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 November 2023

 

HONGLI GROUP INC.

(Exact name of registrant as specified in its charter)

 

Beisanli Street, Economic Development Zone

Changle County, Weifang

Shandong, China 262400

Tel: +86 0536-2185222

(Address of Principal Executive Office)

 

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

 

Form 20-F  ☒      Form 40-F  ☐

 

 

 

 

 

 

EXPLANATORY NOTE

 

Hongli Group Inc., a Cayman Islands exempted company (the “Company”) is furnishing this Form 6-K to provide its unaudited condensed consolidated financial statements for the six months ended June 30, 2023.

 

Financial Statements and Exhibits.

 

Exhibits:

 

Exhibit No.

   Description
99.1   Unaudited Condensed Consolidated Financial Statements as of June 30, 2023 and for the Six Months Ended June 30, 2023 and 2022.
99.2   Operating and Financial Review and Prospects in Connection with the Unaudited Condensed Consolidated Financial Statements for the Six Months Ended June 30, 2023 and 2022.
101.INS   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema Document.
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

1

 

 

SIGNATURES

 

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

 

  Hongli Group Inc.
     
Date: November 30, 2023 By: /s/ Jie Liu
    Jie Liu
    Chief Executive Officer

 

 

2

 

Exhibit 99.1

 

HONGLI GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,   December 31, 
   2023   2022 
   (Unaudited)     
ASSETS        
Current assets:        
Cash and cash equivalent  $678,770   $2,085,033 
Restricted cash   187,976    29,006 
Short-term investment   262,022    
-
 
Accounts receivable   6,475,620    7,429,904 
Notes receivable   648,357    302,775 
Inventories, net   2,802,102    2,613,549 
Prepaid expense and other current assets   1,088,152    1,604,134 
Total current assets   12,142,999    14,064,401 
Non-current assets          
Property, plant and equipment, net   10,849,587    12,300,491 
Prepayment for purchase of Yingxuan Assets   3,363,840    3,535,975 
Intangible assets, net   4,060,693    4,961,881 
Finance lease right-of-use assets, net   739,305    1,299,217 
Other non-current assets   
-
    2,174 
TOTAL ASSETS  $31,156,424   $36,164,139 
           
LIABILITIES          
Current liabilities          
Short-term loans  $3,973,081   $6,015,975 
Accounts payable   1,587,600    2,957,110 
Security deposit received for sales of properties   
-
    1,449,633 
Due to related parties   968,690    607,236 
Income tax payable   57,747    136,544 
Finance lease obligation, current   144,850    315,780 
Accrued expenses and other payables   541,960    955,676 
Total current liabilities   7,273,928    12,437,954 
           
Long-term loans   3,272,517    10,147,428 
Long-term payable   11,185    42,220 
Finance lease obligation, non-current   1,144    46,623 
Deferred tax liability   14,480    15,221 
TOTAL LIABILITIES   10,573,254    22,689,446 
           
SHAREHOLDERS’ EQUITY:          
Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 12,371,875 and 10,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively*   1,237    1,000 
Additional paid-in capital   8,036,663    609,601 
Statutory reserve   370,683    370,683 
Retained earnings   13,537,337    12,740,983 
Accumulated other comprehensive loss   (1,362,750)   (247,574)
TOTAL SHAREHOLDERS’ EQUITY   20,583,170    13,474,693 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $31,156,424   $36,164,139 

 

*The share amounts are presented on a retroactive basis.

 

 

 

 

HONGLI GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)

FOR THE SIX MONTHS ENDED JUNE 30,

 

   2023   2022 
Revenues, net  $8,915,111   $10,485,582 
Cost of revenues   5,869,310    6,986,054 
Gross Profit   3,045,801    3,499,528 
           
Operating expenses:          
Selling, general and administrative expenses   2,260,806    1,987,565 
Total operating expenses   2,260,806    1,987,565 
           
Income from operations   784,995    1,511,963 
           
Other income (expense)          
Other income   445,148    581,677 
Financing expenses   (327,128)   (131,992)
Other expenses   (41,070)   
-
 
Total other income (expenses), net   76,950    449,685 
Income before income taxes   861,945    1,961,648 
Income tax expense   65,591    94,786 
Net income  $796,354   $1,866,862 
           
Comprehensive income (loss)          
Net income  $796,354   $1,866,862 
Other comprehensive income (loss)          
Foreign currency translation adjustment   (1,115,176)   (617,830)
Comprehensive income (loss)  $(318,822)  $1,249,032 
           
Earnings per share          
Basic and diluted
  $0.07   $0.19 
           
Weighted average common shares outstanding*          
Basic and diluted
   11,150,898    10,000,000 

 

*The share amounts are presented on a retroactive basis.

 

2

 

 

HONGLI GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022 (UNAUDITED)

 

   Ordinary Shares*   Additional         Accumulated other    
   Number of
shares		   Amount   paid-in
capital		   Statutory
reserve		   Retained
earnings		   comprehensive
income (loss)		   Total equity 
                             
Balance, December 31, 2022   10,000,000   $1,000   $609,601   $370,683   $12,740,983   $(247,574)  $13,474,693 
                                    
Initial public offering - March 31, 2023   2,062,500    206    8,249,794    
-
    
-
    
-
    8,250,000 
Initial public offering costs   -    
-
    (1,967,388)   
-
    
-
    
-
    (1,967,388)
Underwriter’s option exercised - May 2, 2023   309,375    31    1,237,469    
-
    
-
    
-
    1,237,500 
Exercise costs   -    
-
    (92,813)   
-
    
-
    
-
    (92,813)
Net income for the six months   -    
-
    
-
    
-
    796,354    
-
    796,354 
Foreign currency translation adjustment   -    
-
    
-
    
-
    
-
    (1,115,176)   (1,115,176)
Balance, June 30, 2023 (Unaudited)   12,371,875   $1,237   $8,036,663   $370,683   $13,537,337   $(1,362,750)  $20,583,170 

 

   Ordinary Shares*   Additional          Accumulated other     
  Number of
shares		   Amount   paid-in
capital		   Statutory
reserve		   Retained
earnings		   comprehensive
income (loss)		   Total equity 
                            
Balance, December 31, 2021   10,000,000   $1,000   $609,601   $370,683   $9,808,620   $698,692   $11,488,596 
                                    
Net income for the six months   -    
-
    
-
    
-
    1,866,862    
      -
    1,866,862 
Foreign currency translation adjustment   -    
-
    
-
    
-
    
-
    (617,830)   (617,830)
Balance, June 30, 2022 (Unaudited)   10,000,000   $1,000   $609,601   $370,683   $11,675,482   $80,862   $12,737,628 

 

*The share amounts are presented on a retroactive basis.

 

3

 

 

HONGLI GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   For the Six Months Ended
June 30,		 
   2023   2022 
         
Cash flows from operating activities        
Net income  $796,354   $1,866,862 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:          
Depreciation and amortization   508,428    356,948 
Allowance for current expected credit losses   66,277    
-
 
Amortization of operating lease right-of-use assets   22,793    
-
 
Gain on disposals of property and equipment   (345,519)   
-
 
Changes in operating assets and liabilities:          
Accounts receivable   554,182    (1,721,780)
Notes receivable   (377,266)   819,834 
Inventories   (330,635)   61,703 
Prepaid expense and other current assets   (233,634)   65,153 
Other non-current assets   2,166    73,295 
Due from related parties   
-
    209 
Due to related parties   3,210    (44,604)
Accounts payable   (1,340,227)   (42,430)
Accrued expenses and other payables   (292,690)   110,340 
Income tax payable   (75,543)   57,161 
Net cash (used in) provided by operating activities   (1,042,104)   1,602,691 
           
Cash flows from investing activities          
Purchase of property and equipment   (173,181)   (844,151)
Prepayments for purchase of Yingxuan Assets   
-
    (843,643)
Short-term investment   (274,344)   
-
 
Proceeds from sale of property and equipment   750,837    
-
 
Net cash provided by (used) in investing activities   303,312    (1,687,794)
           
Cash flows from financing activities          
Payments for financing liabilities   (194,002)   (136,645)
Payments for finance leases   (208,115)   (279,892)
Advances from related parties   949,099    1,012,549 
Repayments to related parties   (542,906)   (262,398)
Borrowings from short term loans   1,842,440    3,318,567 
Repayments of short term loans   (3,674,772)   (3,395,743)
Borrowings from long term loans   4,727,388    
-
 
Repayments of long term loans   (11,408,398)   
-
 
Proceeds from initial public offering   9,487,500    
-
 
Disbursements for initial public offering costs   (1,343,572)   (84,734)
Net cash (used in) provided by financing activities   (365,338)   171,704 
           
Effect of exchange rate changes on cash, cash equivalents and restricted cash   (143,163)   (28,590)
           
Net change in cash, cash equivalents and restricted cash   (1,247,293)   58,011 
Cash, cash equivalents and restricted cash, beginning of the period   2,114,039    531,462 
Cash, cash equivalents and restricted cash, end of the period  $866,746   $589,473 
           
Reconciliation of cash, cash equivalents and restricted cash, beginning of the period          
Cash, cash equivalents  $2,085,033   $484,389 
Restricted cash   29,006    47,073 
Cash, cash equivalents and restricted cash, beginning of the period  $2,114,039   $531,462 
           
Reconciliation of cash, cash equivalents and restricted cash, end of the period          
Cash, cash equivalents  $678,770   $544,682 
Restricted cash   187,976    44,791 
Cash, cash equivalents and restricted cash, end of the period  $866,746   $589,473 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest expense  $409,431   $206,232 
Cash paid for income taxes  $330,693   $37,625 
           
Non-cash investing and financing activities          
Right-of-use assets transferred to property and equipment upon exercise of purchase option   482,062    156,858 
Security deposits applied to lease payments  $33,583   $45,077 

 

 

4

 

 

 

 

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Exhibit 99.2

 

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

 

This Report on Form 6-K furnished by Hongli Group Inc. (together with our subsidiaries, unless the context indicates otherwise, “we,” “us,” “our,” or the “Company”), contains forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the Company’s future financial performance. The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions, uncertainties and other factors may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. The information in this Report on Form 6-K is not intended to project future performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company does not guarantee future results, levels of activity, performance or achievements. The Company’s expectations are as of the date this Form 6-K is furnished, and the Company does not intend to update any of the forward-looking statements after the date this Report on Form 6-K is furnished to confirm these statements to actual results, unless required by law.

 

Overview

 

We, Hongli Group Inc. (“Hongli Cayman” or the “Company”), are an offshore holding company incorporated in the Cayman Islands. As a holding company with no material operations of our own, we consolidate the financial results of Shandong Hongli Special Section Tube Co., Ltd., (“Hongli Shandong”) which is a variable interest entity (the “VIE”), and its subsidiaries (together with the VIE, collectively, “the PRC operating entities”), through the contractual arrangements (the “Contractual Arrangements”). Neither Hongli Cayman nor its subsidiaries own any equity interests in the PRC operating entities.

 

The PRC operating entities are one of the leading cold roll formed steel profile manufacturers in China with respect to function innovation, performance improvement, and customized manufacturing of their products, according to China Sub-Association for Cold Formed Steel Industries, a professional industrial association. The PRC operating entities’ main business operation focuses on the design, production, deep processing, and sales of custom-made profile for machinery and equipment in a variety of sectors including but not limited in mining and excavation, construction, agriculture, and transportation industries.

 

From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management and financial resources and other factors.

 

In November 2023, Hongli Cayman filed a lawsuit against Hongli Technology Limited (“Hongli Technology”), Longchang Management Consulting (Shandong) Co., Ltd. (“Longchang Management”), and Transhare Corporation, the transfer agent, regarding a dispute involving the validity of the issuance of certain shares to and stock ownership of Hongli Technology. Both Hongli Technology and Longchang Management are owned and controlled by a former financial advisor of Hongli Shandong. Hongli Cayman has requested that Transhare Corporation, among others, be restrained and enjoined from taking any actions regarding the shares in dispute. On November 23, 2023, Hongli Cayman, Hongli Technology and Longchang Management entered into a settlement agreement to settle the dispute.

 

We accordingly have reviewed all the corporate documents executed by the Company or the Board of Directors of the Company while the former financial advisor was engaged and confirmed that, except for the documents relating to the issuance of the shares in dispute as set forth in the claim by Hongli Cayman, all the other corporate documents and all related corporate actions taken thereunder were duly authorized by the Company or the board of the Company with their knowledge, as applicable. In addition, we are continuing taking relevant measures to enhance our internal control.

 

 

 

 

Results of Operations

 

The following table summarizes the results of our operations for the six months ended June 30, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

 

   Six Months Ended
June 30,		   Changes
Increase		   Changes 
   2023   2022   (Decrease)   in % 
Revenues, net  $8,915,111   $10,485,582   $(1,570,471)   -15.0%
Cost of revenues   5,869,310    6,986,054    (1,116,744)   -16.0%
Gross Profit   3,045,801    3,499,528    (453,727)   -13.0%
Operating expenses                    
Selling, general and administrative   2,260,806    1,987,565    273,241    13.7%
Total operating expenses   2,260,806    1,987,565    273,241    13.7%
Income from operations   784,995    1,511,963    (726,968)   -48.1%
Other income (expenses), net   76,950    449,685    (372,735)   -82.9%
Income before income taxes   861,945    1,961,648    (1,099,703)   -56.1%
Income tax expense   65,591    94,786    (29,195)   -30.8%
Net income  $796,354   $1,866,862   $(1,070,508)   -57.3%

 

Revenues

 

We derive revenues from sales of products in the domestic and overseas markets. The following table presents our revenues by geographical regions.

 

   Six Months Ended
June 30,		   Changes
Increase		   Changes 
   2023   2022   (Decrease)   in % 
Revenue from domestic sales  $6,724,804   $7,948,224   $(1,223,420)   -15.4%
Revenue from export business   2,190,307    2,537,358    (347,051)   -13.7%
Revenues, net  $8,915,111   $10,485,582   $(1,570,471)   -15.0%

  

Our total revenues decreased by approximately $1.6 million, or 15%, to approximately $8.9 million for the six months ended June 30, 2023 from approximately $10.5 million for the six months ended June 30, 2022. The decrease was mainly attributable to (i) a decrease in sales and (ii) appreciation of US dollar to Chinese yuan (RMB).

 

We sold approximately 5,000 tons of our products during the six months ended June 30, 2023, reflecting a decrease of approximately 500 tons decrease, or a 9% decrease, compared to the 5,500 tons of products sold in the six months ended June 30, 2022. Our sales were affected by the economic downturn in the overall construction machinery industry in 2023. Orders from various customers have decreased compared with the same period last year and the sales volume decreased accordingly.

 

The decrease in total revenues was also due to the appreciation of the US dollar to RMB. The average exchange rate was one US dollar equal to 6.9256 RMB during the six months ended June 30, 2023, a 6.9% increase, or a 0.4469 RMB increase, compared to one US dollar equal to 6.4787 RMB in the six months ended June 30, 2022. The appreciation of the US dollar compared to the RMB has had a negative impact on our operations. Our functional currency is RMB. We lost approximately 6 percent of the value when our sales amount in RMB for the six months ended June 30, 2023 translated into the US dollar.

 

2

 

  

Cost of revenues

 

Our cost of revenues consists of cost to manufacture our products, primarily includes the cost to purchase raw materials, direct labor costs and the related depreciation of our production machinery and equipment. Our cost of revenue was $5.9 million, a decrease of $1.1 million, or 16% for the six months ended June 30, 2023, as compared to the $7.0 million in the same period of 2022. The decrease in cost of revenue was in line with the decrease in revenue.

 

Gross profit

 

Our gross profit decreased by approximately $0.5 million, or 13%, to $3.0 million for the six months ended June 30, 2023 from $3.5 million for the six months ended June 30, 2022. As a percentage of revenues, our gross margin rate was 34.1%, a slight increase of 2.4% in the six months ended June 30, 2023, compared to 33.4% for the six months ended June 30, 2022, which resulted from the lower steel price in 2023 and was offset by the increased labor costs.

  

Selling, general and administrative (“SG&A”) expenses

 

SG&A expenses primarily consisted of sales and marketing expenses, general and administrative expenses and research and development expenses.

 

   Six Months Ended
June 30,		   Changes
Increase		   Changes 
   2023   2022   (Decrease)   in % 
Sales and marketing expenses  $310,791   $242,462   $68,329    28.2%
General and administrative expenses   1,306,324    1,001,780    304,544    30.4%
Research and development (“R&D”) expenses   643,691    743,322    (99,631)   -13.4%
Total  $2,260,806   $1,987,564   $273,242    13.7%

 

SG&A expenses increased by approximately $273,000 or 14% from approximately $1,988,000 for the six months ended June 30, 2022 to approximately $2,261,000 for six months ended June 30, 2023. The increase in the SG&A expenses was primarily attributable to (i) an increase in sales and marketing expenses; (ii) an increase in general and administrative expenses; offset by a decrease in R&D expenses, which will be discussed in greater detail below.

 

Sales and marketing expenses

 

Our sales and marketing expenses consist primarily of salary expenses and related employee benefits for sales and marketing personnel, shipping and handling expenses, port and custom clearance costs, storage expense, promotion and marketing expenses and other expenses in associated with sales and marketing activities, which increased by approximately $68,000 or 28% from approximately $242,000 for the six months ended June 30, 2022 to approximately $311,000 for the six months ended June 30, 2023. The increase in sales and marketing expenses was mainly due to (i) a $37,000 increase in the shipping and handling fee; (ii) a $20,000 increase in the quality claim payment; (iii) a $6,000 increase in wages and wage related expenses; and (iv) a $5,000 increase in show and marketing related expenses.

 

3

 

 

General and administrative expenses

 

Our general and administrative expenses consist of primarily salary expenses and related employee benefits, repair and maintenance expenses, professional service expenses, depreciation and amortization, travel and entertainment expense, and office supply and other expenses, which increased by approximately $305,000 or 30% from approximately $1,002,000 for the six months ended June 30, 2022 to approximately $1,306,000 for the six months ended June 30, 2023. The increase in general and administrative expenses was mainly due to (i) an increase in professional service expenses of approximately $232,000 to approximately $492,000 for the six months ended June 30, 2023 from approximately $260,000 for the six months ended June 30, 2022, which was primarily due to the Company’s effort made towards our listing with the Nasdaq and the initial public offering; (ii) an increase in transportation and vehicle expenses of approximately $42,000 to approximately $79,000 for the six months ended June 30, 2023 from approximately $37,000 for the six months ended June 30, 2022, which was primarily due to increased sporadic purchase of raw materials and increased transportation costs accordingly; (iii) an increase in repair and maintenance expenses of approximately $53,000 to approximately $119,000 for the six months ended June 30, 2023 from approximately $66,000 for the six months ended June 30, 2022, which was primarily due to the scheduled inspection and maintenance of some equipment in the workshop and moving expenses for certain equipment; (iv) an increase in depreciation and amortization expenses of $26,000 to $67,000   for the six months ended June 30, 2023 from $41,000 for the six months ended June 30, 2022 due to new equipment purchased and being used in production during 2023 and the equipment acquired in 2022 are fully in use for production in 2023, and (v) a decrease of $49,000 to $549,000 for the costs of wage, labor costs and other G&A expenses in the six months ended June 30, 2023 from $597,000 for the six months ended June 30, 2022, which was primarily due to the Company received reimbursement of $35,000 from employee work injury insurance.

 

Research and development (“R&D”) expenses

 

Substantially all research and development costs represent the Company’s spending on product development activities. For the six months ended June 30, 2023, the Company recorded research and development expense of approximately $644,000 and $743,000, respectively, a decrease of $99,000 or 13%. The decrease of R&D expenses was primarily due to the reduced output and impact of exchange rates as discussed above.

 

Other income

 

   Six Months Ended
June 30,		   Changes
Increase		   Changes 
Other income (expenses)  2023   2022   (Decrease)   in % 
Other income (expenses)  $445,148   $581,677   $(136,529)   -23.5%
Financing expenses   (327,128)   (131,992)   (195,136)   147.8%
Other expense   (41,070)   -    (41,070)     
Total other income (expenses)  $76,950   $449,685   $(372,735)   -82.9%

  

Other income

 

Other income was primarily comprised of income from sale of scrapped materials, government subsidies and others. Other income decreased by $137,000 to $445,000 for the six months ended June 30, 2023 from $582,000 for the six months ended June 30, 2022. The decrease was mainly due to a decrease of $111,000 molds sales.

 

4

 

 

Financial expenses

 

Financial expenses primarily comprised of gain or loss recognized from foreign currency transactions and interest incurred on loans, finance leases and financial liabilities, as well as interest expenses on discounting our notes receivable prior to their maturity. Financial expenses increased by $195,000 or 148% from approximately $132,000 for the six months ended June 30, 2022 to approximately $327,000 for the six months ended June 30, 2023. The increase in financial expenses was mainly due to (i) an increase of $172,000   in interest expenses on loans, finance lease obligation and financing liabilities from approximately $215,000 for the six months ended June 30, 2022 to approximately $388,000 for the six months ended June 30, 2023. The increase in interest was primarily due to the increased bank loan the Company acquired in 2022. (ii) a decrease of $51,000, or 44% in gain from foreign currency transactions from a gain from foreign currency transactions of approximately $115,000 for the six months ended June 30, 2022 to a $64,000 gain from foreign currency transactions for the six months ended June 30, 2023. (iii) a decrease in financing expense of $23,000, or 71%   from $32,000 for the six months ended June 30, 2022 to $9,000 for the six months ended June 30, 2023.

 

Income before income taxes

 

Our income before income taxes was approximately $862,000 for the six months ended June 30, 2023, a decrease of approximately $1,100,000, or 56%, as compared to approximately $1,962,000 for the six months ended June 30, 2022.

 

Income tax expense

 

Our income tax expense was approximately $66,000 for the six months ended June 30, 2023, a decrease of $29,000, or 31%, compared to approximately $95,000 for the six months ended June 30, 2022.

 

Net Income

 

As a result of foregoing, for the six months ended June 30, 2023, our net income was approximately $796,000, a decrease of $1,071,000, or 57%, compared to $1,867,000 in the same period of 2022. Earnings per basic and diluted share was $0.07 for the six months ended June 30, 2023, a decrease of $0.12, or 63%, compared to $0.19 for the same period of 2022.

 

Foreign Currency Translation

 

Our principal operation is located in the PRC. RMB is the functional currency. The financial position and results of our operations are determined using RMB, the local currency. The unaudited condensed consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement 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. Foreign exchange rates published by the Federal Reserve Board were used in our unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2023.

  

1 US$ = RMB  June 30,
2023		   June 30,
2022		   December 31,
2022		   December 31,
2021		 
Period-end Spot Rate   7.2513    6.6977    6.8983    6.3731 
Period Average Rate   6.9256    6.4787    6.7299    6.4512 

 

 

5

 

 

v3.23.3
Document And Entity Information
 6 Months Ended
Jun. 30, 2023
Document Information Line Items  
Entity Registrant Name HONGLI GROUP INC.
Document Type 6-K
Current Fiscal Year End Date --12-31
Amendment Flag false
Entity Central Index Key 0001855557
Document Period End Date Jun. 30, 2023
Document Fiscal Year Focus 2023
Document Fiscal Period Focus Q2
Entity File Number 000-00000
v3.23.3
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2023
Dec. 31, 2022
Current assets:    
Cash and cash equivalent $ 678,770 $ 2,085,033
Restricted cash 187,976 29,006
Short-term investment 262,022
Accounts receivable, net 6,475,620 7,429,904
Notes receivable 648,357 302,775
Inventories, net 2,802,102 2,613,549
Prepaid expense and other current assets 1,088,152 1,604,134
Total current assets 12,142,999 14,064,401
Non-current assets    
Property, plant and equipment, net 10,849,587 12,300,491
Prepayment for purchase of Yingxuan Assets 3,363,840 3,535,975
Intangible assets, net 4,060,693 4,961,881
Finance lease right-of-use assets, net 739,305 1,299,217
Other non-current assets 2,174
TOTAL ASSETS 31,156,424 36,164,139
Current liabilities    
Short-term loans 3,973,081 6,015,975
Accounts payable 1,587,600 2,957,110
Security deposit received for sales of properties 1,449,633
Income tax payable 57,747 136,544
Finance lease obligation, current 144,850 315,780
Accrued expenses and other payables 541,960 955,676
Total current liabilities 7,273,928 12,437,954
Long-term loans 3,272,517 10,147,428
Long-term payable 11,185 42,220
Finance lease obligation, non-current 1,144 46,623
Deferred tax liability 14,480 15,221
TOTAL LIABILITIES 10,573,254 22,689,446
SHAREHOLDERS’ EQUITY:    
Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 12,371,875 and 10,000,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively* [1] 1,237 1,000
Additional paid-in capital 8,036,663 609,601
Statutory reserve 370,683 370,683
Retained earnings 13,537,337 12,740,983
Accumulated other comprehensive loss (1,362,750) (247,574)
TOTAL SHAREHOLDERS’ EQUITY 20,583,170 13,474,693
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 31,156,424 36,164,139
Related Party    
Current liabilities    
Due to related parties $ 968,690 $ 607,236
[1] The share amounts are presented on a retroactive basis.
v3.23.3
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares
Jun. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Ordinary shares, par value (in Dollars per share) $ 0.0001 $ 0.0001
Ordinary shares, shares authorized 500,000,000 500,000,000
Ordinary shares, shares issued 12,371,875 10,000,000
Ordinary shares, shares outstanding 12,371,875 10,000,000
v3.23.3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($)
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]    
Revenues, net $ 8,915,111 $ 10,485,582
Cost of revenues 5,869,310 6,986,054
Gross Profit 3,045,801 3,499,528
Operating expenses:    
Selling, general and administrative expenses 2,260,806 1,987,565
Total operating expenses 2,260,806 1,987,565
Income from operations 784,995 1,511,963
Other income (expense)    
Other income 445,148 581,677
Financing expenses (327,128) (131,992)
Other expenses (41,070)
Total other income (expenses), net 76,950 449,685
Income before income taxes 861,945 1,961,648
Income tax expense 65,591 94,786
Net income 796,354 1,866,862
Comprehensive income (loss)    
Net income 796,354 1,866,862
Other comprehensive income (loss)    
Foreign currency translation adjustment (1,115,176) (617,830)
Comprehensive income (loss) $ (318,822) $ 1,249,032
Earnings per share    
Earnings per share, Basic (in Dollars per share) $ 0.07 $ 0.19
Weighted average common shares outstanding*    
Weighted average common shares outstanding, Basic (in Shares) [1] 11,150,898 10,000,000
[1] The share amounts are presented on a retroactive basis.
v3.23.3
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Parentheticals) - $ / shares
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]    
Earnings per share, Diluted $ 0.07 $ 0.19
Weighted average common shares outstanding, Diluted [1] 11,150,898 10,000,000
[1] The share amounts are presented on a retroactive basis.
v3.23.3
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) - USD ($)
Ordinary Shares
Additional paid-in capital
Statutory reserve
Retained earnings
Accumulated other comprehensive income (loss)
Total
Balance at Dec. 31, 2021 $ 1,000 [1] $ 609,601 $ 370,683 $ 9,808,620 $ 698,692 $ 11,488,596
Balance (in Shares) at Dec. 31, 2021 [1] 10,000,000          
Net income [1] 1,866,862 1,866,862
Foreign currency translation adjustment [1] (617,830) (617,830)
Balance at Jun. 30, 2022 $ 1,000 [1] 609,601 370,683 11,675,482 80,862 12,737,628
Balance (in Shares) at Jun. 30, 2022 [1] 10,000,000          
Balance at Dec. 31, 2022 $ 1,000 [1] 609,601 370,683 12,740,983 (247,574) $ 13,474,693
Balance (in Shares) at Dec. 31, 2022 10,000,000 [1]         10,000,000
Initial public offering - March 31, 2023 $ 206 [1] 8,249,794 $ 8,250,000
Initial public offering - March 31, 2023 (in Shares) [1] 2,062,500          
Initial public offering costs [1] (1,967,388) (1,967,388)
Underwriter’s option exercised - May 2, 2023 $ 31 [1] 1,237,469 1,237,500
Underwriter’s option exercised - May 2, 2023 (in Shares) [1] 309,375          
Exercise costs [1] (92,813) (92,813)
Net income [1] 796,354 796,354
Foreign currency translation adjustment [1] (1,115,176) (1,115,176)
Balance at Jun. 30, 2023 $ 1,237 [1] $ 8,036,663 $ 370,683 $ 13,537,337 $ (1,362,750) $ 20,583,170
Balance (in Shares) at Jun. 30, 2023 12,371,875 [1]         12,371,875
[1] The share amounts are presented on a retroactive basis.
v3.23.3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($)
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Statement of Cash Flows [Abstract]    
Net income $ 796,354 $ 1,866,862
Adjustments to reconcile net income to net cash (used in) provided by operating activities:    
Depreciation and amortization 508,428 356,948
Allowance for current expected credit losses 66,277
Amortization of operating lease right-of-use assets 22,793
Gain on disposals of property and equipment (345,519)
Changes in operating assets and liabilities:    
Accounts receivable 554,182 (1,721,780)
Notes receivable (377,266) 819,834
Inventories (330,635) 61,703
Prepaid expense and other current assets (233,634) 65,153
Other non-current assets 2,166 73,295
Due from related parties 209
Due to related parties 3,210 (44,604)
Accounts payable (1,340,227) (42,430)
Accrued expenses and other payables (292,690) 110,340
Income tax payable (75,543) 57,161
Net cash (used in) provided by operating activities (1,042,104) 1,602,691
Cash flows from investing activities    
Purchase of property and equipment (173,181) (844,151)
Prepayments for purchase of Yingxuan Assets (843,643)
Short-term investment (274,344)
Proceeds from sale of property and equipment 750,837
Net cash provided by (used) in investing activities 303,312 (1,687,794)
Cash flows from financing activities    
Payments for financing liabilities (194,002) (136,645)
Payments for finance leases (208,115) (279,892)
Advances from related parties 949,099 1,012,549
Repayments to related parties (542,906) (262,398)
Borrowings from short term loans 1,842,440 3,318,567
Repayments of short term loans (3,674,772) (3,395,743)
Borrowings from long term loans 4,727,388
Repayments of long term loans (11,408,398)
Proceeds from initial public offering 9,487,500
Disbursements for initial public offering costs (1,343,572) (84,734)
Net cash (used in) provided by financing activities (365,338) 171,704
Effect of exchange rate changes on cash, cash equivalents and restricted cash (143,163) (28,590)
Net change in cash, cash equivalents and restricted cash (1,247,293) 58,011
Cash, cash equivalents and restricted cash, beginning of the period 2,114,039 531,462
Cash, cash equivalents and restricted cash, end of the period 866,746 589,473
Cash, cash equivalents 2,085,033 484,389
Cash, cash equivalents 678,770 544,682
Restricted cash 29,006 47,073
Restricted cash 187,976 44,791
Cash, cash equivalents and restricted cash, beginning of the period 2,114,039 531,462
Cash, cash equivalents and restricted cash, end of the period 866,746 589,473
Supplemental disclosure of cash flow information:    
Cash paid for interest expense 409,431 206,232
Cash paid for income taxes 330,693 37,625
Non-cash investing and financing activities    
Right-of-use assets transferred to property and equipment upon exercise of purchase option 482,062 156,858
Security deposits applied to lease payments $ 33,583 $ 45,077
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