UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

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

 

For the quarterly period ended March 31, 2020

 

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

 

Commission File Number: 333-201360

 

MULIANG AGRITECH, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		NA
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

2498 Wanfeng Highway, Lane 181

Fengjing Town, Jinshan District
Shanghai, China

(Address of principal executive offices) (Zip Code)

 

(86) 21-67355092

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the issuer (1) 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 past 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “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	☐	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 ☒

 

Securities registered pursuant to Section 12(b) of the Act:  None.

  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of June 28, 2020, the registrant had 38,352,954 shares of its common stock outstanding.

 

 

 

MULIANG AGRITECH, INC.

 

QUARTERLY REPORT ON FORM 10-Q

March 31, 2020

 

TABLE OF CONTENTS

 

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
	Signatures	40

 

 

 

 RELIANCE ON SECURITIES AND EXCHANGE COMMISSION ORDER

 

Muliang Agritech, Inc. (the “Company”) is filing this Quarterly Report on Form 10-Q (the “Quarterly Report”) for quarter ended March 31, 2020 pursuant to the Securities and Exchange Commission (the “SEC”) Order dated March 4, 2020 (Release No. 34-88318), as modified on March 25, 2020 (Release No. 34-88465) (the “Order”) to delay the filing of the Quarterly Report due to circumstances related to the coronavirus pandemic (“COVID-19”). On May 15, 2020, the Company filed a Current Report on Form 8-K stating that it is relying on the Order to delay the filing of the Report by up to 45 days due to circumstances related to the COVID-19 pandemic. The Company followed the restrictive measures implemented in China, by suspending operation and having employees work remotely during February and March 2020. The Company gradually resumed operation and production starting in April 2020. Such restrictive measures caused a delay in the preparation of the financial statements and in the entry time of the on-site audit by the Company’s independent public accountant and consequently a delay in the completion of the Company’s financial statements for the Quarterly Report. As a result, the Company was unable to timely file the Quarterly Report without the extension provided for by the Order.

  

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

The following unaudited interim financial statements of Muliang Agritech, Inc. (referred to herein as the “Company,” “we,” “us” or “our”) are included in this quarterly report on Form 10-Q:

 

INDEX TO FINANCIAL STATEMENTS

 

	PAGE
Consolidated Balance Sheets as of March 31, 2020 (Unaudited) and December 31, 2019 (Audited)	2
Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2020 and 2019	3
Condensed Statements of Changes in Stockholders’ Equity for the year ended December 31, 2019 and three months ended March 31, 2020	4
Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019	5
Notes to Consolidated Financial Statements	6

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2020 AND DECEMBER 31 2019

 

		March 31,				December 31,
		2020				2019
						Audited
ASSETS
Current Assets:
Cash and cash equivalents		$	6,067			$	103,868
Accounts receivable, net			6,576,196				7,706,262
Inventories			244,919				262,682
Prepayment			350,539				354,813
Other receivables, net			41,694				47,653
Total Current Assets			7,219,415				8,475,278
Property, plant and equipment, net			14,586,976				15,094,080
Intangible assets, net			3,033,321				3,104,839
Other assets and deposits			33,486				40,021
Deferred tax asset			19,017				19,348
Total Assets		$	24,892,215			$	26,733,566
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt		$	5,281,665			$	5,373,859
Accounts payable and accrued payables			4,696,559				5,162,993
Advances from customers			305,596				250,158
Income tax  payable			488,721				497,251
Other payables			2,428,845				2,394,832
Due to related party			219,677				1,009,325
Total Current Liabilities			13,421,063				14,688,418
Long-term loans			1,710,871				1,855,294
Total Liabilities			15,131,934				16,543,712
Stockholders’ Equity:
Series A Preferred Stock, $0.0001 par value, 30,000,000 shares authorized, 19,000,000 shares issued and outstanding as of March 31, 2020 and December 31, 2019.			1,900				1,900
Common stock, $0.0001 par value, 500,000,000 shares authorized, 37,341,954 shares issued and outstanding as of March 31, 2020 and  December 31, 2019.			3,734				3,734
Additional paid in capital			19,398,854				19,398,854
Accumulated deficit			(9,826,745	)			(9,571,836	)
Accumulated other comprehensive loss			61,116				233,288
Stockholders’ Equity (Deficit) - Mullan Agritech Inc. and Subsidiaries			9,638,859				10,065,940
Noncontrolling interest			121,422				123,914
Total Stockholders’ Equity (Deficit)			9,760,281				10,189,854
Total Liabilities and Stockholders’ Equity		$	24,892,215			$	26,733,566

 

See accompanying notes to consolidated financial statements

 

  

MULIANG AGRITECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Unaudited)

 

		For Three Months Ended March 31,
		2020				2019
Revenues		$	838,947				2,225,368
Cost of goods sold			533,844				1,338,876
Gross profit (loss)			305,103				886,492
Operating expenses:
General and administrative expenses			457,046				341,556
Selling expenses			7,447				177,000
Total operating expenses			464,493				518,556
Income (Loss) from operations			(159,390	)			367,936
Other income (expense):
Interest expense			(98,623	)			(94,596	)
Subsidy income			-				146,560
Rental income,net			2,617				122,960
Other income (expense), net			(1,333	)			587
Total other income (expense)			(97,339	)			175,511
Income (Loss) before income taxes			(256,729	)			543,447
Income taxes			-				97,860
Net income			(256,729	)			445,587
Net income (loss) attributable to noncontrolling interest			(1,820	)			2,927
Net income (loss) attributable to Muliang Agritech Inc. common stockholders			(254,909	)			442,660
Other comprehensive income (loss):
Unrealized foreign currency translation adjustment			(172,844	)			219,081
Total Comprehensive loss			(429,573	)			664,668
Total comprehensive (income) loss attributable to noncontrolliing interests			(2,492	)			3,942
Total comprehensive (income) loss attributable to Muliang Agritech Inc. common stockholders		$	(427,081	)			660,726
Earnings per common share
Basic and diluted			(0.01	)			0.01
Weighted average common shares outstanding
Basic			37,341,954				56,170,859
Diluted			37,341,954				56,170,859

  

See accompanying notes to consolidated financial statements

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2019 AND THREE MONTHS ENDED MARCH 31, 2020
(Unaudited)

 

		Series A Preferred Stock								Common Stock								Additional Paid-in				Accumulated				Accumulated Other Comprehensive				Non-controlling
		Shares				Amount				Shares				Amount				Capital				Deficit				Income (Loss)				Interest				Total
Balance, December 31, 2018						$					56,341,718			$	5,634				19,398,854				(11,773,401	)			344,187				120,537				8,095,811
Net income																							442,660								2,927				445,587
Foreign currency translation adjustment																											219,081				1,015				220,096
Balance, March 31, 2019			-			$	-				56,341,718			$	5,634				19,398,854				(11,330,741	)			563,268				124,479				8,761,494
Common stock transferred to Series A Preferred Stock			19,000,000				1,900				(19,000,000	)			(1,900	)																			-
Rounded shares adjustment											236
Net income											-				-				-				1,758,905								887				1,759,792
Foreign currency translation adjustment											-				-				-				-				(329,980	)			(1,452	)			(331,432	)
Balance, December 31, 2019			19,000,000			$	1,900				37,341,954			$	3734				19,398,854				(9,571,836	)			233,288				123,914				10,189,854
Net income																							(254,909	)							(1,820	)			(256,729	)
Foreign currency translation adjustment																											(172,172	)			(672	)			(172,844	)
Balance, March 31, 2020			19,000,000				1,900				37,341,954				3,734				19,398,854				(9,826,745	)			61,116				121,422				9,760,281

  

See accompanying notes to consolidated financial statements

 

  

MULIANG AGRITECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(Unaudited)

 

		For Three Months Ended March 31,
		2020				2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(256,729	)		$	445,587
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			187,836				291,069
Changes in assets and liabilities:
Accounts receivable			1,006,497				133,884
Inventories			13,371				(329,687	)
Prepayment			84,977				149,975
Other receivables			5,186				(82,007	)
Accounts payable and accrued payables			(381,133	)			145,941
Account payable - related party			-				-
Advances from customers			60,246				25,638
Income tax payable			-				97,860
Other payables			75,491				38,911
Net cash provided by  operating activities			795,742				917,171
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of biological assets			-				(18,508	)
Investment in construction in progress			-				(228,458	)
Net cash used in investing activities			-				(246,966	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from(Repayment to) third party individual			-				62,679
Repayment to related party			(779,010	)			(724,803	)
Repayment of short-term loans			(113,580	)			(14,823	)
Net cash used in financing activities			(892,590	)			(676,947	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(953	)			281
NET INCREASE (DECREASE) IN CASH			(97,801	)			(6,461	)
CASH, BEGINNING OF PERIOD			103,868				12,778
CASH, END OF PERIOD			6,067				6,317
			-
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Cash paid for interest expense, net of capitalized interest		$	16,407			$	23,110
Cash paid for income tax		$	-			$	-
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES
Property addition in connection with liability		$	-			$	7,411

 

See accompanying notes to consolidated financial statements

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

 

Muliang Agritech, Inc. formerly known as M & A Holding Corporation. (“Muliang Agritech”) was incorporated under the laws of the State of Nevada on November 5, 2014. Muliang Agritech’s core business activities of developing, manufacturing, and selling organic fertilizers and bio-organic fertilizers for use in agricultural industry are conducted through several indirectly owned subsidiaries in China.

 

On June 9, 2016, Muliang Agritech filed a Certificate of Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of the State of Nevada, changing its name from “M & A Holding Corporation,” to “Mullan Agritech, Inc.”

 

On July 11, 2016, the Financial Industry Regulatory Authority (FINRA) effected in the marketplace the change of the corporate name from “M & A Holding Corporation,” to “Mullan Agritech, Inc.”, and effective on such date.

 

On April 4, 2019, the Company changed its corporate name from “Mullan Agritech Inc.” to “Muliang Agritech Inc.” The name change took effect on May 7, 2019. In connection with the name change, our stock symbol changed to “MULG”. Muliang Agritech trades under its new name, Muliang Agritech, Inc.

 

History

 

Shanghai Muliang Industry Co., Ltd. (referred to herein as “Muliang Industry”) was incorporated in PRC on December 7, 2006 as a limited liability company, owned 95% by Lirong Wang and 5% by Zongfang Wang. Muliang Industry through its own operations and its subsidiaries is engaged in the business of developing, manufacturing, and selling organic fertilizers and bio-organic fertilizers for use in the agricultural industry.

 

On May 27, 2013, Muliang Industry entered into and consummated an equity purchase agreement whereby it acquired 99% of the outstanding equity of Weihai Fukang Bio-Fertilizer Co., Ltd. (“Fukang”), a corporation organized under the laws of the People’s Republic of China. Fukang was incorporated in Weihai City, Shandong Province on January 6, 2009. Fukang is focused on the distribution of organic fertilizers and the development of new bio-organic fertilizers. As a result of the completion of the transaction, Fukang became a 99% owned subsidiary of Muliang Industry, with the remaining 1% equity interest owned by Mr. Hui Song.

 

On July 11, 2013, Muliang Industry established a wholly owned subsidiary, Shanghai Muliang Agritech Development Co., Ltd. (“Agritech Development”) in Shanghai, China. On November 6, 2013, Muliang Industry sold 40% of the outstanding equity of Agritech Development to Mr. Jianping Zhang for consideration of approximately $65,000 or RMB 400,000. Agritech Development does not currently conduct any operations.

 

On July 17, 2013, Muliang Industry entered into an equity purchase agreement to acquire 100% of the outstanding equity of Shanghai Zongbao Environmental Construction Co., Ltd. (“Zongbao”) with consideration of approximately $3.2 million or RMB 20 million, effectively becoming the wholly-owned subsidiary of Muliang Industry. Zongbao was incorporated in Shanghai on January 25, 2008. Zongbao processes and distributes organic fertilizers. Zongbao wholly owns, Shanghai Zongbao Environmental Construction Co., Ltd. Cangzhou Branch (“Zongbao Cangzhou”).

 

On August 21, 2014, Muliang Agricultural Limited (“Muliang HK”) was incorporated in Hong Kong as an investment holding company.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED)

 

January 27, 2015, Muliang HK incorporated a wholly foreign-owned enterprise, Shanghai Mufeng Investment Consulting Co., Ltd (“Shanghai Mufeng”), in the People’s Republic of China (“PRC”).

 

On July 8, 2015, Muliang Agritech entered into certain stock purchase agreement with Muliang Agriculture, Inc., pursuant to which Muliang Agritech, for a consideration of $5,000, acquired 100% interest in Muliang HK and its wholly-owned subsidiary Shanghai Mufeng. Both Muliang HK and Shanghai Mufeng are controlled by the Company’s sole officer and director, Lirong Wang.

 

On July 23, 2015, Muliang Industry established a wholly owned subsidiary, Shanghai Muliang Agricultural Sales Co., Ltd. (“Muliang Sales”) in Shanghai, China.

 

On September 3, 2015, Muliang Agritech effected a split of its outstanding common stock resulting in an aggregate of 150,525,000 shares outstanding of which 120,000,000 were owned by Chenxi Shi the founder of Muliang Agritech and its sole officer and director. The remaining 30,525,000 were held by a total of 39 investors.

 

On January 11, 2016, Muliang Agritech issued 129,475,000 shares of its common stock to Lirong Wang for an aggregate consideration of $64,737.50. On the same date, Chenxi Shi, the sole officer and director of Muliang Agritech on that date, transferred 120,000,000 shares of the common stock of the Company held by him to Lirong Wang for $800 pursuant to a transfer agreement.

 

On February 10, 2016, Shanghai Mufeng entered into a set of contractual agreements known as Variable Interest Entity (“VIE”) Agreements, including (1) Exclusive Technical Consulting and Service Agreement, (2) Equity Pledge Agreement, and (3) Call Option Cooperation Agreement, with Muliang Industry, and its Principal Shareholders. As a result of the Stock Purchase Agreement and the set of VIE Agreements, Shanghai Muliang Industry Co., Ltd., along with its consolidated subsidiaries, became entities controlled by Muliang Agritech whereby Muliang Agritech would derive all substantial economic benefit generated by Muliang Industry and its subsidiaries.

 

As a result, Muliang Agritech has a direct wholly-owned subsidiary, Muliang HK and an indirectly wholly owned subsidiary Shanghai Mufeng. Through its VIE Agreements, Muliang Agritech exercises control over Muliang Industry. Muliang Industry has two wholly-owned subsidiaries (Zongbao and Muliang Sales), one 99% owned subsidiary (Fukang), one 60% owned subsidiary (Agritech Development), and one indirectly wholly owned subsidiary Zongbao Cangzhou.

 

On June 6, 2016, Muliang Industry established a wholly-owned subsidiary, namely, Muliang (Ningling) Bio-chemical Fertilizer Co. Ltd (“Ningling Fertilizer”) in Henan Province, the central plain of China. On October 12, 2017, the Company ceased operation of Ningling Fertilizer and deregistered Ningling Fertilizer with the Administration for Industry and Commerce as the Land use right was not approved by the government. The Company closed Ningling Fertilizer with net assets of $2,275 and accumulated deficit of $34,739 as of October 12, 2017. The ceased operation does not constitute a strategic shift that will have a major effect on our operations or financial results and as such, the disposal is not classified as discontinued operations in our consolidated financial statements.

 

On July 7, 2016, Muliang Industry established a subsidiary, namely, Zhonglian Huinong (Beijing) Technology Co., Ltd (“Zhonglian”) in Beijing City, China. Muliang Industry owns 65% shares of Zhonglian, and a third-party company, Zhongrui Huilian (Beijing) Technology Co., Ltd owns the other 35% shares. Zhonglian has no operating activity as of December 31, 2018. 

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS (CONTINUED)

 

On October 27, 2016, Muliang Industry established a subsidiary, namely, Yunnan Muliang Animal Husbandry Development Co., Ltd (“Yunnan Muliang”) in Yunnan Province, China. Muliang Industry owns 55% shares of Yunnan Muliang, and a third-party company, Shuangbai County Development Investment Co., Ltd. owns the other 45% shares. On December 8, 2018, Muliang Industry acquired 25% of the shares of Yunnan Muliang with a consideration of $727,125 (RMB5,000,000) from Shuangbai County Development Investment Co., Ltd. And the other 20% of the shares were acquired by Lirong Wang. Yunnan Muliang was setup for goat slaughtering and processing project located in Shuangbai County, Chuxiong City, Yunnan Province, PRC.

 

On March 21, 2019, Muliang Industry established a subsidiary, namely, Heilongjiang suistraw Biotechnology Co., Ltd (“Heilongjiang”) in Heilongjian Province,China. Muliang Industry owns 51% shares of Heilongjiang, Mr Lirong Wang owns 39% shares, and a third-party individual owns the other 10% shares. Heilongjiang was established to develope the organic fertilizer business in the northeast of China.

 

On April 4, 2019, the Company’s Board of Directors and majority shareholder approved a 5 to 1 reverse stock split of all of the issued and outstanding shares of the Company’s common stock, change of corporate name from “Mullan Agritech Inc.” to “Muliang Agritech Inc.”, and creation of one hundred million (100,000,000) shares of Blank Check Preferred Stock.

 

On April 5, 2019, we filed a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada to reflect the Name Change and to authorize the creation of Blank Check Preferred Stock. As a result, the capital stock of the Company consists of 500,000,000 shares of common stock, $0.0001 par value, and 100,000,000 shares of blank check preferred stock, $0.0001 par value.

 

On April 16, 2019, we filed a Certificate of Change to our Articles of Incorporation with the Secretary of State of the State of Nevada to reflect the reverse stock split. Any fractional shares are to be rounded up to whole shares. The reverse stock split does not affect the par value or the number of authorized shares of common stock of the Company.

 

The reverse stock split and the name change took effect on May 7, 2019.

 

Muliang Agritech, Muliang HK, Shanghai Mufeng, Muliang Industry, Zongbao, Zongbao Cangzhou, Muliang Sales, Fukang, Agritech Development, Yunnan Muliang, and Zhonglian are referred to as subsidiaries the Company and its consolidated subsidiaries are collectively referred to herein as the “Company”, “we” and “us”, unless specific reference is made to an entity.

 

The consolidated financial statements were prepared assuming that the Company has controlled Muliang HK and its intermediary holding companies, operating subsidiaries, and variable interest entities: Shanghai Mufeng, Muliang Industry, Zongbao, Zongbao Cangzhou, Muliang Sales, Fukang, Heilongjiang, and Agritech Development, from the first period presented. The transactions detailed above have been accounted for as reverse takeover transaction and a recapitalization of the Company; accordingly, the Company (the legal acquirer) is considered the accounting acquiree and Muliang HK (the legal acquiree) is considered the accounting acquirer. No goodwill has been recorded. As a result of this transaction, the Company is deemed to be a continuation of the business of Muliang HK, Shanghai Mufeng, and Muliang Industry.

 

Liquidity and Going Concern

 

As reflected in the accompanying consolidated financial statements, we had net accumulated deficit of $9,826,745 and $9,571,836 as of March 31, 2020 and December 31, 2019, respectively. Our cash balances as of March 31, 2020 and December 31, 2019 were $6,067 and $103,868, respectively. We had current liabilities of $13,421,063 and $14,688,418 at March 31, 2020 and December 31, 2019, which would be due within the next 12 months. In addition, we had a working capital deficit of $6,201,648 and $6,213,140 at March 31, 2020 and December 31, 2019, respectively.

 

The company plans to continue its expansion and investments, which will require continued improvements in revenue, net income, and cash flows.

 

The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise additional capital, and generate more revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in conformity with US GAAP. The basis of accounting differs from that used in the statutory accounts of the Company, which are prepared in accordance with the accounting principles of the PRC (“PRC GAAP”). The differences between US GAAP and PRC GAAP have been adjusted in these consolidated financial statements. The Company’s functional currency is the Chinese Renminbi (“RMB”); however, the accompanying consolidated financial statements have been translated and presented in United States Dollars (“USD”). 

 

Interim Financial Statements

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2019, as not all disclosures required by generally accepted accounting principles for annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations as the audited financial statements for the year ended December 31, 2019.

 

Use of Estimates

 

The preparation of these financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of these financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ from these estimates. Significant estimates include the useful lives of property and equipment, land use rights, assumptions used in assessing collectability of receivables and impairment for long-term assets.

 

Principles of Consolidation

 

Muliang Agritech consolidates the following entities, including wholly-owned subsidiaries, Muliang HK, Shanghai Mufeng, and its wholly controlled variable interest entities, Muliang Industry, and Zhongbao, 60% controlled Agritech Development, 99% controlled Fukang, 65% controlled Zhonglian, 80% controlled Yunnan Muliang and 51% controlled Heilongjiang. The 40% equity interest holder of Agritech Development, 1% equity interest holders in Fukang, 35% equity interest holders in Zhonglian, 20% interest in Yunnan Muliang and 49% equity interest in Heilongjiang are accounted as non-controlling interest in the Company’s consolidated financial statements.

 

The variable interest entities consolidated for which the Company is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Cash and Cash Equivalents

 

For purposes of the statements of cash flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents. The Company maintains cash with various financial institutions.

 

Accounts Receivable

 

Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection.

 

Inventories

 

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method.

 

Property, Plant and Equipment

 

Plant and equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

 

Included in property and equipment is construction-in-progress which consisted of factory improvements and machinery pending installation and includes the costs of construction, machinery and equipment, and any interest charges arising from borrowings used to finance these assets during the period of construction or installation of the assets. No provision for depreciation is made on construction-in-progress until such time as the relevant assets are completed and ready for their intended use.

 

Estimated useful lives of the Company’s assets are as follows:

 

			Useful Life
Building			20 years
Operating equipment			5-10 years
Vehicle			3-5 years
Electronic equipment			3-20 years
Office equipment			3-20 years
Apple orchard			10 years

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The apple orchard includes rental for an apple farm, labor cost, fertilizers, apple seeds, apple seedlings and others. The costs to purchase and cultivate apple trees and the expenditures related to labor and materials to plant apple trees until they become commercially productive are capitalized, which require a two-year period. The estimated production life for apple tree is 10 years, and the costs are depreciated without a residual value. Expenses incurred maintaining apple trees during the growth cycle until seedling apple trees or grafted varieties are fruited are capitalized into inventory and included in Work in Process—apple orchard, a component of inventories.

 

Depreciation expenses pertaining to apple trees will be included in inventory costs for those apples to be sold and ultimately become a component of cost of goods sold. Similar to other assets, the failure of our apple trees to be serviceable over the entirety of their anticipated useful lives or to be sold at their anticipated residual value will negatively impact our operating results.

 

Intangible Assets

 

Included in the intangible assets are land use rights. According to the laws of the PRC, the government owns all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the Chinese government. Intangible assets are being amortized using the straight-line method over their lease terms or estimated useful life.

 

Estimated useful lives of the Company’s intangible assets are as follows:

 

		Useful Life
Land use rights		50 years
Non-patented technology		10 years

 

The Company carries intangible assets at cost less accumulated amortization. In accordance with US GAAP, the Company examines the possibility of decreases in the value of intangible assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. The Company computes amortization using the straight-line method over estimated useful life of 50 years for the land use rights.

 

Impairment of Long-lived Assets

 

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company recorded no impairment charge for the three months ended March 31, 2020 and 2019. 

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Advances from Customers

 

Advances from customers consist of prepayments from customers for merchandise that had not yet been shipped. The Company will recognize the deposits as revenue as customers take delivery of the goods and title to the assets is transferred to customers in accordance with the Company’s revenue recognition policy.

 

Non-controlling Interest

 

Non-controlling interests in the Company’s subsidiaries are recorded in accordance with the provisions of ASC 810 and are reported as a component of equity, separate from the parent’s equity. Purchase or sale of equity interests that do not result in a change of control are accounted for as equity transactions. Results of operations attributable to the non-controlling interest are included in our consolidated results of operations and, upon loss of control, the interest sold, as well as interest retained, if any, will be reported at fair value with any gain or loss recognized in earnings.

 

Revenue Recognition

 

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for the reporting period beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 605.

 

Management has determined that the adoption of ASC 606 did not impact the Company’s previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to opening retained earnings.

 

Revenue for sale of products is derived from contracts with customers, which primarily include the sale of fertilizer products and environmental protection equipment. The Company’s sales arrangements do not contain variable consideration. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and control of the products has been transferred to the customer. For vast majority of the Company’s product sales, the performance obligations and control of the products transfer to the customer when products are delivered, and customer acceptance is made.

 

Pursuant to the guidance of ASC Topic 840, rent shall be reported as income by lessors over the lease term as it becomes receivable. The Company currently leased part of the building of the Shanghai new plant to third parties as warehouse. The Company recognizes building leasing revenue over the beneficial period described by the agreement, as the revenue is realized or realizable and earned. 

 

The Company recognized rental income from leasing a portion of its manufacturing facility located in Shanghai to third parties. For the three months ended March 31, 2020 and 2019, rental income of $10,738 and $165,711 were recognized as other income.

 

Cost of Sales

 

Cost of goods sold consists primarily of raw materials, utility and supply costs consumed in the manufacturing process, manufacturing labor, depreciation expense and direct overhead expenses necessary to manufacture finished goods as well as warehousing and distribution costs such as inbound freight charges, shipping and handling costs, purchasing and receiving costs.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Income Taxes

 

The Company accounts for income taxes under the provisions of Section 740-10-30 of the FASB Accounting Standards Codification, which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements or tax returns.

 

The Company is subject to the Enterprise Income Tax law (“EIT”) of the People’s Republic of China. The Company’s operations in producing and selling fertilizers are subject to the 25% enterprise income tax.

 

Related Parties

 

Parties are 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 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 related party transactions.

 

Accumulated Other Comprehensive Income (Loss)

 

Comprehensive income (loss) comprised of net income (loss) and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. The Company’s comprehensive income (loss) consist of net income (loss) and unrealized gains from foreign currency translation adjustments.

 

Foreign Currency Translation

 

The Company’s functional currency is the Chinese Renminbi (“RMB”); however, the accompanying consolidated financial statements have been translated and presented in United States Dollars (“USD”). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income/loss. The translation adjustment for three months ended March 31, 2020 and 2019 were loss of $172,845 and gain of $219,081, respectively. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter into any material transaction in foreign currencies. Transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

 

Asset and liability accounts at March 31, 2020 and December 31, 2019 were translated at 7.0712 RMB to $1 USD and 6.9499 RMB to $1 USD, respectively, which were the exchange rates on the balance sheet dates. The average translation rates applied to the statements of income for the three months ended March 31, 2020 and 2019 were 7.0106 RMB and 6.7464 RMB to $1 USD, respectively.

 

Earnings (Loss) per Share

 

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Earnings per share excludes all potential dilutive shares of common stock if their effect is anti-dilutive. There were no potential dilutive securities at March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019.

 

Fair Value of Financial Instruments

 

The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

 

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

 

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

 

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

 

The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, inventories, advances to suppliers, prepaid expenses, short-term loans, accounts payable, accrued expenses, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments.

   

ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

 

  

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The following table summarizes the carrying values of the Company’s financial instruments: 

 

		March 31,			December 31,
		2020			2019
Current portion of long-term debt		$	5,281,665		$	5,373,859
Long-term loan			1,710,871			1,855,543
Total		$	6,992,536		$	7,229,402

 

Government Contribution Plan

 

Pursuant to the laws applicable to PRC law, the Company is required to participate in a government-mandated multi-employer defined contribution plan pursuant to which certain retirement, medical and other welfare benefits are provided to employees. Chinese labor regulations require the Company to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution.

 

Statutory Reserve

 

Pursuant to the laws applicable to the PRC, the Company must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss.

 

Segment Information

 

The standard, “Disclosures about Segments of an Enterprise and Related Information,” codified with ASC-280, requires certain financial and supplementary information to be disclosed on an annual and interim basis for each reportable segment of an enterprise. The Company believes that it operates in two business segments and in one geographical segment (China), as all of the Company’s current operations are carried in China.

 

Recent Accounting Pronouncement

 

In February, 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02) “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. For finance leases, a lessee is required to do the following:

 

●

Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

●

Recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income

 

●

Classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows.

 

For operating leases, a lessee is required to do the following:

 

●

Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position

 

●

Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis

 

●

Classify all cash payments within operating activities in the statement of cash flows.

 

In July, 2018, the FASB issued Accounting Standards Update No. 2018-11 (ASU 2018-11), which amends ASC 842 so that entities may elect not to recast their comparative periods in transition (the “Comparatives Under 840 Option”). ASU 2018-11 allows entities to change their date of initial application to the beginning of the period of adoption. In doing so, entities would:

 

●

Apply ASC 840 in the comparative periods.

 

●

Provide the disclosures required by ASC 840 for all periods that continue to be presented in accordance with ASC 840.

 

●

Recognize the effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings for the period of adoption.

 

In addition, the FASB also issued a series of amendments to ASU 2016-02 that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new lease standard.

 

The management has reviewed the accounting pronouncements and adopted the new standard on January 1, 2019 using the modified retrospective method of adoption.

 

In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this Update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its consolidated financial statements.

 

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – ACCOUNTS RECEIVABLE

 

Accounts receivable consisted of the following:

 

		March 31,				December 31,
		2020				2019
Accounts receivable		$	6,955,463			$	8,047,929
Less: Allowance for doubtful accounts			(379,267	)			(341,667	)
Total, net		$	6,576,196			$	7,706,262

 

The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. After evaluating the collectability of individual receivable balances, the Company did not recognize bad debt allowance expense both for the three months ended March 31, 2020 and 2019.

 

NOTE 4 – INVENTORIES

 

Inventories consisted of the following:

 

		March 31,				December 31,
		2020				2019
Raw materials		$	80,062			$	116,907
Finished goods			164,857				145,775
Total, net		$	244,919			$	262,682

 

The Company did not recognize loss from inventory impairment for the three months ended March 31, 2020 and 2019.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 5 – PREPAYMENT

 

The prepayment balance of $350,539 as of March 31, 2020 represents the advances paid to suppliers for the purchase of raw materials to be delivered in the next operating period.

 

 

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment at March 31, 2020 and December 31, 2019 consisted of:

 

		March 31,				December 31,
		2020				2019
Building		$	12,497,810			$	12,715,941
Operating equipment			2,529,742				2,785,557
Vehicle			80,153				81,552
Office equipment			20,406				20,762
Apple Orchard			998,227				789,344
Construction in progress			1,679,825				1,709,144
			17,806,163				18,102,300
Less: Accumulated depreciation			(3,219,187	)			(3,008,220
		$	14,586,976			$	15,094,080

 

For the three months ended March 31, 2020 and 2019, depreciation expense amounted to $169,420 and $272,302, respectively. Depreciation is not taken during the period of construction or equipment installation. Upon completion of the installation of manufacturing equipment or any construction in progress, construction in progress balances will be classified to their respective property and equipment category.

 

The construction in progress of $1,679,825 represents the investment of a black goat processing plant located in Shuangbai County, Chuxiong City, Yunnan Province, PRC.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 7 – INTANGIBLE ASSETS

 

Intangible assets consisted of the following:

 

		March 31,				December 31,
		2020				2019
Land use rights		$	3,518,758			$	3,580,172
Non-patented technology			14,142				14,389
			3,532,900				3,594,561
Less: Accumulated amortization			(499,579	)			(489,722	)
		$	3,033,321			$	3,104,839

 

For the three months ended March 31, 2020 and 2019, amortization of intangible assets amounted to $18,416 and $18,767, respectively.

 

NOTE 8 – DEFERRED TAX ASSETS, NET

 

The components of the deferred tax assets are as follows:

 

		March 31,				December 31,
		2020				2019
Deferred tax assets, non-current
Allowance for doubtful accounts			19,017				19,348
Deferred tax assets			19,017				19,348
Less: valuation allowance			-				-
Deferred tax assets, non-current		$	19,017			$	19,348

 

Deferred taxation is calculated under the liability method in respect of taxation effect arising from all timing differences, which are expected with reasonable probability to realize in the foreseeable future. The Company’s subsidiary registered in the PRC is subject to income taxes within the PRC at the applicable tax rate.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 9 – LOANS PAYABLE

  

Current portion of long-term loans amounted to $4,221,025 representing balance due to Agricultural Bank of China, with an annual interest rate of 5.70% + (Hongkong InterBank Offered Rate (“HIBOR”)). This loan was collateralized with land use rights and guaranteed by Mr. Lirong Wang, the CEO. 

 

Current portion of long-term loans amounted to $1,060,640 representing balance due to Rushan City Rural Credit Union.

 

Long-term loans represent amounts due to lenders that are due in more than one year, whose balance was $1,710,871 and $1,855,294 as of March 31, 2020 and December 31, 2019, respectively. These loans are non-interest bearing, unsecured.

 

Long-term loan and current portion of long-term loan consisted of the following: 

 

		March 31,			December 31,
		2020			2019
Loan payable to Agricultural Bank of China, annual interest rate of 5.70% + HIBOR, due by September 25, 2019,and extended for another year.		$	4,221,025		$	4,294,707
Loan payable to Rushan City Rural Credit Union, annual interest 8.3125%, due by July 25, 2019, and extended for another year.			1,060,640			1,079,152
Long-term loans due to individuals and entities without interest			1,710,871			1,855,294
			6,992,536			7,229,153
Current portion of long-term loans payable			5,281,665			5,373,859
Total, net		$	1,710,871		$	1,855,294

 

As of March31, 2020, the Company’s future loan obligations according to the terms of the loan agreement are as follows:

 

within 1 year		$	5,281,665
1-2 years			1,710,871
3 years			-
Total		$	6,992,536

 

The Company recognized interest expenses of $98,623 and $94,596 for the three months ended March 31, 2020 and 2019, respectively.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

  

NOTE 10 – STOCKHOLDERS DEFICIT

 

Authorized Stock

 

The Company has authorized 500,000,000 common shares with a par value of $0.0001 per share.  Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

On April 5, 2019, the Company filed a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada to reflect the creation of Blank Check Preferred Stock. As a result, the capital stock of the Company consisted of 500,000,000 shares of common stock, $0.0001 par value, and 100,000,000 shares of blank check preferred stock after the filling.

 

On October 30, 2019, 30,000,000 shares were designated to be Series A Preferred Stock out of the 100,000,000 shares of blank check preferred stock.

 

Common Share Issuances

 

On June 29, 2018, the outstanding amount $326,348 due to Mr. Wang, CEO and Chairman of the Company, were converted into 43,200 shares of Common Shares at $ 7.55 per share.

 

On June 29, 2018 the Company issued 298,518 common shares of the Company at $7.55 for proceeds of $2,255,111 to Mr. Wang, CEO and Chairman of the Company.

  

On April 4, 2019, the Company’s Board of Directors and majority shareholder approved a 5 to 1 reverse stock split of all of the issued and outstanding shares of the Company’s common stock (the “Reverse Stock Split”). No fractional shares of Common Stock will be issued as a result of the reverse stock split. The Stock Split does not affect the par value or the number of authorized shares of common stock of the Company.

  

On April 16, 2019, the Company filed a Certificate of Change to our Articles of Incorporation with the Secretary of State of the State of Nevada to reflect the Reverse stock Split. The reverse stock split took effect on May 7, 2019 The common shares outstanding have been retroactively restated to reflect the reverse stock split.

 

On October 10, 2019 and November 1, 2019, the Company issued a total of 19,000,000 shares of Series A Preferred Stock to Mr. Wang, the CEO and Chairman of the Company, in exchange for 19,000,000 shares of common stock beneficially owned by him. Following the transaction, 19,000,000 shares of common stock were cancelled and returned to treasury.

 

As of the date of this report, there were 37,341,954 shares of common stock outstanding.

 

As a result of the Reverse Stock Split and cancellation of common stock, the total issued and outstanding shares of common stock for the Company is 37,341,954 as of the filling date.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 10 – STOCKHOLDERS DEFICIT (CONTINUED)

 

Blank Check Preferred Stock

 

On April 4, 2019, the Company’s Board of Directors and majority shareholder approved creation of one hundred million (100,000,000) shares of Blank Check Preferred Stock, $0.0001 par value. To the fullest extent permitted by the laws of the State of Nevada, as the same now exists or may hereafter be amended or supplemented, the Board of Directors may fix and determine the designations, rights, preferences or other variations of each class or series within each class of preferred stock of the Company. The Company may issue the shares of stock for such consideration as may be fixed by the Board of Directors.

 

On April 5, 2019, the Company filed a Certificate of Amendment to the Articles of Incorporation with the Secretary of State of the State of Nevada to authorize the creation of Blank Check Preferred Stock.

 

On October 30, 2019, 30,000,000 shares were designated to be Series A Preferred Stock out of the 100,000,000 shares of blank check preferred stock.

  

Series A Preferred Stock

 

On October 30, 2019, the Company’s Board of Directors and majority shareholder approved to designate 30,000,000 shares as Series A Preferred Stock out of the 100,000,000 shares of blank check preferred stock, which the preferences and relative and other rights, and the qualifications, limitations or restrictions thereof, shall be set forth in the discussion below under the “Series A Preferred Stock”. A certificate of designation for the Series A Preferred Stock was filed with the Secretary of the State of the State of Nevada on October 30, 2019.

 

The holders of Series A Preferred Stock shall not be entitled to receive dividends of any kind.

 

The Series A Preferred Stock shall not be subject to conversion into Common Stock or other equity authorized to be issued by the Corporation.

 

The holders of the issued and outstanding shares of Series A Preferred Stock shall have voting rights equal to ten (10) shares of Common Stock for each share of Series A Preferred Stock.

 

On November 1, 2019, the Company issued a total of 19,000,000 shares of Series A Preferred Stock to Mr. Wang, the CEO and Chairman of the Company, in exchange for 19,000,000 shares of common stock beneficially owned by him. Following the transaction, 19,000,000 shares of common stock were cancelled and returned to treasury.

 

As of the filling date, there were 19,000,000 shares of Series A Preferred Stock issued outstanding.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 11 – RELATED PARTY TRANSACTIONS

 

Ms. Hui Song was the Company’s former sales director. In 2013, Ms. Hui Song resigned from the Company and no longer had any significant control or influence over the Company; therefore, she was no longer considered a related party. Jilin Jiliang Zongbao Biological Technology Co., Ltd., an entity controlled by Ms. Hui Song, and Yantai Zongbao Tele-Agriculture Service Co., Ltd., a related company of Ms. Hui Song, were also no longer considered as related parties of the Company.

 

*Accounts receivable from and sales to Ms. Hui Song and her associated company

 

For the three months ended March 31, 2020 and 2019, the Company did not sell any products to Ms. Hui Song and her associated company.

 

The Company sold fertilizer manufacturing equipment to Jilin Jiliang Zongbao Biological Technology Co., Ltd., in the amount of $171,664, with related cost of $107,567 for the three months ended March 31, 2018. This transaction was reflected in the revenue and cost of goods sold.

 

As of March 31, 2020 and December 31, 2019, the Company has account receivable balance of $180,550 and $234,062 from Jilin Jiliang Zongbao Biological Technology Co., Ltd., respectively.

  

*Accounts payable to and purchase from Ms. Hui Song and her associated company

 

For the three months ended March 31, 2020 and 2019, the Company purchased fertilizer of $459,247 and $518,943 from Jilin Jiliang Zongbao Biological Technology Co., Ltd., respectively.

 

As of March 31, 2020 and December 31, 2019, accounts payable to Jilin Jiliang Zongbao Biological Technology Co., Ltd. were $455,312 and $505,331 respectively.

 

*Loan from Ms. Hui Song and her associated company

 

As of March 31, 2020, long-term loan payable balances for Jilin Jiliang Zongbao Biological Technology Co., Ltd. and Ms. Hui Song were $758,527 and $259,503, respectively.

 

As of December 31, 2019, long-term loan payable balances for Jilin Jiliang Zongbao Biological Technology Co., Ltd. and Ms. Hui Song were $799,237 and $264,033, respectively.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 11 – RELATED PARTY TRANSACTIONS (CONTINUED)

  

*Due to related party

 

Outstanding balance due to Mr. Lirong Wang, Ms. Xueying Sheng and Mr. Guohua Lin below are advances to the Company as working capital. These advances are due on demand, non-interest bearing, and unsecured, unless further disclosed.

 

		March 31,				December 31,
		2020				2019				Relationship
Mr. Lirong Wang			42,695				861,702			The CEO and Chairman / Actual controlling person
Ms. Xueying Sheng			99,239				73,474			Controller/Accounting Manager of the Company
Mr. Guohua Lin			77,743				74,149			Senior management / One of the Company’s shareholders
Total			219,677				1,009,325

  

For the three months ended March 31, 2020, the Company borrowed $321,218 from Mr. Lirong Wang, and repaid $1,140,225.

 

For the three months ended March 31, 2020, the Company borrowed $4,992 from Mr. Guohua Lin, and repaid $157.  

 

For the three months ended March 31, 2020, the Company borrowed $0 from Ms. Xueying Sheng and repaid $1,146.

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 12 – CONCENTRATIONS

 

Customer Concentrations

 

The following table sets forth information as to each customer that accounted for 10% or more of the Company’s revenues for the three months ended March 31, 2020 and 2019.

 

		For the three months ended
		March 31,
		2020								2019
Customer		Amount				%				Amount				%
A			353,037				47	%			414,488.00				22	%
B			N/A				N/A				386,325.00				20	%
C			N/A				N/A				266,809.00				14	%
D			N/A				N/A				222,341.00				12	%
E			314,524				42	%			N/A				N/A

 

Supplier Concentrations

 

The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s purchase for the three months ended March 31, 2020 and 2019.

 

		For the three months ended
		March 31,
		2020								2019
Suppliers		Amount				%				Amount				%
A			N/A				N/A				401,440				34	%
B			N/A				N/A				142,476				12	%
C			459,247				85	%			518,943				44	%
D			N/A				N/A				N/A				N/A

 

Credit Risks

 

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. Substantially all of the Company’s cash is maintained with state-owned banks within the PRC, and none of these deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company’s sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. At March 31, 2020 and December 31, 2019, the Company’s cash balances by geographic area were as follows:

 

		March 31, 2020								December 31, 2019
China		$	6,067				100	%		$	103,868				100	%
Total cash and cash equivalents		$	6,067				100	%		$	103,868				100	%

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 13 – INCOME TAXES

 

United States

 

Muliang Agritech is established in the State of Nevada in the United States and is subject to Nevada State and US Federal tax laws. Muliang Agritech has approximately $102,000 of unused net operating losses (“NOLs”) available for carrying forward to future years for U.S. federal income tax reporting purposes. The benefit from the carry forward of such NOLs will begin expiring during the year ended December 31, 2034. Because United States tax laws limit the time during which NOL carry forwards may be applied against future taxable income, the Company may be unable to take full advantage of its NOLs for federal income tax purposes should the Company generate taxable income. Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material ownership changes that could occur in the Company as it continues to raise additional capital. Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain.

 

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company has considered the accounting impact of the effects of the Act during the year ended December 31, 2018 including a reduction in the corporate tax rate from 34% to 21% among other changes.

 

Hong Kong

 

Muliang HK is established in Hong Kong and its income is subject to a 16.5% profit tax rate for income sourced within the country. For the three months ended March 31, 2020 and 2019, Muliang HK did not earn any income derived in Hong Kong, and therefore was not subject to Hong Kong Profits Tax.

 

China, PRC

 

Shanghai Mufeng and its subsidiaries Muliang Industry, Zongbao, Zongbao Cangzhou, Muliang Sales, Fukang, Agritech Development, Zhongliang, Heilongjiang and Yunnan Muliang are established in China and its income is subject to income tax rate of 25%.

 

The reconciliation of effective income tax rate as follows:

 

		For the Three Months Ended
		March 31,				March 31,
		2020				2019
US Statutory income tax rate			21	%			21	%
Lower rates in PRC, net			-				-
Valuation allowance			(21	)%			(21	)%
Total			-				-

The provision for income taxes consists of the following:

 

		For the Three Months Ended March 31,
		2019				2018
Current		$	-			$	97,860
Deferred			-				-
Total		$	-			$	97,860

 

 

MULIANG AGRITECH, INC. AND SUBSIDIARIES

NOTES OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 13 – INCOME TAXES (CONTINUED)   

 

Accounting for Uncertainty in Income Taxes

 

The tax authority of the PRC government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities.

 

ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of March 31, 2020 and December 31, 2019.

 

NOTE 14 – BUSINESS SEGMENTS

 

The revenues and cost of goods sold from operation consist of the following:

 

		Revenues								Cost of Sales
		For the Three Months Ended								For the Three Months Ended
		March 31,				March 31,				March 31,				March 31,
		2020				2019				2020				2019
Fertilizer sales		$	754,120			$	1,915,973			$	448,264			$	1,024,937
Agricultural products (food) sales			84,827				309,395				85,580				313,939
Total		$	838,947			$	2,225,368			$	533,844			$	1,338,876

 

NOTE 15 – SUBSEQUENT EVENTS

 

On June 19, 2020, The board of directors consent and agree to the adoption of the following resolutions;

 

Acquisition of Viagoo Pte Ltd

 

The board has decided to enter Share Exchange Agreement dated June 19, 2020, with the shareholders of Viagoo Pte Ltd., a Singapore private company, for the acquisition of 100% equity interest of Viagoo Pte Ltd., pursuant to the terms and conditions within the Acquisition Agreement.

 

Issuance of Shares for Acquisition

 

The board has decided to issue an aggregate of 1,011,000 share of Company’s restricted common stock, valued at $2.8 per share to shareholders of Viagoo Pte Ltd. for a total consideration of $2,830,800.

 

Appointment of Alan Chow and David Chong

 

The board has decided to appoint Nunissait Tjandra as Company’s director and appoint Shaw Cheng “David” Chong as Company’s Chief Financial Officer pursuant to the terms and conditions set forth in the employment agreement.

 

CFO Compensation

 

The board has decided to enter certain employment agreement with David Chong Shaw Cheng and issue to him 50,000 shares of Company’s common stock upon his appointment. Upon listing on a national exchange, the Company has agreed to pay Mr. Chong an additional 50,000 shares and an annual salary of $100,000.

 

Performance Earn-Out Agreement

 

The board has decided to enter into certain performance earn-out agreement with certain key members of Viagoo Pte Ltd. for a total consideration up to 4,357,143 shares of Company’s common stock upon achievement of certain milestones by Viagoo on a pro-rata basis.

 

  

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

 

The following discussion of our financial condition and results of operations should also be read in conjunction with our unaudited consolidated financial statements and the notes to those financial statements appearing elsewhere in this report. The following discussion contains forward-looking statements relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report. 

  

Business Overview

 

We primarily engage in the manufacturing and distribution of organic fertilizer and the sales of agricultural products in the PRC. Our organic fertilizer products are sold under our brand names “Zongbao,” “Fukang,” and “Muliang.”

 

Through our patented technology, we process crop straw (including corn, rice, wheat, cotton, and other crops) into high quality organic nutritious fertilizers that are easily absorbed by crops in three hours. Straws are common agricultural by-products. In PRC, farmers usually remove the straw stubble that are remains after grains, by burning them in order to continue farming on the same land. These activities have resulted in significant air pollution, and they damage the surface structure of the soil with loss of nutrients. We turn waste into treasure by transforming the straws into organic fertilizer, which also effectively reduces air pollution. The straw organic fertilizer we produce does not contain the heavy metals, antibiotics and harmful bacteria that are common in the traditional manure fertilizer. Our fertilizers also provide optimum levels of primary plant nutrients, including multi-minerals, proteins and carbohydrates that promote the healthiest soils capable of growing the healthy crops and vegetables. It can effectively reduce the use of chemical fertilizers and pesticides as well as reduce the penetration of large chemical fertilizers and pesticides into the soil, thus avoiding water pollution. Therefore, our fertilizer can effectively improve the fertility of soil, and the quality and safety of agricultural products.

 

We generated our revenue mainly from our organic fertilizers, which accounted for approximately 89.9% and 86.1% of our total revenue for the three months ended March 31, 2020 and 2019, respectively. We currently have two integrated factories in Weihai City, Shandong Province, PRC to produce our organic fertilizers, which have been in operations since August 2015. We plan to improve the technology for our existing straw organic fertilizer production lines in the following aspects: (i) adopt more advanced automatic control technology for raw material feed to shorten the processing time of raw material, and (ii) manufacture powdered organic fertilizer instead of granular organic fertilizer production in order to avoid the drying and cooling process, as such will increase our production capacity.

 

With the focus of producing organic fertilizers, we also engage in the business of selling agriculture food products including apples, and as a sales agent for other large agriculture companies in the PRC. In 2014, we rented 350 mu (about 57.66 acres) of mountainous land as an apple orchard. The sales of apples generated less than 1% of our total revenue for the three months ended March 31, 2020 and 2019. We expect to generate more revenues from the sales of apples as the apple orchards become more mature in the next few years.

 

In addition, we plan to engage in the processing and distribution of black goat products, business commencing the third quarter of 2021. We are currently constructing a deep-processing slaughterhouse and processing plant which is expected to have the capacity of slaughtering 200,000 black goats per year in Chuxiong City, Yunnan Province, in China. Our black goat processing products including goat rib lets, goat loin roast, goat loin chops, goat rack, goat leg, goat shoulder, goat leg shanks, ground goat, goat stew meat, whole goat, half goat, lamb viscera, etc. We expect to start generating revenue from the black goat products in 2020.

 

Our assets  mainly include: (i) 42,895 square meters of industrial land and 28,549 square meters of factory and office space located in Jinshan District, Shanghai City, (ii) 22,511 square meters of industrial land and 10,373 square meters of plant area and straw organic fertilizer production line in Weihai City, Shandong Province, and (iii) more than $2 million investment of land use right and the black goat slaughtering and processing plant located in Shuangbai County, Chuxiong City, Yunnan Province, in China.

 

 

As the factory area in Jinshan District, Shanghai City is too close to the urban area to produce straw organic fertilizer, some factory buildings, office buildings and spare land in Jinshan District, Shanghai City, have been leased to third parties.

 

Recent Development

 

Started in December 2019, the outbreak of COVID-19 caused by a novel strain of the coronavirus has become widespread in China and in the rest of the world, including in each of the areas in which the Company, its suppliers and its customers operate. In order to avoid the risk of the virus spreading, the Chinese government enacted various restrictive measures, including suspending business operations and quarantines, starting from the end of January 2020. We followed the requirements of local health authorities to suspend operation and production and have employees work remotely in February and March 2020. Since April 2020, we gradually resumed production and is now operating in full capacity.

 

As a result of the COVID-19 outbreak in December 2019 and continuing in the first quarter of 2020, the Company’s businesses, results of operations, financial position and cash flows were adversely affected in the first quarter of 2020 with potential continuing impacts on subsequent periods, including but not limited to the material adverse impact on the Company’s revenues as result of the suspension of operations and decline in demand by the Company’s customers.

 

We are monitoring the global outbreak and spread of the novel strain of coronavirus (COVID-19) and taking steps in an effort to identify and mitigate the adverse impacts on, and risks to, our business (including but not limited to our employees, customers, other business partners, our manufacturing capabilities and capacity and our distribution channels) posed by its spread and the governmental and community reactions thereto. We continue to assess and update our business continuity plans in the context of this pandemic, including taking steps in an effort to help keep our workforces healthy and safe. The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations in certain cases, and cancellation of physical participation in certain meetings, events and conferences), and we expect to take further actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, customers and other business partners. We are also working with our suppliers to understand the existing and future negative impacts to our supply chain and take actions in an effort to mitigate such impacts. Due to the speed with which the COVID-19 situation is developing, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate impact; therefore, any negative impact on our overall financial and operating results (including without limitation our liquidity) cannot be reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and the impact on our financial and operating results could be material.

 

Acquisition of Viagoo Pte Ltd.

 

On June 19, 2020, we entered into a Share Exchange Agreement (“SEA”) with Viagoo Pte Ltd.. (“Viagoo”) and all the shareholders of Viagoo (“Viagoo Shareholders”) for the acquisition of 100% equity interest of Viagoo. Viagoo is a Singapore-based logistics sharing platform that enables shippers and carriers to share and optimize resources to lower cost and increase efficiency. From last mile delivery to cross border transportation, the platform provides digital transaction contracts for customers to source for service providers to deliver goods and services in a convenient manner. Viagoo partners with various Singapore agencies to promote the platform to support urban logistics need in Singapore, such as Enterprise Singapore, a government agency to support Singapore small and medium businesses, and Singapore Logistics Association. Pursuant to the SEA, we purchased from Viagoo Shareholders all of Viagoo Shareholder’s right, title and interest in and to the Viagoo’s capital stock (“Shares”) for an aggregate purchase price of US$2,830,800, payable in 1,011,000 shares (the “Compensation Shares”) of the Company’s restricted common stock, valued at $2.80 per share.

 

Critical Accounting Policies

  

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate, on an on-going basis, our estimates for reasonableness as changes occur in our business environment. We base our estimates on experience, the use of independent third-party specialists, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

  

 

Critical accounting policies are defined as those that are reflective of significant judgments, estimates and uncertainties, and potentially result in materially different results under different assumptions and conditions. We believe the following are our critical accounting policies:

 

Basis of Presentation

 

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

 

Going Concern

 

As reflected in the accompanying consolidated financial statements, we had net accumulated deficit of $9,826,745 and $9,571,836 as of March 31, 2020 and December 31, 2019, respectively. Our cash balances as of March 31, 2020 and December 31, 2019 were $6,067 and $103,868, respectively. We had current liability of $13,421,063 at March 31, 2020 which would be due within the next 12 months. In addition, we had a working capital deficit of $6,201,648 and $6,213,140 at March 31, 2020 and December 31, 2019, respectively.

 

The company plans to continue its expansion and investments, which will require continued improvements in revenue, net income, and cash flows.

 

The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan, raise additional capital, and generate more revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Principles of Consolidation

 

Muliang Agritech consolidates the following entities, including wholly-owned subsidiaries, Muliang HK, Shanghai Mufeng, and its wholly controlled variable interest entities, Muliang Industry, and Zhongbao, 60% controlled Agritech Development, 99% controlled Fukang, 65% controlled Zhonglian, 51% controlled Heilongjiang, and 80% controlled Yunnan Muliang. The 40% equity interest holder of Agritech Development, 1% equity interest holders in Fukang, 35% equity interest holders in Zhonglian, 49% interest in Heilongjiang, and 20% interest in Yunnan Muliang are accounted as non-controlling interest in the Company’s consolidated financial statements.

 

The variable interest entities consolidated for which the Company is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation.

  

 

Use of Estimates

 

In preparing financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of 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 and the valuation of inventories. Actual results could differ from those estimates.

 

Accounts Receivable

 

We state accounts receivable at cost, net of allowance for doubtful accounts. Based on our past experience and current practice in the PRC, management provides for an 100% allowance for doubtful accounts equivalent to those accounts that are not collected within one year, and 50% for receivables outstanding for longer than six months. It is management’s belief that the current bad debt allowance adequately reflects an appropriate estimate based on management’s judgment.

 

Inventory Valuation

 

We value our fertilizer inventories at the lower of cost, determined on a weighted average basis, and net realizable value (the estimated market price). Substantially all inventory expenses, packaging and supplies are valued by the weighted average method.

 

Apple Orchard

 

Apple Orchard consists primarily of rental for an apple farm, labor cost, fertilizers, apple seeds, apple seedlings and others. The costs to purchase and cultivate apple trees and the expenditures related to labor and materials to plant apple trees until they become commercially productive are capitalized, which require a 2-year period. The estimated production life for apple tree is 10 years, and the costs are amortized without a residual value. Expenses incurred maintaining apple trees during the growth cycle until seedling apple trees or grafted varieties are fruited are capitalized into inventory and included in Work in process—apple orchard, a component of inventories.

 

Amortized expenses pertaining to apple orchard are included in inventory costs for those apples to be sold and ultimately become a component of cost of goods sold. Similar to other assets, the failure of our apple orchard to be serviceable over the entirety of their anticipated useful lives or to be sold at their anticipated residual value will negatively impact our operating results.

 

Revenue Recognition

 

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for the reporting period beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 605.

 

Management has determined that the adoption of ASC 606 did not impact the Company’s previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to opening retained earnings.

 

Revenue for sale of products is derived from contracts with customers, which primarily include the sale of fertilizer products and environmental protection equipment. The Company’s sales arrangements do not contain variable consideration. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and control of the products has been transferred to the customer. For vast majority of the Company’s product sales, the performance obligations and control of the products transfer to the customer when products are delivered, and customer acceptance is made.

  

Pursuant to the guidance of ASC Topic 840, rent shall be reported as income by lessors over the lease term as it becomes receivable. The Company currently leased part of the building of the Shanghai new plant to third parties as warehouse. The Company recognizes building leasing revenue over the beneficial period described by the agreement, as the revenue is realized or realizable and earned. 

 

The Company recognized rental income from leasing a portion of its manufacturing facility located in Shanghai to third parties. For the three months ended March 31, 2020 and 2019, rental income of $10,738 and $165,711 were recognized as other income.

 

 

Income Taxes

 

The Company accounts for income taxes under the provision of FASB ASC 740-10, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. 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.

 

New Accounting Standards

  

In February, 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02) “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. For finance leases, a lessee is required to do the following:

 

●

Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position

 

●

Recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of comprehensive income

 

●

Classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows.

 

For operating leases, a lessee is required to do the following:

 

●

Recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in the statement of financial position

 

●

Recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis

 

●

Classify all cash payments within operating activities in the statement of cash flows.

 

In July, 2018, the FASB issued Accounting Standards Update No. 2018-11 (ASU 2018-11), which amends ASC 842 so that entities may elect not to recast their comparative periods in transition (the “Comparatives Under 840 Option”). ASU 2018-11 allows entities to change their date of initial application to the beginning of the period of adoption. In doing so, entities would:

 

●

Apply ASC 840 in the comparative periods.

 

●

Provide the disclosures required by ASC 840 for all periods that continue to be presented in accordance with ASC 840.

 

●

Recognize the effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings for the period of adoption.

 

In addition, the FASB also issued a series of amendments to ASU 2016-02 that address the transition methods available and clarify the guidance for lessor costs and other aspects of the new lease standard.

 

 

The management has reviewed the accounting pronouncements and adopted the new standard on January 1, 2019 using the modified retrospective method of adoption.

 

In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this Update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its consolidated financial statements.

 

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.

 

Results of Operations

 

We are principally engaged in the organic fertilizer manufacture and distribution business in the PRC, which account for 89.9% of our total revenue for the three months ended March 31, 2020.

 

As a result of the COVID-19 outbreak in December 2019 and continuing in the first quarter of 2020, the Company’s businesses, results of operations, financial position and cash flows were adversely affected in the first quarter of 2020. Evidently, our operating scale shrank significantly over the previous years.

 

 

Results of Operations for the Three Months Ended March 31, 2020 and 2019

 

			Three Months Ended March 31,
			2020				2019				Fluctuation
			$				$				$			%
Revenues-fertilizer			754,120				1,915,973				(1,161,853	)		-60.64	%
Revenues-agricultural products			84,827				309,395				(224,568	)		-72.58	%
Subtotal of revenue			838,947				2,225,368				(1,386,421	)		-62.30	%
Cost-fertilizer			448,264				1,024,937				(576,673	)		-56.26	%
Cost- agricultural products			85,580				313,939				(228,359	)		-72.74	%
Subtotal of cost			533,844				1,338,876				(805,032	)		-60.13	%
Gross profit			305,103				886,492				(581,389	)		-65.58	%
Gross margin			36	%			40	%
Operating expenses:
General and administrative expenses			457,046				341,556				115,490			33.81	%
Selling expenses			7,447				177,000				(169,553	)		-95.79	%
Total operating expenses			464,493				518,556				(54,063	)		-10.43	%
Income(loss) from operations			(159,390	)			367,936				(527,326	)		-143.32	%
Other income (expense):
Interest expense			(98,623	)			(94,596	)			(4,027	)		4.26	%
Subsidy income			-				146,560				(146,560	)		-100.00	%
Rent net income			2,617				122,960				(120,343	)		-97.87	%
Other income (expense), net			(1,333	)			587				(1,920	)		-327.09	%
Total other income (expense)			(97,339	)			175,511				(272,850	)		-155.46	%
Income before income taxes			(256,729	)			543,447				(800,176	)		-147.24	%
Income taxes			-				97,860				(97,860	)		N/A
Net income (loss)			(256,729	)			445,587				(702,316	)		-157.62	%

 

 

Revenue

 

Total revenue for fertilizer decreased from $1,915,973 for the three months ended March 31, 2019 to $754,120 for the three months ended March 31, 2020, which represented a decrease of $1,161,853, or approximately 60.64%. The decrease in revenue was mainly due to the impact of COVID-19. Some large customers suspended to purchase our fertilizer products during the anti epidemic period. Such as Huizhou Sijilv Agricultural Products Co., Ltd., Guangzhou Nonggengshen planting cooperative, and Guangzhou Lvxing Organic Agricultural Products Co., Ltd. etc. Usually the second half year is the peak sale season for fertilizer products and the economy is recovering from the epidemic. We expect to increase our sales significantly in the next quarter.

 

Revenue from agricultural products decreased from $309,395 for the three months ended March 31, 2019 to $84,827 for the three months ended March 31, 2020, which represented a decrease of $224,568, or approximately 72.58%.

  

Cost of sales

 

Cost of sales for fertilizer decreased from $1,024,937 for the three months ended March 31, 2019 to $448,264 for the three months ended March 31, 2020, which represented a decrease of approximately $576,673, or 56.26%. The decrease in cost of revenue was in line with the decrease in revenue.

 

Cost of sales for agricultural products decreased significantly from $313,939 for the three months ended March 31, 2019 to $85,580 for the three months ended March 31, 2020, which represented a decrease of approximately $228,359, or 72.74%.

 

Gross Profit (loss)

 

The gross profit for organic fertilizer decreased from $891,036 for the three months ended March 31, 2019 to gross profit of $305,856 for the three months ended March 31, 2020. The gross margin also decreased from 46.51% for the three months ended March 31, 2019 to 40.56% for the three months ended March 31, 2020. The gross margin of around 45% represents our normal operation result of sales to final customers. The lower gross margin for the three months ended March 31, 2020 was due to the lower price offered to customers for marketing purpose.

 

The agriculture food products sales maintained a negative gross margin due to the small sales scale.

   

Expenses

 

We only incurred $7,447 in selling expenses for the three months ended March 31, 2020, compared to $177,000 for the three months ended March 31, 2019. We incurred $457,046 in general and administrative expenses for the three months ended March 31, 2020, compared to $341,556 for the three months ended March 31, 2019. Total selling, general and administrative expenses decreased by $54,063, or 10.43% for the three months ended March 31, 2020 as compared to the same period in 2019. Our selling expenses decreased by $169,553 and our general and administrative expenses decreased by $115,490. The significant decrease in our selling expenses was mainly due to the decrease in entertainment expense, travelling expense, etc., for selling department. As we could not carry out marketing activities during the outbreak of COVID-19. The decrease in general and administrative expenses was due to the decrease in travelling expense and employee’s expense.

    

Interest income (expense)

 

We incurred $98,623 in interest expense during the three months ended March 31, 2020, compared with interest expense of $94,596 for the three months ended March 31, 2019.

 

Net Income (loss)

 

Our net loss was $256,729 for the three months ended March 31, 2020, compared with net income of $445,587 for the three months ended March 31, 2019, representing a decrease of $702,316.

 

The significant decrease of $702,316 in net income was mainly due to the decrease of 581,389 in gross profit, and the decrease of $120,343 in rental net income, offset by decrease of $54,063 in operating expense, all of which are the result of impact of COVID-19. 

   

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At March 31, 2020 and December 31, 2019 our working capital deficit was $6,201,649 and $6,213,140, respectively.

 

We have financed our operations over the three months ended March 31, 2020 and 2019 primarily through proceeds from net cash inflow in operation, and advances from related parties.

 

The components of cash flows are discussed below: 

 

		Three Months Ended
		March 31,
		2020				2019
Net cash provided by (used in) operating activities		$	795,742			$	917,171
Net cash provided by (used in) investing activities			-				(246,966	)
Net cash used in financing activities			(892,590	)			(676,947	)
Exchange rate effect on cash			(953	)			281
Net cash inflow (outflow)		$	(97,801	)		$	(6,461	)

  

Cash Used in Operating Activities

 

Net cash provided by operating activities was $795,742 for the three months ended March 31, 2020. The net cash inflow consisted primarily of a decrease of $1,006,497 in account receivable, a decrease of $84,977 in prepayment, an increase of $60,246 in advance from customers, which were offset by the net loss of $256,729, a decrease of $381,133 in account payable.

 

Net cash provided by operating activities was $917,171 for the three months ended March 31, 2019. The net cash inflow consisted primarily of net income of $445,587 which was adjusted by depreciation and amortization of $291,069. The Company had an increase of $38,911 in other payable, an increase of $25,638 in our advance from customers, an increase of $145,941 in account payable, a decrease of $149,975 in prepayment, and a decrease of $133,884 in account receivable, which were offset by an increase of $82,007 in other receivable, and an increase of $329,687 in inventory.

 

Cash used in Investing Activities

 

There is no cash flow in investing activities for the three months ended March 31, 2020.

 

Net cash used in investing activities was $246,966 for the three months ended March 31, 2019. The activities consisted of purchase of biological assets of $18,508, and investment in construction in progress of $228,458.

  

Cash Used in Financing Activities

 

Net cash used in financing activities was $892,590 for the three months ended March 31, 2020. During the period, cash used in financing activities consisted of the repayment to related parties of $779,010, and repayment of short-term loan of $113,580.

 

Net cash used in financing activities was $676,947 for the three months ended March 31, 2019. During the period, cash used in financing activities consisted of the repayment to related parties of $724,803, repayment of short term loan of $14,823, and offset by proceeds from third party individual of $62,679.

 

We anticipate that our current cash reserves plus cash from our operating activities will not be sufficient to meet our ongoing obligations and fund our operations for the next twelve months. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of shares of our common stock or renewing our current obligations with loaners. We may also seek to obtain short-term loans from our directors or unrelated parties. Additional funding may not be available, or at acceptable terms, to us at this time. If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results.

 

  

Contractual Commitments and Commitments for Capital Expenditure

 

Contractual Commitments

 

The following table summarizes our contractual obligations at March 31, 2020 and the effect those obligations are expected to have on our liquidity and cash flow in future periods.

 

		Payments Due by Period as of March 31, 2020
		Total				Less than 1 Year				2 – 3 Years				4 – 5 Years				Over 5 Years
Contractual obligations
Loans		$	6,992,536			$	5,281,665			$	1,710,871			$	-			$	-
Others			-				-				-				-				-
		$	6,992,536			$	5,281,665			$	1,710,871			$	-			$	-

 

Commitments for Capital Expenditure

 

There is no commitment for capital expenditure as of March 31, 2020.

 

Off Balance Sheet Items

 

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable because we are a smaller reporting company.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective as of March 31, 2020 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits 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 the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

During the quarterly period ended March 31, 2020, there has been no change in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. We will continue to monitor the deficiencies identified in internal controls and make changes that our management deems necessary.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are no actions, suits, proceedings, inquiries or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. 

 

Item 1A. Risk Factors.

 

Not applicable because we are a smaller reporting company. 

 

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

 

There were no unregistered sales of the Company’s equity securities during the three months ended March 31, 2020, that were not otherwise disclosed in a Current Report on Form 8-K.  

 

Item 3. Defaults Upon Senior Securities.

 

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company. 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information. 

 

There is no other information required to be disclosed under this item which was not previously disclosed.

  

Item 6. Exhibits.

 

Exhibit Number		Description
10.1(1)		Share Exchange Agreement dated June 19, 2020
10.2(1)		Earnout Agreement dated June 22, 2020
10.3(1)		Employment Agreement between David Chong and the Company dated June 19, 2020
31.1		Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certifications of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+		Certifications of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+		Certifications of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

 

(1)	Incorporated by reference to the Current Report on Form 8-K filed with the SEC on June 25, 2020.

+	In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

  

 

SIGNATURES

 

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

 

Date: June 29, 2020	MULIANG AGRITECH, INC.
	By:	/s/ Lirong Wang
	Name:	Lirong Wang
	Title:	Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Shaw Cheng “David” Chong
	Name:	Shaw Cheng “David” Chong
	Title:	Chief Financial Officer
		(Principal Accounting Officer)

40