| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going
Concern The
accompanying consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The Companys
working capital deficit was $ 10,124,811 11,357,758 Use
of estimates In
preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of consolidated financial
statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant items subject to such estimates
and assumptions include allowance for doubtful accounts and advances to suppliers, the valuation of inventories, the useful lives of
property, plant, and equipment and the valuation of deferred tax assets. Contingencies Certain
conditions may exist as of the date the consolidated financial statements (CFS) are issued, which may result in a loss
to the Company but which will only be resolved when one or more future events occur or fail to occur. The Companys management
and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing
loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings,
the Companys legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived
merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates that it is probable that
a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Companys
CFS. If
the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot
be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material,
would be disclosed. Cash
and restricted cash Cash
includes demand deposits with financial institutions that are highly liquid in nature. Restricted cash includes any cash that is legally
restricted as to withdrawal or usage. Account
receivable Accounts
receivable are presented net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated
losses. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowance when there is doubt
as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers
many factors, including the age of the balance, customers payment history, its current creditworthiness and current economic trends.
Accounts are written off after efforts at collection prove unsuccessful. As of June 30, 2023 and December 31, 2022, allowance for doubtful
accounts was nil 0 0 Advances
to suppliers, net Advances
to suppliers represent prepayments made to ensure continuous high-quality supplies and favorable purchase prices for premium quality.
These advances are settled upon suppliers delivering raw materials to the Company when the transfer of ownership occurs. The Company
review its advances to suppliers on a periodic basis and makes general and specific allowances when there is doubt as to the ability
of a supplier to provide supplies to the Company or refund an advance. As of June 30, 2023 and December 31, 2022, allowance for doubtful
accounts was nil and nil, respectively. Inventory Inventory
is comprised primarily of raw materials, work-in-progress and finished goods. The value of inventory is determined using the weighted
average method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory
amounts are reported net of allowances. As of June 30, 2023 and December 31, 2022, inventories were $ 633,174 1,127,678 Property,
plant and equipment, net Property,
plant and equipment are stated at cost, less accumulated depreciation. Major repair and improvements that significantly extend original
useful lives or improve productivity are capitalized and depreciated over the period benefited. Repair and maintenance costs are expensed
as incurred. Depreciation is recorded principally by the straight-line method over the estimated useful lives of our property, plant
and equipment which generally have the following ranges: buildings and improvements: 20 5 10 3 5 Intangible
assets, net Intangible
assets with finite lives are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability
of intangible assets is made to take into account events or circumstances that warrant revise estimates of useful lives or that indicate
that impairment exists. All of the Companys intangible assets are subject to amortization. No impairment of intangible assets
has been identified as of the balance sheet date. Intangible
assets consist of land use rights, patent and purchased software. Intangible assets are stated at cost less accumulated amortization.
The land purchased for industrial use has the right of use for 50 years. We amortized the right to use land in 50 years. Patent and software
amortized using the straight-line method with estimated useful lives of 12 5 Impairment
of long-lived assets In
accordance with FASB ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets such
as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of
an asset may not be recoverable, or it is reasonably possible that these assets could become impaired as a result of technological or
other changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset
to future undiscounted cash flows expected to be generated by the asset. If
such assets are considered impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset
exceeds its present value. Present value generally is determined using the assets expected future undiscounted cash flows or market
value, if readily determinable. Assets to be disposed of are reported at the lower of the carrying amount or FV less cost to sell. For
the six months and three months ended June 30, 2023 and 2022, there was no Revenue Recognition The
Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606). FASB
ASC Topic 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires the
Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate
the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies
each performance obligation. Revenue
is generated by selling fresh mushrooms to authorized distributors and wholesalers mainly in Yangzi River Delta. Contracts were signed
after the communication of the price, and quantities with customers. Our sales terms generally do not allow to sell without a deposit
being made and do not allow for a right of return. Usually, the deposit from the customer equals or more than the sales amount. Control
of the mushrooms is transferred upon receipt or loaded in the truck of carriers at our warehouse, as determined by the specific terms
of the contract. Upon transfer of control to the customer, which completes our performance obligation, revenue is recognized. Deferred
revenue Deferred
revenue consists primarily of government grants. Government grants (sometimes referred to as subsidies, subventions, etc.) are as assistance
by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating
to the operating activities of the entity. Government
grants received relating to depreciable assets are recorded as deferred income and recognized in P/L over the life of the related assets
and in the proportions in which depreciation expense on those assets is recognized. The Company recorded income when receiving a grant
which constitutes compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the
entity with no future related costs. Noncontrolling
Interests The
Company follows FASB ASC Topic 810, The
net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss).
Losses attributable to NCI in a subsidiary may exceed a non-controlling interests interests in the subsidiarys equity.
The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if
that attribution results in a deficit NCI balance. AUFP
and its subsidiaries, AUM and AUMT were 25.48% owned by noncontrolling interest and $ 3,247,428 3,438,129 24,435 91,813 Foreign
currency translation and comprehensive income (loss) The
accounts of the Companys Chinese entities are maintained in RMB and the accounts of the U.S. parent company are maintained in
United States dollar (USD). The accounts of the Chinese entities were translated into USD in accordance with FASB ASC Topic
830 Foreign Currency Matters. All assets and liabilities were translated at the exchange rate on the balance sheet date;
stockholders equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted
average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance
with FASB ASC Topic 220, Comprehensive Income. Gains and losses resulting from foreign currency transactions are reflected
in the statements of operations. The
Company follows FASB ASC Topic 220-10, Comprehensive Income (loss). Comprehensive income (loss) comprises net income (loss)
and all changes to the statements of changes in stockholders equity, except those due to investments by stockholders, changes
in additional paid-in capital and distributions to stockholders. The
exchange rates used to translate amounts in RMB to USD for the purposes of preparing the CFS were as follows:
Schedule of exchange rates
June 30, 2023 December 31, 2022 June 30, 2022
Period-end date USD:RMB exchange rate 7.2537 6.8979 6.6995
Average USD for the reporting period: RMB exchange rate 6.9278 6.7366 6.4784 Income
taxes The
Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, Income
Taxes. Under this method, income tax expense is recognized for the amount of: (i) tax payable or refundable for the current
period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an
entitys financial statements or tax returns. Deferred tax assets also include the prior years net operating losses
carried forward. The Company accounts for income for income taxes in accordance with ASC 740, Income Taxes. ASC 740 requires an
asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of
deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability
approach, deferred taxes are provided for the net effects of temporary difference between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for
deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their
benefits, or not be deductible in the future. | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of presentation and consolidation The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (U.S. GAAP) and include all adjustments necessary for the fair presentation of the Companys
financial position for the periods presented. The
consolidated financial statements of the Company include the financial statements of the Company and its 74.52% owned subsidiaries in
China. All inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation.
The Equity attributable to minority shareholders who own 25.48% of AUFP and its subsidiaries are non controlling interest (NCI).
The NCI were $ 3,438,129 4,121,862 Going
concern The
accompanying consolidated financial statements were prepared assuming the Company will continue as a going concern, which
contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For
the years ended December 31, 2022 and 2021, the Company had a net loss of approximately $0.98 million 982,081 1,202,960 834,220 102,373 Historically,
we have funded our operations primarily through our sale of fresh mushrooms and borrowings. Currently, all the loans are short-term borrowings.
Management is working to increase long-term loans and equity investment in order to improve our capital structure. However, such additional
cash resources may not be available to us on desirable terms, or at all, if and when needed by us. To
enhance our ability to continue to operate, we are dedicating resources to generate recurring revenues and sustainable operating cash
flows. On one side, we improved efficiency with current facilities, the revenue reached $ 3.68 2.11 18.09 The
consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going
concern. Use
of estimates In
preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of consolidated financial
statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant items subject to such estimates
and assumptions include allowance for doubtful accounts, advances to suppliers, valuation of inventories, useful lives of property, plant,
and equipment and intangible assets. Cash
and restricted cash Cash
includes demand deposits with financial institutions that are highly liquid in nature. Restricted cash includes any cash that is legally
restricted as to withdrawal or usage. Account
receivable Accounts
receivable are presented net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for
estimated losses. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowance when
there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances,
the Company considers many factors, including the age of the balance, customers payment history, its current creditworthiness
and current economic trends. Accounts are written off after efforts at collection prove unsuccessful. As of December 31, 2022 and
2021, allowance for doubtful accounts was nil 0 0 Advances
to suppliers, net Advances
to suppliers represent prepayments made to ensure continuous high-quality supplies and favorable purchase prices for premium quality.
These advances are settled upon suppliers delivering raw materials to the Company when the transfer of ownership occurs. The Company
review its advances to suppliers on a periodic basis and makes general and specific allowances when there is doubt as to the ability
of a supplier to provide supplies to the Company or refund an advance. As of December 31, 2022 and 2021, advance to suppliers was $ 116,997 374,417 Inventory Inventory
is comprised primarily of raw materials, work-in-progress and finished goods. The value of inventory is determined using the weighted
average method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory
amounts are reported in net of allowances. As of December 31, 2022 and 2021, inventories were $ 1,127,678 821,602 Property,
plant and equipment, net Property,
plant and equipment are stated at cost, less accumulated depreciation. Major repair and improvements that significantly extend original
useful lives or improve productivity are capitalized and depreciated over the period benefited. Repair and maintenance costs are expensed
as incurred. Depreciation is recorded principally by the straight-line method over the estimated useful lives of our property, plant
and equipment which generally have the following ranges: buildings and improvements: 20 5 10 3 5 Intangible
assets, net Intangible
assets with finite lives are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability
of intangible assets is made to take into account events or circumstances that warrant revise estimates of useful lives or that indicate
that impairment exists. All of the Companys intangible assets are subject to amortization. No impairment of intangible assets
has been identified as of the balance sheet date. Intangible
assets consist of land use rights, patent and purchased software. Intangible assets are stated at cost less accumulated amortization.
The land purchased for industrial use has the right of use for 50 years. We amortized the right to use land in 50 years. Patent and software
amortized using the straight-line method with estimated useful lives of 12 5 Impairment
of long-lived assets In
accordance with FASB ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets such
as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of
an asset may not be recoverable, or it is reasonably possible that these assets could become impaired as a result of technological or
other changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset
to future undiscounted cash flows expected to be generated by the asset. If
such assets are considered impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset
exceeds its present value. Present value generally is determined using the assets expected future undiscounted cash flows or market
value, if readily determinable. Assets to be disposed of are reported at the lower of the carrying amount or FV less cost to sell. For
the years ended December 31, 2022 and 2021, there was no Revenue Recognition The
Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606). FASB
ASC Topic 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires the
Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate
the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies
each performance obligation. Revenue
is generated by selling fresh mushrooms to authorized distributors and wholesalers mainly in Yangzi River Delta. Contracts were signed
after the communication of the price, and quantities with customers. Our sales terms generally do not allow to sell without a deposit
being made and do not allow for a right of return. Usually, the deposit from the customer equals or more than the sales amount. Control
of the mushrooms is transferred upon receipt or loaded in the truck of carriers at our warehouse, as determined by the specific terms
of the contract. Upon transfer of control to the customer, which completes our performance obligation, revenue is recognized. Deferred
revenue Deferred
revenue consists primarily of government grants. Government grants (sometimes referred to as subsidies, subventions, etc.) are as assistance
by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating
to the operating activities of the entity. Government
grants received relating to depreciable assets are recorded as deferred income and recognized in over the life of the related assets.
The Company recorded income when receiving a grant which constitutes compensation for expenses or losses already incurred or for the
purpose of giving immediate financial support to the entity with no future related costs. Noncontrolling
Interests The
Company follows FASB ASC Topic 810, The
net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss).
Losses attributable to NCI in a subsidiary may exceed a non-controlling interests interests in the subsidiarys equity.
The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if
that attribution results in a deficit NCI balance. AUFP
and its subsidiaries, AUM and AUMT were 25.48% owned by noncontrolling interest and $3,438,129 and $4,121,862 of equity were attributable
to noncontrolling interest as of December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021, the Company
had losses of $ 250,234 306,514 Concentration
of credit risk The
Company maintains cash in accounts with state-owned banks within the PRC. Cash in state-owned banks less than $72,486 (RMB500,000) is
covered by insurance. Should any institution holding the Companys cash become insolvent, or if the Company is unable to withdraw
funds for any reason, the Company could lose the cash on deposit with that institution. The Company has not experienced any losses in
such accounts and believes it is not exposed to any risks on its cash in these bank accounts. Cash denominated in RMB with a U.S. dollar
equivalent of $ 132,273 199,045 Foreign
currency translation and comprehensive income (loss) The
accounts of the Companys Chinese entities are maintained in Chinese Yuan (RMB), and the accounts of the U.S. parent
company are maintained in United States dollar (USD). The accounts of the Chinese entities were translated into USD in
accordance with FASB ASC Topic 830 Foreign Currency Matters. All assets and liabilities were translated at the exchange
rate on the balance sheet date; stockholders equity is translated at historical rates and the statements of operations and cash
flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other
comprehensive income (loss) in accordance with FASB ASC Topic 220, Comprehensive Income. Gains and losses resulting from
foreign currency transactions are reflected in the statements of operations. The
Company follows FASB ASC Topic 220-10, Comprehensive Income (loss). Comprehensive income (loss) comprises net income (loss)
and all changes to the statements of changes in stockholders equity, except those due to investments by stockholders, changes
in additional paid-in capital and distributions to stockholders. The
exchange rates used to translate amounts in RMB to USD for the purposes of preparing the CFS were as follows:
Schedule of exchange rates
December 31, 2022 2021
Period-end date USD: RMB exchange rate 6.8979 6.3559
Average USD for the reporting period: RMB exchange rate 6.7366 6.4529 Income
taxes The
Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, Income Taxes.
Under this method, income tax expense is recognized for the amount of: (i) tax payable or refundable for the current period and (ii)
deferred tax consequences of temporary differences resulting from matters that have been recognized in an entitys financial statements
or tax returns. Deferred tax assets also include the prior years net operating losses carried forward. Contingencies
Certain
conditions may exist as of the date the consolidated financial statements (CFS) are issued, which may result in a loss
to the Company but which will only be resolved when one or more future events occur or fail to occur. In accordance with ASC 450, the
Companys management and legal counsel assess such contingent liabilities, and such assessment inherently involves an
exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted
claims that may result in such proceedings, the Companys legal counsel evaluates the perceived merits of any legal proceedings
or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a
contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the
estimated liability would be accrued in the Companys CFS. If
the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot
be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material,
would be disclosed. |
