YIBO 6-K
Planet Image International Ltd (YIBO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September
Commission File Number:
No. 756 Guangfu Road
Hi-tech Development Zone
Xinyu City, Jiangxi Province
People’s Republic of China
+86 0790-7138216
(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
Planet Image International Limited (the “Company”) is filing this current report on Form 6-K to report its financial results for the six months ended June 30, 2026 and to discuss its recent corporate developments.
Attached as exhibits to this current report on Form 6-K are:
| (1) | the unaudited condensed interim consolidated financial statements and related notes as Exhibit 99.1; |
| (2) | Management’s Discussion and Analysis of Financial Condition and Results of Operations as Exhibit 99.2; and |
| (3) | Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T. |
This current report on Form 6-K is being incorporated by reference into the registration statement on Form F-3 of the Company (File No. 333-287740), declared effective by the U.S. Securities and Exchange Commission on July 3, 2025.
1
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this current report with respect to the Company’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of the Company. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. The Company cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the Company with the U.S. Securities and Exchange Commission. Therefore, investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.
All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the cautionary statements 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.
2
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Unaudited Consolidated Financial Statements and Related Notes as of June 30, 2026 and for the Six Months Ended June 30, 2026 and 2025 | |
| 99.2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema 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 Labels 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). |
3
SIGNATURES
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.
| Planet Image International Limited | ||
| Date: September 16, 2026 | By: | /s/ Shaofang Weng |
| Name: | Shaofang Weng | |
| Title: | Chief Executive Officer | |
4
Exhibit 99.1
PLANET IMAGE INTERNATIONAL LIMITED
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
PLANET IMAGE INTERNATIONAL LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amount in thousands of U.S. dollars, except for share and per share data)
| As of December 31, | As of June 30, |
|||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | | | ||||||
| Non-current assets: | ||||||||
| Property, plant and equipment, net | ||||||||
| Right-of-use assets, net | ||||||||
| Long-term investments | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Short-term bank borrowings | $ | $ | ||||||
| Current portion of a long-term bank borrowing | ||||||||
| Accounts payable | ||||||||
| Bank acceptance notes payable | ||||||||
| Amounts due to a related party – current | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Operating lease liabilities – current | ||||||||
| Taxes payable | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Operating lease liabilities – non-current | ||||||||
| Deferred tax liabilities, net | ||||||||
| Long-term bank borrowings | ||||||||
| Total non–current liabilities | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Preferred shares (par value of HK$ | ||||||||
| Class A ordinary shares (par value of HK$ | ||||||||
| Class B ordinary shares (par value of HK$ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
PLANET IMAGE INTERNATIONAL LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Amount in thousands of U.S. dollars, except for share and per share data)
| For the six months ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Net revenues | $ | $ | ||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling expenses | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Research and development expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income/(expenses): | ||||||||
| Other non-operating income, net | ||||||||
| Government subsidy | ||||||||
| Fair value loss on derivative instruments | ( | ) | ||||||
| Foreign exchange gain/(loss) | ( | ) | ||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Total other income, net | ||||||||
| Loss before income tax expense | ( | ) | ( | ) | ||||
| Income tax expense | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive income | ||||||||
| Foreign currency translation adjustment | ||||||||
| Total comprehensive loss | $ | ( | ) | ( | ) | |||
| Net loss per share | ||||||||
| Basic and diluted | ( | ) | ( | ) | ||||
| Weighted average shares | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
PLANET IMAGE INTERNATIONAL LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amount in thousands of U.S. dollars, except for share and per share data)
| Class A Ordinary shares* |
Class B Ordinary shares* |
Additional paid-in |
Statutory | Retained | Accumulated other comprehensive |
Total shareholder’s |
||||||||||||||||||||||||||||||
| Share | Amount | Share | Amount | capital | reserve | earnings | income | equity | ||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | | $ | | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
PLANET IMAGE INTERNATIONAL LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount in thousands of U.S. dollars, except for otherwise noted)
| For the six months ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Change in allowance for credit losses | ( | ) | ||||||
| Provision for inventory reserve | ||||||||
| Depreciation | ||||||||
| Amortization of right-of-use assets | ||||||||
| Share-based compensation | ||||||||
| Loss from the disposal of property, plant and equipment | ||||||||
| Unrealized exchange loss/(gain) | ( | ) | ||||||
| Fair value gain on derivative instruments | ( | ) | ||||||
| Deferred income tax benefits | ( | ) | ||||||
| Interest income from the loan to a third party | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other non-current assets | ||||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Notes payable | ( | ) | ( | ) | ||||
| Amount due to a related party | ( | ) | ||||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Taxes payable | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Payments for acquisition of property, plant and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of subsidiaries | ||||||||
| Purchase of short-term investments | ( | ) | ( | ) | ||||
| Purchase of long-term investments | ( | ) | ||||||
| Proceeds from sales of short-term investments | ||||||||
| Loan to a third party | ( | ) | ||||||
| Net cash provided by/(used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from bank loans | ||||||||
| Repayments of bank loans | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes | ( | ) | ||||||
| Net increase/(decrease) in cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash, at beginning of the period | ||||||||
| Cash and restricted cash, at end of the period | $ | $ | ||||||
| The following table provides a reconciliation of cash and restricted cash reported within the Unaudited Condensed Consolidated Balance Sheets that sum to the same amounts shown in the Unaudited Condensed Consolidated Statements of Cash Flows: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash and restricted cash shown in the Unaudited Condensed Consolidated Statements of Cash Flows | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW INFORMATION: | ||||||||
| Obtaining right-of-use assets in exchange for operating lease liabilities | $ | $ | ||||||
| Acquisition of property and equipment included in accounts payable | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES |
| (a) | Principal activities |
Planet Image International Limited (“Planet Image” or the “Company”) was incorporated in the Cayman Islands on August 5, 2019 under the Cayman Islands Companies Act. The Company, through its consolidated subsidiaries (collectively, the “Group”), is principally engaged in the manufacturing and sale of compatible toner cartridges with its manufacturing facilities based in the People’s Republic of China (the “PRC” or “China”). The majority of the Company’s products are sold in the North America, Europe and Asia, including on an original design manufacturer (“ODM”) basis and throughout distributors.
| (b) | Organization |
Planet Image was incorporated as an ultimate holding company in the Cayman Islands on August 5, 2019.
Planet Image owns
Aster Graphics Company Limited (“Aster HK”), a wholly-owned subsidiary of Aster Industrial, and Aster Online Company Limited (“Aster Online”), a wholly-owned subsidiary of Lucky Knot, were both incorporated under the laws of the Special Administrative Region of Hong Kong (“Hong Kong”), while Aster Graphics, Inc. (“Aster US”), a company incorporated in the State of California in March 2011 and Aster Technology Holland B.V. (“Aster NL”), a company incorporated in the Netherlands in July 2011, were both
Jiangxi Yibo E-Tech Co., Ltd. (“Jiangxi Yibo”) was established under the laws of the PRC in January 2011 and along with its subsidiaries, are the Group’s main operating entities in China.
Prior to the Reorganization (as defined below) described below, Jiangxi Yibo was controlled by several individual shareholders. A reorganization of the Company’s legal structure (“Reorganization”) was completed in March 2020. The Reorganization involved the following major events:
| ● | Formation of Planet Image, Aster BVI, Aster Industrial, Lucky Knot, Aster HK and Aster Online; |
| ● | Transfer of |
| ● | Transfer of |
| ● | Transfer of |
F-6
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 1. | ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.) |
| (b) | Organization (cont.) |
Upon the completion of the above Reorganization, Planet Image became the ultimate holding company of the Group. The Company is effectively controlled by the same group of shareholders before and after the Reorganization and therefore the Reorganization is considered as a recapitalization of these entities under common control.
The details of the Company’s major subsidiaries as of June 30, 2026 are as follows.
| Major Subsidiaries | Date of incorporation | Place of incorporation | Percentage of direct ownership | Principal activities | ||||||
| Aster BVI | % | |||||||||
| Lucky Knot Limited | % | |||||||||
| Aster Industrial Limited | % | |||||||||
| Aster Online | % | |||||||||
| Aster HK | % | toner cartridges | ||||||||
| Aster Graphics, Inc. (“Aster U.S.”) | % | |||||||||
| Aster NL | % | |||||||||
| Jiangxi Yibo | % | |||||||||
| Aster Germany | % | |||||||||
| Aster Italy | % | cartridges in Europe | ||||||||
| Aster France | % | cartridges in Europe | ||||||||
| Jiangxi Leibotai Electronic Technology Co., Ltd. (“Jiangxi Leibotai”) | % | services in the PRC | ||||||||
| Yantuo (Guangdong) Technology Co., Ltd. (“Yantuo”)(1) | % | |||||||||
| Planet Image International Electronic Technology Shenzhen Co., Ltd. (formerly known as Shenzhen Dinghong Shengda E-commerce Co., Ltd.) | % | |||||||||
| Aster Technology UK Ltd. (“Aster UK”) | % | cartridges in Europe | ||||||||
| Peony Trade Co., Limited | % | |||||||||
| White Poplar Co., Limited | % | |||||||||
| Joyful Product Trade Co., Limited | % | |||||||||
| Grand Future Trade Co., Limited | % | |||||||||
| Oriental Poetry Co., Limited | % | |||||||||
| Prosperity Product Trade Co., Limited | % | |||||||||
| Atlantic Marketing Co., Limited | % | |||||||||
| (1) |
F-7
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Basis of presentation |
The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair presentation of the Company’s financial position, its results of operations and its cash flows, as applicable, have been made. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. The accompanying unaudited condensed financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the years ended December 31, 2024 and 2025 appearing in the Company’s annual report on Form 20-F for the year ended December 31, 2025.
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. For consolidated subsidiaries where the Company’s ownership in the subsidiary is less than
| (b) | Use of estimates |
The preparation of the unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the unaudited condensed consolidated financial statements and accompanying notes. Significant accounting estimates include, but not limited to, allowance for credit loss, impairment provision for inventories, useful lives and impairment of long-lived assets, determination of the fair value of derivative instruments and derivative liability arising from foreign exchange forward contracts, accounting for deferred income taxes and valuation allowance for deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
| (c) | Foreign currencies and foreign currency translation |
The functional and reporting currency of the Company is the United States Dollar (“US$”). The Company’s operating subsidiaries in China, Europe and the United States use their respective currencies, Renminbi (“RMB”), Pound (“GBP”), Euro (“EUR”) and US$, as their functional currencies.
The financial statements of Planet Image and its subsidiaries, other than subsidiaries with functional currency of US$, are translated into US$ using the exchange rate as of the balance sheet date for assets and liabilities and average exchange rate for the year for income and expense items. 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 unaudited condensed consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the unaudited condensed 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 included in unaudited condensed consolidated statements of changes in shareholders’ equity. Gains and losses from foreign currency transactions are included in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss.
F-8
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (c) | Foreign currencies and foreign currency translation (cont.) |
The following table outlines the currency exchange rates that were used in preparing the unaudited condensed consolidated financial statements:
| As of December 31, 2025 | As of June 30, 2026 | |||
| Period end RMB: USD exchange rate | US$1=RMB | US$1=RMB | ||
| Period end EUR: USD exchange rate | US$1=EUR | US$1=EUR | ||
| Period end GBP: USD exchange rate | US$1=GBP | US$1=GBP |
| For the six months ended June 30, | ||||
| 2025 | 2026 | |||
| Average RMB: USD exchange rate | US$1=RMB | US$1=RMB | ||
| Average EUR: USD exchange rate | US$1=EUR | US$1=EUR | ||
| Average GBP: USD exchange rate | US$1=GBP | US$1=GBP | ||
| (d) | Accounts Receivable, net |
Accounts receivables are recognized in the period when the Group has sold products to its customers and when its right to consideration is unconditional. The Group adopted Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement on Credit Losses on Financial Instruments”, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”) on January 1, 2023 using the modified retrospective transition approach. 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 the new standard did not have a material effect on the Group’s unaudited condensed consolidated financial statements.
Account receivables are stated net of provision of credit losses. The Group has developed a current expected credit loss (“CECL”) model based on historical experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The Group considers historical collection rates, current financial status, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses.
F-9
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (e) | Inventories |
Inventories primarily consist of raw materials, goods in transit, work in progress and finished goods, are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost of inventory is determined by using the weighted average cost method. The Group writes down the cost of obsolete and slow-moving inventories to the estimated net realizable value, based on inventory obsolescence trends, historical experience, forecasted consumer demand and application of the specific identification method. As of December 31, 2025 and June 30, 2026, $
| (f) | Revenue recognition |
The Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2019 and the Company’s revenue recognition policies are presented as below.
The Group’s revenues are mainly generated from the sales of compatible toner cartridges through offline and online channels. The Group provides products: (i) to offline overseas customers who own their brands on an ODM basis; (ii) to offline overseas dealers who primarily sell its self-branded products and white-label products to end consumers; and (iii) directly to customers on a retail basis under its self-owned brands through online retail platforms. There is no major difference in terms of product capability between the Company’s ODM products, white-label products, and self-own brand products, and the main difference lies in product packaging and pricing.
The Group usually enters into sales orders with customers or receives online sales orders, in which the Group identifies the only performance obligation is to transfer the promised products stated in the sales order. The Group performs shipping services before the products are delivered to the place designated by customers. Shipping service is determined as an activity to fulfill the Group’s promise to transfer the products, rather than another distinct performance obligation as it is performed before the customers obtain control of the products. In the normal course of business, the Group’s warranties are limited to product specifications, and the Company does not accept product returns unless the item is defective as manufactured. Accordingly, warranty costs are treated as a cost of fulfillment subject to accrual, rather than a performance obligation. The Company establishes provisions for both estimated returns and warranties when revenues are recognized.
Revenues represent the amount of consideration that the Group is entitled to, including products settlement price, net of value-added tax (“VAT”), surcharges, discounts and returns, if any. The transaction price is variable as adjusted by return allowances, rebates, which the Group estimates by using the expected value method and updates to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. The Group considers itself a principal as it self-produces all the products. The Group recognizes revenue from the sales of compatible toner cartridges at a point in time when the control of products is transferred to the customers upon customers’ acceptance on a gross basis. Payment is usually required within four months after the issuance of invoice for offline customers and the consideration of online orders is collected in advance of shipment by online platform. Therefore, it is probable that the Group will collect substantially all of the consideration without existence of any significant financing component.
Disaggregation of Revenues
The Group disaggregates its revenues from contracts by sales channel and region, as the Group believes it best depicts how the nature, amount, timing and uncertainty of the revenues and cash flows are affected by economic factors. The Group’s disaggregation of revenues for the six months ended June 30, 2025 and 2026 are disclosed in Note 18 of these unaudited condensed consolidated financial statements.
F-10
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (f) | Revenue recognition (cont.) |
Contract Balances
When either party to a revenue contract has performed, the Group presents the contract in the unaudited condensed consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s payment. The Group merely incurs cost to obtain a contract with a customer. The Group presents any unconditional rights to consideration separately as a receivable. The Group does not have any contract assets. The balance of accounts receivable, net of allowance for credit loss were $
The Group presents the consideration that a customer pays before the Group transfers products to the customer as a contract liability (advances from customers) when the payment is made. Advances from customers is the Group’s obligation to transfer products to a customer for which the Group has received consideration from the customer. As of December 31, 2025 and June 30, 2026, the balance of advances from customers amounted to $
| (g) | Share-based Compensation |
The Group applies ASC 718, Compensation—Stock Compensation (“ASC 718”), to account for all of its share-based payments. In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or equity award. All the Group’s grants of share-based awards without vesting conditions were classified as equity awards and are recognized in the financial statements based on their grant date fair value.
| (h) | Concentration of risk |
Financial instruments that potentially subject the Group to significant concentration of credit risk consist primarily of cash, restricted cash and accounts receivable. As of December 31, 2025 and June 30, 2026, the aggregate amounts of cash and restricted cash of $
The Group’s exposure to credit risk associated with its trading and other activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. Substantially all of the Group’s sales are made to customers located primarily in the U.S., Europe and Asia. The Company’s operating results could be adversely affected by government policies in the PRC on export business, foreign exchange rate fluctuations, and changes in local market conditions. No customer individually represented more than 10% of the Group’s total revenues for the six months ended June 30, 2025. For the six months ended June 30, 2026, approximately
The Company’s inventory purchases from Supplier A accounted for approximately
F-11
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (i) | Recent accounting pronouncements |
In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) which requires detailed disclosures in the notes to financial statements disaggregating specific expense categories and certain other disclosures to provide enhanced transparency into the nature and function of expenses. The FASB further clarified the effective date in January 2025 with the issuance of ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“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, with early adoption permitted. The requirements should be applied on a prospective basis while retrospective application is permitted. The Group does not expect to early adopt this guidance and does not expect the adoption of this ASU to have a material impact on its future consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments in ASU 2025-05 provide entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”) by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for the Company for its annual reporting periods beginning July 1, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Group is currently evaluating the impact ASU 2025-05 will have on its future consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles -Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027 and for interim reporting periods beginning in that fiscal year. The Group is currently evaluating the impact ASU 2025-06 will have on its future consolidated financial statements.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (“Topic 815”) and Revenue from Contracts with Customers (“Topic 606”): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”). ASU 2025-07 expands an existing scope exception under Topic 815 to exclude non-exchange-traded contracts where the underlying is based on the operations or activities specific to one of the contract parties. ASU 2025-07 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The Group is currently evaluating the impact ASU 2025-07 will have on its future consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments—Credit Losses (“Topic 326”): Purchased Loans (“ASU 2025-08”). The amendments expand the population of acquired loans subject to the gross-up approach, treating non-credit-deteriorated loans (excluding credit cards) as “seasoned” if purchased at least 90 days after origination or acquired in a business combination. ASU 2025-08 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is currently evaluating the impact ASU 2025-08 will have on its future consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). The amendments establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. ASU 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is currently evaluating the impact of adopting ASU 2025-10.
F-12
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| (i) | Recent accounting pronouncements (cont.) |
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements (“ASU 2025-11”). The amendments clarify disclosure requirements for interim financial statements. ASU 2025-11 is effective for interim periods beginning after December 15, 2026. Early adoption is permitted. The Group is currently evaluating the impact of adopting ASU 2025-11.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025-12”). ASU 2025-12 addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Group is currently evaluating the impact of adopting ASU 2025-12.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the unaudited condensed consolidated financial statements upon adoption.
The Group does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its unaudited condensed consolidated financial condition, results of operations, cash flows or disclosures.
| 3. | DISPOSAL OF SUBSIDIARIES |
In 2025, the Group disposed ten in-direct subsidiaries (the “Disposed Subsidiaries”), all of which were engaged in providing products directly to customers on a retail basis under its self-owned brands through online retail platforms, as well as three trademark assignments related to the online retail business operations. On December 30, 2025, the Board of Directors of the Company formally authorized the plan to dispose of the Disposed Subsidiaries and the related registered trademarks to a third party. Following this authorization, the Group executed definitive disposal agreements with the purchaser on December 31, 2025, to transfer
The sale of the Disposed Subsidiaries did not represent a strategic shift that has or will have a major effect on the Group’s operations or financial results, given its limited financial impact, in accordance with ASC 205-20-45-1A to 45-1C. Accordingly, the disposal was not presented as discontinued operations, and the results thereof were included in continuing operations for all periods presented.
Details of the entities disposed were as follows:
| Disposed subsidiaries | Total assets | Total liabilities | Total net (liabilities)/assets | |||||||||
| Your Office Supplies Company Limited | $ | $ | $ | ( | ) | |||||||
| Amstech Limited | ( | ) | ||||||||||
| Aztech Enterprise Limited | ( | ) | ||||||||||
| Supplies4U Limited | ( | ) | ||||||||||
| Dellon Technology Company Limited | ( | ) | ||||||||||
| Iprint Enterprise Limited | ( | ) | ||||||||||
| REVOL TRADING INC. | ||||||||||||
| Eco Imaging Inc. | ( | ) | ||||||||||
| Intercon International CORP. | ( | ) | ||||||||||
| Proimage B.V. | ( | ) | ||||||||||
| Total | $ | $ | $ | ( | ) | |||||||
The total consideration was $
F-13
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 4. | ACCOUNTS RECEIVABLE, NET |
Accounts receivable consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The movement of allowance of credit losses was as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Balance at beginning of the periods presented | $ | $ | ||||||
| Addition/(reversal) in credit losses | ( | ) | ||||||
| Write off | ( | ) | ||||||
| Foreign currency translation adjustment | ||||||||
| Balance at end of the periods presented | $ | $ | ||||||
The Group recorded a credit loss of $
The majority of accounts receivable are expected to be recovered within six months. The aging of accounts receivable is calculated from the expiration date of the customer’s credit terms, which differs from the aging of accounts receivable based on the number of days past invoice date. The Group generally grants trade debtors a credit period of
| As of December 31, 2025 | As of June 30, 2026 | |||||||
| (Unaudited) | ||||||||
| Not overdue | $ | $ | ||||||
| Within 90 days | ||||||||
| Between 3 and 6 months | ||||||||
| Between 6 months and a year | ||||||||
| Over a year | ||||||||
| $ | $ | |||||||
F-14
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 5. | INVENTORIES |
Inventories consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Raw materials | $ | $ | ||||||
| Goods in transit | ||||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| Inventories | $ | $ | ||||||
As of December 31, 2025 and June 30, 2026, $
| 6. | PREPAID EXPENSES AND OTHER CURRENT ASSETS |
Prepaid expenses and other current assets consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Loan to a third party (a) | $ | $ | ||||||
| Export input VAT receivables (b) | ||||||||
| Advances to suppliers | ||||||||
| Insurance receivables on written-off accounts receivables (c) | ||||||||
| Interest receivable | ||||||||
| Security deposits | ||||||||
| Employee receivables and business advances | ||||||||
| Receivable from third parties (d) | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| (a) |
| (b) |
| (c) |
| (d) |
F-15
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 7. | PROPERTY, PLANT AND EQUIPMENT, NET |
Property, plant and equipment consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Machinery and equipment | $ | $ | ||||||
| Building improvement | ||||||||
| Land use rights | ||||||||
| Office equipment, furniture and fixtures | ||||||||
| Automobiles | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
Depreciation expense was $
As of December 31, 2025 and June 30, 2026, land use rights owned by Jiangxi Yibo, a subsidiary of the Company, with carrying values of $
| 8. | INVESTMENTS |
Investments consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Fixed deposit receipt, current | $ | $ | ||||||
| Total short-term investments | ||||||||
| Fixed deposit receipt, non-current | ||||||||
| Total long-term investments | ||||||||
| Total investments | $ | $ | ||||||
As of December 31, 2025, an amount of $
As of June 30, 2026, $
F-16
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 9. | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
Accrued expenses and other current liabilities consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Accrued expenses (a) | $ | $ | ||||||
| Accrued payroll and employee benefits | ||||||||
| Advances from customers (b) | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| (a) |
| (b) |
| 10. | BORROWINGS |
The principal of the borrowings is due at maturity. Accrued interest is due either monthly or quarterly. The bank borrowings were for working capital and capital expenditure purposes.
| As of December 31, 2025 | As of June 30, 2026 | |||||||
| (Unaudited) | ||||||||
| Bank of China Xinyu Branch (a) | $ | $ | ||||||
| Export-Import Bank of China Jiangxi Branch (b) | ||||||||
| Agricultural Bank of China Xinyu Branch (c) | ||||||||
| Xinyu Rural Commercial Bank Gaoxin Branch (d) | ||||||||
| Total short-term borrowings | ||||||||
| Industrial and Commercial Bank of China Limited Xinyu High Tech Branch (e) | ||||||||
| Total long-term borrowing, current | ||||||||
| Industrial and Commercial Bank of China Limited Xinyu High Tech Branch (e) | ||||||||
| Total long-term borrowing, non-current | ||||||||
| Total Borrowings | $ | $ | ||||||
| (a) |
| (b) |
F-17
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 10. | BORROWINGS (cont.) |
| (c) |
| (d) |
| (e) |
| Year ending December 31, | Repayment amount | |||
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total | $ | |||
Interest expenses were $
As of June 30, 2026, the Group had unutilized lines of credit aggregating $
| 11. | LEASES |
The leases of the Company were classified as operating leases mainly for offices and staff dormitories. Rent expense is recognized on a straight-line basis over the lease term. The discount rate was set with reference to the loan prime rate published by the Bank of China.
Supplemental balance sheet information related to operating lease was as follows:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liabilities – current | $ | $ | ||||||
| Operating lease liabilities – non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
The weighted average remaining lease terms and discount rates for the operating lease as of June 30, 2026, were as follows:
| Remaining lease term and discount rate: | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
The Group recognized operating lease expense of $
F-18
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 11. | LEASES (cont.) |
The following is a schedule of future minimum payments under the Company’s operating leases as of June 30, 2026:
| For the fiscal years ended December 31, | Amounts | |||
| Remainder of 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total operating lease liabilities, net of interest | $ | |||
| 12. | SHARE BASED COMPENSATION |
2025 Equity Incentive Plan
Effective May 9, 2025, the board of directors of the Company approved the 2025 Equity Incentive Plan (the “Plan”), to attract and retain the best available personnel for positions of responsibility with the Group, to provide additional incentives to them and align their interests with those of the Company’s shareholders, and to thereby promote the Group’s long-term business success. On May 28, 2025,
In accordance with ASC 718, share-based compensation transactions with employees are measured based on the grant-date fair value of the equity instruments awarded. The Company determined the fair value of the Class A ordinary shares granted under the Plan to be $
As the equity awards were fully vested on the grant date and did not contain any future service or performance conditions, the Group recognizes the entire fair value of the award as compensation expense on the date of grant.
For the six months ended June 30, 2025, the share-based compensation expenses were $
A summary of activities of the restricted shares for the six months ended June 30, 2025 and 2026 is as follows:
| Number of nonvested restricted shares | ||||
| In thousand | ||||
| (Unaudited) | ||||
| Unvested on December 31, 2024 | $ | |||
| Granted | ||||
| Vested | ( | ) | ||
| Unvested on June 30, 2025 | $ | |||
The allocation of total share-based compensation expenses is as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| General and administrative expenses | $ | | $ | |||||
| Research and development expenses | ||||||||
| Total | $ | $ | ||||||
F-19
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 13. | TAX |
The Cayman Islands and the BVI
The Company was incorporated in the Cayman Islands and several of its wholly-owned subsidiaries were incorporated in the BVI. Under the current laws of the Cayman Islands and the BVI, these entities are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholding tax in the Cayman Islands and the BVI.
Hong Kong
According to the Tax (Amendment) (No. 3) Ordinance 2018 published by the Hong Kong government, effective April 1, 2018, under the two-tiered profits tax regime, the profits tax rate for the first HKD
United States
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”) which significantly changed previous U.S. tax laws, including a reduction of corporate income tax rate from
The Company’s U.S. subsidiaries file income tax returns with the Internal Revenue Service and are subject to income tax examinations by the IRS and applicable state tax authorities.
For the six months ended June 30, 2025 and 2026, the U.S. federal statutory corporate income tax rate applicable to the Group’s U.S. subsidiaries was
The IRS generally may examine tax returns filed within the preceding three years. However, in cases where a substantial understatement of income is identified, the statute of limitations may be extended to six years.
Europe
The Company’s subsidiaries, which were mainly incorporated in European Union (“EU”) countries, such as the Netherlands, Italy, and France, are subject to enterprise income tax on their respective taxable income as determined under the applicable tax laws and accounting standards at rates ranging from
The PRC
Generally, the Company’s subsidiaries that are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of
In accordance with the implementation rules of the Enterprise Income Tax Law of the PRC (the “EIT Law”), a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of
As a result of the above preferential income tax rate, the aggregate tax savings of the Group were $
F-20
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 13. | TAX (cont.) |
The Group’s loss before income tax expense consisted of:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| PRC | $ | ( | ) | $ | ( | ) | ||
| Non-PRC | ||||||||
| Loss before income tax expense | $ | ( | ) | $ | ( | ) | ||
The income tax provision consisted of the following components:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Current income tax expense | $ | ( | ) | $ | ( | ) | ||
| Deferred income tax benefit/(expense) | ( | ) | ||||||
| Total income tax expense | $ | ( | ) | $ | ( | ) | ||
The PRC
A reconciliation of the Group’s PRC statutory tax rate to the effective income tax rate during the periods is as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Computed income tax expense with PRC statutory tax rate | % | % | ||||||
| Non-deductible items | ( | )% | ( | )% | ||||
| Additional deduction of qualified R&D expenditures | % | % | ||||||
| Effect of tax holiday and preferential tax rate | ( | )% | ( | )% | ||||
| Changes in valuation allowance | ( | )% | ( | )% | ||||
| Effect of income tax rate differences in jurisdictions other than the PRC | % | % | ||||||
| Effective income tax rate | ( | )% | ( | )% | ||||
| * | The PRC statutory tax rate is used because the Group’s headquarters and primary management activities are located in PRC. |
F-21
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 13. | TAX (cont.) |
In accordance with the updated requirements of ASU No. 2023-09 for the six months ended June 30, 2026, a reconciliation between the statutory rate and the Group’s effective income tax rate is as follows (in thousands, except percentages):
| For the six months ended June 30, 2026 | ||||||||
| Amount | Percent | |||||||
| Statutory rate | $ | % | ||||||
| Foreign tax effects | ||||||||
| North America | ||||||||
| Statutory tax rate difference between North America and Chinese mainland | ( | ) | ( | )% | ||||
| Europe | ||||||||
| Statutory tax rate difference between Europe and Chinese mainland | % | |||||||
| Other foreign jurisdictions | % | |||||||
| Changes in valuation allowance | ( | ) | ( | )% | ||||
| Non-deductible items | ( | ) | ( | )% | ||||
| Additional deduction of qualified R&D expenditures | % | |||||||
| Effect of preferential tax rate of HNTE | ( | ) | ( | )% | ||||
| Effective income tax rate | $ | ( | ) | ( | )% | |||
The per share effect of the tax holiday was as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Tax holiday effect | $ | $ | ||||||
| Effect of tax holiday on basic net income per share | ||||||||
| Effect of tax holiday on diluted net income per share | ||||||||
As of December 31, 2025 and June 30, 2026, the significant components of the deferred tax assets and deferred tax liability were summarized below:
| As of December 31, 2025 | As of June 30, 2026 | |||||||
| (Unaudited) | ||||||||
| Allowance for inventories and others | $ | $ | ||||||
| Net operating loss carried forward | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net of valuation allowance | $ | $ | ||||||
| Deferred tax liability: | ||||||||
| Accelerated tax depreciation and others | $ | ( | ) | $ | ( | ) | ||
| Total deferred tax liability | $ | ( | ) | $ | ( | ) | ||
| Deferred tax liabilities, net | $ | ( | ) | $ | ( | ) | ||
Pursuant to the disclosure requirements of ASU 2023-09, the following table summarizes income taxes paid, net of refunds, by jurisdiction:
| For the six months ended June 30, 2026 | ||||
| Asia | $ | |||
| Europe | ||||
| Total income taxes paid (net of refunds) | $ | |||
F-22
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 14. | EQUITY |
Ordinary shares
The Company’s authorized share capital is comprised of
Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting, transfer and conversion rights. Each Class A ordinary share is entitled to
On January 29, 2024, the Company closed its initial public offering on the Nasdaq Capital Market where
As of December 31, 2025, and June 30, 2026, the number of the Company’s authorized Class A ordinary shares was
Preferred shares
As of December 31, 2025 and June 30, 2026, the number of the Company’s authorized preferred shares was
| 15. | RESTRICTED NET ASSETS |
A significant portion of the Group’s operations are conducted through its PRC (excluding Hong Kong) subsidiaries, and the Company’s ability to pay dividends is primarily dependent on receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation to statutory reserves. The Group 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
As a result of these PRC laws and regulations, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. As of December 31, 2025 and June 30, 2026, net assets restricted in the aggregate, which include paid-in capital and statutory reserve funds of the Company’s subsidiaries, that are included in the Company’s consolidated net assets were approximately $
F-23
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 16. | COMMITMENTS AND CONTINGENCIES |
Commitments
As of December 31, 2025 and June 30, 2026, the Group had no material purchase commitments, significant capital commitments, long-term obligations or guarantees.
Contingencies
On November 12, 2021, ML Products Inc. filed a lawsuit against Aster U.S. and certain other entities in the U.S. District Court for the Central District of California. ML Products alleges that the defendants, including Aster U.S. and certain related entities, manipulated the Amazon search algorithm to promote sales of their consumer replacement ink and toner cartridges on Amazon.com and seeks damages. Aster U.S. filed a motion to dismiss the complaint on February 9, 2022. On October 12, 2023, ML Products filed a revised complaint against Aster U.S. in a separate action, ML Products Inc. v. Aster Graphics Inc., Case No. 5:23-cv-2094.
As of the date of this report, fact discovery has been completed and expert deposition discovery is underway. The trial, which has been continued several times, is currently scheduled for December 7, 2026.
Given that the litigation remains at a relatively early stage and significant factual and legal issues remain unresolved, the Group is currently unable to determine whether a loss will be incurred or estimate the possible loss or range of loss. No material loss or liability accrual has been recorded as of June 30, 2026.
| 17. | RELATED PARTY TRANSACTIONS |
Related parties
The Company’s related parties with which the Group had transactions include its affiliates, any director or executive officers of the Company and their immediate family members, as well as any shareholders owning more than
The table below sets forth the related parties and their relationships with the Group who had transaction with the Group for the six months ended June 30, 2025 and 2026:
| Name | Relationship | |
| Mr. Weidong Gu | ||
| Mr. Zhisheng Cheng | ||
| Mr. Xingzhi Huang | ||
| Xinyu High-Tech Investment Co., Ltd. |
F-24
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 17. | RELATED PARTY TRANSACTIONS (cont.) |
Amounts due to a Related party
The amounts due to a related party are as follows:
| As of December 31, | As of June 30, | |||||||
| 2025 | 2026 | |||||||
| (Unaudited) | ||||||||
| Rental income received in advance: | ||||||||
| Xinyu High-Tech Investment Co., Ltd. | $ | $ | ||||||
Related party transactions
The transactions of related parties are as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Guarantee provided for bank short-term borrowings | ||||||||
| Xinyu High-Tech Investment Co., Ltd. – Export-Import Bank of China Jiangxi Branch | $ | $ | ||||||
| Mr. Weidong Gu – Bank of China | ||||||||
| Mr. Weidong Gu – Xinyu Rural Commercial Bank | ||||||||
| Mr. Weidong Gu – Export-Import Bank of China Jiangxi Branch | ||||||||
| Mr. Zhisheng Cheng – Bank of China | ||||||||
| Mr. Zhisheng Cheng – Export-Import Bank of China Jiangxi Branch | ||||||||
| Mr. Xingzhi Huang – Bank of China | ||||||||
| Mr. Xingzhi Huang – Export-Import Bank of China Jiangxi Branch | ||||||||
| Rental income: | ||||||||
| Xinyu High-Tech Investment Co., Ltd. | $ | $ | ||||||
Mr. Weidong Gu, Mr. Zhisheng Cheng and Mr. Xingzhi Huang also provided guarantees with their personal property for the Group’s notes payable credited by Agricultural Bank of China Xinyu Branch and Bank of China Xinyu Branch.
| 18. | SEGMENT INFORMATION |
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Group’s chief operating decision maker in order to allocate resources and assess performance of the segment.
In accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Group applies the “management approach” in determining reportable operating segments, which considers the internal organization and reporting used by the Group’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable segments.
F-25
PLANET IMAGE INTERNATIONAL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amount in thousands of U.S. dollars, except share and per share data)
| 18. | SEGMENT INFORMATION (cont.) |
Revenues by sales channel
The Group’s revenues derived from different channels for the six months ended June 30, 2025, and 2026, are as follows:
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Offline sales to dealers | $ | $ | ||||||
| Offline sales to ODM customers | ||||||||
| Online sales to retail customers | ||||||||
| Total | $ | $ | ||||||
Geographic information
The Group’s revenues for the six months ended June 30, 2025, and 2026, were primarily generated from North America, Europe, Asia and other regions.
| For the six months ended June 30, | ||||||||
| 2025 | 2026 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| North America | $ | $ | ||||||
| Europe | ||||||||
| Asia | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
As of December 31, 2025 and June 30, 2026, the Group’s
| 19. | SUBSEQUENT EVENTS |
Borrowings
On July 14, 2026, Jiangxi Yibo entered into a one-year loan agreement with Bank of China Xinyu Branch for a principal amount of $
On July 31, 2026, Jiangxi Yibo entered into a one-year loan agreement with Bank of China Xinyu Branch for a principal amount of $
The Group has evaluated subsequent events through September 16, 2026, the date on which the unaudited condensed consolidated financial statements were issued, and has determined that no events occurred subsequent to June 30, 2026, that would have a material impact on the unaudited condensed consolidated financial statements.
F-26
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in the Form 6-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in the Company’s Form 20-F for the year ended December 31, 2025.
Overview
Through its operating subsidiaries, Planet Image International Limited (the “Company,” “we,” “our,” and “us”) is an export-oriented manufacturer and seller of compatible toner cartridges based in the People’s Republic of China (“China” or the “PRC”), the United States of America (the “U.S.”) and Europe, with the mission to deliver high-quality and cost-effective printing solutions to consumers around the world with our proprietary technology, research and development capabilities and our integrated and localized sales, logistics and service platform.
Through the operating subsidiaries, we primarily develop and manufacture compatible toner cartridges that can be used for a wide range of commonly available models of laser printers from different manufacturers, on a white-label or third-party brand basis or under our self-owned brands. Through the operating subsidiaries, we have a wide international footprint through offline sales channels, and the operating subsidiaries’ products are mainly sold to customers in the U.S. and Germany. Customers of the operating subsidiaries primarily consist of wholesalers, dealers to retail customers. We believe that our integrated business model encompassing a value chain from research and development, patented technology, manufacturing, and operating localized sales branches, allows us to capture industry opportunities in a timely manner and provides us with stable growth potential. During the six months ended June 30, 2025 and 2026, our revenue was primarily generated from our customers in North America, Europe and Asia.
Through the operating subsidiaries, we sell our products: (i) to offline overseas customers who own their brands on an Original Design Manufacturer (“ODM”) basis; and (ii) to offline overseas dealers who primarily resell white-label products and self-branded products to end consumers. There is no major difference in terms of product capability between the ODM products and white-label products offered by the operating subsidiaries, and the main difference lies in product packaging and pricing.
Our revenue decreased by US$5.2 million, or 7.0%, from US$74.5 million for the six months ended June 30, 2025 to US$69.3 million for the six months ended June 30, 2026. For the six months ended June 30, 2025 and 2026, we realized a net loss of US$8.0 million and US$1.0 million, respectively. This decrease in net loss was mainly due to (i) a decrease in share-based compensation expenses of US$8.6 million, which were recognized solely during the six months ended June 30, 2025, (ii) a decrease in selling expenses of US$2.9 million, mainly due to lower payroll expense, sales commissions and platform advertising fees; and (iii) an increase in other non-operating income of US$2.6 million mainly generated from warehouse leasing; offset by (i) a decrease in gross profit of US$4.4 million attributable to our disposal of the online business and a decrease in revenue from offline sales to dealers due to increased U.S. tariff and material costs, and (ii) a shift from a foreign exchange gain of US$1.8 million to a foreign exchange loss of US$1.8 million, mainly due to exchange rate fluctuations. Both our online business and offline sales to dealers historically generated relatively higher gross profit margins, and the decrease in revenue from these higher-margin businesses had a corresponding adverse impact on our gross profit.
Major Factors Affecting Our Results of Operations
Our business and results of operations are affected by a number of general factors that impact the compatible toner cartridge industry including, among others, economic, political and social conditions in the PRC, export regulations or enforcement, economic and regulatory conditions or global trade policy of the U.S., Europe, or Asia, changes in the business strategies of U.S. customers, European customers, or Asian customers, any increase in customer demand for our products, raw material costs, and the competitive environment. Unfavorable changes in any of these general factors could adversely affect demand for our products and materially and adversely affect our results of operations.
While our business is influenced by these general factors, our results of operations are more directly affected by the following company-specific factors.
Ability to retain existing customers or attract new customers
The compatible toner cartridge market is characterized by rapid technological development and continual introduction of new models. As a specialized manufacturer of toner cartridges, our future success depends largely on the number of customers using the operating subsidiaries’ products. To successfully maintain customer basis, we rely heavily on excellent product quality and functionality, and prompt responses to the latest developments in the compatible toner cartridge market. Some factors that may affect the ability of the operating subsidiaries to meet customer demands and to attract customers include: the ability to (i) develop or acquire the necessary technical know-hows to design and manufacture new products and to enhance or adapt existing products to respond to changes in printer technologies, market trends and customer demands; (ii) manage growth while maintaining the consistency of product quality, promote products to a broader base of prospective customers; and (iii) provide satisfactory customer support and after-sale services in a timely manner. We believe the operating subsidiaries’ strong design, research and development capabilities represent a key strength that allows us to provide patent-compliant products with advanced technologies to their customers.
Ability to manage inventories efficiently
Our inventories consist of raw materials, work-in-progress and finished goods. For self-branded products and white-label products, the operating subsidiaries’ sales and marketing department, based on their understanding of historical sales and perceived market trends, formulates annual sales targets at the Company’s level and at the regional level. The operating subsidiaries manufacture their ODM products on a made-to-order basis. We believe that maintaining an appropriate level of inventories helps the operating subsidiaries deliver their products to meet the market demands in a timely manner. Meanwhile, it is critical to keep close observation on changing sales condition due to change in consumer demand or preferences, change of marketing strategy by customers or incorrect estimation of the market demand for products, as well as technological upgrades of printer which renders the operating subsidiaries’ toner cartridge not compatible with it anymore and exposes us to risks of obsolete inventories. Our research and development capabilities have been instrumental to the quality and time-to-market of the operating subsidiaries’ products, which are our key strengths.
Ability to establish higher prices for our products
Our results of operations are affected by the pricing of the operating subsidiaries’ products. The operating subsidiaries generally price their products on the basis of a cost-plus calculation of the costs involved in manufacturing, and with reference to the prevailing market prices. The operating subsidiaries are generally able to charge higher price for their products as a result of their localized operation and ancillary services provided to offline customers including drop ship service, private labeling and customized packing services. We believe that the quality and reliability of the operating subsidiaries’ products coupled with their localized customer services are vital in maintaining customer loyalty and upholding their reputation and higher price of products.
Ability to control production and material costs
Our cost of inventory sold mainly consists of the raw materials used in production of toner cartridges such as OPC drums, toner and chips which form a major part of our cost of sales. The operating subsidiaries source raw materials predominantly from PRC suppliers. The prices of the operating subsidiaries’ raw materials are largely dependent on market forces, such as fluctuations of commodity prices, market supply and demand, and logistics and transport costs. As their business further grows in scale and the operating subsidiaries establish themselves as a major player in the China compatible toner cartridges industry, the operating subsidiaries expect to have higher bargaining power and hence more favorable terms from suppliers, including pricing and payment terms.
2
Impact related to global economic factors
The military invasion of Ukraine by Russia, which commenced in February 2022 and has continued since, and the sanctions against Russia resulting from such conflict have resulted in supply chain interruptions and have impaired our ability to compete in certain markets, and could otherwise subject us to potential liability. In 2024, to mitigate potential adverse impacts on our business and operating results caused by the Russia-Ukraine war, we proactively reduced the scale of our sales in Russia and Ukraine. For the six months ended June 30, 2025 and 2026, we did not generate any revenue from Russia or Eastern Europe. In addition, conflicts in the Middle East, particularly in the Iran region, have contributed to higher global oil prices due to risks of supply disruptions near the Strait of Hormuz. These developments have resulted in increased maritime insurance costs, route diversions, and delivery delays, thereby disrupting global supply chains and increasing logistics costs. For the six months ended June 30, 2026, we did not generate any revenue from Iran or the surrounding region. Notwithstanding the foregoing disruptions, based on management’s assessment, the Company did not experience any material increase in logistics costs for the six months ended June 30, 2026 as compared to the same period in 2025, and the Company has not been materially affected by the Red Sea route diversions or the Strait of Hormuz disruptions. As of the date of this report, we do not believe that our business segments, products, lines of service, projects, or operations have been materially impacted by the foregoing global supply chain disruptions, however, we cannot guarantee that we will not be materially impacted by the economic uncertainty and volatility in the markets in the future, especially in light of Russia’s invasion of Ukraine and the ongoing geopolitical tensions in the Middle East.
Global trade policies and tariffs
Our results of operations are subject to risks arising from global trade policies and tariff regimes that impact cross-border commerce. Because we manufacture compatible toner cartridges that are primarily sold into the U.S., European, and Asian markets, changes in trade relations, the imposition of new tariffs, or the modification of existing duties could directly affect our cost structure and pricing. For example, tariffs on finished goods could reduce the competitiveness of our products in key markets.
In addition, shifts in trade policy between the U.S., the European Union (the “EU”), Asian countries, and other jurisdictions may create uncertainty in demand, supply chain logistics, and customer purchasing behavior. Heightened trade restrictions or retaliatory measures could limit our ability to source materials efficiently or to serve customers on commercially favorable terms. Since 2018, the U.S. has imposed, and subsequently escalated, tariffs on a broad range of Chinese imports. Although certain temporary reductions in reciprocal tariff rates have been agreed upon from time to time as part of ongoing trade negotiations between the U.S. and China, a heightened tariff environment persists, and there is no assurance that such reduced tariff rates will be maintained, that further reductions will be achieved, or that additional tariffs or other trade restrictions will not be imposed with little or no warning. The additional tariffs imposed by the U.S. government on certain products imported from China may adversely impact our supply chain and cost structure.
Tensions between the U.S. and China have led to a series of tariffs being imposed by the U.S. on imports from mainland China, as well as other business restrictions. The rise in tariff costs has directly pushed up the import costs of our products when entering the U.S. market, which adversely impacted the gross margin that we earn on our products. Tariffs can also make our products more expensive for customers, which could make our products less competitive and reduce consumer demand. Our revenue generated from the U.S. market were US$42.5 million and US$28.2 million for the six months ended June 30, 2025 and 2026, representing 57.0% and 40.7% of our total revenues, respectively. We cannot guarantee that we will not be materially impacted by future changes in U.S. tariff rates or related trade policy uncertainties and market volatility, especially in light of potential adjustments to Sino-U.S. trade relations and tariff measures.
Although we continue to monitor developments in trade policy and evaluate alternative sales strategies, the ultimate impact of global trade policies and tariffs remains difficult to predict and could materially affect our sales volumes, margins, and overall financial performance.
3
Results of operations
The following table sets forth a summary of our unaudited condensed consolidated results of operations for the periods indicated. This information should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| For the six months ended June 30, | Change | |||||||||||||||
| 2025 | 2026 | Amount | % | |||||||||||||
| (in USD in thousands) | ||||||||||||||||
| Net revenue | $ | 74,508 | $ | 69,276 | $ | (5,232 | ) | (7.0 | )% | |||||||
| Cost of revenue | (50,505 | ) | (49,651 | ) | 854 | (1.7 | )% | |||||||||
| Gross profit | 24,003 | 19,625 | (4,378 | ) | (18.2 | )% | ||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | (18,909 | ) | (16,029 | ) | 2,880 | (15.2 | )% | |||||||||
| General and administrative expenses | (8,368 | ) | (3,252 | ) | 5,116 | (61.1 | )% | |||||||||
| Research and development expenses | (7,267 | ) | (2,476 | ) | 4,791 | (65.9 | )% | |||||||||
| Total operating expenses | (34,544 | ) | (21,757 | ) | 12,787 | (37.0 | )% | |||||||||
| Loss from operations | (10,541 | ) | (2,132 | ) | 8,409 | (79.8 | )% | |||||||||
| Other income (expenses): | ||||||||||||||||
| Other non-operating income, net | 697 | 3,257 | 2,560 | 367.3 | % | |||||||||||
| Government subsidy | 243 | - | (243 | ) | (100.0 | )% | ||||||||||
| Fair value loss on derivative instruments | (14 | ) | - | 14 | (100.0 | )% | ||||||||||
| Foreign exchange gain (loss) | 1,795 | (1,760 | ) | (3,555 | ) | (198.1 | )% | |||||||||
| Interest expense, net | (12 | ) | (40 | ) | (28 | ) | 233.3 | % | ||||||||
| Total other income | 2,709 | 1,457 | (1,252 | ) | (46.2 | )% | ||||||||||
| Loss before income tax expense | (7,832 | ) | (675 | ) | 7,157 | (91.4 | )% | |||||||||
| Income tax expense | (207 | ) | (365 | ) | (158 | ) | 76.3 | % | ||||||||
| Net loss | $ | (8,039 | ) | $ | (1,040 | ) | $ | 6,999 | (87.1 | )% | ||||||
Key Components of Results of Operations
Net revenue
We generate revenue primarily from sales of compatible toner cartridges and, to a lesser extent, from sales of certain ancillary components of toner cartridges through both offline and online channels. For the six months ended June 30, 2025 and 2026, our total net revenue was US$74.5 million and US$69.3 million, respectively. During these periods, we derived substantially all of our revenue from sales of compatible toner cartridge products in North America, Europe, Asia and other markets, primarily Brazil.
The following table sets forth our net revenue by sales channel for the periods indicated.
| For the six months ended June 30, | Change | |||||||||||||||
| 2025 | 2026 | Amount | % | |||||||||||||
| (in USD in thousands) | ||||||||||||||||
| Offline sales to dealers | $ | 39,384 | $ | 22,190 | $ | (17,194 | ) | (43.7 | )% | |||||||
| Offline sales to ODM customers | 27,735 | 46,803 | 19,068 | 68.8 | % | |||||||||||
| Online sales to retail customers | 7,389 | 283 | (7,106 | ) | (96.2 | )% | ||||||||||
| Total net revenue | $ | 74,508 | $ | 69,276 | $ | (5,232 | ) | (7.0 | )% | |||||||
4
The majority of our net revenue for the six months ended June 30, 2025 and 2026 was generated from North America, Europe and Asia. The following table sets forth the disaggregation of our net revenue by geographic region for the periods indicated.
| For the six months ended June 30, | Change | |||||||||||||||
| 2025 | 2026 | Amount | % | |||||||||||||
| (in USD in thousands) | ||||||||||||||||
| North America | $ | 45,255 | $ | 32,289 | $ | (12,966 | ) | (28.7 | )% | |||||||
| Europe | 22,273 | 27,500 | 5,227 | 23.5 | % | |||||||||||
| Asia | 5,723 | 8,786 | 3,063 | 53.5 | % | |||||||||||
| Others | 1,257 | 701 | (556 | ) | (44.2 | )% | ||||||||||
| Total net revenue | $ | 74,508 | $ | 69,276 | $ | (5,232 | ) | (7.0 | )% | |||||||
Cost of revenue
Our cost of revenue primarily consists of the following components: (i) inventory costs, which primarily include procurement costs for chips, toner and OPC drums; (ii) staff costs, which consist of salaries and benefits of production workers; (iii) depreciation expense relating to our plant, property and equipment used for production; (iv) freight charges incurred by us for delivering products from our factories to our warehouses abroad; (v) tariffs imposed on our products sold in the U.S.; and (vi) others, which primarily include overhead costs relating to consumables and electricity used for production.
The following table sets forth our cost of revenue by sales channel for the periods indicated.
| For the six months ended June 30, | Change | |||||||||||||||
| 2025 | 2026 | Amount | % | |||||||||||||
| (in USD in thousands) | ||||||||||||||||
| Offline sales to dealers | $ | 27,283 | $ | 15,369 | $ | (11,914 | ) | (43.7 | )% | |||||||
| Offline sales to ODM customers | 20,459 | 34,155 | 13,696 | 66.9 | % | |||||||||||
| Online sales to retail customers | 2,763 | 127 | (2,636 | ) | (95.4 | )% | ||||||||||
| Total cost of revenue | $ | 50,505 | $ | 49,651 | $ | (854 | ) | (1.7 | )% | |||||||
Gross profit and gross profit margin
Gross profit represents our revenue less cost of sales. Our gross profit margin represents our gross profit as a percentage of our revenue. For the six months ended June 30, 2025 and 2026, our gross profit was US$24.0 million and US$19.6 million, respectively, and our gross profit margins were 32.2% and 28.3%, respectively.
The following table sets forth our gross profit and gross profit margin by sales channel for the periods indicated.
| For the six months ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Change | ||||||||||||||||||||||
| Gross Profit | Gross Profit Margin | Gross Profit | Gross Profit Margin | Amount | % | |||||||||||||||||||
| (in USD in thousands) | ||||||||||||||||||||||||
| Offline sales to dealers | $ | 12,101 | 30.7 | % | $ | 6,821 | 30.7 | % | $ | (5,280 | ) | (43.6 | )% | |||||||||||
| Offline sales to ODM customers | 7,276 | 26.2 | % | 12,648 | 27.0 | % | 5,372 | 73.8 | % | |||||||||||||||
| Online sales to retail customers | 4,626 | 62.6 | % | 156 | 55.1 | % | (4,470 | ) | (96.6 | )% | ||||||||||||||
| Total gross profit | $ | 24,003 | 32.2 | % | $ | 19,625 | 28.3 | % | $ | (4,378 | ) | (18.2 | )% | |||||||||||
5
Selling expenses
Selling expenses primarily consist of: (i) salaries and benefits for our sales and marketing personnel; (ii) freight charges from our warehouses to our customers; (iii) depreciation relating to property, plant and equipment and leased properties used for selling and marketing purposes; (iv) consulting expenses; (v) office expenses; (vi) traveling expenses incurred by our sales and marketing personnel for business purposes; and (vii) others, which primarily include low-value consumables and insurance expenses.
General and administrative expenses
General and administrative expenses primarily consist of: (i) salaries and benefits for our administrative personnel; (ii) professional fees; (iii) office expenses, representing expenses for office supplies and consumables; (iv) utilities, which are primarily represented by water and electricity charges for administrative purposes; (v) depreciation and amortization expenses relating to our property, plant and equipment and leased properties used for administrative purposes; and (vi) others, which primarily include bad debt expenses, traveling, repair and maintenance, recruitment expenses, and other miscellaneous expenses for administrative purposes.
Research and development expenses
Research and development expenses primarily include: (i) share-based compensation expenses; (ii) costs for procuring materials for research and development activities; (iii) salaries and benefits for research and development personnel; (iv) depreciation, which represents depreciation expenses for property, plant and equipment used for research and development purposes; (v) patent registration-related expenses and patent litigation expenses; and (vi) others, which primarily include consumables, traveling expenses, utilities and miscellaneous expenses.
Other income
Other income primarily consists of: (i) other non-operating income, inclusive of income from warehouse services, and sales of scrap materials, which represent sales of excess miscellaneous materials left over from our production; (ii) foreign exchange gain or loss arising from currency exchange among U.S. Dollar (“US$”), Euro (“EUR”), Hong Kong Dollar, Renminbi (“RMB”) and Great British Pound; (iii) interest expense on short-term bank borrowings, and interest expense on lease liabilities, which is non-cash and calculated as the difference between lease payments and the net present value of the lease payments over the entire term of the lease.
Income tax expenses
The Cayman Islands and the British Virgin Islands (the “BVI”)
We were incorporated in the Cayman Islands and several of our wholly owned subsidiaries were incorporated in the BVI. Under the current laws of the Cayman Islands and the BVI, these entities are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholding tax in the Cayman Islands and the BVI.
Hong Kong
According to the Tax (Amendment) (No. 3) Ordinance 2018 published by the Hong Kong government, effective April 1, 2018, under the two-tiered profits tax rates regime, the profits tax rate for the first HKD2 million of assessable profits has been lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (“IRO”)) for corporations. We were not subject to Hong Kong profit tax for any period presented as we did not have assessable profits during the periods presented.
6
United States
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which significantly changed previous U.S. tax laws, including a reduction of corporate income tax rate from 35% to 21% and a one-time transition tax on deemed repatriation of undistributed foreign earnings.
Europe
Our subsidiaries that were incorporated in EU countries, such as the Netherlands, Italy, and France, are subject to enterprise income tax on the respective country’s taxable income as determined under the tax laws and accounting standards at rates ranging from 16.5% to 28%.
Mainland PRC
Generally, our Mainland PRC subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%, except for certain of our Mainland PRC subsidiaries that are qualified as high and new technology enterprises under the PRC Enterprise Income Tax Law and are eligible for a preferential enterprise income tax rate of 15%. The enterprise income tax is calculated based on the entity’s global income as determined under Mainland PRC tax laws and accounting standards.
Our products are primarily subject to value-added tax at a rate of 13% on sales of compatible toner cartridges, in each case less any deductible value-added tax we have already paid or borne. We are also subject to surcharges on value-added tax payments in accordance with Mainland PRC law.
Dividends paid by our Mainland PRC subsidiaries in Mainland China to our Hong Kong subsidiaries will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Double Taxation Avoidance Arrangement and receives approval from the relevant tax authority. If our Hong Kong subsidiaries satisfy all the requirements under the tax arrangement and receive approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiaries would be subject to withholding tax at the standard rate of 5%. Effective from November 1, 2015, the above-mentioned approval requirement has been abolished, but a Hong Kong entity is still required to file an application package with the relevant tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority.
If we or any of our subsidiaries outside of Mainland China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, such entity would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Under the PRC Enterprise Income Tax Law and the Notice on Improvements to Policies of Weighted Pre-tax Deduction of Research and Development Expenses, research and development expenses incurred by an enterprise in the course of carrying out research and development activities that have not formed intangible assets and are included in the profit and loss account for the current year are eligible for additional pre-tax deduction. Starting from January 1, 2021, besides deducting the actual amount of research and development expenses incurred, an enterprise is allowed an additional 100% deduction of such amount in calculating its taxable income for the relevant year, the rate of which was 75% before 2021. For research and development expenses that have formed intangible assets, the tax amortization is based on 200% of the costs of the intangible assets.
In accordance with the implementation rules of the PRC Enterprise Income Tax Law (the “EIT Law”), a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of 15%. The HNTE certificate is effective for a period of three years, and an entity may re-apply for the HNTE certificate upon expiration of the prior certificate. Jiangxi Yibo E-Tech Co., Ltd., a subsidiary of the Company, has been recognized as an HNTE and renewed its HNTE certificate in 2025, which will expire on October 29, 2028. Accordingly, for the six months ended June 30, 2025 and 2026, Jiangxi Yibo E-Tech Co., Ltd. was eligible to enjoy a preferential tax rate of 15% under the EIT Law.
7
Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2026
Net revenue
Comparison by Sales Channel
For our offline sales to dealers, we mainly sell white-label products and self-branded products through our offline channels. Our revenue from offline sales to dealers decreased by 43.7%, from US$39.4 million for the six months ended June 30, 2025 to US$22.2 million for the six months ended June 30, 2026, mainly due to a decrease in market demand resulting from the imposition of higher U.S. tariffs.
For our direct offline sales to ODM customers, our revenue increased by 68.8%, from US$27.7 million for the six months ended June 30, 2025 to US$46.8 million for the six months ended June 30, 2026, which was primarily driven by a significant surge in order volumes resulting from our strategy of offering flexible packaging and pricing options to meet diverse customer requirements.
For our online sales, we mainly sell self-branded and household products through the Online Selling Platforms. Our revenue generated from online sales decreased by 96.2%, from US$7.4 million for the six months ended June 30, 2025 to US$0.3 million for the six months ended June 30, 2026, mainly due to the completion of our disposal of the online business in December 2025. Following the disposal, we operated only one remaining online store as of June 30, 2026, which conducted clearance sales during the period. We expect to complete the clearance of its remaining inventory by September 2026, after which its operations will cease entirely.
Comparison by Area
Our revenue generated from North America decreased by 28.7%, from US$45.3 million for the six months ended June 30, 2025 to US$32.3 million for the six months ended June 30, 2026, due to a decrease in market demand resulting from the imposition of higher U.S. tariffs.
Our revenue generated from Europe increased by 23.5%, from US$22.3 million for the six months ended June 30, 2025 to US$27.5 million for the six months ended June 30, 2026, primarily attributable to increased sales volumes resulting from our continuous market expansion efforts in the English and Dutch markets.
Our revenue generated from Asia increased by US$3.1 million, or 53.5%, from US$5.7 million for the six months ended June 30, 2025 to US$8.8 million for the six months ended June 30, 2026, primarily due to our market expansion in China.
Our revenue generated from others decreased by US$0.6 million, or 44.2%, from US$1.3 million for the six months ended June 30, 2025 to US$0.7 million for the six months ended June 30, 2026, mainly due to a market downturn in Brazil.
Cost of revenue
Our cost of revenue decreased from US$50.5 million for the six months ended June 30, 2025 to US$49.7 million for the six months ended June 30, 2026, primarily attributable to a US$6.7 million decrease in freight charges and U.S. tariffs due to the decreased sales volume of offline sales to dealers, which was offset by an increase in material costs of US$5.8 million driven by rising prices of raw materials, especially semiconductors and chips.
Gross profit and gross profit margin
Gross profit of offline sales to dealers decreased by 43.6%, from US$12.1 million for the six months ended June 30, 2025 to US$6.8 million for the six months ended June 30, 2026 with a relatively stable gross profit margin of around 30.7%, which was consistent with the decrease in sales revenue of offline sales to dealers.
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Gross profit of offline sales to ODM customers increased by 73.8%, from US$7.3 million for the six months ended June 30, 2025 to US$12.6 million for the six months ended June 30, 2026, which was primarily driven by a significant surge in order volumes resulting from our strategy of offering flexible packaging and pricing options to meet diverse customer requirements. The gross profit margin increased from 26.2% to 27.0%, mainly due to more sales of new products with higher profit margin.
Gross profit of online sales to retail customers decreased by 96.6%, from US$4.6 million for the six months ended June 30, 2025 to US$0.2 million for the six months ended June 30, 2026, primarily due to the completion of our disposal of the online business in December 2025. Following the disposal, we operated only one remaining online store as of June 30, 2026, which conducted clearance sales during the period. We expect to complete the clearance of its remaining inventory by September 2026, after which its operations will cease entirely.
Selling expenses
Our selling expenses decreased from US$18.9 million for the six months ended June 30, 2025 to US$16.0 million for the six months ended June 30, 2026, primarily driven by (i) a decrease of US$1.7 million in payroll expense due to our control over employee compensation and (ii) a decrease of US$0.9 million in sales commissions and a decrease of US$0.7 million in platform advertising fees, consistent with the decrease in revenue from online business, partially offset by an increase in rent of US$0.5 million due to rising rental rates and an additional warehouse leased in the U.S.
General and administrative expenses
Our general and administrative expenses decreased by US$5.1 million, from US$8.4 million for the six months ended June 30, 2025 to US$3.3 million for the six months ended June 30, 2026, mainly due to (i) a decrease in share-based compensation expenses of US$4.1 million for shares granted to employees during the six months ended June 30, 2025; (ii) a decrease in professional fees of US$0.4 million resulting from lower audit and legal fees; and (iii) a decrease in credit losses of US$0.4 million due to the recovery of long-aged receivables.
Research and development expenses
Our research and development expenses decreased from US$7.3 million for the six months ended June 30, 2025 to US$2.5 million for the six months ended June 30, 2026, which was primarily attributable to a decrease in share-based compensation expenses of US$4.5 million for shares granted during the six months ended June 30, 2025.
Other income
For the six months ended June 30, 2025 and 2026, we recorded other income of US$2.7 million and US$1.5 million, respectively. The decrease was primarily attributable to (i) a swing of US$3.6 million from a foreign exchange gain of US$1.8 million for the six months ended June 30, 2025 to a foreign exchange loss of US$1.8 million for the six months ended June 30, 2026 due to fluctuations in exchange rates; and (ii) a decrease of US$0.2 million in government subsidies, which was partially offset by (iii) an increase in other non-operating income of US$2.6 million resulting from increased income from warehouse services.
Income tax expenses
Our income tax expenses increased from US$0.2 million for the six months ended June 30, 2025 to US$0.4 million for the six months ended June 30, 2026, primarily due to an increase in taxable income resulting from reduced utilization of tax loss carryforwards as compared to the six months ended June 30, 2025.
Net loss
As a result of the foregoing, we recorded net loss of US$8.0 million and US$1.0 million for the six months ended June 30, 2025 and 2026, respectively.
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Liquidity and Capital Resources
As of June 30, 2026, we had US$24.8 million in cash and restricted cash, which consisted of (i) cash in mainland China of US$14.9 million; (ii) cash in the BVI of US$5.1 million; (iii) cash in the Cayman Islands of US$2.7 million; (iv) cash in Europe of US$1.2 million; (v) cash in the U.S. of US$0.5 million; and (vi) cash in the UK of US$0.4 million. As of December 31, 2025, we had US$54.0 million in cash and restricted cash, which consisted of (i) cash in mainland China of US$31.7 million; (ii) cash in the BVI of US$14.4 million; (iii) cash in the Cayman Islands of US$2.8 million; (iv) cash in the U.S. of US$1.5 million; (v) cash in Hong Kong of US$1.5 million; (vi) cash in Europe of US$1.4 million; and (vii) cash in the UK of US$0.6 million. Under the existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments, and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange of the PRC by complying with certain procedural requirements. Therefore, there is no material restriction on foreign exchange that impairs our ability to transfer cash between entities, including to U.S. investors.
Our net cash used in operating activities for the six months ended June 30, 2025 and 2026, was US$4.5 million and US$19.8 million, respectively. Our principal sources of cash were our income from operations and bank loans. Most of our cash resources were used to pay for the procurement of raw materials, purchase of equipment and property, and payroll and rental expenses. We believe that our current cash and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements, capital expenditures and debt repayment obligations for at least the next 12 months.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated:
| For the six months ended June 30, | Change | |||||||||||||||
| 2025 | 2026 | Amount | % | |||||||||||||
| Net cash used in operating activities | $ | (4,493 | ) | $ | (19,767 | ) | $ | (15,274 | ) | 340.0 | % | |||||
| Net cash provided by (used in) investing activities | 3,499 | (10,212 | ) | (13,711 | ) | (391.9 | )% | |||||||||
| Net cash provided by financing activities | 7,661 | 1,378 | (6,283 | ) | (82.0 | )% | ||||||||||
| Effects of exchange rate changes | 309 | (485 | ) | (794 | ) | (257.0 | )% | |||||||||
| Net increase (decrease) in cash and restricted cash | 6,976 | (29,086 | ) | (36,062 | ) | (516.9 | )% | |||||||||
| Cash and restricted cash, at beginning of the period | 45,886 | 53,909 | 8,023 | 17.5 | % | |||||||||||
| Cash and restricted cash, at end of the period | $ | 52,862 | $ | 24,823 | $ | (28,039 | ) | (53.0 | )% | |||||||
Operating activities
For the six months ended June 30, 2026, our net cash used in operating activities was US$19.8 million, which was primarily attributable to (i) a net loss of US$1.0 million; (ii) an add-back adjustment for non-cash items of a net amount of US$0.9 million, inclusive of provision for inventory reserve, amortization and depreciation, and other non-cash items; and (iii) changes in working capital that negatively affected the cash flow from operating activities, primarily including (a) a decrease in accounts payable of US$7.5 million and an increase in prepaid expenses and other current assets of US$4.0 million, which was slightly offset by a decrease in inventory of US$1.1 million, primarily for materials procurement in advance, especially for semiconductors and chips so as to secure operational resources for future production under strained market capacity; (b) an increase of US$2.7 million in accounts receivable, mainly due to lower collections resulting from longer payment terms extended as preferential terms to our customers; (c) a decrease of US$5.2 million in accrued expenses and other current liabilities, mainly due to the decrease in freight charges and tariffs associated with lower overseas inventory levels resulting from the decrease in offline sales to dealers; and (d) a decrease in operating lease liabilities of US$1.1 million for rental payments.
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For the six months ended June 30, 2025, our net cash used in operating activities was US$4.5 million, which was primarily attributable to (i) a net loss of US$8.0 million; (ii) an add-back adjustment for non-cash items of a net amount of US$11.6 million, inclusive of share-based compensation, provision for inventory reserve, amortization and depreciation, and other non-cash items; and (iii) changes in working capital that negatively affected the cash flow from operating activities, primarily including (a) an increase of US$5.5 million in accounts receivable, primarily due to the increased sales volume from offline ODM customers, which were subject to longer payment terms; (b) a decrease of US$3.4 million in accrued expenses and other current liabilities, mainly due to the decrease in payroll payable; and (c) a decrease of US$7.5 million in accounts payable and notes payable, mainly due to the decline in procurement volume; and mainly offset by (iv) changes in working capital that positively affected the cash flow from operating activities, primarily including (a) a decrease in inventories of US$5.4 million resulting from the lower procurement volume compared to the year-end peak sales season and the increased sales volume from offline ODM customers with lower inventory requirements, and (b) a decrease of US$3.0 million in prepaid expenses and other current assets, mainly due to lower advance payments to vendors and a decrease in prepaid expenses.
Investing activities
For the six months ended June 30, 2026, our net cash used in investing activities was US$10.2 million, which mainly consisted of (i) a loan provided to a third party of US$7.2 million; (ii) purchases of short-term investments of US$2.2 million; (iii) purchases of long-term investments of US$1.4 million; and (iv) purchases of equipment of US$0.9 million for production, partially offset by proceeds from sales of short-term investments of US$1.4 million.
For the six months ended June 30, 2025, our net cash provided by investing activities was US$3.5 million, which mainly consisted of proceeds of US$6.5 million from sales of short-term investments, offset by purchases of short-term investments of US$2.6 million.
Financing activities
For the six months ended June 30, 2026, our net cash provided by financing activities was US$1.4 million, which consisted of net proceeds of US$1.4 million from short-term bank borrowings.
For the six months ended June 30, 2025, our net cash provided by financing activities was US$7.7 million, which consisted of net proceeds of US$7.7 million from short-term bank borrowings.
Capital expenditures
Our capital expenditures are incurred primarily in connection with the purchase of molds for production, upgrades of production equipment, purchases of motor vehicles and electronic and other equipment for office use, and office renovations. Our capital expenditures were US$0.4 million and US$0.9 million for the six months ended June 30, 2025 and 2026, respectively. We will continue to make capital expenditures to support the expected growth of our business.
Tabular Disclosure of Contractual Obligations
The following table sets forth our contractual obligations as of June 30, 2026:
| Payment Due by Period | ||||||||||||||||
| Total | Less than 1 year | 1 – 3 years | 3 – 5 years | |||||||||||||
| (in USD in thousands) | ||||||||||||||||
| Borrowings | $ | 32,663 | $ | 24,149 | $ | 8,514 | $ | - | ||||||||
| Lease obligations | 9,350 | 2,506 | 4,786 | 2,058 | ||||||||||||
| Total | $ | 42,013 | $ | 26,655 | $ | 13,300 | $ | 2,058 | ||||||||
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Capital commitments relate to the purchase of property and equipment, including leasehold improvements. Operating lease obligations consist of leases in relation to certain offices and buildings, plants and other property for our sales and after-sales network.
Other than those shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of June 30, 2026.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our unaudited condensed consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
Trend Information
Other than as disclosed below and elsewhere in this report on Form 6-K, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from January 1, 2026 to June 30, 2026 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
An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the unaudited condensed consolidated financial statements.
We prepare our financial statements in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.
The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our unaudited condensed consolidated financial statements and other disclosures included in this report. When reviewing our unaudited condensed consolidated financial statements, you should consider (i) our selection of critical accounting policies; (ii) the judgments and other uncertainties affecting the application of such policies; and (iii) the sensitivity of reported results to changes in conditions and assumptions.
Use of estimates
The preparation of the unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date, and revenues and expenses during the reported periods. Significant accounting estimates include, but are not limited to, allowance for credit losses, impairment provision for inventories, useful lives and impairment of long-lived assets, determination of the fair value of derivative instruments and derivative liabilities arising from foreign exchange forward contracts, accounting for deferred income taxes and valuation allowance for deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited condensed consolidated financial statements.
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Accounts receivable, net
Accounts receivable are recognized in the period when we have provided services to our customers and when our right to consideration is unconditional. We adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement on Credit Losses on Financial Instruments”, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”) on January 1, 2023 using the modified retrospective transition approach. ASC 326 introduces an approach based on expected losses to estimate the allowance for credit losses, which replaces the previously incurred loss impairment model. The adoption of the new standard did not have a material effect on our unaudited condensed consolidated financial statements.
Accounts receivable are stated net of provision for credit losses. We have developed a current expected credit loss (“CECL”) model based on historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. We consider historical collection rates, current financial status, macroeconomic factors, and other industry-specific factors when evaluating current expected credit losses.
Inventories, net
Inventories, primarily consisting of raw materials, goods in transit, work in progress and finished goods, are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Cost of inventory is determined using the weighted average cost method. We write down the cost of obsolete and slow-moving inventories to the estimated net realizable value, based on inventory obsolescence trends, historical experience, forecasted consumer demand and application of the specific identification method.
Revenue recognition
Our revenues are mainly generated from the sales of compatible toner cartridges through offline and online channels. We provide products: (i) to offline overseas customers who own their brands on an ODM basis; (ii) to offline overseas dealers who primarily sell our self-branded products and white-label products to end consumers; and (iii) directly to customers on a retail basis under our self-owned brands through online retail platforms. There is no major difference in terms of product capability between our ODM products, white-label products and self-owned brand products, and the main difference lies in product packaging and pricing.
We usually enter into sales orders with customers or receive online sales orders, in which we identify the only performance obligation is to transfer the promised products stated in the sales order. We perform shipping services before the products are delivered at the designated place. Shipping service is determined as an activity to fulfill our promise to transfer the products, rather than another distinct performance obligation as it is performed before the customers obtain control of the products. In the normal course of business, our warranties are limited to product specifications, and we do not accept product returns unless the item is defective as manufactured. Accordingly, warranty costs are treated as a cost of fulfillment subject to accrual, rather than a performance obligation. We establish provisions for both estimated returns and warranties when revenue is recognized.
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Revenues represent the amount of consideration to which we are entitled, including product settlement price, net of value-added tax (“VAT”), surcharges, discounts and returns, if any. The transaction price is variable, adjusted by return allowances and rebates, which we estimate using the expected value method and update to faithfully represent the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. We consider ourselves a principal as we self-produce all the products. We recognize revenue from the sales of compatible toner cartridges at a point in time when control of the products is transferred to the customers upon customers’ acceptance on a gross basis. Payment is usually required within four months after the issuance of an invoice for offline customers, and the consideration for online orders is collected in advance of shipment by the online platform. Therefore, it is probable that we will collect substantially all of the consideration without the existence of any significant financing component.
Disaggregation of Revenue
We disaggregate our revenue from contracts by sales channel and region, as we believe it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. Our disaggregation of revenues for the six months ended June 30, 2025 and 2026 are disclosed in Note 18 of our unaudited condensed consolidated financial statements included elsewhere in this report.
Contract balance
When either party to a revenue contract has performed, we present the contract in the unaudited condensed consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between our performance and the customer’s payment. We merely incur cost to obtain a contract with a customer. We present any unconditional rights to consideration separately as a receivable. We do not have any contract asset.
We present the consideration that a customer pays before we transfer products to the customer as a contract liability (advance from customers) when the payment is made. Advance from customers is our obligation to transfer products to a customer for which we have received consideration from the customer.
Recent accounting pronouncements
A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this report.
We are an emerging growth company (“EGC”) as defined by the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition periods, which may result in our financial statements not being comparable to those of companies that comply with public company effective dates. However, this election will not apply should we cease to be classified as an EGC.
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