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Item 7. Management’s Discussion and Analysis

2023-02-06 compared with 2019-04-16 · 119 added, 85 removed, 9 unchanged (96% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are headquartered in Shanghai, China.

Since the restructuring of our company in September 2018, our primary business, which is carried out by Taishan Muren, our newly acquired business, is:

to develop and market products, such as sauces, from herbs and spices that we grow in China;

to sell brown rice syrup and tea bags developed using our unique recipes in China.

Results of Operations

The following tables set forth key components of our results of operations for the periods indicated, and the differences between the two periods expressed in dollars and percentages.

Increase/(Decrease)

(In thousands of U.S.

Cost of Revenue

Operating Expenses:

Selling and Marketing

General and administrative

(Loss)/Income from continuing operations

Non-operating Income (Expenses):

Government grant

Interest income

Other expense

Interest Expense

(Loss)/income from continuing operations

Discontinued operations:

Income/(loss) from discontinued operations

Provision for income taxes

Income/(loss) from discontinued operations, net of taxes

Net Income(Loss)

Non-Controlling Interest

Net Income/(Loss) of common stockholders

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

Net Revenues .

Net revenues increased by $1.7 million, or approximately 33.6%, to $6.8 million in 2018 from $5.1 million in 2017.

The increase of net revenue is mainly due to the acquisition transaction of Taishan Muren Agriculture Co.

Ltd., which closed on September 28, 2018.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

We are headquartered in Flushing, New York.

After a series of acquisitions

and dispositions in 2021 and 2020, our primary business, which is carried out by Shandong Yunchu, Jingshan Sanhe, Jilin Chuangyuan, Anhui

Ansheng, Fast Approach Inc and Xianning Bozhuang, includes:

● Tea product cultivation, packaging, and sales;

● To sell high-grade synthetic fuel products;

● To import beef products and sell

such products in China;

● To sell f ormaldehyde,

urea-formaldehyde glue, methylal, and clean fuel oil;

● To sell the barrier and explosion-proof skid-mounted refueling devices,

SF double-layer buried oil storage tank;

● Online advertising services;

The accompanying audited consolidated financial statements have been prepared

assuming that the Company will continue as a going concern.

However, the Company has incurred a net loss of $9,740,486 attributable to

common shareholders for the year ended December 31, 2021.

As of December 31, 2021, the Company had an accumulated deficit of $94,072,383,

a working capital deficit of $7,075,320, and its net cash used in operating activities for the year ended December 31, 2021 was $519,396

Company plans to continue its expansion and investments, which will require continued improvements in revenue, net income and cash flows.

of Operations

following discussion should be read in conjunction with the company’s audited consolidated financial statement for the years ended

December 31, 2021, and 2020 and related notes to that.

Twelve months ended

(In Thousands of USD)

Cost of revenues

Our cost of revenues increased $1.5 million, or approximately 19.4%, to $6.5 million in 2018 from $5.5 million in 2017, as a result of increase of net revenue.

Gross Profit .

Our gross profit increased $0.6 million, or 185.9%, to $0.3 million in 2018 from negative $0.4 million in 2017, mainly attributed to the fact that revenues increased by $1.7 million.

The gross profit ratio increased from negative 6.9% to negative 4.5% in 2018, mainly because of the acquisition of Taishan Muren Agriculture Co.

Operating expenses:

Selling and marketing expenses

Our selling and marketing expenses decreased approximately $0.4 million, or 96.8%, to $0.01 million in 2018 from $0.4 million in 2017.

The decrease is attributable to decreases of employee salary, travel expense, entertainment expense, transportation fee and storage charge in 2018.

General and administrative expenses

Our general and administrative expenses decreased approximately $39.7 million, or 97.8%, to $ 0.9 million in 2018 from $40.6 million in 2017.

The decrease mainly due to the spinning off the chestnut business and acquiring new business of spice plants and fruit trees in 2018.

Income Before Taxation and Non-Controlling Interest

Income before taxation and non-controlling interest increased $95.1 million, or 121.4%, to $17.0 million in 2018 from negative $78.3 million in 2017, mainly due to gain from discontinued operations.

This increase is attributable to the sales transaction of some direct and indirect subsidiaries and the acquisition transaction of Taishan Muren Agriculture Co.

Income taxes decreased approximately $0.003 million, or 1.9%, to $0.2 million in 2018, as compared to $0.2 million in 2017, almost remain the same comparing to the past year.

Non-Controlling Interest

Si Chen holds 50% of the issued and outstanding shares of Shandong Greenpia, which is reflected in the non-controlling interest of negative $3.7 million in 2018 and negative $15.1 million in 2017.

Discontinued operations

Our income before tax from discontinued operations increased by

48,097, or approximately 155%, to $17,144 in 2018 from negative $31.0 million in 2017.

The increase is attributable to the spinning off the chestnut business.

Income/Loss attributable to common stockholders

Income attributable to common stockholders increased approximately $84.0 million, or 132.5%, to $20.6 million in 2018 from negative $63.2 million in 2017, mainly due to the sale or discontinuation of our historical business operations and acquiring new business of spice plants and fruit trees in 2018.

Liquidity and Capital Resources

Management anticipates that our existing capital resources and cash flows from operations are adequate to satisfy our liquidity requirements through 2019.

Our primary capital needs have been to fund our working capital requirements.

In the past, our primary sources of financing have been cash generated from operations and short-term loans from banks in China.

As of December 31, 2018 and 2017, cash and cash equivalents (including restricted cash) were $1.1 million and $0.09 million, respectively.

The debt to assets ratio was 57.7% and 113.3% as of December 31, 2018 and 2017, respectively.

We expect to continue to finance our operations and working capital needs in 2019 from cash generated from operations and, if needed, private financings.

If available liquidity is not sufficient to meet our operating and loan obligations as they come due, our plans include pursuing alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements.

However, there is no assurance that we will be able to raise additional capital or reduce discretionary spending to provide liquidity, if needed.

We cannot be sure of the availability or terms of any alternative financing arrangements.

The following table provides detailed information about our net cash flow for all financial statement periods presented in this report.

Cash Flows Data:

For year ended December 31 ,

Research & Developing expenses

Operating income (loss)

Interest income (expense)

Other income (expense)

Impairment of goodwill

Write off receivables from disposal of former subsidiaries

(Loss) income before tax

Loss on disposal

Income tax expense/(income)

Income (loss) from continuing operations

Net income(loss)from discontinuing operations

Net (loss) income

Our net revenues for the twelve months ended December 31, 2021 amounted to $37.77 million, which represents an increase

of approximately $34.13 million, or 938%, from $3.64 million for the twelve months ended December 31, 2020.

This increase was attributable

to the acquisition of certain subsidiaries and VIEs.

During the twelve months ended December 31, 2021, we experienced an increase in cost of revenue of $31.6 million or

1331%, in comparison to the twelve months ended December 31, 2020, from approximately $2.37 million to $33.9 million.

This increase was

mainly due to the acquisition of certain subsidiaries and VIEs.

Gross Profit.

Our gross profit increased by $2.58 million,

or 203% to $3.85 million for the twelve months ended December 31, 2021 from $1.27 million for the twelve months ended December 31, 2020.

This increase was mainly attributable to the acquisition of certain subsidiaries and VIEs.

and Marketing Expenses.

Our selling and marketing expenses increased by $1.89 million, or 1183%, to $2.05 million for the twelve

months ended December 31, 2021 from $0.16 million for the twelve months ended December 31, 2020.

This increase was mainly due to our

effort to expand our business.

General and Administrative Expenses.

We experienced an increase

in general and administrative expense of $3.33 million from $3.90 million to approximately $7.22 million for the twelve months ended December

31, 2021, compared to the twelve months ended December 31, 2020.

This cost increase was mainly due to the increase of the professional

service fees and expenses incurred by the newly acquired business operation.

net loss decreased by $1.06 million, or 10%, to a net loss of $9.99 million for the twelve months ended December 31, 2021 from $11.05

million in net loss for the twelve months ended December 31, 2020.

This decrease was mainly due to our effort to expand our business.

and Capital Resources

assessing our liquidity, we monitor and analyze our cash-on-hand and operating and capital expenditure commitments.

Our liquidity needs

meet our working capital requirements, operating expenses, and capital expenditure obligations.

In the reporting period in the fiscal

year 2021, our primary sources of financing have been cash generated from operations and private placements.

of December 31, 2021, we had cash and cash equivalents (including restricted cash) of $1.13 million compared to $3.42 million as of December

The debt to assets ratio was 40.41% and 16.65% as of December 31, 2021 and December 31, 2020, respectively.

We expect to continue

to finance our operations and working capital needs in 2021 from cash generated from operations and, if needed, private financings.

available liquidity is insufficient to meet our operating and loan obligations as they come due.

In that case, our plans include pursuing

alternative financing arrangements or reducing expenditures as necessary to meet our cash requirements.

However, there is no assurance

that we will raise additional capital or reduce discretionary spending to provide liquidity if needed.

We cannot be sure of the availability

or terms of any alternative financing arrangements.

following table provides detailed information about our net cash flow for all financial statement periods presented in this report.

For the twelve months ended

(In thousands of U.S.

Net cash flows (used in)/provided by operating activities

Net cash flows used in operating activities

Net cash flows used in investing activities

Net cash flows (used in)/provided by financing activities

Operating Activities

Net cash used in operating activities for 2018 and 2017 was approximately $14.1 million and $0.4 million respectively.

The increase of approximately $17.9 million in net cash flows used in operating activities resulted primarily from net gain of approximately $13.7 million, the gain and adjustment to retained earnings as a result of disposal of subsidies of approximately negative $41.1 million and $24 million respectively in 2018.

Investing Activities

Net cash used in investing activities for 2018 and 2017 were $0.5 million and $0.8 million, respectively, with the

decrease of approximately $0.3 million cash provided in investing activities primarily from a decrease in restricted cash of $1.0 million, and the purchase of plant and equipment, the sale of intangible assets and the payment for deposits all for $0.5 million in 2018.

Financing Activities

Net cash provided by (used in) financing activities for 2018 and 2017 were approximately $15.5 million and negative $0.8 million, respectively, with the decrease of $16.2 million cash provided by financing activities from proceeds from issuance of common stock and the increase in additional paid in capital for approximately $6.0 million and $9.5 million respectively in 2018.

Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any.

We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including those set forth in Note 2 to the financial statements included herein.

The Company has evaluated the timing and the impact of the aforesaid guidance on the financial statements.

As of December 31, 2018, there were no other recently issued accounting standards not yet adopted that would or could have a material effect on the Company's consolidated financial statements.

Off Balance Sheet Arrangements

We do not have any off balance arrangements.

Net cash flows provided by financing activities

the year ended December 31, 2021, net cash used in operating activities was $0.52 million, which consisted primarily of net loss of $9.99

million, and was adjusted by depreciation and amortization of $2.45 million, impairment of goodwill of $3.23 million and share based

compensation expense of $1.16 million.

The Company had an increase of $4.81 million in other receivables from

related parties, an increase of $1.33 million in inventories and an increase of $4.31 million in payables and other current liabilities.

the year ended December 31, 2020, net cash used in operating activities was $3.50 million, which consisted primarily of net loss of $11.10

million, and was adjusted by depreciation and amortization of $0.45 million, write off receivables of $6.08 million, impairment of goodwill

of $2.34 million and exchange loss of $1.83 million.

Company had an increase of $1.53 million in accounts and other receivables, an increase of $4.07 million in prepayments and other current

assets and an increase of $0.88 million in payables and other current liabilities.

Net cash used in investing activities for the twelve months ended December

31, 2021 was $11.81 million, representing an increase of $10.96 million in net cash used in investing activities from $0.85 million for

the same period of 2020.

This is mainly due to the recent acquisition activities.

Net cash provided by financing activities for the twelve months ended December

31, 2021, was $8.93 million, representing an increase of $8.69 million in net cash provided by financing activities from $0.24 million

for the same period of 2020.

This is mainly due to the proceeds from the private placement transactions.

Accounting Policies

preparation of financial statements in conformity with the United States generally accepted accounting principles requires our management

to make assumptions, estimates, and judgments that affect the amounts reported in the financial statements, including the notes to that,

and related disclosures of commitments contingencies, if any.

consider our critical accounting policies to require the more significant judgments and estimates in preparing financial statements,

including those outlined in Note 2 to the financial statements included herein.

Company has evaluated the timing and the impact of the guidance above on the financial statements.

of December 31, 2021, there were no other recently issued accounting standards not yet adopted that would or could have a material effect

on the Company’s consolidated financial statements.

Sheet Arrangements

do not have any off-balance arrangements.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

1 unchanged sentence

FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA

The full text of our audited consolidated financial statements As of December 31, 2018 begins on page F-1 of this Annual Report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

The full text of our audited consolidated financial statements as

of December 31, 2021, begins on page F-1 of this annual report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE.

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/A

Item 7. Management’s Discussion and Analysis