UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~September~~March 3031, ~~2021~~2022
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-34246

LITHIUM & BORON TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Nevada

98-0514768

(State or other jurisdiction of incorporation

or organization)

(IRS Employer Identification No.)

60 East Ren-Min Road
Dachaidan

(Da Qaidam Administrative Committee)
XaiXi, Qinghai Province 817000

(Address of principal executive offices)

+86 (24) 2519-7699

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001		LBTI		Grey

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐

(do not check if a smaller reporting company)

Smaller reporting company ☒

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

As of ~~November~~May 818, ~~2021~~2022, there were 185,986,370 shares of common stock outstanding.

Lithium & Boron Technology, Inc.

Table of Contents

		Page
Note about Forward-Looking Statements
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2725
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3633
Item 4.	Controls and Procedures	3633
~~PART II. OTHER INFORMATION~~	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3734
Item 1A.	Risk Factors	3734
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3734
Item 3.	Defaults Upon Senior Securities	3734
Item 4.	Mine Safety Disclosures	3734
Item 5.	Other Information	3734
Item 6.	Exhibits	3734
	Exhibit Index	3734
	Signatures	3835

NOTE ABOUT FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which include, but are not limited to, statements concerning our projected revenues, expenses, gross profit and income, mix of revenue, demand for our products, the benefits and potential applications for our products, the need for additional capital, our ability to obtain and successfully perform additional new contract awards and the related funding and profitability of such awards, the competitive nature of our business and markets and product qualification requirements of our customers. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Such factors include, but are not limited to the following:

● our goals and strategies;

● our expansion plans;

● our future business development, financial conditions and results of operations;

● our expectations regarding demand for our products;

● our expectations regarding keeping and strengthening our relationships with key customers;

● our ability to stay abreast of market trends and technological advances;

● our ability to protect our intellectual property rights effectively and not infringe on the intellectual property rights of others;

● our ability to attract and retain quality employees;

● our ability to pursue strategic acquisitions and alliances;

● competition in our industry in China;

● general economic and business conditions in the regions in which we sell our products;

● relevant government policies and regulations relating to our industry; and

● market acceptance of our products.

Additionally, this report contains statistical data we obtained from various publicly available government publications and industry-specific third party reports. Statistical data in these publications also include projections based on a number of assumptions. The changing nature of our customers’ industries results in uncertainties in any projections or estimates relating to the growth prospects or future condition of our markets. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.

Unless otherwise indicated, information in this report concerning economic conditions and our industry is based on information from independent industry analysts and publications, as well as our estimates. Except where otherwise noted, our estimates are derived from publicly available information released by third party sources, as well as data from our internal research, and are based on such data and our knowledge of our industry, which we believe to be reasonable. None of the market data from independent industry publications cited in this report was prepared on our or our affiliates’ behalf.

Additional information on the various risks and uncertainties potentially affecting our operating results are discussed in this report and other documents we file with the Securities and Exchange Commission, or the SEC, or available upon written request to our corporate secretary at: 60 East Ren-Min Road, Da-Chai Dan Town, Xai Xi County, Qing Hai Province 8100000. We undertake no obligation to revise or update publicly any forward-looking statements for any reason, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements.

Table of Contents

As used in this report, “LBTI,” “Company,” “we,” “our” and similar terms refer to Lithium & Boron Technology, Inc. and its subsidiaries, unless the context indicates otherwise.

Our functional currency is the US Dollar, or USD, while the functional currency of our subsidiaries in China are denominated in Chinese Yuan Renminbi, or RMB, the national currency of the People’s Republic of China, which we refer to as the PRC or China, and the functional currency of our subsidiary in Germany is denominated in Euros, or EUR. The functional currencies of our foreign operations are translated into USD for balance sheet accounts using the current exchange rates in effect as of the balance sheet date and for revenue and expense accounts using the average exchange rate during the fiscal year. See Note 2 of the consolidated financial statements included herein.

~~Table of Contents~~4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LITHIUM & BORON TECHNOLOGY, INC

CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30,			DECEMBER 31,
	MARCH 31,			DECEMBER 31,
	2021 (UNAUDITED)			2020
	2022 (Unaudited)			2021
ASSETS
CURRENT ASSETS
Cash and equivalents	$	21,~~192~~110,~~191~~036		$	~~972~~1,~~066~~253,661
Accounts receivable, net		-			223,194
Prepaid expenses		6,968			12,402
Prepaid expenses		18,342			-
Advances to suppliers, net		52,741			15,858
Advances to suppliers, net		99,680			242,311
Other receivables ,net		248,454			214,704
Other receivables		196,143			60,226
Notes receivable		-			78,423
Notes receivable		-			96,367
Inventories		4,752			4,732
Due from related parties		-			1,771,789
Total current assets		1,422,951			1,579,780
Inventories		248,575			1,179,387
Total current assets		2,754,931			4,545,340
NONCURRENT ASSETS
Due from related party, net		-			1,411,891
Property and equipment, net		1,313,170			1,389,294
Property and equipment, net		1,431,741			1,488,783
Intangible asset, net		50,528			50,640
Intangible asset, net		50,108			-
Construction in progress		1,843,057			1,623,309
Construction in progress		1,516,122			141,846
Total noncurrent assets		3,206,755			3,063,243
Total noncurrent assets		2,997,971			3,042,520
TOTAL ASSETS	$	4,629,706		$	4,643,023
TOTAL ASSETS	$	5,752,902		$	7,587,860
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	~~339~~153,~~120~~262		$	~~525~~312,~~775~~532
Unearned revenue		5869,~~009~~858			6469,~~190~~557
Accrued liabilities and other payables		1,~~596~~701,~~269~~143			1,~~522~~561,~~347~~585
Taxes payable		~~213~~147,~~836~~044			~~106~~203,~~651~~443
Due to related parties		23,~~696~~168,~~884~~207			12,~~114~~784,~~662~~534
Total current liabilities		45,~~904~~239,~~118~~514			34,~~333~~931,~~625~~651
DEFERRED INCOME		1,~~108~~028,~~490~~796			1,~~253~~075,~~046~~960
TOTAL LIABILITIES		6,~~012~~268,~~608~~310			46,~~586~~007,~~671~~611
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value; 500,000,000 shares authorized, 185,968,370 shares issued and outstanding		185,968			185,968
Paid-in capital deficiency		(6,666,351	)		(6,666,351	)
Statutory reserves		~~243~~282,~~905~~736			~~177~~246,~~843~~845
Accumulated other comprehensive income		~~258~~293,~~331~~207			~~223~~288,~~922~~865
Retained earnings		53,~~021~~657,~~088~~618			83,~~328~~966,~~736~~532
TOTAL COMPANY STOCKHOLDERS' EQUITY (DEFICIT)		(~~957~~2,~~059~~246,822	)		2(1,~~250~~978,~~118~~141	)
Noncontrolling interest		~~697~~608,~~353~~218			~~751~~613,~~071~~553
TOTAL EQUITY (DEFICIT)		(~~259~~1,~~706~~638,604	)		3(1,~~001~~364,~~189~~588	)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	54,~~752~~629,~~902~~706		$	74,~~587~~643,~~860~~023

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

LITHIUM & BORON TECHNOLOGY, INC CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~INCOME (~~LOSS) (UNAUDITED)

	NINE MONTHS ENDED SEPTEMBER 30,						THREE MONTHS ENDED SEPTEMBER 30,
	THREE MONTHS ENDED MARCH 31,
	2021			2020			2021			2020
	2022			2021
Sales	$	5,464,652		$	5,458,052		$	1,456,803		$	2,229,722
Revenue
Sales - related party		-			202,130			-			100,570
Boronic acid sales	$	-		$	1,828,380
Total sales		5,464,652			5,660,182			1,456,803			2,330,292
Total revenue		-			1,828,380
Cost of sales		4,205,605			5,031,305			912,679			2,126,770
Cost of revenue
Gross profit		1,259,047			628,877			544,124			203,522
Boronic acid		-			1,696,118
Operating expenses
Total cost of revenue		-			1,696,118
Selling		53,418			125,407			7,361			39,858
Gross profit		-			132,262
Bad debts for due from related party		3,523,085			-			3,523,085			-
Operating expenses
General and administrative		887,718			922,681			355,765			308,686
Selling		-			23,055
Total operating expenses		4,464,221			1,048,088			3,886,211			348,544
General and administrative		308,648			274,371
Loss from operations		(3,205,174	)		(419,211	)		(3,342,087	)		(145,022	)
Total operating expenses		308,648			297,426
Non-operating income (expenses)
Loss from operations		(308,648	)		(165,164	)
Financial expense		(3,914	)		(3,365	)		(3,523	)		(2,974	)
Non-operating income (expenses)
Other income (expense)		(5,037	)		39,651			(5,712	)		26,246
Financial expense		(46	)		(189	)
Interest income		2,998			1,833			1,822			999
Other expense		-			(60	)
Subsidy income		152,963			143,726			51,291			48,091
Interest income		874			477
Total non-operating income, net		147,010			181,845			43,878			72,362
Subsidy income		51,808			50,737
Loss before income tax		(3,058,164	)		(237,366	)		(3,298,209	)		(72,660	)
Total non-operating income, net		52,636			50,965
Income tax expense		166,839			47,117			74,892			21,184
Loss before income tax		(256,012	)		(114,199	)
Loss before noncontrolling interest		(3,225,003	)		(284,483	)		(3,373,101	)		(93,844	)
Income tax expense		-			11,458
Less: loss attributable to noncontrolling interest		(58,417	)		(8,554	)		(18,497	)		(5,809	)
Loss before noncontrolling interest		(256,012	)		(125,657	)
Net loss to the Company		(3,166,586	)		(275,929	)		(3,354,604	)		(88,035	)
Less: loss attributable to noncontrolling interest		(7,989	)		(9,933	)
Other comprehensive items
Net loss to the Company		(248,023	)		(115,724	)
Foreign currency translation gain (loss) attributable to the Company		34,409			45,671			(13,138	)		162,633
Other comprehensive items
Foreign currency translation gain (loss) attributable to noncontrolling interest		4,699			29,234			(2,762	)		27,692
Foreign currency translation gain (loss) attributable to the Company		4,342			(33,357	)
Comprehensive income (loss) attributable to the Company	$	(3,132,177	)	$	(230,258	)	$	(3,367,742	)	$	74,598
Foreign currency translation gain (loss) attributable to noncontrolling interest		2,654			(5,173	)
Comprehensive income (loss) attributable to noncontrolling interest	$	(53,718	)	$	20,680		$	(21,259	)	$	21,883
Comprehensive loss attributable to the Company	$	(243,681	)	$	(149,081	)
Basic and diluted weighted average shares outstanding		185,968,370			185,968,370			185,968,370			185,968,370
Comprehensive loss attributable to noncontrolling interest	$	(5,335	)	$	(15,106	)
Basic and diluted net income (loss) per share	$	(0.02	)	$	(0.00	)	$	(0.02	)	$	(0.00	)
Basic and diluted weighted average shares outstanding		185,968,370			185,968,370
Basic and diluted net income (loss) per share	$	(0.00	)	$	(0.00	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

LITHIUM & BORON TECHNOLOGY, INC STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIT) ~~NINE AND~~ THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2021~~2022 AND ~~2020~~2021 (UNAUDITED)

	Common Stock				Paid-in capital deficiency			Statutory reserves			Accumulated other comprehensive (loss) income			Retained earnings			Total			Noncontrolling interest
	Shares		Amount		~~Paid-in capital deficiency~~			~~Statutory reserves~~			~~Accumulated other comprehensive income~~			~~Retained earnings~~			~~Total~~			~~Noncontrolling interest~~
Balance at January 1, 2021		185,968,370	$	185,968	$	(6,666,351	)	$	177,843		$	223,922		$	8,328,736		$	2,250,118		$	751,071
Balance at January 1, 2022		185,968,370	$	185,968	$	(6,666,351	)	$	246,845		$	288,865		$	3,966,532		$	(1,978,141	)	$	613,553
Net loss		-		-		-			-			-			(248,023	)		(248,023	)		(7,989	)
Dividend accrued		-		-		-			-			-			(25,000	)		(25,000	)		-
Statutory reserve		-		-		-			35,891			-			(35,891	)		-			-
Foreign currency translation gain		-		-		-			-			4,342			-			4,342			2,654
Balance at March 31, 2022		185,968,370		185,968		(6,666,351	)		282,736			293,207			3,657,618			(2,246,822	)		608,218
Balance at January 1, 2021		185,968,370		185,968		(6,666,351	)		177,843			223,922			8,328,736			2,250,118			751,071
Net loss		-		-		-			-			-			(115,724	)		(115,724	)		(9,933	)
Statutory reserve		-		-		-			20,620			-			(20,620	)		-			-
Dividend accrued		-		-		-			-			-			(25,000	)		(25,000	)		-
Foreign currency translation loss		-		-		-			-			(33,357	)		-			(33,357	)		(5,173	)
Statutory reserve		-		-		-			20,620			-			(20,620	)		-			-
Balance at March 31, 2021		185,968,370		185,968		(6,666,351	)		198,463			190,565			8,167,392			2,076,037			735,965
Foreign currency translation gain		-		-		-			-			(33,357	)		-			(33,357	)		(5,173	)
Net income		-		-		-			-			-			303,742			303,742			(29,987	)
Balance at March 31, 2021		185,968,370	$	185,968	$	(6,666,351	)	$	198,463		$	190,565		$	8,167,392		$	2,076,037		$	735,965
Statutory reserve		-		-		-			59,279			-			(59,279	)		-			-
Dividend accrued		-		-		-			-			-			(25,000	)		(25,000	)		-
Foreign currency translation gain		-		-		-			-			80,904			-			80,904			12,634
Balance at June 30, 2021		185,968,370		185,968		(6,666,351	)		257,742			271,469			8,386,855			2,435,683			718,612
Net income		-		-		-			-			-			(3,354,604	)		(3,354,604	)		(18,497	)
Statutory reserve		-		-		-			(13,837	)		-			13,837			-			-
Dividend accrued		-		-		-			-			-			(25,000	)		(25,000	)		-
Foreign currency translation gain		-		-		-			-			(13,138	)		-			(13,138	)		(2,762	)
Balance at September 30, 2021		185,968,370	$	185,968	$	(6,666,351	)	$	243,905		$	258,331		$	5,021,088		$	(957,059	)	$	697,353

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

	Common Stock
	Shares		Amount		Paid-in capital deficiency			Statutory reserves		Accumulated other comprehensive loss			Retained earnings			Total			Noncontrolling interest
Balance at January 1, 2020		185,968,370	$	185,968	$	(6,666,351	)	$	71,252	$	(14,600	)	$	8,765,225		$	2,341,494		$	-
Net loss		-		-		-			-		-			(230,628	)		(230,628	)		-
Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-
Foreign currency translation loss		-		-		-			-		(59,196	)		-			(59,196	)		-
Balance at March 31, 2020		185,968,370		185,968		(6,666,351	)		71,252		(73,796	)		8,509,597			2,026,670			-
Net income		-		-		-			-		-			42,734			42,734			(2,745	)
Capital contribution		-		-		-			-		-			-			-			704,742
Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-
Statutory reserve		-		-		-			64,424		-			(64,424	)		-			-
Foreign currency translation loss		-		-		-			-		(57,766	)		-			(57,766	)		1,542
Balance at June 30, 2021		185,968,370		185,968		(6,666,351	)		135,676		(131,562	)		8,462,907			1,986,638			703,539
Net income		-		-		-			-		-			(88,035	)		(88,035	)		(5,809	)
Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-
Statutory reserve		-		-		-			10,974		-			(10,974	)		-			-
Foreign currency translation loss		-		-		-			-		162,633						162,633			27,692
Balance at September 30, 2020		185,968,370	$	185,968	$	(6,666,351	)	$	146,650	$	31,071		$	8,338,898		$	2,036,236		$	725,422

LITHIUM & BORON TECHNOLOGY, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	THREE MONTHS ENDED MARCH 31,
	2022			2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Loss including noncontrolling interest	$	(256,012	)	$	(125,657	)
Adjustments to reconcile loss including noncontrolling
interest to net cash provided by (used in) operating activities:
Depreciation and amortization		84,910			90,534
Changes in deferred income		(51,808	)		(50,737	)
(Increase) decrease in assets and liabilities:
Accounts receivable		-			(12,152	)
Prepaid expenses		5,486			(1,542	)
Advances to suppliers		(36,802	)		(120,386	)
Other receivables		(32,809	)		(56,440	)
Inventories		-			657,614
Accounts payable		(81,833	)		(77,986	)
Unearned revenue		-			127,027
Accrued liabilities and other payables		114,355			(2,351	)
Taxes payable		(57,262	)		86,206

Net cash provided by (used in) operating activities		(311,775	)		514,130

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(2,463	)		(33,606	)
Construction in progress		(212,643	)		(650,901	)

Net cash used in investing activities		(215,106	)		(684,507	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from noncontrolling interest		-			-
Changes in due from related parties					(620,402	)
Changes in due to related parties		377,877			747,140

Net cash provided by financing activities		377,877			126,738

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS		5,379			(6,287	)

NET DECREASE IN CASH AND EQUIVALENTS		(143,625	)		(49,926	)

CASH AND EQUIVALENTS, BEGINNING OF PERIOD		1,253,661			972,066

CASH AND EQUIVALENTS, END OF PERIOD	$	1,110,036		$	922,140

Supplemental cash flow data:
Income tax paid	$	-		$	-
Interest paid	$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

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LITHIUM & BORON TECHNOLOGY, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	NINE MONTHS ENDED SEPTEMBER 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss including noncontrolling interest	$	(3,225,003	)	$	(284,483	)
Adjustments to reconcile loss including noncontrolling interest to net cash provided by operating activities:
Depreciation and amortization		272,855			236,026
Bad debt expense for due from related party		3,523,085			-
Changes in deferred income		(152,516	)		(141,167	)
(Increase) decrease in assets and liabilities:
Accounts receivable		225,036			164,434
Prepaid expenses		(16,321	)		(18,642	)
Advances to suppliers		113,513			(83,051	)
Other receivables		(137,906	)		(18,997	)
Inventories		940,019			1,097,154
Accounts payable		(93,104	)		(38,817	)
Unearned revenue		(6,586	)		(64,304	)
Accrued liabilities and other payables		(1,994	)		248,051
Taxes payable		106,765			49,122
Net cash provided by operating activities		1,547,843			1,145,326
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(175,156	)		(301,080	)
Purchase of intangible asset		(50,759	)		-
Construction in progress		(1,376,376	)		(32,400	)
Net cash used in investing activities		(1,602,291	)		(333,480	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from noncontrolling interest		-			715,130
Changes in due from related parties		(313,101	)		(892,286	)
Changes in due to related parties		1,584,374			348,724
Net cash provided by financing activities		1,271,273			171,568
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS		3,300			30,133
NET INCREASE IN CASH AND EQUIVALENTS		1,220,125			1,013,547
CASH AND EQUIVALENTS, BEGINNING OF PERIOD		972,066			160,024
CASH AND EQUIVALENTS, END OF PERIOD	$	2,192,191		$	1,173,571
Supplemental cash flow data:
Income tax paid	$	-		$	-
Interest paid	$	-		$	-
Supplemental disclosure of non-cash investing activities
Transfer of advance to suppliers to intangible asset	$	30,905		$	-
Sale of the construction in progress to related party company	$	-		$	1,632,277

The accompanying notes are an integral part of these consolidated financial statements.

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LITHIUM & BORON TECHNOLOGY, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2021~~2022 ~~(UNAUDITED)~~ AND DECEMBER 31, ~~2020~~ 2021

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Lithium & Boron Technology, Inc., (the “Company” or “Lithium Tech”), formerly known as SmartHeat, Inc. (“SmartHeat”), was incorporated August 4, 2006, in the State of Nevada. The Company currently produces boric acid in the PRC and plans to expand its manufacturing facilities through a joint venture (“JV”) to produce up to 30,000 tonnes of lithium carbonate annually for the electric vehicle battery market in China, subject to funding.

On December 31, 2018 (the “Closing Date”), the Company entered into and closed a Share Exchange Agreement and Plan of Reorganization, as amended on January 24, 2019 (the “Share Exchange Agreement”) with Mid-Heaven Sincerity International Resources Investment Co., Ltd (Mid-heaven BVI) and its shareholders Mao Zhang, Jian Zhang, and Ying Zhao, constituting all the shareholders of Mid-heaven BVI (the “Mid-heaven Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the shareholders of Mid-Heaven BVI delivered all issued and outstanding shares of capital stock of Mid-Heaven BVI to the Company, for 106,001,971 shares of the Company’s Common Stock. Mid-heaven BVI, through two subsidiaries, Qinghai Mid-Heaven Sincerity Technology Co., Ltd (“Sincerity”) and Qinghai Mid-Heaven Sincerity Salt-Lake R&D Co., Ltd (“Salt-Lake”) owns 100% of Qing Hai Mid-Heaven Boron & Lithium Technology Company, Ltd. (“Technology”). On November 4, 2021, Mr. Jimin Zhang purchased a total of 106,001,971 shares of common stock of the Company at a purchase price of $.001 per share (80,625,099 shares from Mao Zhang, 22,165,012 shares from Jian Zhang, and 3,211,860 shares from Ying Zhao). After giving effect to the purchases, Mr. Jimin Zhang now holds, directly or indirectly, a total of 152,769,779 shares of Common Stock which represents approximately 82% of the Company’s issued and outstanding Common Stock.

The main operating entity, Technology was incorporated December 18, 2018. The business of Technology was carved out of the business of Qinghai Zhongtian Boron & Lithium Mining Co., Ltd (“Qinghai Mining”) on December 20, 2018. Qinghai Mining was founded March 6, 2001, and ~~manufactures~~formerly manufactured and ~~wholesales~~sold boric acid and related compounds for industrial and consumer use. ~~Technology~~Qinghai ~~obtains~~Mining ~~its~~has ~~raw~~stopped ~~material~~the mining of boron rock and will only provide brine ~~exclusively~~to ~~from~~Technology. ~~Qinghai~~In ~~Mining~~order ~~and~~to ~~currently~~maintain ~~processes~~the normal operation of the Company, in July 2021, Technology Company entered a processing contract to provide boric acid bycommissioned ~~crushing~~processing ~~and~~service for a processing ~~ore~~fee ~~from~~of ~~third~~RMB 2,000 ($308) ~~party~~per ~~suppliers~~ton with borax provided by the customer. ~~Technology~~On ~~previously~~August ~~purchased~~31, ~~ore~~2021, ~~from~~two ~~Qinghai~~parties ~~Mining;~~signed ~~however~~the supplement agreement, ~~Technology~~the ~~recently~~final ~~shifted~~settlement ~~suppliers~~price increased to ~~third~~RMB 2450 ($375) ~~parties~~per inton ~~order~~due to ~~fulfill~~increased ~~what~~costs. ~~management~~In ~~believes~~September ~~will~~2021, beTechnology Company entered a ~~short-term~~new ~~reliance~~agreement onwith ~~ore~~the ~~for~~same customer, where Technology Company would no longer provide the ~~production~~processing ofservice but only provided boric acid. ~~Management~~manufacturing offacility, ~~Technology~~equipment, ~~expects~~auxiliary ~~that~~equipment, itnecessary ~~will~~utilities, ~~source~~and ~~all~~workers ~~material~~to ~~that~~the ~~will~~customer befor ~~used~~them ~~for~~to ~~both~~produce the boric acid ~~and~~by ~~lithium~~themselves. ~~carbonate~~The ~~production~~customer ~~from~~was required to pay RMB 400,000 ($63,000) per month for facility usage fee to the Company, or RMB 500,000 ($78,700) per month if the customer wants to use the Company’s low-grade abandoned slag. In April 2022, Technology, together with Qinghai Mining ~~once~~entered ~~the~~a ~~brine~~new ~~processing~~Contact ~~process~~Cooperation ~~receives~~Agreement ~~approval~~with a contractor (or lessee) for leasing out manufacturing facility, equipment, auxiliary equipment and necessary utilities for a term of five years from April 1, 2022 to March 31, 2027, monthly leasing fee of RMB 500,000 ($78,700); of which, RMB 200,000 ($31,500) pays to Technology, and RMB 300,000 ($47,200) pays to Qinghai Mining. Technology owns the ~~relevant~~equipment ~~governmental~~and ~~authorities~~machinery, Qinghai Mining owns the ~~Company~~land ~~expected~~and toplant ~~receive~~and will provide the ~~approval~~silicic inacid and slag to the ~~end~~contractor ofat ~~2021~~no additional charge.

InManagement ~~December 2019, a novel strain~~ of ~~coronavirus~~Technology ~~(COVID-19)~~expects ~~was~~that ~~reported,~~it ~~and~~will ~~the~~source ~~World~~all ~~Health~~material ~~Organization~~that ~~declared~~will ~~the~~be ~~outbreak~~used tofor ~~constitute~~both aboric ~~“Public~~acid ~~Health Emergency of International Concern.” This contagious disease outbreak, which continues to spread to additional countries,~~ and ~~disrupts~~lithium ~~supply~~carbonate ~~chains and affecting~~ production ~~and~~from ~~sales~~Qinghai ~~across~~Mining aonce ~~range~~the ofbrine ~~industries~~processing asprocess areceives ~~result~~approval ~~of quarantines, facility closures,~~ and ~~travel~~permits ~~and~~from ~~logistics~~the ~~restrictions~~relevant ingovernmental ~~connection with the outbreak~~authorities. ~~The~~Technology ~~COVID-19~~and ~~outbreak~~Qinghai ~~impacted~~Mining ~~the~~submitted ~~Company’s~~an ~~operations~~application ~~for~~to the ~~first~~Environment ~~quarter~~Protection ofDepartment ~~2020. However,~~in asJanuary ~~a result~~ of ~~PRC~~2022 ~~government’s~~and ~~effort on disease control, most cities in China were reopened in April 2020, the outbreak in China~~ is currently under the ~~control; and the Company’s production and sales started back to normal since April 2020~~review. ~~Since~~ ~~April~~Technology ~~2020~~expects toa ~~date,~~response ~~there were some new COVID-19 cases discovered~~ in athe ~~few~~second ~~provinces~~quarter of ~~China~~2022, ~~however,~~and ~~the~~will ~~number~~supply ofadditional ~~new~~data ~~cases~~if there are ~~not~~further ~~significant~~comments ~~due~~on ~~to PRC government’s strict control, and~~ the ~~Company but has noted the impact of COVID-19 in this report where applicable~~application.

OnIn ~~March~~December 272019, ~~2020,~~a ~~Technology~~novel ~~entered~~strain ~~into~~of ancoronavirus ~~Investment~~(COVID-19) ~~Cooperation~~was ~~Agreement~~reported, ~~Memorandum~~and ofthe ~~Cooperation~~World ~~and~~Health ~~Licensing~~Organization ~~Agreement~~declared ~~with~~the ~~Xi'an~~outbreak ~~Jinzang~~to ~~Membrane~~constitute ~~Environmental~~a ~~Protection~~“Public ~~Technology~~Health ~~Co.,~~Emergency ~~Ltd.~~of ~~(“Xi’an~~International ~~Jinzang~~Concern.”) toThis ~~produce~~contagious updisease ~~to 30~~outbreak,~~000~~ ~~tonnes~~which ofcontinues ~~battery~~to ~~grade~~spread ~~lithium~~to ~~carbonate~~additional ~~annually~~countries, ~~subject~~and todisrupts ~~funding.~~supply Onchains ~~April~~and ~~15,~~affecting ~~2020,~~production ~~the~~and ~~parties~~sales ~~formed~~across a ~~joint~~range ~~Venture~~of ~~(“JV”)~~industries ~~Zhonglixinmo~~as ~~Technology~~a ~~Co.,~~result ~~Ltd~~of ~~(“Qinghai~~quarantines, ~~Zhongli”~~facility orclosures, ~~JV)~~and totravel ~~process~~and ~~brine~~logistics ~~supplied~~restrictions byin ~~Technology.~~connection ~~Technology~~with ~~owns 51% of~~ the ~~JV and Xi’ Jinzang owns the remaining 49%~~outbreak. The ~~JV cooperation agreement calls for a capital contribution of RMB 140 million ($~~COVID-19~~,746,000),~~ tooutbreak beimpacted ~~paid~~the inCompany’s ~~three~~operations ~~phases~~for ~~according to~~ the ~~project~~first ~~construction~~quarter ~~progress:~~of ~~RMB 36 million~~2020. ~~($5~~However,~~077,000)~~ toas bea ~~paid~~result ~~within 10 days from the date~~ of ~~registration~~PRC ~~and~~government’s ~~establishment~~effort ofon ~~the~~disease JVcontrol, ~~RMB 72 million~~most ~~($10,155,000)~~cities toin beChina ~~paid before~~were ~~July~~reopened ~~31,~~in April 2020, ~~and~~the ~~RMB 32 million~~outbreak ~~($4,513,000)~~in toChina beis ~~paid~~under ~~before~~the ~~October~~control; ~~31,~~and ~~2020.~~the ~~The JV~~Company’s ~~shareholders~~production ~~are~~and ~~required~~sales tostarted ~~contribute~~back ~~capital~~to innormal ~~accordance~~since ~~with~~April ~~their respective shareholding ratio~~2020. ~~Each~~Since ~~party made an initial capital contribution of RMB 5 million ($0.71 million) in~~ April 2020. Asto ofJanuary ~~the date of this report~~2022, ~~the~~there ~~parties~~were ~~have~~some ~~not~~new ~~made~~COVID-19 ~~all~~cases ~~capital~~discovered ~~contributions~~in ona ~~the~~few ~~dates~~provinces ~~due~~of China, ~~pending financing by the Company~~however, as the ~~capital~~number ~~contribution~~of ~~amount~~new ~~and~~cases ~~timing~~are ~~can~~not besignificant ~~adjusted~~due ~~anytime~~to ~~upon~~PRC ~~both parties~~government’s ~~mutual~~strict ~~consent~~control. ~~During~~Since ~~the~~February ~~construction~~2022 ~~and~~to ~~operation of the project~~date, ~~all~~COVID-19 ~~parties~~case ~~agree~~increased toin ~~raise~~many ~~construction~~cities ~~funds by means~~ of ~~bank~~China; ~~loans~~however, ~~self-owned~~there ~~funds,~~are ~~etc.~~only ifa ~~the~~few ~~funds~~new ~~are~~cases ~~not raised~~ in ~~time,~~Qinghai ~~the~~Province ~~term~~which ofwe ~~capital~~do ~~contribution~~not ~~can~~expect beimpact ~~extended~~the ~~upon~~Company’s ~~agreement of all parties~~operations.

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InOn ~~order~~March to27, ~~maintain~~2020, ~~the~~Technology ~~normal~~entered ~~operation~~into ofan ~~the~~Investment ~~Company;~~Cooperation inAgreement, ~~July~~Memorandum ~~2021,~~of ~~Technology~~Cooperation ~~Company~~and ~~entered~~Licensing aAgreement ~~processing~~with ~~contract~~Xi'an toJinzang ~~provide~~Membrane ~~boric~~Environmental ~~acid~~Protection ~~commissioned~~Technology ~~processing~~Co., ~~service~~Ltd. at(“Xi’an ~~processing~~Jinzang”) ~~fee~~to ofproduce ~~RMB~~up 2to 30,000 ~~($308)~~tonnes ~~per~~of ~~ton~~battery ~~with~~grade ~~boron~~lithium ~~provided~~carbonate byannually, ~~the~~subject ~~customer~~to funding. On ~~August~~April 3115, ~~2021~~2020, ~~two~~the parties ~~signed~~formed ~~the~~a ~~supplement~~joint ~~agreement~~Venture (“JV”) Zhonglixinmo Technology Co., Ltd (“Qinghai Zhongli” or JV) to process brine supplied by Technology. Technology owns 51% of the ~~final~~JV ~~settlement~~and ~~price~~Xi’ ~~was~~Jinzang owns the remaining 49%. The JV cooperation agreement calls for a capital contribution of RMB ~~2450~~140 million ($~~375~~19,746,000), ~~per~~to ~~ton.~~be Inpaid ~~September~~in ~~2021,~~three ~~Technology~~phases ~~Company~~according ~~entered~~to athe ~~new~~project ~~agreement~~construction ~~with~~progress: ~~the~~RMB ~~same~~36 ~~customer~~million ($5,077,000) ~~where~~to ~~the~~be ~~Company~~paid ~~provide~~within 10 days from the ~~boric~~date ~~acid~~of ~~manufacturing~~registration ~~facility,~~and ~~equipment~~establishment of the JV, ~~auxiliary~~RMB ~~equipment~~72 million ($10,155,000) ~~necessary~~to ~~utilities~~be paid before July 31, 2020, and ~~workers~~RMB ~~for~~32 ~~the~~million ~~customer~~($4,513,000) to ~~produce~~be ~~the~~paid ~~boric~~before ~~acid~~October by31, ~~themselves~~2020. The ~~customer~~JV’s ~~was~~shareholders are required to ~~pay~~contribute capital in accordance with their respective shareholding ratio. Each party made an initial capital contribution of RMB ~~400,000~~5 million ($~~61,680~~0.71 million) ~~per~~in ~~month~~April ~~for~~2020. aAs ~~facility~~of ~~usage~~the ~~fee~~date toof ~~the~~this ~~Company~~report, orthe ~~RMB~~parties ~~500,000~~have ~~($77,090)~~not ~~per~~made ~~month~~all ifcapital contributions on the ~~customer~~dates ~~wants~~due, topending ~~use~~financing by the Company and obtaining required licenses and approvals. The capital contributions and timing can be adjusted anytime upon the parties’s ~~low~~mutual consent. During the construction and operation of the project, all parties agree to raise construction funds by means of bank loans and self-~~grade~~funding ~~abandoned~~in ~~slag~~the event additional equity financing is not available. On May 9, 20222, JV changed its name to Qinghai Zhongli Technology Co., Ltd.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern

The accompanying consolidated financial statements (“CFS”) 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.

As reflected in the accompanying CFS, the Company had ~~net~~ loss before noncontrolling interest of $30.17 26 million and $0.~~28 million~~13 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, respectively; the ~~Company had~~ net loss ofto the Company was $30.35 25 million and $~~88,035~~0.12 million for the three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020, respectively; the Company stopped produce and selling boron acid starting from September~~ 2021 ~~due to decreased mine production resulting from rectifying the mines in the area by the authority for environment protection~~, ~~which raise substantial doubt about the Company’s ability to continue as a going concern~~respectively.

~~Because~~After ~~the~~Technology ~~Company~~ ceased ~~obtaining~~sourcing ore for the production of boric acid from ~~its~~Qinghai ~~affiliate~~Mining , ~~the~~Technology ~~Company~~ leased out the boric acid manufacturing facility, equipment and auxiliary equipment for a monthly fee in order to provide interim cash flow and maintain revenues from boric acid operations. ~~The~~(see ~~Company~~Note ~~plans~~1 ~~to produce lithium carbonate that can be sold for the electric vehicle battery use and is currently at test production stage~~above). The Company expects to generate additional revenues and cash flow once it receives government approval of the official production process which is expected by late fourth quarter 2021 or early first quarter 2022. Management also intends to raise additional funds by way of a private or public offerings, by obtaining loans from banks or form other sources of debt or equity capital. While the Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

The Company plans to produce lithium carbonate that can be sold for the electric vehicle battery use and is currently at test production stage. The Company expects to generate additional revenues and cash flow once it receives government approval of the official production process which is expected by second quarter 2022. Management also intends to raise additional funds by way of a private or public offerings, by obtaining loans from banks or form other sources of debt or equity capital. While the Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

The CFS do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.

Basis of Presentation

The CFS were prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The interim consolidated financial information as of ~~September~~March 3031, ~~2021~~2022 and for the ~~nine and~~ three-month periods ended ~~September~~March 3031, ~~2021~~2022 ~~and 2020~~ was prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, which are normally included in CFS prepared in accordance with U.S. GAAP were not included. The interim consolidated financial information should be read in conjunction with the CFS and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021, filed with the SEC on ~~April~~March 1531, ~~2021~~2022.

In the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of September 30, 2021, its consolidated results of operations and cash flows for the nine and three months ended September 30, 2021 and 2020, as applicable, were made.10

Principles of Consolidation

For the nine and three months ended September 30, 2021 and 2020, the accompanying CFS include the accounts of the Company’s US parent, and Mid-heaven BVI and its subsidiaries, Sincerity, Salt-Lake, Technology and Qinghai Zhongli, which are collectively referred to as the “Company.” All significant intercompany accounts and transactions were eliminated in consolidation.

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In the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2022, its consolidated results of operations and cash flows for the three months ended March 31, 2022, as applicable, were made.

Principles of Consolidation

For the three months ended March 31, 2022 and 2021, the accompanying CFS include the accounts of the Company’s US parent, and Mid-heaven BVI and its subsidiaries, Sincerity, Salt-Lake, Technology and Qinghai Zhongli, which are collectively referred to as the “Company.” All significant intercompany accounts and transactions were eliminated in consolidation. Mid-heaven BVI, Sincerity and Salt-Lake had no operations as of today.

Use of Estimates

In preparing financial statements in conformity with US 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 the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, required by management, include the recoverability of long-lived assets, allowance for doubtful accounts and the reserve for obsolete and slow-moving inventories. Actual results could differ from those estimates.

Cash and Equivalents

Cash includes cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

Accounts Receivable, net

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, the Company had allowance of $1920,~~891~~ 321 and $1920,~~770~~ 233 at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively.

Advances to Suppliers, net

The Company makes advances to certain vendors to purchase raw material, tools and equipment for production. The advances are interest-free and unsecured. As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, the Company had gross advance to suppliers of $~~102~~55,~~443~~ 564 and $~~245~~18,~~058~~668 respectively, and the Company had allowance for advances to suppliers of $2,~~763~~ 823 and $2,~~747~~810 , respectively.

Inventories, net

Inventories are stated at the lower of cost or net realizable value with cost determined on a weighted-average basis. Management compares the cost of inventories with the net realizable value and an allowance is made to write down inventories to market value, if lower.

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance and repairs are expensed as incurred; major additions, repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method with a 3% - 10% salvage value and estimated lives as follows:

Buildings	20 years
Structures and improvements	4-20 years
Vehicles	4-8 years
Office equipment	5 years
Production equipment	3-10 years
Equipment upgrade	5 years

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Depreciation of plant, property and equipment attributable to manufacturing is capitalized as part of inventories, and expensed to cost of sales when inventories are sold.

Impairment of Long-Lived Assets

Long-lived assets, which include tangible assets, such as property and equipment, goodwill and other intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable, but at least annually.

12Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized based on the excess of the carrying amount over the fair value of the assets. Fair value generally is determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review, the Company believes that, as of March 31, 2022 and December 31, 2021, there was no significant impairments of its long-lived assets.

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Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized based on the excess of the carrying amount over the fair value of the assets. Fair value generally is determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review, the Company believes that, as of September 30, 2021 and December 31, 2020, there was no significant impairments of its long-lived assets.

Effective January 1, 2020, the Company adopted ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

Deferred Income

Deferred income consists primarily of government grants and subsidies for supporting the Company’s technology innovation and transformation of boric acid, lithium and magnesium sulfate projects. The Company uses most of the subsidies to purchase machinery and equipment. Deferred income is amortized to revenue (other income) over the life of the assets for which the grant and subsidy was used. Subsidies for declared project fund require government inspection to ensure proper use of the funds for the designated project.

Unearned Revenue

The Company records payments received from customers in advance of their orders as unearned revenue. These orders normally are delivered (usually within one month) based upon contract terms and customer demand.

Revenue Recognition

The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive for those goods. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs typically upon receipts of the goods by customers. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government. VAT taxes are not affected by the income tax holiday. The Company also ~~provides~~temporarily provided boric acid commissioned processing service with boron material provided by the customer; the Company recognizes revenue when the final products are picked up by the customer at the Company’s warehouse, where the control transfers to the customer.

Starting from September 2021, Technology stopped processing service and leased out its boric acid manufacturing facility, equipment and auxiliary equipment to a customer. The facility leasing revenue is recorded on monthly basis.

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Cost of Sales

Cost of sales consists primarily of material costs and direct labor and manufacturing overhead attributable to the production of the products. Write-down of inventory to lower of cost or net realizable value is also recorded in cost of sales.

Research and Development Costs

Research and development (“R&D”) costs are expensed as incurred and included in general and administrative expenses. These costs primarily consist of cost of materials used, salaries paid for the Company’s development department and fees paid to third parties. R&D costs for the ~~nine and~~ three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 were ~~immaterial~~$4,631 and $0, respectively.

Share-Based Compensation

The Company accounts for share-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that share-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period.

The Company accounts for share-based compensation awards to non-employees in accordance with FASB ASC Topic 718 and FASB ASC Subtopic 505-50, “Equity-Based Payments to Non-employees”. Share-based compensation associated with the issuance of equity instruments to non-employees is measured at the fair value(“FV”) of the equity instrument issued or committed to be issued, as this is more reliable than the FV of the services received. The FV is measured at the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete.

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Effective January 1, 2020, the Company adopted ASU 2018-07, "Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting," which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. An entity should apply the requirements of FASB ASC 718 to non-employee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. The amendments specify that FASB ASC 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. The adoption of ASU 2018-07 did not have an impact on the Company’s CFS.

Income Taxes

Income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company follows FASB ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

Under the provisions of FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of operations. At ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, the Company did not take any uncertain positions that would necessitate recording a tax related liability.

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Noncontrolling Interests

The Company follows FASB ASC Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCI (previously referred to as minority interests) be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to non-controlling interests even when such allocation might result in a deficit balance.

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 NCIs interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCIs balance.

On April 15, 2020, Technology and Xi’an Jinzang formed a JV, Qinghai Zhongli, to process brine supplied by Technology. Technology owns 51% of the JV and Xi’an Jinzang owns the remaining 49%. During the ~~nine and~~ three months ended ~~September~~March 3031, ~~2021,~~2022 ~~the Company had loss of $58,417~~ and ~~$18~~2021,~~497 attributable~~ to the ~~NCI. During the nine and three months ended September 30, 2020, the~~ Company had loss of $87,~~554~~989 and $59,~~809~~933 attributable to the NCI.

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Concentration of Credit Risk

Cash includes cash on hand and demand deposits in accounts maintained within China. Balances at financial institutions and state-owned banks within the PRC are covered by insurance up to RMB 500,000 ($77,000) per bank. Any balance over RMB 500,000 ($77,000) per PRC bank will not be covered. The Company has not experienced any losses in such accounts.

Certain other financial instruments, which subject the Company to concentration of credit risk, consist of accounts and other receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of its customers’ financial condition and customer payment practices to minimize collection risk on accounts receivable.

The operations of the Company are primarily in China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in China, as well as by the general state of the PRC economy.

Basic and Diluted Earnings (Loss) per Share (EPS)

Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted EPS are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to have been exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Foreign Currency Translation and Comprehensive Income (Loss)

The accounts of the US parent company are maintained in USD. The functional currency of the Company’s China subsidiaries is the Chinese Yuan Renminbi (“RMB”). The accounts of the China subsidiaries were translated into USD in accordance with FASB ASC Topic 830, “Foreign Currency Matters.” According to FASB ASC Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date, stockholders’ equity was translated at the historical rates and statement of operations items were translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with FASB ASC Topic 220, “Comprehensive Income.”

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Statement of Cash Flows

In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts shown on the statement of cash flows may not necessarily agree with changes in the corresponding asset and liability on the balance sheet.

Fair Value of Financial Instruments

Certain of the Company’s financial instruments, including cash and equivalents, notes receivable, accrued liabilities and accounts payable, carrying amounts approximate their FV due to their short maturities. FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the FV of financial instruments held by the Company. The carrying amounts reported in the balance sheets for current liabilities each qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and the current market rate of interest.

Fair Value Measurements and Disclosures

FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” defines FV, and establishes a three-level valuation hierarchy for disclosures of FV measurement that enhances disclosure requirements for FV measures. The three levels are defined as follow:

	●	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
	●	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
	●	Level 3 inputs to the valuation methodology are unobservable and significant to the FV measurement.

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Effective January 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement: Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the FV hierarchy.

As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at FV.

Leases

The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases, and will keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term.

ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.

ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Operating leases are included in operating lease ROU assets and operating lease liabilities (current and non-current), on the consolidated balance sheets. The Company did not have any leases as of September 30, 2021.15

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Related Parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions.

Segment Reporting

FASB ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Management determined the Company’s current operations constitute a single reportable segment in accordance with ASC 280. The Company currently operates in one business and industry segment: manufacture and sale of boric acid. The Company plans to expand its manufacturing facilities through a newly formed JV with Qinghai Zhongli in which the Company owns 51% to produce lithium carbonate for the electric vehicle battery market in China. Qinghai Zhongli is currently constructing the production workshop but has no production yet.

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New Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its FV, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its CFS.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its CFS.

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Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future CFS.

3. INVENTORIES, NET

Inventories at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively, were as follows:

	2021		2020
	2022		2021
Raw materials	$	~~164~~4,~~681~~017	$	~~275~~4,~~416~~000
Finished goods		~~83,894~~735		~~903,971~~732
Total	$	~~248~~4,~~575~~752	$	14,~~179,387~~732

4. NOTES RECEIVABLE – BANK ACCEPTANCES

The Company sold goods to its customers and received notes (bank acceptances) from them in lieu of payment. These bank acceptances were issued by customers to the Company and would be honored by the applicable bank. The Company may hold a bank acceptance until maturity for full payment or have the bank acceptance cashed by the bank at a discount at an earlier date, or transfer the bank acceptance to its vendors in lieu of payment for their own obligations. As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, the Company had notes receivable of $0 and $9678,~~367~~423 , respectively; and at ~~September~~March 3031, ~~2021~~2022, the Company had $0~~.23 million~~ notes receivable endorsed and transferred to its vendors, in lieu of payment. The Company was contingently liable for these endorsed and transferred notes receivable until they are paid by the bank.

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5. OTHER RECEIVABLES

Other receivables consisted of the following at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021:

	2021			2020
	2022			2021
VAT receivable	$	~~179~~219,~~195~~173		$	57204,~~364~~883
Prepaid rent (short term)		1,696			2,043
Security deposit		3,308			3,294
Other		1537,~~252~~559			~~819~~18,064
Total	$	~~196~~260,~~143~~040		$	~~60,~~226,241
Less: bad debt allowance		(11,586	)		(11,537	)
Other receivables, net	$	248,454		$	214,704

6. PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively:

	2021			2020
	2022			2021
Building structures and improvements	$	~~627~~643,~~633~~266		$	~~481~~640,~~270~~492
Production equipment		23,~~925~~008,~~661~~757			2,~~880~~995,~~146~~779
Vehicle		~~105~~107,~~479~~759			70107,~~836~~294
Equipment		~~268~~277,~~863~~137			~~267~~273,~~235~~488
Total		34,~~927~~036,~~636~~919			34,~~699~~017,~~487~~053
Less: accumulated depreciation		(2,~~495~~723,~~895~~749	)		(2,~~210~~627,~~704~~759	)
Property and equipment, net	$	1,~~431~~313,~~741~~170		$	1,~~488~~389,~~783~~294

In May 2021, the Company acquired RMB 1.1 million ($~~170~~172,~~270~~500) of land and building structures from a bankrupt company, of which, $~~115~~121,~~760~~000 was for building structures including workshop and office, $5451,~~510~~500 was for the land use right (see Note 7). The Company prepaid RMB 200,000 ($30,960) in March 2020, and paid remaining balance of RMB 900,000 ($139,310) in May 2021.

Depreciation for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020 was $272,313 and $236,026, respectively. Depreciation for the three months ended September 30,~~ 2021 ~~and 2020~~ was $9184,~~254~~578 and $8490,~~483~~534, respectively.

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7. INTANGIBLE ASSET, NET

Intangible asset consisted of the following at ~~September~~March 3031, 2022 and December 31, 2021:

Land use right	$	50,649
	2022			2021
Less: accumulated amortization		(541	)
Land use right	$	51,744		$	51,521
Intangible asset, net	$	50,108
Less: accumulated amortization		(1,216	)		(881	)
Intangible asset, net	$	50,528		$	50,640

The Company acquired land use right of $5051,~~649~~521 from a bankrupt company in May 2021, the transfer of Land Use Right Certificate was in process as of this report date. The Company has the right to use the land for 37 years and eight months and is amortizing such rights on a straight-line basis.

Amortization ~~for~~of ~~the~~land ~~nine~~use ~~months~~right ~~and~~for the three months ended ~~September~~March 3031, 2022 and 2021 was $~~541~~ 332 and $~~308, respectively~~0. Annual amortization for the next five years from ~~September~~March 3031, ~~2021~~2022, is expected to be $1,~~348~~374 for each year.

8. CONSTRUCTION IN PROGRESS (“CIP”)

As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, the Company had CIP of $1,~~516~~843,~~122~~ 057 and $~~141~~1,~~846~~623,309 , respectively. The CIP was mainly for Qinghai Zhongli’s Adsorption Station Project, which is the early stage of an integrated lithium carbonate production system. The adsorption station is equipped with a liquid storage tank for the adsorption material to be placed inside, and its function is to preliminarily extract lithium mother solution from brine for initial purification; the lithium mother solution will go into evaporation shed for refining and concentration; and the concentrated mother solution (also called lithium water saturated solution) is then sent to the production workshop for precipitation and drying to form the finished product of lithium carbonate. As of ~~September~~March 3031, ~~2021~~2022, the Company spent $1.5284 million for constructing the adsorption station; as of this report date, the Company completed the construction of No. 1 adsorption stations, and is currently doing the technological transformation for No. 2 refining station for ~~adding~~strengthening the ~~adsorption~~exterior ~~tank~~wall ~~to increase daily production and installation of the heating equipment~~insulation. The Company was committed to pay $0.~~20 million~~18 million based on the various construction - related contracts entered as of ~~September~~March 3031, ~~2021~~2022.

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9. TAXES PAYABLE

Taxes payable consisted of the following ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively:

	2021		2020
	2022		2021
Income tax payable	$	~~120~~49,~~860~~291	$	-55,658
Other		147,~~014~~488		18,~~331~~604
VAT		7890,~~962~~265		88129,~~320~~181
Taxes payable	$	~~213~~147,~~836~~044	$	~~106~~203,~~651~~443

10. ACCRUED LIABILITIES AND OTHER PAYABLES

Accrued liabilities and other payables consisted of the following at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively:

	2021		2020
	2022		2021
Advances from third parties	$	1324,~~747~~919	$	626,~~035~~003
Other		~~717~~815,000		~~561~~675,000
Accrued salary		~~865~~861,~~522~~224		~~955~~860,~~312~~582
Total	$	1,~~596~~701,~~269~~143	$	1,~~522~~561,~~347~~585

Advances from third parties were short term, non-interest-bearing and due on demand.

As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, other mainly consisted of 1) dividend payable to Northtech of $~~575~~625,000 and $~~500~~600,000, respectively; and 2) payables for professional fees and other miscellaneous expenses of $~~142~~190,000 and $6175,000, respectively.

As of September 30, 2021, accrued salary of $865,522 included $840,000 accrued salary for the three senior officers. As of December 31, 2020, accrued salary of $955,312 included $840,000 accrued salary for three senior officers.18

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As of March 31, 2022, accrued salary of $861,224 included $840,000 accrued salary for three senior officers. As of December 31, 2021, accrued salary of $860,582 included $840,000 accrued salary for the three senior officers.

11. RELATED PARTY TRANSACTIONS

Due from related parties, net

Technology purchased raw material boron rock from Qinghai Mining (owned by three former major shareholders of the Company); in addition, Technology received no-interest short-term advances from Qinghai Mining for daily operational needs. As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, due from Qinghai Mining was $0 and $~~3.11~~0 million ~~(the net amount of intercompany transactions between Technology and Qinghai Mining)~~, respectively. Technology purchased boron ore of $~~725,052~~0 and $1261,~~188,802~~258 from Qinghai Mining during the ~~nine months ended September 30, 2021 and 2020, respectively. Technology purchased boron ore of $76,212 and $594,276 from Qinghai Mining during the~~ three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, respectively. During the ~~three~~year ~~months~~ ended ~~September~~December 3031, 2021, the Company wrote off the receivable of $ 34.5 million from Qinghai Mining, because Qinghai mining ceased production of boron rock sold to the Company. This halt in production has impaired the Mining Company’s ability to repay the receivable to the Company.

InDue ~~the~~to ~~first quarter~~related of 2020, Technology and Qinghai Mining entered a purchase contract, the price for boron ore was RMB 77.5 ($11.10) per tonne, and the price for slag was RMB 30 ($4.41) per tonne. This purchase contract will be in effect until a replacement contact with a new purchase price is entered.parties

~~During~~Technology ~~the~~used ~~fourth~~equipment ~~quarter~~for ~~2020~~production that belongs to Qinghai Province Dachaidan Zhongtian Resources Development Co., Ltd (“Zhongtian Resources”, which is owned by the Chairman and his brother who were formerly two major shareholders of the Company). ~~made~~The adepreciation ~~short-term~~of ~~cash~~these ~~advance~~fixed assets had an impact on the production costs of ~~RMB 500~~boric acid of the Company and was included in the Company’s cost of sales. The depreciation of these fixed assets for the three months ended March 31,~~000~~ 2022 and 2021 was $2,427 (and $765,~~630)~~586, respectively. Amount of due to ~~Xi’an~~Zhongtian ~~Jinzang~~Resources ~~(49%~~resulting ~~NCI~~from using its equipment and payment of ~~the~~worker’s ~~JV)~~compensation ~~with~~made noby ~~interest~~Zhongtian Resource for Technology was $96,691 and ~~payable~~$96,274 at ~~upon~~March ~~demand.~~31, Xi2022 and December 31, 2021 , respectively; however, Technology, Qinghai Mining and Zhongtian agreed to use the creditor’ans ~~Jinzang~~rights ~~repaid~~of Technology to Qinghai Mining to offset the ~~amount~~debts inof ~~full~~Technology into ~~January~~Zhongtian, accordingly, due to Zhongtian Resource was $0 as of March 31, 2022 and December 31, 2021.

Technology sold boric acid to Qinghai Dingjia Zhixin Trading Co., Ltd (“Dingjia”) which is 90% owned by the son of the Company’s former major shareholder and Chairman. For the three months ended March 31, 2022 and 2021, the Company’s sales to Dingjia was $0 and $0. At March 31, 2022 and December 31, 2021, payable to Dingjia was $21,340 and $21,248, respectively; however, Technology, Qinghai Mining and Dingjia agreed to use the creditor’s rights of Technology to Qinghai Mining to offset the debts of Technology to Dingjia, accordingly, due to Dingjia was $0 as of March 31, 2022 and December 31, 2021.

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($630,100) with an annual interest of 6.8% from Xi’an Jinzang. The funds were used for the production and operation activities and construction of Adsorption Station Project of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($393,812) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($236,287) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 4.0 million ($630,100) at March 31, 2022; in addition, the Company borrowed additional RMB 2 million ($315,050) with the same terms during the second quarter of 2021 under the oral agreement. The Company borrowed additional RMB 2 million ($315,050) with the same terms during the third quarter of 2021 under the oral agreement. In January and February 2022, the Company entered two borrowing agreements with same lender for RMB 1 million ($157,500) with maturity date on July 30, 2022 and RMB 2 million ($315,000) with maturity date on December 31, 2022, respectively, both loans have a 10% annual interest rate. The Company only received RMB 2 million ($315,000) during the first quarter of 2022. The Company recorded $80,935 and $55,679 capitalized interest on CIP of Adsorption Station as of March 31, 2022 and December 31, 2021.

In addition, at March 31, 2022 and December 31, 2021, the Company had $1,510,591 and $1,473,591 due to a major shareholder of the Company and Chief Executive Officer, resulting from certain Company operating expenses of the US parent company such as legal and audit fees that were paid by him on behalf of the Company. This short-term advance bore no interest, and was payable upon demand.

At March 31, 2022 and December 31, 2021, the Company had $1,431 and $499 due to a senior officer of the Company, resulting from the Company’s expenses paid by him. This short-term advance bore no interest, and was payable upon demand.

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~~Due~~The following table summarized the due from (to) related parties as of March 31, 2022 and December 31, 2021, respectively:

Technology used equipment for production that belongs to Qinghai Province Dachaidan Zhongtian Resources Development Co., Ltd (“Zhongtian Resources”, which is owned by the Chairman and his brother who were formerly two major shareholders of the Company). The depreciation of these fixed assets had an impact on the production costs of boric acid of the Company and was included in the Company’s cost of sales. The depreciation of these fixed assets for the nine months ended September 30, 2021 and 2020 was $12,504 and $19,547, respectively. The depreciation of these fixed assets for the three months ended September 30, 2021 and 2020 was $2,382 and $6,927, respectively. Due to Zhongtian Resources resulting from using its equipment and payment of worker’s compensation made by Zhongtian Resource for Technology was $92,269 and $79,309 at September 30, 2021 and December 31, 2020, respectively.

	Related party name	2022			2021
Due from	Qinghai Mining including $1.77 million sale of CIP (Test and Experimental Plant I)	$	5,610,394		$	5,567,440
Due to	Qinghai Mining		(1,071,196	)		(1,047,820	)
Less: bad debt allowance for Qinghai Mining			(4,539,198	)		(4,519,619	)
Due from, net (current and noncurrent)		$	-		$	-

Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest	$	1,656,185		$	1,310,444
Due to	Senior officer		1,431			499
Due to	A major shareholder		1,510,591			1,473,591
Due to, total		$	3,168,207		$	2,758,534

Technology sold boric acid to Qinghai Dingjia Zhixin Trading Co., Ltd (“Dingjia”) which is 90% owned by the son of the Company’s major shareholder and Chairman. For the nine months and three months ended September 30, 2021, the Company’s sales to Dingjia was $0. For the nine and three months ended September 30, 2020, the Company’s sales to Dingjia was $202,130 and $100,570, respectively. At September 30, 2021 and December 31, 2020, payable to Dingjia was $20,888 and $20,762, respectively.

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($619,185) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities and construction of Adsorption Station Project of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($380,442) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($228,266) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 2.5 million ($380,442) at September 30, 2021; in addition, the Company borrowed additional RMB 2 million ($309,593) with the same terms during the second quarter of 2021 under the oral agreement. The Company borrowed additional RMB 2 million ($309,593) with the same terms during the third quarter of 2021 under the oral agreement. The Company recorded $33,595 capitalized interest on CIP of Adsorption Station as of September 30, 2021.

In addition, at September 30, 2021 and December 31, 2020, the Company had $1,316,591 and $1,014,591 due to another major shareholder of the Company and Chief Executive Officer, resulting from certain Company operating expenses of the US parent company such as legal and audit fees that were paid by him on behalf of the Company. This short-term advance bore no interest, and was payable upon demand.

The following table summarized the due from (to) related parties as of September 30, 2021 and December 31, 2020, respectively:

	Related party name	2021			2020
Due from	Qinghai Mining including $1.77 million sale of CIP (Test and Experimental Plant I)	$	4,542,738		$	3,457,488
Due to	Qinghai Mining		(1,027,241	)		(350,438	)
Due from Xi'an Jinzang (NCI of the JV)			-			76,630
Less: bad debt allowance for Qinghai Mining			(3,515,497	)		-
Due from, net (current and noncurrent)		$	-		$	3,183,680
Due to	Dingjia	$	20,888		$	20,762
Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest		1,267,136			-
Due to	Zhongtian Resources		92,269			79,309
Due to	A major shareholder		1,316,591			1,014,591
Due to, total		$	2,696,884		$	1,114,662

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12. DEFERRED INCOME

Deferred income consisted mainly of the government subsidy to the Company’s special projects.

The detail of deferred income for the Company’s special projects at ~~September~~March 3031, ~~2021~~2022 is:

	Government subsidy amount		Project completion date	Useful life in years		~~Accumulated amortization~~	Accumulated amortization		~~Net~~	Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	~~339~~346,~~224~~555	8/1/2013	10	10	$	~~277,033~~$	300,348	$	~~62,191~~$	46,207
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		7778,~~096~~762	5/1/2015	10	10		~~49,470~~	54,477		~~27,626~~	24,285
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,~~541~~575,~~295~~250	1/1/2018	10	10		~~578,222~~	669,481		~~963,703~~	905,769
Project of high value utilization of magnesium-rich waste liquid		~~308~~315,~~385~~050	7/9/2019	10	10		~~253,415~~	262,515		~~54,970~~	52,535
Total	$	2,~~266~~315,~~630~~617				$	~~1,158,140~~$	1,286,821	$	~~1,108,490~~$	1,028,796

The detail of deferred income for the Company’s special projects at December 31, ~~2020~~2021 is:

	Government subsidy amount		Project completion date	Useful life in years		~~Accumulated amortization~~	Accumulated amortization		~~Net~~	Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	~~337~~345,~~170~~060	8/1/2013	10	10	$	~~250,068~~$	290,426	$	~~87,102~~$	54,634
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		7678,~~629~~423	5/1/2015	10	10		~~43,422~~	52,282		~~33,207~~	26,141
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,~~532~~568,~~591~~455	1/1/2018	10	10		~~459,778~~	627,382		~~1,072,813~~	941,073
Project of high value utilization of magnesium-rich waste liquid		~~306~~313,~~518~~691	7/9/2019	10	10		~~246,594~~	259,579		~~59,924~~	54,112
Total	$	2,~~252~~305,~~908~~629				$	~~999,862~~$	1,229,669	$	~~1,253,046~~$	1,075,960

2120

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13. SUBSIDY INCOME

Subsidy income consisted of amortization of deferred income for declared special projects and government’s general incentive fund (recorded as income upon receipt) for the ~~nine and~~ three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, respectively:

	Nine Months Ended September 30
	Three Months Ended March 31,
	2021		2020
	2022		2021
Technology upgrade for using lean ore to produce magnesium sulfate	$	258,~~497~~661	$	238,~~599~~482
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		51,~~795~~968		51,~~364~~928
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		~~115~~39,~~895~~368		~~107~~38,~~270~~554
Project of high value utilization of magnesium-rich waste liquid		51,~~330~~811		41,~~934~~773
Subsidy for resuming work		446		2,559
Total	$	51,808	$	50,737
Total	$	152,963	$	143,726

	Three Months Ended September 30,
	2021		2020
Technology upgrade for using lean ore to produce magnesium sulfate	$	8,500	$	7,956
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		1,931		1,809
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		38,637		36,165
Project of high value utilization of magnesium-rich waste liquid		1,777		1,663
Subsidy for resuming work		446		498
Total	$	51,291	$	48,091

14. DEFERRED TAX ASSETS

As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively, deferred tax assets consisted of the following:

	2021			2020
	2022			2021
Deferred tax asset –NOL of US parent company	$	~~127~~178,~~890~~710		$	47146,~~460~~790
Less: valuation allowance		(127,890	)		(47,460	)
Deferred tax asset –NOL of PRC subsidiaries		784,469			759,517
Less: valuation allowance		(963,179	)		(906,307	)
Deferred tax assets, net	$	-		$	-

The Company recorded a 100% valuation allowance for deferred tax assets due to the uncertainty of its realization.

15. INCOME TAXES

The Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is domiciled. The Company’s PRC subsidiaries file their income tax returns online with PRC tax authorities.

The H.R. 1 (the “Tax Reform”), effective for tax years beginning on or after January 1, 2018, except for certain provisions, resulted in changes to existing U.S. tax law, including various provisions that are expected to impact the Company. The Tax Reform Law reduced the federal corporate tax rate from 35% to 21% effective January 1, 2018 for the U.S. entity of the Company.

The U.S. parent company, was incorporated in the U.S. and has net operating losses (“NOLs”) for income tax purposes, under the 2018 Tax Reform, the NOLs arising in tax years beginning after 2017 may reduce 80% of a taxpayer’s taxable income, and be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The U.S. parent Company has NOLs carry forwards for income taxes of approximately $0.61 90 million at ~~September~~March 3031, ~~2021~~2022. Management believes the realization of benefits from these losses remains uncertain due to the parent Company’s limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance was provided.

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Mid-Heaven BVI is a BVI company, and there is no income tax for companies domiciled in the BVI. Sincerity and Salt-Lake are governed by the Income Tax Law of the PRC concerning privately-run enterprises, which are generally subject to tax at 25% on income reported in the statutory financial statements after appropriate tax adjustments. Mid-Heaven BVI, Sincerity and Salt-Lake do not have any operations, and are not expected to have any operations in the future. Technology and Qinghai Zhongli have a 15% preferential PRC income tax rate.

The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the federal statutory rate on income (loss) before income taxes for the nine months ended September 30, 2021 and 2020, respectively:21

	2021			2020
Tax (benefit) at U.S. federal statutory rates	$	(642,214	)	$	(49,847	)
Foreign income taxed at different rates		(107,007	)		13,815
Tax holiday in PRC		267,516			(34,536	)
Permanent difference		26,699			-
Other		9,909			-
Valuation allowance		611,936			117,685
Tax expense per financial statements	$	166,839		$	47,117

The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the federal statutory rate on income (loss) before income taxes for the three months ended September 30, 2021 and 2020, respectively:

	2021			2020
Tax (credit) at U.S. federal statutory rates	$	(692,624	)	$	(15,258	)
Foreign income taxed at different rates		(125,649	)		5,135
Tax holiday in PRC		314,121			(12,834	)
Permanent difference		11,154			-
Other		15,633			-
Valuation allowance		552,257			44,141
Tax expense per financial statements	$	74,892		$	21,184

The income tax expense for the nine months ended September 30, 2021 and 2020, respectively, consisted of the following:

	2021		2020
Income tax expense – current	$	166,839	$	47,117
Income tax expense – deferred		-		-
Total income tax expense	$	166,839	$	47,117

The income tax expense for the three months ended September 30, 2021 and 2020, respectively, consisted of the following:

	2021		2020
Income tax expense – current	$	74,892	$	21,184
Income tax expense – deferred		-		-
Total income tax expense	$	74,892	$	21,184

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The following is a reconciliation of the difference between the actual provision for income taxes and the provision computed by applying the federal statutory rate on income (loss) before income taxes for the three months ended March 31, 2022 and 2021, respectively:

	2022			2021
Tax (benefit) at U.S. federal statutory rates	$	(53,763	)	$	(23,983	)
Foreign income taxed at different rates		(4,161	)		1,317
Tax holiday in PRC		10,401			(3,290	)
Permanent difference		6,786			3,482
Valuation allowance		40,737			33,932
Tax expense per financial statements	$	-		$	11,458

The income tax expense for the three months ended March 31, 2022 and 2021, respectively, consisted of the following:

	2022		2021
Income tax expense – current	$	-	$	11,458
Income tax expense – deferred		-		-
Total income tax expense	$	-	$	11,458

16. MAJOR CUSTOMERS AND VENDORS

~~The~~For ~~following~~the ~~table~~three ~~sets~~months ~~forth~~ended ~~information~~March as31, to2022, ~~the~~there ~~Company’s~~was ~~customers~~no ~~that~~customer ~~accounted~~accounts ~~for~~more than 10% ~~or more~~ of the Company’s ~~sales~~total ~~for the nine and three months ended September 30, 2021 and 2020~~sales.

Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
Customer	Percentage of Total Sales			Customer	Percentage of Total Sales
A		14	%	A		-	%
B		12	%	B		14	%
C		10	%	C		-	%
D		-	%	D		12	%
E		-	%	E		10	%

The following table sets forth information as to the Company’s customers that accounted for 10% or more of the Company’s sales for the three months ended March 31, 2021.

Three Months Ended September 30, 2021				Three Months Ended September 30, 2020
Three Months Ended March 31, 2021
Customer	Percentage of Total Sales			~~Customer~~	~~Percentage of Total Sales~~
A		3111	%	A		-	%
B		1611	%	B		-	%
C		11	%	C		-	%
D		10	%	D		-	%
E		-	%	E		15	%
F		-	%	F		12	%
G		-	%	G		11	%
H		-	%	H		10	%

The Company had no ~~and one~~ customer that accounted for 10% or more of the Company’s accounts receivable as of ~~September~~March ~~30, 2021 and December~~ 31, ~~2020,~~2022 ~~respectively. The accounts receivable from this customer was $0~~ and ~~$211,134 as of September 30, 2021 and~~ December 31, ~~2020, respectively~~2021.

Technology purchased all of its boron ore raw material of $~~725,052~~0 and $1261,~~188,802~~258 from Qinghai Mining during the ~~nine months ended September 30, 2021 and 2020, respectively. Technology purchased boron ore of $76,212 and $594,276 from Qinghai Mining during the~~ three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, respectively.

Beginning in July 2021, Management of Technology began shifting suppliers to third parties in order to fulfill what management believes will be a short term reliance on ore for the production of boric acid. Management of Technology expects that it will source all material and compounds that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval from the relevant governmental authorities.

~~The~~For ~~following~~the ~~table~~three ~~sets~~months ~~forth~~ended ~~information~~March as31, to2022, ~~the~~there ~~Company’s~~was ~~suppliers~~no ~~that~~supplier ~~accounted~~accounts ~~for~~more than 10% ~~or more~~ of the Company’s total purchases ~~for the nine and three months ended September 30, 2021 and 2020~~.

Nine Months Ended September 30, 2021				Nine Months Ended September 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		39	%	A – Qinghai Mining		41	%
B		24	%	B		16	%
C		15	%	C		-	%
D		12	%	D		10	%
E				E		20	%

Three Months Ended September 30, 2021				Three Months Ended September 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		22	%	A – Qingai Mining		35	%
B		56	%	B		11	%
C		12	%	C		-	%
D		-	%	D		34	%

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The ~~Company~~ ~~had~~following ~~two~~table sets forth information as to the Company’s suppliers that accounted for 10% or more of the Company’s ~~accounts~~total ~~payable~~purchases asfor ofthe ~~September~~three ~~30,~~months ~~2021.~~ended ~~The~~March ~~accounts payable to these suppliers was $77~~31,~~152 and~~ ~~$26,587 as of September 30,~~ 2021~~, respectively~~.

The Company had one supplier that accounted for 10% or more of the Company’s accounts payable as of December 31, 2020. The accounts payable to this supplier was $240,504 as of December 31, 2020.

Three Months Ended March 31, 2021
Supplier	Percentage of Total Purchases
A – Qinghai Mining		24	%
B		13	%
C		12	%
D		11	%

The Company had no supplier that accounted for 10% or more of the Company’s accounts payable as of March 31, 2022. The Company had three suppliers that accounted for 10% or more of the Company’s accounts payable as of December 31, 2021. The accounts payable to these suppliers was $78,480, $25,471 and $18,821 as of December 31, 2021, respectively.

17. STATUTORY RESERVES AND RESTRICTED NET ASSETS

The Company’s ability to pay dividends primarily depends on it receiving funds from its subsidiaries. PRC laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of the subsidiary’s retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with US GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries.

In accordance with the PRC Regulations on Enterprises with Foreign Investment and their articles of association, a foreign-invested enterprise (“FIE”) established in the PRC is required to provide statutory reserves, which are appropriated from net profit as reported in the FIE’s PRC statutory accounts. An FIE is required to allocate at least 10% of its annual after-tax profit to the surplus reserve until such reserve reaches 50% of its respective registered capital based on the FIE’s PRC statutory accounts. Appropriations to other funds are at the discretion of the BOD for all FIEs. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. Additionally, shareholders of an FIE are required to contribute capital to satisfy the registered capital requirement of the FIE. Until such contribution of capital is satisfied, the FIE is not allowed to repatriate profits to its shareholders, unless otherwise approved by the State Administration of Foreign Exchange. Sincerity, incorporated on July 9, 2018 in China as a wholly foreign-owned enterprise (“WFOE”) with registered capital of $1.00 million, has 10 years from the incorporation date to fulfill the registered capital requirement.

Additionally, in accordance with the Company Laws of the PRC, a domestic enterprise is required to provide surplus reserve at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to have a discretionary surplus reserve, at the discretion of the BOD, from the profits determined in accordance with the enterprise’s PRC statutory accounts. Appropriation to such reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each year. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. Technology was established as domestic enterprises and therefore are subject to the above-mentioned restrictions on distributable profits.

As a result of these PRC laws and regulations that require annual appropriations of 10% of after-tax income to be set aside prior to payment of dividends as general reserve fund, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company as a dividend.

According to Administrative Measures for the Collection and Utilization of Enterprise Work Safety Funds issued by the PRC Ministry of Finance and the State Administration of Work Safety, for the companies with dangerous goods production or storage, the company is required to make a special reserve for the use of enhancing and improving its safe production conditions. Under PRC GAAP, the reserve is recorded as cost of sales; however, under US GAAP, since the expense has not been incurred and the Company already recorded cost of sales for safety related expenses when incurred, this special reserve was recorded as an appropriation of its after-tax income. At September 30, 2021, the Company had $138,135 production safety related reserve, which was included in $243,905 statutory reserve in the balance sheet. The reserve is calculated at regressive rates levied on revenue in excess of specific amounts as follows: 23

Annual revenue amount	Reserve ratio
Less than RMB 10 million ($1.41 million)	4.0% of annual revenue
Over RMB 10 million ($1.41 million), but less than RMB 100 million ($14.13 million)	2.0% of annual revenue
Over RMB 100 million ($14.13 million), but less than RMB 1 billion ($141.25 million)	0.5% of annual revenue
Over RMB 1 billion ($141.25 million)	0.2% of annual revenue

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According to Administrative Measures for the Collection and Utilization of Enterprise Work Safety Funds issued by the PRC Ministry of Finance and the State Administration of Work Safety, for the companies with dangerous goods production or storage, the company is required to make a special reserve for the use of enhancing and improving its safe production conditions. Under PRC GAAP, the reserve is recorded as cost of sales; however, under US GAAP, since the expense has not been incurred and the Company already recorded cost of sales for safety related expenses when incurred, this special reserve was recorded as an appropriation of its after-tax income. At March 31, 2022, the Company had $179,804 production safety related reserve, which was included in $282,736 statutory reserve in the balance sheet. The reserve is calculated at regressive rates levied on revenue in excess of specific amounts as follows:

Annual revenue amount		Reserve ratio
Less than RMB 10 million ($1.41 million)		4.0% of annual revenue
Over RMB 10 million ($1.41 million), but less than RMB 100 million ($14.13 million)		2.0% of annual revenue
Over RMB 100 million ($14.13 million), but less than RMB 1 billion ($141.25 million)		0.5% of annual revenue
Over RMB 1 billion ($141.25 million)		0.2% of annual revenue

18. COMMITMENTS

Capital Contribution

Both Sincerity and Salt-Lake were incorporated in China in 2018 with registered capital of $1.00 million and $0.88 million, respectively, they have 10 years from the incorporation date to fulfill the registered capital requirement. Under PRC company law, registered capital must be used in the operations of the domestic company within its approved business scope.

19. CONTINGENCIES

The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments in China and foreign currency exchange. The Company’s results may be adversely affected by changes in PRC government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad and rates and methods of taxation, among other things.

The Company’s sales, purchases and expense transactions in China are denominated in RMB and all of the Company’s assets and liabilities in China are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current PRC law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation in order to affect the remittance.

20. SUBSEQUENT EVENTS

The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company has ~~the~~no ~~following~~ material subsequent event: other than as disclosed in Notes 1 and 2 above.

On November 4, 2021, Mr. Jimin Zhang purchased a total of 106,001,971 shares of common stock of the Company at a purchase price of $.001 per share (80,625,099 shares from Mao Zhang, 22,165,012 shares from Jian Zhang, and 3,211,860 shares from Ying Zhao). After giving effect to the purchases, Mr. Jimin Zhang now holds, directly or indirectly, a total of 152,769,779 shares of Common Stock which represents approximately 82% of the Company’s issued and outstanding Common Stock.24

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Safe Harbor Declaration

The comments made throughout this Annual Report should be read in conjunction with our Financial Statements and the Notes thereto, and other financial information appearing elsewhere in this document. In addition to historical information, the following discussion and other parts of this document contain certain forward-looking information. When used in this discussion, the words, “believes,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from projected results, due to a number of factors beyond our control. We do not undertake to publicly update or revise any of our forward-looking statements, even if experience or future changes show that the indicated results or events will not be realized. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Readers are also urged to carefully review and consider our discussions regarding the various factors that affect our business, which are described in this section and elsewhere in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The Company currently ~~produces~~leases it facilities to produce boric acid in the Peoples Republic of China (“PRC”) and plans to expand its manufacturing facilities through a Joint Venture (“JV”) to produce up to 30,000 tonnes of lithium carbonate annually for the electric vehicle battery market in China, subject to funding.

On December 31, 2018 (the "Closing Date"), we entered into a Share Exchange Agreement and Plan of Reorganization, as amended January 24, 2019 (the “Share Exchange Agreement”) with Mid-Heaven Sincerity International Resources Investment Co., Ltd (Mid-heaven BVI) and its shareholders Mao Zhang, Jian Zhang, and Ying Zhao, constituting all of the shareholders of Mid-heaven BVI (the “Mid-heaven Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the shareholders of Mid-heaven BVI delivered all of the issued and outstanding shares of capital stock of Mid-Heaven BVI to SmartHeat, for 106,001,971 shares of our Common Stock. Mid-heaven BVI, through two subsidiaries, Qinghai Mid-Heaven Sincerity Technology Co., Ltd (“Sincerity”) and Qinghai Mid-Heaven Sincerity Salt-Lake R&D Co., Ltd (“Salt-Lake”) owns 100% of Qing Hai Mid-Heaven Boron & Lithium Technology Company, Ltd. (“Technology”). On November 4, 2021, Mr. Jimin Zhang purchased a total of 106,001,971 shares of common stock of the Company at a purchase price of $.001 per share (80,625,099 shares from Mao Zhang, 22,165,012 shares from Jian Zhang, and 3,211,860 shares from Ying Zhao). After giving effect to the purchases, Mr. Jimin Zhang now holds, directly or indirectly, a total of 152,769,779 shares of Common Stock which represents approximately 82% of the Company’s issued and outstanding Common Stock.

The main operating entity, Technology was incorporated on December 18, 2018. The business of Technology was carved out of the business of Qinghai Zhongtian Boron & Lithium Mining Co., Ltd (“Qinghai Mining”) on December 20, 2018. Qinghai Mining was founded March 6, 2001, and ~~manufactures~~manufactured and ~~wholesales~~sold boric acid and related compounds for industrial and consumer usage. Technology obtains its brine exclusively from Qinghai Mining and currently ~~processes~~leases ~~boric~~its ~~acid~~facilities byto ~~crushing~~third ~~and~~parties ~~processing~~to ~~ore~~produce ~~from~~boric ~~third~~acid ~~party~~and ~~suppliers~~related compounds. . Technology previously purchased ore from Qinghai Mining; however, ~~Technology~~Qinghai ~~recently~~Mining ~~shifted~~ceased ~~suppliers~~ore production due to ~~third~~environmental ~~parties~~protection inrestriction from the government. In order to ~~fulfill~~maintain ~~what~~the ~~management~~normal ~~believes~~operation ~~will~~of bethe aCompany; ~~short~~in ~~term~~July ~~reliance~~2021, onTechnology ~~ore~~Company ~~for~~entered ~~the~~a ~~production~~processing ofcontract to provide boric acid. ~~Management~~commissioned processing service at processing fee of RMB 2,000 ($308) per ton with borax provided by the customer. On August 31, 2021, two parties signed the supplement agreement, the final settlement price increased to RMB 2450 ($375) per ton due to increased costs. In September 2021, Technology ~~expects~~Company ~~that~~entered ita ~~will~~new ~~source~~agreement ~~all~~with ~~material~~the ~~and~~same ~~compounds~~customer, ~~that~~the ~~will~~Company bewould ~~used~~no ~~for~~longer ~~both~~provide the processing services and agreed to lease its boric acid manufacturing facility, equipment, auxiliary equipment, necessary utilities, and ~~lithium~~workers ~~carbonate~~to ~~production~~produce ~~from~~the boric acid. The customer is required to pay RMB 400,000 ($63,000) per month for facility usage fee to the Company, or RMB 500,000 ($78,700) per month if the customer wants to use the Company’s low-grade abandoned slag. In April 2022, Technology, together with Qinghai Mining ~~once~~entered ~~the~~a ~~brine~~new ~~processing~~Contact ~~process~~Cooperation ~~receives~~Agreement ~~approval~~with a contractor (or lessee) for leasing out manufacturing facility, equipment, auxiliary equipment and necessary utilities for a term of five years from April 1, 2022 to March 31, 2027, monthly leasing fee of RMB 500,000 ($78,700); of which, RMB 200,000 ($31,500) pays to Technology, and RMB 300,000 ($47,200) pays to Qinghai Mining. Technology owns the ~~relevant~~equipment ~~governmental~~and ~~authorities~~machinery, Qinghai Mining owns the ~~Company~~land ~~expected~~and toplant ~~receive~~and will provide the ~~approval~~silicic inacid and slag to the ~~end~~contractor ofat ~~2021~~no additional charge.

In December 2019, a novel strain of coronavirus (COVID-19) was reported and the World Health Organization declared the outbreak to constitute a “Public Health Emergency of International Concern.” This contagious disease outbreak, which continues to spread to additional countries, and disrupts supply chains and affecting production and sales across a range of industries as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak. The COVID-19 outbreak impacted the Company’s operations for the first quarter of 2020. However, as a result of PRC government’s effort on disease control, most cities in China were reopened in April 2020, the outbreak in China is under the control, and the Company’s production and sales has been gradually increasing since April 2020. Since April 2020 and to date, there were some new COVID-19 cases discovered in a few provinces of China, and we do not believe the number of new cases is significant to our operations due to PRC government’s strict control but have noted its impact where applicable in this report.25

On March 27, 2020 (PRC time), Technology entered into an Investment Cooperation Agreement, Memorandum of Cooperation and Licensing Agreement with Xi'an Jinzang Membrane Environmental Protection Technology Co., Ltd. (“Xi’an Jinzang”) to produce up to 30,000 tonnes of battery grade lithium carbonate annually, subject to funding. On April 15, 2020, the parties formed a JV company Qinghai Zhonglixinmo Technology Co., Ltd (“Qinghai Zhongli” or JV) to process brine supplied by Technology. Technology owns 51% of the JV and Xi’ Jinzang owns the remaining 49%. The JV cooperation agreement calls for a capital contribution of RMB 140 million ($19,746,000), to be paid in three phases according to the project construction progress: RMB 36 million ($5,077,000) to be paid within 10 days from the date of registration and establishment of the JV, RMB 72 million ($10,155,000) to be paid before July 31, 2020, and RMB 32 million ($4,513,000) to be paid before October 31,2020. The JV’s shareholders are required to contribute capital in accordance with their respective shareholding ratio. The capital contribution amount and timing can be adjusted upon both parties’ mutual consent. Each party made an initial capital contribution of RMB 5 million ($0.71 million) in April 2020. As of the date of this report, the parties have not made all capital contributions on the dates due, pending financing by the Company, as the capital contribution amount and timing can be adjusted anytime upon both parties’ mutual consent. During the construction and operation of the project, all parties agree to actively raise construction funds by means of bank loans, self-owned funds, etc. if the funds are not raised in time, the term of paid in capital can be extended accordingly upon agreement of all parties.

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In ~~order~~December to2019, ~~maintain~~a ~~the~~novel ~~normal~~strain ~~operation~~ of coronavirus (COVID-19) was reported and the ~~Company;~~World inHealth ~~July~~Organization ~~2021,~~declared ~~Technology~~the ~~Company~~outbreak ~~entered~~to constitute a ~~processing~~“Public ~~contract~~Health toEmergency ~~provide~~of ~~boric~~International ~~acid~~Concern.” ~~commissioned~~This ~~processing~~contagious ~~service~~disease atoutbreak, ~~processing~~which ~~fee~~continues ofto ~~RMB~~spread 2to additional countries,~~000~~ ~~($308)~~and ~~per~~disrupts ~~ton~~supply ~~with~~chains ~~borax~~and ~~provided~~affecting byproduction ~~the~~and ~~customer.~~sales Inacross ~~September~~a ~~2021,~~range ~~Technology~~of ~~Company~~industries ~~entered~~as a ~~new~~result ~~agreement~~of quarantines, facility closures, and travel and logistics restrictions in connection with the ~~same~~outbreak. ~~customer,~~The COVID-19 outbreak impacted the Company’s ~~provided~~operations ~~boric~~for ~~acid~~the ~~manufacturing~~first ~~facility~~quarter of 2020. However, ~~equipment~~as a result of PRC government’s effort on disease control, ~~auxiliary~~most ~~equipment~~cities in China were reopened in April 2020, ~~necessary~~the ~~utilities~~outbreak in China is under the control, and ~~workers~~the toCompany’s ~~the~~production ~~customer~~and ~~for~~sales ~~them~~has been gradually increasing since April 2020. Since April 2020 to ~~produce~~January ~~the~~2022, ~~boric~~there ~~acid~~were bysome ~~themselves.~~new ~~The~~COVID-19 ~~customer~~cases ~~was~~discovered ~~required~~in toa ~~pay~~few ~~RMB~~provinces ~~400~~of China,~~000~~ ~~($61~~however,~~680)~~ ~~per~~the ~~month~~number ~~for~~of ~~facility~~new ~~usage~~cases ~~fee~~are not significant due to ~~the~~PRC ~~Company,~~government’s orstrict ~~RMB~~control. ~~500~~Since February 2022,~~000~~ ~~($77~~the COVID-19 case bounced again in many cities of China; however,~~090)~~ ~~per~~there ~~month~~are ifonly ~~the~~a ~~customer~~few ~~wants~~new tocases ~~use~~in Qinghai Province which does not impact the Company’s ~~low-grade abandoned slag~~operations.

Going Concern

As reflected in the accompanying CFS, the Company had net loss of $30.1725 million and $0.2812 million ~~for~~ ~~the nine months ended September 30, 2021 and 2020, respectively; the Company had net loss of $3.35 million and $88,035~~ for the three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, respectively; the Company stopped produce and selling boron acid starting from September 2021 due to decreased mine production resulting from rectifying the mines in the area by the authority for environment protection, which raise substantial doubt about the Company’s ability to continue as a going concern.

Because the Company ceased obtaining ore for the production of boric acid from its affiliate, the Company leased out the boric acid manufacturing facility, equipment and auxiliary equipment for a monthly fee in order to provide interim cash flow and maintain revenues from boric acid operations. The Company plans to produce lithium carbonate that can be sold for the electric vehicle battery use and is currently at test production stage. The Company expects to generate additional revenues and cash flow once it receives government approval of the official production process, ~~which~~and isthe ~~expected by~~Company ~~late~~will ~~fourth~~source ~~quarter~~all ~~2021~~material orthat ~~early~~will ~~first~~be ~~quarter~~used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval from the relevant governmental authorities, the Company submitted application to Environment Protection Department in the beginning of 2022 and is currently under the review. Management also intends to raise additional funds by way of a private or public offerings, by obtaining loans from banks or form other sources of debt or equity capital. While the Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

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Related Party Transactions

Due from related parties, net

Technology purchased raw material boron rock from Qinghai Mining (owned by three former major shareholders of the Company); in addition, Technology received no-interest short-term advances from Qinghai Mining from time to time for daily operational needs. As of ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, due from Qinghai Mining was $0 (a 100% bad debt allowance was recorded for due from Qinghai Mining of $4.5 million due to the concern of its ability to repay the debt because it ceased production of boron ore sold to us) ~~and $3~~.11 ~~million, respectively (the net amount of intercompany transactions between Technology and~~ Qinghai ~~Mining). Qinghai~~ Technology purchased boron ore at a cost of $~~725,052~~0 and $1261,~~188,802~~258 from Qinghai Mining during the ~~nine months ended September 30, 2021 and 2020, respectively. Qinghai Technology purchased boron ore at a cost of $76,212 and $594,276 from Qinghai Mining during the~~ three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, respectively.

Due to related parties

Technology uses equipment that belongs to Qinghai Province Dachaidan Zhongtian Resources Development Co., Ltd (“Zhongtian Resources”) for production which is owned by our former Chairman and his brother who ~~are~~were two major shareholders of the Company in 2021. The depreciation of these fixed assets had an impact on the production costs of boric acid of the Company and was included in the Company’s cost of sales. The depreciation of these fixed assets for the ~~nine~~three months ended ~~September~~March 3031, ~~2021and~~2022 ~~2020 was $12,504~~ and ~~$19,547,~~2021 ~~respectively. The depreciation of these fixed assets for the three months ended September 30, 2021and 2020~~ was $2,~~382~~427 and $65,~~927~~586, respectively. ~~Due~~Amount of due to Zhongtian Resources resulting from using its equipment and payment of worker’s compensation made by Zhongtian Resource for Technology was $9296,~~269~~691 and $7996,~~309~~274 at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively; however, Technology, Qinghai Mining and Zhongtian agreed to use the creditor’s rights of Technology to Qinghai Mining to offset the debts of Technology to Zhongtian, accordingly, due to Zhongtian Resource was $0 as of March 31, 2022 and December 31, 2021.

28Technology sold boric acid to Qinghai Dingjia Zhixin Trading Co., Ltd (“Dingjia”) which is 90% owned by the son of the Company’s major shareholder and Chairman. For the three months ended March 31, 2022 and 2021, the Company’s sales to Dingjia was $0 and $0, respectively. At March 31, 2022 and December 31, 2021, outstanding payable to Dingjia was $21,340 and $21,248, respectively; however, Technology, Qinghai Mining and Dingjia agreed to use the creditor’s rights of Technology to Qinghai Mining to offset the debts of Technology to Dingjia, accordingly, due to Dingjia was $0 as of March 31, 2022 and December 31, 2021.

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($630,100) with an annual interest of 6.8% from Xi’an Jinzang. The funds were used for the production and operation activities and construction of Adsorption Station of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($393,812) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($236,287) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 4.0 million ($630,100) at March 31, 2022; in addition, the Company borrowed additional RMB 2 million ($315,050) with same terms during the second quarter of 2021 under the oral agreement. The Company borrowed additional RMB 2 million ($315,050) with the same terms during the third quarter of 2021 under the oral agreement. In January and February 2022, the Company entered two borrowing agreements with same lender for RMB 1 million ($157,500) with maturity date on July 30, 2022 and RMB 2 million ($315,000) with maturity date on December 31, 2022, respectively, both loans have a 10% annual interest rate. The Company only received RMB 2 million ($315,000) during the first quarter of 2022. The Company recorded $80,935 and $55,679 capitalized interest on CIP of Adsorption Station Project as of March 31, 2022 and December 31, 2021.

In addition, at March 31, 2022 and December 31, 2021, the Company had $1,510,591 and $1,473,591 due to a major shareholder and Chief Executive Officer of the Company, resulting from certain of the Company’s operating expenses such as legal and audit fees that were paid by him on behalf of the Company. This short-term advance bore no interest, and payable upon demand.

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~~Technology~~The ~~sold~~following ~~boric~~table ~~acid~~summarized tothe ~~Qinghai~~due ~~Dingjia~~from ~~Zhixin Trading Co., Ltd~~ (~~“Dingjia”~~to) ~~which~~related isparties ~~90%~~as ~~owned by the son~~ of ~~the~~March ~~Company’s major shareholder and Chairman. For the nine months ended September 30~~31, ~~2021~~2022 and 2020, the Company’s sales to Dingjia was $0 and $202,130, respectively. For the three months ended September 30, 2021 and 2020, the Company’s sales to Dingjia was $0 and $100,570, respectively. At September 30, 2021 and December 31, ~~2020~~2021, ~~outstanding payable to Dingjia was $20,888 and $20,762,~~ respectively.:

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($619,185) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities and construction of Adsorption Station of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($380,442) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($228,266) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 2.5 million ($380,442) at June 30, 2021; in addition, the Company borrowed additional RMB 2 million ($309,593) with same terms during the second quarter of 2021 under the oral agreement. The Company borrowed additional RMB 2 million ($308,385) with the same terms during the third quarter of 2021 under the oral agreement. The Company recorded $33,595 capitalized interest on CIP of Adsorption Station Project as of September 30, 2021.

	Related party name	2022			2021
Due from	Qinghai Mining including $1.77 million sale of CIP (Test and Experimental Plant I)	$	5,610,394		$	5,567,440
Due to	Qinghai Mining		(1,071,196	)		(1,047,820	)
Less: bad debt allowance			(4,539,198	)		(4,519,619	)
Due from, net (current and noncurrent)		$	-		$	-

Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest	$	1,656,185		$	1,310,444
Due to	Senior officer		1,431			499
Due to	A major shareholder (CEO)		1,510,591			1,473,591
Due to, total		$	3,168,207		$	2,758,534

In addition, at September 30, 2021 and December 31, 2020, the Company had $1,316,591 and $1,014,591 due to another major shareholder and Chief Executive Officer of the Company, resulting from certain of the Company’s operating expenses such as legal and audit fees that were paid by him on behalf of the Company. This short-term advance bore no interest, and payable upon demand.

The following table summarized the due from (to) related parties as of September 30, 2021 and December 31, 2020, respectively:

	Related party name	2021			2020
Due from	Qinghai Mining including $1.77 million sale of CIP (Test and Experimental Plant I)	$	4,542,738		$	3,457,488
Due to	Qinghai Mining		(1,027,241	)		(350,438	)
Due from Xi'an Jinzang (NCI of the JV)			-			76,630
Bad debt allowance			(3,515,497	)		-
Due from, net (current and noncurrent)		$	-		$	3,183,680
Due to	Dingjia	$	20,888		$	20,762
Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest		1,267,136			-
Due to	Zhongtian Resources		92,269			79,309
Due to	A major shareholder (CEO)		1,316,591			1,014,591
Due to, total		$	2,696,884		$	1,114,662

Significant Accounting Policies

While our significant accounting policies are more fully described in Note 2 to our CFS, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.

Basis of Presentation

Our CFS are prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP.

Principles of Consolidation

For the ~~nine and~~ three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021, the accompanying CFS include the accounts of the Company’s US parent, and Mid-heaven BVI and its subsidiaries, Sincerity, Salt-Lake, Technology and Qinghai Zhongli, which are collectively referred to as the “Company.” All significant intercompany accounts and transactions were eliminated in consolidation.

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Use of Estimates

In preparing financial statements in conformity with US 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 the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for obsolete and slow-moving inventories. Actual results could differ from those estimates.

Accounts Receivable

We maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, we had bad debt allowance for accounts receivable of $1920,~~891~~321 and $1920,~~770~~233 at ~~September~~March 3031, ~~2021~~2022 and December 31, ~~2020~~2021, respectively.

Revenue Recognition

The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon receipts of the goods by customer. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government. VAT taxes are not affected by the income tax holiday. 28

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Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs typically upon receipts of the goods by customers. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government. VAT taxes are not affected by the income tax holiday. The Company also temporarily provided boric acid commissioned processing service with boron material provided by the customer; the Company recognizes revenue when the final products are picked up by the customer at the Company’s warehouse, where the control transfers to the customer.

Deferred Income

Deferred income consists primarily of government grants and subsidies for supporting the Company’s technology innovation and transformation of boric acid, lithium and magnesium sulfate projects. The Company used most of the subsidies to purchase machinery and equipment. Deferred income is amortized to revenue (other income) over the life of the assets for which the grant and subsidy was used for. Subsidies for declared project fund require government inspection to ensure proper use of the funds for the designated project.

Foreign Currency Translation and Comprehensive Income (Loss)

The accounts of the US parent company are maintained in USD. The functional currency of the Company’s China subsidiaries is the Chinese Yuan Renminbi (“RMB”). The accounts of the China subsidiaries were translated into USD in accordance with FASB ASC Topic 830, “Foreign Currency Matters.” According to FASB ASC Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity was translated at the historical rates and statement of operations items were translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with FASB ASC Topic 220, “Comprehensive Income.”

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Noncontrolling Interests

The Company follows FASB ASC Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs (previously referred to as minority interests) be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to NCI even when such allocation might result in a deficit balance.

The net income (loss) attributed to NCIs was separately designated in the accompanying statements of operation and comprehensive income (loss). Losses attributable to NCIs in a subsidiary may exceed an NCIs 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 NCIs balance.

On April 15, 2020, Technology and Xi’an Jinzang formed a JV company Qinghai Zhongli to process brine supplied by Technology. Technology owns 51% of the JV and Xi’an Jinzang owns the remaining 49%. During the ~~nine and~~ three months ended ~~September~~March 3031, ~~2021,~~2022 ~~the Company had loss of $58,417~~ and ~~$18~~2021,~~497~~ ~~that were attributable to~~ the ~~NCI. During the nine and three months ended September 30, 2020, the~~ Company had loss of $87,~~554~~989 and $59,~~809~~933 that were attributable to the NCI.

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis. As a smaller reporting company, the standard will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its CFS.

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Results of Operations

~~Nine~~Three Months Ended ~~September~~ 30March 31, ~~2021~~2022 Compared to ~~Nine~~ Three Months Ended ~~September~~ 30March 31, ~~2020~~2021

The following table sets forth the consolidated results of our operations for the periods indicated as a percentage of net sales, certain columns may not add due to rounding.

	2021			% of Sales			2020			% of Sales
	2022			% of Sales			2021			% of Sales
Sales	$	5,464,652					$	5,660,182
Boronic acid sales	$	-			-	%	$	1,828,380			100.0	%
Cost of sales		4,205,605			77.0	%		5,031,305			88.9	%
Boronic acid costs		-			-	%		1,696,118			92.8	%
Gross profit		~~1,259,047~~-			~~23.0~~-	%		~~628~~132,~~877~~262			117.12	%
Selling expenses		~~53,418~~-			~~1.0~~-	%		~~125~~23,~~407~~055			21.23	%
General and administrative expenses		4308,~~410,803~~648			~~80.7~~-	%		~~922~~274,~~681~~371			1615.30	%
Total operating expenses		4308,~~464,221~~648			~~81.7~~-	%		1297,~~048,088~~426			1816.53	%
Income (loss) from operations		(3308,~~205,174~~648	)		~~(58.7~~-	)%		(~~419~~165,~~211~~164	)		(79.41	)%
Other income		~~147~~52,~~010~~636			~~2.7~~-	%		~~181~~50,~~845~~965			3.2.8	%
Income (loss) before income taxes		(3256,~~058,164~~012	)		~~(56.0~~-	)%		(~~237~~114,~~366~~199	)		(46.23	)%
Income tax expense		~~166,839~~-			~~3.0~~-	%		4711,~~117~~458			0.86	%
Income (loss) before noncontrolling interest		(3256,~~225,003~~012	)		~~(59.0~~-	)%		(~~284~~125,~~483~~657	)		(56.09	)%
Less: loss attributable to noncontrolling interest		(587,~~417~~989	)		~~(1.1~~-	)%		(89,~~554~~933	)		(0.16	)%
Net loss to the Company	$	(3248,~~166,586~~023	)		~~(57.9~~-	)%	$	(~~275~~115,~~929~~724	)		(46.93	)%

~~Sales~~Revenue

~~Sales~~Revenue for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 was $~~5,464,652~~0 and $51,~~660~~828,~~182~~380, respectively, a decrease of $~~195~~1,~~530~~828,380 or ~~3.5~~100%. ~~The~~Starting ~~decrease~~from inthe ~~sales~~third ~~was~~quarter ~~mainly~~2021, we were no longer produce the boron acid but only providing the processing service; starting the fourth quarter 2021, we stopped the ore processing due to anincreased ~~26%~~cost ~~decrease~~but inonly ~~sales~~leasing ~~quantity,~~our ~~which~~facilities ~~was~~out ~~partly~~to ~~offset~~a third party who imports boron ore and process it for sale by themselves. However, due to the Chinese New Year holiday and the lessee did not actually use the Company’s facility to produce, the Company did not charge any leasing revenue for the three months ended March 31, 2022. In April 2022, Technology, together with Qinghai Mining entered a 4%new ~~increase~~Contact inCooperation ~~average~~Agreement ~~unit~~with ~~selling~~a ~~price~~contractor (or lessee) for leasing out manufacturing facility, equipment, auxiliary equipment and necessary utilities for a 18term of five years from April 1, 2022 to March 31, 2027, monthly leasing fee of RMB 500,000 ($78,700); of which, RMB 200,000 ($31,500) pays to Technology, and RMB 300,000 ($47,200) pays to Qinghai Mining.5% ~~increase~~Technology ~~due~~owns the equipment and machinery, Qinghai Mining owns the land and plant and will provide the silicic acid and slag to ~~change~~the incontractor ~~exchange~~at ~~rate~~no additional charge.

Cost of ~~sales~~revenue

Cost of ~~sales~~revenue (“~~COS~~COR”) for the ~~nine~~three months ended ~~September 30~~March31, ~~2021~~2022 and ~~2020~~2021 was $~~4,205,605~~0 and $51,~~031~~696,~~305~~118, respectively, a decrease of $~~825~~1,~~700~~696,118 or 16100.40%. The decrease was mainly due to decreased sales and production. The ~~COS~~overall COR as a percentage of ~~sales~~revenue was ~~77.~~0% for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 compared with 8892.98% for ~~2020~~2021. The decrease in COS as a percentage of sales was mainly due to decreased average cost of production. In the comparable period of 2020, we had abnormal high COS as a percentage of sales; due to COVID19 outbreak, our factory was reopened one month later than originally planned, and we did not resume the production one week after the factory reopened due to the drought of master liquid pool resulting from the longer period of shutdown of the machine, we spent additional days and had extra acid and mineral consumption to cultivate the concentration level of master liquid pool.

~~Gross profit~~30

Gross profit for the nine months ended September 30, 2021 and 2020 was $1,259,047 and $628,877, respectively, an increase of $630,170 or 100.2%. The profit margin was 23.0% for the nine months ended September 30, 2021 compared to 11.1% for the nine months ended September 30, 2020, the increase in profit margin was mainly due to decreased production cost as described above.

Operating expenses

Selling expenses consist mainly of salespersons’ salaries and freight out. Selling expense were $53,418 for the nine months ended September 30, 2021, compared to $125,407 for the nine months ended September 30, 2020, a decrease of $71,989 or 57.4%, mainly resulting from decreased salespersons’ salaries by $54,620 resulting from restructure of our sales department for improving its efficiency and cost-saving and decreased freights expense by $18,900, which was partly offset by increased other selling expenses by $1,530.

General and administrative expenses consist mainly of salary, R&D, office, welfare, business meeting, maintenance, bad debt expense and utilities. General and administrative expenses were $4,410,803 for the nine months ended September 30, 2021, compared to $922,681 for the nine months ended September 30 2020, a decrease of $3,488,122 or 378.0%, mainly resulting from increased bad debt expense by $3,523,085, which was partly offset by decreased maintenance fee by $44,080.

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Other income

Other income was $147,010 for the nine months ended September 30, 2021, compared to $181,845 for the nine months ended September 30, 2020, a decrease of $34,835 or 19.2%. For the nine months ended September 30, 2021, other income mainly consisted of subsidy income of $152,963, interest income of $2,998, but offset with financial expense of $3,914 and other expenses of $5,037. For the nine months ended September 30, 2020, other income mainly consisted of subsidy income of $143,726 and other income of $39,651.

Government provides grants and subsidies to support the Company’s technology innovation and transformation of boric acid, lithium and magnesium sulfate projects. The Company uses most of the subsidies to purchase machinery and equipment, which is amortized to revenue (other income) over the life of the assets for which the grant and subsidy was used for. Subsidies for declared project fund require government inspection to ensure proper use of the funds for the designated project.

Net loss

We had net loss of $3,166,586 for the nine months ended September 30, 2021, compared to net loss of $275,929 for the nine months ended September 30, 2020, an increase in net loss by $2,890,657 or 1,047.6%. The increase in our net loss mainly resulted from increased bad debt expense described above.

Results of Operations

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

The following table sets forth the consolidated results of our operations for the periods indicated as a percentage of net sales, certain columns may not add due to rounding.

	2021			% of Sales			2020			% of Sales
Sales	$	1,456,803					$	2,330,292
Cost of sales		912,679			62.6	%		2,126,770			91.3	%
Gross profit		544,124			37.4	%		203,522			8.7	%
Selling expenses		7,361			0.5	%		39,858			1.7	%
General and administrative expenses		3,878,850			266.3	%		308,686			13.2	%
Total operating expenses		3,886,211			266.8	%		348,544			14.9	%
Loss from operations		(3,342,087	)		(229.4	)%		(145,022	)		(6.2	)%
Other income		43,878			3.0	%		72,362			3.1	%
Loss before income taxes		(3,298,209	)		(226.4	)%		(72,660	)		(3.1	)%
Income tax expense		74,892			5.1	%		21,184			0.9	%
Loss before noncontrolling interest		(3,373,101	)		(231.5	)%		(93,844	)		(4.0	)%
Less: loss attributable to noncontrolling interest		(18,497	)		(1.3	)%		(5,809	)		(0.2	)%
Net loss	$	(3,354,604	)		(230.2	)%	$	(88,035	)		(3.8	)%

Sales

Sales for the three months ended September 30, 2021 and 2020 was $1,456,803 and $2,330,292, respectively, a decrease of $873,489 or 37.5%. The decrease in sales was mainly due to a decreased sales quantity of 76.0% resulting from 1) less boric acid inventory carried over from prior periods, and 2) temporary decreased mine production resulting from rectifying the mines in the area by the authority for environment protection, 3) In July and August 2021, the remaining stock of boric acid was sold out, which resulting in September 2021, no boric acid was available for sale; however, the decrease in sales quantity was partly offset by a 19.0% increase in average unit selling price and a 19.5% increase due to change in exchange rate.

Cost of sales

Cost of sales (“COS”) for the three months ended September 30, 2021 and 2020 was $912,679 and $2,126,770, respectively, a decrease of $1,214,091 or 57.1%. The decrease was mainly due to decreased sales and production. The COS as a percentage of sales was 62.6% for the three months ended September 30, 2021 compared with 91.3% for 2020. The decrease in COS as a percentage of sales was mainly due to decreased average cost of production. From July to September 2020, we started acquiring boron rock from Tibet to produce boric acid to increase our productivity. The Tibet boron rock has higher grade of the mineral deposit and thus the high unit cost, which resulted the increased raw material cost of boric acid production for the quarter ending September 30, 2020; we stopped purchasing boron rock form Tibet from October 2020 due to its higher cost.

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Gross profit

Gross profit for the three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021 was $~~544,124~~0 and $~~203~~132,~~522~~262, respectively, an ~~increase~~decrease of $~~340~~132,~~602~~262 or ~~167~~100.40%. The blended profit margin was ~~37.4~~0% for the three months ended ~~September~~March 3031, ~~2021~~2022 compared to 8.7.2% for the three months ended ~~September~~March 3031, ~~2020, the increase in profit margin was mainly due to decreased production cost as described above~~2021.

Operating expenses

Selling expenses consist mainly of salespersons’ salaries and freight out. Selling expense were $~~7,361~~0 for the three months ended ~~September~~March 3031, ~~2021~~2022, compared to $3923,~~858~~055 for the three months ended ~~September~~March 3031, ~~2020~~2021, a decrease of $3223,~~497~~055 or 81100.50%, mainly ~~resulting~~due ~~from~~to ~~decreased~~no ~~freight expense by $19,140, decreased~~ sales ~~person~~incurred ~~salary~~during ~~expense~~the bythree ~~$11,700~~months ~~and~~ended ~~decreased~~Mach ~~other selling expenses by $1~~31,~~660~~ 2022.

General and administrative expenses consist mainly of salary, R&D, office, welfare, business meeting, maintenance, bad debt expense and utilities. General and administrative expenses were $3308,~~878,850~~648 for the three months ended ~~September~~March 3031, ~~2021~~2022, compared to $~~308~~274,~~686~~371 for the three months ended ~~September~~March 3031, ~~2020~~2021, an increase of $334,~~570,164~~277 or ~~1,256~~12.65%, mainly resulting from increased ~~bad~~maintenance ~~debt~~ expense by $354,~~523,085~~170 ~~for due from Qinghai Mining due to its stoppage of boron ore production~~ which itwas ~~used~~partly tooffset ~~sell to us, and it caused concern of its ability to generate revenue and make repayment to us, increased business entertainment expense~~ by ~~$5,160,~~decreased ~~increased~~vehicle ~~advisory~~ expense by $86,~~740~~630, ~~increased~~decreased ~~vehicle~~business management expense by $105,~~390~~100 and ~~increased~~ other G&A expenses by $228,~~740~~150.

Other income

Other income was $4352,~~878~~ 636 for the three months ended ~~September~~March 3031, ~~2021~~2022, compared to $7250,~~362~~965 for the three months ended ~~September~~March 3031, ~~2020~~2021, aan ~~decrease~~increase of $281,~~484~~671 or 393.43%. For the three months ended ~~September~~March 3031, ~~2021~~2022, other income mainly consisted of subsidy income of $51,~~291~~808, ~~and~~ interest income of $1874,~~822,~~ but offset with financial expense of $~~3,523 and other expense of $5,712~~46. For the three months ended ~~September~~March 3031, ~~2020~~2021, other income mainly consisted of subsidy income of $4850,~~091~~737, ~~and~~interest ~~other~~ income of $26477,~~246~~ but offset with other expenses of $249.

Net loss

We had net loss of $3248,~~354,604~~023 for the three months ended ~~September~~March 3031, ~~2021~~2022, compared to net loss of $88115,~~035~~724 for the three months ended ~~September~~March 3031, ~~2020~~2021, an increase ofin net loss by $3132,~~266,569~~299 or ~~3,710~~114.53%. The increase in our net loss mainly resulted from increased ~~operating~~G&A ~~expenses~~expense ~~including~~and ~~bade~~decreased ~~debt~~gross ~~expense~~profit as described above.

Liquidity and Capital Resources

As of ~~September~~March 3031, ~~2021~~2022, we had cash and equivalents of $21,~~192~~110,~~191~~036. Working capital deficit was $23,~~149~~816,~~187~~563 at ~~September~~March 3031, ~~2021~~2022. The ratio of current assets to current liabilities was 0.5627:1 at ~~September~~March 3031, ~~2021~~2022.

The following is a summary of cash provided by or used in each of the indicated types of activities during ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 and ~~2020~~2021:

	2021			2020
	2022			2021
Cash provided by (used in):
Operating activities	$	1(311,~~547,843~~775	)	$	1514,~~145,326~~130
Investing activities		(1215,~~602,291~~106	)		(~~333~~684,~~480~~507	)
Financing activities		1377,~~271,273~~877			~~171~~126,~~568~~738

Net cash ~~provided~~used byin operating activities was $1311,~~547,843~~775 for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022, compared to net cash provided by operating activities of $1514,~~145,326~~130 for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021. The increase of $825,905 cash ~~inflow~~outflow from operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 was principally attributable to ~~decreased~~increased cash outflow from ~~unearned~~inventory ~~revenue~~ by $57657,~~718~~614, increased cash ~~inflow~~outflow form taxes payable by $57143,~~643~~468, ~~increased~~and decreased cash inflow from ~~accounts~~unearned ~~receivable~~revenue by $60127,~~602~~027, ~~and~~which was partly offset by decreased cash outflow from ~~advance~~advances to suppliers by $~~196~~83,~~564~~584, and decreased cash outflow on other receivable by $23,631.

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Net cash used in investing activities was $1215,~~602,291~~106 for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022, compared to $~~333~~684,~~480~~507 for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021. Net cash used in investing activities in ~~2021~~2022 mainly consisted of purchase of property and equipment of $~~175~~2,~~156,~~463 ~~purchase of intangible asset of $50,759,~~ and $1212,~~376,376~~643 payment for constructing the adsorption station. Net cash used in investing activities in ~~2020~~2021 ~~was~~ mainly consisted of purchase of property and equipment of $~~301~~33,~~080~~606, and ~~construction~~$650,901 inpayment ~~progress~~for ofconstructing ~~$32,400~~the absorption station for preliminarily extract lithium ion from brine for further concentration and purification.

Net cash provided by financing activities was $1377,~~271,273~~877 for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022, compared to $~~171~~126,~~568~~738 for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021. The net cash provided by financing activities in ~~2021~~2022 consisted of amount due to other related parties of $1377,~~584~~877,~~374,~~ include loans from Xi’an Jinzang described below~~, but partly offset by increase in due from Qinghai Mining of $313,101~~. The net cash provided by financing activities in ~~2020~~2021 consisted of ~~capital~~amount ~~contribution~~owing ~~from~~to ~~noncontrolling~~other ~~interest~~related ~~Qinghai~~parties ~~Zhongli~~of by $~~715~~747,~~130,~~140 ~~and~~include ~~increase~~loans infrom ~~amount~~Xi’an ~~due~~Jinzang todescribed ~~other related parties of $348~~below,~~724,~~ but partly offset by increase in due from Qinghai Mining of $~~892~~620,~~286~~402.

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($~~619~~630,~~185~~100) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities and construction of ~~adsorption~~Adsorption ~~station~~Station Project of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($~~380~~393,~~442~~812) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($~~228~~236,~~266~~287) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 24.50 million ($~~380~~630,~~442~~100) at ~~June~~March 3031, ~~2021~~2022; in addition, the Company borrowed additional RMB 2 million ($~~309~~315,~~593~~050) with the same terms during the second quarter of 2021 under the oral agreement. The Company borrowed additional RMB 2 million ($~~308~~315,~~385~~050) with the same terms during the third quarter of 2021 under the oral agreement. The Company borrowed additional RMB 3 million ($472,575) with the same terms during the first quarter of 2022 under the oral agreement, but the Company only received RMB 2 million ($315,050). The Company recorded $3380,~~595~~935 and $55,679 capitalized interest on CIP of ~~adsorption~~Adsorption ~~station~~Station as of ~~September~~March 3031, 2022 and December 31, 2021.

Dividend Distribution

We are a US holding company that conducts substantially all of our business through our wholly owned and other consolidated operating entities in China. We rely in part on dividends paid by our subsidiaries in China for our cash needs, including the funds necessary to pay dividends and other cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. The payment of dividends by entities organized in China is subject to limitations. In particular, PRC regulations currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Our PRC subsidiaries also are required to set aside at least 10% of their after-tax profit based on PRC accounting standards each year to a statutory surplus reserve fund until the accumulative amount of such reserve reaches 50% of registered capital. Appropriation to such reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each year. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. These reserves are not distributable as cash dividends. In addition, our PRC subsidiaries, at their discretion, may allocate a portion of their after-tax profit to their staff welfare and bonus fund, which may not be distributed to equity owners except in the event of liquidation. Moreover, if any of our subsidiaries incur debt on its own behalf in the future, the instruments governing the debt may restrict such subsidiary’s ability to pay dividends or make other distributions to us. Any limitation on the ability of one of our subsidiaries to distribute dividends and other distributions to us could materially and adversely limit our ability to make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

Off-Balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties other than as described following under “Contractual Obligations.” We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders’ equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are not required to provide the information requested by this Item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, our principal executive officer and principal financial officer, respectively, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September~~March 3031, ~~2021~~2022, our disclosure controls and procedures were not effective as of such date because of a material weakness identified in our internal control over financial reporting related to our internal level of US GAAP expertise. We lack sufficient personnel with the appropriate level of knowledge, experience and training in US GAAP for the preparation of financial statements in accordance with US GAAP. None of our internal accounting staff, including our Chief Financial Officer, that are primarily responsible for the preparation of our books and records and financial statements in compliance with US GAAP holds a license such as Certified Public Accountant in the US, nor have any attended US institutions or extended educational programs that would provide enough of the relevant education relating to US GAAP.

Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended ~~September~~March 3031, ~~2021,~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We may become involved in various lawsuits and legal proceedings arising in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may have an adverse effect on our business, financial conditions or operating results. Other than the proceedings we have disclosed below, we are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

Item 1A. Risk Factors

You should consider carefully the factors discussed in the “Risk Factors” in our Annual Report on Form 10-K, as amended, for the year ended December 31, ~~2020~~2021, as amended, which could materially affect our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information

None.

Item 6. Exhibits

See the Exhibit Index preceding the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

EXHIBIT INDEX

Exhibit No.		Document Description
31.1 †		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 †		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 †		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS†		Inline XBRL Instance Document
101.SCH†		Inline XBRL Schema Document
101.CAL†		Inline XBRL Calculation Linkbase Document
101.DEF†		Inline XBRL Definition Linkbase Document
101.LAB†		Inline XBRL Label Linkbase Document
101.PRE†		Inline XBRL Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

† Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LITHIUM & BORON TECHNOLOGY, INC.
	(Registrant)
Date: November 15, 2021	By:	/s/ Jimin Zhang
Date: May 20, 2022	By:	/s/ Jimin Zhang
		Mr. Jimin Zhang Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory)

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Filing Compare · Lithium & Boron Technology, Inc.