Rubber Leaf Inc. Reports No Sales Revenue and Significant Losses Amid Legal Challenges

Rubber Leaf Inc. reported significant financial challenges in its latest 10-Q filing for the six months ending June 30, 2025. The company recorded no sales revenue during this period, a stark contrast to $4.9 million in sales for the same period in 2024. This decline is attributed to a construction-related lawsuit with Zhejiang Fengrong, which resulted in the freezing of the company's bank accounts and a temporary suspension of all business operations. Consequently, the net loss for the first half of 2025 was $686,971, a notable improvement from a net loss of $1.3 million in the prior year, primarily due to reduced operating expenses.

In terms of operational metrics, Rubber Leaf's total cost of sales decreased to $319,729 from $5.3 million in the previous year, reflecting the halt in production activities. The gross loss for the first half of 2025 was $319,729, compared to a gross loss of $354,782 in 2024. The company reported a significant reduction in general and administrative expenses, which fell to $223,423 from $715,533, as a result of the operational suspension. Selling expenses were eliminated entirely, down from $15,300 in the previous year.

The company’s balance sheet as of June 30, 2025, showed total assets of $21.8 million, slightly up from $21.7 million at the end of 2024. However, liabilities increased to $24.9 million, leading to a stockholders' deficit of $3.2 million, compared to a deficit of $2.5 million at the end of the previous fiscal year. The accumulated deficit reached $6.1 million, raising concerns about the company's ability to continue as a going concern. Rubber Leaf has negative working capital of $14.8 million, which underscores its liquidity challenges.

Strategically, the company has been focusing on resolving its legal issues to restore normal operations. Rubber Leaf has access to a line of credit of approximately $3.6 million from the Industrial and Commercial Bank of China, which it has not yet utilized due to the ongoing account freeze. Management remains optimistic about a favorable resolution to the legal disputes, which they believe will allow the company to resume operations by September 2025. However, the company acknowledges that it will need to secure additional investment capital to fund its operations in the near future.

Looking ahead, Rubber Leaf Inc. is preparing for a potential recovery as it anticipates resuming business operations. The management is actively exploring options to raise additional funds and is hopeful that the resolution of its legal issues will enable it to stabilize its financial position. However, the company has not established firm arrangements for financing, and uncertainties regarding its ability to access capital remain a significant concern.