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Item 7. Management’s Discussion and Analysis

2024-12-13 compared with 2023-03-09 · 134 added, 103 removed, 25 unchanged (90% of the section changed)

2 unchanged sentences

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;

a series of acquisitions and dispositions in 2023 and 2022, our primary business, which is carried out by Shandong Yunchu, Jingshan Sanhe,

Jilin Chuangyuan, Fast Approach Inc and Xianning Bozhuang, is:

● To sell black 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

● Online advertising services and mobile game.

Results of Operations

The following discussion should be read in conjunction

with the company’s audited consolidated financial statement for the years ended December 31, 2023, and 2022 and related notes to

(In Thousands of USD)

4 unchanged sentences

Research & Developing expenses

Operating income (loss)

Interest income (expense)

Operating loss

Interest 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

Share of losses from equity method investments

Loss on disposal of equity investments

Loss before tax

Income tax expense

Loss from continuing operations

Net 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.

Net Revenues .

Our net revenues for the

fiscal year ending on December 31, 2023 amounted to $27.12 million, reflecting a decline of approximately $17.64 million or 39% compared

to the previous year’s figure of $44.76 million (ending on December 31, 2022).

In the previous fiscal year, 50% of our total revenue was

generated from the sale of a diverse range of food products to restaurants.

However, this segment has been significantly impacted by the

adverse effects of COVID-19, leading to a decline in sales from $23.34 million in 2022 to $14.32 million in 2023.

The residual decrease

was attributable to disposal of certain subsidiaries in late 2022.

Cost of Revenues.

During the year ended

December 31, 2023, we experienced a decrease in cost of revenue of $14.72 million or 36%, in comparison to the year ended December 31,

2022, from approximately $40.41 million to $25.69 million.

This change was mainly due to a decrease in sales of revenue, as discussed

above, and disposal of certain subsidiaries in late 2022.

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.

Our gross profit

declined by $2.92 million, representing a decrease of 67% to $1.43 million for the fiscal year ended December 31, 2023 compared to

$4.35 million for the fiscal year ended December 31, 2022.

This decline can be primarily attributed to the aforementioned factors,

namely a decrease in sales revenue and the divestiture of certain subsidiaries towards the end of 2022.

Additionally, another

contributing factor was a slight increase in the average combined cost per unit of our products.

The gross profit margin decreased

from 10.77% in 2022 to 5.57% in 2023, representing a decrease of 5.2%.

This decline is primarily attributed to the significant

reduction in sales of cold chain food mentioned earlier, as well as a notable increase in associated warehousing costs.

Operating Expenses

Selling and Marketing Expenses.

and marketing expenses decreased by $1.27 million, or 59%, to $0.90 million for the year ended December 31, 2023 from $2.17 million for

the year ended December 31, 2022.

This decrease was mainly due to the aforementioned reasons, attributable to a decrease in sales of revenue

and the disposal of certain subsidiaries in 2022.

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

general and administrative expenses for the year ended December 31, 2023 increased by $1.98 million, or 28%, to $9.04 million compared

to the previous year’s $7.06 million.

After adjusting for the impact of $1.10 million from last year’s General and Administrative

Expenses generated by the disposed subsidiary, the increase in fiscal 2023 is approximately $3.03 million.

The primary reason for this

increase is attributed to inadequate inventory management, resulting in a loss of inventory of approximately $1.97 million and an expected

credit loss of $2.76 million on trade receivables, partially offset by a decrease of $1.70 million attributed to cost control during 2023.

Our net loss decreased by $5.09 million, or 20%,

to a net loss of $20.84 million for the year ended December 31, 2023 from $25.94 million in net loss for the year ended December 31, 2022.

This decrease was mainly due to the aforementioned reasons, attributable to a decrease in sales of revenue and the disposal of certain

subsidiaries in 2022.

Liquidity and Capital Resources

In 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 2023, our primary sources of financing have

been cash generated from operations and private placements.

As of December 31, 2023, we had cash and cash equivalents

of $436.38 thousand compared to $93.49 thousand as of December 31, 2022.

The debt to assets ratio was 54.40% and 33.16% as of December

31, 2023 and December 31, 2022, respectively.

We expect to continue to finance our operations and working capital needs in 2023 from cash

generated from operations and, if needed, private financings.

Suppose 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.

Going Concern

The accompanying 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 $20,843,796

attributable to common shareholders for the year ended December 31, 2023.

As of December 31, 2023, the Company had an accumulated deficit

of $140,724,597, a working capital deficit of $6,675,220, its net cash used in operating activities for the year ended December 31, 2023

was $ 5,282,343.

These factors raise substantial doubt on the Company’s ability

to continue as a going concern.

The accompanying audited consolidated financial statements do not include any adjustments that might result

from the outcome of this uncertainty.

Management’s plan for the Company’s continued existence is dependent upon management’s

ability to execute the business plan, develop the plan to generate profit;

additionally, Management may need to continue to rely on private

placements or certain related parties to provide funding for investment, for working capital and general corporate purposes.

If management

is unable to execute its plan, the Company may become insolvent.

The following table provides detailed information

about our net cash flow for all financial statement periods presented in this report.

Cash Flows Data:

For the years ended

(In thousands of U.S.

Net cash flows used in operating activities

Net cash flows used in investing activities

Net cash flows provided by investing activities

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.

Operating Activities

Net cash used in operating activities decreased by $3.73 million to

$5.28 million during the year ended December 31, 2023 from $9.01 million during the year ended December 31, 2022.

This decrease was primarily

due to the decrease in net loss excluding non-cash expenses, gains and losses of $1.42 million and changes in net operating assets and

liabilities of $5.15 million.

Investing Activities

Net cash provided by investing activities for

the year ended December 31, 2023 was $2.67 million, representing an increase of $6.52 million from the $3.85 million used in investing

activities for the same period in 2022.

This increase is primarily attributed to the disposal of a certain subsidiary amounting to $2.77

million and a decrease in long-term investments totaling $4.10 million compared to the previous year.

Financing Activities

Net cash provided by financing activities for the year ended December

31, 2023, amounted to $2.88 million, indicating a decrease of $7.95 million compared to the corresponding period in 2022.

primarily stems from a reduction of $11.10 million in proceeds generated from the issuance of common stock as opposed to 2022, partially

offset by an increase of $2.97 million attributed to changes involving related parties during 2023.

Critical Accounting Policies

The 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,

We 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.

The Company has evaluated the timing and the impact

of the guidance above on the financial statements.

As of December 31, 2023, 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.

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

The full text of our audited consolidated financial

statements as of December 31, 2023, begins on page F-1 of this annual report on Form 10-K/A.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

1 unchanged sentence

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