What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-08-17 compared with 2025-04-11 · 221 added, 242 removed, 319 unchanged (59% of the section changed)

40 unchanged sentences

September 1, 2017.

The Company believes that this

is another step by the government to improve the environment.

The Company believes that this is

another step by the government to improve the environment.

It further believes the goal of the government is not to close all plants,

7 unchanged sentences

The local governmental

agencies acknowledged the facts that their initial requirements for the bromine industry did not include the project, the planning and

agencies acknowledged the fact that their initial requirements for the bromine industry did not include the project, the planning and

the land use rights approvals, which were later introduced by the provincial government as new requirements.

The Company understood from

the local government that local government were coordinating with various government agencies to solve these three outstanding approval

the local government that local government was coordinating with various government agencies to solve these three outstanding approval

issues in a timely manner and that all impacted bromine plants will not be allowed to commence production prior to obtaining those approvals.

4 unchanged sentences

Subsequently, the Company received

an approval dated on February 27, 2020 issued by the local governmental authority which allows us to resume production after the winter

temporary closure.

Further, the Company received another approval from the Shouguang Yangkou People’s Government dated on March

5, 2020 to resume production at its bromine factories No.1, No.

approval dated February 27, 2020, issued by the local governmental authority which allows us to resume production after the winter temporary

Further, the Company received another approval from the Shouguang Yangkou People’s Government dated on March 5, 2020, to

resume production at its bromine factories No.1, No.

4, No.7 and No.

9 in order to meet the needs of bromide products for epidemic

prevention and control (the “March 2020 Approval”).

The Company’s factories No.7 and No.1 started trial production in

middle-March, 2020, and commenced commercial production on April 3, 2020.

9 in order to meet the needs of bromide products for epidemic prevention

and control (the “March 2020 Approval”).

The Company’s factories No.7 and No.1 started trial production in middle-March

2020, and commenced commercial production on April 3, 2020.

The Company received oral notification

2 unchanged sentences

Factory No.8 began contributing revenue

in the fourth quarter 2022.

in the fourth quarter of 2022.

The Company is awaiting governmental

1 unchanged sentence

To our knowledge, the government is finalizing plans for all mining areas, including flood prevention

As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement of

operations of these factories in order to satisfy the local government's requirements.

The Company completed its flood prevention project

in December 2023.

As a result, we may be required to make certain modifications to our existing wells and aqueducts prior to commencement of operations

of these factories in order to satisfy the local government's requirements.

The Company completed its flood prevention project in December

This project was implemented for safeguarding its bromine facilities.

27 unchanged sentences

We anticipate proceeding with the completion of its chemical factory in due course.

However, in the event that the Chinese economy persists in its weakness and if we perceives this trend to be ongoing, there is a possibility

However, in the event that the Chinese economy persists in its weakness and if we perceive this trend to be ongoing, there is a possibility

that the chemical factory could be repurposed for the production of Sodium-Ion batteries.

12 unchanged sentences

(Trial) promulgated by the Ministry of Natural Resources of PRC on January 9, 2020, which came into effect on May 1, 2020, privately owned

enterprises are allowed to participate in the natural gas production.

The Company is engaged in ongoing discussions with the government

of Daying County regarding the establishment of a joint venture for the exploration and production of natural gas and brine products in

enterprises are allowed to participate in natural gas production.

The Company is engaged in ongoing discussions with the government of

Daying County regarding the establishment of a joint venture for the exploration and production of natural gas and brine products in Sichuan.

As a result of our

4 unchanged sentences

read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Flood Prevention Project

2023, the Company initiated its preventive measures for safeguarding its bromine facilities.

Our strategy involves the renovation of the

channels of four major rivers within our mining area, encompassing the tributary of the Mihe River.

The aim is to prevent flooding that

could harm the wells, aqueducts and crude salt pans at our plant.

In December 2023, the Company completed this flood prevention project.

As of December 31, 2023, we incurred $46,510,856 in other expenses for the project.

The cost incurred for four major

(1) Liansigou Section for $8,057,722;(2) Mi River Section for $20,168,321;(3) Ta River Section $10,070,033;

(4) Weitan River

Section for $8,214,780.

RESULTS OF OPERATIONS.

Year ended December 31, 2024 as compared to year ended

Year ended December 31, 2025,

as compared to year ended December 31, 2024

December 31, 2025

Percent Change

Increase/ (Decrease)

Cost of Net Revenue

December 31, 2024 (Restated)

Percent Change Increase/ (Decrease)

Cost of Revenue

$ (23,257,971 )

1 unchanged sentence

$ (7,085,731 )

Sales, Marketing and Other Operating Expense

Sales and Marketing Expense

Direct labor and factory overheads incurred during plant shutdown

7 unchanged sentences

$ (22,248,569 )

Other Income, Net

Expenditure on water pollution treatment

Other Expense, Net

$ (3,948,736 )

Loss on disposal of property, plant and equipment

Loss on disposal of long-lived assets

$ (2,008,853 )

Impairment of Property, plant and equipment

$ (29,169,008 )

Impairment of long-lived assets

$ (30,068,794 )

$ (6,772,500 )

Gain on disposal of subsidiary

Loss before Taxes

5 unchanged sentences

$ (59,900,372 )

$ (61,795,279 )

of $58,935,452 for year 2024 was mainly attributable to decreased sales and reduced margins.

The company also suffered a loss of $29,169,008

and $6,772,500 on retirement of fixed assets and impairment of fixed assets.

Additionally, the compensation expenses amounted to $194,700

for shares issued to company employees, officers and consultant for the year 2024 .

of $61,795,279 for year 2023 was mainly attributable to decreased sales and reduced margins.

Additionally, the compensation expenses amounted

to $451,350 for shares issued to company employees, officers and consultant for the year 2023 .

The Company also incurred losses

of $46,510,856 on a flood prevention project.

Net Revenue The

table below shows the changes in net revenue in the respective segment of the Company for the fiscal year 2024 compared to the same period

Loss for fiscal year 2025 decreased to $43,920,231 from $59,900,372 in 2024, mainly due to increased sales and margins, a $17,757,325

increase in net revenue and a $27,160,155 reduction in loss on disposal of long-lived assets.

These positive factors were partially offset

by a sharp rise in impairment of long-lived assets to $30,068,794.

Loss of $59,900,372 for fiscal year 2024 was mainly attributable to decreased sales and reduced margins.

The company also suffered a

loss of $29,169,008 and $6,772,500 on retirement of fixed assets and impairment of fixed assets.

Additionally, the compensation expenses

amounted to $194,700 for shares issued to company employees, officers and consultant for the year 2024 .

Net Revenue The table

below shows the changes in net revenue in the respective segment of the Company for the fiscal year 2025 compared to the same period in

Net Revenue by Segment

5 unchanged sentences

Years Ended December 31

Percent Change

Percent Increase

Bromine and crude salt segments product sold in tonnes

Bromine (excluded volume sold to SYCI)

Bromine se g ment

Net revenue from our bromine segment decreased by 79.4%

to $5,549,815 for the year ended December 31, 2024, compared to $26,921,462 for the year ended December 31, 2023.

This decrease was due

to a decrease in bromine unit price of 27% and a decrease in volume of 72%.

Crude salt se g ment

Net revenue from our crude salt segment decreased by 31.0%

to $2,049,988 for the year ended December 31, 2024, compared to $2,971,467 for the last year.

This decrease was due to a decrease in crude

salt unit price of 13% and a decrease in volume of 20%.

Bromine segment

revenue from our bromine segment increased by 314.4% to $23,000,303 for the year ended December 31, 2025, compared to $5,549,815 for

the year ended December 31, 2024.

This increase was due to an increase in bromine unit price of 55% and an increase in volume of 168%.

Crude salt segment

Net revenue from our crude salt segment increased by 18.0% to

$2,418,032 for the year ended December 31, 2025, compared to $2,049,988 for the last year.

This increase was due to an increase in

volume of 22%.

Chemical products segment

For the years ended December 31, 2024

and December 31, 2023, the net revenue for the chemical products segment was $0 due to the closure of our chemical factories since September

the years ended December 31, 2025, and December 31, 2024, the net revenue for the chemical products segment was $0 due to the closure

of our chemical factories since September 1, 2017.

Natural gas segment

For the year ended December 31, 2024, and December 31, 2023,

the net revenue for the n atural g as se g ment was $61,207 and $150,861.

The 59.4% decrease in revenue was primarily

due to the expiration of contracts.

Cost of Net Revenue

Cost of Net Revenue by Segment

the years ended December 31, 2025, and December 31, 2024, the net revenue for natural gas production was nil and $61,207.

This decrease

was due to the expiration of contracts.

Cost of Revenue

Cost of Revenue by Segment

December 31, 2025

1 unchanged sentence

Chemical Products

Cost of net revenue

primarily includes costs of the raw materials consumed, the direct salaries and benefits for production staff, electricity costs,

depreciation and amortization of manufacturing plant and machinery, and other manufacturing-related costs.

Our cost of net revenue

was $14,746,741 for the year ended December 31, 2024, representing a $13,343,212 (or 48%) decrease compared to the preceding year.

The decrease in costs was mainly due to a significant decrease in sales volume.

of revenue primarily includes costs of the raw materials consumed, the direct salaries and benefits for production staff, electricity

costs, depreciation and amortization of manufacturing plants and machinery, and other manufacturing-related costs.

Our cost of revenue

was $23,257,971 for the year ended December 31, 2025, representing a $8,511,230 (or 58%) increase compared to the preceding year.

increase in costs was mainly due to a significant increase in sales volume.

Bromine production capacity and utilization of our factories

5 unchanged sentences

Variance of the fiscal year 2025 and 2024

(i) Utilization ratio is calculated based on the annualized actual production volume in tonnes for the periods

divided by the annual production capacity in tonnes.

Bromine segment

For the year ended December 31, 2024, the cost of net revenue

for the bromine segment was $13,750,051.

For the year ended December 31, 2023, the cost of net revenue for the bromine segment was $26,521,281.

Crude salt segment

For the year ended December 31, 2024, the cost

of net revenue for the crude salt segment was $996,396.

The cost of net revenue for our crude salt segment for the year ended

December 31, 2023 was $1,567,993.

Chemical products segment

Cost of net revenue for our chemical products segment for

the fiscal year 2024 and 2023 was $0.

Natural Gas segment

Cost of net revenue for our natural gas segment for the

year ended December 31, 2024 and 2023 was $294 and $679.

Gross (Loss) Profit.

Gross (loss) was $7,085,731or

93%, of net revenue for the year ended December 31, 2024, compared to $1,953,837, or 7%, of net revenue for the same period in 2023.

(i) Utilization ratio is calculated based on the annualized actual production volume in tonnes for the

periods divided by the annual production capacity in tonnes.

the year ended December 31, 2025, the cost of revenue for the bromine segment was $22,221,144.

For the year ended December 31, 2024,

the cost of revenue for the bromine segment was $13,750,051.

the year ended December 31, 2025, the cost of revenue for the crude salt segment was $1,036,827.

The cost of revenue for our crude

salt segment for the year ended December 31, 2024, was $996,396.

products segment

Cost of revenue for our chemical products segment for

the fiscal year 2025 and 2024 was nil.

Natural g as segment

Cost of revenue for our natural gas segment for the

year ended December 31, 2025, and 2024 was nil and $294.

Profit/(Loss).

Gross profit was $2,160,364 or 8%, of net revenue for the year ended December 31, 2025, compared to the gross

loss of $7,085,731 or 93%, of net revenue for the same period in 2024.

Gross Profit (Loss) by Segment

2 unchanged sentences

% Point Change

Profit Margin

(loss) Margin

of Gross Profit Margin

Gross Profit (loss) Margin

$ (8,200,236 )

Chemical Products

Total Gross (Loss) Profit

Total Gross Profit/(Loss)

$ (7,085,731 )

Bromine se g ment

For the year ended December 31, 2024, the gross loss margin

for our bromine segment was 147% compared to the gross profit of 2% in the previous year.

This decrease was due to a decrease in bromine

unit price of 27% and a decrease in volume of 72%.

Crude salt se g ment

ended December 31, 2024, the gross profit margin for our crude salt segment was 51%, compared to 47% in the preceding year, representing

a 4% increase.

Direct labor and factory

overheads incurred during plant shutdown.

On September 1, 2017, the Company received notification from the government of Yangkou

County, Shouguang City of PRC stating that production at all its bromine and crude salt and chemical factories should be halted with immediate

effect in order for the Company to perform rectification and improvement in accordance with the county’s new safety and environmental

protection requirements.

On November 24, 2017, the Company received a letter from the Government of Yangkou County, Shouguang City notifying

the Company to relocate its two chemical production plants located in the second living area of the Qinghe Oil Extraction Plant to Bohai

As such, direct labor and factory overhead costs (including depreciation of plant and machinery) amounted $8,880,643 and $9,544,675

for fiscal years 2024 and 2023, which were presented as operating expenses instead of in cost of revenue.

The decrease in direct labor

and factory overhead costs was primarily attributable to the factories operation status during the fiscal year 2024 and year 2023, respectively.

Bromine segment

For the year ended December 31, 2025, the gross profit

margin for our bromine segment was 3% compared to the gross loss of 147% in the previous year.

This increase was due to an increase in

bromine unit price of 55% and an increase in volume of 168%.

Crude salt segment

the year ended December 31, 2025, the gross profit margin for our crude salt segment was 57%, compared to 51% in the preceding year,

representing a 6 percentage point increase.

For the year ended December 31, 2025,

the gross profit margin for our natural gas segment was nil, compared to 100% in the preceding year.

The decrease was due to the expiration

of contracts.

labor and factory overheads were incurred during plant shutdown.

On September 1, 2017, the Company received notification from

the government of Yangkou County, Shouguang City of PRC stating that production at all its bromine and crude salt and chemical factories

should be halted with immediate effect in order for the Company to perform rectification and improvement in accordance with the county’s

new safety and environmental protection requirements.

On November 24, 2017, the Company received a letter from the Government of Yangkou

County, Shouguang City notifying the Company to relocate its two chemical production plants located in the second living area of the

Qinghe Oil Extraction Plant to Bohai Park.

As such, direct labor and factory overhead costs (including depreciation of plant and machinery)

amounted to $5,098,990 and $8,880,643 for fiscal years 2025 and 2024, which were presented as operating expenses instead of in cost of

The decrease in direct labor and factory overhead costs was primarily attributable to the factories operation status during

the fiscal year 2025 and year 2024.

These five factories (including No.1, No.4, No.7, No.8 and No.9) were in production during the year

General and Administrative

General and administrative expenses were $5,271,011 for the year ended December 31, 2024, representing an increase of

$1,030,179 (or 24%) as compared to $4,240,832 for the same period in 2023.

General and administrative expenses were $5,580,071 for the year ended

December 31, 2025, representing a decrease of $655,860 (or 11%) as compared to $6,235,931 for the same period in 2024.

The decrease was

mainly contributed by a decrease in bad debt expenses.

Loss from Operations.

Operating loss was $21,283,649

for the fiscal year 2024, compared to a loss of $11,890,725 in the same period in 2023.

Operating loss was $8,568,624 for the fiscal year 2025, compared to a loss of

$22,248,569 in the same period in 2024.

Income (loss) from Operations by Segment

Year ended December 31, 2025

Year ended December 31, 2023

Year ended December 31, 2024 (Restated)

$ (4,658,726 )

7 unchanged sentences

Corporate costs

$ (1,450,130 )

Loss from operations before taxes

1 unchanged sentence

$ (22,248,569 )

Bromine se g ment

Bromine segment

Loss from operations from our bromine segment was $4,658,726

for the fiscal year 2025, compared to a loss of $17,455,130 in the same period in 2024.

This decrease was due to a decrease in bromine

unit price of 27% and a decrease in volume of 72%.

Crude salt se g ment

Loss from operations from our

crude salt segment was $76,694 for fiscal year 2024 compared to an income of $640,309 in the same period in 2023.

The main reason for

the decline in crude salt in 2024 compared with 2023 is that the unit price of sales is down by 13%, and the sales volume is also down

Chemical products segment

Loss from operations from our chemical products segment

was $3,028,479 for the fiscal year 2024, compared to a loss of $1,653,349 in the same period in 2023.

Natural Gas segment

Loss from operations from our natural gas segment was $195,364

for the fiscal year 2024, compared to a loss of $86,284 in the same period in 2023.

Other (Expense)/Income, Net .

income, net, which represent bank interest income, net of finance lease interest expense and $50,470 of non-operating expenses was

$62,113 for the fiscal year 2024, representing a decrease of $207,032 (or approximately 143% as compared to the preceding year.

Loss on disposal of property, plant and equipment.

Loss on disposal of property, plant and equipment was $29,169,008 in the fiscal year 2024.

In June 2024, considered the bromide

well and transmission channel have been in use for many years, the Company conducted a site inspection and found that some wells and channels

were seriously damaged by water seepage which in turn required write-off or new construction, and the write-off amount is $29,169,008.

Impairment of Property, plant and equipment.

of property, plant and equipment was $6,772,500 in the fiscal year 2024.

In December 2024, due to the delayed completion of some machinery

and equipment of Yuxin Chemical's new plant resulting from the impact of the current market environment, our company hired professional

evaluators to perform impairment test on these assets.

The latter determined impairment was $6,772,500.

This decrease was due to an increase in bromine

unit price of 55% and an increase in volume of 168%.

Crude salt segment

from operations from our crude salt segment was $908,680 for fiscal year 2025 compared to a loss of $668,110 in the same period in 2024.

The main reason for the increase in loss in crude salt in 2025 compared with 2024 is due to the increase in depreciation expenses.

products segment

from operations from our chemical products segment was $1,393,175 for the fiscal year 2025, compared to a loss of $3,185,472 in the same

period in 2024.

The main reason for the changes was due to the decrease in the bad debt for the fiscal year 2025 compared to the fiscal

from operations from our natural gas segment was $157,913 for the fiscal year 2025, compared to a loss of $195,364 in the same period

Expense, Net .

Other expenses, net was $4,003,497 for the fiscal year 2025, representing an increase of $3,953,027 as compared

to the preceding year.

It represents provision for guaranteed litigation for the fiscal year 2025.

on Disposal of Long-lived Assets

on disposal of long-lived assets was $2,008,853 in the fiscal year 2025.

As the company was the joint responsible party for the debts

of the Vegetable Group, the court auctioned the land and the attached properties on it of SYCI.

on disposal of long-lived assets was $29,169,008 in the fiscal year 2024.

In June 2024, considering the bromide well and transmission

channel have been in use for many years, the Company conducted a site inspection and found that some wells and channels were seriously

damaged by water seepage which in turn required write-off or new construction, and the write-off amount is $29,169,008.

of Long-lived Assets

The court engaged a third-party

valuer for evaluation of the land at xiangjiang road, yangkou town, shouguang city and its attached properties;

The Company engaged an

independent third-party valuer for evaluation of the fixed assets of Daying County.

The valuation reports returned a total fair value

of $ 5,066,558.

The Company recognized a total impairment loss of $30,068,794 accordingly.

Gain on disposal of subsidiary

The sale of SYCI was completed in December 2025, and the

gain on disposal of subsidiary amounted to $674,776.

Net loss was $43,920,231 for the

1 unchanged sentence

Net Loss Per Share

For the fiscal year 2024, net loss per share was $5.49 compared

to net loss per share of $5.92 in the preceding year.

There were 10,726,924 shares outstanding compared to 10,726,924 shares.

Foreign Currency Translation

For the fiscal year 2024, the Company

had a negative foreign currency translation adjustment of $2,800,874 versus a negative adjustment of $5,025,980 in the previous year.

This adjustment impacts all balance sheet translations into U.S.

the fiscal year 2025, net loss per share was $32.95 compared to net loss per share of $54.88 in the preceding year.

There were 1,332,954

shares outstanding compared to 1,091,562 shares.

Foreign Currency Translation Adjustment

For the fiscal year 2025, the Company had a positive foreign currency

translation adjustment of $2,677,801 versus a negative adjustment of $2,730,049 in the previous year.

This adjustment impacts all balance

sheet translations into U.S.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2024, cash and cash equivalents were

$10,075,162 as compared to $72,223,894 as of December 31, 2023.

As of December 31, 2025, cash and cash equivalents

were $3,793 as compared to $10,075,162 as of December 31, 2024.

The components of this decrease of $10,071,369 are reflected below.

1 unchanged sentence

Years Ended December 31

Net cash provided by (used in) operating activities

$ (32,751,851 )

2024 (Restated)

Net cash provided by operating activities

Net cash used in investing activities

$ (22,571,837 )

Net cash used in financing activities

Effects of exchange rate changes on cash and cash equivalents

$ (28,948,917 )

Net cash provided by/(used in) financing activities

$ (31,851,811 )

Effects of exchange rate changes on cash and cash equivalents

$ (2,023,830 )

Net decrease in cash and cash equipment

1 unchanged sentence

$ (62,148,732 )

For the fiscal years 2024 and

2023, we met our working capital and capital investment requirements by using cash flows from operations and cash on hand.

Net Cash Provided by (Used

in) Operating Activities

During the year ended December

31, 2024, cash flow used in operating activities of approximately $0.68 million was mainly due to a net loss of $58.9 million, offset

by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $18 million, impairment of property,

gain on disposal of equipment of $29 million, plant and equipment of $6.8 million and an increase in account receivable of $4.26 million.

During the year ended

December 31, 2023, cash flow used in operating activities of approximately $32.75 million was mainly due to a net loss of $61.8

million, offset by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $27.13 million

and an increase in accounts and other payable and accrued expenses of $1.11 million.

For the fiscal years 2025 and 2024, we met our working capital

and capital investment requirements by using cash flows from operations and cash on hand.

Net Cash Provided by Operating Activities

the year ended December 31, 2025, cash flow provided by operating activities of approximately $7.8 million was mainly due to a non-cash

adjustment related to depreciation and amortization of property, plant and equipment of $13.1 million, amortization of finance lease

right-of-use asset of $3.1 million, accrued liabilities of $4 million, a loss on disposal of long-lived assets of $2 million, an impairment

of long-lived assets of $30.1 million, and offset by a net loss of $43.9 million.

the year ended December 31, 2024, cash flow provided by operating activities of approximately $0.68 million was mainly due to a net loss

of $59.9 million, offset by a non-cash adjustment related to depreciation and amortization of property, plant and equipment of $15.82

million, impairment of long-lived assets of $6.8 million, loss on disposal of equipment of $29 million, and a decrease in account receivable

of $4.26 million.

Accounts receivable

13 unchanged sentences

Aged 211-240 days

The overall accounts receivable

balance as of December 31, 2024 decreased by $4,301,173, compared to those of December 31, 2023.

The decrease was mainly due to the decrease

in the amount of accounts receivable in the current period as a result of the decrease in sales revenue.

We have policies in place to

ensure that sales are made to customers with an appropriate credit history.

We perform ongoing credit evaluation on the financial condition

of our customers.

The overall accounts receivable balance as of December 31, 2025 increased

by $2,704,897, compared to those of December 31, 2024.

The increase was mainly due to an increase in the amount of accounts receivable

in the current period as a result of the increase in sales revenue.

We have policies in place to ensure that sales are made to customers

with an appropriate credit history.

We perform ongoing credit evaluations on the financial condition of our customers.

Our inventory consists of the following:

3 unchanged sentences

Finished goods

The net inventory level as of

December 31, 2024 decreased by $261,858, as compared to the net inventory level as of December 31, 2023, one of the main reasons for the

reduction in inventories was the decline in sales.

Raw materials decreased by $22,230 as of December 31,

2024, as compared to December 31, 2023.

Finished goods decreased by $239,628 as of December

The net inventory level as of December

31, 2025 increased by $247,446, as compared to the net inventory level as of December 31, 2024, one of the main reasons for the increase

in inventories was the rise in sales.

Raw materials increased by $9,469 as of December 31,

2025, as compared to December 31, 2024.

Finished goods increased by $237,977 as of December 31, 2025, as compared to December 31, 2024.

Net Cash Used In Investing Activities

For the fiscal year 2024, we used approximately $60.5 million

for purchase of fixed assets.

For the fiscal year 2023, we used $0 for investing activities.

Net Cash Used In Financing

For the fiscal year 2024 and 2023, we used $0.3 million

to repay finance lease obligations.

We believe that our available

funds and cash flows generated from operations will be sufficient to meet our anticipated ongoing operating needs for the next twelve

the fiscal year 2025, net cash used in investing activities was $22.57 million.

This was driven by $8.85 million for purchase of fixed

assets and $13.93 million of loans to third parties.

the fiscal year 2024, net cash used in investing activities was $28.95 million.

This was driven by $28.92 million for purchase of fixed

Cash Provided By / (Used In) Financing Activities

the fiscal year 2025, net cash provided by financing activities was $4.84 million.

This was driven by cash inflows from borrowings, including

$2.31 million from long-term borrowing and $2.80 million from short-term borrowing, offset by $0.26 million of principal payments for

obligations under finance leases.

the fiscal year 2024, net cash used in financing activities was $31.85 million, which was almost entirely used for the principal payment

for obligations under finance leases.

that our available funds and cash flows generated from operations will be sufficient to meet our anticipated ongoing operating needs for

the next twelve months.

As of December 31, 2025, we had

approximately $10 million in available cash, all of which is in highly liquid current deposits yielding minimal or no interest.

not anticipate paying cash dividends in the foreseeable future.

We intend to continue to focus

our efforts on the activities of SCHC, SYCI, SHSI and DCHC as these segments continue to expand within the Chinese market.

approximately $3,793 in available cash, all of which is in highly liquid current deposits yielding minimal or no interest.

We do not anticipate

paying cash dividends in the foreseeable future.

We intend to continue to focus our efforts on the activities

of SCHC, SHSI and DCHC as these segments continue to expand within the Chinese market.

We may not be able to identify,

successfully integrate or profitably manage any businesses or business segment we may acquire, or any expansion of our business.

successfully integrate or profitably manage any business or business segment we may acquire, or any expansion of our business.

may involve a number of risks, including possible adverse effects on our operating results, diversion of management’s attention,

5 unchanged sentences

and future prospects.

Going Concern Consideration

consolidated financial statements are prepared on the going concern basis, meaning that the enterprise is expected to realize the

assets and settle the liabilities through normal business operations.

However, the going concern of the enterprise relies on many

factors, such as profitable operations, generating operating cash flows, obtaining financing, etc.

The company assesses its

liquidity by monitoring cash and cash equivalents, as well as operating and capital expenditure commitments.

As of December 31,

2024, As of Dec 31, 2024, the Company had current assets of $17.45 million and current liabilities of $17.73 million.

the deficit was $0.28 million, and it has suffered losses in both the fiscal years of 2024 and 2023 as well.

If it is unable to

raise additional funds, it may need to take measures such as cutting administrative and operational cost and save funds.

there are significant doubts regarding the company's ability to continue operations, the company is attempting to alleviate such

concerns through measures such as controlling operating expenses, shifting business focus to revenue-generating activities,

obtaining authorization from domestic banks and other financial institutions, and seeking equity or debt financing.

Additionally,

the company will also obtain financial support commitments from related parties.

However, these situations still pose significant

doubts regarding the company's ability to continue operations.

The financial statements do not consider the potential impact on the

recoverability of assets, classification, and amounts and classification of liabilities if the company is unable to continue

Contractual Obligations and Commitments

We have no significant contractual

obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements.

Additional information regarding our contractual obligations and commitments at December 31, 2024 is provided in the notes to our consolidated

financial statements.

We have no significant contractual obligations not fully

recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements.

Additional information

regarding our contractual obligations and commitments on December 31, 2025 is provided in the notes to our consolidated financial statements.

Material Off-Balance Sheet Arrangements

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Our most critical estimates include:

· allowance for doubtful accounts, which impacts revenue;

· allowance for doubtful accounts;

· the valuation of inventory, which impacts gross margins;

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We make estimates of the uncollectibility

of accounts receivable, especially analyzing accounts receivable and historical bad debts, customer concentrations, customer credit-worthiness,

of accounts receivable, especially analyzing accounts receivable and historical bad debts, customer concentrations, customer creditworthiness,

current economic trends and changes in customer payment terms, when evaluating the adequacy of the allowance for doubtful accounts.

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the future, which could have a material adverse effect on our results of operations.

Depreciation of Property, Plant and Equipment

Property, plant and equipment

are stated at cost less accumulated depreciation and any impairment losses.

Depreciation of Property, Plant

and Equipment

Property, plant and equipment are

stated at cost less accumulated depreciation and any impairment losses.

Expenditures for new facilities or equipment, and major expenditures

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In some situations, the life

of the asset may be extended or shortened if circumstances arise that would lead us to believe that the estimated life of the asset has

of the asset may be extended or shortened if circumstances arose that would lead us to believe that the estimated life of the asset has

The life of leasehold improvements may change based on the extension of lease contracts with our landlords.

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of the asset’s carrying value over its fair value is recorded.

Allowance on D eferred

Allowance on Deferred Tax Assets

We evaluate our deferred income

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis