# EDGAR Filing Document

**Accession Number:** 0001687277
**File Stem:** 0001213900-25-100041
**Filing Date:** 2025-10
**Character Count:** 138916
**Document Hash:** 1b46512985b190bac7bdcf913dc46066
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-100041.hdr.sgml**: 20251017

**ACCESSION NUMBER**: 0001213900-25-100041

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 92

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20251017

**DATE AS OF CHANGE**: 20251017

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ReTo Eco-Solutions, Inc.
- **CENTRAL INDEX KEY:** 0001687277
- **STANDARD INDUSTRIAL CLASSIFICATION:** ABRASIVE ASBESTOS & MISC NONMETALLIC MINERAL PRODUCTS [3290]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** D8
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38307
- **FILM NUMBER:** 251401591

**BUSINESS ADDRESS:**
- **STREET 1:** X-702, 60 ANLI ROAD, CHAOYANG DISTRICT
- **CITY:** BEIJING
- **STATE:** F4
- **ZIP:** 100101
- **BUSINESS PHONE:** (86) 10-64827328

**MAIL ADDRESS:**
- **STREET 1:** X-702, 60 ANLI ROAD, CHAOYANG DISTRICT
- **CITY:** BEIJING
- **STATE:** F4
- **ZIP:** 100101

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**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 2025**

**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 ☒&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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](https://www.sec.gov/Archives/edgar/data/1687277/000121390022051475/ea164945-f3_retoecosol.htm)), of ReTo Eco-Solutions, Inc., a British Virgin Islands business company ("ReTo"), (ii) the registration statement on Form S-8, as amended (File No. [333-270355](https://www.sec.gov/Archives/edgar/data/1687277/000121390023071297/ea184224-s8pos_retoeco.htm)), of ReTo, (iii) the registration statement on Form S-8 (File No. [333-280119](https://www.sec.gov/Archives/edgar/data/1687277/000121390024051751/ea0207334-s8_reto.htm)) of ReTo, and (iv) the registration statement on Form F-1, as amended (File No. [333-290262](https://www.sec.gov/Archives/edgar/data/1687277/000121390025087644/ea0257108-f1_retoeco.htm)), of ReTo 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, 2025 and 2024](ea026159601ex99-1_reto.htm) |
| 99.2 | [Unaudited Interim Consolidated Financial Statements for the Six Months Ended June 30, 2025 and 2024](ea026159601ex99-2_reto.htm) |
| 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 |
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---

**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 17, 2025

---

| | | |
|:---|:---|:---|
| **RETO ECO-SOLUTIONS, INC.** | **RETO ECO-SOLUTIONS, INC.** | **RETO ECO-SOLUTIONS, INC.** |
| By: | */s/ Xinyang Li* | */s/ Xinyang Li* |
|  | Name: | Xinyang Li |
|  | Title: | Chief Executive Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL<br> CONDITION AND RESULTS OF OPERATIONS**

Unless context otherwise requires, all references herein to "we," "us," "our" or the "Company" refer to ReTo Eco-Solutions, Inc. and its subsidiaries and all references herein to "ReTo" refer to ReTo Eco-Solutions, Inc., a British Virgin Islands business company. 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 (the "PRC" or "China");

● any changes in the laws of the PRC or local province that may affect our operations;

● our ability to operate as a going concern;

● the liquidity of our securities;

● inflation and fluctuations in foreign currency exchange rates;

● our expansion into new businesses, industries or international markets, and undertaking of mergers, acquisitions, investments or divestments;

● the ability to realize benefits of the acquisition of MeinMalzeBier Holdings Limited ("MeinMalzeBier Holdings") and integrate and expand its businesses into our existing business and grow and manage growth profitably;

● the ability to navigate geographic market risks of our products;

● 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*" and "*Item 5. Operating and Financial Review and Prospects*" in our Annual Report on Form 20-F for the year ended December 31, 2024 filed with the Securities and Exchange Commission on May 9, 2025. 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.

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 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**

Our continuing operation primarily consisted of sales of equipment and accessories and sales of craft beer, which accounted for 98% and 2% of our total revenue from our continuing operations for the six months ended June 30, 2025, respectively, and 100% and nil of our total revenue from our continuing operations for the six months ended June 30, 2024, respectively.

Our domestic customers are throughout China and our international customers are mainly located in Southeast Asia, the Middle East and Africa. Sales to customers in China and internationally from our continuing operations accounted for approximately 52% and 48%, respectively, of our total sales for the six months ended June 30, 2025, approximately 96% and 4%, respectively, of our total sales for the six months ended June 30, 2024.

**Results of Operations from Our Continuing Operations**

On December 31, 2024, ReTo sold all of its shares in REIT Holdings (China) Limited, a Hong Kong limited company ("REIT Holdings"), to a shareholder holding less-than 5% of Class A shares of the Company (the "Buyer") for a purchase price of US$80,000. REIT Holdings was the holding company of multiple indirect subsidiaries of ReTo, which were engaged in in the business of manufacture and distribution of eco-friendly construction materials, ecological restoration projects and software development services and solutions utilizing Internet of Things technologies. The disposition was completed on December 31, 2024. The discontinued operations represent a strategic shift that has a major effect on the Company's operations and financial results, which triggers discontinued operations accounting in accordance with Accounting Standards Codification ("ASC") 205-20-45. The results of operations related to the discontinued operations for the six months ended June 30, 2024 were reported as loss from discontinued operations.

***Comparison of Operation Results for Six Months Ended June 30, 2025 and 2024***

The following table summarizes the results of our continuing operations during for the six months ended June 30, 2025 and 2024, and provides information regarding the changes in terms of dollar amounts and percentage during such years.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **For the Six Months Ended** <br> **June 30,** | **For the Six Months Ended** <br> **June 30,** | **For the Six Months Ended** <br> **June 30,** | **For the Six Months Ended** <br> **June 30,** | | |
| | **2025** | **2025** | **2024** | **2024** |<br>**Amount** |<br>**Percentage** |
| <br>**Statements of Income Data:** | **Amount** | **As % of<br> Sales** | **Amount** | **As % of<br> Sales** | **Increase<br> (Decrease)** | **Increase<br> (Decrease)** |
| Revenues | $1049341 | 100% | $768361 | 100% | $280980 | 37% |
| Cost of revenues | 864006 | 82% | 435806 | 57% | 428200 | 98% |
| **Gross profit** | 185335 | 18% | 332555 | 43% | (147220) | (44)% |
| **Operating expenses:** |  |  |  |  |  |  |
| Selling expenses | 313130 | 30% | 107387 | 14% | 205743 | 192% |
| General and administrative expenses | 1350077 | 129% | 658050 | 86% | 692027 | 105% |
| Provision (recovery) for credit losses | (82175) | (8)% | 89584 | 12% | (171759) | (192)% |
| **Total operating expenses** | **1581032** | 151% | **855021** | 111% | 726011 | 85% |
| **Loss from continuing operations** | **(1395697)** | (133)% | **(522466)** | (68)% | (873231) | 167% |
| **Other income (expenses)** |  |  |  |  |  |  |
| Interest expense, net | (20839) | (2)% | (1628) |  | (19211) | 1180% |
| Interest income | 267 |  | 212 |  | 55 | 26% |
| Other income | 7367 | 1% | 222 |  | 7145 | 3218% |
| **Total other expenses, net** | (13205) | (1)% | (1194) |  | (12011) | 1006% |
| **Loss before continuing operating income taxes** | (1408902) | (134)% | (523660) | (68)% | (885242) | 169% |
| Income taxes benefit | - |  | - |  | - |  |
| **Net loss from continuing operations** | $(1408902) | (134)% | $(523660) | (68)% | $(885242) | 169% |
| Net loss from discontinued operations, net of taxes | - |  | (192973) | (25)% | 192973 | (100)% |
| **Net loss** | $(1408902) | (134)% | $(716633) | (93)% | $(692269) | 97% |

---

***Revenues***

The following table shows revenues by business segments for the six months ended June 30, 2025 and 2024:

**Revenue by Business Segment**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Variance** | **Variance** |
|  | **2025** | **2025** | **2024** | **2024** | | |
|  | **Amount** | **% of<br> Sales** | **Amount** | **% of<br> Sales** | **Amount**<br>**Increase<br> (Decrease)** | **Percentage**<br>**Increase<br> (Decrease)** |
| Equipment and accessories | $1023796 | 98% | $768361 | 100% | $255435 | 33% |
| Craft beer | 25545 | 2% | - | - | 25545 |  |
| Total | $1049341 | 100% | $768361 | 100% | $280980 | 37% |

---

Our total revenues increased by approximately $0.3 million, or 37%, to approximately $1.0 million for the six months ended June 30, 2025 from approximately $0.8 million for the six months ended June 30, 2024. The increase in total revenue was mainly attributable to the increase in sales of equipment and accessories.

*Equipment and accessories*

Revenue from equipment and accessories sales increased by approximately $0.3 million, or 33%, from $0.8 million for the six months ended June 30, 2024 to approximately $1.0 million for the six months ended June 30, 2025. The increase is due to higher overseas demand which led to increased international sales.

*Craft beer*

 

Revenue from craft beer sales amounted to $25,545 during the period from April 25, 2025 to June 30, 2025. On April 25, 2025, ReTo acquired 51% equity interest in MeinMalzeBier Holdings. MeinMalzeBier Holdings, through its subsidiaries in the PRC, is engaged in the business of selling craft beer and beer vending machines in the PRC.

***Cost of Revenues***

Our total cost of revenues from continuing operations increased by approximately $0.4 million, or 98%, to approximately $0.9 million for the six months ended June 30, 2025 from approximately $0.4 million for the six months ended June 30, 2024. The increase in our total cost of revenue was due to cost increase in sales of equipment and accessories.

**Cost of Revenues by Business Segment**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Variance** | **Variance** |
|  | **2025** | **2025** | **2024** | **2024** | | |
|  | **Amount** | **% of <br> Costs** | **Amount** | **% of <br> Costs** | **Amount**<br>**Increase<br> (Decrease)** | **Percentage**<br>**Increase<br> (Decrease)** |
| Equipment and accessories | $852888 | 99% | $435806 | 100% | $417082 | 96% |
| Craft beer | 11118 | 1% | - | - | 11118 |  |
| Total | $864006 | 100% | $435806 | 100% | $428200 | 98% |

---

 

*Equipment and accessories*

Cost of revenues for equipment and accessories sales was approximately $0.9 million for the six months ended June 30, 2025, increased by approximately $0.4 million, or 96%, from approximately $0.4 million for the six months ended June 30, 2024 due to increased sales, increased manufacturing cost and increased purchase price of accessories.

*Craft beer*

 

Cost of revenues from craft beer sales amounted to $11,118 during the period from April 25, 2025 to June 30, 2025.

***Gross Profit***

Our gross profit decreased by approximately $0.1 million, or 44%, to approximately $0.2 million for the six months ended June 30, 2025 from approximately $0.3 million for the six months ended June 30, 2024. Gross profit margin was 18% for the six months ended June 30, 2025, as compared with 43% for the six months ended June 30, 2024. The decrease in gross profit margin was due to more competitive prices we offered, as well as increased manufacturing cost and increased purchase price of accessories.

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **For the Six Months Ended June 30,** | **Variance** | **Variance** |
|  | **2025** | **2025** | **2024** | **2024** | **Gross** | **Gross** |
|  | **Gross<br> Profit** | **Gross<br> Profit <br> %** | **Gross <br> Profit** | **Gross <br> Profit <br> %** | **Profit<br> Increase<br> (Decrease)** | **Profit% <br> Increase<br> (Decrease)** |
| Equipment and accessories | $170908 | 17% | $332555 | 43% | $(161647) | (49)% |
| Craft beer | 14427 | 56% | - |  | 14427 |  |
| Total | $185335 | 18% | $332555 | 43% | $(147220) | (44)% |

---

*Equipment and accessories*

Gross profit for equipment and accessories sales was approximately $0.2 million for the six months ended June 30, 2025, decreased by approximately $0.2 million, or 49%, from approximately $0.3 million for the six months ended June 30, 2024.

*Craft beer*

 

Gross profit for craft beer sales amounted to $14,427 during the period from April 25, 2025 to June 30, 2025.

***Selling Expenses***

For the six months ended June 30, 2025, our selling expenses from continuing operations were approximately $0.3 million, representing a 192% increase from $0.1 million for the six months ended June 30, 2024. The increase was mainly due to an increase of $0.08 million in travel expenses due to market expansion and an increase of $0.02 million in salary and other expenses due to the increase in international sales for the six months ended June 30, 2025 because equipment business was transferred to existing subsidiaries after the disposal of discontinued operation.

***General and Administrative Expenses***

For the six months ended June 30, 2025, our general and administrative expenses were approximately $1.4 million, representing an increase of approximately $0.7 million compared to approximately $0.7 million for the six months ended June 30, 2024. The increase in general and administrative expenses was mainly due to (1) approximately $0.2 million increase in audit expense, (2) approximately $0.5 million increase in legal fees, (3) approximately $0.1 million increase in NASDAQ fees, partially offset by approximately $0.2 million decrease in stock-based compensation for services.

***Provision for (Recovery of) Credit Losses***

For the six months ended June 30, 2025, recovery of credit losses from continuing operations was $82,175, as compared to a provision for credit losses of $89,584 for the six months ended June 30, 2024.

***Interest Expense, Net***

Our interest income, net, from continuing operations was $20,572 and $1,416 for the six months ended June 30, 2025 and 2024, respectively. The increase in interest expenses was in line with the increase in outstanding bank loans.

***Other Income***

Other income from continuing operations amounted to $7,367 and $222 for the six months ended June 30, 2025 and 2024, respectively.

***Loss before Income Taxes***

As a result of the foregoing, our loss before income taxes from continuing operations was approximately $1.4 million for the six months ended June 30, 2025, an increase of approximately $0.9 million as compared to loss before income taxes of approximately $0.5 million for the six months ended June 30, 2024.

***Provision for Income Taxes***

Our PRC subsidiaries are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. Under the PRC Enterprise Income Tax Law, the corporate income tax rate applicable to all companies, including both domestic and foreign-invested companies, is 25%.

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<br> June 30,** | **For the Six Months Ended<br> June 30,** |
|  | **2025** | **2024** |
| Income tax expense computed based on PRC statutory income tax rate | $(352226) | $(130915) |
| Non-PRC entities not subject to PRC tax | 184003 | 102098 |
| Non-deductible expenses – permanent difference | 2148 |  |
| Change in valuation allowance | 166075 | 28817 |
| Income tax expenses | $- | $- |

---

(1) Represents the tax losses incurred from operations outside of China.

(2) Represents expenses incurred by the Company that were not deductible for PRC income tax.

***Net Loss***

 ****

As a result of the foregoing, net loss from continuing operations amounted to approximately $1.4 million and $0.5 million for the six months ended June 30, 2025 and 2024, respectively. Net loss from discontinued operations amounted to approximately nil and $0.2 million for the six months ended June 30, 2025 and 2024, respectively. Total net loss amounted to approximately $1.4 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively.

***Discontinued Operations***

The disposition of REIT Holdings was completed on December 31, 2024. The Company recorded a loss from the disposition of $3.6 million for the year ended December 31, 2024.

The discontinued operation represents a strategic shift that has a major effect on the Company's operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45. The results of operations related to the discontinued operations for the six months ended June 30, 2024 were reported as loss from discontinued operations.

The results of discontinued operations of REIT Holdings for the six months ended June 30, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| Revenues | $- | $1070278 |
| Cost of revenues | - | 835352 |
| Gross profit |  | 234926 |
| Operating expenses | - | 786560 |
| Loss from discontinued operations |  | (551634) |
| Other income, net | - | 342281 |
| Loss before tax |  | (209353) |
| Income tax benefit | - | (16380) |
| **Net loss from discontinued operations** | $**-** | $(192973) |

---

**Liquidity and Going Concern** 

ReTo is a holding company incorporated in the British Virgin Islands. New REIT International Co., Limited, Sunoro Holdings Limited ("Sunoro Holdings") and MeinMalzeBier Global Limited ("MeinMalzeBier Global") are our subsidiaries established in Hong Kong. Sunoro Holdings directly owns Beijing ReTo Hengda Technology Co., Ltd. (formerly known as Sunoro Hengda (Beijing) Technology Co., Ltd. until April 8, 2025), which in turn owns Beijing REIT Equipment Technology Co., Ltd. (formerly known as Beijing REIT Ecological Engineering Technology Co., Ltd. until August 9, 2023), Honghe ReTo Ecological Technology Co., Ltd. and Beijing ReTo Hengye Technology Co., Ltd. (formerly known as Sunoro Bochuang (Beijing) Technology Co., Ltd. until April 10, 2025). MeinMalzeBier Global directly owns Shenzhen Melody Catering Management Co., Ltd. and Dirong Century Big Data Technology Co., Ltd. We may need 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.

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 the China's State Administration of Foreign Exchange (the "SAFE"), not from a company's "capital account," which includes foreign direct investments and loans, without the prior approval of the SAFE.

We have historically funded our working capital needs from cash flow from operations, advance payments from customers, bank borrowings, equity and debt offerings and related-party loans. Presently, our principal sources of liquidity are generated from our operations, proceeds from equity financings, 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.

As reflected in the Company's consolidated financial statements for the six months ended June 30, 2025, the Company reported a net loss of approximately $1.4 million. As of June 30, 2025, the Company had a working capital deficit of approximately of $2.7 million. As of June 30, 2025, the Company had cash of approximately $2.5 million. In addition, the Company had outstanding accounts receivable of approximately $0.3 million. As of June 30, 2025, the Company had outstanding bank loans of $0.2 million. 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 condensed consolidated financial statements.

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, 2025 and 2024***

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

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended** <br> **June 30,** | **For the Six Months Ended** <br> **June 30,** |
|  | **2025** | **2024** |
| Net cash used in operating activities from continuing operations | $**(1597331)** | $**(10180371)** |
| Net cash provided by operating activities from discontinued operations | - | **5425039** |
| **Net cash used in operating activities** | **(1597331)** | **(4755332)** |
| Net cash used in investing activities from continuing operations | **(29836)** | $**(3951146)** |
| Net cash provided by (used in) investing activities from discontinued operations | - | **-** |
| **Net cash used in investing activities** | **(29836)** | **(3951146)** |
| Net cash provided by financing activities from continuing operations | **3649243** | **10300886** |
| Net cash used in financing activities from discontinuing operations | - | **(978162)** |
| **Net cash provided by financing activities** | $**3649243** | $**9322724** |

---

***Operating Activities***

Net cash used in operating activities was approximately $1.6 million for the six months ended June 30, 2025. Net cash used in operating activities for the six months ended June 30, 2025 mainly consisted of net loss of approximately $1.4 million, an increase of approximately $0.4 million in advance to suppliers, a decrease of approximately $0.4 million in accrued and other liabilities, a decrease of approximately $0.01 million in accounts payable, partially offset by an increase of approximately $0.5 million in advance from customers and adjustments of non-cash items of approximately $0.09 million.

Net cash used in operating activities was approximately $4.8 million for the six months ended June 30, 2024. Net cash used in continuing operating activities for the six months ended June 30, 2024 mainly consisted of net loss from approximately $0.5 million, an increase of approximately $10.3 million in advance to suppliers, an increase of approximately $0.1 million in accounts receivable, partially offset by an increase of approximately $0.5 million in advance from customers and adjustments of non-cash items of approximately $0.3 million. Net cash provided by discontinued operating activities was approximately $5.4 million.

***Investing Activities***

Net cash used in investing activities was $29,836 for the six months ended June 30, 2025, which consisted of purchase of property and equipment of $53,884, partially offset by collection form related-party loans of $24,048.

Net cash used in investing activities was approximately $4.0 million for the six months ended June 30, 2024. Net cash used in continuing investing activities for the six months ended June 30, 2024 mainly consisted of approximately $4.1 million paid as a deposit pursuant to a letter of intent executed in March 2024 in connection with a potential equity acquisition, partially offset by proceeds of approximately $0.2 million from disposal of subsidiaries. Net cash used in discontinued investing activities for the six months ended June 30, 2024 was nil.

 ****

***Financing Activities***

Net cash provided by financing activities was approximately $3.6 million for the six months ended June 30, 2025, including proceeds from convertible loans of approximately $3.0 million, proceeds from related-party loans of approximately $0.2 million, proceeds from bank loans of approximately $0.2 million and proceeds from third-party loans of approximately $0.2 million.

Net cash provided by financing activities was approximately $9.3 million for the six months ended June 30, 2024. Net cash used in continuing financing activities for the six months ended June 30, 2024 mainly consisted of proceeds from a private placement of approximately $4.0 million, proceeds from a direct offering of approximately $6.0 million, proceeds from third-party loans of $88,704 and proceeds from related-party loans of approximately $0.2 million. Net cash used in discontinued financing activities for the six months ended June 30, 2024 was approximately $1.0 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 our Board of Directors. The restricted amounts as determined pursuant to PRC laws totaled $1,072,895 as of June 30, 2025 and December 31, 2024.

**Capital Expenditures**

We had capital expenditures of $0.05 million and $4.1 million for the six months ended June 30, 2025 and 2024, respectively.

**Recent Accounting Pronouncements** 

A list of recent relevant accounting pronouncements is included in Note 2 "Summary of Principal Accounting Policies" of our consolidated financial statements included elsewhere in this filing.

**Research and Development, Patents and Licenses, etc.**

See "*Item 4. Information on the Company—B. Business Overview— Research and Development*" in the Annual Report on Form 20-F for the year ended December 31, 2024 filed with the Securities and Exchange Commission on May 9, 2025.

**Trend Information**

Other than as disclosed elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments or events for the six months ended June 30, 2025 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily 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, 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 unaudited condensed 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 unaudited condensed consolidated financial condition and results of operations.

***Accounts Receivable, Net***

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update ("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 were 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 $30,342 and $108,936 as of June 30, 2025 and December 31, 2024, respectively.

***Impairment of Long-lived Assets***

The Company reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value.

***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 equipment and accessories sales

The Company recognizes revenue when the equipment and accessories sales are delivered and control is transferred. The Company generally provides 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, 2025 and 2024.

● Revenue from craft beer sales

The Company recognizes revenue when the craft beer is delivered and control is transferred. The Company generally provides a warranty for a period of 5 days after the customers receive the craft beer. The Company determines that such product warranty is not a separate 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, 2025 and 2024.

***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 time when an order is placed and when shipment or delivery occurs.

For the six months ended June 30, 2025 and 2024, 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.

***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.

***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, 2025 and 2024. As of June 30, 2025, the tax years ended December 31, 2019 through December 31, 2024 for the Company's PRC subsidiaries remain open for statutory examination by PRC tax authorities.

## Exhibit 99.2

?xml version='1.0' encoding='ASCII'?

**Exhibit 99.2**

**RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES**

---

| | |
|:---|:---|
| **Unaudited Condensed Consolidated Financial Statements** |  |
| [Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024](#f_001) | F-2 |
| [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Six Months Ended June 30, 2025 and 2024](#f_002) | F-3 |
| [Unaudited Condensed Consolidated Statements of Changes in Equity (Deficit) for the Six Months Ended June 30, 2025 and 2024](#f_003) | F-4 |
| [Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024](#f_004) | F-5 |
| [Notes to Unaudited Condensed Consolidated Financial Statements](#f_005) | F-6 |

---

**RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br>**2025** | **December 31,**<br>**2024** |
| **<u>ASSETS</u>** | (Unaudited) |  |
| **Current Assets:** |  |  |
| Cash and cash equivalents | $2459943 | $671355 |
| Accounts receivable, net | 308435 | 145853 |
| Advances to suppliers, net | 935199 | 522190 |
| Advances to supplier - related party | 916 | - |
| Prepayments and other current assets | 60114 | 5202 |
| Due from related parties | - | 24048 |
| Inventories | 47784 | - |
| **Total Current Assets** | **3812391** | **1368648** |
| Property, plant and equipment, net | 278575 | 21497 |
| Intangible assets, net | 7694606 | 7654767 |
| Prepayment for construction of properties | 6790027 | 6663795 |
| Right-of-use assets | 305052 | 28085 |
| Deposits for business acquisitions | 14542126 | 18520126 |
| Goodwill | 7982271 | - |
| **Total Assets** | $**41405048** | $**34256918** |
| **<u>LIABILITIES AND SHAREHOLDERS' EQUITY</u>** |  |  |
| **Current Liabilities:** |  |  |
| Convertible note, net of issuance cost | $776900 | $- |
| Short-term bank loans | 212184 | - |
| Advances from customers | 1780856 | 1213465 |
| Accounts payable | 67362 | 37866 |
| Accounts payable - related party | 4193 | - |
| Accrued expenses and other liabilities | 2001462 | 2338075 |
| Loans from third parties | 155000 | 109600 |
| Taxes payable | 256043 | 249628 |
| Due to related parties | 1100577 | - |
| Lease liability - current | 144914 | - |
| **Total Current Liabilities** | **6499491** | **3948634** |
| Loans from third parties - non-current | 176029 | - |
| Long-term accounts payable | 390865 | 383598 |
| Lease liability - non-current | 125625 | - |
| **Total Liabilities** | $**7192010** | $**4332232** |
| **Commitments and Contingencies** |  |  |
| **Shareholders' Equity:** |  |  |
| Class A shares, no par value, unlimited shares authorized, 7,323,491 shares and 1,979,879 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively\* | - | - |
| Class B shares, $0.01 par value, 2,000,000 shares authorized, 1,000,000 shares and nil shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | 10000 | 10000 |
| Additional paid-in capital | 102964031 | 100740868 |
| Statutory reserve | 1072895 | 1072895 |
| Accumulated deficit | (73194815) | (71813934) |
| Accumulated other comprehensive loss | (484097) | (85143) |
| **Total Shareholders' Equity** | **30368014** | **29924686** |
| Non-controlling interest | 3845024 | - |
| **Total Equity** | $**34213038** | $**29924686** |
| **Total Liabilities and Equity** | $**41405048** | $**34256918** |

---

\* Balance as of December 31, 2024 was retroactively stated for change of par value from $1.0 to no par value on May 12, 2025.

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

**RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| Revenues | $1049341 | $768361 |
| Cost of revenues | 864006 | 435806 |
| **Gross Profit** | **185335** | **332555** |
| **Operating Expenses:** |  |  |
| Selling expenses | 313130 | 107387 |
| General and administrative expenses | 1350077 | 658050 |
| (Recovery of) provision for credit losses | (82175) | 89584 |
| **Total Operating Expenses** | **1581032** | **855021** |
| **Loss from Operations** | **(1395697)** | **(522466)** |
| **Other Income (Expenses):** |  |  |
| Interest expenses | (20839) | (1628) |
| Interest income | 267 | 212 |
| Other income (expenses), net | 7367 | 222 |
| **Total Other Expenses (Income)** | **(13205)** | **(1194)** |
| **Loss Before Income Taxes** | **(1408902)** | **(523660)** |
| **Income Taxes Expense (Benefit)** | - | **-**  |
| Net loss from continuing operations | (1408902) | (523660) |
| Net loss from discontinued operations | - | (192973) |
| **Net Loss** | **(1408902)** | **(716633)** |
| Less: Net loss attributable to non-controlling interest | (28021) | (38174) |
| **Net loss attributable to ReTo Eco-Solutions, Inc.** | $**(1380881)** | $**(678459)** |
| **Comprehensive Loss:** |  |  |
| **Net Loss** | $**(1408902)** | $**(716633)** |
| Other comprehensive loss: |  |  |
| Foreign currency translation adjustment | (398954) | (489400) |
| **Comprehensive Loss** | **(1807856)** | **(1206033)** |
| Less: Comprehensive loss attributable to non-controlling interest | 37148 | (46745) |
| **Comprehensive loss attributable to ReTo Eco-Solutions, Inc.** | $**(1845004)** | $**(1159288)** |
| **Net loss attributable to ReTo Eco-Solutions, Inc.** |  |  |
| Continuing operations | (1380881) | (523660) |
| Discontinued operations | - | (154799) |
| **Total** | $**(1380881)** | $**(678459)** |
| **Basic and Diluted Loss Per Share Attributable to ReTo Eco-Solutions, Inc.** |  |  |
| Continuing operations | $(0.70) | $(1.91) |
| Discontinued operations | - | (0.56) |
| **Total** | $**(0.70)** | $**(0.25)** |
| **Weighted average number of shares** |  |  |
| Basic and diluted | **1960715** | **274536** |

---

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

**RETO ECO-SOLUTIONS, INC. AND SUBSIDIARIES**

**UNAUDITED CONDEDSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY** 

**FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A<br> Shares** | **Class A<br> Shares** | **Class B<br> Shares** | **Class B<br> Shares** | | | | | | |
|  | **Number** | **Amount\*** | **Number** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Statutory**<br>**Reserve** | **Accumulated**<br>**Deficit** | **Accumulated<br> Other<br> Comprehensive**<br>**Loss** | **Non-controlling**<br>**Interest** | **Total**<br>**Equity** |
| **Balance at December 31, 2023** | **120519** | $**-**  | **-**  | $**-**  | $**68996775** | $**1072895** | $**(63461282)** | $**(2253561)** | $**496347** | $**4851174** |
| Net income |  |  |  | - | - | - | (678459) | **-**  | (38174) | (716633) |
| Fractional share issued for reverse stock split | 5642 | - |  | - | - | - | - | **-**  | - | - |
| Issuance of shares in private placements | 100000 | - |  | - | 3969063 | - | - | - | - | 3969063 |
| Issuance of shares to employees and officers | 6726 | - |  | - | 162769 | - | - | - | - | 162769 |
| Appropriation to statutory reserve |  | - |  | - | - | 55779 | (55779) | - | - | - |
| Issuance of shares | 150000 | - |  | - | 6000000 | - | - | - | - | 6000000 |
| Foreign currency translation adjustment | - | - | - | - | - | - | - | (480829) | (8571) | (489400) |
| **Balance at June 30, 2024** | **382887** | $**-**  | - | $- | $**79128607** | $**1128674** | $**(64195520)** | $**(2734390)** | $**449602** | $**13776973** |
| **Balance at December 31, 2024** | **1931264** | $**-**  | **1000000** | $**10000** | $**100740868** | $**1072895** | $**(71813934)** | $**(85143)** | $**-**  | $**29924686** |
| Net income | **-** | **-**  | **-** | **-**  | **-**  | - | (1380881) | - | (28021) | (1408902) |
| Issuance of reserve shares | 4680000 | - |  | - | - | - | - | - | - | - |
| Pre-delivery shares issued for financing | 635000 | - |  |  | 2127313 | - | - | - | - | 2127313 |
| Commitment shares issued for financing | 28612 | - |  | - | 95850 | - | - | - | - | 95850 |
| Fractional share issued for reverse stock split | 48615 | - |  | - | - | - | - | - | - | - |
| Non-controlling interests from acquisition |  | - |  | - | - | - | - | - | 3807876 | 3807876 |
| Foreign currency translation adjustment | - | - | - | - | - | - | - | (398954) | 65169 | (333785) |
| **Balance at June 30, 2025** | **7323491** | $**-**  | **1000000** | $**10000** | $**102964031** | $**1072895** | $**(73194815)** | $**(484097)** | $**3845024** | $**34213038** |

---

\* Retroactively stated for change of par value from $1.0 to no par value on May 12, 2025.

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

**RETO ECO-SOLUTIONS, INC.**

**UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(1408902) | $(716633) |
| &nbsp;&nbsp;&nbsp;Net loss from discontinued operations | - | (192973) |
| &nbsp;&nbsp;&nbsp;Net loss from continuing operations | (1408902) | (523660) |
| **Adjustments to reconcile net loss to net cash used in operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 122414 | 7808 |
| &nbsp;&nbsp;&nbsp;Change in allowance for credit losses | (82174) | 89584 |
| &nbsp;&nbsp;&nbsp;Amortization of share-based compensation for services | - | 162769 |
| &nbsp;&nbsp;&nbsp;Amortization of operating lease right-of-use assets | 53646 | 4158 |
| Changes in operating assets: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (36290) | (110209) |
| &nbsp;&nbsp;&nbsp;Advances to suppliers | (374782) | (10260372) |
| &nbsp;&nbsp;&nbsp;Advances to suppliers - related party | - | (910) |
| &nbsp;&nbsp;&nbsp;Inventories | 43601 | (393) |
| &nbsp;&nbsp;&nbsp;Prepayments and other current assets | (31707) | (1763) |
| Changes in operating liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | (11204) | - |
| &nbsp;&nbsp;&nbsp;Accounts payable - related party | 4141 | - |
| &nbsp;&nbsp;&nbsp;Advances from customers | 537723 | 251926 |
| &nbsp;&nbsp;&nbsp;Advances from customers - related party | - | 227345 |
| &nbsp;&nbsp;&nbsp;Accrued and other liabilities | (354058) | (50557) |
| &nbsp;&nbsp;&nbsp;Taxes payable | 899 | 23903 |
| &nbsp;&nbsp;&nbsp;Operating lease liability | (60638) | - |
| &nbsp;&nbsp;&nbsp;**Net cash used in operating activities from continuing operations** | **(1597331)** | **(10180371)** |
| &nbsp;&nbsp;&nbsp;**Net cash provided by operating activities from discontinued operations** | **-**  | **5425039** |
| &nbsp;&nbsp;&nbsp;**Net cash used in operating activities** | **(1597331)** | **(4755332)** |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | (53884) | - |
| &nbsp;&nbsp;&nbsp;Collection from related party | 24048 | - |
| &nbsp;&nbsp;&nbsp;Proceeds from disposal of subsidiaries | - | 176854 |
| &nbsp;&nbsp;&nbsp;Deposits for equity acquisition | - | (4128000) |
| &nbsp;&nbsp;&nbsp;**Net cash used in investing activities from continuing operations** | **(29836)** | **(3951146)** |
| &nbsp;&nbsp;&nbsp;**Net cash used in investing activities from discontinued operations** | **-**  | **-**  |
| &nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | **(29836)** | **(3951146)** |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term bank loans | 231641 | - |
| &nbsp;&nbsp;&nbsp;Repayment of short-term bank loans | (22061) | - |
| &nbsp;&nbsp;&nbsp;Proceeds from third-party loans | 218563 | 88704 |
| &nbsp;&nbsp;&nbsp;Proceeds from convertible note | 3000064 | - |
| &nbsp;&nbsp;&nbsp;Proceeds from private placement | - | 3969063 |
| &nbsp;&nbsp;&nbsp;Proceeds from a direct offering | - | 6000000 |
| &nbsp;&nbsp;&nbsp;Proceeds from related party loans | 222577 | 243119 |
| &nbsp;&nbsp;&nbsp;Repayment to related party loans | (1541) | - |
| &nbsp;&nbsp;&nbsp;**Net cash provided by financing activities from continuing operations** | **3649243** | **10300886** |
| &nbsp;&nbsp;&nbsp;**Net cash used in financing activities from discontinued operations** | **-**  | **(978162)** |
| &nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | **3649243** | **9322724** |
| **EFFECT OF EXCHANGE RATE CHANGES ON CASH** | **(233488)** | **(477460)** |
| **NET INCREASE IN CASH** | **1788588** | **138786** |
| **CASH, BEGINNING OF THE PERIOD** | **671355** | **1413669** |
| **CASH, END OF THE PERIOD** | $**2459943** | $**1552455** |
| **SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:** |  |  |
| Interest paid | $20839 | $1628 |
| Income tax paid | $- | $- |
| **Non-Cash Investing and Financing Activities** |  |  |
| Right-of-use assets obtained in exchange for operating lease obligations | $215983 | $- |
| Convertible note issuance cost | $2127313 | $- |

---

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

**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 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 manufacture and distribution of ecological environment protection equipment, intelligent mining equipment and related consultation and technological services. On April 25, 2025, ReTo entered into a share exchange agreement (the "Share Exchange Agreement") to acquire 51% equity interest in MeinMalzeBier Holdings Limited. MeinMalzeBier Holdings Limited, through its subsidiaries in the PRC, is engaged in the business of selling craft beer and beer vending machines in the PRC.

As of June 30, 2025, the unaudited condensed 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<br> Incorporation** | **Ownership<br> Percentage** |
| ReTo Eco-Solutions, Inc. | British Virgin Islands | Parent |
| New REIT International Co., Limited ("New REIT") | Hong Kong, China | 100% |
| Sunoro Holdings Limited ("Sunoro Holdings") | Hong Kong, China | 100% |
| Beijing ReTo Hengda Technology Co., Ltd. ("Reto Hengda")\* | Beijing, China | 100% |
| Beijing REIT Equipment Technology Co., Ltd. ("REIT Equipment") | Beijing, China | 100% |
| Honghe ReTo Ecological Technology Co., Ltd. ("Honghe ReTo") | Yunnan, China | 100% |
| Beijing ReTo Hengye Technology Co., Ltd. ("ReTo Hengye")\*\* | Beijing, China | 100% |
| MeinMalzeBier Holdings Limited ("MMB") | Hong Kong, China | 51% controlled by ReTo |
| MeinMalzeBier Global Limited ("MMB HK") | Hong Kong, China | 100% controlled by MMB |
| Shenzhen Dirong Century Big Data Technology Co., Ltd. ("Dirong") | Shenzhen China | 100% controlled by MMB HK |
| Shenzhen Melody Catering Management Co., Ltd. ("Melody") | Shenzhen, China | 100% controlled by MMB HK |

---

\* On April 8, 2025, Sunoro Hengda (Beijing) Technology Co., Ltd. was renamed to "Beijing ReTo Hengda Technology Co., Ltd."

\*\* On April 10, 2025, Sunoro Bochuang (Beijing) Technology Co., Ltd. was renamed to "Beijing ReTo Hengye Technology Co., Ltd."

**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 and Exchange Commission. 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, 2025 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 ReTo and its subsidiaries. All intercompany transactions and balances are eliminated upon consolidation.

Subsidiaries are those entities in which ReTo, 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 interests***

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 interests' operating results are presented on the face of the unaudited condensed consolidated statements of income and comprehensive income as an allocation of the total income for the six months between non-controlling shareholders and the shareholders of the Company.

***Business acquisition***

 ****

The Company accounts for its business combinations using the acquisition method of accounting. The cost of an acquisition is measured as the aggregate of the acquisition date fair value of the assets transferred to the sellers, liabilities incurred by the Company and equity instruments issued by the Company. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of consideration paid and fair value of the non-controlling interests over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the consideration of acquisition is less than the fair value of the net assets acquired, the difference is recognized directly in the unaudited condensed statements of operations and comprehensive (loss) income.

The Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination. Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

 ****

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

**Use of Estimates**

The preparation of unaudited condensed consolidated 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, advances to suppliers, 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 Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. Accounting Standards Codification ("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 were 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 $30,342 and $108,936 as of June 30, 2025 and December 31, 2024, 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 services and materials 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 continuing operations amounted to nil and $2,740 as of June 30, 2025 and December 31, 2024, respectively.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

**Intangible Assets**

Intangible assets consist primarily of an acquired concession right on forest land. Intangible assets are stated at cost less accumulated amortization. Intangible assets are amortized using the straight-line method with the following estimated useful lives:

---

| | |
|:---|:---|
| **Items** | **Useful life** |
| Concession right on forest land | 37 years |

---

**Impairment of Long-lived Assets**

The Company reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value.

**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 flow.

**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, advances to suppliers, accounts payable, accrued expenses 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 at June 30, 2025 and December 31, 2024 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 on June 30, 2025 and December 31, 2024 based on the terms of the borrowings and current market rates as the rates of the borrowings are reflective of the current market rates.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

The following tables represent the fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** | **As of June 30, 2025** |
|  | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** | **Fair Value Measurement at the Reporting Date using** |
|  | **Quoted price<br> in active<br> markets for<br> identical<br> assets<br> Level 1** | **Significant<br> other<br> observable<br> inputs<br> Level 2** | **Significant<br> unobservable<br> inputs<br> Level 3** | **Total** |
| **Financial liabilities:** |  |  |  |  |
| Earn-out liability from MMB acquisition |  |  | $- |  |

---

*Contingent consideration – earn-out liability from MMB acquisition*

On April 25, 2025, ReTo entered into the Share Exchange Agreement to acquire 51% equity interest in MMB, a British Virgin Islands business company, from its original shareholders (the "Sellers"). Pursuant to the Share Exchange Agreement, subject to the terms and conditions set forth therein, the purchase consideration consisted of (i) an amount in cash equal to $3,978,000 and (ii) issuance of 4,680,000 of the Company's Class A shares, no par value (the "Class A Shares"), with earnout and escrow conditions (the "Escrow Earnout Shares"). In connection with the acquisition of MMB, the Sellers of MMB are entitled to receive the 4,680,000 Escrow Earnout Shares based on the Contributed Profits (as defined below) of MMB's two operating companies, Melody and Dirong (the "MMB Operating Companies"), during the three (3) year period (the "Earnout Period") following the closing of the transaction (the "MMB Closing"). "Contributed Profits" means with respect to an MMB Operating Company for any fiscal year, the amount of net income, if any, of such MMB Operating Company determined in accordance with U.S. GAAP but excluding taxes and any amounts payable pursuant to the management services agreement, dated April 25, 2025, by and among ReTo, ReTo Hengda, and the MMB Operating Companies; <u>provided</u>, <u>however</u>, if after the MMB Closing and during the Earnout Period, MMB or its subsidiaries acquire another business or material assets, then the Contributed Profits shall be computed without taking into consideration (i) the revenues of or generated by such acquired business or material assets or (ii) any impact such acquired business or material assets would have on the net income of an MMB Operating Company. Contributed Profits also exclude (x) any extraordinary gains (such as from the sale of real property, investments, securities or fixed assets) or any other extraordinary income and (y) any revenues that are non-recurring and earned outside of the ordinary course.

If the Contributed Profits of the MMB Operating Companies for the fiscal year ending December 31, 2025 (the "2025 Contributed Profits") is greater than $1,600,000 (the "2025 Contributed Profits Target"), each Seller shall be entitled to receive its pro rata share of thirty percent (30%) of the Escrow Earnout Shares (the "2025 Escrow Earnout Shares"); provided, however, the number of 2025 Escrow Earnout Shares that vest and become payable to each Seller shall be reduced by the number of shares forfeited by Sellers as payment due in respect of its indemnification obligations. In the event that the Contributed Profits of the MMB Operating Companies do not exceed the 2025 Contributed Profits Target, (A) a number of 2025 Escrow Earnout Shares equal to the product of (I) the number of 2025 Escrow Earnout Shares and (II) the quotient obtained by dividing 2025 Contributed Profits by the 2025 Contributed Profits Target, shall immediately vest and become payable to each Seller in accordance with their respective pro rata share and (B) either, at Sellers' representative's sole option: (I) Sellers shall forfeit and shall no longer be eligible to receive the remaining 2025 Escrow Earnout Shares (but shall still be eligible to receive 2026 Escrow Earnout Shares (as defined below) and 2027 Escrow Earnout Shares (as defined below) or (II) Sellers shall be entitled to purchase all, but not less than all, of the remaining 2025 Escrow Earnout Shares for cash in an aggregate amount equal to the 2025 Contributed Profits Target *less* the 2025 Contributed Profits.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

If the Contributed Profits of the MMB Operating Companies for the fiscal year ending December 31, 2026 (the "2026 Contributed Profits") is greater than $2,800,000 (the "2026 Contributed Profits Target"), each Seller shall be entitled to receive its pro rata share of thirty percent (30%) of the Escrow Earnout Shares (the "2026 Escrow Earnout Shares"); provided, however, the number of 2026 Escrow Earnout Shares that vest and become payable to each Seller shall be reduced by the number of shares forfeited by Sellers as payment due in respect of its indemnification obligations. In the event that the Contributed Profits of the MMB Operating Companies do not meet the 2026 Contributed Profits Target, (A) a number of 2026 Escrow Earnout Shares equal to the product of (I) the number of 2026 Escrow Earnout Shares and (II) the quotient obtained by dividing 2026 Contributed Profits by the 2026 Contributed Profits Target, shall immediately become vested and payable to each Seller in accordance with their respective pro rata share and (B) either, at Sellers' representative's sole option: (I) Sellers shall forfeit and shall no longer be eligible to receive the remaining 2026 Escrow Earnout Shares (but shall still be eligible to receive 2027 Escrow Earnout Shares) or (II) Sellers shall be entitled to purchase all, but not less than all, of the remaining 2026 Escrow Earnout Shares for cash in an aggregate amount equal to the 2026 Contributed Profits Target *less* the 2026 Contributed Profits.

If the Contributed Profits of the MMB Operating Companies for the fiscal year ending December 31, 2027 is greater than $3,400,000 (the "2027 Contributed Profits Target"), each Seller shall be entitled to receive its pro rata share of forty percent (40%) of the Escrow Earnout Shares (the "2027 Escrow Earnout Shares"); provided, however, the number of 2027 Escrow Earnout Shares that vest and become payable to each Seller shall be reduced by the number of shares forfeited by Sellers as payment due in respect of its indemnification obligations. In the event that the Contributed Profits of the MMB Operating Companies do not meet the 2027 Contributed Profits Target, (A) a number of 2027 Escrow Earnout Shares equal to the product of (I) the number of 2027 Escrow Earnout Shares and (II) the quotient obtained by dividing 2027 Contributed Profits by the 2027 Contributed Profits Target, shall immediately become vested and payable to each Seller in accordance with their respective pro rata share and (B) either, at Sellers' representative's sole option: (I) Sellers shall forfeit and shall no longer be eligible to receive the remaining 2027 Escrow Earnout Shares or (II) Sellers shall be entitled to purchase all but not less than all of the remaining 2027 Escrow Earnout Shares for cash in an aggregate amount equal to the 2027 Contributed Profits Target *less* the 2027 Contributed Profits.

If the Contributed Profits of the MMB Operating Companies exceed the targets in each year during the Earnout Period, then ReTo shall issue to the Sellers an aggregate number of the Class A Shares equal to the product of (a) the quotient obtained by *dividing* the Total Excess Profits (as defined below) *by* 3 and (b) the quotient obtained by *dividing* (i) 10 *by* (ii) the Price Per Newly Issued Earnout Share (as defined below). "Total Excess Profits" means the sum of the Contributed Profits during the Earnout Period *less* the sum of the Contributed Profits targets. "Price Per Newly Issued Earnout Share" means the closing price of the Class A Shares quoted on the Nasdaq Stock Market LLC on the first trading day after the end of each applicable earnout year subject to a collar as described in the Share Exchange Agreement.

Upon the MMB Closing, the Company recorded the fair value of the contingent consideration resulted from earn-out liability and recorded the changes in fair value in earnings. The Company determined the fair value of the contingent consideration using binomial model, which includes significant unobservable inputs that are classified as level 3 in the fair value hierarchy. A binomial model uses random numbers, together with the assumption of volatility, risk-free rate, expected dividend rate, to generate individual stock price paths. The major assumptions used in the binomial model are as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2025** | **April 25, 2025** |
| Risk-free interest rate | 1.90% | 1.98% |
| Share price | $1.94 | $3.88 |
| Probability | 30% - 40 | 30% - 40 |

---

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

The Company did not transfer any assets or liabilities in or out of Level 3 during the six months ended June 30, 2025. The following is a reconciliation of the beginning and ending balances for contingent consideration measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2025:

**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 from continuing operations are primarily derived from the following sources:

&nbsp;&nbsp;&nbsp;&nbsp;● Revenue from equipment and accessories sales

The Company recognizes revenue when the equipment and accessories are delivered and control is transferred. The Company generally provides a warranty for a period of 12 months after the customers receive the equipment. The Company determines that such product warranty is not a separate 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, 2025 and 2024.

&nbsp;&nbsp;&nbsp;&nbsp;● Revenue from craft beer
 and vending machine sales

The Company recognizes revenue when the craft beer and vending machine are delivered and control is transferred. The Company generally provides a warranty for a period of 5 days after the customers receive the craft beer. The Company determines that such product warranty is not a separate performance obligation because the nature of warranty is to provide assurance of quality, 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, 2025 and 2024.

The following summarizes the Company's revenue by nature from continuing operations:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| Equipment and accessories | $1023797 | $768361 |
| Craft beer and vending machine | 25544 | - |
| **Total revenue** | $**1049341** | $**768361** |

---

**Contract Assets and Liabilities**

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

As of June 30, 2025 and December 31, 2024, 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.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

**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.

**Shipping and Handling**

Shipping and handling costs are expensed as incurred and are included in operating expenses as a part of selling and general and administrative expenses in the Company's consolidated statements of income and comprehensive income. Shipping and handling costs associated with the Company's continuing operations were $28,669 and $6,581 for the six months ended June 30, 2025 and 2024, 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 unaudited condensed 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 unaudited condensed 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, 2025 and 2024. As of June 30, 2025, the tax years ended December 31, 2019 through December 31, 2024 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.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

**Loss per Share**

The Company computes 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 shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential 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 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. For the six months ended June 30, 2024 and 2025, the Company had no dilutive security outstanding that could potentially dilute EPS in the future. Since Class B shareholder has no rights to any dividend, therefore, the Class B shares were excluded from the calculation of basic and diluted loss per share.

**Foreign Currency Translation**

The Company's principal country of operations is the PRC. The financial position and results of its operations located in the PRC are determined using Renminbi ("RMB"), the local currency, as the functional currency. ReTo, New REIT and Sunoro Holdings use U.S. Dollars ("US$") as their 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 unaudited condensed consolidated financial statements in this report:

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| | | | |
|:---|:---|:---|:---|
|  | **June 30,<br> 2025** | **December 31,<br> 2024** | **June 30,<br> 2024** |
| Year-end spot rate | US$1=RMB 7.1636 | US$1=RMB 7.2993 | US$1=RMB 7.2672 |
| Year-end spot rate (discontinued operations) | US$1= INR 85.74 | US$1= INR 85.55 | US$1=INR 83.33 |
| Average rate | US$1=RMB 7.2526 | US$1=RMB 7.1957 | US$1=RMB 7.2150 |
| Average rate (discontinued operations) | US$1=INR 86.07 | US$1=INR 83.66 | US$1=INR 83.20 |

---

**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 the political, economic, and legal environment in the PRC, as well as by the general state of the PRC economy. 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.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

**Discontinued Operations**

The Company reports a disposal of its component or a group of its components as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on the Company's operations and financial results. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. In the period that a discontinued operation is classified as held for sale, the assets and liabilities of the discontinued operation are presents separately in asset and liability sections, respectively, of the consolidated balance sheets and prior periods are presented on a comparative basis. In the consolidated statements of operations and comprehensive (loss)/income, the results from discontinued operations are reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. Cash flows for discontinued operations are presented separately in the consolidated statements of cash flows. Unless otherwise noted, discussion in the notes to unaudited condensed consolidated financial statements refers to the Company's continuing operations. Refer to Note 4 for additional information.

**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 two operating segments as defined by ASC 280, including (i) equipment and accessories and (ii) craft beer.

**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, 2025 and December 31, 2024, $210,539 and $216,433 of the Company's cash and cash equivalents were deposited at financial institutions in mainland China. These deposits were insured for up to RMB500,000 for one bank pursuant to the PRC' deposit insurance regime.

For the six months ended June 30, 2025, three customers accounted for 28%, 19% and 18% of the Company's total revenue, respectively. For the six months ended June 30, 2024, two customers accounted for 39% and 11% of the Company's total revenue, respectively.

As of June 30, 2025, two customers accounted for 60% and 15% of the Company's consolidated accounts receivable, respectively. As of December 31, 2024, four customers accounted for 37%, 23%, 22% and 12% of the Company's consolidated accounts receivable, respectively.

For the six months ended June 30, 2025, the Company purchased approximately 29%, 23%, 17% and 15% of its raw materials from four major suppliers, respectively. For the six months ended June 30, 2024, the Company purchased approximately 16%, 16%, 14%, 12% and 11% of its raw materials from five major suppliers.

As of June 30, 2025, three suppliers accounted for 33%, 29% and 19% of the total accounts payable balance, respectively. As of December 31, 2024, two suppliers accounted for 58% and 33% of the total accounts payable balance, respectively.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

**Recent Accounting Pronouncements**

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

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which requires disclosure of significant segment expenses and other segment items on an annual and interim basis under ASC 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The adoption of this ASU did not have significant impact on the Company's financial statements.

In December 2023, the 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 adoption of this ASU did not have significant impact on the Company's 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. The adoption of this ASU did not have significant impact on the Company's financial statements.

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures" (Subtopic 220-40) ("ASU 2024-03"). The objective of ASU 2024-03 is to improve disclosures about a public entity's expenses, primarily through additional disaggregation of income statement expenses. In January 2025, the FASB further clarified the effective date of ASU 2024-03 with the issuance of Accounting Standards Update 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2025-01"). ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted and may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statement disclosures.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. ASU 2025-03 clarifies the guidance to determine the accounting acquirer in a business combination that is affected primarily by exchanging equity interests, when the legal acquiree is a variable interest entity ("VIE") that meets the definition of a business. ASU 2025-03 requires entities to consider the same factors in ASC 805, Business Combinations, required for determining which entity is the accounting acquirer in other acquisition transactions. ASU 2025-03 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-03 is required to be applied on a prospective basis to any acquisition transaction that occurs after the initial application date. The Company is currently evaluating the impact ASU 2025-03 will have on its financial statement disclosures.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company's annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently evaluating the impact ASU 2025-05 will have on its financial statement disclosures.

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.

**NOTE 3 – GOING CONCERN**

As reflected in the Company's unaudited condensed consolidated financial statements for the six months ended June 30, 2025, the Company's revenue increased by approximately $0.3 million, or 37%, from approximately $0.8 million for the six months ended June 30, 2024 to approximately $1.0 million for the six months ended June 30, 2025; its gross profit from continuing operations decreased by approximately $0.1 million, or 44%, from approximately $0.3 million for the six months ended June 30, 2024 to approximately $0.2 million for the six months ended June 30, 2025. Operating expenses increased from approximately $0.9 million for the six months ended June 30, 2024 to approximately $1.6 million for the six months ended June 30, 2025. As a result, for the six months ended June 30, 2025 and 2024, the Company reported a net loss of approximately $1.4 million and $0.7 million, respectively. As of June 30, 2025, the Company had a working deficit of approximately $2.7 million.

As of June 30, 2025, the Company had cash of approximately $2.5 million. In addition, the Company had outstanding accounts receivable of approximately $0.3 million. As of June 30, 2025, the Company had approximately $0.2 million short-term bank loans.

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.

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

**NOTE 4 – DISCONTINUED OPERATIONS**

The Company's former subsidiary, REIT Holdings (China) Limited ("REIT Holdings"), and its subsidiaries were primarily engaged in the businesses of sales of municipal construction materials, municipal construction projects and equipment manufacture and sales. On December 31, 2024, the Company sold its 100% ownership interest in REIT Holdings to a shareholder holding less-than 5% of Class A shares of the Company (the "Buyer"), for a cash consideration of $80,000 (based on the valuation assessed by a third-party valuation firm), which was fully paid by the Buyer by December 31, 2024. The disposition was completed on December 31, 2024. The Company recorded a loss from the disposition of $3,577,279 for the year ended December 31, 2024.

The discontinued operations represent a strategic shift that has a major effect on the Company's operations and financial results, which triggers discontinued operations accounting in accordance with ASC 205-20-45. The results of operations related to the discontinued operations for the six months ended June 30, 2024 were reported as loss from discontinued operations.

The results of discontinued operations of REIT Holdings for the six months ended June 30, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| Revenues | $- | $1070278 |
| Cost of revenues | - | 835352 |
| Gross profit | - | 234926 |
| Operating expenses | - | 786560 |
| Gain (loss) from discontinued operations | - | (551634) |
| Other income (loss), net | - | 342281 |
| Loss before tax | - | (209353) |
| Income tax benefit | - | (16380) |
| **Net loss from discontinued operations** | $- | $(192973) |

---

**NOTE 5 — ACQUISITION**

On April 25, 2025, ReTo entered into the Share Exchange Agreement to acquire 51% equity interest in MMB, a British Virgin Islands business company, from the Sellers. Pursuant to the Share Exchange Agreement, subject to the terms and conditions set forth therein, the purchase consideration consisted of (i) an amount in cash equal to $3,978,000 and (ii) issuance of 4,680,000 Escrow Earnout Shares at a price $3.88 per share. MMB, through its subsidiaries in the PRC, is engaged in the business of selling craft beer and beer machines in the PRC. The historical consolidated operating results of MMB were not significant to the Company. The MMB acquisition was accounted for as business combination in accordance with ASC 805. Acquisition-related costs incurred for the acquisitions are not material. The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date, which represents the net purchase price allocation at the date of the acquisition based on a valuation performed by an independent valuation firm engaged by the Company.

---

| | |
|:---|:---|
|  | **Amount** |
| Cash | 3196 |
| Accounts receivable, net | 44822 |
| Prepaid expenses and other current assets | 244421 |
| Property and equipment, net | 215198 |
| Goodwill | 7982271 |
| Total assets | 8489908 |
| Current liabilities | (689908) |
| Total liabilities | (689908) |
| 49% equity value with non-controlling interests | (3822000) |
| **Total consideration** | **3978000** |

---

**NOTE 6 – ACCOUNTS RECEIVABLE, NET**

Accounts receivable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of**<br> **June 30,<br> 2025** | **As of December 31, <br> 2024** |
| Trade accounts receivable | $338777 | $254789 |
| Less: Allowance for doubtful accounts | (30342) | (108936) |
| **Accounts receivable, net** | $**308435** | $**145853** |

---

Allowance for credit losses movement is as follows:

---

| | | |
|:---|:---|:---|
|  | **For the**<br> **Six Months Ended**<br> **June 30,**<br> **2025** | **For the Year Ended<br> December 31,<br> 2024** |
| Beginning balance | $108936 | $279 |
| Provision for credit losses | 20428 | 110229 |
| Recovery | (99845) | - |
| Foreign exchange translation | 823 | (1572) |
| **Ending balance** | $**30342** | $**108936** |

---

**NOTE 7 – DEPOSITS FOR BUSINESS ACQUISITION**

On August 31, 2024, the Company made prepayments in an aggregate amount of $18,520,126 to Sunflower Energy Holding Limited ("Sunflower") as deposits to secure potential business acquisitions. On April 25, 2025, the Company completed a business acquisition of 51% equity interest in MMB, which was controlled by a shareholder of Sunflower. In connection with the acquisition, the Company is obligated to pay cash consideration of $3,978,000, which was deducted from the deposit made by the Company. In addition, the Company issued 4,680,000 Class A Shares as part of its purchase consideration on April 25, 2025 (See Note 5). The remaining balance will be used for future potential acquisitions.

**NOTE 8 – 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:

---

| | | |
|:---|:---|:---|
|  | **As of<br> June 30,<br> 2025** | **As of<br> December 31, <br> 2024** |
| Prepayment for raw material purchase | $936115 | $524930 |
| Less: Advance to related parties | (916) | - |
| Less: Allowance for credit losses | - | (2740) |
| **Advances to suppliers, net** | $**935199** | $**522190** |

---

The Company's suppliers generally require refundable prepayments from the Company before delivery of goods or services. It usually takes 3 to 6 months for the suppliers to deliver raw materials for the Company 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 for the six months ended June 30, 2025 and the year ended December 31, 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br> **2025** | **December 31, <br> 2024** |
| Beginning balance | $2740 | $2817 |
| Recovery | (2758) | - |
| Foreign exchange translation | 18 | (77) |
| **Ending balance** | $**-** | $**2740** |

---

**NOTE 9 – LEASES**

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. Rent expense for the six months ended June 30, 2025 and 2024 was $57,716, and $4,158, respectively.

The Company's operating leases primarily include leases for dormitories, office space and manufacturing facilities. The current portion of operating lease liabilities is presented on the consolidated balance sheet. For the six months ended June 30, 2025, total lease expense amounted to $57,716, which included $4,069 of interest, $53,647 of amortization expense of ROU assets and short-term lease expense of nil. For the six months ended June 30, 2024, total lease expense amounted to $4,158, which included nil of interest, $4,158 of amortization expense of right-of-use assets and short-term lease expense of nil. Total cash paid for operating leases amounted to $60,838 and nil for the six months ended June 30, 2025 and 2024, respectively. Supplemental balance sheet information related to operating leases is as follows:

---

| | |
|:---|:---|
|  | **As of<br> June,<br> 2025** |
| Right-of-use assets | $305052 |
| Operating lease liabilities - current | $144914 |
| Operating lease liabilities - non-current | 125625 |
| **Total operating lease liabilities** | $**270539** |

---

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2025:

---

| | |
|:---|:---|
| Remaining lease term and discount rate: |  |
| Weighted average remaining lease term (years) | 2.16 |
| Weighted average discount rate | 3.97% |

---

The following is a schedule of maturities of lease liabilities as of June 30, 2025:

---

| | |
|:---|:---|
|  | **RMB** |
| Six months ending December 31, 2025 | 87202 |
| Twelve months ending December 31, |  |
| 2026 | 118843 |
| 2027 | 74427 |
| 2028 | - |
| 2029 | - |
| 2030 | - |
| Total future minimum lease payments | **280472** |
| Less: Imputed interest | (9933) |
| **Present value of lease liabilities** | **270539** |

---

**NOTE 10 – INTANGIBLE ASSETS, NET**

Intangible assets, net, consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **As of<br> June 30,<br> 2025** | **As of<br> December 31,<br> 2024** |
| Concession right on forest land <sup>(i)</sup> | $7817299 | $7671969 |
| Less: Accumulated amortization | (122693) | (17202) |
| **Intangible assets, net** | $**7694606** | $**7654767** |

---

&nbsp;&nbsp;&nbsp;&nbsp;(i) On December 3, 2024, the Company acquired a concession right on forest land from a third party for consideration of $7,671,969. The concession right with a finite useful life of 37 years gives the Company rights to operate in the designated forests in the PRC.

Amortization expense was $103,875 and nil for the six months ended June 30, 2025, and 2024, respectively.

Estimated future amortization expense is as follows:

---

| | |
|:---|:---|
|  | **Amortization<br> expense** |
| Six months ending December 31, 2025 | $105165 |
| Twelve months ending December 31, |  |
| 2026 | 210331 |
| 2027 | 210331 |
| 2028 | 210331 |
| 2029 | 210331 |
| Thereafter | 6748117 |
| **Total** | $**7694606** |

---

**NOTE 11 – CONVERTIBLE NOTE**

 

On June 16, 2025, ReTo entered into a securities purchase agreement (the "Securities Purchase Agreement") with Streeterville Capital, LLC (the "Investor"). Pursuant to the Securities Purchase Agreement, the Company agreed to issue and sell to the Investor one or more pre-paid purchases (each, a "Pre-Paid Purchase" and collectively, the "Pre-Paid Purchases") at an aggregate purchase price of up to $10,000,000 for the purchase of the Company's Class A Shares. The Company also agreed to issue (i) 28,612 Class A Shares to the Investor (the "Commitment Shares") as consideration for the Investor's commitment and (ii) 635,000 Class A Shares to the Investor (the "Pre-Delivery Shares") for $63.50 on June 17, 2025. The proceeds from the Pre-Paid Purchases are expected to be used for working capital and other corporate purposes.

The Securities Purchase Agreement provides for an initial Pre-Paid Purchase in the principal amount of $3,165,000 (the "Convertible Note"), before deducting an original issue discount (the "OID") of $150,000 and a transaction expense amount of $15,000 (the "Initial Pre-Paid Purchase"). The OID for each subsequent Pre-Paid Purchase after the Initial Pre-Paid Purchase will be five percent (5%) of the amount set forth in the applicable Request (as defined in the Securities Purchase Agreement) and each subsequent Pre-Paid Purchase will accrue interest at the rate of seven percent (7%) per annum. Within a committed two-year period, and subject to certain specified conditions, the Company may request the issuance of additional Pre-Paid Purchases to the Investor, with each purchase amount no less than $250,000, provided that the total outstanding balance of all Pre-Paid Purchases does not exceed $2,000,000. Following the funding of each Pre-Paid Purchase, the Investor has the right, but not the obligation, to purchase from the Company its Class A Shares not exceeding (i) the outstanding balance of the funded amount, and (ii) 9.99% beneficial ownership of the Company's outstanding Class A Shares. The purchase price of the Class A Shares will be 85% of the lowest daily VWAP during the ten (10) trading days immediately prior to the purchase notice date, but not less than the floor price (the "Floor Price"). The Floor Price for the Initial Pre-Paid Purchase is $1.00. The Floor Price for the subsequent Pre-Paid Purchase is the greater of 20% of the "Minimum Price" as defined under Nasdaq Listing Rule 5635(d) as of the applicable Pre-Paid Purchase date and $1.00.

The Company has identified and evaluated the embedded features of the Convertible Note and concluded that the risks associated with the conversion provisions are in substance a redemption option and are clearly and closely associated with the risks associated with the Convertible Note (Debt host), and other embedded features such as the Company's call option, contingent interest features for event of default, the right to prepay, and event of delisting put option are also clearly and closely related to the debt host instrument and, therefore, are not required to be bifurcated under ASC 815. Consequently, the Company accounts for the Convertible Note as a liability following the respective guidance ASC 470-20, measured at its amortized cost on the consolidated balance sheets.

As Pre-Delivery Shares can be separately exercised (i.e. each can continue to exist unchanged when the other is exercised), the Company concluded that they were freestanding. The Pre-Delivery Shares are considered a form of stock borrowing facility and are accounted for as own-share lending arrangement in accordance with 470-20-25-20A. The Company did not receive any proceeds or pay any consideration related to the Pre-Delivery Shares, except that the Company received a one-time nominal fee of $63.5 upon the issuance of the Pre-Delivery Shares and will pay the same amount to the investors upon the return of Pre-Delivery Shares, respectively. The fair value of the Pre-Delivery Shares was based on the Nasdaq trading price ($3.35) on the issuance day. The Company included the fair value of the Pre-Delivery Shares as an issuance cost and recorded at fair value upon issuance date against additional paid-in capital. Although legally issued, the Pre-Delivery Shares were not considered outstanding and therefore excluded from basic and diluted loss per share unless default of the share lending arrangement occurs, at which time the Pre-Delivery Shares would be included in the basic and diluted loss per share calculation.

The Convertible Note accounted for at amortized cost as of June 30, 2025 consisted of following:

---

| | |
|:---|:---|
|  | **As of <br>June 30, <br> 2025** |
| Convertible Note Principal | $3165000 |
| OID | (150000) |
| Legal cost | (15000) |
| Fair value for Pre-Delivery Shares related to the issuance of Convertible Note | (2223100) |
| **Total** | $776900 |

---

**NOTE 12 – LOANS FROM THIRD PARTIES - CURRENT**

---

| | | |
|:---|:---|:---|
| **Loans from Third Parties** | **As of<br> June 30,<br> 2025** | **As of<br> December 31,<br> 2024** |
| Ms. Qingcai Guan<sup>(2)</sup> | $155000 | $- |
| Honghe County Yisa Hengtong Decoration Company<sup>(1)</sup> | 111676 | 109600 |
| Yunnan Longbao Biotechnology Co., LTD<sup>(2)</sup> | 14937 | - |
| Mr. Shaocheng Li<sup>(2)</sup> | 37690 | - |
| Zhongrong Honghe Environmental Protection Building Materials Co., LTD<sup>(2)</sup> | 4746 | - |
| Zhongnongxintou Litu Technology (Honghe) Co., LTD<sup>(2)</sup> | 6980 | - |
| **Loans from third parties** | $**331029** | $**109600** |
| Less: Loans from third parties - non-current | (176029) | - |
| **Loans from third parties - current** | $**155000** | $**109600** |

---

<sup>(1)</sup> On May 6, 2024, the Company entered into a loan agreement with Honghe County Yisa Hengtong Decoration Company to borrow $109,600 as a working capital loan. The loan was interest-free and due on May 5, 2025. In May 2025, the maturity of the loan was extended to May 5, 2027.

<sup>(2)</sup> During the six months ended June 30, 2025, the Company borrowed $219,353 from several third parties as working capital loans. These loans were interest-free and due on demand.

**NOTE 13 – TAXES**

&nbsp;&nbsp;&nbsp;&nbsp;**(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 British Virgin Islands and is exempt from paying income tax. New REIT, Sunoro Holdings, MMB and MMB HK are registered in Hong Kong as holding companies.

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 Enterprise Income Tax Law, the corporate income tax rate applicable to all companies, including both domestic and foreign-invested companies, is 25%.

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

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| China Statutory income tax rate | $(352226) | $(130915) |
| Non-PRC entities not subject to PRC tax <sup>(1)</sup> | 184003 | 102098 |
| Non-deductible expenses - permanent difference | 2148 |  |
| Change in valuation allowance | 166075 | 28817 |
| Effective tax rate | $- | $- |

---

(1) Represents the tax losses incurred from operations outside of China.

**NOTE 13 – TAXES (continued)**

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

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| Loss before income tax expense from China | $(672889) | (115269) |
| Loss before income tax expense from outside of China | (736012) | (408391) |
| Total loss before income tax provision | $(1408901) | (523660) |

---

Loss before income tax expense from outside of China represents the losses incurred by ReTo holdings companies incorporated outside of China.

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, 2025 and December 31, 2024.

---

| | | |
|:---|:---|:---|
| **Deferred tax asset** | **As of<br> June 30<br> 2025** | **As of<br> December 31, <br> 2024** |
| Allowance for credit loss | $29590 | $756 |
| Tax loss carried forwards | 731431 | 28817 |
| Deferred tax assets | 761021 | 29573 |
| Valuation allowance | (761021) | (29573) |
| **Deferred tax assets, net** | $**-**  | $**-**  |

---

**NOTE 13 – TAXES (continued)**

&nbsp;&nbsp;&nbsp;&nbsp;**(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.

&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Taxes payable** 

The Company's taxes payable consist of the following:

---

| | | |
|:---|:---|:---|
|  | **As of<br> June 30,**<br>**2025** | **As of<br> December 31,**<br>**2024** |
| VAT payable | $74944 | $71796 |
| Corporate income tax payable | 173599 | 170370 |
| Other taxes payable | 7500 | 7462 |
| **Total** | $**256043** | $**249628** |

---

As of June 30, 2025 and December 31, 2024, the Company had taxes payable of approximately $0.3 million and $0.2 million, respectively, mostly related to the unpaid income tax in China. For the six months ended June 30, 2025 and 2024, the Company had 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.

**NOTE 14 – 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.

**NOTE 15 – RELATED PARTY TRANSACTIONS**

The Company records transactions with various related parties. These related party balances as of June 30, 2025 and December 31, 2024 and transactions for the six months ended June 30, 2025 and 2024 are identified as follows:

&nbsp;&nbsp;&nbsp;&nbsp;**(1)** **Related parties** 

---

| | |
|:---|:---|
| **Name of Related Party** | **Relationship to the Company** |
| Mr. Hengfang Li\* | Chief Executive Officer and Chairman of the board of directors of ReTo prior to May 25, 2025, shareholder of the Company |
| Mr. Xiaojun Zou | Chief Executive Officer and Chairman of Dirong |
| Mr. Lap Cheong Chan | A shareholder of MMB and Reto |
| Shexian Ruibo Environmental Science and Technology Co., Ltd. ("Shexian Ruibo") | Mr. Hengfang Li is the Chairman of the board of directors of Shexian Ruibo |
| Shexian Ruida Environmental Science and Technology Co., Ltd. ("Shexian Ruida") | An entity controlled by Shexian Ruibo |
| Q Green Techcon Private Limited | A non-controlling shareholder of disposed subsidiary |

---

\* On May 25, 2025, Mr. Hengfang Li resigned as the Chief Executive Officer and a director of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;**(2)** **Advances to supplier - related party** 

---

| | | |
|:---|:---|:---|
|  | **As of<br> June 30,<br> 2025** | **As of<br> December 31,<br> 2024** |
| Shexian Ruida | $916 | $- |

---

&nbsp;&nbsp;&nbsp;&nbsp;**(3)** **Accounts payable - related party** 

---

| | | |
|:---|:---|:---|
|  | **As of<br> June 30,<br> 2025** | **As of<br> December 31,<br> 2024** |
| Shexian Ruibo | $4193 | $- |

---

&nbsp;&nbsp;&nbsp;&nbsp;**(4)** **Due from related party** 

As of June 30, 2025 and December 31, 2024, the balance due from related parties was as follows:

---

| | | |
|:---|:---|:---|
|  | **As of<br> June 30,<br> 2025** | **As of<br> December 31,<br> 2024** |
| Mr. Hengfang Li | $- | $24048 |

---

&nbsp;&nbsp;&nbsp;&nbsp;**(5)** **Sales to related party** 

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> June 30,** | **For the Six Months Ended <br> June 30,** |
|  | **2025** | **2024** |
| Sales to a related party |  |  |
| &nbsp;&nbsp;&nbsp;Q Green Techcon Private Limited | $- | $218631 |

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&nbsp;&nbsp;&nbsp;&nbsp;**(6)** **Due to related parties** 

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| | | |
|:---|:---|:---|
|  | **As of<br> June 30,<br> 2025** | **As of<br> December 31,<br> 2024** |
| Mr. Hengfang Li | $470165 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - |
| Mr. Lap Cheong Chan | 611544 | - |
| Mr. Xiaojun Zou | 18868 | - |
|  | $**1100577** | $**-**  |

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For the six months ended June 30, 2025, the above related parties paid certain business expenses on behalf of the Company. The Company expects to repay the amount by December 31, 2025.

**NOTE 16** – **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 $1,072,895 as of June 30, 2025 and December 31, 2024.

**Shares**

ReTo was established on August 7, 2015 under the laws of the British Virgin Islands.

*<u>Share redesignation</u>*

On August 4, 2024, shareholders of ReTo at the 2024 Annual General Meeting of Shareholders approved the amendment and restatement of its amended memorandum and articles of association to, among other things, (a) redesignate the existing shares, par value $0.10 each, as Class A Shares, par value $0.10 each, with the same rights as the existing shares, including the right to one vote at a meeting of the shareholders or on any resolution of shareholders; the right to an equal share in any dividend paid by the Company; and the right to an equal share in the distribution of the surplus assets of the Company on its liquidation, and (b) create an additional 2,000,000 shares each to be designated as Class B shares, par value $0.01 each, 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. The Company has retroactively reflected the above changes made to the Company's capital structure in the consolidated financial statements as of the earliest period presented.

Immediately after the share redesignation, the Company has an unlimited authorized number of Class A Shares, no par value, and 2,000,000 authorized Class B shares with par value of $0.01 each.

*<u>Issuance of Class B shares</u>*

On August 14, 2024, as approved by the Company's board of directors and shareholders, the Company issued 1,000,000 Class B shares to REIT International Development (Group) Co., Limited for a total consideration of $10,000. The issuance of the Class B shares was in reliance on the registration exemption contained in Section 4(a)(2) of the Securities Act of 1933, as amended.

 

**NOTE 16** – **SHAREHOLDERS' EQUITY (continued)**

 

*<u>Share combinations</u>*

 

On May 9, 2023, the Company implemented a combination of its authorized, issued and outstanding shares at a ratio of ten-for-one so that every ten shares (or part thereof) authorized and issued were combined into one share (with the fractional shares rounding up to the next whole share) (the "2023 Share Combination"). The Company's shares began trading on a post-combination basis on May 12, 2023. As a result of the 2023 Share Combination, the Company's authorized shares were changed from 200,000,000 shares, par value $0.001 per share, to 20,000,000 shares, par value $0.01 per share.

On 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 $0.01 to an unlimited number of shares of a single class each with a par value of $0.01, effective July 31, 2023.

On February 1, 2024, the Company's board of directors approved another combination of shares on a ten-for-one basis (the "2024 Share Combination"). The Company's shares began trading on a post combination basis on March 1, 2024. As a result of the 2024 Share Combination, each ten pre-combination shares of the Company were automatically combined into one share without any action on the part of the holders, with par value of the shares of the Company changing from $0.01 per share to $0.1 per share.

On February 11, 2025, the Company's board of directors approved another combination of shares on a ten-to-one basis (the "2025 Share Combination"). The Company's shares began trading on a post-combination basis on March 7, 2025. As a result of the 2025 Share Combination, each ten pre-combination shares of the Company were automatically combined into one share without any action on the part of the holders, with par value of the shares of the Company changing from $0.1 per share to $1.0 per share.

On May 12, 2025, the Company's board of directors approved to amend and restate the memorandum and articles of association, currently in effect, to adjust the par value of its existing Class A Shares from "par value $1 each" to "no par value." The Company filed the amended and restated memorandum articles of association to reflect this adjustment with the British Virgin Islands Registrar of Corporate Affairs.

The share number and share-related data in the financial statements have been adjusted to reflect the above share combinations and change of par value. As of June 30, 2025 and December 31, 2024, 7,323,491 and 1,979,879 Class A Shares, respectively, were issued and outstanding.

*<u>Equity grants</u>*

On June 7, 2024, the Company's board of directors approved the issuance of an aggregate of 18,726 Class A Shares to its employees, officers and directors for their services under the 2022 Share Incentive Plan. For the six months ended June 30, 2024, the Company issued an aggregate of 6,726 Class A Shares, and the Company recognized share-based compensation expenses of $162,769.

*<u>Private placements</u>*

On September 29, 2023, the Company entered into a securities purchase agreement (the "Public Offering SPA") to sell an aggregate of 150,000 shares at a price of $100.0 per share to certain investors. On March 13, 2024, the Company entered into an amendment to the Public Offering SPA with such investors to change the subscription price from $100.0 to $40.0. Net proceeds amounted to $6,000,000. In addition, in a concurrent private placement (the "Concurrent Private Placement") on September 29, 2023, the Company agreed to sell to certain other investors an aggregate of 100,000 shares, par value $1.0, at $100.0 per share. On March 13, 2024, the Company entered into an amendment to the Concurrent Private Placement with such investors to change the subscription price from $100.0 to $40.0, and the Company closed the Concurrent Private Placement with gross proceeds of $4,000,000 and net proceeds of $3,969,063.

**NOTE 17 – 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 two operating segments as defined by ASC 280, including (i) equipment and accessories and (ii) craft beer and vending machine.

Equipment and accessories segment manufactures and sells equipment and accessories used to manufacture construction material. Craft beer and vending machine segment sells craft beer to the catering industry.

The following table presents summary information by segments for the Company's continuing operations for the six months ended June 30, 2025 and 2024:

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| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30, 2025** | **For the Six Months Ended June 30, 2025** | **For the Six Months Ended June 30, 2025** |
|  | **Equipment and accessories** | **Craft beer and vending machine** | **Total** |
| Revenues | $1023796 | $25545 | $1049341 |
| Cost of goods sold | 852888 | 11118 | 864006 |
| Gross profit | 170908 | 14427 | 185335 |
| Interest expense and charges | (20777) | (62) | (20839) |
| Interest income | 266 | 1 | 267 |
| Depreciation and amortization | 111387 | 11027 | 122414 |
| Capital expenditures | - | (53884) | (53884) |
| Income tax expenses | - | - | - |
| Segment loss | (1351716) | (57186) | (1408902) |
| Segment assets | $32895647 | $8509401 | $41405048 |

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| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months Ended June 30, 2024** | **For the Six Months Ended June 30, 2024** | **For the Six Months Ended June 30, 2024** |
|  | **Machinery and Equipment sales** | **Craft beer and vending machine** | **Total** |
| Revenues | $768361 | $- | $768361 |
| Cost of goods sold | 435806 | - | 435806 |
| Gross profit | 332555 | - | 332555 |
| Interest expense and charges | (1628) | - | (1628) |
| Interest income | 212 | - | 212 |
| Depreciation and amortization | 7808 | - | 7808 |
| Capital expenditures | - | - | - |
| Income tax expenses | - | - | - |
| Segment loss | (523660) | - | (523660) |
| Segment assets | $33671537 | $- | $33671537 |

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**NOTE 18 – SUBSEQUENT EVENTS** 

The Company evaluated all events and transactions that occurred after June 30, 2025 up through the date the Company issued these unaudited condensed consolidated financial statements. No subsequent events have occurred that would require recognition or disclosure in the Company's unaudited condensed consolidated financial statements.