Planet Green Holdings Corp. 10-K

ITEM 1. BUSINESS Overview of Our Business PLAG, headquartered in Flushing, NY, is not an operating company but a Nevada holding company with operations primarily conducted by our directly owned subsidiaries and through our variable interest entities, or VIEs. After a series of acquisitions and dispositions in 2020 and 2021, our primary business, which is carried out by Fast Approach, Jingshan Sanhe Luckysky, Jilin Chuangyuan, Xianning Bozhuang, Anhui Ansheng and Shandong Yunchu, is: ● to provide food and beverage products such as Cyan brick tea, black tea and green tea as well as beef products in China; and ● to research, develop, manufacture and sell products of formaldehyde, urea formaldehyde adhesive, methylal, ethanol fuel, fuel additives and clean fuel in China; and ● to develops and manufactures skid-mounted refueling equipment, LNG cryogenic equipment and oil storage tank, and sells such products in China; and ● to develop and operate a demand side platform which empowers buyers of advertising to manage and optimize their digital advertising across different real-time bidding networks in North America. Organizational Structure PLAG was incorporated on February 4, 1986 and was formerly known as “American Lorain Corporation.” Effective November 12, 2009, PLAG reincorporated in Nevada from Delaware. The following diagram illustrates our corporate structure as of the date of this annual report on Form 10-K, including our subsidiaries and our VIEs. Subsidiary On May 9, 2019, the Company and Shanghai Xunyang Internet Technology Co., Ltd., a subsidiary of the Company, entered into a Share Exchange Agreement with Xianning Bozhuang, and each of the shareholders of Xianning Bozhuang, pursuant to which, among other things and subject to the terms and conditions contained therein, the Subsidiary agreed to effect an acquisition of Xianning Bozhuang by acquiring from the Sellers all of the outstanding equity interests of Xianning Bozhuang. On May 14, 2019, the Company closed the acquisition transaction and entered into a series of VIE agreements with Xianning Bozhuang and its shareholders. For company internal restructure purpose, on December 20, 2019, Xianning Bozhuang terminated the VIE agreements with Shanghai Xunyang Internet Technology Co., Ltd. and entered into similar series of VIE agreements with Jiayi Technologies on the same day. On August 2, 2021, as part of the internal restructure efforts to remove VIE arrangement, the Company and its subsidiary terminated series of VIE agreements and acquired 100% equity ownership of Xianning Bozhuang. On June 5, 2020, the Company entered into a share exchange agreement with Fast Approach to acquire all outstanding shares of Fast Approach, a corporation incorporated under the laws of Canada and in the business of operating a demand side platform. Upon completing the transaction, Fast Approach became a wholly owned subsidiary of the Company. Fast Approach owns 100% equity of Shanghai Shuning. 2 On January 4, 2021, through Jiayi Technologies, formerly known as Lucky Sky Petrochemical, the Company entered into a series of VIE agreements with Jingshan Sanhe Luckysky as well as its shareholders, which gives the Company the ultimate control of Jingshan Sanhe Luckysky and its shareholders, making it operate in accordance with the will of the Company. The Company is considered the primary beneficiary of Jingshan Sanhe Luckysky and it consolidates its accounts as VIEs. On September 10, 2021, as part of the internal restructure efforts to remove VIE arrangement, Hubei Bulaisi acquired 85% equity ownership of Jingshan Sanhe Lucksky and Jiayi Technologies terminated the VIE agreements with Jingshan Sanhe Luckysky on the same date. On December 9, 2021, the Company and Jiayi Technologies, a subsidiary of the Company, entered into a Share Exchange Agreement with Shandong Yunchu and each of shareholders of Shandong Yunchu. Upon closing of the transaction, Jiayi Technologies acquired 100% equity ownership of Shandong Yunchu. VIE Arrangement On March 9, 2021, through Jiayi Technologies, the Company entered into a series of VIE agreements with Jilin Chuangyuan as well as its shareholders, which gives the Company 75% control of Jilin Chuangyuan and its shareholders, making it operate in accordance with the will of the Company. The Company is considered the primary beneficiary of Jilin Chuangyuan and it consolidates its accounts as VIEs. On November 30, 2021, through Jiayi Technologies, the Company entered into a series of VIE agreements with Jilin Chuangyuan as well as its shareholders, which gives the Company the remaining 25% of the outstanding equity interests of Jilin Chuangyuan. As a result of the completion of the transaction, the Company owns 100% of Jilin Chuangyuan through Jiayi Technologies, making Jilin Chuangyuan operate in accordance with the will of the Company. The Company is considered the primary beneficiary of Jilin Chuangyuan and it consolidates its accounts as VIEs. On July 15, 2021, through Jiayi Technologies, the Company entered into a series of VIE agreements with Anhui Ansheng as well as its shareholders, which gives the Company 66% control of Anhui Ansheng and its shareholders, making it operate in accordance with the will of the Company. The Company is considered the primary beneficiary of Jilin Chuangyuan and it consolidates its accounts as VIEs. On February 11, 2022, through Jiayi Technologies, the Company entered into a series of VIE agreements with Xiaodong Cai, a shareholder of Anhui Ansheng, which gives the Company additional 20.58% of the outstanding equity interests of Anhui Ansheng. As a result of the completion of the transaction, the Company owns 86.58% of Anhui Ansheng through Jiayi Technologies, making Anhui Ansheng operate in accordance with the will of the Company. The Company is considered the primary beneficiary of Anhui Ansheng and it consolidates its accounts as VIEs. Each of the VIE Agreements is described in detail below: Consultation and Service Agreement . Pursuant to the Consultation and Service Agreement, WFOE has the exclusive right to provide consultation and services to the operating entities in China in the area of business management, human resource, technology and intellectual property rights. WFOE exclusively owns any intellectual property rights arising from the performance of this Consultation and Service Agreement. The amount of service fees and payment term can be amended by the WFOE and operating companies’ consultation and the implementation. The term of the Consultation and Service Agreement is 20 years. WFOE may terminate this agreement at any time by giving 30 day’s prior written notice. 3 Business Cooperation Agreement . Pursuant to the Business Cooperation Agreement, WFOE has the exclusive right to provide complete technical support, business support and related consulting services, including but not limited to technical services, business consultations, equipment or property leasing, marketing consultancy, system integration, product research and development, and system maintenance. WFOE exclusively owns any intellectual property rights arising from the performance of this Business Cooperation Agreement. The rate of service fees may be adjusted based on the services rendered by WFOE in that month and the operational needs of the operating entities. The Business Cooperation Agreement shall maintain effective unless it was terminated or was compelled to terminate under applicable PRC laws and regulations. WFOE may terminate this Business Cooperation Agreement at any time by giving 30 day’s prior written notice. Equity Pledge Agreements . Pursuant to the Equity Pledge Agreements among WFOE, operating entities and each of operating entities’ shareholder, shareholders of the operating entities pledge all of their equity interests in the operating entities to WFOE to guarantee their performance of relevant obligations and indebtedness under the Technical Consultation and Service Agreement and other control agreements. In addition, shareholders of the operating entities are in the process of registering the equity pledge with the competent local authority. Equity Option Agreements . Pursuant to the Equity Option Agreements, WFOE has the exclusive right to require each shareholder of the operating companies to fulfill and complete all approval and registration procedures required under PRC laws for WFOE to purchase, or designate one or more persons to purchase, each shareholder’s equity interests in the operating companies, once or at multiple times at any time in part or in whole at WFOE’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interest owned by each operating entities shareholder has been legally transferred to WFOE or its designee(s). Voting Rights Proxy Agreements . Pursuant to the Voting Rights Proxy Agreements, each shareholder irrevocably appointed WFOE or WFOE’s designee to exercise all his or her rights as the shareholders of the operating entities under the Articles of Association of each operating entity, including but not limited to the power to exercise all shareholder’s voting rights with respect to all matters to be discussed and voted in the shareholders’ meeting. The term of each Voting Rights Proxy Agreement is 20 years. WOFE has the right to extend each Voting Proxy Agreement by giving written notification. Products We grow, produce and distribute Cyan brick tea, black tea and green tea in China through our wholly owned subsidiary Xianning Bozhuang. We import and distribute beef products in China through our wholly owned subsidiary Shandong Yunchu. We research, develop, manufacture and sell products of formaldehyde, urea formaldehyde adhesive, methylal, ethanol fuel, fuel additives and clean fuel through our subsidiary Jingshan Sanhe Luckysky and we research, develop, manufacture and sell formaldehyde, urea formaldehyde adhesive, methylal, and clean fuel products through our VIE, Jilin Chuangyuan. We research, develop and manufacture skid-mounted refueling equipment, LNG cryogenic equipment and oil storage tank, and sells such products in China through our VIE, Anhui Ansheng. Service We provide a demand-side platform which allows buyers of digital advertising inventory to manage multiple ad exchange and data exchange through one interface. Our digital service is provided by Fast Approach. Our Manufacturing Facilities General We currently manufacture our products and provide services in Meihekou City ofJilin Province, Jingshan City and Xianning City of Hubei Province, Qingdao City of Shandong Province, Xuancheng City of Anhui Province, and Shanghai in China, and Toronto in Canada. 4 The following table indicates the year that operations commenced at each of the facilities and the size of the facilities. Facility Year Operations Commenced Facility Size (square meters) Xianning Bozhuang * 2013 33,333 Jingshan Sanhe Luckysky ** 2018 11,018 Jilin Chuangyuan*** 2013 59,690 Anhui Ansheng**** 2012 51,367 * Became a VIE in May 2019. ** Became a subsidiary September 2021. *** Became a VIE in March 2021. **** Became a VIE in July, 2021 Production Lines We currently manufacture our products using production lines. The production process for our cyan brick tea products involves, primary processing of fresh leaves, piling and fermenting, storing and aging, picking, pressing, and baking. The production process for our black tea products involves selecting and sorting the fresh leaves, withering, rolling, fermenting, baking and drying, grading according to color, prompting fragrance, packing and warehousing. The production process for our green tea products involves selecting and sorting the fresh leaves, airing, fixating, cooling, rolling, stir drying, selecting and grading, prompting fragrance, packing and warehousing. The production process for our formaldehyde products is illustrated as follows. The raw material methanol, after being injected into the high position tank, enters the methanol evaporator through the filter, mixes with the air from the roots blower to form the binary mixture, and then adds steam to form the ternary mixture, which is heated by the superheater to 120 ℃ and enters the oxidizer, carries out oxidation and dehydrogenation reaction through the silver catalyst to form the formaldehyde gas, and then absorbs the formaldehyde solution through the first absorption tower and the second absorption tower. The excess waste gas is burned out by the exhaust gas boiler. The production process for our methyl starting with the raw materials methanol and formaldehyde are pumped into the reaction distillation tower according to the proportion. At the bottom of the tower, formaldehyde and methanol are indirectly heated by steam. The reaction liquid vapor from the tower upwards through the catalyst reaction to produce methyl acetal, and then through the distillation tower separation, cooling, the final product methyl acetal. The production process for our urea-formaldehyde glue is demonstrated as follows. Formaldehyde is pumped from the formaldehyde workshop into the tank of formaldehyde storage, and then pumped into the metering tank through the feed pump of formaldehyde. After the PH value is adjusted by adding alkali, it is sent into the reaction kettle. At the same time, urea is also added into the kettle according to the corresponding proportion, heating the reaction kettle. After heating up the kettle, melamine is added, so that the material can undergo addition reaction in the kettle. After the PH value is adjusted by dropping formic acid in the kettle, the material is sent into the condensation kettle through the transfer pump. Urea and additives are added into the condensation kettle according to a certain proportion for condensation reaction, and the finished product is formed after cooling treatment. The production process for our clean fuel oil is illustrated as follows. The self-control design of the facilities for storage of raw materials and addition of additives shall, in accordance with the requirements of the process, conduct centralized indication and adjustment of the temperature, flow rate and liquid level of the raw oil tanks, raw oil metering tanks, product oil allocation tanks and finished oil tanks during the fuel blending process; realize remote monitoring of the whole fuel production process, and conduct on-the-spot indication of pressure and partial flow rate. The production process for our construction rubber powder (re-dispersible latex powder) is demonstrated as follows. Using polymer emulsion (VAE emulsion) as raw material, all kinds of additives are added, and then transported to the reaction kettle through diaphragm pump to warm up and mix evenly, and then transported to the mixing kettle with additives through diaphragm pump to mix evenly, then transported to the high-speed reactor through diaphragm pump to emulsify, emulsified and then transported to the spare material tank through the diaphragm pump, and then transported to the spray drying tower through the spare material tank through the diaphragm pump to form polymer powder after spray drying, and the polymer powder and various additives are mixed and screened through the mixer to be packed into the warehouse. 5 The following table shows the number and types of production lines, the types of products produced and the production capacity as of the date of this report: Facility Production Lines Product Portfolio Capacity Xianning Bozhuang There are six production lines: the production line of cyan brick tea with traditional handicraft; the production line of cyan brick tea; the production line of teabag; the production line of green tea and the production line of black tea Cyan brick tea, black tea and green tea Production line with 5,020 tons of production capacity Jingshan Sanhe Luckysky There are two production lines: the production line of ethanol fuel and the production line of fuel additive Alcohol based clean fuel, liquid wax, arene and biomass fuel Two production lines with a total production capacity of 300,000 tons/ year for ethanol fuel, and 3000 tons/year for fuel additive Jilin Chuangyuan The company has two formaldehyde production lines, eight rubber production units, one methylal production line and one clean fuel oil production line Formaldehyde, urea formaldehyde adhesive, methylal and clean fuel oil Annual production capacity of 120,000 tons of formaldehyde, 100,000 tons of urea formaldehyde glue, 3,0000 tons of methylal and 20,000 tons of clean fuel oil Anhui Ansheng Cryogenic Liquid Storage Tank, Microbulk Solutions for IG –Pama, Medical oxygen integrated air supply station, Microbulk Solutions for LNG -Pama, Integrated LNG Supply Staion-AYS, Vaporizer for industrial gases and LNGL-CNG filling station, Container LNG filling station, Gas supply station design and installation Provided more than 1,000 sets of IG and LNG equipment’s and installation services for customers We operate our production lines year-round. Raw Materials Our Supply Sources Our business depends on obtaining a reliable supply of various products, including tea, refined methanol, methanol, formaldehyde, polymer emulsion and beef products. Because of the diversity of available sources of these raw materials, we believe that our raw materials are currently in adequate supply. We obtain our raw materials primarily from domestic procurement for our tea production, formaldehyde and methanol products. When it comes to our beef products, we rely on overseas suppliers to import the raw materials. Shandong Yunchu carries out our beef products business. It mainly purchased frozen beef from six countries: Uruguay, Brazil, Chile, Argentina, Australia and New Zealand and 25 factories are involved. The top ten suppliers include: Marrig, Minerva S.A., G & K O’Connor Pty Ltd, Frigorifico matadero Pando ontilcor S.A., Las Moras, Frigorifico de Osorno S.A., Ersinal S.A. ecoparks S.A., lorsinal S.A., and Minerva S.A. The Company has established a stable long term cooperative relationship with these beef and mutton manufacturers. The stable supply provides competitive advantage for Company to procure various various beef products with high quality and low price to meet the needs of domestic customers. We select suppliers based on price and product quality. We typically rely on numerous domestic suppliers, including some with whom we have a long-term relationship. Our suppliers generally include wholesale agricultural product companies, food production companies, tea bag processing companies and chemical products wholesale company. 6 Our Customers Our products are sold both in Chinese domestic market and overseas market. We sell our agricultural products in first-tier cities in China, including Beijing, Shanghai, Tianjin and Guangzhou. Our sales team sells our products directly to supermarket chains, mass merchandisers, large wholesalers, restaurants and others in these markets. In second-tier and third-tier cities, we currently sell our products to third-party distributors, such as food companies or trading companies with established distribution channels in such regions, rather than through our own sales team. The terms of a typical sales contract between us and our distributors provide that we are responsible for transportation costs and the distributors are responsible for storage costs. Furthermore, the distributors have the right to return products that fail to satisfy specified quality standards, at our cost. The majority of such contracts require the distributors to pay us in cash in full upon delivery, and the remaining contracts provide for short-term credit, usually two to three weeks. We also operate an online store on Tmall, an open business-to-consumer (B2C) platform in China, to sell tea products to consumers directly. As to our formaldehyde products, vehicles gasoline and diesel products, we are a leading regional chemical products provider in north eastern China area, and we are the sole provider of formaldehyde in Jilin Province, China. When it comes to manufacturing and sales of synthetic fuel products, we do business through direct sales, constructing refuel facilities and conducting technical cooperation with other companies. Anhui Ansheng’s Insulation type explosion-proof skid-mounted refueling equipment and SF double-layer buried type storage tank are the leading brands in the industry. The company is China National Petroleum Corporation’s Top 5 supplier for SF double layer buried storage tanks. The production scale and market share of the Explosion-proof skid-mounted refueling equipment are both ranking No.1 in China and such product is a success in overseas markets as well. Shandong Yunchu distributes beef products in China including several major beef products providers and distributors in China, such as: Henan Hengdu Food Co., Ltd, Shanxi Pingyao Beef Group, Shandong Delis Food Co., Ltd and Heilongjiang Binxi Group. Our Sales and Marketing Efforts We have not spent a significant amount of capital on advertising in the past, and our advertising budget continues to be limited. In 2021, our marketing and branding efforts mainly focus on internet advertising and long-term customers. Competition and Market Position Black tea is produced in Guangxi, Sichuan, Yunnan, Hunan, Hubei, Shanxi and Anhui provinces in China. Our black tea products are processed in our factory in Hubei province and distributed nationwide. There are few large players on the market but we face fierce competition from numerous small black tea manufactures and distributors. However, as our brand has over hundreds of year’s history, we have accumulated loyal consumers and gained favorable market reputation over years. Competitive factors in our industry include product innovation, product quality, price, brand recognition and loyalty, product variety and ingredients, product packaging and package design, effectiveness of marketing and promotional activity, and our ability to identify and satisfy consumer tastes and preferences. Since its inception, the company has developed rapidly relying on advanced enterprise management and safe, effective, exclusive patented products and strong marketing strength. The production scale of formaldehyde is ranking top three among provinces in northeast China. The production scale of urea-formaldehyde glue attains the first place in China. Our enterprise comprehensive strength is considered first tier among all companies in northeast China. Jingshan Sanhe Luckysky is one of the top ten private enterprises in the region of Jingshan with 12 patents, 17 sets of professional laboratory equipment and 2 advanced and complete production lines. 7 Anhui Ansheng was established in May 2012, with a registered capital of RMB 30 million and an area of approximately 100,000 square meters. It is equipped with advanced manufacturing and testing equipments, and has first-class R&D, manufacturing and management team in the industry. Anhui Ansheng has three business divisions: Insulation type explosion-proof skid-mounted refueling equipment business division, LNG cryogenic equipment business division and SF double deck oil storage tank business division. Anhui Ansheng has the national pressure vessel manufacturing certificate, pressure pipeline installation license, ASME U certificate and T certificate, national industrial production license, ISO9001 quality management system certificate, ISO14001 environmental management system certificate, QHSAS18001 occupational health and safety management system certificate, as well as UL certificate, etc. It’s Insulation type explosion-proof skid-mounted refueling equipment and SF double-layer buried type storage tank are the leading brands in the industry. Anhui Ansheng is China National Petroleum Corporation’s Top 5 supplier for SF double layer buried storage tanks. The production scale and market share of the Explosion-proof skid-mounted refueling equipment are both ranking No.1 in China and such product is a success in overseas markets as well. Jilin Chuangyuan is a leading chemical enterprise integrating R & D, production and sales. It was attacted and invited by Meihekou city government and completed the reconstruction and extention. Its main products and annual production capacity are 120,000 tons of formaldehyde, 100,000 tons of urea formaldehyde glue, 3,0000 tons of methylal and 20,000 tons of clean fuel oil respectively. It is a large-scale enterprise in the production of formaldehyde and urea formaldehyde glue in Chinese northeast provinces and is the only enterprise in Jilin province to produce and sell formaldehyde. The main products are sold to wood-based panel, chemical, pharmaceutical and construction enterprises in Jilin and Liaoning provinces. Shandong Yunchu mainly purchased frozen beef from six countries: Uruguay, Brazil, Chile, Argentina, Australia and New Zealand and 25 factories are involved. The top ten suppliers include: Marrig, Minerva S.A., G & K O’Connor Pty Ltd, Frigorifico matadero Pando ontilcor S.A., Las Moras, Frigorifico de Osorno S.A., Ersinal S.A. ecoparks S.A., lorsinal S.A., and Minerva S.A. The Company has established a stable long term cooperative relationship with these beef and mutton manufacturers. The stable supply provides competitive advantage for Company to procure various various beef products with high quality and low price to meet the needs of domestic customers. Intellectual Property Patents The company vigorously implements scientific and technological innovation. Jingshan Sanhe Luckysky obtains 12 practical patent certificates from the State Intellectual Property Office of the PRC, which includes a diesel exhaust cleaner and its preparation method, a kind of automobile exhaust cleaner and preparation method, a kind of filtering device for exhaust port of cleaning liquid production plant, a kind of automobile cleaner dispensing device, a kind of liquid dispensing equipment, a kind of mixing and stirring tank, a kind of cleaning brush for cleaning agent storage tank, a kind of reactor for producing auto cleaner, a kind of cleaning brush for cleaning agent mixing kettle, a kind of mixing tank, a cleaning tool for cleaning the reactor for detergent production and a kind of mixing and defoaming tank. The company will give full play to the advantages of independent intellectual property rights, continue to innovate, maintain the leading technology and enhance the core competitiveness of the company. Anhui Ansheng obtains 1 invention patent and 23 utility patent from the State Intellectual Property Office of the PRC, which includes a LNG tank container with self-balancing lifting mechanism, a LNG tank type container type with intermediate moving positioning mechanism, a LNG tank container with new vehicle mounted support frame, a LNG tank type container type with integrated fixed frame, Self-drying gas station canopy, fuel dispenser, a constant temperature and pressure unloading device for gasification station, integrated mobile LNG gasification station, an integrated skid type LNG filling station, fuel dispenser with automatic coordination position, a LNG tank type container type with self-balancing lifting mechanism, an anti-breaking mechanism at the inlet and a outlet of pump pool in LNG integrated gas filling device. We take reasonable steps to protect our proprietary information and trade secrets, such as limiting disclosure of proprietary plans, methods and other similar information on a need-to-know basis and requiring employees with access to our proprietary technology to enter into confidentiality arrangements. We believe that our proprietary technology and trade secrets are adequately protected. Our Employees As of December 31, 2021, we had a total of 185 employees. Approximately 185 of our full-time employees are directly employed by our subsidiaries and VIEs. The following table sets forth the allocation of employees, both direct and leased, by job function. Number of Department Employees Production 108 Purchasing 2 Research and Development 4 Quality Control 8 Sales 15 Finance 7 Management 14 Administration 27 Total 185 8 We have not experienced any significant problems or disruption to our operations due to labor disputes, nor have we experienced any difficulties in recruitment and retention of experienced staff. We compensate our production line employees by unit produced (piece work) and compensate other employees with a base salary and bonus based on performance. We also provide training for our staffs from time to time to enhance their technical and product knowledge, including knowledge of industry quality standards. Our employees participate in state pension scheme and various types of social insurance organized by municipal and provincial governments. Outsourcing agents are responsible for contributions on behalf of the leased employees. Our Research and Development Activities We have research and development staffs at each of our facilities. In total, 4 employees are dedicated to research and development. Jingshan Sanhe Luckysky contains a professional laboratory which includes 17 sets of professional experimental equipment operated by 6 high-end scientific research experts to ensure the high quality of raw materials and products. Jilin Chuanyuan was jointly awarded by Jilin Provincial Department of education and Jilin Provincial Department of industry and information technology as Jilin University enterprise joint technology innovation laboratory. The company currently carries out a project of transformation of scientific and technological achievements with Beihua University. Specifically, it is a kind of urea formaldehyde resin adhesive with ultra-low formaldehyde emission and its preparation process, ZL 201510055885x. At the same time, as a participant, the project is applying for the national science and technology progress award. Beihua University has set up a teaching and research practice base in our company. On top of that, the company also successfully developed the urea formaldehyde resin for E1 grade waterproof particleboard, E0 grade and F grade particleboard, as well as the UF resin for E0 grade and F grade particleboard with UFC. We rely heavily on customer feedback to assist us in the modification and development of our products. We also utilize customer feedback to assist us in the development of new products. The amount we spent on research and development activities during the years ended December 31, 2021 and 2020 was not a material portion of our total expenses for those years. Government Regulation As a company that continuously strives to create new value, we have been doing business in five areas: tea product cultivation, packaging, and sales; manufacturing and sales of synthetic fuel products, formaldehyde products, vehicles gasoline and diesel products; manufacturing of insulation type explosion-proof skid-mounted refueling equipment and SF double-layer buried type storage tank products business; importing and distribution of beef products and multimedia design, advertising business. Our tea product cultivation, packaging, and sales business is subject to regulations of China’s Agricultural Ministry and Ministry of Health. This regulatory scheme governs the manufacture (including composition and ingredients), labeling, packaging and safety of food. It also regulates manufacturing practices, including quality assurance programs, for foods through its current manufacturing practice regulations, and specifies the standards of identity for certain foods. We have obtained approvals from Chinese authorities for products that requires the approval under regulations, including quality safety approval from government. Our manufacturing and sales of chemical products business is subject to multiple regulations under PRC law. We have complete certificates, including the work safety license, production license and emission license. We have passed the environmental assessment acceptance and currently works on the promotion to the second level of work safety standardization from the third level. Our operation meets the requirements of relevant national laws, regulations, standards and specifications, as well as other the requirements of national management departments at all levels. 9 Our manufacturing of insulation type explosion-proof skid-mounted refueling equipment and SF double-layer buried type storage tank products business, carried out by Anhui Ansheng, is subject to multiple regulations under PRC law. We have obtained required certificates, including the national industrial product production license, Manufacture License of Special Equipment (pressure vessels), installation, alteration, repair & maintenance license of special equipment (pressure tunnel), the American Society of Mechanical Engineers certificate of authorization, environmental management system certification and quality management system certification. Our importing and distribution of beef products business is carried out by Shandong Yunchu and we have obtained relevant certifications including the record registration form of foreign trade operators and food business license. As to our multimedia design and advertising business, we are licensed to operate data related business in China through our subsidiary, Shanghai Shuning. ITEM 1A. RISK FACTORS Not required for smaller reporting companies. ITEM 1B. UNRESOLVED STAFF COMMENTS None.