TENGJUN BIOTECHNOLOGY CORP. The following discussion of the results of operations and financial condition should be read in conjunction with our condensed consolidated financial statements and notes thereto included in Item 1 of this part. This report, including the information incorporated by reference, contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The use of any of the words "believe," "expect," "anticipate," "plan," "estimate," and similar expressions are intended to identify such statements. Forward-looking statements include statements concerning our possible or assumed future results. The actual results that we achieve may differ materially from those discussed in such forward-looking statements due to the risks and uncertainties described in the Risk Factors section of this report, in Management's Discussion and Analysis of Financial Condition and Results of Operations, and in other sections of this report, as well as in our annual report on Form 10-K. We undertake no obligation to update any forward-looking statements.
Overview
Corporate History and Structure
We were incorporated on
On
Acquisitions/Business Combinations
On
In connection with the acquisition of the Target pursuant to the Share Exchange
Agreement, the Company is entering into the Chinese tea and water purifier
business through its newly acquired subsidiary the
The Target was incorporated on
17
As a result of the consummation of the Acquisition on
The diagram below illustrates our corporate structure following the Acquisition:
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We have limited operations and are currently generating limited revenues from
our business operations. Our independent registered public accounting firm has
issued a going concern opinion for the year ended
18
Results of Operations
Results of Operations - Three Months Ended
The following table sets forth information from our statements of comprehensive
income for the three months ended
Three Months Ended
March 31, Change
2022 2021 (Amount) (Percent)
Sales revenue $ 4,284,114 $ - $ 4,284,114 * %
Cost of Goods Sold (370,064 ) - (370,064 ) * %
Gross Profit 3,914,050 - 3,914,050 * %
Operating Expenses (3,588,312 ) (161,126 ) (3,427,186 ) 2,127 %
Operating Income (Loss) 325,738 (161,126 ) 486,864 (302 )%
Interest Income (Expense) 24 (4,973 ) 4,997 (100 )%
Income Tax Provision (92,955 ) - (92,955 ) * %
Net Income (Loss) 232,807 (166,099 ) 398,906 (240 )%
Comprehensive Income (loss) $ 223,369 $ (159,502 ) $ 382,871 (240 )%
Revenues
We generated
The following is the sales breakdown by segment during the three months ended
For the three months ended
March 31,
2022 2021
Dandelion teas
$ 4,284,114 100 % $ - - %
During the three months ended
Cost of Goods Sold
Our cost of goods sold was
Gross Margin
The following table presents gross margin by segment for three months ended
For the three months ended
March 31,
2022 2021
Dandelion teas
$ 3,914,050 100 % $ - - %
The gross profit as a percentage of net revenue for the Dandelion teas was 92%
for the three months ended
19
Selling and Marketing Expenses
Our selling and marketing expenses primarily consist of sales commission,
advertising and product promotion expenses. Our selling and marketing expenses
were
General and administrative expenses
Our general and administrative expenses primarily consist of payroll and benefit costs for corporate employees, legal, consulting, professional expenses, rental expenses and other corporate overhead costs.
The general and administrative expenses was
Interest income (expense)
Interest income (expense) was
Net Income (Loss)
Our net income was
Foreign Currency Translation Loss
We had
Liquidity and Capital Resources
Working Capital
Change
March 31, December 31,
2022 2021 (Amount) (Percent)
Current Assets $ 5,277,371 $ 4,628,531 634,840 14 %
Current Liabilities $ 16,755,289 $ 16,316,116 439,713 3 %
Working Capital (deficit) $ (11,477,918 ) $ (11,687,585 ) 209,667 (2 )%
Our working capital deficit was
20
Cash Flow from Operating Activities
Our net cash provided by operating activities were
Cash Flow from Investing Activities
Our net cash used in investing activities was
Cash Flow from Financing Activities
Our net cash provided by financing activities were
Off-Balance Sheet Arrangements
As of
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with Generally Accepted
Accounting Principles ("GAAP") of
While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
Inventories
Our inventories primarily consist of dandelion teas and water purifiers.
Inventories are valued at the lower of cost (determined on a weighted average
basis) and net realizable value. Inventories consist of raw materials, goods in
process, and finished goods. We review our inventories regularly for possible
obsolete goods and establishes reserves when determined necessary. As of
21
Construction in Progress
Construction in progress represents direct costs of construction, interest and
design fees incurred. No interest was capitalized for the three months ended
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. To determine the revenue to be recognized, the Company applies the following five-step model:
? identify arrangements with customers;
? identify performance obligations;
? determine transaction price;
? allocate transaction price to the separate performance obligations in the
arrangement, if more than one exists; and
? recognize revenue as performance obligations are satisfied.
The Company generates revenues mainly from sales of packaged dandelion teas and water purifiers. Revenue from the sales of goods is recognized when the control over the promised goods is transferred to customers.
Cash payments received or due from customers before revenue recognized are recorded as advances from customers. The advance from customers is recognized as revenue when the Company's performance obligation is completed.
Related parties
The Company follows ASC 850, "Related Party Disclosures," for the identification of related parties and disclosure of related party transactions. Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.
Recent Accounting Pronouncements
See Note 3 to our unaudited consolidated financial statements for the three
months ending
22
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