UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedMarch 31, ~~2021~~2022

☐

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, QinghaiProvince817000

(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		~~HEAT~~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 May ~~16, 2021~~18, 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	2325
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3033
Item 4.	Controls and Procedures	3033

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3134
Item 1A.	Risk Factors	3134
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3134
Item 3.	Defaults Upon Senior Securities	3134
Item 4.	Mine Safety Disclosures	3134
Item 5.	Other Information	3134
Item 6.	Exhibits	3134

	Exhibit Index	3134

	Signatures	3235

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 ~~that~~ 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~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LITHIUM & BORON TECHNOLOGY, INC

CONSOLIDATED BALANCE SHEETS

AS OF
MARCH 31,

AS OF
DECEMBER 31,

2021
(UNAUDITED)

2020

ASSETS

CURRENT ASSETS

     Cash and equivalents
$ 922,140 $ 972,066
     Accounts receivable, net
233,609 223,194
     Prepaid expense
3,550 -
     Notes receivable
73,045 96,367
     Other receivables
113,468 60,226
     Advances to suppliers, net
359,395 242,311
     Due from related parties
2,371,479 1,771,789
     Inventories
522,138 1,179,387

        Total current assets
4,598,824 4,545,340

NONCURRENT ASSETS

     Due from related party
1,401,922 1,411,891
     Property and equipment, net
1,422,095 1,488,783
     Construction in progress
783,141 141,846

       Total noncurrent assets
3,607,158 3,042,520

TOTAL ASSETS
$ 8,205,982 $ 7,587,860

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

     Accounts payable
$ 422,468 $ 525,775
     Unearned revenue
189,084 64,190
     Accrued liabilities and other payables
1,544,513 1,522,347
     Taxes payable
190,965 106,651
     Due to related parties
1,852,818 1,114,662

       Total current liabilities
4,199,848 3,333,625

DEFERRED INCOME
1,194,132 1,253,046

TOTAL LIABILITIES
5,393,980 4,586,671

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

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 reserve
198,463 177,843
Accumulated other comprehensive income
190,565 223,922
Retained earnings
8,167,392 8,328,736

       TOTAL COMPANY STOCKHOLDERS' EQUITY
2,076,037 2,250,118

       Noncontrolling interest
735,965 751,071

       TOTAL EQUITY
2,812,002 3,001,189

TOTAL LIABILITIES AND EQUITY
$ 8,205,982 $ 7,587,860

	MARCH 31,			DECEMBER 31,
	2022 (Unaudited)			2021
ASSETS

CURRENT ASSETS
Cash and equivalents	$	1,110,036		$	1,253,661
Prepaid expenses		6,968			12,402
Advances to suppliers, net		52,741			15,858
Other receivables ,net		248,454			214,704
Notes receivable		-			78,423
Inventories		4,752			4,732

Total current assets		1,422,951			1,579,780

NONCURRENT ASSETS
Property and equipment, net		1,313,170			1,389,294
Intangible asset, net		50,528			50,640
Construction in progress		1,843,057			1,623,309

Total noncurrent assets		3,206,755			3,063,243

TOTAL ASSETS	$	4,629,706		$	4,643,023

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	153,262		$	312,532
Unearned revenue		69,858			69,557
Accrued liabilities and other payables		1,701,143			1,561,585
Taxes payable		147,044			203,443
Due to related parties		3,168,207			2,784,534

Total current liabilities		5,239,514			4,931,651

DEFERRED INCOME		1,028,796			1,075,960

TOTAL LIABILITIES		6,268,310			6,007,611

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		282,736			246,845
Accumulated other comprehensive income		293,207			288,865
Retained earnings		3,657,618			3,966,532

TOTAL COMPANY STOCKHOLDERS' EQUITY (DEFICIT)		(2,246,822	)		(1,978,141	)

Noncontrolling interest		608,218			613,553

TOTAL EQUITY (DEFICIT)		(1,638,604	)		(1,364,588	)

TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	4,629,706		$	4,643,023

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~~ ~~LOSS~~

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

THREE MONTHS ENDED MARCH 31,

2021

2020

Sales
$ 1,828,380 $ 1,010,498

Cost of sales
1,696,118 930,744

Gross profit
132,262 79,754

Operating expenses

     Selling
23,055 56,205
     Bad debts
- 2,568
     General and administrative
274,371 284,434

     Total operating expenses
297,426 343,207

Loss from operations
(165,164 ) (263,453 )

Non-operating income

     Financial expense
(189 ) -
     Other expenses
(60 ) (14,349 )
     Interest income
477 33
     Subsidy income
50,737 47,141

     Total non-operating income, net
50,965 32,825

Loss before income tax
(114,199 ) (230,628 )

Income tax expense
11,458 -

Loss before noncontrolling interest
(125,657 ) (230,628 )

Less: loss attributable to noncontrolling interest
(9,933 ) -

Net loss to the Company
(115,724 ) (230,628 )

Other comprehensive item

Foreign currency translation loss attributable to the Company
(33,357 ) (59,196 )
Foreign currency translation loss attributable to noncontrolling interest
(5,173 ) -

Comprehensive loss attributable to the Company
$ (149,081 ) $ (289,824 )

Comprehensive loss attributable to noncontrolling interest
$ (15,106 ) $ -

Basic and diluted weighted average shares outstanding
185,968,370 185,968,370

Basic and diluted net loss per share
$ (0.00 ) $ (0.00 )

	THREE MONTHS ENDED MARCH 31,
	2022			2021

Revenue
Boronic acid sales	$	-		$	1,828,380
Total revenue		-			1,828,380

Cost of revenue
Boronic acid		-			1,696,118
Total cost of revenue		-			1,696,118

Gross profit		-			132,262

Operating expenses
Selling		-			23,055
General and administrative		308,648			274,371

Total operating expenses		308,648			297,426

Loss from operations		(308,648	)		(165,164	)

Non-operating income (expenses)
Financial expense		(46	)		(189	)
Other expense		-			(60	)
Interest income		874			477
Subsidy income		51,808			50,737

Total non-operating income, net		52,636			50,965
					��
Loss before income tax		(256,012	)		(114,199	)

Income tax expense		-			11,458

Loss before noncontrolling interest		(256,012	)		(125,657	)

Less: loss attributable to noncontrolling interest		(7,989	)		(9,933	)

Net loss to the Company		(248,023	)		(115,724	)

Other comprehensive items
Foreign currency translation gain (loss) attributable to the Company		4,342			(33,357	)
Foreign currency translation gain (loss) attributable to noncontrolling interest		2,654			(5,173	)

Comprehensive loss attributable to the Company	$	(243,681	)	$	(149,081	)

Comprehensive loss attributable to noncontrolling interest	$	(5,335	)	$	(15,106	)

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~~

~~THREE MONTHS ENDED MARCH 31, 2021 AND 2020~~

STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY (DEFICIT)

THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(UNAUDITED)

Common Stock

Paid-in capital
Statutory
Accumulated other
comprehensive
Retained Noncontrolling

Shares

Amount

deficiency

reserves

income (loss)

earnings

Total

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

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 )

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

	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 (loss) income			Retained earnings			Total			Noncontrolling interest
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	)

Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-

Statutory reserve		-		-		-			20,620		-			(20,620	)		-			-

Foreign currency translation gain		-		-		-			-		(33,357	)		-			(33,357	)		(5,173	)

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

Common Stock

Paid-in capital
Statutory
Accumulated other
comprehensive
Retained

Shares

Amount

deficiency

reserves

income (loss)

earnings

Total

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

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

Table of Contents

LITHIUM & BORON TECHNOLOGY, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

THREE MONTHS ENDED MARCH 31,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

            Loss including noncontrolling interest
$ (125,657 ) $ (230,628 )
            Adjustments to reconcile loss including noncontrolling
                 interest to net cash provided by operating activities:

            Depreciation
90,534 76,346
            Provision for bad debts
- 2,568
            Changes in deferred income
(50,737 ) (47,141 )
                         (Increase) decrease in assets and liabilities:

                                   Accounts receivable
(12,152 ) 84,486
                                   Other receivables
(56,440 ) (19,856 )
                                   Advances to suppliers
(120,386 ) (44,268 )
                                   Inventories
657,614 606,756
                                   Prepaid expense
(1,542 ) (15,618 )
                                   Accounts payable
(77,986 ) (192,472 )
                                   Unearned revenue
127,027 (10,102 )
                                   Accrued liabilities and other payables
(2,351 ) 32,719
                                   Taxes payable
86,206 31,882

            Net cash provided by operating activities
514,130 274,672

CASH FLOWS FROM INVESTING ACTIVITIES:

                                   Purchase of property and equipment
(33,606 ) -
                                   Construction in progress
(650,901 ) -

            Net cash used in investing activities
(684,507 ) -

CASH FLOWS FROM FINANCING ACTIVITIES:

                                  Changes in due from related parties
(620,402 ) (191,744 )
                                  Changes in due to related parties
747,140 112,986

            Net cash provided by (used in) financing activities
126,738 (78,758 )

EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS
(6,287 ) (5,393 )

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS
(49,926 ) 190,521

CASH AND EQUIVALENTS, BEGINNING OF PERIOD
972,066 160,024

CASH AND EQUIVALENTS, END OF PERIOD
$ 922,140 $ 350,545

Supplemental cash flow data:

   Income tax paid
$ - $ -
   Interest paid
$ - $ -

	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.

Table of Contents

LITHIUM & BORON TECHNOLOGY, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, ~~2021 (UNAUDITED)~~2022 AND DECEMBER31,~~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~~2 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”).

~~The acquisition was structured as~~ On November 4, 2021, Mr. Jimin Zhang purchased a ~~tax-free reorganization. As a result~~total of ~~the Share Exchange Agreement, Mid-heaven BVI’s shareholders own approximately 57%~~106,001,971 shares of ~~the combined company. For accounting purposes, the transaction was accounted for as a reverse acquisition~~common stock of the Company ~~by Mid-heaven BVI.~~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 ~~is engaged in the manufacture~~formerly manufactured and ~~wholesale sale of~~sold boric acid and related compounds for industrial and consumer ~~usage.~~use. Qinghai Mining has stopped the mining of boron rock and will only provide brine to Technology. In order to maintain the normal operation of the Company, in July 2021, Technology ~~obtains its raw~~Company entered a processing contract to provide boric acid commissioned processing service for a 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 Company entered a new agreement with the same customer, where Technology Company would no longer provide the processing service but only provided boric acid manufacturing facility, equipment, auxiliary equipment, necessary utilities, and workers to the customer for them to produce the boric acid by themselves. The customer 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 entered a new Contact Cooperation Agreement 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 equipment and machinery, Qinghai Mining owns the land and plant and will provide the silicic acid and slag to the contractor at no additional charge.

Management of Technology expects that it will source all material ~~minerals exclusively~~that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval and permits from the relevant governmental authorities. Technology and Qinghai Mining submitted an application to the Environment Protection Department in January of 2022 and is currently ~~processes boric acid by crushing~~under the review. Technology expects a response in the second quarter of 2022, and ~~processing ore.~~ will supply additional data if there are further comments on the application.

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~~ started back to normal since April 2020. Since April 2020 to ~~date,~~January 2022, there were some new COVID-19 cases discovered in a few provinces of China, ~~as of today,~~ however, the number of new cases are not significant due to PRC government’s strict ~~control, and the Company does not believe the~~control. Since February 2022 to date, COVID-19 case increased in many cities of China; however, there are only a few new cases ~~would have a significant~~in Qinghai Province which we do not expect impact on the Company’s ~~operations in 2021.~~operations.

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On March 27, 2020, 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)~~(“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 JVjoint Venture (“JV”) Zhonglixinmo Technology Co., Ltd (“Qinghai Zhongli” or JV) to process brine supplied by ~~Qinghai~~ 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.~~31, 2020. The JV’s shareholders are required to contribute capital in accordance with their respective shareholding ratio. 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~~and obtaining required licenses and approvals. The capital ~~contribution amount~~contributions and timing ~~of making the capital contribution~~ can be adjusted anytime upon ~~both~~the 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~~and self-funding in the ~~funds are~~event additional equity financing is not ~~raised in time, the term of capital contribution can be extended upon consensus of all parties.~~available. On May 9, 20222, JV changed its name to Qinghai Zhongli Technology Co., Ltd.

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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 loss before noncontrolling interest of ~~$115,724~~$0.26 million and ~~$230,628~~$0.13 million for the three months ended March 31, 2022 and 2021, respectively; the net loss to the Company was $0.25 million and ~~2020, respectively, which raises substantial doubt about~~$0.12 million for the ~~Company’s ability to continue as a going concern.~~three months ended March 31, 2022 and 2021, respectively.

~~In addition to current~~After Technology ceased sourcing ore for the production of boric acid ~~production business,~~from Qinghai Mining , Technology 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 (see Note 1 above).

The Company plans to produce lithium carbonate that can be sold for the electric vehicle ~~batteries through a recently established JV from brine that~~battery use and is ~~provided by Technology.~~currently at test production stage. The Company ~~will absorb costs for~~expects to generate additional revenues and cash flow once it receives government approval of the ~~brine it provides to the JV~~official production process which is ~~pumped out directly from the nearby Salt Lake.~~expected by second quarter 2022. Management also intends to raise additional funds by way of a private or public ~~offering, or~~offerings, by obtaining loans from banks or ~~others.~~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 ~~assurance~~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 March 31, ~~2021~~2022 and for the three-month periods ended March 31, ~~2021 and 2020~~2022 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 ~~Financial Statements~~CFS and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020, previously~~2021, filed with the SEC on ~~April 15, 2021.~~March 31, 2022.

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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, ~~2021,~~2022, its consolidated results of operations and cash flows for the three months ended March 31, ~~2021 and 2020,~~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.

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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 ~~$19,631~~$20,321 and ~~$19,770~~$20,233 at March 31, ~~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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had gross advance to suppliers of ~~$362,122~~$55,564 and ~~$245,058~~$18,668 respectively, and the Company had allowance for advances to suppliers of ~~$2,727~~$2,823 and ~~$2,747,~~$2,810 , respectively. In addition, as of March 31, 2021, advances to suppliers also included a prepayment of $30,436 to a third-party company for purchasing equipment and a land use right; total purchase price is $167,395, the remaining $136,959 will be paid within three days after the completion of the land certificate and related deed transfer, or the prepayment will be returned to the Company if failure to obtain the land use certificate and related deed. As of this report date, the Company is still waiting for relevant authorities to process the title transfer of the land use right.

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.

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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

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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.

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.

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 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.

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 (“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 three months ended March 31, 2022 and 2021 were $4,631 and ~~2020 were immaterial.~~$0, respectively.

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~~value(“FV”) of the equity instrument issued or committed to be issued, as this is more reliable than the ~~fair value~~FV of the services received. The ~~fair value~~FV is measured at the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete.

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 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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company did not take any uncertain positions that would necessitate recording a tax related liability.

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 ~~non-controlling interest’s~~NCIs interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. ~~non-controlling interests~~NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit ~~non-controlling interests~~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 three months ended March 31, 2022 and 2021, the Company had loss of $7,989 and $9,933 attributable to the NCI.

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 ~~(US$~~($77,000) per bank. Any balance over RMB 500,000 ($77,000) per PRC bank ~~in PRC~~ 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 ~~located~~ 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 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.

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.”

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.

Certain of the Company’s financial instruments, including cash and equivalents, notes receivable, accrued liabilities and accounts payable, carrying amounts approximate their ~~fair value~~FV due to their short maturities. FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the ~~fair value (“FV”)~~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.

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:

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 March 31, ~~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.

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 ~~will elect~~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 March 31, 2022 and December 31, 2021.

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.

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~~1 business and industry segment: manufacture and sale of boric acid. The Company plans to expand its manufacturing facilities through a newly formed ~~joint venture~~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.

~~Certain prior period balance sheet accounts were reclassified for the purpose of consistency with the current year’s presentation.~~

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.

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.

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

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 ~~the~~ maturity for full payment or have the bank acceptance cashed ~~out~~ 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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had notes receivable of ~~$73,045~~$0 and ~~$96,367,~~$78,423 , respectively; and at March 31, ~~2021,~~2022, the Company had ~~$0.84 million~~$0 notes receivable ~~that were~~ endorsed and transferred to its vendors, in lieu of payment. The Company was contingently liable for these endorsed and transferred notes receivable until ~~paid.~~they are paid by the bank.

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

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

In May 2021, the Company acquired RMB 1.1 million ($172,500) of land and building structures from a bankrupt company, of which, $121,000 was for building structures including workshop and office, $51,500 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 three months ended March 31, 2022 and 2021 was $84,578 and ~~2020 was~~ $90,534, ~~and $76,346,~~ respectively.

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

The Company acquired land use right of $51,521 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 of land use right for the three months ended March 31, 2022 and 2021 was $332 and $0. Annual amortization for the next five years from March 31, 2022, is expected to be $1,374 for each year.

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had CIP of ~~$783,141~~$1,843,057 and ~~$141,846,~~$1,623,309 , 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 March 31, ~~2021,~~2022, the Company spent ~~$783,141~~$1.84 million for constructing the adsorption station; as of this report date, the Company completed the construction of ~~two~~No. 1 adsorption stations, and is currently doing the ~~equipment commissioning~~technological transformation for No. 2 refining station for strengthening the ~~second absorption station.~~exterior wall insulation. The Company was committed to pay ~~$203,180 more~~$0.18 million based on the various construction - related contracts entered as of March 31, ~~2021.~~2022.

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

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

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

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, other mainly consisted of 1) dividend payable to Northtech of ~~$525,000~~$625,000 and ~~$500,000,~~$600,000, respectively; and 2) payables for professional fees and other miscellaneous expenses of ~~$87,100~~$190,000 and ~~$61,000,~~$75,000, respectively.

As of March 31, 2022, accrued salary of $861,224 included $840,000 accrued salary for 3 senior officers. As of December 31, 2021, accrued salary of ~~$909,071~~$860,582 included $840,000 accrued salary for the ~~three~~3 senior officers. ~~As of December 31, 2020, accrued salary of $955,312 included $840,000 accrued salary for three senior officers.~~

Technology purchased raw material boron rock from Qinghai Mining (owned by ~~three~~3 former major shareholders of the Company); in addition, Technology received no-interest short-term advances from Qinghai Mining for daily operational needs. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, due from Qinghai Mining was ~~$3.77~~$0 and $0 million, ~~and $3.11 million (the net amount of intercompany transactions between Technology and Qinghai Mining),~~ respectively. Technology purchased boron ore of ~~$261,258~~$0 and ~~$113,528~~$261,258 from Qinghai Mining during the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively.

On July 1, 2019, Technology and Qinghai Mining entered a boron ore purchase contract for one year. Qinghai Mining is to supply Technology boron ore based on Technology’s monthly production plan at RMB 62 ($9.10) per tonne. The price is adjustable in During the future if there is a significant fluctuation of the market price for the boron ore. In the fourth quarter of 2019, this price was adjusted to RMB 70.46 ($10.21) per tonne. In the first quarter of 2020, Technology and Qinghai Mining entered a new purchase contract, the price for boron ore was adjusted to 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 new purchase price is entered.

In September 2020, Technology sold the Test and Experimental Plant I to Qinghai Mining at cost of RMB 11.41 million ($1.74 million) (see Note 7). The payment term is five years with annual interest of 4.75%. The first payment of $334,789 is due September 30, 2021. As of Marchyear ended December 31, 2021, the ~~future minimum payments for next five years is: $334,789, $334,789, $334,789, $334,789 and $397,555.~~Company wrote off the receivable of $4.5 million from Qinghai Mining, ~~guarantees payment with its accounts receivables, and~~because Qinghai mining ceased production of boron rock sold to the Company. This halt in production has impaired the ~~right~~Mining Company’s ability to repay the ~~purchase price in full any time before~~receivable to the ~~maturity date.~~Company.

During the fourth quarter 2020, the Company made a short-term cash advance of RMB 500,000 ($76,630) to Xi’an Jinzang (49% NCI of the JV) with no interest and payable upon demand. Xi’an Jinzang repaid the amount in full in January 2021.

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 ~~are also~~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 three months ended March 31, 2022 and 2021 was $2,427 and ~~2020 was~~ $5,586, ~~and $6,263,~~ 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 ~~$84,261~~$96,691 and ~~$79,309~~$96,274 at March 31, ~~2021~~2022 and December 31, ~~2020, respectively.~~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.

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, ~~2021~~2022 and ~~2020,~~2021, the Company’s sales to Dingjia was $0 ~~respectively.~~and $0. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, payable to Dingjia was ~~$20,615~~$21,340 and ~~$20,762 respectively.~~$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 ~~three months ended March 31,~~first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($~~608,708)~~630,100) with an annual interest of 6.8% from Xi’an Jinzang. The ~~fund was~~funds were used for the production and operation activities and construction of Adsorption Station Project of Qinghai Zhongli. The Company ~~shall~~was to repay RMB 2.5 million ($~~380,442)~~393,812) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($~~228,266)~~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, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had ~~$1,135,591~~$1,510,591 and ~~$1,014,591~~$1,473,591 due to ~~another~~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.

The following table summarized the due from (to) related parties as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively:

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 March 31, ~~2021~~2022 is:

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

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 three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively:

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

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

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 ~~reduces~~reduced the federal corporate tax rate from 35% to 21% effective January 1, 2018 for the U.S. entity of the Company.

The USU.S. parent company, was incorporated in the USU.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 ~~$5.30~~$0.90 million at March 31, ~~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.

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 three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively:

The income tax expense for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, consisted of the following:

For the three months ended March 31, 2022, there was no customer accounts more than 10% of the Company’s total sales.

The following table sets forth information as to the Company’s ~~major~~ customers that accounted for 10% or more of the Company’s sales for the three months ended March 31, ~~2021 and 2020.~~2021.

The Company had ~~one~~no customer that accounted for 10% or more of the Company’s accounts receivable as of March 31, ~~2021~~2022 and December 31, ~~2020. The accounts receivable from this customer was $233,610 and $211,134 as of March 31, 2021 and December 31, 2020, respectively.~~2021.

Technology purchased all of its boron ore raw material of ~~$261,258~~$0 and ~~$113,528~~$261,258 from Qinghai Mining during the three months ended March 31, 2022 and 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 ~~2020, respectively.~~ 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.

For the three months ended March 31, 2022, there was no supplier accounts more than 10% of the Company’s total purchases.

The following table sets forth information as to the Company’s ~~major~~ suppliers that accounted for 10% or more of the Company’s total purchases for the three months ended March 31, ~~2021 and 2020.~~2021.

The Company had ~~one~~no supplier that accounted for 10% or more of the Company’s accounts payable as of March 31, ~~2021 and~~2022. The Company had three suppliers that accounted for 10% or more of the Company’s accounts payable as of December 31, ~~2020.~~2021. The accounts payable ~~from this supplier~~to these suppliers was ~~$255,716~~$78,480, $25,471 and ~~$240,504~~$18,821 as of ~~March~~December 31, 2021, ~~and December 31, 2020,~~ respectively.

The Company’s ability to pay dividends primarily depends on ~~the Company~~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 ~~certain~~ 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 ~~has reached~~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 ~~reverse~~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, ~~2021,~~2022, the Company had ~~$89,307~~$179,804 production safety related reserve, which was included in ~~$198,463~~$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:

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.

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.

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 no material subsequent ~~events.~~event other than as disclosed in Notes 1 and 2 above.

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

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.

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. ~~We sold plate heat exchangers and heat pumps and sold those operations on September 30, 2019.~~

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”).

~~The Acquisition was structured as~~ On November 4, 2021, Mr. Jimin Zhang purchased a ~~tax-free reorganization. As a result~~total of ~~the Share Exchange Agreement, Mid-heaven BVI’s shareholders own approximately 57%~~106,001,971 shares of ~~the combined company. For accounting purposes, the transaction was accounted for as a reverse acquisition~~common stock of the Company ~~by Mid-heaven BVI.~~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 ~~is engaged in manufacture~~manufactured and ~~wholesale of~~sold boric acid and related compounds for industrial and consumer usage. Technology obtains its ~~raw material minerals~~brine exclusively from Qinghai Mining and currently ~~processes~~leases its facilities to third parties to produce boric acid ~~by crushing~~ and ~~processing ore.~~

On September 30, 2019, Heat HP, Inc. and Heat PHE, Inc, our wholly owned subsidiaries, sold their respective equity interests in Jinhui, SmartHeat Investment, SmartHeat Trading, SmartHeat Pump and Heat Exchange for $353. The equity interests were soldrelated compounds. . Technology previously purchased ore from Qinghai Mining; however, Qinghai Mining ceased ore production due to ~~individuals and businesses in~~environmental protection restriction from the ~~PRC. Each subsidiary was sold for nominal cash consideration as below and, as~~government. In order to maintain the ~~transactions were structured as purchases of equity interests, the subsidiary companies retained all liabilities when sold.~~

On October 23, 2019, we filed a certificate of amendment to its certificate of incorporation to change its name from “SmartHeat, Inc.” to “Lithium & Boron Technology, Inc.” to better reflect the operationsnormal operation of the ~~Company.~~Company; in July 2021, Technology Company entered a processing contract to provide boric acid 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 Company entered a new agreement with the same customer, the Company would no longer provide the processing services and agreed to lease its boric acid manufacturing facility, equipment, auxiliary equipment, necessary utilities, and workers to produce 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 entered a new Contact Cooperation Agreement 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 equipment and machinery, Qinghai Mining owns the land and plant and will provide the silicic acid and slag to the contractor at 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,~~January 2022, there were some new COVID-19 cases discovered in a few provinces of China, ~~and we do not believe that~~however, the number of new cases are not significant ~~to our operations~~ due to PRC government’s strict control. Since February 2022, the COVID-19 case bounced again in many cities of China; however, there are only a few new cases in Qinghai Province which does not impact the Company’s operations.

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)~~(“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~~(“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), ~~which shall~~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 ~~of making the capital contribution~~ 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 ~~of making the capital contribution~~ 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 ~~consensus~~agreement of all parties.

Technology purchases raw material boron rock from Qinghai Mining (owned by three 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 March 31, 2021 and December 31, 2020, due from Qinghai Mining was $3.77 million 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 $261,258 and $113,528 from Qinghai Mining during the three months ended March 31, 2021 and 2020, respectively.

On July 1, 2019, Technology and Qinghai Mining entered a boron ore purchase contract for a term of one year. Qinghai Mining is to supply Qinghai Technology boron ore based on Qinghai Technology’s monthly production plan at a price of RMB 62 ($9.10) per tonne. The price is adjustable in the future if there is a significant fluctuation of the market price for the boron ore. In the fourth quarter of 2019, this price was adjusted to RMB 70.46 ($10.21) per tonne. In the first quarter of 2020, Technology and Qinghai Mining entered a new purchase contract, the price for boron ore was adjusted to RMB 77.5 ($11.10) per tonne, and the price for slag was RMB 30 ($4.41) per tonne. The new purchase contract will be in effect until a replacement contact with new purchase price is entered.

~~In September 2020, Technology sold the Test and Experimental Plant I~~May 9, 20222, JV changed its name to Qinghai Mining at cost of RMB 11.41 million ($1.75 million) (see Note 7). The payment term is five years with annual interest of 4.75%. The first payment of $334,789 is due September 30, 2021. Qinghai Mining guarantees payment with its accounts receivable , and has the right to repay the purchase price in full any time before the maturity date.

Zhongli Technology ~~uses equipment that belongs to Qinghai Province Dachaidan Zhongtian Resources Development~~ Co., Ltd (“Zhongtian Resources” which is owned by our Chairman and his brother who are two major shareholders of the Company) for production. 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 three months ended March 31, 2021and 2020 was $5,586 and $6,263, respectively. Due to Zhongtian Resources resulting from using its equipment and payment of worker’s compensation made by Zhongtian Resource for Technology was $84,261 and $79,309 at March 31, 2021 and December 31, 2020, respectively.Ltd.

During the three months ended March 31, 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($608,708) with an annual interest 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities of Qinghai Zhongli. The Company shall 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.

In addition, at March 31, 2021 and December 31, 2020, the Company had $1,135,591 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 March 31, 2021 and December 31, 2020, respectively:~~

As reflected in the accompanying CFS, the Company had net loss of ~~$115,724~~$0.25 million and ~~$230,628~~$0.12 million for the three months ended March 31, 2022 and 2021, respectively; the Company stopped produce and ~~2020, respectively,~~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.

~~In addition to current~~Because the Company ceased obtaining ore for the production of boric acid ~~production business,~~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 ~~batteries through a recently established JV~~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, and the Company will source all material that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine ~~that~~processing process receives approval from the relevant governmental authorities, the Company submitted application to Environment Protection Department in the beginning of 2022 and is ~~provided by Technology.~~currently under the review. Management also intends to raise additional funds by way of a private or public ~~offering, or~~offerings, by obtaining loans from banks or ~~others.~~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.

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 March 31, 2022 and December 31, 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). Qinghai Technology purchased boron ore at a cost of $0 and $261,258 from Qinghai Mining during the three months ended March 31, 2022 and 2021, respectively.

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 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 three months ended March 31, 2022 and 2021 was $2,427 and $5,586, respectively. Amount of due to Zhongtian Resources resulting from using its equipment and payment of worker’s compensation made by Zhongtian Resource for Technology was $96,691 and $96,274 at March 31, 2022 and December 31, 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.

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 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.

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

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.

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

For the three months ended March 31, ~~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.

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.

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 ~~$19,631~~$20,321 and ~~$19,770~~$20,233 at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively.

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.~~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 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~~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.

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.”

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 ~~non-controlling interests~~NCIs in a subsidiary may exceed an ~~non-controlling interest’s~~NCIs interests in the subsidiary’s equity. The excess attributable to ~~non-controlling interests~~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 three months ended March 31, 2022 and 2021, the Company had loss of $7,989 and $9,933 that were attributable to the NCI.

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.

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021 ~~Compared to~~~~Three Months Ended~~~~March 31, 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.

Revenue for the three months ended March 31, 2022 and 2021 was $0 and ~~2020~~$1,828,380, respectively, a decrease of $1,828,380 or 100%. Starting from the third quarter 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 increased cost but only leasing our facilities out to 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 new Contact Cooperation Agreement 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 equipment and machinery, Qinghai Mining owns the land and plant and will provide the silicic acid and slag to the contractor at no additional charge.

Cost of revenue (“COR”) for the three months ended March31, 2022 and 2021 was ~~$1,828,380~~$0 and ~~$1,010,498,~~$1,696,118, respectively, ~~an increase~~a decrease of ~~$817,882~~$1,696,118 or ~~80.9%~~100.0%. The ~~increase in sales~~decrease was mainly due to ~~66% increase in~~decreased sales ~~quantity~~ and ~~1% increase in average unit selling price resulting from increased demand, and 14% increase due to change in exchange rate. In~~production. The overall COR as a percentage of revenue was 0% for the ~~comparable period of 2020, due to the outbreak of COVID-19 and related logistic restriction, our sales was decreased significantly.~~three months ended March 31, 2022 compared with 92.8% for 2021.

Cost of sales (“COS”) for the three months ended March 31, 2021 and 2020 was $1,696,118 and $930,774, respectively, an increase of $765,374 or 82.2%. The increase was mainly due to increased sales and production. The COS as a percentage of sales was 92.8% for the three months ended March 31, 2021 compared with 92.1% for 2020. The increase in COS as a percentage of sales was mainly due to increased average cost of production resulting from consumption of remaining Tibet boron rock which was carried over from 2020. From July to September 2020, we tested to acquire 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, we stopped acquiring Tibet boron rock in October due to its higher cost. All the Tibet rock which was purchased previously was consumed during the first quarter of 2021

Gross profit for the three months ended March 31, 2022 and 2021 was $0 and ~~2020 was~~ $132,262, ~~and $79,754,~~ respectively, an ~~increase~~decrease of ~~$52,508~~$132,262 or ~~65.8%~~100.0%. The blended profit margin was 0% for the three months ended March 31, 2022 compared to 7.2% for the three months ended March 31, ~~2021 compared to 7.9% for the three months ended March 31, 2020, the decrease in profit margin was mainly due to increased production cost as described above.~~2021.

Selling expenses consist mainly of salespersons’ salaries and freight out. Selling expense were $0 for the three months ended March 31, 2022, compared to $23,055 for the three months ended March 31, 2021, ~~compared~~a decrease of $23,055 or 100.0%, mainly due to ~~$56,205 for~~no sales incurred during the three months ended ~~March~~Mach 31, 2020, a decrease of $33,150 or 59.0%, mainly resulting from decreased salespersons’ salaries by $41,700 resulting from restructure of our sales department for improving its efficiency and cost-saving which was partly offset by increased freights expense by $8,000.2022.

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 $308,648 for the three months ended March 31, 2022, compared to $274,371 for the three months ended March 31, 2021, ~~compared to $287,002~~an increase of $34,277 or 12.5%, mainly resulting from increased maintenance expense by $54,170 which was partly offset by decreased vehicle expense by $6,630, decreased business management expense by $5,100 and other G&A expenses by $8,150.

Other income was $52,636 for the three months ended March 31, 2020, a decrease of $12,631 or 4.4%, mainly resulting from decreased maintenance expense by $15,050 and decreased bad debt expense by $2,568, which was partly offset by increased business entertainment expense by $5,600.

~~Other income was~~2022, compared to $50,965 for the three months ended March 31, 2021, ~~compared to $32,825 for~~an increase of $1,671 or 3.3%. For the three months ended March 31, ~~2020, an increase~~2022, other income mainly consisted of ~~$18,140 or 55.3%.~~subsidy income of $51,808, interest income of $874, but offset with financial expense of $46. For the three months ended March 31, 2021, other income mainly consisted of subsidy income of ~~$50,737. For the three months ended March 31, 2020, other income mainly consisted of subsidy~~$50,737, interest income of ~~$47,141 and non-operating~~$477, but offset with other expenses of ~~$14,349.~~$249.

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.

We had anet loss of $248,023 for the three months ended March 31, 2022, compared to net loss of $115,724 for the three months ended March 31, 2021, ~~compared to $230,628 for the three months ended March 31, 2020, a decrease of~~an increase in net loss by ~~$114,904~~$132,299 or ~~49.8%~~114.3%. The ~~decrease~~increase in our net loss mainly resulted from increased ~~sales~~G&A expense and decreased ~~operating expenses~~gross profit as described above.

As of March 31, ~~2021,~~2022, we had cash and equivalents of ~~$922,140.~~$1,110,036. Working capital deficit was ~~$398,976~~$3,816,563 at March 31, ~~2021.~~2022. The ratio of current assets to current liabilities was ~~1.09:~~0.27:1 at March 31, ~~2021.~~ 2022.

The following is a summary of cash provided by or used in each of the indicated types of activities during three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:

Net cash used in operating activities was $311,775 for the three months ended March 31, 2022, compared to net cash provided by operating activities of $514,130 for the three months ended March 31, 2021. The increase of $825,905 cash outflow from operating activities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was principally attributable to increased cash outflow from inventory by $657,614, increased cash outflow form taxes payable by $143,468, and decreased cash inflow from unearned revenue by $127,027, which was partly offset by decreased cash outflow from advances to suppliers by $83,584, and decreased cash outflow on other receivable by $23,631.

Net cash ~~provided by operating~~used in investing activities was ~~$514,130~~$215,106 for the three months ended March 31, ~~2021,~~2022, compared to $274,672 for the three months ended March 31, 2020. The increase of cash inflow from operating activities for 2021 was principally attributable to decreased cash outflow from accounts payable by $114,486 and increased cash inflow from unearned revenue by $137,129, increased cash inflow form taxes payable by $54,324, and decreased net loss by $104,971, despite we had decreased cash form accounts receivable by $96,638 and increased cash outflow from advance to suppliers by $76,118.

~~Net cash used in investing activities was~~ $684,507 for the three months ended March 31, ~~2021, compared to $0~~2021. Net cash used in investing activities in 2022 mainly consisted of purchase of property and equipment of $2,463 and $212,643 payment for constructing the ~~three months ended March 31, 2020.~~adsorption station. Net cash used in investing activities in 2021 mainly consisted of purchase of property and equipment of $33,606, and $650,901 payment for constructing the absorption station for preliminarily extract lithium ion from brine for further concentration and purification.

Net cash provided by financing activities was $377,877 for the three months ended March 31, 2022, compared to $126,738 for the three months ended March 31, ~~2021, compared to~~2021. The net cash ~~used in~~provided by financing activities in 2022 consisted of ~~$78,758 for the three months ended March 31, 2020.~~amount due to other related parties of $377,877, include loans from Xi’an Jinzang described below. The net cash provided by financing activities in 2021 consisted of amount owing to other related parties of $747,140 include loans from Xi’an Jinzang described below, but partly offset by increase in due from Qinghai Mining of $620,402. ~~The net cash used in financing activities in 2020 consisted of increase in due from Qinghai Mining of $191,744 and increase in due to other related parties of $112,986.~~

During the ~~three months ended March 31,~~first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang ~~(who is the noncontrolling interest shareholder of Qinghai Zhongli)~~ entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($~~608,708)~~630,100) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities and construction of Adsorption Station Project of Qinghai Zhongli. The Company ~~shall~~was to repay RMB 2.5 million ($~~380,442)~~393,812) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($~~228,266)~~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. 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 $80,935 and $55,679 capitalized interest on CIP of Adsorption Station as of March 31, 2022 and December 31, 2021.

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.

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.

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

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 March 31, ~~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.

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 March 31, ~~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.

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.

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.

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.

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.

	2021		2020
Raw materials	$	229,905	$	275,416
Finished goods		292,233		903,971
Total	$	522,138	$	1,179,387

	2021		2020
VAT receivable	$	102,405	$	57,364
Prepaid rent (short term)		6,528		2,043
Other		4,535		819
Total	$	113,468	$	60,226

	2022			2021
VAT receivable	$	219,173		$	204,883
Security deposit		3,308			3,294
Other		37,559			18,064
Total		260,040			226,241
Less: bad debt allowance		(11,586	)		(11,537	)
Other receivables, net	$	248,454		$	214,704

	2021			2020
Structures and improvements	$	477,872		$	481,270
Production equipment		2,887,416			2,880,146
Vehicle		75,890			70,836
Equipment		265,348			267,235
Total		3,706,526			3,699,487
Less: accumulated depreciation		(2,284,431	)		(2,210,704	)
Property and equipment, net	$	1,422,095		$	1,488,783

	2022			2021
Building structures and improvements	$	643,266		$	640,492
Production equipment		3,008,757			2,995,779
Vehicle		107,759			107,294
Equipment		277,137			273,488
Total		4,036,919			4,017,053
Less: accumulated depreciation		(2,723,749	)		(2,627,759	)
Property and equipment, net	$	1,313,170		$	1,389,294

	AS OF MARCH 31,			AS OF DECEMBER 31,
	2021 (UNAUDITED)			2020
ASSETS

CURRENT ASSETS
Cash and equivalents	$	922,140		$	972,066
Accounts receivable, net		233,609			223,194
Prepaid expense		3,550			-
Notes receivable		73,045			96,367
Other receivables		113,468			60,226
Advances to suppliers, net		359,395			242,311
Due from related parties		2,371,479			1,771,789
Inventories		522,138			1,179,387

Total current assets		4,598,824			4,545,340

NONCURRENT ASSETS
Due from related party		1,401,922			1,411,891
Property and equipment, net		1,422,095			1,488,783
Construction in progress		783,141			141,846

Total noncurrent assets		3,607,158			3,042,520

TOTAL ASSETS	$	8,205,982		$	7,587,860

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	422,468		$	525,775
Unearned revenue		189,084			64,190
Accrued liabilities and other payables		1,544,513			1,522,347
Taxes payable		190,965			106,651
Due to related parties		1,852,818			1,114,662

Total current liabilities		4,199,848			3,333,625

DEFERRED INCOME		1,194,132			1,253,046

TOTAL LIABILITIES		5,393,980			4,586,671

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
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 reserve		198,463			177,843
Accumulated other comprehensive income		190,565			223,922
Retained earnings		8,167,392			8,328,736

TOTAL COMPANY STOCKHOLDERS' EQUITY		2,076,037			2,250,118

Noncontrolling interest		735,965			751,071

TOTAL EQUITY		2,812,002			3,001,189

TOTAL LIABILITIES AND EQUITY	$	8,205,982		$	7,587,860

	THREE MONTHS ENDED MARCH 31,
	2021			2020

Sales	$	1,828,380		$	1,010,498

Cost of sales		1,696,118			930,744

Gross profit		132,262			79,754

Operating expenses
Selling		23,055			56,205
Bad debts		-			2,568
General and administrative		274,371			284,434

Total operating expenses		297,426			343,207

Loss from operations		(165,164	)		(263,453	)

Non-operating income
Financial expense		(189	)		-
Other expenses		(60	)		(14,349	)
Interest income		477			33
Subsidy income		50,737			47,141

Total non-operating income, net		50,965			32,825

Loss before income tax		(114,199	)		(230,628	)

Income tax expense		11,458			-

Loss before noncontrolling interest		(125,657	)		(230,628	)

Less: loss attributable to noncontrolling interest		(9,933	)		-

Net loss to the Company		(115,724	)		(230,628	)

Other comprehensive item
Foreign currency translation loss attributable to the Company		(33,357	)		(59,196	)
Foreign currency translation loss attributable to noncontrolling interest		(5,173	)		-

Comprehensive loss attributable to the Company	$	(149,081	)	$	(289,824	)

Comprehensive loss attributable to noncontrolling interest	$	(15,106	)	$	-

Basic and diluted weighted average shares outstanding		185,968,370			185,968,370

Basic and diluted net loss per share	$	(0.00	)	$	(0.00	)

	Common Stock				Paid-in capital			Statutory		Accumulated other comprehensive			Retained						Noncontrolling
	Shares		Amount		deficiency			reserves		income (loss)			earnings			Total			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

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	)

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

	Common Stock				Paid-in capital			Statutory		Accumulated other comprehensive			Retained
	Shares		Amount		deficiency			reserves		income (loss)			earnings			Total
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

	●	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.

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

	2022		2021
Income tax payable	$	49,291	$	55,658
Other		7,488		18,604
VAT		90,265		129,181
Taxes payable	$	147,044	$	203,443

	2021		2020
Advances from third parties	$	23,342	$	6,035
Other		612,100		561,000
Accrued salary		909,071		955,312
Total	$	1,544,513	$	1,522,347

	Related party name	2021			2020
Due from	Qinghai Mining including $1.75 million sale of CIP	$	4,635,533		$	3,457,488
Due to	Qinghai Mining		(862,132	)		(350,438	)
Due from Xi'an Jinzang (NCI of the JV)			-			76,630
Due from, net (current and noncurrent)		$	3,773,401		$	3,183,680

Due to	Dingjia	$	20,615		$	20,762
Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest		612,351			-
Due to	Zhongtian Resources		84,261			79,309
Due to	A major shareholder		1,135,591			1,014,591
Due to, total		$	1,852,818		$	1,114,662

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net

Technology upgrade for using lean ore to produce magnesium sulfate	$	334,789	8/1/2013		10	$	256,672	$	78,117
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		76,088	5/1/2015		10		45,019		31,069
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,521,769	1/1/2018		10		494,575		1,027,194
Project of high value utilization of magnesium-rich waste liquid		304,354	7/9/2019		10		246,602		57,752
Total	$	2,237,000				$	1,042,868	$	1,194,132

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net

Technology upgrade for using lean ore to produce magnesium sulfate	$	346,555	8/1/2013		10	$	300,348	$	46,207
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		78,762	5/1/2015		10		54,477		24,285
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,575,250	1/1/2018		10		669,481		905,769
Project of high value utilization of magnesium-rich waste liquid		315,050	7/9/2019		10		262,515		52,535
Total	$	2,315,617				$	1,286,821	$	1,028,796

	2021			2020
Deferred tax asset –NOL of US parent company	$	1,112,735		$	1,081,844
Less: valuation allowance		(1,112,735	)		(1,081,844	)
Deferred tax assets, net	$	-		$	-

	2021			2020
Tax benefit at U.S. federal statutory rates	$	(23,983	)	$	(48,432	)
Foreign income taxed at different rates		1,317			(3,177	)
Tax holiday in PRC		(3,290	)		7,943
Other		3,482			-
Valuation allowance		33,932			43,666
Tax expense per financial statements	$	11,458		$	-

	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

	2021		2020
Income tax expense – current	$	11,458	$	-
Income tax benefit – deferred		-		-
Total income tax benefit, net	$	11,458	$	-

~~For the~~ Three Months Ended March 31, 2021				~~For the Three Months Ended March 31, 2020~~
~~Customer~~	~~Percentage of~~ ~~Total Sales~~			Customer	Percentage of Total Sales
A		11	%	A		-	%
B		11	%	B		-	%
C		11	%	C		-	%
D		10	%	D		-	%
E		-	%	E		10	%

For the Three Months Ended March 31, 2021				For the Three Months Ended March 31, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A		24	%	A		32	%
B		13	%	B		-	%
C		12	%	C		-	%
D		11	%	D		14	%

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

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

	2021			% of Sales			2020			% of Sales
Sales	$	1,828,380					$	1,010,498
Cost of sales		1,696,118			92.8	%		930,744			92.1	%
Gross profit		132,262			7.2	%		79,754			7.9	%
Selling expenses		23,055			1.3	%		56,205			5.6	%
General and administrative expenses		274,371			15.0	%		287,002			28.4	%
Total operating expenses		297,426			16.3	%		343,207			34.0	%
Loss from operations		(165,164	)		(9.1	%)		(263,453	)		(26.1	%)
Other income		50,965			2.8	%		32,825			3.2	%
Loss before income taxes		(114,199	)		(6.3	%)		(230,628	)		(22.9	%)
Income tax expense		11,458			0.6	%		-			-	%
Income (loss) before noncontrolling interest		(125,657	)		(6.9	%)		(230,628	)		(22.9	%)
Less: loss attributable to noncontrolling interest from continuing operation		(9,933	)		(0.6	%)		-			-	%
Net income (loss)	$	(115,724	)		(6.3	%)	$	(230,628	)		(22.9	%)

	2022			% of Sales			2021			% of Sales
Boronic acid sales	$	-			-	%	$	1,828,380			100.0	%
Boronic acid costs		-			-	%		1,696,118			92.8	%
Gross profit		-			-	%		132,262			7.2	%
Selling expenses		-			-	%		23,055			1.3	%
General and administrative expenses		308,648			-	%		274,371			15.0	%
Total operating expenses		308,648			-	%		297,426			16.3	%
Income (loss) from operations		(308,648	)		-	%		(165,164	)		(9.1	)%
Other income		52,636			-	%		50,965			2.8	%
Income (loss) before income taxes		(256,012	)		-	%		(114,199	)		(6.3	)%
Income tax expense		-			-	%		11,458			0.6	%
Income (loss) before noncontrolling interest		(256,012	)		-	%		(125,657	)		(6.9	)%
Less: loss attributable to noncontrolling interest		(7,989	)		-	%		(9,933	)		(0.6	)%
Net loss to the Company	$	(248,023	)		-	%	$	(115,724	)		(6.3	)%

	2021			2020
Cash provided by (used in):
Operating activities	$	514,130		$	274,672
Investing activities		(684,507	)		-
Financing activities		126,738			(78,758	)

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)

	LITHIUM & BORON TECHNOLOGY, INC.
	(Registrant)

Date: May ~~17, 2021~~20, 2022	By:	/s/ Jimin Zhang
		Mr. Jimin Zhang Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory)