Results of Operations

Net Revenues The company’s net revenues for the fiscal year ending on December 31, 2024 amounted to $6.73 million, reflecting a decline of approximately $10.93 million or 62% compared to the previous year’s figure of $17.66 million (ending on December 31, 2023). This decline was primarily due to a significant impact on the company’s food product sales to restaurants, which decreased from $14.32 million in 2023 to $2.04 million in 2024 due to the adverse effects of COVID-19.

Cost of Revenues During the year ended December 31, 2024, the company experienced a decrease in cost of revenue of $10.11 million or 63%, from approximately $16.08 million to $5.97 million. This change was mainly due to the decrease in sales revenue.

Gross Profit The company’s gross profit declined by $0.82 million, representing a decrease of 52% to $0.76 million for the fiscal year ended December 31, 2024 compared to $1.58 million for the fiscal year ended December 31, 2023. This decline can be primarily attributed to the decrease in sales revenue, partially offset by a slight decrease in the average combined cost per unit of the company’s products. The gross profit margin increased from 9.0% in 2023 to 11.3% in 2024, primarily due to a change in product mix.

Operating Expenses Selling and Marketing Expenses: The company’s selling and marketing expenses decreased by $0.05 million, or 57%, to $0.04 million for the year ended December 31, 2024 from $0.09 million for the year ended December 31, 2023, mainly due to the decrease in transportation and storage costs, as well as a decline in sales staff salaries.

General and Administrative Expenses: The company’s general and administrative expenses for the year ended December 31, 2024 decreased by $0.67 million, to $7.33 million compared to the previous year’s $8.00 million, mainly due to a loss of $1.97 million recognized for obsolete tea products during the year ended December 31, 2023, partially offset by an increase in allowance for doubtful accounts and impairment of long-term investments during the year ended December 31, 2024.

Net Loss The company’s net loss decreased by $13.51 million, or 65%, to a net loss of $7.33 million for the year ended December 31, 2024 from $20.84 million in net loss for the year ended December 31, 2023. This decrease was mainly due to the decrease in loss on the disposal of certain subsidiaries.

Liquidity and Capital Resources

As of December 31, 2024, the company had cash and restricted cash of $195,153 compared to $237,214 as of December 31, 2023. The debt to assets ratio was 54.0% and 54.4% as of December 31, 2024 and December 31, 2023, respectively. The company expects to continue to finance its operations and working capital needs in 2024 from cash generated from operations and, if needed, private financings. However, there is no assurance that the company will raise additional capital or reduce discretionary spending to provide liquidity if needed.

The following table provides detailed information about the company’s net cash flow for all financial statement periods presented in this report:

Operating Activities: Net cash provided by operating activities was $0.93 million during the year ended December 31, 2024, compared to $5.28 million used in operating activities during the year ended December 31, 2023. This change was primarily due to the decrease in net loss excluding non-cash expenses, gains and losses of $1.41 million, changes in net operating assets and liabilities of $5.23 million, and partially offset by a decrease in net cash provided by operating activities from discontinued operations of $0.43 million.

Investing Activities: Net cash used in investing activities for the year ended December 31, 2024 was $5,421, compared to $2.47 million provided by investing activities for the same period in 2023. This change is primarily due to a reduction in proceeds from disposal of equity method investments of $2.77 million compared to the year ended December 31, 2023.

Financing Activities: The net cash used in financing activities was $0.97 million during the year ended December 31, 2024, compared to net cash provided by financing activities of $2.89 million for the same period in 2023. This change can be attributed to a rise in loan to related parties, partially offset by an increase in bank loans.

Going Concern

The company’s consolidated financial statements have been prepared assuming that the company will continue as a going concern; however, the company has incurred a net loss from continuing operations of $7,457,193 for the year ended December 31, 2024. As of December 31, 2024, the company had an accumulated deficit of $148,053,653, a working capital deficit of $6,120,752, and its net cash provided by operating activities from continuing operations for the year ended December 31, 2024 was $928,644. These factors raise substantial doubt on the company’s ability to continue as a going concern. The company’s continued existence is dependent upon management’s ability to execute the business plan, develop the plan to generate profit, and potentially rely on private placements or certain related parties to provide funding for investment, working capital, and general corporate purposes.

Critical Accounting Policies

The preparation of the company’s financial statements in conformity with the United States generally accepted accounting principles requires management to make assumptions, estimates, and judgments that affect the amounts reported in the financial statements, including the notes to that, and related disclosures of commitments and contingencies. The company considers its critical accounting policies to require the more significant judgments and estimates in preparing financial statements, including those outlined in Note 2 to the financial statements.

Off-Balance Sheet Arrangements

The company does not have any off-balance sheet arrangements.