Tantech Announces Full Year 2020 Financial Results

LISHUI,China,April 28,2021 --Tantech Holdings Ltd (NASDAQ: TANH) ("Tantech" or the "Company"),a clean energy company in China,today announced its audited financial results for the year ended December 31,2020.

Full Year 2020 Financial Results

For the Twelve Months Ended

December 31,

($ millions,expect per share data and percentages)

2020

2019

Change

Revenues

$

42.3

$

49.2

(14.1)

%

Consumer product

$

29.4

$

45.8

(35.8)

%

Trading

$

12.5

$

3.4

269.3

%

Gross profit

$

4.5

$

6.0

(25.0)

%

Gross margin

10.6

%

12.1

%

(1.5)

percentage points

Net income (loss) attributable to common stockholders of Tantech Holdings Ltd

$

(6.5)

$

(6.3)

$

(0.2)

Basic/ Diluted earnings (loss) per share

$

(0.22)

$

(0.22)

$

0.0

•

Total revenues decreased 14.1% to $42.3 million from $49.2 million. The decrease was mainly attributable to the significant decrease of the Company's revenues from consumer products due to COVID-19. However,the Company' revenue from trading segment increased due to higher demands for its bamboo charcoal used for active charcoal masks,air purification and sanitation products in order to combat COVID-19. The Company also had higher revenue from EV segment as compared to 2019.

•

During the year 2020,due to the impact of COVID-19,our subsidiary Shangchi Automobile Co.,Ltd. ("Shangchi Automobile") was unable to maintain normal operations and all sales and marketing events were disrupted due to travel restrictions and other government regulations. While the spread of COVID-19 has gradually been under control in China,it could adversely affect the Company's business for the future. Shangchi Automobile has no immediate business plan to start manufacturing the electric vehicles. Management determined that the electric vehicle manufacturing licenseshould be impaired. The Company recorded an impairment of $12.0 million for the year ended December 31,2020. For the year ended December 31,2019,the Company recorded an impairment of $1.1 million because the carrying amount was not recoverable and it exceeded its fair value based on the management's assessment for the electric vehicle manufacturing license.

•

Gross profit decreased 25% to $4.5 million in 2020 from $6.0 million in 2019,and gross margin decreased to 10.6% from 12.1%,primarily due to lower revenues,and higher raw materials and supply chain costs,in the full year 2020 compared to the full year 2019. As a joint effort to fight COVID-19,the Company charged lower gross margin for certain orders. As a result,the gross margin of trading segment decreased to 5.4% in fiscal 2020 from 32.8% in fiscal 2019.

•

Selling expenses increased 205.3% to $1.0 million in 2020 from $0.3 million in 2019,as the Company complied with new,higher-cost sales activities,while continuing to invest in online marketing support and expanding its electric vehicle (the "EV") sales efforts during 2020.

•

General and administration expenses decreased 79.5% to $1.0 million in 2020 from $4.7 million in 2019. The decrease was primarily attributable to the recovery of bad debt provision of $1.3 million in 2020 as compared to 2019.

•

Research and development expenses increased $0.9 million in 2020 from $0.3 million in 2019,primarily due to increased activities related to electrical battery and vehicle research in the Company's electric vehicle segment,mainly on driverless street sweepers,as compared to the same period last year.

•

Other expenses decreased 25.3% to $0.3 million from $0.4 million,primarily due to lower interest expense in 2020,as compared to 2019.

•

Net loss attributable to common stockholders of Tantech Holdings Ltd was increased to $6.5 million for the full year 2020 from a net loss of $6.3 million for the full year 2019,with net loss per share on both a basic and diluted basis of $0.22 in 2020 compared to $0.22 in 2019.

•

The Company maintains a positive working capital as of December 31,2020 and generated positive cash flows from its operations for the years ended December 31,2020 and 2019. As of December 31,2020,the Company had a $37.1 million balance of cash and cash equivalents,with total shareholders' equity of approximately $99.5 million.

Mr. Wangfeng Yan,Chief Executive Officer of Tantech,said,"Our team remained focused during 2020 and adjusted to the global COVID-19 challenges. Government restrictions and closures slowed growth in our business,including the sales of our electric vehicles. We moved quickly,however,when the economy re-opened to restart our R&D efforts and re-engage with our supply channel and customers. On the other side,demand was stable in 2020 for our bamboo-based charcoal products,and our revenue from trading segment increased due to higher demands for our bamboo charcoal used for active charcoal masks,air purification and sanitation products in order to combat COVID-19. We were pleased that our strong supply chain relationships put us in a position to help people in such a difficult time."

Mr. Wangfeng Yan,added,"We will continue to leverage our leadership position in the charcoal products industry to drive revenue,profit growth and increased operating cash flow. There are many opportunities in front of us given the estimated $30 billion size of the domestic China market for bamboo production,and bamboo's position as a pillar industry of economic development. Our many innovations and strong brand recognition give us a competitive advantage,as we work to achieve the Company's long-term strategic objectives. At the same time,we continue to build momentum in the EV market,where we currently hold more than 20 core technologies and patents about EV,including nanotechnology for raw materials for power lithium electronics,group technology of power lithium electronics and battery management technology. Our priority remains on leveraging our R&D expertise to develop new energy-efficient specialty-use electric vehicles,including driverless street sweepers. Our engineers have built sleek,high efficiency,low-operating-cost vehicles for the industrial market. Overall,we like the industrial EV market segment given its size,global footprint and support of favorable infrastructure policies in major markets."

About Tantech Holdings Ltd

For the past decade,Tantech has been a highly specialized high-tech enterprise producing,researching and developing bamboo charcoal-based products with an established domestic and international sales and distribution network. Since 2017 when the Company acquired 70% of Shangchi Automobile,a vehicle manufacturer based in Zhangjiagang City,Jiangsu Province,it has manufactured and sold vehicles. The Company established two new subsidiaries in November 2020,with the plan to produce and sell street sweepers and other electric vehicles. The Company is fully ISO 90000 and ISO 14000 certified and has received a number of national,provincial and local honors,awards and certifications for its quality products and scientific research efforts. For more information please visit: http://ir.tantech.cn.

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans,objectives,goals,strategies,future events or performance,and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including,but not limited to,product and service demand and acceptance,changes in technology,economic conditions,the impact of competition and pricing,government regulations,and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements,whether written or oral,and whether made by or on behalf of the Company,are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition,the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Tantech Holdings Ltd and Subsidiaries

Consolidated Balance Sheets

December 31,

2020

December 31,

2019

Assets

Current Assets

Cash and cash equivalents (Note 3 at VIE)

$

37,119,195

$

12,440,457

Restricted cash (Note 3 at VIE)

220,109

205,520

Accounts receivable,net (Note 3 at VIE)

34,410,597

39,352,408

Inventories,net (Note 3 at VIE)

671,251

595,627

Advances to suppliers,net (Note 3 at VIE)

6,854,461

13,079,889

Advances to suppliers – related party

1,533,000

-

Prepaid taxes (Note 3 at VIE)

1,046,667

2,396,349

Prepaid expenses and other receivables,net (Note 3 at VIE)

45,467

91,377

Total Current Assets (Note 3 at VIE)

81,900,747

68,161,627

Property,plant and equipment,net (Note 3 at VIE)

2,477,912

2,700,034

Other Assets

Manufacturing rebate receivable (Note 3 at VIE)

5,755,237

7,746,116

Intangible assets,net (Note 3 at VIE)

664,033

12,959,017

Long-term Investment

25,497,316

23,883,983

Total Other Assets (Note 3 at VIE)

31,916,586

44,589,116

Total Assets (Note 3 at VIE)

$

116,295,245

$

115,450,777

Liabilities and Stockholders' Equity

Current Liabilities

Short-term bank loans

$

5,564,790

$

6,861,208

Bank acceptance notes payable (Note 3 at VIE)

1,753,520

Accounts payable (Note 3 at VIE)

1,543,994

1,650,851

Due to related parties (Note 3 at VIE)

2,019,087

1,838,603

Customer deposits (Note 3 at VIE)

3,183,088

6,742,659

Taxes payable (Note 3 at VIE)

571,354

102,704

Due to third parties

306,600

287,200

Accrued liabilities and other payables (Note 3 at VIE)

1,835

1,444,896

Total Current Liabilities (Note 3 at VIE)

16,803,857

19,133,641

Deferred tax liability (Note 3 at VIE)

-

1,784,875

Total Liabilities (Note 3 at VIE)

16,857

20,918,516

Stockholders' Equity

Common stock,$0.001 par value,50,000,000 shares authorized,

35,894,097 and 28,853,242 shares issued and outstanding as of

December 31,2020 and 2019,respectively

35,894

28,853

Additional paid-in capital

48,392,181

39,310,178

Statutory reserves

6,437,506

6,379,276

Retained earnings

45,480,031

52,058,681

Accumulated other comprehensive loss

(1,493,070)

(7,590,943)

Total Stockholders' Equity attributable to the Company

98,852,542

90,186,045

Noncontrolling interest

638,846

4,346,216

Total Stockholders' Equity

99,491,388

94,532,261

Total Liabilities and Stockholders' Equity

$

116,777

Tantech Holdings Ltd and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

For the Years Ended December 31

2020

2019

Revenues

$

42,283,670

$

49,230,570

Cost of revenues

37,807,297

43,253,070

Gross Profit

4,476,373

5,977,500

Operating expenses

Selling expenses

977,201

319,946

General and administrative expenses

955,210

4,655,382

Impairment of goodwill and intangible asset

11,998,606

9,584,000

Research and development expenses

890,316

327,260

Total operating expenses

14,821,333

14,886,588

Income (loss) from operations

(10,344,960)

(8,909,088)

Other income (expenses)

Interest income

50,732

53,060

Interest expense

(300,125)

(443,262)

Other (loss) income,net

(39,530)

3,669

Total other expenses

(288,923)

(386,533)

(Loss) income before income tax expense (credit)

(10,633,883)

(9,621)

Income tax expense (credit)

(611,655)

363,662

Net (loss) income from continuing operations

(10,022,228)

(9,659,283)

Discontinued operation:

Income from discontinued operations,net of tax

-

270,479

Loss from disposal of discontinued operations

-

(569,891)

Net (loss) income from discontinued operations

-

(299,412)

Net (loss) income

(10,958,695)

Less: net loss attributable to noncontrolling interest from continuing operations

(3,501,808)

(3,601,728)

Net (loss) income attributable to common stockholders of Tantech Holdings Ltd

$

(6,520,420)

$

(6,356,967)

Net (loss) income

(10,695)

Other comprehensive income (loss):

Foreign currency translation adjustment

5,892,311

(5,494,731)

Comprehensive (loss) income

(4,129,917)

(15,453,426)

Less: Comprehensive loss attributable tononcontrolling interest

(3,707,370)

(3,571,880)

Comprehensive income (loss) attributable to common stockholders of Tantech Holdings Ltd

$

(422,547)

$

(11,881,546)

(Loss) earnings per share - Basic and Diluted

Continuing operations

$

(0.22)

$

(0.21)

Discontinued operations

$

0.00

$

(0.01)

Total

$

(0.22)

$

(0.22)

Weighted Average Shares Outstanding - Basic and Diluted

Continuing operations and discontinued operations

29,566,243

28,242

Tantech Holdings Ltd and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31

2020

2019

Cash flows from operating activities

Net (loss) income

$

(10,228)

$

(9,695)

Net loss (income) from discontinued operations

-

299,412

Net (loss) income from continuing operations

(10,283)

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

(Reversal of) Allowance for doubtful accounts -

accounts receivable

(845,416)

1,297,752

(Reversal of) Allowance for doubtful accounts -

advance to suppliers

(378,233)

164,220

(Reversal of) Allowance for doubtful accounts –

other receivables

(84,573)

705,400

Allowance for doubtful accounts - due from related

party

-

-

Inventory reserve

92,064

1,030,236

Impairment of goodwill and intangible asset

11,000

Decrease in deferred tax liability

(1,799,791)

(165,500)

Depreciation expense

436,427

462,639

Amortization of intangible asset

441,489

441,489

Amortization of prepaid consulting expense

-

140,738

Loss (gain) from disposal of property,plant and

equipment

68,614

(8,047)

Issuance of common stock for service

33,812

-

Changes in operating assets and liabilities:

Accounts receivable - non-related party

8,024,036

(9,879,682)

Accounts receivable - related party

-

-

Advances to suppliers

7,093,022

415,727

Advances to suppliers,non-current

-

-

Advances to suppliers - related party

(1,448,000)

-

Inventory

(125,492)

242,142

Prepaid expenses and other receivables

133,768

9,127

Manufacturing rebate receivable

2,374,720

1,563,840

Accounts payable

(206,261)

(751,363)

Accrued liabilities and other payables

313,552

(78,923)

Customer deposits

(3,792,409)

6,184,836

Collection of receivable from discontinued operations

-

8,962,187

Taxes payable

1,863,853

(597,392)

Net cash provided by continuing operations

14,171,560

10,064,143

Net cash provided by discontinued operations

-

4,632,769

Net cash provided by operating activities

14,560

14,696,912

Cash flows from investing activities

Acquisition of property,plant and equipment

(144,806)

(92,369)

Proceeds from disposal of property,plant and

equipment

21,842

16,580

Additions to intangible assets

-

-

Payment for investment

-

(6,570)

Proceeds from disposition of subsidiaries

-

854,567

Net cash used in continuing operations

(122,964)

(5,928,792)

Net cash used in discontinued operations

-

(1,522)

Net cash used in investing activities

(122,930,314)

Cash flows from financing activities

Proceeds from (repayment of) loans from third parties

-

(2,823,890)

Notes receivable

-

-

Bank acceptance notes payable,net of repayment

1,667

(1,003)

Proceeds from bank loans

9,568,384

6,544

Repayment of bank loans

(11,688)

(7,944)

Proceeds from (repayment of) loans from related

parties,net

98,474

(378,833)

Proceeds from issuance of common stock and warrants

9,055,232

-

Net cash provided by (used in) continuing operations

8,940,069

(5,460,126)

Net cash provided by discontinued operations

-

-

Net cash provided by (used in) financing activities

8,126)

Effect of exchange rate changes on cash,restricted cash

and cash equivalents

1,704,662

(530,288)

Net increase (decrease) in cash,restricted cash and cash equivalents

24,693,327

2,776,184

Cash,restricted cash and cash equivalents,beginning of year

12,645,977

9,869,793

Cash,end of year

$

37,339,304

$

12,977

Supplemental disclosure information:

Income taxes paid

$

436,566

$

1,105,876

Interest paid

$

308,690

$

439,869

Supplemental non-cash activities:

Common shares issued for service

$

33,812

$

-

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