMB 0.1 million) from Shexian Ruibo hardware tools factory. The loan is from March 13, 2024 to January 1, 2025 and interest-free.
   
(15) One April 27, 2024, Beijin RETO obtained a working capital loan of $19,264 (RMB 0.1 million) from Jinyue Kelley Trading (Beijing) Co., LTD. The loan is due on demanded and interest-free.
   
(16) On November 20, 2023, Inner Mongolia REIT Ecological Environment Management Co., Ltd. obtained a working capital loan of $985,930 from Qihang Hongye Technology (Inner Mongolia) Co., Ltd. The loan is due on demand and bears an annual interest of 12%. After partial repayment, both the principle and interests of the loan were $470,959 (RMB3.4 million) as of June 30, 2024.

 

For the six months ended June 30, 2024 and 2023, interest on the Company’s loans from third parties amounted to $ 58,582 and nil, respectively.

 

F-20

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 12 – TAXES

 

(a) Corporate income taxes

 

The Company is subject to income taxes on an entity basis on income arising in or derived from the location in which each entity is domiciled.

 

ReTo was incorporated in the BVI and is exempt from paying income tax. REIT Holdings is registered in Hong Kong as a holding company.

 

The Company’s PRC subsidiaries are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the EIT Law, the corporate income tax rate applicable to all companies, including both domestic and foreign-invested companies, is 25%. Beijing REIT and IoV Technology Research were recognized as HNTE by PRC government and subject to a favorable income tax rate of 15% for six months ended June 30, 2023 and 2024. Hainan Yile IoT was recognized as a HNTE by PRC government and subject to a favorable income tax rate of 15% for six months ended June 30, 2023 and 2024.

 

The following table reconciles income tax expense by statutory rate to the Company’s actual income tax expense:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
China Statutory income tax rate   25.0%   25.0%
Effect of favorable income tax rate in certain entity in PRC   (0.2)%   (2.2)%
Non-PRC entities not subject to PRC tax (3)   (7.9)%   (8.2)%
Research & Development (“R&D”) tax credit (1)   2.6%   1.7%
Non-deductible expenses - permanent difference (1)   (2.4)%   1.5%
Change in valuation allowance   (14.8)%   (17.8)%
Effective tax rate   2.2%   0.0%

 

(1) Represents the tax losses incurred from operations outside of China.
   
(2) According to PRC tax regulations, 200% of current year R&D expense approved by the local tax authority may be deducted from tax income.
   
(3) Represents expenses incurred by the Company that were not deductible for PRC income tax.

 

The breakdown of the Company’s loss before income tax provision is as follows:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
Loss before income tax expense from China  $(326,101)   (7,658,140)
Loss before income tax expense from outside of China   (406,912)   (3,985,666)
Total loss before income tax provision  $(733,013)   (11,643,806)

 

F-21

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 12 – TAXES (continued)

 

(a) Corporate income taxes (continued)

 

Loss before income tax expense from outside of China represents the losses incurred in ReTo and REIT India which are companies incorporated outside of China.

 

The income tax provision (benefit) for the six months ended June 30, 2024 and 2023 were as follows:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
Current  $
-
   $52 
Deferred   (16,380)   
-
 
Total  $(16,380)  $52 

 

Deferred income taxes reflect the net effects of temporary difference between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Due to continuous losses incurred, the Company provided full allowance on the deferred tax assets as of June 30, 2024 and December 31, 2023. 

 

Deferred tax asset  June 30,
2024		   December 31,
2023		 
Provision of doubtful accounts  $2,266,110   $2,391,460 
Tax loss carried forwards   8,865,851    8,276,814 
Valuation allowance on tax losses   (11,131,961)   (10,668,274)
   $
-
   $
-
 

 

(b) VAT

 

The Company is subject to VAT for selling products in China. The applicable VAT rate is 13% for products sold in the PRC. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued.

 

(c) Taxes Payable

 

The Company’s taxes payable consists of the following:

 

   As of
June 30,		   As of
December 31,		 
   2024   2023 
   (Unaudited)     
VAT tax payable  $377,992   $320,946 
Corporate income tax payable   1,615,700    1,653,827 
Land use tax and other taxes payable   16,009    12,162 
Total  $2,009,701   $1,986,935 

 

As of June 30, 2024 and December 31, 2023, the Company had tax payables of approximately $2.0 million and $2.0 million, respectively, mostly related to the unpaid income tax and business tax in China. For the six months ended June 30, 2024 and 2023, the Company has not received any penalty or interest charge notice from local tax authorities. Due to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these unpaid tax balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of the statute of limitations. The Company believes it is likely that the Company can reach an agreement with the local tax authority to fully settle its tax payables in a short term but cannot guarantee such settlement will ultimately occur.

 

F-22

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 13– COMMITMENTS AND CONTIGENCIES

 

Contingencies

 

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The majority of these claims and proceedings are related to, or arise from, lease disputes, commercial disputes, worker compensation complaints, default on guaranteeing third-party lease obligations, and default on loans. The Company first determines whether a loss from a claim is probable, and if it is reasonable to estimate the potential loss, the loss will be accrued. The Company discloses a range of possible losses, if a loss from a claim is probable but the amount of loss cannot be reasonably estimated.

 

Contractual commitments

 

As of June 30, 2024, the Company’s contractual obligations consisted of the following:

 

Contractual Obligations  Total   Less than
1 year		   1-3 years   3-5 years   More than
5 years		 
Operating lease commitment  $258,847   $126,838    132,009   $
        -
   $
         -
 
Repayment of bank loans   5,263,128    5,263,128    
-
    
-
    
-
 
Total  $5,521,975    5,389,966    132,009   $
-
   $
-
 

 

NOTE 14– RELATED PARTY TRANSACTIONS

 

The Company records transactions with various related parties. These related party balances as of June 30, 2024 and December 31, 2023 and transactions for the six months ended June 30, 2024 and 2023 are identified as follows:

 

(1) Related parties

 

Name of Related Party   Relationship to the Company
Mr. Hengfang Li   Chief Executive Officer and Chairman of the Board of Directors, and shareholder of the Company
Q Green Techcon Private Limited   Owned by the minority shareholder of REIT India
Shexian Ruibo   The Company owns 41.67% equity interest in Shexian Ruibo
Hunyuan Baiyang Food Co., Ltd.   An entity controlled by Mr. Hengfang Li
Handan Ruisheng Construction Material Technology Co., Ltd.   An entity controlled by Shexian Ruibo
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd.   Hainan Yile IoT owns 45% ownership interest in this company
Shexian Ruida   An entity controlled by Shexian Ruibo

 

(2) Due from related parties

 

As of June 30, 2024 and December 31, 2023, the balance of due from related parties was as follows: 

 

   As of
June 30,
2024		   As of
December 31,
2023		 
Due from related parties        
Mr. Hengfang Li  $72,082   $358,659 

 

(3) Accounts receivable from related parties

 

Accounts receivable from related parties consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shexian Ruibo  $26,232   $26,851 
Hunyuan Baiyang Food Co., Ltd.   35,157    35,986 
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd.   44,305    45,351 
Total accounts receivable from related parties  $105,694   $108,188 

 

The balance of the accounts receivable as of June 30, 2024 from related parties was outstanding as of the date of issuance of these financial statements.

 

F-23

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 14 – RELATED PARTY TRANSACTIONS (continued)

 

(4) Advance to suppliers, related party

 

Advance to suppliers, related party, consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shexian Ruibo*  $1,450,543   $1,796,831 
Shexian Ruida   39,563    
-
 
Handan Ruisheng Construction Material Technology Co., Ltd.   10,877    11,134 
Total  $1,500,983   $1,807,965 

 

* The balance represents the Company’s purchase advances for eco-friendly materials and equipment supplied by Shexian Ruibo.

 

(5) Accounts payable to related parties

 

Accounts payable to related parties consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
Shexian Ruibo  $
-
   $3,080 

 

(6) Sales to related parties

 

Sales to related parties consisted of the following:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
   (Unaudited)   (Unaudited) 
Sales to a related party        
Q Green Techcon Private Limited   218,631    210,864 

 

Cost of revenue associated with the sales to the related party amounted to $141,624 and $359,398 for the six months ended June 30, 2024 and 2023, respectively.

 

(7) Purchases from related parties

 

Purchases from related parties consisted of the following:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
   (Unaudited)   (Unaudited) 
Purchase from a related party        
Shexian Ruibo  $232,016   $359,398 

 

(7) Equity grants

 

On March 12, 2023, the Company issued an aggregate of 6,700 common shares to directors under the 2022 Share Incentive Plan.

 

F-24

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 15 – SHAREHOLDERS’ EQUITY

 

Statutory Reserve

 

The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The restricted amounts as determined pursuant to PRC laws totaled $1,128,674 and $1,072,895 as of June 30, 2024 and December 31, 2023, respectively.

 

Common Shares

 

ReTo was established on August 7, 2015 under the laws of the BVI and was initially authorized to issue 200,000,000 common shares at $0.001 par value. As approved by the shareholders of the Company at the Meeting (defined below), the existing common shares were redesignated as Class A Shares on August 8, 2024.

 

Share Combinations

 

Effective May 12, 2023, the Company implemented a 10-for-1 share combination of its authorized and issued and outstanding common shares (the “2023 Share Combination”). As a result of the 2023 Share Combination, the Company’s authorized shares were changed from 200,000,000 common shares, par value $0.001 per share, to 20,000,000 common shares, par value $0.01 per share.

 

Effective July 31, 2023, the Company’s board of directors approved a change of the maximum number of shares that the Company is authorized to issue from 20,000,000 shares of a single class each with a par value of US$0.01 to an unlimited number of shares of a single class each with a par value of US$0.01.

 

Effective March 1, 2024, the Company implemented a 10-for-1 share combination of its authorized and issued and outstanding common shares (the “2024 Share Combination”). As a result of the 2024 Share Combination, par value of the common shares of the Company changed from $0.01 per share to $0.1 per share.

 

The share number and share-related data in the financial statements have been adjusted to reflect the two share combinations.

 

Class B Shares

 

The Company approved on its 2024 Annual General Meeting of Shareholders (the “Meeting”) the amendment and restatement of its amended Memorandum and Articles of Association (the “Amended and Restated Memorandum and Articles of Association”) on August 4, 2024 to, (a) redesignate the existing common shares, par value US$0.10 each, as Class A Shares, par value US$0.10 each, with the same rights as the existing common shares and (b) create an additional 2,000,000 shares each to be designated as Class B shares, par value US$0.01 each (the “Class B Shares”), with each share to entitle the holder thereof to 1,000 votes but with transfer restrictions, pre-emption rights and no right to any dividend or distribution of the surplus assets on liquidation. Following the approval, the Amended and Restated Memorandum and Articles of Association became effective upon the registration by the BVI Registrar of Corporate Affairs, as filed by the Company’s BVI registered agent on August 8, 2024. On August 14, 2024, as approved by the Company’s board of directors and on the Meeting, the Company issued 1,000,000 Class B Shares to REIT International Development (Group) Co., Limited at par value for a total consideration of $10,000.

 

As of June 30, 2024 and December 31, 2023, 3,828,868 and 1,205,188 common shares were issued and outstanding, nil Class B common shares were issued and outstanding.

 

F-25

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 15 – SHAREHOLDERS’ EQUITY (continued)

 

Equity Grants

 

On March 8, 2023, the Company’s board of directors approved the issuance of an aggregate of 50,000 common shares to its employees, officers and directors for their services under the 2022 Share Incentive Plan. For the six months ended June 30, 2023, the Company recognized share-based compensation expenses of $2,100,000.

 

On June 7, 2024, the Company’s board of directors approved the issuance of an aggregate of 187,260 common shares to its employees, officers and directors for their services under the 2022 Share Incentive Plan. On June 24, 2024, the Company issued 67,260 common shares and the Company recognized share-based compensation expenses of $162,769.

 

Issuances for Consulting Services

 

On February 27, 2023, the Company entered into a consulting service agreement with Express Transportation Ltd. (“ETL”). Pursuant to the agreement, ETL has agreed to provide feasibility, analysis and risk management services on investment project in mainland China in exchange for 20,000 common shares, which were issued on March 8, 2023. For the six months ended June 30, 2023, the Company recognized share-based compensation expenses of $840,000.

 

On February 27, 2023, the Company entered into a consulting service agreement with Maxleed Investment Holding Ltd. (“MIHL”). Pursuant to the agreement, MIHL has agreed to provide strategy, due diligence, business expansion and optimization services in exchange for 20,000 common shares, which were issued on March 8, 2023. For the six months ended June 30, 2023, the Company recognized share-based compensation expenses of $840,000.

 

Financing

  

On May 18, 2023, the Company entered into a securities purchase agreement. Pursuant to the agreement, the Company issued 200,000 common shares on May 25, 2023 at $33 per share for aggregate gross proceeds of $6,600,000.

 

On September 29, 2023, the Company entered into a securities purchase agreement (the “Public Offering SPA”) to sell an aggregate of 1,500,000 common shares at a price of $10.00 per share to certain investors pursuant to the prospectus supplement, dated September 29, 2023, filed with the Securities and Exchange Commission on October 3, 2023 (the “Public Offering”). On March 13, 2024, the Company entered into an amendment to the Public Offering SPA with such investors to change the per share purchase price from $10.00 to $4.00 and to change the terms of the closing of the Public Offering. Net proceeds amounted to $6,000,000.

 

In addition, in a concurrent private placement (the “Concurrent Private Placement”), the Company entered into certain separate securities purchase agreements on September 29, 2023 (collectively, the “Private Placement SPAs”), to sell to certain other investors an aggregate of 1,000,000 common shares, par value $0.1, at $10.00 per share. On March 13, 2024, the Company entered into an amendment to the Private Placement SPA with such investors to change the per share purchase price from $10.00 to $4.00 and to change the terms of the closing of the Concurrent Private Placement. Net proceeds amounted to $3,969,063.

 

Conversion of Convertible Notes

 

During the year ended December 31, 2023, the Company issued an aggregate of 279,660 common shares for conversion of $4,111,082 in principle and interests of the Note based on the conversion price ranging from $8.71 to $29.2 (see Note 9).

 

F-26

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 16 – SEGMENT REPORTING

 

ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different products or services. Based on management’s assessment, the Company has determined that it has four operating segments as defined by ASC 280, including machinery and equipment, construction material, municipal construction projects, and technology consulting and other services.

 

Construction material segment manufactures and sells eco-friendly construction material. Machinery and equipment segment manufactures and sells machinery and equipment used to manufacture construction material. Construction service segment generates revenue from contracting municipal construction projects. Technological consulting service segment generates revenue from providing environmental-protection related consulting services to customers. 

 

The following table presents summary information by segments for the Company’s continuing operations for the six months ended June 30, 2024 and 2023, respectively: 

 

   For the Six Months Ended June 30, 2024 
   Machinery
and
Equipment
sales		   Construction
materials
sales		   Technological
consulting
and other
services		   Total 
Revenues  $1,661,336    146,293    31,010    1,838,639 
Cost of goods sold   959,450    303,838    7,870    1,271,158 
Gross profit   701,886    (157,545)   23,140    567,481 
Interest expense and charges   (2,721)   150    257,810    255,240 
Interest income   232    16    24,138    24,386 
Depreciation and amortization   76,471    217,849    102,057    396,377 
Capital expenditures   
-
    
-
    
-
    
-
 
Income tax expenses   
-
    
-
    (16,380)   (16,380)
Segment loss   136,408    (244,481)   (608,560)   (716,633)
Segment assets  $11,296,630    9,817,774    12,557,133    33,671,537 

 

F-27

 

 

RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 16 – SEGMENT REPORTING (continued)

 

   For the Six Months Ended June 30, 2023 
   Machinery
and
Equipment
sales		   Construction
materials
sales		   Municipal
construction
projects		   Technological
consulting
and other
services		   Total 
Revenues  $1,029,131    24,510    90,177    89,965    1,233,783 
Cost of goods sold   941,352    
-
    168,514    30,326    1,140,192 
Gross profit   87,779    24,510    (78,337)   59,639    93,591 
Interest expense and charges   90,729    5,771    5,219    79,053    180,772 
Interest income   1,396    37    3    73    1,509 
Depreciation and amortization   101,375    339,032    
-
    30,475    470,882 
Capital expenditures   54,033    
-
    
-
    50,359    104,392 
Income tax benefit   52    
-
    
-
    
-
    52 
Segment loss   (5,429,194)   (378,340)   (296,551)   (5,539,773)   (11,643,858)
Segment assets  $7,272,071    10,976,507    4,955    2,089,650    20,343,183 

 

NOTE 17 – SUBSEQUENT EVENTS

 

On August 12, 2024, the Company issued an aggregate of 120,000 common shares to directors under the 2022 Share Incentive Plan.

 

On August 30, 2024, the Company entered into a securities purchase agreement with certain purchasers, in connection with the issuance and sale of an aggregate of 14,095,200 Class A Shares of the Company at $1.38 per share for an aggregate of purchase price of $19,451,376. On the same day, the parties closed the Private Placement. The Company intends to use the net proceeds from the Private Placement for future mergers and acquisitions and working capital purposes.

 

On August 30, 2024, the Company engaged Jaash Investment Limited, a company organized under the laws of Hong Kong (the “Financial Advisor”), for consulting services in connection with the Private Placement and agreed to issue 1,268,568 Class A Shares to the Financial Advisor as consideration for its services within 5 business days after the closing of the Private Placement. The 1,268,568 Class A Shares were issued on the closing date of the Private Placement.

 

The Company has evaluated the impact of events that have occurred subsequent to June 30, 2024, through the issuance date of the unaudited condensed consolidated financial statement and concluded that no material subsequent events other than the above have occurred that would require recognition in the unaudited condensed consolidated financial statements or disclosure in the notes to the unaudited condensed consolidated financial statements.

 

 

F-28

 

REIT Equipment was previously known as “Beijing REIT Ecological Engineering Technology Co., Ltd.” and Hainan Fangyuyuan was previously known as “Yangpu Fangyuyuan United Logistics Co., Ltd.” 2025-02-07 Represents the tax losses incurred from operations outside of China. Represents expenses incurred by the Company that were not deductible for PRC income tax. 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v3.24.3
Document And Entity Information
 6 Months Ended
Jun. 30, 2024
Document Information Line Items  
Entity Registrant Name RETO ECO-SOLUTIONS, INC.
Document Type 6-K
Current Fiscal Year End Date --12-31
Amendment Flag false
Entity Central Index Key 0001687277
Document Period End Date Jun. 30, 2024
Document Fiscal Year Focus 2024
Document Fiscal Period Focus Q2
Entity File Number 001-38307
v3.24.3
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Current Assets:    
Cash and cash equivalents $ 1,552,455 $ 1,413,669
Accounts receivable, net 636,733 1,062,237
Accounts receivable, net - related party 105,694 108,188
Advances to suppliers, net 10,867,426 5,292,114
Advances to suppliers, net - related party 1,500,983 1,807,965
Inventories, net 281,653 136,191
Prepayments and other current assets 112,966 285,655
Due from third parties 346,822
Deposits for equity acquisition 4,128,000
Due from related parties 72,082 358,659
Total Current Assets 19,604,814 10,464,678
Property, plant and equipment, net 7,389,114 7,761,328
Intangible assets, net 4,156,564 4,449,989
Long-term investment in equity investee 2,226,023 2,337,451
Right-of-use assets 295,022 231,802
Total Assets 33,671,537 25,245,248
Current Liabilities:    
Short-term loans 5,263,128 5,387,400
Advances from customers 2,107,745 1,712,320
Deferred grants - current 187 191
Accounts payable 2,956,208 2,974,650
Accrued and other liabilities 3,089,936 3,240,663
Loans from third parties 3,116,433 1,274,666
Taxes payable 2,009,701 1,986,935
Operating lease liabilities, current 126,838 89,500
Deferred tax liability 276,452 299,622
Total Current Liabilities 19,287,009 17,313,078
Loans from third parties-noncurrent 475,546 2,977,166
Operating lease liabilities - noncurrent 132,009 103,830
Total Liabilities 19,894,564 20,394,074
Commitments and Contingencies
Shareholders’ Equity:    
Additional paid-in capital 78,745,720 68,876,257
Statutory reserve 1,128,674 1,072,895
Accumulated deficit (64,195,520) (63,461,282)
Accumulated other comprehensive loss (2,734,390) (2,253,561)
Total Shareholders’ Equity Attributable to ReTo Eco-Solutions, Inc. 13,327,371 4,354,827
Noncontrolling interest 449,602 496,347
Total Shareholders’ Equity 13,776,973 4,851,174
Total Liabilities and Shareholders’ Equity 33,671,537 25,245,248
Related Party    
Current Liabilities:    
Advances from customers-related party 340,381 344,051
Accounts payable - related party 3,080
Class A Shares    
Shareholders’ Equity:    
Common shares, value 382,887 120,518
Class B Shares    
Shareholders’ Equity:    
Common shares, value
v3.24.3
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares
Jun. 30, 2024
Dec. 31, 2023
Class A Shares    
Common shares, par value (in Dollars per share) $ 0.1 $ 0.1
Common shares, shares authorized 20,000,000 20,000,000
Common shares, shares issued 3,828,868 1,205,188
Common shares, shares outstanding 3,828,868 1,205,188
Class B Shares    
Common shares, par value (in Dollars per share) $ 0.01 $ 0.01
Common shares, shares authorized 2,000,000 2,000,000
Common shares, shares issued
Common shares, shares outstanding
v3.24.3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Total revenues $ 1,838,639 $ 1,233,783
Total Cost 1,271,158 1,140,192
Gross Profit 567,481 93,591
Operating Expenses:    
Selling expenses 133,455 289,730
General and administrative expenses 1,368,407 5,539,187
Bad debt expenses 63,462 460,116
Research and development expenses 76,257 809,979
Total Operating Expenses 1,641,581 7,099,012
Loss from Operations (1,074,100) (7,005,421)
Other Income (expenses):    
Interest expenses (255,240) (180,772)
Interest income 24,385 1,509
Other income (expenses), net 629,902 (4,356,224)
Change in fair value of convertible debt (57,985)
Gain from disposal of subsidiaries 38,394
Share of losses in equity method investments (57,960) (83,307)
Total Other Income (expenses), Net 341,087 (4,638,385)
Loss Before Income Taxes (733,013) (11,643,806)
Income Taxes Expense (Benefit) (16,380) 52
Net Loss (716,633) (11,643,858)
Less: net loss attributable to noncontrolling interest (38,174) (424,115)
Net Loss Attributable to ReTo Eco-Solutions, Inc. (678,459) (11,219,743)
Net Loss (716,633) (11,643,858)
Other comprehensive loss:    
Foreign currency translation adjustment (489,400) 258,053
Comprehensive Loss (1,206,033) (11,385,805)
Less: comprehensive loss attributable to noncontrolling interest (46,745) (334,923)
Comprehensive Loss Attributable to ReTo Eco-Solutions, Inc $ (1,159,288) $ (11,050,882)
Loss Per Share    
Basic (in Dollars per share) $ (0.25) $ (20.63)
Diluted (in Dollars per share) $ (0.25) $ (20.63)
Weighted Average Number of Shares    
Basic and diluted (in Shares) 2,745,361 543,785
Diluted (in Shares) 2,745,361 543,785
Third Party Customers    
Total revenues $ 1,620,008 $ 1,022,919
Total Cost 1,129,534 780,794
Related Parties    
Total revenues 218,631 210,864
Total Cost $ 141,624 $ 359,398
v3.24.3
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity - USD ($)
Common Shares
Class A
Common Shares
Class B
Additional Paid-in Capital
Subscription receivable
Statutory Reserve
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive Income (Loss)
Noncontrolling Interest
Total
Balance at Dec. 31, 2022 $ 43,400 $ 53,331,093 $ 1,066,554 $ (47,813,206) $ (2,388,890) $ 835,578 $ 5,074,529
Balance (in Shares) at Dec. 31, 2022 433,989              
Net income (11,219,743)   (424,115) (11,643,858)
Fractional share issued for reverse shares split $ 154 (154)
Fractional share issued for reverse shares split (in Shares) 1,539                
Issuance of common shares $ 20,000 6,580,000 (5,887,546) 712,454
Issuance of common shares (in Shares) 200,000                
Conversion of convertible debt $ 4,705 987,356 992,061
Conversion of convertible debt (in Shares) 47,057                
Issuance of common shares $ 4,000 1,676,000 1,680,000
Issuance of common shares (in Shares) 40,000                
Issuance of common shares $ 5,000 2,095,000 2,100,000
Issuance of common shares (in Shares) 50,000                
Appropriation to statutory reserve 3,328 (3,328)
Foreign currency translation adjustment 168,861 89,192 258,053
Balance at Jun. 30, 2023 $ 77,259 64,669,295 (5,887,546) 1,069,882 (59,036,277) (2,220,029) 500,655 (826,761)
Balance (in Shares) at Jun. 30, 2023 772,585              
Balance at Dec. 31, 2023 $ 120,518 68,876,257 1,072,895 (63,461,282) (2,253,561) 496,347 4,851,174
Balance (in Shares) at Dec. 31, 2023 1,205,188              
Net income (678,459) (38,174) (716,633)
Fractional share issued for reverse shares split $ 5,643 (5,643)
Fractional share issued for reverse shares split (in Shares) 56,420                
Issuance of common shares in private placements, net $ 100,000 3,869,063 3,969,063
Issuance of common shares in private placements, net (in Shares) 1,000,000                
Share-based compensation $ 6,726 156,043   162,769
Share-based compensation (in Shares) 67,260                
Issuance of common shares $ 150,000 5,850,000 6,000,000
Issuance of common shares (in Shares) 1,500,000                
Appropriation to statutory reserve 55,779 (55,779)
Foreign currency translation adjustment (480,829) (8,571) (489,400)
Balance at Jun. 30, 2024 $ 382,887 $ 78,745,720 $ 1,128,674 $ (64,195,520) $ (2,734,390) $ 449,602 $ 13,776,973
Balance (in Shares) at Jun. 30, 2024 3,828,868              
v3.24.3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES    
Net loss $ (716,633) $ (11,643,858)
Adjustments to reconcile net loss to net cash used in operating activities:    
Deferred tax benefit (16,380)
Depreciation and amortization 396,377 470,882
Change in fair value of convertible debt 57,985
Convertible debt issuance cost 145,569
Accrued interest for convertible debt 69,821
Amortization of share-based compensation for services 162,769 3,780,000
Change in bad debt allowances 63,462 460,116
Gain from disposal of subsidiary (38,394)
Shares of losses in equity method investments 57,960 83,307
Amortization of operating lease right-of-use assets 65,310 93,991
Changes in operating assets:    
Accounts receivable 395,388 373,948
Accounts receivable - related party
Advances to suppliers (5,738,720) 111,149
Advances to suppliers - related party 267,230 2,096,160
Inventories (149,681) (522,597)
Prepayments and other current assets 79,163 179,672
Changes in operating liabilities:    
Advances from customers 438,061 (369,899)
Advances from customers - related party 4,292 174,027
Accounts payable 50,499 458,172
Deferred grant - current portion (18,202)
Accounts payable - related party (3,031)
Accrued and other liabilities (116,494) (224,020)
Taxes payable 69,071 (55,605)
Operating lease liability (63,975) (222,494)
Net cash used in operating activities from operations (4,755,332) (4,540,270)
CASH FLOWS FROM INVESTING ACTIVITIES    
Addition of property and equipment (104,392)
Addition of intangible assets (404)
Proceeds from disposal of subsidiary 176,854 511,800
Deposits for equity acquisition (4,128,000)
Net cash used in investing activities from operations (3,951,146) 407,004
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from short-term bank loans 5,266,800 5,520,835
Repayment of short-term bank loans (5,266,800) (1,313,444)
Repayment of convertible debt (200,000)
Repayment of third-party loans (970,463) (154,439)
Proceeds from third-party loans 404,548 865,108
Loan to third parties (379,343) (709,842)
Proceeds from private placement, net 3,969,063 712,454
Proceeds from public offering 6,000,000
Proceeds from related party loans 328,116 302,873
Repayment to related party loans (29,197) (561,592)
Payments to non-controlling shareholders (288,671)
Net cash provided by financing activities from operations 9,322,724 4,173,282
EFFECT OF EXCHANGE RATE CHANGES ON CASH (477,460) 79,928
NET INCREASE IN CASH 138,786 119,944
CASH, BEGINNING OF THE PERIOD 1,413,669 113,895
CASH, END OF THE PERIOD 1,552,455 233,839
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Interest paid 174,137 180,772
Income tax paid
Non-Cash Investing Activities    
Right-of-use assets obtained in exchange for operating lease obligations 281,001 58,977
Right-of-use assets offset with operating lease obligations due to lease cancellation 146,630 77,941
Non-Cash Financing Activities    
Conversion of investor loans to equity 992,060
Subscription receivable $ (5,887,546)
v3.24.3
Organization and Description of Business
 6 Months Ended
Jun. 30, 2024
Organization and Description of Business [Abstract]  
ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

ReTo Eco-Solutions, Inc. (“ReTo”) is a business company established under the laws of the British Virgin Islands (“BVI”) on August 7, 2015 as a holding company to develop business opportunities in the People’s Republic of China (the “PRC” or “China”). ReTo and its subsidiaries are collectively referred to as the Company. ReTo, through its subsidiaries, is engaged in (i) manufacture and distribution of eco-friendly construction materials and equipment used for the production of eco-friendly construction materials and related consultation and technological services; (ii) consultation, design, project implementation and construction of urban ecological protection projects; (iii) roadside assistance services; and (iv) software development services.

 

As of June 30, 2024, the consolidated financial statements of the Company reflected the principal activities of the entities listed below. All inter-company balances and transactions have been eliminated upon consolidation. 

 

Name of the Entity   Place of
Incorporation		   Ownership
Percentage		  
ReTo Eco-Solutions, Inc.   British Virgin Islands     Parent  
REIT Holdings (China) Limited (“REIT Holdings”)   Hong Kong, China     100 %
Sunoro Holdings Limited (“Sunoro Holdings”)   Hong Kong, China     100 %
Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”)   Beijing, China     100 %
Beijing REIT Equipment Technology Co., Ltd. (“REIT Equipment”)*   Beijing, China     100 %
REIT New Materials Xinyi Co., Ltd. (“Xinyi REIT”)   Xinyi, China     100 %
REIT Q GREEN Machines Private Ltd (“REIT India”)   India     51 %
REIT Ecological Technology Co., Ltd. (“REIT Ordos”)   Ordos, China     100 %
Datong Ruisheng Environmental Engineering Co., Ltd. (“Datong Ruisheng”)   Datong, China     100 %
Guangling REIT Ecological Cultural Tourism Co., Ltd.   Datong, China     100 %
REIT Technology Development Co., Ltd (“REIT Technology”)   Haikou, China     100 %
Hainan REIT Mingde Investment Holding Co., Ltd. (“REIT Mingde”)   Haikou, China     100 %
Hainan Fangyuyuan United Logistics Co., Ltd. (“Hainan Fangyuyuan”)*   Haikou, China     90 %
Hainan Kunneng Direct Supply Chain Management Co., Ltd.   Haikou, China     51 %
Hainan Yile IoT Technology Co., Ltd. (“Hainan Yile IoT”)   Haikou, China     61.6 %
Hainan Yile IoV Technology Research Institute Co., Ltd, (“IoV Technology Research”)   Haikou, China     90 %
Honghe Reit Ecological Technology Co., Ltd. (“Honghe REIT”)   Yunnan, China     100 %
Inner Mongolia GuoRui Daojing Information Technology Co., Ltd.   Ordos, China     51 %
Sunoro Hengda (Beijing) Technology Co., Ltd.   Beijing, China     100 %
Inner Mongolia Reit Echological Environment Management Co., Ltd. (“Mongolia Reit”)   Ordos, China     100 %
Senrui Bochuang (Beijing) Technology Co., LTD   Beijing, China     100 %

 

*REIT Equipment was previously known as “Beijing REIT Ecological Engineering Technology Co., Ltd.” and Hainan Fangyuyuan was previously known as “Yangpu Fangyuyuan United Logistics Co., Ltd.”
v3.24.3
Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2024
Summary of Significant Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year.

 

Principles of consolidation

 

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation.

 

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than 50% of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

 

Non-controlling interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements.

 

Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition under the input method, and realization of deferred tax assets. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

Cash and cash equivalents represent cash on hand and cash deposited in major third-party payment processing platforms such as Alipay. In addition, highly liquid investments which have original maturities of three months or less when purchased are classified as cash equivalents.

 

Accounts Receivable, Net

 

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions, customer-specific circumstances, recent payment history and other relevant factors. Allowance for credit losses amounted to $2,105,670 and $2,146,679 as of June 30, 2024 and December 31, 2023, respectively.

 

Inventories

 

Inventories are stated at the lower of cost or net realizable value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories.

 

Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. The Company evaluates inventories on a quarterly basis for its net realizable value adjustments, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and future demand of each type of inventories. The Company recorded an inventory reserve of $253,635 and $259,621 as of June 30, 2024 and December 31, 2023, respectively. 

 

Advances to Suppliers, Net

 

Advances to suppliers consist of balances paid to suppliers for services and materials that have not been provided or received. Advances to suppliers for service and material are short-term in nature. Advances to Suppliers are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance for uncollectible balances from the operations amounted to $3,066 and $3,138 as of June 30, 2024 and December 31, 2023, respectively.

 

Long-term Investment in Equity Investee

 

The Company’s long-term investments include equity method investments and equity investments without readily determinable fair values.

 

Investments in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investment at cost and the difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is accounted for as if the investee were a consolidated subsidiary. The share of earnings or losses of the investee are recognized in the consolidated statements of comprehensive loss. Equity method adjustments include the Company’s proportionate share of investee income or loss, adjustments to recognize certain differences between the Company’s carrying value and its equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. The Company assesses its equity investment for other-than-temporary impairment by considering factors as well as all relevant and available information including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and cash burn rate and other company-specific information.

 

Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive loss equal to the amount by which the carrying value exceeds the fair value of the investment. Prior to the adoption of ASU 2016-01 on January 1, 2019, these investments were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment.

 

As of June 30, 2024 and December 31, 2023, the Company’s long-term investment in equity investee balance represents its $2,226,021 and $2,337,451, or 41.67% equity investment in Shexian Ruibo Environmental Science and Technology Co., Ltd. (“Shexian Ruibo”). On September 7, 2020, the Company acquired such equity interest from an original shareholder of Shexian Ruibo and the original shareholder of Shexian Ruibo. Shexian Ruibo manufactures and sells eco-friendly construction materials in the PRC. The Company accounted for the investments using equity method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity investee. Under the equity method, the Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings or loss of the investee after the date of investment. When the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee. For the six months ended June 30, 2024 and 2023, the investment loss from Shexian Ruibo was $57,960 and $83,307, respectively.

 

The Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value. For the six months ended June 30, 2024 and 2023, the Company did not recognize any impairment on its equity investment. 

 

Leases

 

The Company adopted ASU No. 2016-02—Leases (Topic 842) on January 1, 2019 using the modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The standard did not materially impact the Company’s consolidated net earnings and cash flows.

 

Fair Value of Financial Instruments

 

ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

 

● Level 1 - Quoted prices in active markets for identical assets and liabilities.
   
● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
   
● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

 

The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advance to suppliers, accounts payable, accrued and other liabilities, advances from customers, deferred revenue, taxes payable and due to related parties to approximate the fair value of the respective assets and liabilities as of June 30, 2024 and December 31, 2023, based upon the short-term nature of the assets and liabilities.

 

The Company believes that the carrying amount of the short-term and long-term borrowings approximates fair value as of June 30, 2024 and December 31, 2023 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.

 

The Company elected the fair value option to account for its convertible loans. The Company engaged an independent valuation firm to perform the valuation. The convertible loans are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of the convertible loans include time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion. Refer to Note 9 for additional information.

 

As the inputs used in developing the fair value for level 3 instruments are unobservable, and require significant management estimate, a change in these inputs could result in a significant change in the fair value measurement.

 

Revenue Recognition

 

The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services.

 

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

 

The Company’s revenues are primarily derived from the following sources:

 

● Revenue from machinery and equipment sales

 

The Company recognizes revenue when the machinery and equipment is delivered and control is transferred. The Company generally provide a warranty for a period of 12 months after the customers receive the equipment. The Company determines that such product warranty is not a separated performance obligation because the nature of warranty is to provide assurance that a product will function as expected and in accordance with customer’s specification and the Company has not sold the warranty separately. From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the six months ended June 30, 2024 and 2023.

 

● Revenue from construction materials sales

 

The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. 

 

● Revenue from municipal construction projects

 

The Company provides municipal construction services, including sponge city projects and ecological restoration projects. The Company recognizes revenue associated with these contracts over time as service is performed and the transfer of control occurs, based on a percentage-of-completion method using cost-to-cost input methods as a measure of progress. When the percentage-of-completion method is used, the Company estimates the costs to complete individual contracts and records as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach).

 

Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

 

● Revenue from technological consulting and other services

 

The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers.

 

Contract Assets and Liabilities

 

Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contact assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs.

 

As of June 30, 2024 and December 31, 2023, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred.

 

Disaggregation of Revenues

 

The Company disaggregates its revenue from contracts by products and services, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the six months ended June 30, 2024 and 2023 is disclosed in Note 16.

 

Government Grants

 

Government grants represent cash subsidies received from PRC government or related institutions. Cash subsidies which have no defined rules and regulations to govern the criteria necessary for companies to enjoy the benefits are recognized as other income, net when received. Specific subsidies that local government has provided for a specific purpose, such as research and development are recorded as other non-current liabilities when received and recognized as other income or reduction of related expense when the specific performance is meet. As of December 31, 2020, the Company received related grants of $490,560 for a specific research and development project to be conducted during the period from 2021 to 2022. The Company recorded such grants as deferred grants on its consolidated balance sheet. As of June 30, 2024 and December 31, 2023, the remaining balance was $187 and $191, respectively.

 

Share-based Compensation

 

The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award. All the Company’s share-based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values. 

 

Income Taxes

 

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

 

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated.

 

To the extent applicable, the Company records interest and penalties as a general and administrative expense. The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the six months ended June 30, 2024 and 2023. As of June 30, 2024, the tax years ended December 31, 2019 through December 31, 2023 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities.

 

Value Added Tax (“VAT”)

 

Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13%, starting from April 1, 2019, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying consolidated financial statements. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing.

 

Earnings (Loss) per Share

 

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of June 30, 2024 and June 30, 2023, the Company had no dilutive security outstanding that could potentially dilute EPS in the future.

 

Foreign Currency Translation

 

The Company’s principal country of operations is the PRC. The financial position and results of its operations located in PRC are determined using RMB, the local currency, as the functional currency. ReTo and REIT Holdings use U.S. Dollars as their functional currency, while REIT India uses Indian rupee as the functional currency. The Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in the results of operations.

 

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

 

    June 30,
2024		   December 31,
2023		   June 30,
2023
             
Year-end spot rate   US$1=RMB 7.2672   US$1=RMB 7.0999   US$1=RMB 7.2513
 Year-end spot rate   US$1=INR 83.33   US$1=INR 83.19   US$1=INR 82.06 
Average rate   US$1=RMB 7.2150   US$1=RMB 7.0809   US$1=RMB 6.9283
Average rate   US$1=INR 83.20   US$1=INR 82.57   US$1=INR 82.20

 

Risks and Uncertainties

 

The main operation of the Company is located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.

  

Concentrations and Credit Risk 

 

A majority of the Company’s transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

 

As of June 30, 2024 and December 31, 2023, $1,519,456 and $1,314,636 of the Company’s cash and cash equivalents was deposited at financial institutions in the PRC. These deposits were insured per PRC’s new Deposit Insurance Regulation for up to RMB500,000 for one bank. In addition, as of June 30, 2024 and December 31, 2023, $5,663 and $4,161 of the Company’s cash and cash equivalents was deposited at financial institutions in the Republic of India (“India”) which is insured under the Deposit Insurance and Credit Guarantee Corporation for up to 100,000 Indian Rupee (approximately $1,200).

 

For the six months ended June 30, 2024, two customers accounted for more than 16% and 12% of the Company’s total revenue. For the six months ended June 30, 2023, two customers accounted for more than 22% and 17% of the Company’s total revenue.

 

As of June 30, 2024, three customers accounted for 33%, 24% and 13% of the Company’s consolidated accounts receivable. As of December 31, 2023, three customers accounted for 29%, 21% and 12% of the Company’s consolidated accounts receivable, respectively.

 

For the six months ended June 30, 2024, the Company purchased approximately 30%, 22% and 10% of its raw materials from three major suppliers. For the six months ended June 30, 2023, the Company purchased approximately 21%, 17% and 13% of its raw materials from three major suppliers.

 

As of June 30, 2024 and December 31, 2023, three suppliers accounted for 30%, 22% and 10% of the total accounts payable balance, respectively.

 

Recent Accounting Pronouncements

 

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. 

 

In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The adoption does not have a material effect on the consolidated financial statements.

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). This ASU requires that public business entities must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. The adoption does not have a material effect on the consolidated financial statements.

 

In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.

 

Except for the above-mentioned pronouncements, there are no recently issued accounting standards that will have a material impact on the audited consolidated financial position, statements of operations, and cash flows of the Company.
v3.24.3
Going Concern
 6 Months Ended
Jun. 30, 2024
Going Concern [Abstract]  
GOING CONCERN

NOTE 3 – GOING CONCERN

 

The Company’s unaudited condensed consolidated financial statements have been prepared assuming that it will continue as a going concern. As of June 30, 2024, the Company had a working capital of approximately $0.3 million, and approximately $0.7 million net loss and approximately $4.8 million cash used in operating activities during the six months ended June 30, 2024. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

As of June 30, 2024, the Company had cash of approximately $1.6 million. Management believes that it would be able to renew all of its existing bank loans upon their maturity based on past experience and the Company’s credit history. Currently, the Company is working to improve its liquidity and capital source mainly through cash flow from its operations, renewal of bank borrowings and borrowing from related parties. In order to fully implement its business plan and sustain operations, the Company may also seek equity financing from outside investors. At the present time, however, the Company does not have commitments of funds from any potential investors. No assurance can be given that additional financing, if required, would be available on favorable terms or at all.

 

On August 30, 2024, the Company entered into a securities purchase agreement with certain purchasers, in connection with the issuance and sale (the “Private Placement”) of an aggregate of 14,095,200 Class A shares, par value US$0.10 per share (the “Class A Shares”), of the Company at $1.38 per share for an aggregate of purchase price of $19,451,376. On the same day, the parties closed the Private Placement. The Company intends to use the net proceeds from the Private Placement for future mergers and acquisitions and working capital purposes.

 

Based on above reasons, the Company believe it has the ability to continue as a going concern for the next 12 months from the issuance of these consolidated financial statements.
v3.24.3
Accounts Receivable, Net
 6 Months Ended
Jun. 30, 2024
Accounts Receivable, Net [Abstract]  
ACCOUNTS RECEIVABLE, NET

NOTE 4 – ACCOUNTS RECEIVABLE, NET

 

Accounts receivable consisted of the following:

 

   June 30,
2024		   December 31,
2023		 
   (Unaudited)     
Trade accounts receivable from third-part customers  $2,742,403   $3,208,916 
Less: allowances for doubtful accounts   (2,105,670)   (2,146,679)
Total accounts receivable from third-party customers, net   636,733    1,062,237 
Add: accounts receivable, net, related parties   105,694    108,188 
Accounts receivable, net  $742,427   $1,170,425 

 

As of June 30, 2024, the remaining balance is expected to be substantially collected from customers before December 31, 2024.

 

Allowance for credit losses movement is as follows: 

 

   For the
Six Months Ended
June 30,
2024		   For the
Six Months Ended
June 30,
2023		   For the
Year Ended
December 31,
2023		 
   (Unaudited)   (Unaudited)     
Beginning balance  $2,146,679   $2,460,037   $1,771,761 
Provision for credit losses   150,732    1,193,688    433,867 
Recovery   
-
    (423,898)   (7,061)
Written off   (142,191    
-
    
-
 
Foreign exchange translation   (49,551    (332,092)   (51,888)
Ending balance  $2,105,670   $2,897,735   $2,146,679 
v3.24.3
Advances to Suppliers, Net
 6 Months Ended
Jun. 30, 2024
Advances to Suppliers, Net [Abstract]  
ADVANCES TO SUPPLIERS, NET

NOTE 5 – ADVANCES TO SUPPLIERS, NET

 

Advances to suppliers include prepayments for raw materials used for production of construction materials for the Company’s construction projects, which consisted of the following:

 

   June 30,
2024		   December 31,
2023		 
   (Unaudited)     
Raw material prepayments for equipment production  $572,365   $309,121 
Advances to construction subcontractors   10,298,127    4,986,131 
Total:   10,870,492    5,295,252 
Less: allowances for credit losses   (3,066)   (3,138)
Advances to suppliers, net, third parties  $10,867,426   $5,292,114 

 

Our suppliers generally require refundable prepayments from us before delivery of goods or services. It usually takes 3 to 6 months for the suppliers to deliver raw materials for our equipment production and takes up to 6 to 12 months for the suppliers to deliver the construction materials. The prepayment is necessary to secure the supply in the market or secure a favorable price.

 

The changes of allowance for doubtful accounts as of June 30, 2024 and December 31, 2023 are as follows: 

 

   June 30,
2024		   June 30,
2023		   December 31,
2023		 
   (Unaudited)   (Unaudited)     
Beginning balance  $3,138   $449,517   $449,517 
Provision for credit losses   
-
    
-
    (434,668)
Recovery   
-
    (400,107)   
-
 
Foreign exchange translation   (72)   (4,169)   (11,711)
Ending balance  $3,066   $45,241   $3,138 
v3.24.3
Inventories, Net
 6 Months Ended
Jun. 30, 2024
Inventories, Net [Abstract]  
INVENTORIES, NET

NOTE 6 – INVENTORIES, NET

 

Inventories, net, consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Raw materials  $289,437   $119,405 
Finished goods   234,711    276,407 
Transfer finished goods   11,140    - 
Subtotal   535,288    395,812 
Less: Inventory allowance   (253,635)   (259,621)
Inventories, net  $281,653   $136,191 

 

Inventories include raw material and finished goods. Finished goods include direct material costs, direct labor costs and manufacturing overhead.  
v3.24.3
Prepayments and Other Current Assets
 6 Months Ended
Jun. 30, 2024
Prepayments and Other Current Assets [Abstract]  
PREPAYMENTS AND OTHER CURRENT ASSETS

NOTE 7 – PREPAYMENTS AND OTHER CURRENT ASSETS

 

The Company’s prepaid expenses and other current assets are as follows:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Other receivable, net (1)  $68,800   $242,151 
Value added tax receivable   44,166    43,504 
Total  $112,966   $285,655 

 

(1) Other receivables mainly consisted of advances to employees for business development purposes and prepaid employee insurance and welfare benefits which will be subsequently deducted from the employee’s payroll.
v3.24.3
Lease
 6 Months Ended
Jun. 30, 2024
Lease [Abstract]  
LEASE

NOTE 8– LEASE

 

The Company has several operating leases for manufacturing facilities, dormitories and offices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Lease expense for the six months ended June 30, 2024 and 2023 was $85,630, and $116,791, respectively.

 

The Company’s operating leases primarily include leases for office space and manufacturing facilities. The current portion of operating lease liabilities and the non-current portion of operating lease liabilities are presented on the consolidated balance sheet. Total lease expense related to right-of-use assets amounted to $75,470 which included $10,160 of interest and $65,310 of amortization expense of right-of-use assets. Total cash paid for operating leases amounted to $63,975 and $22,494 for the six months ended June 30, 2024 and 2023. Supplemental balance sheet information related to operating leases is as follows:

 

   As of
June 30,
2024		 
   (Unaudited) 
Right-of-use assets  $295,022 
      
Operating lease liabilities – current  $126,838 
Operating lease liabilities - non-current   132,009 
Total operating lease liabilities  $258,847 

 

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2024:

 

Remaining lease term and discount rate:    
Weighted average remaining lease term (years)   2.38 
Weighted average discount rate   7.42%

 

The following is a schedule of maturities of lease liabilities as of June 30, 2024:

 

For the period ending December 31,    
2024  $68,097 
For the years ending December 31,     
2025   137,634 
2026   64,706 
2027   7,568 
Total lease payments   278,005 
Less: imputed interest   19,158 
Present value of lease liabilities  $258,847 
v3.24.3
Convertible Loans
 6 Months Ended
Jun. 30, 2024
Convertible Loans [Abstract]  
CONVERTIBLE LOANS

NOTE 9 – CONVERTIBLE LOANS

 

March 2022 Note

 

On March 10, 2022, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a Convertible Promissory Note (the “Note”) in the aggregate principal amount of $3,105,000 with a maturity date of twelve months after the payment of the purchase price for the Note, which will be converted into Company’s common shares. The Note carries an original issue discount of $90,000. In addition, the Company paid $15,000 to the investor to cover legal fees, accounting fees, due diligence etc. On October 13, 2022, the Company entered into a standstill agreement with the investor. Pursuant to the standstill agreement, the investor will not seek to convert any portion of the Note for a period beginning as of the date of the agreement and ending on December 10, 2022 (the “Standstill Period”). Balance of the Note were increased by $310,500.00 (the “Standstill Fee”) as of the date of the agreement. The fair value of the Note was $3,922,686 as of December 31, 2022.On May 26, 2023, the Company entered into an extension agreement with the investor to extend the maturity date until March 10, 2024. Balance of the Note were increased by $145,569 as of the date of the agreement.

 

The principal balance of $100,000 of the March 2022 Note was converted into 2,908 common shares of the Company on December 20, 2022. The remaining balance of $3,461,069 was converted into 279,660 common shares of the Company during the year ended December 31, 2023. 

 

For the six months ended June 30, 2023, due to change in fair value of convertible debentures, the Company recorded a change in fair value of convertible loan of $57,985 in other expense. Interest expense recognized for these convertible debentures were $69,821 for the six months ended June 30, 2023.
v3.24.3
Short-term Loans
 6 Months Ended
Jun. 30, 2024
Short-term Loans [Abstract]  
SHORT-TERM LOANS

NOTE 10 – SHORT-TERM LOANS

 

Short-term loans consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shanxi Hunyuan Rural Commercial Bank Co., Ltd (1)  $5,228,800   $5,352,188 
Bank of China (2)   34,328    35,212 
Total  $5,263,128   $5,387,400 

 

(1)

 On April 28, 2023, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.4 million (RMB38 million) as working capital loan from April 28, 2023 to April 13, 2024. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan. The loans were fully repaid on April 10, 2024.

 

On April 10, 2024, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.2 million (RMB38 million) as working capital loan from April 10, 2024 to March 28, 2025. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan.

   
(2) On March 3, 2023, IoV Technology Research entered into a line of credit agreement with Bank of China. The agreement allows IoV Technology Research to obtain loans up to approximately $35,212 (RMB250,000) for use as working capital between March 3, 2023 and March 2, 2024 for a term of one year. The loan bears a fixed interest rate of 4.35% per annum. Subsequently, the loan was extended to December 2, 2024.

 

For the six months ended June 30, 2024 and 2023, interest expense on all short-term loans amounted to $174,137, and $180,772, respectively.
v3.24.3
Loans from Third Parties
 6 Months Ended
Jun. 30, 2024
Loans from Third Parties [Abstract]  
LOANS FROM THIRD PARTIES

NOTE 11 – LOANS FROM THIRD PARTIES

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Jiangsu Yuantong Municipal Projects Construction Co., Ltd. (1)  $1,315,093   $1,549,317 
Changshu Tongjiang Machinery Co., Ltd. (2)   199,520    140,847 
Tu and Lei Creative Design (Beijing) Co., Ltd. (3)   
-
    14,080 
Zhang Miao (4)   847,235    725,140 
Zhang Lei Studio (5)   13,760    14,085 
Xinyi Xinshuo Concrete Co., Ltd.(6)   
-
    70,424 
Xinyi Xinnan Real Estate Co., Ltd. (7)   
-
    84,508 
Bai Shu Tong (8)   275,200    281,694 
Hainan Boxinda Technology Partnership (Limited partnership) (9)   197,325    206,482 
Chen Guo (10)   58,231    59,605 
Honghe County Yisa Hengtong Decoration Company (11)   110,080    112,678 
Ordos Ruitu Rural Development Promotion Center (12)   
-
    7,042 
Yu Zhanfeng (13)   68,800    
-
 
Shexian Ruibo hardware tools factory (14)   16,512    
-
 
Jinyue Kelley Trading (Beijing) Co., LTD (15)   19,264    
-
 
Qihang Hongye Technology (Inner Mongolia) Co., Ltd. (16)   470,959    985,930 
Total  $3,591,979   $4,251,832 
Less: Loans from third parties-non current  $(475,546)  $(2,977,166)
Loans from third parties-current  $3,116,433   $1,274,666 

 

(1)

On October 11, 2022, Beijing REIT entered into a loan agreement with Jiangsu Yuantong Municipal Projects Construction Co., Ltd. to borrow approximately $1.2 million (RMB 8 million) as working capital loan for two years. The loan was from October 11, 2022 to October 10, 2024 and interest-free. On January 18, 2023, the parties revised the loan agreement to increase the principal amount to approximately $1.2 million (RMB9 million) with a new maturity date of January 17, 2025.

 

On January 1, 2023, Xinyi REIT obtained a working capital loan of $281,694 (RMB2 million) from Jiangsu Yuantong Municipal Projects Construction Co., Ltd. The loan was from January 1, 2023 to December 15, 2024 and interest-free. After partial repayment, the outstanding loans were $76,693 (RMB 0.6 million) as of June 30, 2024.

   
(2)

On January 1, 2023, Beijing REIT entered into a loan agreement with Changshu Tongjiang Machinery Co., Ltd. to borrow $140,847 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free.

 

On April 9, 2024, Beijing REIT obtained a working capital loan of $61,920 (RMB 0.5 million) from Changshu Tongjiang Engineering Co., Ltd. The loan is from April 9, 2024 to April 8, 2025 and interest-free. 

   
(3) On January 1, 2023, Beijing REIT entered into a loan agreement with Tu and Lei Creative Design (Beijing) Co., Ltd. to borrow $138,812 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free. The loan was fully repaid in June 2024.

 

(4)

On February 8, 2023, Beijing REIT and Xinyi REIT entered into a loan agreement with Zhang Miao to borrow $598,377 (RMB4.2 million) as working capital loan for two years. The loan was from February 8, 2023 to February 7, 2025 and interest-free. During from January 1  to June 30, 2024, Xinyi REIT further obtained a loan of $138,812 (RMB 1.0 million) from Zhang Miao. After partial repayment, the outstanding balance of the loan was $723,395 (RMB 5.3 million) as of June 30, 2024.

 

On February 8, 2021, Beijing REIT obtained a working capital loan of $156,900 from Zhang Miao. The loan is from February 8, 2021 to February 7, 2022 and interest-free. After partial repayment, the loan balance was $123,840 (RMB 0.9 million) as of June 30, 2024. The loan was renewed upon maturity with a new maturity date of February 7, 2025.

   
(5) On November 20, 2023, Beijing REIT entered into a loan agreement Zhang Lei Studio to borrow $14,085 (RMB0.1 million) as working capital loan for two years. The loan was from November 20, 2023 to November 19, 2025 and interest-free.  
   
(6) On September 17, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinshuo Concrete Co., Ltd. to borrow $70,424 (RMB0.5 million) as working capital loan for two years. The loan was from September 17, 2023 and September 16, 2025 and interest-free. The loan was fully repaid in June 2024.
   
(7) On May 27, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinnan to borrow $84,508 (RMB0.6 million) as working capital loan for two years. The loan was from May 27, 2023 to on May 26, 2025 and interest-free. The loan was fully repaid in June 2024.
   
(8) On December 27, 2023, REIT Ecological Technology Co., Ltd entered into a loan agreement with Bai Shu Tong to borrow $281,694 (RMB2.0 million) as working capital loan for two years. The loan was from December 27, 2023 and December 26, 2025 and interest-free.
   
(9) In 2023, REIT Technology, Hainan Yile IoT and IoV Technology Research obtained working capital loans of $207,036 (RMB1.5 million) from Hainan Boxinda Science Technology Partnership. The loan was from January 30, 2023 to July 3, 2025 and interest-free. After partially repaid, the outstanding loans were $197,325 (RMB 1.4 million) as of June 30, 2024.
   
(10) On January 20, 2023, the Company entered into a loan agreement with Chen Guo to borrow $59,605 (RMB0.42 million) as working capital loan for two years. The loan is from January 20, 2023 to January 19, 2025 and bears an annual interest of 1%.  
   
(11) On May 26, 2023, the Company entered into a loan agreement with Honghe County Yisa Hengtong Decoration Company to borrow $112,678 (RMB0.8 million) as working capital loan for two years. The loan is from May 26, 2023 to May 5, 2025 and bears an annual interest of 1%. The loan was fully repaid in June 2024.
   
(12) On July 7, 2023, REIT Ecological Technology obtained a working capital loan of $7,042 from Ordos Ruitu Rural Development Promotion Center. The loan is from July 7, 2023 to July 6, 2024 and interest-free. The loan was fully repaid in January 2024.
   
(13) On March 13, 2024, REIT Ecological Technology obtained a working capital loan of $68,800 (RMB 0.5 million) from Yu Zhanfeng. The loan is from March 13, 2024 to July 12, 2024 and interest-free. The loan was fully repaid in July12, 2024.
   
(14) One January 1, 2024, Beijin RETO obtained a working capital loan of $16,512 (RMB 0.1 million) from Shexian Ruibo hardware tools factory. The loan is from March 13, 2024 to January 1, 2025 and interest-free.
   
(15) One April 27, 2024, Beijin RETO obtained a working capital loan of $19,264 (RMB 0.1 million) from Jinyue Kelley Trading (Beijing) Co., LTD. The loan is due on demanded and interest-free.
   
(16) On November 20, 2023, Inner Mongolia REIT Ecological Environment Management Co., Ltd. obtained a working capital loan of $985,930 from Qihang Hongye Technology (Inner Mongolia) Co., Ltd. The loan is due on demand and bears an annual interest of 12%. After partial repayment, both the principle and interests of the loan were $470,959 (RMB3.4 million) as of June 30, 2024.

 

For the six months ended June 30, 2024 and 2023, interest on the Company’s loans from third parties amounted to $ 58,582 and nil, respectively.
v3.24.3
Taxes
 6 Months Ended
Jun. 30, 2024
Taxes [Abstract]  
TAXES

NOTE 12 – TAXES

 

(a) Corporate income taxes

 

The Company is subject to income taxes on an entity basis on income arising in or derived from the location in which each entity is domiciled.

 

ReTo was incorporated in the BVI and is exempt from paying income tax. REIT Holdings is registered in Hong Kong as a holding company.

 

The Company’s PRC subsidiaries are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the EIT Law, the corporate income tax rate applicable to all companies, including both domestic and foreign-invested companies, is 25%. Beijing REIT and IoV Technology Research were recognized as HNTE by PRC government and subject to a favorable income tax rate of 15% for six months ended June 30, 2023 and 2024. Hainan Yile IoT was recognized as a HNTE by PRC government and subject to a favorable income tax rate of 15% for six months ended June 30, 2023 and 2024.

 

The following table reconciles income tax expense by statutory rate to the Company’s actual income tax expense:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
China Statutory income tax rate   25.0%   25.0%
Effect of favorable income tax rate in certain entity in PRC   (0.2)%   (2.2)%
Non-PRC entities not subject to PRC tax (3)   (7.9)%   (8.2)%
Research & Development (“R&D”) tax credit (1)   2.6%   1.7%
Non-deductible expenses - permanent difference (1)   (2.4)%   1.5%
Change in valuation allowance   (14.8)%   (17.8)%
Effective tax rate   2.2%   0.0%

 

(1) Represents the tax losses incurred from operations outside of China.
   
(2) According to PRC tax regulations, 200% of current year R&D expense approved by the local tax authority may be deducted from tax income.
   
(3) Represents expenses incurred by the Company that were not deductible for PRC income tax.

 

The breakdown of the Company’s loss before income tax provision is as follows:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
Loss before income tax expense from China  $(326,101)   (7,658,140)
Loss before income tax expense from outside of China   (406,912)   (3,985,666)
Total loss before income tax provision  $(733,013)   (11,643,806)

 

Loss before income tax expense from outside of China represents the losses incurred in ReTo and REIT India which are companies incorporated outside of China.

 

The income tax provision (benefit) for the six months ended June 30, 2024 and 2023 were as follows:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
Current  $
-
   $52 
Deferred   (16,380)   
-
 
Total  $(16,380)  $52 

 

Deferred income taxes reflect the net effects of temporary difference between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. The Company periodically evaluates the likelihood of the realization of deferred tax assets and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Due to continuous losses incurred, the Company provided full allowance on the deferred tax assets as of June 30, 2024 and December 31, 2023. 

 

Deferred tax asset  June 30,
2024		   December 31,
2023		 
Provision of doubtful accounts  $2,266,110   $2,391,460 
Tax loss carried forwards   8,865,851    8,276,814 
Valuation allowance on tax losses   (11,131,961)   (10,668,274)
   $
-
   $
-
 

 

(b) VAT

 

The Company is subject to VAT for selling products in China. The applicable VAT rate is 13% for products sold in the PRC. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT). Under the commercial practice of the PRC, the Company pays VAT based on tax invoices issued.

 

(c) Taxes Payable

 

The Company’s taxes payable consists of the following:

 

   As of
June 30,		   As of
December 31,		 
   2024   2023 
   (Unaudited)     
VAT tax payable  $377,992   $320,946 
Corporate income tax payable   1,615,700    1,653,827 
Land use tax and other taxes payable   16,009    12,162 
Total  $2,009,701   $1,986,935 

 

As of June 30, 2024 and December 31, 2023, the Company had tax payables of approximately $2.0 million and $2.0 million, respectively, mostly related to the unpaid income tax and business tax in China. For the six months ended June 30, 2024 and 2023, the Company has not received any penalty or interest charge notice from local tax authorities. Due to uncertainties associated with the status of examinations, including the protocols of finalizing audits by the relevant tax authorities, there is a high degree of uncertainty regarding the future cash outflows associated with these unpaid tax balances. The final outcome of this tax uncertainty is dependent upon various matters including tax examinations, interpretation of tax laws or expiration of the statute of limitations. The Company believes it is likely that the Company can reach an agreement with the local tax authority to fully settle its tax payables in a short term but cannot guarantee such settlement will ultimately occur.
v3.24.3
Commitments and Contigencies
 6 Months Ended
Jun. 30, 2024
Commitments and Contigencies [Abstract]  
COMMITMENTS AND CONTIGENCIES

NOTE 13– COMMITMENTS AND CONTIGENCIES

 

Contingencies

 

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The majority of these claims and proceedings are related to, or arise from, lease disputes, commercial disputes, worker compensation complaints, default on guaranteeing third-party lease obligations, and default on loans. The Company first determines whether a loss from a claim is probable, and if it is reasonable to estimate the potential loss, the loss will be accrued. The Company discloses a range of possible losses, if a loss from a claim is probable but the amount of loss cannot be reasonably estimated.

 

Contractual commitments

 

As of June 30, 2024, the Company’s contractual obligations consisted of the following:

 

Contractual Obligations  Total   Less than
1 year		   1-3 years   3-5 years   More than
5 years		 
Operating lease commitment  $258,847   $126,838    132,009   $
        -
   $
         -
 
Repayment of bank loans   5,263,128    5,263,128    
-
    
-
    
-
 
Total  $5,521,975    5,389,966    132,009   $
-
   $
-
 
v3.24.3
Related Party Transactions
 6 Months Ended
Jun. 30, 2024
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 14– RELATED PARTY TRANSACTIONS

 

The Company records transactions with various related parties. These related party balances as of June 30, 2024 and December 31, 2023 and transactions for the six months ended June 30, 2024 and 2023 are identified as follows:

 

(1) Related parties

 

Name of Related Party   Relationship to the Company
Mr. Hengfang Li   Chief Executive Officer and Chairman of the Board of Directors, and shareholder of the Company
Q Green Techcon Private Limited   Owned by the minority shareholder of REIT India
Shexian Ruibo   The Company owns 41.67% equity interest in Shexian Ruibo
Hunyuan Baiyang Food Co., Ltd.   An entity controlled by Mr. Hengfang Li
Handan Ruisheng Construction Material Technology Co., Ltd.   An entity controlled by Shexian Ruibo
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd.   Hainan Yile IoT owns 45% ownership interest in this company
Shexian Ruida   An entity controlled by Shexian Ruibo

 

(2) Due from related parties

 

As of June 30, 2024 and December 31, 2023, the balance of due from related parties was as follows: 

 

   As of
June 30,
2024		   As of
December 31,
2023		 
Due from related parties        
Mr. Hengfang Li  $72,082   $358,659 

 

(3) Accounts receivable from related parties

 

Accounts receivable from related parties consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shexian Ruibo  $26,232   $26,851 
Hunyuan Baiyang Food Co., Ltd.   35,157    35,986 
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd.   44,305    45,351 
Total accounts receivable from related parties  $105,694   $108,188 

 

The balance of the accounts receivable as of June 30, 2024 from related parties was outstanding as of the date of issuance of these financial statements.

 

(4) Advance to suppliers, related party

 

Advance to suppliers, related party, consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shexian Ruibo*  $1,450,543   $1,796,831 
Shexian Ruida   39,563    
-
 
Handan Ruisheng Construction Material Technology Co., Ltd.   10,877    11,134 
Total  $1,500,983   $1,807,965 

 

* The balance represents the Company’s purchase advances for eco-friendly materials and equipment supplied by Shexian Ruibo.

 

(5) Accounts payable to related parties

 

Accounts payable to related parties consisted of the following:

 

   As of
June 30,
2024		   As of
December 31,
2023		 
Shexian Ruibo  $
-
   $3,080 

 

(6) Sales to related parties

 

Sales to related parties consisted of the following:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
   (Unaudited)   (Unaudited) 
Sales to a related party        
Q Green Techcon Private Limited   218,631    210,864 

 

Cost of revenue associated with the sales to the related party amounted to $141,624 and $359,398 for the six months ended June 30, 2024 and 2023, respectively.

 

(7) Purchases from related parties

 

Purchases from related parties consisted of the following:

 

   For the Six Months Ended
June 30,		 
   2024   2023 
   (Unaudited)   (Unaudited) 
Purchase from a related party        
Shexian Ruibo  $232,016   $359,398 

 

(7) Equity grants

 

On March 12, 2023, the Company issued an aggregate of 6,700 common shares to directors under the 2022 Share Incentive Plan.
v3.24.3
Shareholders’ Equity
 6 Months Ended
Jun. 30, 2024
Shareholders’ Equity [Abstract]  
SHAREHOLDERS’ EQUITY

NOTE 15 – SHAREHOLDERS’ EQUITY

 

Statutory Reserve

 

The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The restricted amounts as determined pursuant to PRC laws totaled $1,128,674 and $1,072,895 as of June 30, 2024 and December 31, 2023, respectively.

 

Common Shares

 

ReTo was established on August 7, 2015 under the laws of the BVI and was initially authorized to issue 200,000,000 common shares at $0.001 par value. As approved by the shareholders of the Company at the Meeting (defined below), the existing common shares were redesignated as Class A Shares on August 8, 2024.

 

Share Combinations

 

Effective May 12, 2023, the Company implemented a 10-for-1 share combination of its authorized and issued and outstanding common shares (the “2023 Share Combination”). As a result of the 2023 Share Combination, the Company’s authorized shares were changed from 200,000,000 common shares, par value $0.001 per share, to 20,000,000 common shares, par value $0.01 per share.

 

Effective July 31, 2023, the Company’s board of directors approved a change of the maximum number of shares that the Company is authorized to issue from 20,000,000 shares of a single class each with a par value of US$0.01 to an unlimited number of shares of a single class each with a par value of US$0.01.

 

Effective March 1, 2024, the Company implemented a 10-for-1 share combination of its authorized and issued and outstanding common shares (the “2024 Share Combination”). As a result of the 2024 Share Combination, par value of the common shares of the Company changed from $0.01 per share to $0.1 per share.

 

The share number and share-related data in the financial statements have been adjusted to reflect the two share combinations.

 

Class B Shares

 

The Company approved on its 2024 Annual General Meeting of Shareholders (the “Meeting”) the amendment and restatement of its amended Memorandum and Articles of Association (the “Amended and Restated Memorandum and Articles of Association”) on August 4, 2024 to, (a) redesignate the existing common shares, par value US$0.10 each, as Class A Shares, par value US$0.10 each, with the same rights as the existing common shares and (b) create an additional 2,000,000 shares each to be designated as Class B shares, par value US$0.01 each (the “Class B Shares”), with each share to entitle the holder thereof to 1,000 votes but with transfer restrictions, pre-emption rights and no right to any dividend or distribution of the surplus assets on liquidation. Following the approval, the Amended and Restated Memorandum and Articles of Association became effective upon the registration by the BVI Registrar of Corporate Affairs, as filed by the Company’s BVI registered agent on August 8, 2024. On August 14, 2024, as approved by the Company’s board of directors and on the Meeting, the Company issued 1,000,000 Class B Shares to REIT International Development (Group) Co., Limited at par value for a total consideration of $10,000.

 

As of June 30, 2024 and December 31, 2023, 3,828,868 and 1,205,188 common shares were issued and outstanding, nil Class B common shares were issued and outstanding.

 

Equity Grants

 

On March 8, 2023, the Company’s board of directors approved the issuance of an aggregate of 50,000 common shares to its employees, officers and directors for their services under the 2022 Share Incentive Plan. For the six months ended June 30, 2023, the Company recognized share-based compensation expenses of $2,100,000.

 

On June 7, 2024, the Company’s board of directors approved the issuance of an aggregate of 187,260 common shares to its employees, officers and directors for their services under the 2022 Share Incentive Plan. On June 24, 2024, the Company issued 67,260 common shares and the Company recognized share-based compensation expenses of $162,769.

 

Issuances for Consulting Services

 

On February 27, 2023, the Company entered into a consulting service agreement with Express Transportation Ltd. (“ETL”). Pursuant to the agreement, ETL has agreed to provide feasibility, analysis and risk management services on investment project in mainland China in exchange for 20,000 common shares, which were issued on March 8, 2023. For the six months ended June 30, 2023, the Company recognized share-based compensation expenses of $840,000.

 

On February 27, 2023, the Company entered into a consulting service agreement with Maxleed Investment Holding Ltd. (“MIHL”). Pursuant to the agreement, MIHL has agreed to provide strategy, due diligence, business expansion and optimization services in exchange for 20,000 common shares, which were issued on March 8, 2023. For the six months ended June 30, 2023, the Company recognized share-based compensation expenses of $840,000.

 

Financing

  

On May 18, 2023, the Company entered into a securities purchase agreement. Pursuant to the agreement, the Company issued 200,000 common shares on May 25, 2023 at $33 per share for aggregate gross proceeds of $6,600,000.

 

On September 29, 2023, the Company entered into a securities purchase agreement (the “Public Offering SPA”) to sell an aggregate of 1,500,000 common shares at a price of $10.00 per share to certain investors pursuant to the prospectus supplement, dated September 29, 2023, filed with the Securities and Exchange Commission on October 3, 2023 (the “Public Offering”). On March 13, 2024, the Company entered into an amendment to the Public Offering SPA with such investors to change the per share purchase price from $10.00 to $4.00 and to change the terms of the closing of the Public Offering. Net proceeds amounted to $6,000,000.

 

In addition, in a concurrent private placement (the “Concurrent Private Placement”), the Company entered into certain separate securities purchase agreements on September 29, 2023 (collectively, the “Private Placement SPAs”), to sell to certain other investors an aggregate of 1,000,000 common shares, par value $0.1, at $10.00 per share. On March 13, 2024, the Company entered into an amendment to the Private Placement SPA with such investors to change the per share purchase price from $10.00 to $4.00 and to change the terms of the closing of the Concurrent Private Placement. Net proceeds amounted to $3,969,063.

 

Conversion of Convertible Notes

 

During the year ended December 31, 2023, the Company issued an aggregate of 279,660 common shares for conversion of $4,111,082 in principle and interests of the Note based on the conversion price ranging from $8.71 to $29.2 (see Note 9).
v3.24.3
Segment Reporting
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 16 – SEGMENT REPORTING

 

ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different products or services. Based on management’s assessment, the Company has determined that it has four operating segments as defined by ASC 280, including machinery and equipment, construction material, municipal construction projects, and technology consulting and other services.

 

Construction material segment manufactures and sells eco-friendly construction material. Machinery and equipment segment manufactures and sells machinery and equipment used to manufacture construction material. Construction service segment generates revenue from contracting municipal construction projects. Technological consulting service segment generates revenue from providing environmental-protection related consulting services to customers. 

 

The following table presents summary information by segments for the Company’s continuing operations for the six months ended June 30, 2024 and 2023, respectively: 

 

   For the Six Months Ended June 30, 2024 
   Machinery
and
Equipment
sales		   Construction
materials
sales		   Technological
consulting
and other
services		   Total 
Revenues  $1,661,336    146,293    31,010    1,838,639 
Cost of goods sold   959,450    303,838    7,870    1,271,158 
Gross profit   701,886    (157,545)   23,140    567,481 
Interest expense and charges   (2,721)   150    257,810    255,240 
Interest income   232    16    24,138    24,386 
Depreciation and amortization   76,471    217,849    102,057    396,377 
Capital expenditures   
-
    
-
    
-
    
-
 
Income tax expenses   
-
    
-
    (16,380)   (16,380)
Segment loss   136,408    (244,481)   (608,560)   (716,633)
Segment assets  $11,296,630    9,817,774    12,557,133    33,671,537 

 

   For the Six Months Ended June 30, 2023 
   Machinery
and
Equipment
sales		   Construction
materials
sales		   Municipal
construction
projects		   Technological
consulting
and other
services		   Total 
Revenues  $1,029,131    24,510    90,177    89,965    1,233,783 
Cost of goods sold   941,352    
-
    168,514    30,326    1,140,192 
Gross profit   87,779    24,510    (78,337)   59,639    93,591 
Interest expense and charges   90,729    5,771    5,219    79,053    180,772 
Interest income   1,396    37    3    73    1,509 
Depreciation and amortization   101,375    339,032    
-
    30,475    470,882 
Capital expenditures   54,033    
-
    
-
    50,359    104,392 
Income tax benefit   52    
-
    
-
    
-
    52 
Segment loss   (5,429,194)   (378,340)   (296,551)   (5,539,773)   (11,643,858)
Segment assets  $7,272,071    10,976,507    4,955    2,089,650    20,343,183 
v3.24.3
Subsequent Events
 6 Months Ended
Jun. 30, 2024
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 17 – SUBSEQUENT EVENTS

 

On August 12, 2024, the Company issued an aggregate of 120,000 common shares to directors under the 2022 Share Incentive Plan.

 

On August 30, 2024, the Company entered into a securities purchase agreement with certain purchasers, in connection with the issuance and sale of an aggregate of 14,095,200 Class A Shares of the Company at $1.38 per share for an aggregate of purchase price of $19,451,376. On the same day, the parties closed the Private Placement. The Company intends to use the net proceeds from the Private Placement for future mergers and acquisitions and working capital purposes.

 

On August 30, 2024, the Company engaged Jaash Investment Limited, a company organized under the laws of Hong Kong (the “Financial Advisor”), for consulting services in connection with the Private Placement and agreed to issue 1,268,568 Class A Shares to the Financial Advisor as consideration for its services within 5 business days after the closing of the Private Placement. The 1,268,568 Class A Shares were issued on the closing date of the Private Placement.

 

The Company has evaluated the impact of events that have occurred subsequent to June 30, 2024, through the issuance date of the unaudited condensed consolidated financial statement and concluded that no material subsequent events other than the above have occurred that would require recognition in the unaudited condensed consolidated financial statements or disclosure in the notes to the unaudited condensed consolidated financial statements.
v3.24.3
Accounting Policies, by Policy (Policies)
 6 Months Ended
Jun. 30, 2024
Summary of Significant Accounting Policies [Abstract]  
Basis of presentation

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year.
Principles of consolidation

Principles of consolidation

The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation.

Subsidiaries are those entities in which the Company, directly or indirectly, controls more than 50% of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.

Non-controlling interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company. The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders of the Company. Non-controlling interest’s operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders of the Company.
Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements.

Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, inventories, advances to suppliers, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition under the input method, and realization of deferred tax assets. Actual results could differ from those estimates.
Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand and cash deposited in major third-party payment processing platforms such as Alipay. In addition, highly liquid investments which have original maturities of three months or less when purchased are classified as cash equivalents.
Accounts Receivable, Net

Accounts Receivable, Net

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. The Company adopted this guidance effective January 1, 2023. ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment model. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated economic conditions, customer-specific circumstances, recent payment history and other relevant factors. Allowance for credit losses amounted to $2,105,670 and $2,146,679 as of June 30, 2024 and December 31, 2023, respectively.

 
Inventories

Inventories

Inventories are stated at the lower of cost or net realizable value. Costs include the cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories.

Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. The Company evaluates inventories on a quarterly basis for its net realizable value adjustments, and reduces the carrying value of those inventories that are obsolete or in excess of the forecasted usage to their estimated net realizable value based on various factors including aging and future demand of each type of inventories. The Company recorded an inventory reserve of $253,635 and $259,621 as of June 30, 2024 and December 31, 2023, respectively. 
Advances to Suppliers, net

Advances to Suppliers, Net

Advances to suppliers consist of balances paid to suppliers for services and materials that have not been provided or received. Advances to suppliers for service and material are short-term in nature. Advances to Suppliers are reviewed periodically to determine whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance for uncollectible balances from the operations amounted to $3,066 and $3,138 as of June 30, 2024 and December 31, 2023, respectively.
Long-term investment in Equity Investee

Long-term Investment in Equity Investee

The Company’s long-term investments include equity method investments and equity investments without readily determinable fair values.

Investments in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investment at cost and the difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is accounted for as if the investee were a consolidated subsidiary. The share of earnings or losses of the investee are recognized in the consolidated statements of comprehensive loss. Equity method adjustments include the Company’s proportionate share of investee income or loss, adjustments to recognize certain differences between the Company’s carrying value and its equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. The Company assesses its equity investment for other-than-temporary impairment by considering factors as well as all relevant and available information including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and cash burn rate and other company-specific information.

Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the consolidated statements of comprehensive loss equal to the amount by which the carrying value exceeds the fair value of the investment. Prior to the adoption of ASU 2016-01 on January 1, 2019, these investments were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment.

 

As of June 30, 2024 and December 31, 2023, the Company’s long-term investment in equity investee balance represents its $2,226,021 and $2,337,451, or 41.67% equity investment in Shexian Ruibo Environmental Science and Technology Co., Ltd. (“Shexian Ruibo”). On September 7, 2020, the Company acquired such equity interest from an original shareholder of Shexian Ruibo and the original shareholder of Shexian Ruibo. Shexian Ruibo manufactures and sells eco-friendly construction materials in the PRC. The Company accounted for the investments using equity method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity investee. Under the equity method, the Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings or loss of the investee after the date of investment. When the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee. For the six months ended June 30, 2024 and 2023, the investment loss from Shexian Ruibo was $57,960 and $83,307, respectively.

The Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region, market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written down to fair value. For the six months ended June 30, 2024 and 2023, the Company did not recognize any impairment on its equity investment. 
Leases

Leases

The Company adopted ASU No. 2016-02—Leases (Topic 842) on January 1, 2019 using the modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. The standard did not materially impact the Company’s consolidated net earnings and cash flows.
Fair Value of Financial Instruments

Fair Value of Financial Instruments

ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

● Level 1 - Quoted prices in active markets for identical assets and liabilities.
   
● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
   
● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advance to suppliers, accounts payable, accrued and other liabilities, advances from customers, deferred revenue, taxes payable and due to related parties to approximate the fair value of the respective assets and liabilities as of June 30, 2024 and December 31, 2023, based upon the short-term nature of the assets and liabilities.

The Company believes that the carrying amount of the short-term and long-term borrowings approximates fair value as of June 30, 2024 and December 31, 2023 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.

 

The Company elected the fair value option to account for its convertible loans. The Company engaged an independent valuation firm to perform the valuation. The convertible loans are classified as level 3 instruments as the valuation was determined based on unobservable inputs which are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Significant estimates used in developing the fair value of the convertible loans include time to maturity, risk-free interest rate, straight debt discount rate, probability to convert and expected timing of conversion. Refer to Note 9 for additional information.

As the inputs used in developing the fair value for level 3 instruments are unobservable, and require significant management estimate, a change in these inputs could result in a significant change in the fair value measurement.
Revenue Recognition

Revenue Recognition

The Company adopted ASC Topic 606 Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018 using the modified retrospective approach. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services.

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

The Company’s revenues are primarily derived from the following sources:

● Revenue from machinery and equipment sales

The Company recognizes revenue when the machinery and equipment is delivered and control is transferred. The Company generally provide a warranty for a period of 12 months after the customers receive the equipment. The Company determines that such product warranty is not a separated performance obligation because the nature of warranty is to provide assurance that a product will function as expected and in accordance with customer’s specification and the Company has not sold the warranty separately. From its past experience, the Company has not experienced any material warranty costs and, therefore, the Company does not believe an accrual for warranty cost is necessary for the six months ended June 30, 2024 and 2023.

● Revenue from construction materials sales

The Company recognizes revenue, net of sales taxes and estimated sales returns, when the construction materials are shipped to, delivered to or picked up by customers and control is transferred. 

● Revenue from municipal construction projects

The Company provides municipal construction services, including sponge city projects and ecological restoration projects. The Company recognizes revenue associated with these contracts over time as service is performed and the transfer of control occurs, based on a percentage-of-completion method using cost-to-cost input methods as a measure of progress. When the percentage-of-completion method is used, the Company estimates the costs to complete individual contracts and records as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach).

 

Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

● Revenue from technological consulting and other services

The Company recognizes revenue when technological consulting and other services are rendered and accepted by the customers.
Contract assets and liabilities

Contract Assets and Liabilities

Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contact assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing of when an order is placed and when shipment or delivery occurs.

As of June 30, 2024 and December 31, 2023, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred.
Disaggregation of Revenues

Disaggregation of Revenues

The Company disaggregates its revenue from contracts by products and services, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the six months ended June 30, 2024 and 2023 is disclosed in Note 16.
Government grants

Government Grants

Government grants represent cash subsidies received from PRC government or related institutions. Cash subsidies which have no defined rules and regulations to govern the criteria necessary for companies to enjoy the benefits are recognized as other income, net when received. Specific subsidies that local government has provided for a specific purpose, such as research and development are recorded as other non-current liabilities when received and recognized as other income or reduction of related expense when the specific performance is meet. As of December 31, 2020, the Company received related grants of $490,560 for a specific research and development project to be conducted during the period from 2021 to 2022. The Company recorded such grants as deferred grants on its consolidated balance sheet. As of June 30, 2024 and December 31, 2023, the remaining balance was $187 and $191, respectively.

 
Share-based Compensation

Share-based Compensation

The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”). In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award. All the Company’s share-based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values. 
Income Taxes

Income Taxes

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated.

To the extent applicable, the Company records interest and penalties as a general and administrative expense. The Company’s subsidiaries in China and Hong Kong are subject to the income tax laws of the PRC and Hong Kong. No significant taxable income was generated outside the PRC for the six months ended June 30, 2024 and 2023. As of June 30, 2024, the tax years ended December 31, 2019 through December 31, 2023 for the Company’s PRC subsidiaries remain open for statutory examination by PRC tax authorities.
Value Added Tax (“VAT”)

Value Added Tax (“VAT”)

Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price and VAT rates range up to 13%, starting from April 1, 2019, depending on the type of products sold. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The Company recorded a VAT payable net of payments in the accompanying consolidated financial statements. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing.
Earnings (Loss) per Share

Earnings (Loss) per Share

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of June 30, 2024 and June 30, 2023, the Company had no dilutive security outstanding that could potentially dilute EPS in the future.

 
Foreign Currency Translation

Foreign Currency Translation

The Company’s principal country of operations is the PRC. The financial position and results of its operations located in PRC are determined using RMB, the local currency, as the functional currency. ReTo and REIT Holdings use U.S. Dollars as their functional currency, while REIT India uses Indian rupee as the functional currency. The Company’s financial statements are reported using U.S. Dollars. The results of operations and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in the results of operations.

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

    June 30,
2024		   December 31,
2023		   June 30,
2023
             
Year-end spot rate   US$1=RMB 7.2672   US$1=RMB 7.0999   US$1=RMB 7.2513
 Year-end spot rate   US$1=INR 83.33   US$1=INR 83.19   US$1=INR 82.06 
Average rate   US$1=RMB 7.2150   US$1=RMB 7.0809   US$1=RMB 6.9283
Average rate   US$1=INR 83.20   US$1=INR 82.57   US$1=INR 82.20
Risks and Uncertainties

Risks and Uncertainties

The main operation of the Company is located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
Concentrations and Credit Risk

Concentrations and Credit Risk 

A majority of the Company’s transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

As of June 30, 2024 and December 31, 2023, $1,519,456 and $1,314,636 of the Company’s cash and cash equivalents was deposited at financial institutions in the PRC. These deposits were insured per PRC’s new Deposit Insurance Regulation for up to RMB500,000 for one bank. In addition, as of June 30, 2024 and December 31, 2023, $5,663 and $4,161 of the Company’s cash and cash equivalents was deposited at financial institutions in the Republic of India (“India”) which is insured under the Deposit Insurance and Credit Guarantee Corporation for up to 100,000 Indian Rupee (approximately $1,200).

For the six months ended June 30, 2024, two customers accounted for more than 16% and 12% of the Company’s total revenue. For the six months ended June 30, 2023, two customers accounted for more than 22% and 17% of the Company’s total revenue.

As of June 30, 2024, three customers accounted for 33%, 24% and 13% of the Company’s consolidated accounts receivable. As of December 31, 2023, three customers accounted for 29%, 21% and 12% of the Company’s consolidated accounts receivable, respectively.

 

For the six months ended June 30, 2024, the Company purchased approximately 30%, 22% and 10% of its raw materials from three major suppliers. For the six months ended June 30, 2023, the Company purchased approximately 21%, 17% and 13% of its raw materials from three major suppliers.

As of June 30, 2024 and December 31, 2023, three suppliers accounted for 30%, 22% and 10% of the total accounts payable balance, respectively.
Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. 

In October 2021, the FASB issued ASU No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The adoption does not have a material effect on the consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). This ASU requires that public business entities must annually “(1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).” A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. The adoption does not have a material effect on the consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01, “Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards” (“ASU 2024-01”), which intends to improve clarity and operability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with Topic 718. Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of adopting this guidance on its financial statements.

Except for the above-mentioned pronouncements, there are no recently issued accounting standards that will have a material impact on the audited consolidated financial position, statements of operations, and cash flows of the Company.
v3.24.3
Organization and Description of Business (Tables)
 6 Months Ended
Jun. 30, 2024
Organization and Description of Business [Abstract]  
Schedule of Fincancial Statements As of June 30, 2024, the consolidated financial statements of the Company reflected the principal activities of the entities listed below. All inter-company balances and transactions have been eliminated upon consolidation.
Name of the Entity   Place of
Incorporation		   Ownership
Percentage		  
ReTo Eco-Solutions, Inc.   British Virgin Islands     Parent  
REIT Holdings (China) Limited (“REIT Holdings”)   Hong Kong, China     100 %
Sunoro Holdings Limited (“Sunoro Holdings”)   Hong Kong, China     100 %
Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”)   Beijing, China     100 %
Beijing REIT Equipment Technology Co., Ltd. (“REIT Equipment”)*   Beijing, China     100 %
REIT New Materials Xinyi Co., Ltd. (“Xinyi REIT”)   Xinyi, China     100 %
REIT Q GREEN Machines Private Ltd (“REIT India”)   India     51 %
REIT Ecological Technology Co., Ltd. (“REIT Ordos”)   Ordos, China     100 %
Datong Ruisheng Environmental Engineering Co., Ltd. (“Datong Ruisheng”)   Datong, China     100 %
Guangling REIT Ecological Cultural Tourism Co., Ltd.   Datong, China     100 %
REIT Technology Development Co., Ltd (“REIT Technology”)   Haikou, China     100 %
Hainan REIT Mingde Investment Holding Co., Ltd. (“REIT Mingde”)   Haikou, China     100 %
Hainan Fangyuyuan United Logistics Co., Ltd. (“Hainan Fangyuyuan”)*   Haikou, China     90 %
Hainan Kunneng Direct Supply Chain Management Co., Ltd.   Haikou, China     51 %
Hainan Yile IoT Technology Co., Ltd. (“Hainan Yile IoT”)   Haikou, China     61.6 %
Hainan Yile IoV Technology Research Institute Co., Ltd, (“IoV Technology Research”)   Haikou, China     90 %
Honghe Reit Ecological Technology Co., Ltd. (“Honghe REIT”)   Yunnan, China     100 %
Inner Mongolia GuoRui Daojing Information Technology Co., Ltd.   Ordos, China     51 %
Sunoro Hengda (Beijing) Technology Co., Ltd.   Beijing, China     100 %
Inner Mongolia Reit Echological Environment Management Co., Ltd. (“Mongolia Reit”)   Ordos, China     100 %
Senrui Bochuang (Beijing) Technology Co., LTD   Beijing, China     100 %
v3.24.3
Summary of Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2024
Summary of Significant Accounting Policies [Abstract]  
Schedule of Currency Exchange Rates that were used in Creating the Consolidated Financial Statements The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:
    June 30,
2024		   December 31,
2023		   June 30,
2023
             
Year-end spot rate   US$1=RMB 7.2672   US$1=RMB 7.0999   US$1=RMB 7.2513
 Year-end spot rate   US$1=INR 83.33   US$1=INR 83.19   US$1=INR 82.06 
Average rate   US$1=RMB 7.2150   US$1=RMB 7.0809   US$1=RMB 6.9283
Average rate   US$1=INR 83.20   US$1=INR 82.57   US$1=INR 82.20
v3.24.3
Accounts Receivable, Net (Tables)
 6 Months Ended
Jun. 30, 2024
Accounts Receivable, Net [Abstract]  
Schedule of Accounts Receivable Accounts receivable consisted of the following:
   June 30,
2024		   December 31,
2023		 
   (Unaudited)     
Trade accounts receivable from third-part customers  $2,742,403   $3,208,916 
Less: allowances for doubtful accounts   (2,105,670)   (2,146,679)
Total accounts receivable from third-party customers, net   636,733    1,062,237 
Add: accounts receivable, net, related parties   105,694    108,188 
Accounts receivable, net  $742,427   $1,170,425 
Schedule of Allowance for Credit Losses Allowance for credit losses movement is as follows:
   For the
Six Months Ended
June 30,
2024		   For the
Six Months Ended
June 30,
2023		   For the
Year Ended
December 31,
2023		 
   (Unaudited)   (Unaudited)     
Beginning balance  $2,146,679   $2,460,037   $1,771,761 
Provision for credit losses   150,732    1,193,688    433,867 
Recovery   
-
    (423,898)   (7,061)
Written off   (142,191    
-
    
-
 
Foreign exchange translation   (49,551    (332,092)   (51,888)
Ending balance  $2,105,670   $2,897,735   $2,146,679 
v3.24.3
Advances to Suppliers, Net (Tables)
 6 Months Ended
Jun. 30, 2024
Advances to Suppliers, Net [Abstract]  
Schedule of Advances to Suppliers Advances to suppliers include prepayments for raw materials used for production of construction materials for the Company’s construction projects, which consisted of the following:
   June 30,
2024		   December 31,
2023		 
   (Unaudited)     
Raw material prepayments for equipment production  $572,365   $309,121 
Advances to construction subcontractors   10,298,127    4,986,131 
Total:   10,870,492    5,295,252 
Less: allowances for credit losses   (3,066)   (3,138)
Advances to suppliers, net, third parties  $10,867,426   $5,292,114 
Schedule of Changes of Allowance for Doubtful Accounts The changes of allowance for doubtful accounts as of June 30, 2024 and December 31, 2023 are as follows:
   June 30,
2024		   June 30,
2023		   December 31,
2023		 
   (Unaudited)   (Unaudited)     
Beginning balance  $3,138   $449,517   $449,517 
Provision for credit losses   
-
    
-
    (434,668)
Recovery   
-
    (400,107)   
-
 
Foreign exchange translation   (72)   (4,169)   (11,711)
Ending balance  $3,066   $45,241   $3,138 
v3.24.3
Inventories, Net (Tables)
 6 Months Ended
Jun. 30, 2024
Inventories, Net [Abstract]  
Schedule of Inventories, Net Inventories, net, consisted of the following:
   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Raw materials  $289,437   $119,405 
Finished goods   234,711    276,407 
Transfer finished goods   11,140    - 
Subtotal   535,288    395,812 
Less: Inventory allowance   (253,635)   (259,621)
Inventories, net  $281,653   $136,191 
v3.24.3
Prepayments and Other Current Assets (Tables)
 6 Months Ended
Jun. 30, 2024
Prepayments and Other Current Assets [Abstract]  
Schedule of Prepaid Expenses and Other Current Assets The Company’s prepaid expenses and other current assets are as follows:
   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Other receivable, net (1)  $68,800   $242,151 
Value added tax receivable   44,166    43,504 
Total  $112,966   $285,655 
(1) Other receivables mainly consisted of advances to employees for business development purposes and prepaid employee insurance and welfare benefits which will be subsequently deducted from the employee’s payroll.
v3.24.3
Lease (Tables)
 6 Months Ended
Jun. 30, 2024
Lease [Abstract]  
Schedule of Supplemental Balance Sheet Information Related to Operating Leases Supplemental balance sheet information related to operating leases is as follows:
   As of
June 30,
2024		 
   (Unaudited) 
Right-of-use assets  $295,022 
      
Operating lease liabilities – current  $126,838 
Operating lease liabilities - non-current   132,009 
Total operating lease liabilities  $258,847 
The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2024:
Remaining lease term and discount rate:    
Weighted average remaining lease term (years)   2.38 
Weighted average discount rate   7.42%
Schedule of Maturities of Lease Liabilities The following is a schedule of maturities of lease liabilities as of June 30, 2024:
For the period ending December 31,    
2024  $68,097 
For the years ending December 31,     
2025   137,634 
2026   64,706 
2027   7,568 
Total lease payments   278,005 
Less: imputed interest   19,158 
Present value of lease liabilities  $258,847 
v3.24.3
Short-term Loans (Tables)
 6 Months Ended
Jun. 30, 2024
Short-term Loans [Abstract]  
Schedule of Short-Term Loans Short-term loans consisted of the following:
   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shanxi Hunyuan Rural Commercial Bank Co., Ltd (1)  $5,228,800   $5,352,188 
Bank of China (2)   34,328    35,212 
Total  $5,263,128   $5,387,400 
(1)

 On April 28, 2023, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.4 million (RMB38 million) as working capital loan from April 28, 2023 to April 13, 2024. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan. The loans were fully repaid on April 10, 2024.

 

On April 10, 2024, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.2 million (RMB38 million) as working capital loan from April 10, 2024 to March 28, 2025. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan.

   
(2) On March 3, 2023, IoV Technology Research entered into a line of credit agreement with Bank of China. The agreement allows IoV Technology Research to obtain loans up to approximately $35,212 (RMB250,000) for use as working capital between March 3, 2023 and March 2, 2024 for a term of one year. The loan bears a fixed interest rate of 4.35% per annum. Subsequently, the loan was extended to December 2, 2024.
v3.24.3
Loans from Third Parties (Tables)
 6 Months Ended
Jun. 30, 2024
Loans from Third Parties [Abstract]  
Schedule of Loans from Third Parties
   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Jiangsu Yuantong Municipal Projects Construction Co., Ltd. (1)  $1,315,093   $1,549,317 
Changshu Tongjiang Machinery Co., Ltd. (2)   199,520    140,847 
Tu and Lei Creative Design (Beijing) Co., Ltd. (3)   
-
    14,080 
Zhang Miao (4)   847,235    725,140 
Zhang Lei Studio (5)   13,760    14,085 
Xinyi Xinshuo Concrete Co., Ltd.(6)   
-
    70,424 
Xinyi Xinnan Real Estate Co., Ltd. (7)   
-
    84,508 
Bai Shu Tong (8)   275,200    281,694 
Hainan Boxinda Technology Partnership (Limited partnership) (9)   197,325    206,482 
Chen Guo (10)   58,231    59,605 
Honghe County Yisa Hengtong Decoration Company (11)   110,080    112,678 
Ordos Ruitu Rural Development Promotion Center (12)   
-
    7,042 
Yu Zhanfeng (13)   68,800    
-
 
Shexian Ruibo hardware tools factory (14)   16,512    
-
 
Jinyue Kelley Trading (Beijing) Co., LTD (15)   19,264    
-
 
Qihang Hongye Technology (Inner Mongolia) Co., Ltd. (16)   470,959    985,930 
Total  $3,591,979   $4,251,832 
Less: Loans from third parties-non current  $(475,546)  $(2,977,166)
Loans from third parties-current  $3,116,433   $1,274,666 
(1)

On October 11, 2022, Beijing REIT entered into a loan agreement with Jiangsu Yuantong Municipal Projects Construction Co., Ltd. to borrow approximately $1.2 million (RMB 8 million) as working capital loan for two years. The loan was from October 11, 2022 to October 10, 2024 and interest-free. On January 18, 2023, the parties revised the loan agreement to increase the principal amount to approximately $1.2 million (RMB9 million) with a new maturity date of January 17, 2025.

 

On January 1, 2023, Xinyi REIT obtained a working capital loan of $281,694 (RMB2 million) from Jiangsu Yuantong Municipal Projects Construction Co., Ltd. The loan was from January 1, 2023 to December 15, 2024 and interest-free. After partial repayment, the outstanding loans were $76,693 (RMB 0.6 million) as of June 30, 2024.

   
(2)

On January 1, 2023, Beijing REIT entered into a loan agreement with Changshu Tongjiang Machinery Co., Ltd. to borrow $140,847 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free.

 

On April 9, 2024, Beijing REIT obtained a working capital loan of $61,920 (RMB 0.5 million) from Changshu Tongjiang Engineering Co., Ltd. The loan is from April 9, 2024 to April 8, 2025 and interest-free. 

   
(3) On January 1, 2023, Beijing REIT entered into a loan agreement with Tu and Lei Creative Design (Beijing) Co., Ltd. to borrow $138,812 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free. The loan was fully repaid in June 2024.

 

(4)

On February 8, 2023, Beijing REIT and Xinyi REIT entered into a loan agreement with Zhang Miao to borrow $598,377 (RMB4.2 million) as working capital loan for two years. The loan was from February 8, 2023 to February 7, 2025 and interest-free. During from January 1  to June 30, 2024, Xinyi REIT further obtained a loan of $138,812 (RMB 1.0 million) from Zhang Miao. After partial repayment, the outstanding balance of the loan was $723,395 (RMB 5.3 million) as of June 30, 2024.

 

On February 8, 2021, Beijing REIT obtained a working capital loan of $156,900 from Zhang Miao. The loan is from February 8, 2021 to February 7, 2022 and interest-free. After partial repayment, the loan balance was $123,840 (RMB 0.9 million) as of June 30, 2024. The loan was renewed upon maturity with a new maturity date of February 7, 2025.

   
(5) On November 20, 2023, Beijing REIT entered into a loan agreement Zhang Lei Studio to borrow $14,085 (RMB0.1 million) as working capital loan for two years. The loan was from November 20, 2023 to November 19, 2025 and interest-free.  
   
(6) On September 17, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinshuo Concrete Co., Ltd. to borrow $70,424 (RMB0.5 million) as working capital loan for two years. The loan was from September 17, 2023 and September 16, 2025 and interest-free. The loan was fully repaid in June 2024.
   
(7) On May 27, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinnan to borrow $84,508 (RMB0.6 million) as working capital loan for two years. The loan was from May 27, 2023 to on May 26, 2025 and interest-free. The loan was fully repaid in June 2024.
   
(8) On December 27, 2023, REIT Ecological Technology Co., Ltd entered into a loan agreement with Bai Shu Tong to borrow $281,694 (RMB2.0 million) as working capital loan for two years. The loan was from December 27, 2023 and December 26, 2025 and interest-free.
   
(9) In 2023, REIT Technology, Hainan Yile IoT and IoV Technology Research obtained working capital loans of $207,036 (RMB1.5 million) from Hainan Boxinda Science Technology Partnership. The loan was from January 30, 2023 to July 3, 2025 and interest-free. After partially repaid, the outstanding loans were $197,325 (RMB 1.4 million) as of June 30, 2024.
   
(10) On January 20, 2023, the Company entered into a loan agreement with Chen Guo to borrow $59,605 (RMB0.42 million) as working capital loan for two years. The loan is from January 20, 2023 to January 19, 2025 and bears an annual interest of 1%.  
   
(11) On May 26, 2023, the Company entered into a loan agreement with Honghe County Yisa Hengtong Decoration Company to borrow $112,678 (RMB0.8 million) as working capital loan for two years. The loan is from May 26, 2023 to May 5, 2025 and bears an annual interest of 1%. The loan was fully repaid in June 2024.
   
(12) On July 7, 2023, REIT Ecological Technology obtained a working capital loan of $7,042 from Ordos Ruitu Rural Development Promotion Center. The loan is from July 7, 2023 to July 6, 2024 and interest-free. The loan was fully repaid in January 2024.
   
(13) On March 13, 2024, REIT Ecological Technology obtained a working capital loan of $68,800 (RMB 0.5 million) from Yu Zhanfeng. The loan is from March 13, 2024 to July 12, 2024 and interest-free. The loan was fully repaid in July12, 2024.
   
(14) One January 1, 2024, Beijin RETO obtained a working capital loan of $16,512 (RMB 0.1 million) from Shexian Ruibo hardware tools factory. The loan is from March 13, 2024 to January 1, 2025 and interest-free.
   
(15) One April 27, 2024, Beijin RETO obtained a working capital loan of $19,264 (RMB 0.1 million) from Jinyue Kelley Trading (Beijing) Co., LTD. The loan is due on demanded and interest-free.
   
(16) On November 20, 2023, Inner Mongolia REIT Ecological Environment Management Co., Ltd. obtained a working capital loan of $985,930 from Qihang Hongye Technology (Inner Mongolia) Co., Ltd. The loan is due on demand and bears an annual interest of 12%. After partial repayment, both the principle and interests of the loan were $470,959 (RMB3.4 million) as of June 30, 2024.
v3.24.3
Taxes (Tables)
 6 Months Ended
Jun. 30, 2024
Taxes [Abstract]  
Schedule of Reconciles Income Tax Expense by Statutory Rate to the Company’s Actual Income Tax Expense The following table reconciles income tax expense by statutory rate to the Company’s actual income tax expense:
   For the Six Months Ended
June 30,		 
   2024   2023 
China Statutory income tax rate   25.0%   25.0%
Effect of favorable income tax rate in certain entity in PRC   (0.2)%   (2.2)%
Non-PRC entities not subject to PRC tax (3)   (7.9)%   (8.2)%
Research & Development (“R&D”) tax credit (1)   2.6%   1.7%
Non-deductible expenses - permanent difference (1)   (2.4)%   1.5%
Change in valuation allowance   (14.8)%   (17.8)%
Effective tax rate   2.2%   0.0%
Schedule of Income Before Income Tax The breakdown of the Company’s loss before income tax provision is as follows:
   For the Six Months Ended
June 30,		 
   2024   2023 
Loss before income tax expense from China  $(326,101)   (7,658,140)
Loss before income tax expense from outside of China   (406,912)   (3,985,666)
Total loss before income tax provision  $(733,013)   (11,643,806)

 
Schedule of Income Tax Provision (Benefit) The income tax provision (benefit) for the six months ended June 30, 2024 and 2023 were as follows:
   For the Six Months Ended
June 30,		 
   2024   2023 
Current  $
-
   $52 
Deferred   (16,380)   
-
 
Total  $(16,380)  $52 
Schedule of Deferred Tax Asset Due to continuous losses incurred, the Company provided full allowance on the deferred tax assets as of June 30, 2024 and December 31, 2023.
Deferred tax asset  June 30,
2024		   December 31,
2023		 
Provision of doubtful accounts  $2,266,110   $2,391,460 
Tax loss carried forwards   8,865,851    8,276,814 
Valuation allowance on tax losses   (11,131,961)   (10,668,274)
   $
-
   $
-
 
Schedule of Taxes Payable The Company’s taxes payable consists of the following:
   As of
June 30,		   As of
December 31,		 
   2024   2023 
   (Unaudited)     
VAT tax payable  $377,992   $320,946 
Corporate income tax payable   1,615,700    1,653,827 
Land use tax and other taxes payable   16,009    12,162 
Total  $2,009,701   $1,986,935 
v3.24.3
Commitments and Contigencies (Tables)
 6 Months Ended
Jun. 30, 2024
Commitments and Contigencies [Abstract]  
Schedule of Company’s Contractual Obligations As of June 30, 2024, the Company’s contractual obligations consisted of the following:
Contractual Obligations  Total   Less than
1 year		   1-3 years   3-5 years   More than
5 years		 
Operating lease commitment  $258,847   $126,838    132,009   $
        -
   $
         -
 
Repayment of bank loans   5,263,128    5,263,128    
-
    
-
    
-
 
Total  $5,521,975    5,389,966    132,009   $
-
   $
-
 
v3.24.3
Related Party Transactions (Tables)
 6 Months Ended
Jun. 30, 2024
Related Party Transactions [Abstract]  
Schedule of Related Parties Related parties
Name of Related Party   Relationship to the Company
Mr. Hengfang Li   Chief Executive Officer and Chairman of the Board of Directors, and shareholder of the Company
Q Green Techcon Private Limited   Owned by the minority shareholder of REIT India
Shexian Ruibo   The Company owns 41.67% equity interest in Shexian Ruibo
Hunyuan Baiyang Food Co., Ltd.   An entity controlled by Mr. Hengfang Li
Handan Ruisheng Construction Material Technology Co., Ltd.   An entity controlled by Shexian Ruibo
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd.   Hainan Yile IoT owns 45% ownership interest in this company
Shexian Ruida   An entity controlled by Shexian Ruibo
Schedule of Due from Related Parties As of June 30, 2024 and December 31, 2023, the balance of due from related parties was as follows:
   As of
June 30,
2024		   As of
December 31,
2023		 
Due from related parties        
Mr. Hengfang Li  $72,082   $358,659 
Schedule of Accounts Receivable from Related Parties Accounts receivable from related parties consisted of the following:
   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shexian Ruibo  $26,232   $26,851 
Hunyuan Baiyang Food Co., Ltd.   35,157    35,986 
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd.   44,305    45,351 
Total accounts receivable from related parties  $105,694   $108,188 
Schedule of Advance to Suppliers, Related Party Advance to suppliers, related party, consisted of the following:
   As of
June 30,
2024		   As of
December 31,
2023		 
   (Unaudited)     
Shexian Ruibo*  $1,450,543   $1,796,831 
Shexian Ruida   39,563    
-
 
Handan Ruisheng Construction Material Technology Co., Ltd.   10,877    11,134 
Total  $1,500,983   $1,807,965 
Schedule of Accounts Payable to Related Parties Accounts payable to related parties consisted of the following:
   As of
June 30,
2024		   As of
December 31,
2023		 
Shexian Ruibo  $
-
   $3,080 
Schedule of Sales to Related Parties Sales to related parties consisted of the following:
   For the Six Months Ended
June 30,		 
   2024   2023 
   (Unaudited)   (Unaudited) 
Sales to a related party        
Q Green Techcon Private Limited   218,631    210,864 
Schedule of Purchases from Related Parties Purchases from related parties consisted of the following:
   For the Six Months Ended
June 30,		 
   2024   2023 
   (Unaudited)   (Unaudited) 
Purchase from a related party        
Shexian Ruibo  $232,016   $359,398 
v3.24.3
Segment Reporting (Tables)
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Schedule of Information by Segment The following table presents summary information by segments for the Company’s continuing operations for the six months ended June 30, 2024 and 2023, respectively:
   For the Six Months Ended June 30, 2024 
   Machinery
and
Equipment
sales		   Construction
materials
sales		   Technological
consulting
and other
services		   Total 
Revenues  $1,661,336    146,293    31,010    1,838,639 
Cost of goods sold   959,450    303,838    7,870    1,271,158 
Gross profit   701,886    (157,545)   23,140    567,481 
Interest expense and charges   (2,721)   150    257,810    255,240 
Interest income   232    16    24,138    24,386 
Depreciation and amortization   76,471    217,849    102,057    396,377 
Capital expenditures   
-
    
-
    
-
    
-
 
Income tax expenses   
-
    
-
    (16,380)   (16,380)
Segment loss   136,408    (244,481)   (608,560)   (716,633)
Segment assets  $11,296,630    9,817,774    12,557,133    33,671,537 

 

   For the Six Months Ended June 30, 2023 
   Machinery
and
Equipment
sales		   Construction
materials
sales		   Municipal
construction
projects		   Technological
consulting
and other
services		   Total 
Revenues  $1,029,131    24,510    90,177    89,965    1,233,783 
Cost of goods sold   941,352    
-
    168,514    30,326    1,140,192 
Gross profit   87,779    24,510    (78,337)   59,639    93,591 
Interest expense and charges   90,729    5,771    5,219    79,053    180,772 
Interest income   1,396    37    3    73    1,509 
Depreciation and amortization   101,375    339,032    
-
    30,475    470,882 
Capital expenditures   54,033    
-
    
-
    50,359    104,392 
Income tax benefit   52    
-
    
-
    
-
    52 
Segment loss   (5,429,194)   (378,340)   (296,551)   (5,539,773)   (11,643,858)
Segment assets  $7,272,071    10,976,507    4,955    2,089,650    20,343,183 
v3.24.3
Organization and Description of Business (Details) - Schedule of Fincancial Statements
 6 Months Ended
Jun. 30, 2024
ReTo Eco-Solutions, Inc. [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation British Virgin Islands
Ownership Percentage Parent
REIT Holdings (China) Limited (“REIT Holdings”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Hong Kong, China
Ownership Percentage 100%
Sunoro Holdings Limited (“Sunoro Holdings”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Hong Kong, China
Ownership Percentage 100%
Beijing REIT Technology Development Co., Ltd. (“Beijing REIT”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Beijing, China
Ownership Percentage 100%
Beijing REIT Equipment Technology Co., Ltd. (“REIT Equipment”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Beijing, China [1]
Ownership Percentage 100% [1]
REIT New Materials Xinyi Co., Ltd. (“Xinyi REIT”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Xinyi, China
Ownership Percentage 100%
REIT Q GREEN Machines Private Ltd (“REIT India”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation India
Ownership Percentage 51%
REIT Ecological Technology Co., Ltd. (“REIT Ordos”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Ordos, China
Ownership Percentage 100%
Datong Ruisheng Environmental Engineering Co., Ltd. (“Datong Ruisheng”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Datong, China
Ownership Percentage 100%
Guangling REIT Ecological Cultural Tourism Co., Ltd. [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Datong, China
Ownership Percentage 100%
REIT Technology Development Co., Ltd (“REIT Technology”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Haikou, China
Ownership Percentage 100%
Hainan REIT Mingde Investment Holding Co., Ltd. (“REIT Mingde”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Haikou, China
Ownership Percentage 100%
Hainan Fangyuyuan United Logistics Co., Ltd. (“Hainan Fangyuyuan”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Haikou, China [1]
Ownership Percentage 90% [1]
Hainan Kunneng Direct Supply Chain Management Co., Ltd. [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Haikou, China
Ownership Percentage 51%
Hainan Yile IoT Technology Co., Ltd. (“Hainan Yile IoT”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Haikou, China
Ownership Percentage 61.6%
Hainan Yile IoV Technology Research Institute Co., Ltd, (“IoV Technology Research”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Haikou, China
Ownership Percentage 90%
Honghe Reit Ecological Technology Co., Ltd. (“Honghe REIT”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Yunnan, China
Ownership Percentage 100%
Inner Mongolia GuoRui Daojing Information Technology Co., Ltd. [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Ordos, China
Ownership Percentage 51%
Sunoro Hengda (Beijing) Technology Co., Ltd. [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Beijing, China
Ownership Percentage 100%
Inner Mongolia Reit Echological Environment Management Co., Ltd. (“Mongolia Reit”) [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Ordos, China
Ownership Percentage 100%
Senrui Bochuang (Beijing) Technology Co., LTD [Member]  
Subsidiary of Limited Liability Company or Limited Partnership [Line Items]  
Place of Incorporation Beijing, China
Ownership Percentage 100%
[1] REIT Equipment was previously known as “Beijing REIT Ecological Engineering Technology Co., Ltd.” and Hainan Fangyuyuan was previously known as “Yangpu Fangyuyuan United Logistics Co., Ltd.”
v3.24.3
Summary of Significant Accounting Policies (Details)
 6 Months Ended 12 Months Ended
Apr. 01, 2019
Jun. 30, 2024
USD ($)
shares
Jun. 30, 2024
CNY (¥)
shares
Jun. 30, 2023
USD ($)
Dec. 31, 2023
USD ($)
Summary of Significant Accounting Policies [Line Items]          
voting power percentage   50.00% 50.00%    
Allowances for uncollectible amounted receivable (in Dollars)   $ 2,105,670     $ 2,146,679
Inventory reserve (in Dollars)   253,635     259,621
Allowances for uncollectible amounted to suppliers (in Dollars)   3,066     3,138
Long term investment in equity investee balance (in Dollars)   2,226,023     2,337,451
Investment loss (in Dollars)   57,960   $ 83,307  
Related grants (in Dollars)   490,560      
Deferred grants (in Dollars)   187     191
Value added tax percentage 13.00%        
Cash and cash equivalents (in Dollars)   $ 5,663     4,161
Insurance regulation (in Yuan Renminbi) | ¥     ¥ 500,000    
FDIC insurance limits (in Shares) | shares   100,000 100,000    
FDIC insurance limits (in Dollars)   $ 1,200      
Shexian Ruibo [Member]          
Summary of Significant Accounting Policies [Line Items]          
Long term investment in equity investee balance (in Dollars)   $ 2,226,021     $ 2,337,451
Ownership interest, percentage   41.67% 41.67%    
One Suppliers [Member] | Supplier Concentration Risk [Member] | Purchase of Raw Materials [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   30.00% 30.00% 21.00%  
One Suppliers [Member] | Supplier Concentration Risk [Member] | Accounts Payable [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   30.00% 30.00%    
Two Suppliers [Member] | Supplier Concentration Risk [Member] | Purchase of Raw Materials [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   22.00% 22.00% 17.00%  
Two Suppliers [Member] | Supplier Concentration Risk [Member] | Accounts Payable [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   22.00% 22.00%    
Three Suppliers [Member] | Supplier Concentration Risk [Member] | Purchase of Raw Materials [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   10.00% 10.00% 13.00%  
Three Suppliers [Member] | Supplier Concentration Risk [Member] | Accounts Payable [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage         10.00%
Cash and Cash Equivalents [Member]          
Summary of Significant Accounting Policies [Line Items]          
Cash and cash equivalents (in Dollars)   $ 1,519,456     $ 1,314,636
One Customer [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   16.00% 16.00% 22.00%  
One Customer [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   24.00% 24.00%   29.00%
Two Customer [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   12.00% 12.00% 17.00%  
Two Customer [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   33.00% 33.00%   21.00%
Three customer [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]          
Summary of Significant Accounting Policies [Line Items]          
Concentration risk, percentage   13.00% 13.00%   12.00%
v3.24.3
Summary of Significant Accounting Policies (Details) - Schedule of Currency Exchange Rates that were used in Creating the Consolidated Financial Statements
Jun. 30, 2024
USD ($)
Jun. 30, 2024
CNY (¥)
Jun. 30, 2024
INR (₨)
Dec. 31, 2023
USD ($)
Dec. 31, 2023
CNY (¥)
Dec. 31, 2023
INR (₨)
Jun. 30, 2023
USD ($)
Jun. 30, 2023
CNY (¥)
Jun. 30, 2023
INR (₨)
Schedule of Currency Exchange Rates that were used in Creating the Consolidated Financial Statements [Abstract]                  
Year-end spot rate $ 1 ¥ 7.2672 ₨ 83.33 $ 1 ¥ 7.0999 ₨ 83.19 $ 1 ¥ 7.2513 ₨ 82.06
Average rate $ 1 ¥ 7.215 ₨ 83.2 $ 1 ¥ 7.0809 ₨ 82.57 $ 1 ¥ 6.9283 ₨ 82.2
v3.24.3
Going Concern (Details) - USD ($)
 6 Months Ended
Aug. 30, 2024
Jun. 30, 2024
Feb. 01, 2024
Dec. 31, 2023
Jun. 30, 2023
Going Concern [Line Items]          
Gross Profit         $ 4,800,000
Gross profit from continued operation percentage   0.70%      
Cash   $ 1,600,000      
Par value (in Dollars per share) $ 0.1        
Sale of Stock, Price Per Share (in Dollars per share) $ 1.38        
Minimum [Member]          
Going Concern [Line Items]          
Gross Profit   $ 300,000      
Par value (in Dollars per share)     $ 0.01    
Common Class A [Member]          
Going Concern [Line Items]          
Aggregate shares (in Shares) 14,095,200        
Par value (in Dollars per share)   $ 0.1   $ 0.1  
Forecast [Member]          
Going Concern [Line Items]          
Purchase price $ 19,451,376        
Forecast [Member] | Common Class A [Member]          
Going Concern [Line Items]          
Aggregate shares (in Shares) 14,095,200        
v3.24.3
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Accounts Receivable [Abstract]    
Trade accounts receivable from third-part customers $ 2,742,403 $ 3,208,916
Less: allowances for doubtful accounts (2,105,670) (2,146,679)
Total accounts receivable from third-party customers, net 636,733 1,062,237
Add: accounts receivable, net, related parties 105,694 108,188
Accounts receivable, net $ 742,427 $ 1,170,425
v3.24.3
Accounts Receivable, Net (Details) - Schedule of Allowance for Credit Losses - USD ($)
 6 Months Ended 12 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Schedule of Allowance for Credit Losses [Abstract]      
Beginning balance $ 2,146,679 $ 2,460,037 $ 1,771,761
Provision for credit losses 150,732 1,193,688 433,867
Recovery (423,898) (7,061)
Written off 142,191
Foreign exchange translation 49,551 (332,092) (51,888)
Ending balance $ 2,105,670 $ 2,897,735 $ 2,146,679
v3.24.3
Advances to Suppliers, Net (Details)
 6 Months Ended
Jun. 30, 2024
Advances to Suppliers, Net [Abstract]  
Construction material, description It usually takes 3 to 6 months for the suppliers to deliver raw materials for our equipment production and takes up to 6 to 12 months for the suppliers to deliver the construction materials.
v3.24.3
Advances to Suppliers, Net (Details) - Schedule of Advances to Suppliers - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Advances to Suppliers [Abstract]    
Raw material prepayments for equipment production $ 572,365 $ 309,121
Advances to construction subcontractors 10,298,127 4,986,131
Total: 10,870,492 5,295,252
Less: allowances for credit losses (3,066) (3,138)
Advances to suppliers, net, third parties $ 10,867,426 $ 5,292,114
v3.24.3
Advances to Suppliers, Net (Details) - Schedule of Changes of Allowance for Doubtful Accounts - USD ($)
 6 Months Ended
Jun. 30, 2024
Dec. 31, 2023
Jun. 30, 2023
Schedule of Changes of Allowance for Doubtful Accounts [Abstract]      
Beginning balance $ 3,138 $ 449,517 $ 449,517
Provision for credit losses (434,668)
Recovery (400,107)
Foreign exchange translation (72) (11,711) (4,169)
Ending balance $ 3,066 $ 3,138 $ 45,241
v3.24.3
Inventories, Net (Details) - Schedule of Inventories, Net - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Inventories, Net [Line Items]    
Raw materials $ 289,437 $ 119,405
Finished goods 234,711 276,407
Transfer finished goods 11,140  
Subtotal 535,288 395,812
Less: Inventory allowance (253,635) (259,621)
Inventories, net $ 281,653 $ 136,191
v3.24.3
Prepayments and Other Current Assets (Details) - Schedule of Prepaid Expenses and Other Current Assets - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Prepaid Expenses and Other Current Assets [Abstract]    
Other receivable, net [1] $ 68,800 $ 242,151
Value added tax receivable 44,166 43,504
Total $ 112,966 $ 285,655
[1] Other receivables mainly consisted of advances to employees for business development purposes and prepaid employee insurance and welfare benefits which will be subsequently deducted from the employee’s payroll.
v3.24.3
Lease (Details) - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Lease [Line Items]    
Lease expense $ 85,630 $ 116,791
Right-of-use assets 75,470  
Interest expense 10,160  
Amortization expense 65,310  
Maximum [Member]    
Lease [Line Items]    
Cash paid for operating leases 63,975  
Minimum [Member]    
Lease [Line Items]    
Cash paid for operating leases $ 22,494  
v3.24.3
Lease (Details) - Schedule of Supplemental Balance Sheet Information Related to Operating Leases - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Supplemental Balance Sheet Information Related to Operating Leases [Abstract]    
Right-of-use assets $ 295,022 $ 231,802
Operating lease liabilities – current 126,838 89,500
Operating lease liabilities - non-current 132,009 $ 103,830
Total operating lease liabilities $ 258,847  
Remaining lease term and discount rate:    
Weighted average remaining lease term (years) 2 years 4 months 17 days  
Weighted average discount rate 7.42%  
v3.24.3
Lease (Details) - Schedule of Maturities of Lease Liabilities
Jun. 30, 2024
USD ($)
Schedule of Maturities of Lease Liabilities [Abstract]  
2024 $ 68,097
2025 137,634
2026 64,706
2027 7,568
Total lease payments 278,005
Less: imputed interest 19,158
Present value of lease liabilities $ 258,847
v3.24.3
Convertible Loans (Details) - USD ($)
 6 Months Ended 12 Months Ended
Dec. 20, 2022
Mar. 10, 2022
Jun. 30, 2024
Dec. 31, 2023
Dec. 31, 2022
Mar. 31, 2022
Convertible Loans [Line Items]            
Principal amount       $ 3,461,069   $ 100,000
Discount issued   $ 90,000        
Legal fees   15,000        
Standstill fee       $ 310,500    
Fair value         $ 3,922,686  
Increase in note receivable     $ 145,569      
Common share conversion (in Shares) 2,908          
Converted common shares (in Shares)       279,660    
Unrealized loss expense     69,821      
2022 March Debenture [Member]            
Convertible Loans [Line Items]            
Principal amount   $ 3,105,000        
March Debenture [Member]            
Convertible Loans [Line Items]            
Structuring fee     $ 57,985      
v3.24.3
Short-term Loans (Details)
 6 Months Ended
Jun. 30, 2024
USD ($)
Jun. 30, 2023
USD ($)
Apr. 10, 2024
USD ($)
Apr. 10, 2024
CNY (¥)
Dec. 31, 2023
USD ($)
Apr. 28, 2023
USD ($)
Apr. 28, 2023
CNY (¥)
Mar. 03, 2023
USD ($)
Mar. 03, 2023
CNY (¥)
Short-term Loans [Line Items]                  
Short term borrow $ 5,263,128       $ 5,387,400        
Fixed interest rate percentage           6.55% 6.55% 4.35% 4.35%
Interest expense on all short-term bank loans $ 174,137 $ 180,772              
Shanxi Hunyuan Rural Commercial Bank Co., Ltd [Member]                  
Short-term Loans [Line Items]                  
Short term borrow     $ 5.2 ¥ 38,000,000   $ 5,400,000 ¥ 38,000,000    
Beijing REIT [Member]                  
Short-term Loans [Line Items]                  
Fixed interest rate percentage     6.55% 6.55%          
IoV Technology Research [Member]                  
Short-term Loans [Line Items]                  
Short term borrow               $ 35,212 ¥ 250,000
v3.24.3
Short-term Loans (Details) - Schedule of Short-Term Loans - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Short-Term Debt [Line Items]    
Total short-term loans $ 5,263,128 $ 5,387,400
Hunyuan Rural Credit Cooperative Association [Member]    
Short-Term Debt [Line Items]    
Total short-term loans [1] 5,228,800 5,352,188
Bank of China [Member]    
Short-Term Debt [Line Items]    
Total short-term loans [2] $ 34,328 $ 35,212
[1] On April 28, 2023, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.4 million (RMB38 million) as working capital loan from April 28, 2023 to April 13, 2024. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan. The loans were fully repaid on April 10, 2024.

 

On April 10, 2024, Datong Ruisheng entered into a new bank loan agreement with Shanxi Hunyuan Rural Commercial Bank Co., Ltd to borrow approximately $5.2 million (RMB38 million) as working capital loan from April 10, 2024 to March 28, 2025. The loan bears a fixed interest rate of 6.55% per annum. The loan is guaranteed by Beijing REIT Ecological. Zhongrong Honghe Eco Construction Materials Co., Ltd, a related party, pledged a land use right for the loan.
[2] On March 3, 2023, IoV Technology Research entered into a line of credit agreement with Bank of China. The agreement allows IoV Technology Research to obtain loans up to approximately $35,212 (RMB250,000) for use as working capital between March 3, 2023 and March 2, 2024 for a term of one year. The loan bears a fixed interest rate of 4.35% per annum. Subsequently, the loan was extended to December 2, 2024.
v3.24.3
Loans from Third Parties (Details)
¥ in Thousands
 6 Months Ended
Jan. 18, 2023
USD ($)
Jan. 18, 2023
CNY (¥)
Jun. 30, 2024
USD ($)
Jun. 30, 2024
CNY (¥)
Jun. 30, 2023
USD ($)
Jun. 30, 2024
CNY (¥)
Apr. 27, 2024
USD ($)
Apr. 27, 2024
CNY (¥)
Apr. 09, 2024
USD ($)
Apr. 09, 2024
CNY (¥)
Mar. 13, 2024
USD ($)
Mar. 13, 2024
CNY (¥)
Jan. 01, 2024
USD ($)
Jan. 01, 2024
CNY (¥)
Dec. 31, 2023
USD ($)
Dec. 31, 2023
CNY (¥)
Dec. 27, 2023
USD ($)
Dec. 27, 2023
CNY (¥)
Nov. 20, 2023
USD ($)
Nov. 20, 2023
CNY (¥)
Sep. 17, 2023
USD ($)
Sep. 17, 2023
CNY (¥)
Jul. 07, 2023
USD ($)
May 27, 2023
USD ($)
May 27, 2023
CNY (¥)
May 26, 2023
USD ($)
May 26, 2023
CNY (¥)
Feb. 08, 2023
USD ($)
Feb. 08, 2023
CNY (¥)
Jan. 20, 2023
USD ($)
Jan. 20, 2023
CNY (¥)
Jan. 01, 2023
USD ($)
Jan. 01, 2023
CNY (¥)
Oct. 11, 2022
USD ($)
Oct. 11, 2022
CNY (¥)
Feb. 08, 2021
USD ($)
Loans from Third Parties [Line Items]                                                                        
increase the principal amount $ 1,200,000 ¥ 9,000                                                                    
Interest     $ 58,582                                                                
Loan agreement [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Maturity date Jan. 17, 2025 Jan. 17, 2025                                                                    
Beijing REIT [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Maturity date     Feb. 07, 2025 Feb. 07, 2025                                                                
Jiangsu Yuantong Municipal Projects Construction Co. Ltd. [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                                               $ 281,694 ¥ 2,000 $ 1,200,000 ¥ 8,000  
Repayment of loan     $ 76,693 ¥ 600                                                                
Changshu Tongjiang Machinery Co., Ltd. [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                                               140,847        
Changshu Tongjiang Engineering Co., Ltd [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                 $ 61,920 ¥ 500                                             1,000      
Lei Creative Design (Beijing) Co., Ltd. [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                                               $ 138,812 ¥ 1,000      
Zhang Miao [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                                       $ 598,377 ¥ 4,200              
Repayment of loan     723,395 5,300                                                                
Xinyi REIT [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan     138,812     ¥ 1,000                                                            
Beijing REIT [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                                                       $ 156,900
Repayment of loan     123,840 900                                                                
Zhang Lei Studio [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                     $ 14,085 ¥ 100                                
Xinyi Xinshuo Concrete Co., Ltd. [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                         $ 70,424 ¥ 500                            
Xinyi Xinnan [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                               $ 84,508 ¥ 600                      
REIT Ecological Technology Co., Ltd [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                 $ 281,694 ¥ 2,000                                    
Hainan Yile IoV Technology Research Institute Co., Ltd, (“IoV Technology Research”) [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                             $ 207,036 ¥ 1,500                                        
Repayment of loan     197,325 1,400                                                                
Chen Guo [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                                           $ 59,605 ¥ 420          
Annual interest                                                           1.00% 1.00%          
Honghe County Yisa Hengtong Decoration Company [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                                   $ 112,678 ¥ 800                  
Annual interest                                                   1.00% 1.00%                  
Ordos Ruitu Rural Development Promotion Center [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                             $ 7,042                          
Yu Zhanfeng [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                     $ 68,800 ¥ 500                                                
Beijin RETO [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan             $ 19,264 ¥ 100         $ 16,512 ¥ 100                                            
Qihang Hongye Technology (Inner Mongolia) Co., Ltd [Member]                                                                        
Loans from Third Parties [Line Items]                                                                        
Working capital loan                                     $ 985,930                                  
Repayment of loan     $ 470,959 ¥ 3,400                                                                
Annual interest                                     12.00% 12.00%                                
v3.24.3
Loans from Third Parties (Details) - Schedule of Loans from Third Parties - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties $ 3,591,979 $ 4,251,832
Less: Loans from third parties-non current (475,546) (2,977,166)
Loans from third parties-current 3,116,433 1,274,666
Jiangsu Yuantong Municipal Projects Construction Co., Ltd. [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [1] 1,315,093 1,549,317
Changshu Tongjiang Machinery Co., Ltd. [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [2] 199,520 140,847
Tu and Lei Creative Design (Beijing) Co., Ltd. [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [3] 14,080
Zhang Miao [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [4] 847,235 725,140
Zhang Lei Studio [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [5] 13,760 14,085
Xinyi Xinshuo Concrete Co., Ltd. [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [6] 70,424
Xinyi Xinnan Real Estate Co., Ltd. [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [7] 84,508
Bai Shu Tong [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [8] 275,200 281,694
Hainan Boxinda Technology Partnership (Limited partnership) [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [9] 197,325 206,482
Chen Guo [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [10] 58,231 59,605
Honghe County Yisa Hengtong Decoration Company [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [11] 110,080 112,678
Ordos Ruitu Rural Development Promotion Center [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [12] 7,042
Yu Zhanfeng [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [13] 68,800
Shexian Ruibo hardware tools factory [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [14] 16,512
Jinyue Kelley Trading (Beijing) Co., LTD [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [15] 19,264
Qihang Hongye Technology (Inner Mongolia) Co., Ltd. [Member]    
Schedule of Loans from Third Parties [Line Items]    
Loans from third parties [16] $ 470,959 $ 985,930
[1]

On October 11, 2022, Beijing REIT entered into a loan agreement with Jiangsu Yuantong Municipal Projects Construction Co., Ltd. to borrow approximately $1.2 million (RMB 8 million) as working capital loan for two years. The loan was from October 11, 2022 to October 10, 2024 and interest-free. On January 18, 2023, the parties revised the loan agreement to increase the principal amount to approximately $1.2 million (RMB9 million) with a new maturity date of January 17, 2025.

 

On January 1, 2023, Xinyi REIT obtained a working capital loan of $281,694 (RMB2 million) from Jiangsu Yuantong Municipal Projects Construction Co., Ltd. The loan was from January 1, 2023 to December 15, 2024 and interest-free. After partial repayment, the outstanding loans were $76,693 (RMB 0.6 million) as of June 30, 2024.
[2]

On January 1, 2023, Beijing REIT entered into a loan agreement with Changshu Tongjiang Machinery Co., Ltd. to borrow $140,847 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free.

 

On April 9, 2024, Beijing REIT obtained a working capital loan of $61,920 (RMB 0.5 million) from Changshu Tongjiang Engineering Co., Ltd. The loan is from April 9, 2024 to April 8, 2025 and interest-free.
[3] On January 1, 2023, Beijing REIT entered into a loan agreement with Tu and Lei Creative Design (Beijing) Co., Ltd. to borrow $138,812 (RMB1.0 million) as working capital loan for two years. The loan was from January 1, 2023 to December 31, 2025 and interest-free. The loan was fully repaid in June 2024.
[4]

On February 8, 2023, Beijing REIT and Xinyi REIT entered into a loan agreement with Zhang Miao to borrow $598,377 (RMB4.2 million) as working capital loan for two years. The loan was from February 8, 2023 to February 7, 2025 and interest-free. During from January 1  to June 30, 2024, Xinyi REIT further obtained a loan of $138,812 (RMB 1.0 million) from Zhang Miao. After partial repayment, the outstanding balance of the loan was $723,395 (RMB 5.3 million) as of June 30, 2024.

 

On February 8, 2021, Beijing REIT obtained a working capital loan of $156,900 from Zhang Miao. The loan is from February 8, 2021 to February 7, 2022 and interest-free. After partial repayment, the loan balance was $123,840 (RMB 0.9 million) as of June 30, 2024. The loan was renewed upon maturity with a new maturity date of February 7, 2025.
[5] On November 20, 2023, Beijing REIT entered into a loan agreement Zhang Lei Studio to borrow $14,085 (RMB0.1 million) as working capital loan for two years. The loan was from November 20, 2023 to November 19, 2025 and interest-free.
[6] On September 17, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinshuo Concrete Co., Ltd. to borrow $70,424 (RMB0.5 million) as working capital loan for two years. The loan was from September 17, 2023 and September 16, 2025 and interest-free. The loan was fully repaid in June 2024.
[7] On May 27, 2023, Xinyi REIT entered into a loan agreement with Xinyi Xinnan to borrow $84,508 (RMB0.6 million) as working capital loan for two years. The loan was from May 27, 2023 to on May 26, 2025 and interest-free. The loan was fully repaid in June 2024.
[8] On December 27, 2023, REIT Ecological Technology Co., Ltd entered into a loan agreement with Bai Shu Tong to borrow $281,694 (RMB2.0 million) as working capital loan for two years. The loan was from December 27, 2023 and December 26, 2025 and interest-free.
[9] In 2023, REIT Technology, Hainan Yile IoT and IoV Technology Research obtained working capital loans of $207,036 (RMB1.5 million) from Hainan Boxinda Science Technology Partnership. The loan was from January 30, 2023 to July 3, 2025 and interest-free. After partially repaid, the outstanding loans were $197,325 (RMB 1.4 million) as of June 30, 2024.
[10] On January 20, 2023, the Company entered into a loan agreement with Chen Guo to borrow $59,605 (RMB0.42 million) as working capital loan for two years. The loan is from January 20, 2023 to January 19, 2025 and bears an annual interest of 1%.
[11] On May 26, 2023, the Company entered into a loan agreement with Honghe County Yisa Hengtong Decoration Company to borrow $112,678 (RMB0.8 million) as working capital loan for two years. The loan is from May 26, 2023 to May 5, 2025 and bears an annual interest of 1%. The loan was fully repaid in June 2024.
[12] On July 7, 2023, REIT Ecological Technology obtained a working capital loan of $7,042 from Ordos Ruitu Rural Development Promotion Center. The loan is from July 7, 2023 to July 6, 2024 and interest-free. The loan was fully repaid in January 2024.
[13] On March 13, 2024, REIT Ecological Technology obtained a working capital loan of $68,800 (RMB 0.5 million) from Yu Zhanfeng. The loan is from March 13, 2024 to July 12, 2024 and interest-free. The loan was fully repaid in July12, 2024.
[14] One January 1, 2024, Beijin RETO obtained a working capital loan of $16,512 (RMB 0.1 million) from Shexian Ruibo hardware tools factory. The loan is from March 13, 2024 to January 1, 2025 and interest-free.
[15] One April 27, 2024, Beijin RETO obtained a working capital loan of $19,264 (RMB 0.1 million) from Jinyue Kelley Trading (Beijing) Co., LTD. The loan is due on demanded and interest-free.
[16] On November 20, 2023, Inner Mongolia REIT Ecological Environment Management Co., Ltd. obtained a working capital loan of $985,930 from Qihang Hongye Technology (Inner Mongolia) Co., Ltd. The loan is due on demand and bears an annual interest of 12%. After partial repayment, both the principle and interests of the loan were $470,959 (RMB3.4 million) as of June 30, 2024.
v3.24.3
Taxes (Details) - USD ($)
$ in Millions
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Taxes [Line Items]      
Corporate income tax rate 25.00% 25.00%  
R&D expense approved by local tax authority deducted from tax income 200.00%    
Products sold percentage 13.00%    
Tax payables (in Dollars) $ 2.0   $ 2.0
Beijing REIT [Member]      
Taxes [Line Items]      
Favorable income tax rate 15.00% 15.00%  
HNTE by PRC [Member]      
Taxes [Line Items]      
Favorable income tax rate 15.00% 15.00%  
v3.24.3
Taxes (Details) - Schedule of Reconciles Income Tax Expense by Statutory Rate to the Company’s Actual Income Tax Expense
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Schedule of Reconciles Income Tax Expense by Statutory Rate to the Company’s Actual Income Tax Expense [Abstract]    
China Statutory income tax rate 25.00% 25.00%
Effect of favorable income tax rate in certain entity in PRC (0.20%) (2.20%)
Non-PRC entities not subject to PRC tax [1] (7.90%) (8.20%)
Research & Development (“R&D”) tax credit [2] 2.60% 1.70%
Non-deductible expenses - permanent difference [2] (2.40%) 1.50%
Change in valuation allowance (14.80%) (17.80%)
Effective tax rate 2.20% 0.00%
[1] Represents expenses incurred by the Company that were not deductible for PRC income tax.
[2] Represents the tax losses incurred from operations outside of China.
v3.24.3
Taxes (Details) - Schedule of Income Before Income Tax - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Schedule of Income Before Income Tax [Abstract]    
Loss before income tax expense from China $ (326,101) $ (7,658,140)
Loss before income tax expense from outside of China (406,912) (3,985,666)
Loss Before Income Taxes $ (733,013) $ (11,643,806)
v3.24.3
Taxes (Details) - Schedule of Income Tax Provision (Benefit) - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Schedule of Income Tax Provision (Benefit) [Abstract]    
Current $ 52
Deferred (16,380)
Total $ (16,380) $ 52
v3.24.3
Taxes (Details) - Schedule of Deferred Tax Asset - USD ($)
Jun. 30, 2024
Jun. 30, 2023
Schedule of Deferred Tax Asset [Abstract]    
Provision of doubtful accounts $ 2,266,110 $ 2,391,460
Tax loss carried forwards 8,865,851 8,276,814
Valuation allowance on tax losses (11,131,961) (10,668,274)
Deferred tax assets, net
v3.24.3
Taxes (Details) - Schedule of Taxes Payable - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Taxes Payable [Abstract]    
VAT tax payable $ 377,992 $ 320,946
Corporate income tax payable 1,615,700 1,653,827
Land use tax and other taxes payable 16,009 12,162
Total $ 2,009,701 $ 1,986,935
v3.24.3
Commitments and Contigencies (Details) - Schedule of Company’s Contractual Obligations
Jun. 30, 2024
USD ($)
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, Total $ 5,521,975
Operating lease commitment [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, Total 258,847
Repayment of bank loans [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, Total 5,263,128
Less than 1 year [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, Less than 1 year 5,389,966
Less than 1 year [Member] | Operating lease commitment [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, Less than 1 year 126,838
Less than 1 year [Member] | Repayment of bank loans [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, Less than 1 year 5,263,128
1-3 years [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, 1-3 years 132,009
1-3 years [Member] | Operating lease commitment [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, 1-3 years 132,009
1-3 years [Member] | Repayment of bank loans [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, 1-3 years
3-5 years [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligation, 3-5 years
3-5 years [Member] | Operating lease commitment [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligation, 3-5 years
3-5 years [Member] | Repayment of bank loans [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligation, 3-5 years
More than 5 years [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, More than 5 years
More than 5 years [Member] | Operating lease commitment [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, More than 5 years
More than 5 years [Member] | Repayment of bank loans [Member]  
Schedule of Company’s Contractual Obligations [Line Items]  
Contractual Obligations, More than 5 years
v3.24.3
Related Party Transactions (Details) - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Mar. 12, 2023
Mar. 08, 2023
Related Party Transactions [Line Items]        
Cost of revenue related parties $ 141,624 $ 359,398    
2022 Share Incentive Plan [Member]        
Related Party Transactions [Line Items]        
Aggregate shares (in Shares)     6,700 50,000
v3.24.3
Related Party Transactions (Details) - Schedule of Related Parties
 6 Months Ended
Jun. 30, 2024
Mr. Hengfang Li [Member]  
Schedule of Related Parties with Transactions and Related Party Relationships [Line Items]  
Name of related party Chief Executive Officer and Chairman of the Board of Directors, and shareholder of the Company
Q Green Techcon Private Limited [Member]  
Schedule of Related Parties with Transactions and Related Party Relationships [Line Items]  
Name of related party Owned by the minority shareholder of REIT India
Shexian Ruibo [Member]  
Schedule of Related Parties with Transactions and Related Party Relationships [Line Items]  
Name of related party The Company owns 41.67% equity interest in Shexian Ruibo
Hunyuan Baiyang Food Co., Ltd. [Member]  
Schedule of Related Parties with Transactions and Related Party Relationships [Line Items]  
Name of related party An entity controlled by Mr. Hengfang Li
Handan Ruisheng Construction Material Technology Co., Ltd. [Member]  
Schedule of Related Parties with Transactions and Related Party Relationships [Line Items]  
Name of related party An entity controlled by Shexian Ruibo
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd. [Member]  
Schedule of Related Parties with Transactions and Related Party Relationships [Line Items]  
Name of related party Hainan Yile IoT owns 45% ownership interest in this company
Shexian Ruida [Member]  
Schedule of Related Parties with Transactions and Related Party Relationships [Line Items]  
Name of related party An entity controlled by Shexian Ruibo
v3.24.3
Related Party Transactions (Details) - Schedule of Due from Related Parties - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Mr. Hengfang Li [Member]    
Due from related parties    
Due from related parties $ 72,082 $ 358,659
v3.24.3
Related Party Transactions (Details) - Schedule of Accounts Receivable from Related Parties - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Accounts Receivable from Related Parties [Line Items]    
Total accounts receivable from related party $ 105,694 $ 108,188
Shexian Ruibo [Member]    
Schedule of Accounts Receivable from Related Parties [Line Items]    
Total accounts receivable from related party 26,232 26,851
Hunyuan Baiyang Food Co., Ltd. [Member]    
Schedule of Accounts Receivable from Related Parties [Line Items]    
Total accounts receivable from related party 35,157 35,986
Bei Qi Yin Jian Yi Le (Haikou) Smart Move Science Technology Co., Ltd. [Member]    
Schedule of Accounts Receivable from Related Parties [Line Items]    
Total accounts receivable from related party $ 44,305 $ 45,351
v3.24.3
Related Party Transactions (Details) - Schedule of Advance to Suppliers, Related Party - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Schedule of Advance to Suppliers, Related Party [Line Items]    
Total $ 1,500,983 $ 1,807,965
Shexian Ruibo [Member]    
Schedule of Advance to Suppliers, Related Party [Line Items]    
Total [1] 1,450,543 1,796,831
Shexian Ruida [Member]    
Schedule of Advance to Suppliers, Related Party [Line Items]    
Total 39,563
Handan Ruisheng Construction Material Technology Co., Ltd. [Member]    
Schedule of Advance to Suppliers, Related Party [Line Items]    
Total $ 10,877 $ 11,134
[1] The balance represents the Company’s purchase advances for eco-friendly materials and equipment supplied by Shexian Ruibo.
v3.24.3
Related Party Transactions (Details) - Schedule of Accounts Payable to Related Parties - USD ($)
Jun. 30, 2024
Dec. 31, 2023
Shexian Ruibo [Member]    
Schedule of Accounts Payable to Related Parties [Line Items]    
Accounts payable to related parties $ 3,080
v3.24.3
Related Party Transactions (Details) - Schedule of Sales to Related Parties - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Q Green Techcon Private Limited [Member]    
Sales to a related party    
Sales to related party $ 218,631 $ 210,864
v3.24.3
Related Party Transactions (Details) - Schedule of Purchases from Related Parties - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Shexian Ruibo [Member]    
Purchase from a related party    
Purchase from a related party $ 232,016 $ 359,398
v3.24.3
Shareholders’ Equity (Details) - USD ($)
 6 Months Ended 12 Months Ended
Aug. 14, 2024
Aug. 12, 2024
Jun. 24, 2024
Jun. 07, 2024
Mar. 13, 2024
Sep. 29, 2023
May 25, 2023
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Aug. 30, 2024
Aug. 04, 2024
Feb. 01, 2024
Jul. 31, 2023
May 18, 2023
May 09, 2023
Mar. 12, 2023
Mar. 08, 2023
Feb. 27, 2023
Aug. 07, 2015
Shareholders’ Equity [Line Items]                                        
Appropriations to the statutory surplus reserve, description               Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital.                        
Common stock, shares authorized                               20,000,000        
Common stock, par value (in Dollars per share)                     $ 0.1                  
Par value of common stock (in Dollars per share)                     $ 1.38                  
Recognized stock-based compensation expense (in Dollars)             $ 33                          
Common stock, shares issued               3,828,868   3,828,868                    
Common stock, shares outstanding               1,205,188   1,205,188                    
Compensation expenses (in Dollars)               $ 2,100,000                        
Common shares issued           1,000,000                            
Aggregate gross proceeds (in Dollars)             $ 6,600,000                          
Net proceeds amount (in Dollars)         $ 6,000,000     3,969,063                        
Common shares of value issued (in Dollars)               $ 6,000,000 $ 712,454                      
Common Shares [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, par value (in Dollars per share)           $ 10               $ 0.01   $ 0.001        
Common shares of value issued (in Dollars)           $ 0.1                            
Subsequent Event [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, par value (in Dollars per share)                       $ 1,000                
Subsequent Event [Member] | Consulting Service Agreement [Member]                                        
Shareholders’ Equity [Line Items]                                        
Recognized stock-based compensation expense (in Dollars) $ 10,000                                      
Board of Directors [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, shares authorized                           20,000,000            
Common stock, par value (in Dollars per share)                           $ 0.01            
Board of Directors [Member]                                        
Shareholders’ Equity [Line Items]                                        
Recognized stock-based compensation expense (in Dollars)     $ 162,769                                  
Common stock issuance of shares     67,260     1,500,000                            
Common stock issuance of amount (in Dollars)           $ 10                            
Conversion of Convertible Notes [Member]                                        
Shareholders’ Equity [Line Items]                                        
Aggregate common shares                   279,660                    
Principle and interests (in Dollars)                   $ 4,111,082                    
Conversion price ranging (in Dollars per share)                   $ 8.71                    
Conversion price (in Dollars per share)                   $ 29.2                    
Minimum [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, par value (in Dollars per share)                         $ 0.01              
Purchase price (in Dollars per share)         $ 4                              
Minimum [Member] | Private Placement [Member]                                        
Shareholders’ Equity [Line Items]                                        
Purchase price (in Dollars per share)         4                              
Maximum [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, par value (in Dollars per share)                         $ 0.1              
Purchase price (in Dollars per share)         10                              
Maximum [Member] | Private Placement [Member]                                        
Shareholders’ Equity [Line Items]                                        
Purchase price (in Dollars per share)         $ 10                              
British Virgin Islands [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, shares authorized                                       200,000,000
Common stock, par value (in Dollars per share)                                       $ 0.001
2021 Share Incentive Plan [Member]                                        
Shareholders’ Equity [Line Items]                                        
Aggregate common shares               0.1                        
2022 Share Incentive Plan [Member]                                        
Shareholders’ Equity [Line Items]                                        
Aggregate common shares                                 6,700 50,000    
Common stock issuance of shares       187,260                                
2022 Share Incentive Plan [Member] | Subsequent Event [Member]                                        
Shareholders’ Equity [Line Items]                                        
Shares issued   120,000                                    
Maxleed Investment Holding Ltd. [Member]                                        
Shareholders’ Equity [Line Items]                                        
Recognized stock-based compensation expense (in Dollars)                 840,000                      
Express Transportation Ltd. [Member]                                        
Shareholders’ Equity [Line Items]                                        
Compensation expenses (in Dollars)                 840,000                      
Common shares issued                                     20,000  
Maxleed Investment Holding Ltd. [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common shares issued                                     20,000  
PRC [Member]                                        
Shareholders’ Equity [Line Items]                                        
Restricted amounts (in Dollars)               $ 1,128,674   $ 1,072,895                    
Common Shares [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, shares authorized                               200,000,000        
Par value of common stock (in Dollars per share)                               $ 0.01        
Aggregate common shares                             200,000          
Class B [Member]                                        
Shareholders’ Equity [Line Items]                                        
Common stock, shares authorized               2,000,000   2,000,000                    
Common stock, par value (in Dollars per share)               $ 0.01   $ 0.01                    
Common stock, shares issued                                    
Common stock, shares outstanding                                    
Class B [Member] | Common Shares [Member]                                        
Shareholders’ Equity [Line Items]                                        
Net proceeds amount (in Dollars)                                      
Common shares of value issued (in Dollars)                                    
Class B [Member] | Subsequent Event [Member]                                        
Shareholders’ Equity [Line Items]                                        
Shares issued 1,000,000                                      
v3.24.3
Segment Reporting (Details)
 6 Months Ended
Jun. 30, 2024
Segment Reporting [Abstract]  
Number of operating segment 4
v3.24.3
Segment Reporting (Details) - Schedule of Information by Segment - USD ($)
 6 Months Ended
Jun. 30, 2024
Jun. 30, 2023
Dec. 31, 2023
Revenues $ 1,838,639 $ 1,233,783  
Cost of goods sold 1,271,158 1,140,192  
Gross profit 567,481 93,591  
Interest expense and charges 255,240 180,772  
Interest income 24,386 1,509  
Depreciation and amortization 396,377 470,882  
Capital expenditures 104,392  
Income tax benefit (16,380) 52  
Income tax expenses (16,380)    
Segment loss (716,633) (11,643,858)  
Segment assets 33,671,537 20,343,183 $ 25,245,248
Machinery and Equipment sales [Member]      
Revenues 1,661,336 1,029,131  
Cost of goods sold 959,450 941,352  
Gross profit 701,886 87,779  
Interest expense and charges (2,721) 90,729  
Interest income 232 1,396  
Depreciation and amortization 76,471 101,375  
Capital expenditures 54,033  
Income tax benefit   52  
Income tax expenses    
Segment loss 136,408 (5,429,194)  
Segment assets 11,296,630 7,272,071  
Construction materials sales [Member]      
Revenues 146,293 24,510  
Cost of goods sold 303,838  
Gross profit (157,545) 24,510  
Interest expense and charges 150 5,771  
Interest income 16 37  
Depreciation and amortization 217,849 339,032  
Capital expenditures  
Income tax benefit    
Income tax expenses    
Segment loss (244,481) (378,340)  
Segment assets 9,817,774 10,976,507  
Technological consulting and other services [Member]      
Revenues 31,010 89,965  
Cost of goods sold 7,870 30,326  
Gross profit 23,140 59,639  
Interest expense and charges 257,810 79,053  
Interest income 24,138 73  
Depreciation and amortization 102,057 30,475  
Capital expenditures 50,359  
Income tax benefit    
Income tax expenses (16,380)    
Segment loss (608,560) (5,539,773)  
Segment assets $ 12,557,133 2,089,650  
Municipal construction projects [Member]      
Revenues   90,177  
Cost of goods sold   168,514  
Gross profit   (78,337)  
Interest expense and charges   5,219  
Interest income   3  
Depreciation and amortization    
Capital expenditures    
Income tax benefit    
Segment loss   (296,551)  
Segment assets   $ 4,955  
v3.24.3
Subsequent Events (Details) - USD ($)
Aug. 30, 2024
Aug. 12, 2024
Mar. 12, 2023
Mar. 08, 2023
Common Class A [Member]        
Subsequent Events [Line Items]        
Aggregate of common shares 14,095,200      
2022 Share Incentive Plan [Member]        
Subsequent Events [Line Items]        
Aggregate of common shares     6,700 50,000
2022 Share Incentive Plan [Member] | Subsequent Event [Member]        
Subsequent Events [Line Items]        
Common stock shares   120,000    
Forecast [Member]        
Subsequent Events [Line Items]        
Price per share (in Dollars per share) $ 1.38      
Aggregate of purchase price (in Dollars) $ 19,451,376      
Forecast [Member] | Common Class A [Member]        
Subsequent Events [Line Items]        
Aggregate of common shares 14,095,200      
Private placement of common shares 1,268,568      
Forecast [Member] | Private Placement [Member]        
Subsequent Events [Line Items]        
Private placement of common shares 1,268,568      
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