[Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) [Condensed Consolidated Balance Sheets](index=2&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $136.2 million, driven by new factoring receivables which offset a significant decrease in cash Key Balance Sheet Items | Balance Sheet Items | June 30, 2022 (Unaudited) ($) | December 31, 2021 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 10,802,613 | 43,144,049 | | Accounts receivable, net | 47,011,566 | 44,962,926 | | Factoring receivable | 43,728,005 | — | | Total Current Assets | 107,673,710 | 105,807,889 | | Total Assets | 136,227,771 | 134,527,058 | | **Liabilities & Equity** | | | | Short-term bank loans | 4,192,344 | 4,719,552 | | Total Liabilities | 17,646,334 | 21,990,347 | | Total Stockholders' Equity | 118,581,437 | 112,536,711 | [Unaudited Condensed Consolidated Statements of Income (Loss) and Comprehensive Loss](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Loss) The company achieved a significant turnaround with a net income of $1.87 million in H1 2022, driven by revenue growth and reduced operating expenses Key Income Statement Items | Income Statement Items | Six Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2021 ($) | | :--- | :--- | :--- | | Revenues | 27,025,728 | 20,633,188 | | Gross Profit | 5,134,216 | 3,972,801 | | Total operating expenses | 1,910,183 | 9,713,193 | | Income (loss) from operations | 3,224,033 | (5,740,392) | | Net income (loss) | 1,872,244 | (6,752,212) | | Basic Earnings (loss) per share | 2.72 | (42.33) | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to $118.6 million, primarily due to net proceeds from stock issuance and net income Changes in Stockholders' Equity | Equity Changes (Six Months Ended June 30, 2022) | Amount ($) | | :--- | :--- | | Balance at December 31, 2021 | 112,536,711 | | Proceeds from issuance of common stock | 10,120,400 | | Foreign currency translation adjustment | (5,947,918) | | Net income | 1,872,244 | | **Balance at June 30, 2022** | **118,581,437** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) A significant net cash outflow from operations of $47.5 million was driven by an increase in factoring receivables Key Cash Flow Items | Cash Flow Items (Six Months Ended) | June 30, 2022 ($) | June 30, 2021 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (47,547,037) | (1,656,029) | | Net cash used in investing activities | (21,879) | (5,086) | | Net cash provided by financing activities | 15,958,904 | 4,714,214 | | **Net (decrease) increase in cash** | **(32,764,268)** | **3,372,497** | | Cash, end of period | 10,802,613 | 40,711,801 | - The primary driver for the large cash outflow from operations was a **$45.2 million increase in factoring receivables**, a new item on the cash flow statement[17](index=17&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1 – Organization and Nature of Business](index=6&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Business) The company operates in China across bamboo products, electric vehicles, and mining exploration investment segments - The company's principal business activities include bamboo product development, production, and distribution; manufacturing and selling electric and non-electric vehicles; and investment in mining exploration[20](index=20&type=chunk) - The company **dismantled its Variable Interest Entity (VIE) structure** on August 3, 2021[20](index=20&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=7&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) The company recognizes revenue under ASC 606 from multiple sources and acknowledges risks related to its PRC operations - Revenue is primarily derived from four sources: sales of products, commission income, government manufacturing rebates, and factoring income[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - The company's operations are located in the PRC, which presents risks related to political, economic, and legal environments, as well as currency controls on the RMB[65](index=65&type=chunk)[66](index=66&type=chunk) - Management believes the impact of the COVID-19 outbreak on the business is temporary and limited, noting that **revenues have started growing again in fiscal 2021 and 2022**[70](index=70&type=chunk) [Note 3 – Liquidity](index=15&type=section&id=Note%203%20%E2%80%93%20Liquidity) The company's liquidity is supported by revenue growth, equity financing, and plans for future funding through debt and shareholder support - The company had approximately **$10.8 million in cash** on hand as of June 30, 2022, following a successful equity financing that raised net proceeds of **$10.1 million** during the period[79](index=79&type=chunk) - Future funding plans rely on renewing bank loans, raising additional equity, and obtaining financial support from its principal shareholder and affiliated entities as needed[80](index=80&type=chunk) [Note 7 – Manufacturing Rebate Receivable](index=17&type=section&id=Note%207%20%E2%80%93%20Manufacturing%20Rebate%20Receivable) The company has fully written off its manufacturing rebate receivable due to a new government policy making collection remote - Due to a new government policy requiring a minimum of 1,000 commercial vehicles for rebate application, the company determined that the successful claim of its existing manufacturing rebate was a **remote possibility**[91](index=91&type=chunk) - A **100% allowance** was recorded against the manufacturing rebate receivable as of December 31, 2021[91](index=91&type=chunk) [Note 11 – Short-term Bank Loans](index=19&type=section&id=Note%2011%20%E2%80%93%20Short-term%20Bank%20Loans) Short-term bank loans decreased to $4.2 million and are collateralized by company assets and guaranteed by related parties Bank Loan Balances | Date | Total Bank Loans Payable ($) | | :--- | :--- | | June 30, 2022 | 4,192,344 | | December 31, 2021 | 4,719,552 | - The loans are collateralized by building and land use rights and **guaranteed by related parties**, including Chairman Zhengyu Wang, his wife, and their controlled company, Forasen Group Co, Ltd[105](index=105&type=chunk)[107](index=107&type=chunk) [Note 12 – Related Party Balances and Transactions](index=21&type=section&id=Note%2012%20%E2%80%93%20Related%20Party%20Balances%20and%20Transactions) The company engages in significant transactions with related parties, including unsecured loans and leasing arrangements Due to Related Parties | Due to Related Parties | June 30, 2022 ($) | | :--- | :--- | | Forasen Group (Chairman's affiliate) | 794,232 | | Mr. Wangfeng Yan (CEO) & affiliates | 177,687 | | **Total** | **971,919** | - The company leases production facilities to Zhejiang Nongmi Food Co, Ltd and Zhejiang Nongmi Biotechnology Co, Ltd, both of which are controlled by director Ms Yefang Zhang, generating rental income[117](index=117&type=chunk)[120](index=120&type=chunk) [Note 13 – Commitments and Contingencies](index=22&type=section&id=Note%2013%20%E2%80%93%20Commitments%20and%20Contingencies) A lawsuit resulted in a final judgment of approximately $1.4 million against the company, for which funds have been accrued and frozen - A lawsuit filed by Mr Hengwei Chen resulted in a final judgment against the company for approximately **$1.4 million (RMB 8.95 million)**[123](index=123&type=chunk) - The company has accrued for the disputed amount and interest, and the court has **frozen $1.3 million** in the company's bank accounts to enforce the judgment[123](index=123&type=chunk) [Note 14 – Stockholders' Equity](index=23&type=section&id=Note%2014%20%E2%80%93%20Stockholders'%20Equity) The company executed two reverse stock splits to maintain its Nasdaq listing and raised $10.1 million through a stock offering - The company conducted **two reverse stock splits in 2022** (one-for-ten and one-for-twenty-four) to regain compliance with NASDAQ's minimum bid price rule[125](index=125&type=chunk)[126](index=126&type=chunk) - In March 2022, the company raised total net proceeds of approximately **$10.1 million** from an offering of common shares and the exercise of an over-allotment option[131](index=131&type=chunk) [Note 16 – Long Term Investments](index=25&type=section&id=Note%2016%20%E2%80%93%20Long%20Term%20Investments) The company holds two significant long-term investments in mining companies accounted for using the cost method - The company holds an **18% equity interest in Libo Haokun**, a marble quarry company, and an indirect **14.76% interest in Fuquan Chengwang**, a basalt mining company[140](index=140&type=chunk)[143](index=143&type=chunk) - These investments are accounted for using the cost method, and **no impairment was recorded** for the six months ended June 30, 2022[144](index=144&type=chunk) [Note 17 – Segment Information](index=26&type=section&id=Note%2017%20%E2%80%93%20Segment%20Information) The consumer products segment drove performance in H1 2022, while all company revenues were generated from customers in China Segment Performance | Segment Performance (Six Months Ended June 30, 2022) | Revenue ($) | Segment Profit / (Loss) ($) | | :--- | :--- | :--- | | Consumer Products | 26,290,353 | 2,754,183 | | Electric Vehicles (EV) | 679,064 | (916,312) | | Commercial Factoring | 56,311 | 34,373 | - All of the company's revenues for the periods presented were generated from customers located in the PRC[150](index=150&type=chunk)[151](index=151&type=chunk) [Note 18 – Major Customers and Suppliers](index=27&type=section&id=Note%2018%20%E2%80%93%20Major%20Customers%20and%20Suppliers) The company exhibits significant concentration risk with a heavy reliance on a small number of customers and suppliers - Customer concentration is high, with **four customers representing 68% of total sales** for the six months ended June 30, 2022[152](index=152&type=chunk) - Supplier concentration is also high, with **four suppliers accounting for 71% of total purchases** for the six months ended June 30, 2022[153](index=153&type=chunk) [Note 19 – Subsequent Events](index=28&type=section&id=Note%2019%20%E2%80%93%20Subsequent%20Events) Post-period events include a reverse stock split for NASDAQ compliance, international expansion, and securing a new bank loan - A **one-for-twenty-four reverse stock split** was approved and became effective on November 9, 2022, to regain NASDAQ compliance[155](index=155&type=chunk) - NASDAQ granted the company an extension until **April 24, 2023**, to meet the $1.00 per share minimum bid price requirement[156](index=156&type=chunk) - On July 12, 2022, the company formed a wholly-owned subsidiary in Canada, **EPakia Canada Inc**, to develop a biodegradable packaging trading business[157](index=157&type=chunk)