| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 Company’s financial position for the periods presented. The consolidated financial statements of the Company include the financial
statements of the Company and its 74.52% 25.48% 3,071,325 3,274,308 Interim Financial Information The unaudited financial statements have been prepared in accordance
with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and
Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure
required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results
are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair
presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These
financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2023,
as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim
financial statements follow the same accounting policies and methods of computations as the audited financial statements as of and for
the year ended December 31, 2023. 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 cash equivalent Cash and cash equivalent includes demand deposits with financial institutions
that are highly liquid in nature. 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, customer’s payment history, its current creditworthiness, and current economic trends. Accounts are written
off after efforts at collection prove unsuccessful. As of September 30, 2024 and December 31, 2023, 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 September 30, 2024 and December 31, 2023, advance to suppliers was $ 1,208,222 166,010 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. 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 Company’s 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 50 12 5 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. Customer concentration
Schedule customer concentration
For the Three Months Ended September 30, (Unaudited) For the Nine Months Ended September 30, (Unaudited)
2024 2023 2024 2023
Customer A 25 % 21 % 17 % 20 %
Customer B 37 % - 20 % -
Customer C 19 % - 20 % -
Customer D 16 % - 15 % -
Customer E - 43 % - 42 % Deferred income 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. Deferred income consists primarily of government grants related
to depreciable assets. Government grants received relating to depreciable assets are recorded as deferred income and recognized in over
the life of the related assets. Company records 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. As of September 30, 2024
and December 31, 2023, deferred income was $ 1,271,088 1,355,552 Research and development expenses Research and development expenses are expensed in the period when incurred.
These costs primarily consist of cost of materials used, salaries paid for the Company’s development department, and fees paid to
the third parties. The research and development expenses were $ 144,582 152,839 404,366 $457,306 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
interest’s interests in the subsidiary’s 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% 3,071,325 3,274,308 26,218 28,829 201,063 13,337 Foreign currency translation and comprehensive income (loss) The accounts of the Company’s 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 foreign currency exchange rates
September 30, 2024 September 30, 2023 December 31, 2023
Period-end date USD: RMB exchange rate 7.0182 7.2952 7.0797
Average USD for the reporting period: RMB exchange rate 7.1773 7.0327 7.0750 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 entity’s financial statements or tax returns. Deferred tax assets also include the prior year’s
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 Company’s 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 Company’s 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 Company’s 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. |
