Tantech Reports Full Year 2021 Financial Results

Highlights (Full Year 2021 Compared to Full Year 2020)

30.7% Increase in Revenue to $55.3 Million

133.0% Increase in Gross Profit to $10.4 Million

8.3 Percentage Point Expansion in Gross Margin

$105.8 Million Current Asset Balance with $21.8 Million in Current Liabilities at December 31,2021,with a $7.2 Million Market Capitalization at July 12,2022

LISHUI,China,July 18,2022 -- Tantech Holdings Ltd (NASDAQ: TANH) ("Tantech" or the "Company"),a clean energy company,today reported its audited financial results for the twelve months ended December 31,2021.

Mr. Wangfeng Yan,Chief Executive Officer of Tantech,said,"We achieved a record 30.7% increase in revenue to $55.3 million for the full year 2021 compared to the full year 2020. On top of that we drove a 133.0% increase in gross profit to 10.4 million,with an 8.3 percentage point expansion in gross margin. Our results are even more impressive given our team's ability to execute and remain focused in the face of the COVID-19 pandemic and closures in China,and global supply chain challenges. This impacted our profitability in 2021 and continues to in 2022 but we are working diligently with our supply chain partners to mitigate costs,secure inventory and best support demand from our customers."

Mr. Wangfeng Yan,continued,"Overall,we are pleased with our continued execution on multiple fronts as we drove growth in our core business,made major progress in the transformation of our EV and specialty vehicles business,and strengthened our balance sheet. We are excited about opportunities in the specialty EV market based on customer feedback and forecasts for specialty EVs,including electric driverless street sweepers,supported by the global zero-emission vehicle trend,as well as favorable government policies and support in terms of subsidies,grants and tax rebates. Domestically,China has become the largest new energy vehicle market in the world led by the government's endorsement and its focus on petroleum resource independence,environmental protection and the 'Made in China 2025' industrial upgrade. We are already collaborating with technology companies and consultants on developing specialty EVs,and plan to invest heavily in this area in 2022."

"Finally," concluded Mr. Wangfeng Yan,"the fact that we ended 2021 with a $105.8 million current asset balance with just $21.8 million in current liabilities – and our recent market capitalization was just $7.2 million – underscores the significant opportunity we believe exists to fund our growth initiatives and build value for shareholders. We are confident that we can achieve our goal by continuing to successfully execute and delivering positive proof points on our EV and speciality vehicle business transformation,while showing a further expansion in revenue and profit growth."

Financial Results

For the Twelve Months Ended

December 31,

($ millions,except per share data and percentages)

2021

2020

Change

Revenues

$

55.3

$

42.3

30.7

%

Gross profit

$

10.4

$

4.5

133.0

%

Gross margin

18.9

%

10.6

%

8.3

percentage points

Operating expenses

$

18.9

$

14.8

27.8

%

Net (loss) income attributable to common

stockholders of Tantech Holdings Ltd

$

(8.4)

$

(6.5)

28.2

%

Basic/Diluted (loss) earnings per share

$

(2.01)

$

(2.21)

$

(9.0)

%

Total revenue increased by approximately $13.0 million,or 30.7%,to approximately $55.3 million in fiscal 2021 from approximately $42.3 million in fiscal 2020. The increase was mainly attributable to the significant increase of our revenues from consumer products due to higher sales volume from existing and new customers. Revenue from Company's EV segment increased 382.4% to approximately $1.9 million in fiscal 2021,as compared to approximately $0.4 million in fiscal 2020,with increased sales of smart electronic sanitation vehicles,income from the sale of electric specialty vehicles and power batteries and commission income for electric specialty vehicles sold on behalf of other manufacturers.

Our gross profit increased by approximately $6.0 million,or 133.0% to approximately $10.4 million in fiscal 2021 from approximately $4.5 million in fiscal 2020. The gross profit margin was 18.9% in fiscal 2021,as compared to 10.6% in fiscal 2020. On a segment basis,gross margins for consumer product and EV segments were 18.7% and 24.2%,respectively,for fiscal 2021,compared to 10.7% and (3.0)%,for fiscal 2020. The increase in overall gross margin was primarily attributable to the higher selling price and lower unit cost related to consumer product segment and EV segment.

Research and development expenses increased by $7.2 million,or 804.8%,to $8.1 million in fiscal 2021 from $0.9 million in fiscal 2020. The increase was primarily due to the R&D activities in connection with our EV segment. During fiscal 2021,we increased our investment significantly for smart electric sanitation vehicles designed to be used in closed industrial parks and residential communities. We have successfully manufactured sanitation vehicles and generated revenue approximately $1.9 million from EV sales in fiscal year 2021.

Total operating expenses increased by $4.1 million,or 27.8%,to $18.9 million in fiscal 2021 from $14.8 million in fiscal 2020,which was mainly due to increases of approximately $7.9 million in general and administrative expense and $7.2 million in research and development expenses,offset by a decrease of approximately $12.0 million in impairment of intangible assets for fiscal 2021,as compared to of the fiscal 2020.

Loss before income tax was approximately $8.3 million in fiscal 2021,a decrease of approximately $2.4 million compared to a loss of approximately $10.6 million in fiscal 2020. The decrease was primarily attributable to an increase of approximately $6.0 million in gross profit compared to fiscal 2020.

As of December 31,the Company had cash and restricted cash on hand of approximately $43.6 million. Current assets were approximately $105.8 million and current liabilities were approximately $21.8 million,which resulted in a current ratio of 4.9:1. Total stockholders' equity as of December 31,2021 was approximately $112.5 million.

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,Lishui Smart New Energy Automobile Co.,Ltd. and Zhejiang Shangchi New Energy Automobile Co.,Ltd.,in November 2020,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 products and scientific research efforts. The Company's subsidiary,First International Commercial Factoring (Shenzhen) Co.,LTD,is engaged in commercial factoring for businesses in and related to its supply chain. In May 2022,the Company established a wholly-owned subsidiary,EPakia Inc. Based in the Mid-Atlantic region of the United States,EPakia plans to develop biodegradable packaging business in the United States and other international markets. 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 the sales,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,except as expressly required by applicable law.

Tantech Holdings Ltd and Subsidiaries

Consolidated Balance Sheets

(audited)

For the Twelve Months Ended

December 31,

2021

2020

Assets

Current Assets

Cash and cash equivalents

$

43,144,049

$

37,119,195

Restricted cash

422,832

220,109

Accounts receivable,net

44,962,926

34,410,597

Inventories,net

1,069,698

671,251

Due from related party

10,354,051

-

Advances to suppliers,net

3,420,628

6,854,461

Advances to suppliers – related party

—

1,533,000

Prepaid taxes

1,609,466

1,046,667

Prepaid expenses and other receivables,net

824,239

45,467

Total Current Assets

105,807,889

81,900,747

Property,plant and equipment,net

2,103,947

2,477,912

Other Assets

Manufacturing rebate receivable

—

5,755,237

Intangible assets,net

205,971

664,033

Right of use assets

313,172

—

Long-term Investment

26,096,079

25,497,316

Total Other Assets

26,615,222

31,916,586

Total Assets (Note 3 at VIE)

$

134,527,058

$

116,295,245

Liabilities and Stockholders' Equity

Current Liabilities

Short-term bank loans

$

4,719,552

$

5,564,790

Bank acceptance notes payable

—

1,753,109

Accounts payable

1,563,787

1,543,994

Due to related parties

1,847,421

2,019,087

Customer deposits

3,580,622

3,183,088

Taxes payable

823,701

571,354

Loan payable to third parties

7,002,385

306,600

Lease liabilities-current

115,330

—

Accrued liabilities and other payables

2,114,258

1,861,835

Total Current Liabilities

21,767,056

16,803,857

Lease liabilities non-current

223,291

—

Total Liabilities

21,990,347

16,857

Stockholders' Equity

Common stock,$0.01 par value,60,000,000 shares authorized,

6,399,460 and 3,589,409 shares issued and outstanding as of

December 31,2021 and 2020,respectively*

63,995

35,894

Additional paid-in capital

69,566,786

48,392,181

Statutory reserves

6,874,614

6,437,506

Retained earnings

36,684,794

45,480,031

Accumulated other comprehensive income (loss)

1,071,149

(1,493,070)

Total Stockholders' Equity attributable to the Company

114,261,338

98,852,542

Noncontrolling interest

(1,724,627)

638,846

Total Stockholders' Equity

112,536,711

99,491,388

Total Liabilities and Stockholders' Equity

$

134,245

*Retroactively restated for one-for-ten reverse split with effective date of February 25,2022.

*please see "Note 3: Variable Interest Entities" in the notes accompanying the audited financial statements filed on the Company's

Report of Foreign Private Issuer on Form 20-F dated July 18,2022.

Tantech Holdings Ltd and Subsidiaries

Consolidated Statements of Comprehensive Loss

(audited)

For the Twelve Months Ended

December 31,

2021

2020

Revenues

$

55,263,673

$

42,283,670

Cost of revenues

44,832,347

37,297

Gross Profit

10,431,326

4,476,373

Operating expenses

Selling expenses

221,364

977,201

General and administrative expenses

8,831,407

955,210

Share based compensation

1,840,000

—

Impairment of goodwill and intangible asset

—

11,998,606

Research and development expenses

8,053,400

890,316

Total operating expenses

18,946,171

14,821,333

Loss from operations

(8,514,845)

(10,344,960)

Other income (expenses)

Interest income

117,735

50,732

Interest expense

(740,400)

(300,125)

Rental income from related party

117,958

—

Gain from sale property to a related party

545,874

—

Other income (loss),net

210,176

(39,530)

Total other income (expenses)

251,343

(288,923)

Loss before income tax expense

(8,502)

(10,633,883)

Income tax expense (credit)

2,429,480

(611,655)

Net loss

(10,692,982)

(10,022,228)

Less: net loss attributable to noncontrolling interest

(2,334,853)

(3,501,808)

Net loss attributable to common stockholders of Tantech Holdings Ltd

$

(8,358,129)

$

(6,520,420)

Net loss

(10,228)

Other comprehensive income (loss):

Foreign currency translation adjustment

2,535,599

5,892,311

Comprehensive loss

(8,157,383)

(4,129,917)

Less: Comprehensive loss attributable to noncontrolling interest

(2,363,473)

(3,707,370)

Comprehensive loss attributable to common stockholders of

Tantech Holdings Ltd

$

(5,793,910)

$

(422,547)

Loss per share - Basic and Diluted*

$

(2.01)

$

(2.21)

Weighted Average Shares Outstanding - Basic and Diluted Continuing

operations and discontinued operations*

4,148,737

2,956,624

*Retroactively restated for one-for-ten reverse split with effective date of February 25,2022.

Tantech Holdings Ltd and Subsidiaries

Consolidated Statements of Cash Flows

(audited)

For the Twelve Months Ended,

December 31,

2021

2020

Cash flows from operating activities

Net loss

$

(10,982)

$

(10,228)

Adjustments to reconcile net income (loss) to net cash provided by operating

activities:

Allowance (Reversal of) for doubtful accounts - accounts receivable

(52,789)

(845,416)

Reversal of allowance for doubtful accounts - advance to suppliers

(142,799)

(378,233)

Write off manufacturing rebate receivable

5,819,059

—

Reversal of allowance for doubtful accounts – other receivables

—

(84,573)

Share based compensation

1,000

—

Inventory reserve

359,501

92,064

Impairment of goodwill and intangible asset

—

11,606

Decrease in deferred tax liability

—

(1,799,791)

Depreciation expense

444,462

436,427

Amortization of intangible asset

472,140

441,489

Amortization of right of use assets

44,964

—

(Gain) Loss from disposal of property,plant and equipment

(545,844)

68,614

Issuance of common stock for service

—

33,812

Contingent liability

535,389

—

Changes in operating assets and liabilities:

Accounts receivable - non-related party

(9,573,463)

8,024,036

Advances to suppliers

3,694,066

7,093,022

Advances to suppliers - related party

1,550,000

(1,448,000)

Inventory

(737,552)

(125,492)

Prepaid expenses and other receivables

(768,288)

133,768

Manufacturing rebate receivable

2,374,720

Accounts payable

(16,266)

(206,261)

Accrued liabilities and other payables

(323,441)

313,552

Customer deposits

318,875

(3,792,409)

Collection of receivables from discontinued operations

—

—

Lease liabilities

(19,824)

—

Taxes payable

(295,666)

1,863,853

Net cash (used in) provided by operating activities

(8,090,458)

14,171,560

Cash flows from investing activities

Acquisition of property,plant and equipment

(220,308)

(144,806)

Proceeds from disposal of property,plant and equipment

748,612

21,842

Additions to intangible assets

(4,220)

—

Net cash provided by (used in) investing activities

524,084

(122,964)

Cash flows from financing activities

Proceeds from loans from third parties

6,917,589

—

Repayment of loans from third parties

(310,000)

—

Bank acceptance notes payable,net of repayment

(1,772,550)

1,667

Proceeds from bank loans

7,774,800

9,568,384

Repayment of bank loans

(8,738,900)

(11,230,688)

Proceeds from (repayment of) loans from related parties,net

(10,428,196)

98,474

Proceeds from issuance of common stock and warrants

19,362,706

9,055,232

Net cash provided by) financing activities

12,805,449

8,940,069

Effect of exchange rate changes on cash,restricted cash and cash equivalents

988,502

1,704,662

Net increase in cash,restricted cash and cash equivalents

6,227,577

24,693,327

Cash,restricted cash and cash equivalents,beginning of year

37,339,304

12,645,977

Cash,end of year

$

43,881

$

37,304

Supplemental disclosure information:

Income taxes paid

$

2,278,134

$

436,566

Interest paid

$

265,248

$

308,690

Supplemental non-cash activities:

Common shares issued for service

$

1,000

$

33,812

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