10-Q

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 June 30, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-34246 

LITHIUM & BORON TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Nevada	98-0514768
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

60 East Ren-Min Road
Dachaidan

(Da Qaidam Administrative Committee)
XaiXi, Qinghai Province 817000

(Address of principal executive offices)

+86 (24) 2519-7699

(Registrant’s telephone number, including area code)

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

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

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

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

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (do not check if a smaller reporting company)	Smaller reporting company ☒
Emerging Growth Company ☐

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS

As of August 16, 2021 there were 185,986,370 shares of common stock outstanding. 

Lithium & Boron Technology, Inc.

Table of Contents

		Page
Note about Forward-Looking Statements
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	34
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
	Exhibit Index	35
	Signatures	36

NOTE ABOUT FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

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

●        our goals and strategies;

●        our expansion plans;

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

●        our expectations regarding demand for our products;

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

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

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

●        our ability to attract and retain quality employees;

●        our ability to pursue strategic acquisitions and alliances;

●        competition in our industry in China;

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

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

●        market acceptance of our products.

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

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

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

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

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LITHIUM & BORON TECHNOLOGY, INC

CONSOLIDATED BALANCE SHEETS

	JUNE 30,			DECEMBER 31,
	2021 (UNAUDITED)			2020
ASSETS
CURRENT ASSETS
Cash and equivalents	$	2,285,657		$	972,066
Accounts receivable, net		13,704			223,194
Prepaid expenses		4,028			-
Advances to suppliers, net		117,669			242,311
Other receivables		192,004			60,226
Notes receivable		32,507			96,367
Due from related parties		2,058,787			1,771,789
Inventories		346,084			1,179,387
Total current assets		5,050,440			4,545,340
NONCURRENT ASSETS
Due from related party		1,426,054			1,411,891
Property and equipment, net		1,500,522			1,488,783
Intangible asset, net		54,279			-
Construction in progress		1,291,020			141,846
Total noncurrent assets		4,271,875			3,042,520
TOTAL ASSETS	$	9,322,315		$	7,587,860
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	334,944		$	525,775
Unearned revenue		641,790			64,190
Accrued liabilities and other payables		1,575,431			1,522,347
Taxes payable		158,973			106,651
Due to related parties		2,293,123			1,114,662
Total current liabilities		5,004,261			3,333,625
DEFERRED INCOME		1,163,759			1,253,046
TOTAL LIABILITIES		6,168,020			4,586,671
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 500,000,000 shares authorized, 185,968,370 shares issued and outstanding		185,968			185,968
Paid-in capital deficiency		(6,666,351	)		(6,666,351	)
Statutory reserves		257,742			177,843
Accumulated other comprehensive income		271,469			223,922
Retained earnings		8,386,855			8,328,736
TOTAL COMPANY STOCKHOLDERS' EQUITY		2,435,683			2,250,118
Noncontrolling interest		718,612			751,071
TOTAL EQUITY		3,154,295			3,001,189
TOTAL LIABILITIES AND EQUITY	$	9,322,315		$	7,587,860

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

5

LITHIUM & BORON TECHNOLOGY, INC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	SIX MONTHS ENDED JUNE 30,						THREE MONTHS ENDED JUNE 30,
	2021			2020			2021			2020
Sales	$	4,007,849		$	3,228,330		$	2,179,469		$	2,217,832
Sales - related party		-			101,560			-			101,560
Total sales		4,007,849			3,329,890			2,179,469			2,319,392
Cost of sales		3,292,926			2,904,535			1,596,808			1,973,791
Gross profit		714,923			425,355			582,661			345,601
Operating expenses
Selling		46,057			85,549			23,002			29,344
General and administrative		531,953			613,995			257,582			326,993
Total operating expenses		578,010			699,544			280,584			356,337
Income (loss) from operations		136,913			(274,189	)		302,077			(10,736	)
Non-operating income
Financial expense		(391	)		-			(202	)		-
Other income		675			13,405			735			27,754
Interest income		1,176			443			699			410
Subsidy income		101,672			95,635			50,935			48,494
Total non-operating income, net		103,132			109,483			52,167			76,658
Income (loss) before income tax		240,045			(164,706	)		354,244			65,922
Income tax expense		91,947			25,933			80,489			25,933
Income (loss) before noncontrolling interest		148,098			(190,639	)		273,755			39,989
Less: loss attributable to noncontrolling interest		(39,920	)		(2,745	)		(29,987	)		(2,745	)
Net income (loss) to the Company		188,018			(187,894	)		303,742			42,734
Other comprehensive items
Foreign currency translation income (loss) attributable to the Company		47,547			(116,962	)		80,904			(57,766	)
Foreign currency translation income attributable to noncontrolling interest		7,461			1,542			12,634			1,542
Comprehensive income (loss) attributable to the Company	$	235,565		$	(304,856	)	$	384,646		$	(15,032	)
Comprehensive loss attributable to noncontrolling interest	$	(32,459	)	$	(1,203	)	$	(17,353	)	$	(1,203	)
Basic and diluted weighted average shares outstanding		185,968,370			185,968,370			185,968,370			185,968,370
Basic and diluted net income (loss) per share	$	0.00		$	(0.00	)	$	0.00		$	0.00

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

6

LITHIUM & BORON TECHNOLOGY, INC

STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY

SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(UNAUDITED)

	Common Stock
	Shares		Amount		Paid-in capital deficiency			Statutory reserves		Accumulated other comprehensive income			Retained earnings			Total			Noncontrolling interest
Balance at January 1, 2021		185,968,370	$	185,968	$	(6,666,351	)	$	177,843	$	223,922		$	8,328,736		$	2,250,118		$	751,071
Net loss		-		-		-			-		-			(115,724	)		(115,724	)		(9,933	)
Statutory reserve		-		-		-			20,620		-			(20,620	)		-			-
Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-
Foreign currency translation loss		-		-		-			-		(33,357	)		-			(33,357	)		(5,173	)
Balance at March 31, 2021		185,968,370		185,968		(6,666,351	)		198,463		190,565			8,167,392			2,076,037			735,965
Net income		-		-		-			-		-			303,742			303,742			(29,987	)
Statutory reserve		-		-		-			59,279		-			(59,279	)		-			-
Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-
Foreign currency translation gain		-		-		-			-		80,904			-			80,904			12,634
Balance at June 30, 2021		185,968,370	$	185,968	$	(6,666,351	)	$	257,742	$	271,469		$	8,386,855		$	2,435,683		$	718,612

	Common Stock
	Shares		Amount		Paid-in capital deficiency			Statutory reserves		Accumulated other comprehensive loss			Retained earnings			Total			Noncontrolling interest
Balance at January 1, 2020		185,968,370	$	185,968	$	(6,666,351	)	$	71,252	$	(14,600	)	$	8,765,225		$	2,341,494		$	-
Net loss		-		-		-			-		-			(230,628	)		(230,628	)		-
Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-
Foreign currency translation loss		-		-		-			-		(59,196	)		-			(59,196	)		-
Balance at March 31, 2020		185,968,370		185,968		(6,666,351	)		71,252		(73,796	)		8,509,597			2,026,670			-
Net income		-		-		-			-		-			42,734			42,734			(2,745	)
Capital contribution		-		-		-			-		-			-			-			704,741
Dividend accrued		-		-		-			-		-			(25,000	)		(25,000	)		-
Statutory reserve		-		-		-			64,424		-			(64,424	)		-			-
Foreign currency translation loss		-		-		-			-		(57,766	)		-			(57,766	)		1,542
Balance at June 30, 2021		185,968,370	$	185,968	$	(6,666,351	)	$	135,676	$	(131,562	)	$	8,462,907		$	1,986,638		$	703,538

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

7

LITHIUM & BORON TECHNOLOGY, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	SIX MONTHS ENDED JUNE 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) including noncontrolling interest	$	148,098		$	(190,639	)
Adjustments to reconcile income (loss) including noncontrolling      interest to net cash provided by operating activities:
Depreciation and amortization		181,292			151,543
Changes in deferred income		(101,672	)		(93,573	)
(Increase) decrease in assets and liabilities:
Accounts receivable		211,346			133,902
Prepaid expenses		(1,960	)		(15,501	)
Advances to suppliers		95,939			(84,597	)
Other receivables		(133,001	)		(2,526	)
Inventories		843,603			935,004
Accounts payable		(131,038	)		(32,999	)
Unearned revenue		575,912			24,196
Accrued liabilities and other payables		1,869			123,115
Taxes payable		51,159			13,042
Net cash provided by operating activities		1,741,547			960,967
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(146,967	)		(287,221	)
Purchase of intangible asset		(54,413	)		-
Construction in progress		(1,145,675	)		(2,202	)
Net cash used in investing activities		(1,347,055	)		(289,423	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from noncontrolling interest		-			711,044
Changes in due from related parties		(268,739	)		(640,158	)
Changes in due to related parties		1,175,728			256,233
Net cash provided by financing activities		906,989			327,119
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS		12,110			(9,048	)
NET INCREASE IN CASH AND EQUIVALENTS		1,313,591			989,615
CASH AND EQUIVALENTS, BEGINNING OF PERIOD		972,066			160,024
CASH AND EQUIVALENTS, END OF PERIOD	$	2,285,657		$	1,149,639
Supplemental cash flow data:
Income tax paid	$	-		$	-
Interest paid	$	-		$	-
Supplemental disclosure of non-cash investing activities
Transfer of advance to suppliers to intangible asset	$	30,903		$	-

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

8

LITHIUM & BORON TECHNOLOGY, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021 (UNAUDITED) AND DECEMBER 31, 2020

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

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

On December 31, 2018 (the “Closing Date”), the Company entered into and closed a Share Exchange Agreement and Plan of Reorganization, as amended on January 24, 2019 (the “Share Exchange Agreement”) with Mid-Heaven Sincerity International Resources Investment Co., Ltd (Mid-heaven BVI) and its shareholders Mao Zhang, Jian Zhang, and Ying Zhao, constituting all the shareholders of Mid-heaven BVI (the “Mid-heaven Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the shareholders of Mid-Heaven BVI delivered all issued and outstanding shares of capital stock of Mid-Heaven BVI to the Company, for 106,001,971 shares of the Company’s Common Stock. Mid-heaven BVI, through two subsidiaries, Qinghai Mid-Heaven Sincerity Technology Co., Ltd (“Sincerity”) and Qinghai Mid-Heaven Sincerity Salt-Lake R&D Co., Ltd (“Salt-Lake”) owns 100% of Qing Hai Mid-Heaven Boron & Lithium Technology Company, Ltd. (“Technology”).

The acquisition was structured as a tax-free reorganization. As a result of the Share Exchange Agreement, Mid-heaven BVI’s shareholders own approximately 57% of the combined company.  For accounting purposes, the transaction was accounted for as a reverse acquisition of the Company by Mid-heaven BVI.

The main operating entity, Technology was incorporated December 18, 2018. The business of Technology was carved out of the business of Qinghai Zhongtian Boron & Lithium Mining Co., Ltd (“Qinghai Mining”) on December 20, 2018. Qinghai Mining was founded March 6, 2001, and manufactures and wholesales boric acid and related compounds for industrial and consumer use. Technology obtains its raw material brine exclusively from Qinghai Mining and currently processes boric acid by crushing and processing ore from third party suppliers. Technology previously purchased ore from Qinghai Mining; however, Technology recently shifted suppliers to third parties in order to fulfil what management believes will be a short term reliance on ore for the production of boric acid. Management of Technology expects that it will source all material that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval from the relevant governmental authorities.

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

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

9

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

The interim consolidated financial information as of June 30, 2021 and for the six and three-month periods ended June 30, 2021 and 2020 was prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, which are normally included in CFS prepared in accordance with U.S. GAAP were not included. The interim consolidated financial information should be read in conjunction with the CFS and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on April 15, 2021.

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

Principles of Consolidation 

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

Use of Estimates

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

Cash and Equivalents

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

Accounts Receivable, net

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, the Company had allowance of $19,969 and $19,770 at June 30, 2021 and December 31, 2020, respectively.

Advances to Suppliers, net

The Company makes advances to certain vendors to purchase raw material, tools and equipment for production. The advances are interest-free and unsecured. As of June 30, 2021 and December 31, 2020, the Company had gross advance to suppliers of $120,443 and $245,058 respectively, and the Company had allowance for advances to suppliers of $2,774 and $2,747, respectively.

Inventories, net

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

10

Property and Equipment, net

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

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

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

Impairment of Long-Lived Assets

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

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

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

Deferred Income

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

Unearned Revenue

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

Revenue Recognition

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

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

Cost of Sales

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

Research and Development Costs

Research and development (“R&D”) costs are expensed as incurred and included in general and administrative expenses. These costs primarily consist of cost of materials used, salaries paid for the Company’s development department and fees paid to third parties. R&D costs for the six and three months ended June 30, 2021 and 2020 were immaterial.

Share-Based Compensation

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

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

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

Income Taxes

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

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

Under the provisions of FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of operations.  At June 30, 2021 and December 31, 2020, the Company did not take any uncertain positions that would necessitate recording a tax related liability.   

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Noncontrolling Interests

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

The net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss). Losses attributable to NCI in a subsidiary may exceed a NCIs interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCIs balance.

On April 15, 2020, Technology and Xi’an Jinzang formed a JV, Qinghai Zhongli, to process brine supplied by Technology. Technology owns 51% of the JV and Xi’an Jinzang owns the remaining 49%. During the six and three months ended June 30, 2021, the Company had loss of $39,920 and $29,987 attributable to the NCI. During the six and three months ended June 30, 2020, the Company had loss of $2,745 and $2,745 attributable to the NCI. 

Concentration of Credit Risk

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

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

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

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

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

Foreign Currency Translation and Comprehensive Income (Loss)

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

Statement of Cash Flows

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

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Fair Value of Financial Instruments

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

Fair Value Measurements and Disclosures

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

● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

● Level 3 inputs to the valuation methodology are unobservable and significant to the FV measurement.

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

As of June 30, 2021 and December 31, 2020, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at FV. 

Leases

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

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

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

Operating leases are included in operating lease ROU assets and operating lease liabilities (current and non-current), on the consolidated balance sheets.  The Company did not have any leases as of June 30, 2021.

Related Parties

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

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Segment Reporting

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

Reclassification

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

New Accounting Pronouncements 

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

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

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

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

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

3. INVENTORIES, NET 

Inventories at June 30, 2021 and December 31, 2020, respectively, were as follows: 

	2021		2020
Raw materials	$	221,837	$	275,416
Finished goods		124,247		903,971
Total	$	346,084	$	1,179,387

4. NOTES RECEIVABLE – BANK ACCEPTANCES

The Company sold goods to its customers and received notes (bank acceptances) from them in lieu of payment. These bank acceptances were issued by customers to the Company and would be honored by the applicable bank. The Company may hold a bank acceptance until maturity for full payment, or have the bank acceptance cashed by the bank at a discount at an earlier date, or transfer the bank acceptance to its vendors in lieu of payment for their own obligations. As of June 30, 2021 and December 31, 2020, the Company had notes receivable of $32,507 and $96,367, respectively; and at June 30, 2021, the Company had $0.65 million notes receivable endorsed to its vendors, in lieu of payment. The Company was contingently liable for these notes receivable until paid.

5. OTHER RECEIVABLES

Other receivables consisted of the following at June 30, 2021 and December 31, 2020:

	2021		2020
VAT receivable	$	175,920	$	57,364
Prepaid rent (short term)		774		2,043
Other		15,310		819
Total	$	192,004	$	60,226

6. PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following at June 30, 2021 and December 31, 2020, respectively:

	2021			2020
Building structures and improvements	$	601,862		$	481,270
Production equipment		2,937,119			2,880,146
Vehicle		105,892			70,836
Equipment		269,915			267,235
Total		3,914,788			3,699,487
Less: accumulated depreciation		(2,414,266	)		(2,210,704	)
Property and equipment, net	$	1,500,522		$	1,488,783

In May 2021, the Company acquired RMB 1.1 million ($170,270) of land and building structures from a bankrupt company, of which, $115,760 was for building structures including workshop and office, $54,510 was for the land use right (see Note 7). The Company prepaid RMB 200,000 ($30,960) in March 2020, and paid remaining balance of RMB 900,000 ($139,310) in May 2021.

Depreciation for the six months ended June 30, 2021 and 2020 was $181,059 and $151,543, respectively. Depreciation for the three months ended June 30, 2021 and 2020 was $90,525 and $75,197, respectively. 

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7. INTANGIBLE ASSET, NET

Intangible asset consisted of the following at June 30, 2021:

Land use right	$	54,512
Less: accumulated amortization		(233	)
Intangible asset, net	$	54,279

The Company acquired land use right of $54,512 from a bankrupt company in May 2021, the transfer of Land Use Right Certificate was in process as of this report date. The Company has the right to use the land for 37 years and eight months and is amortizing such rights on a straight-line basis.

Amortization for the six months and three months ended June 30, 2021 was $233 and $233, respectively. Annual amortization for the next five years from June 30, 2021, is expected to be $1,442 for each year.

8. CONSTRUCTION IN PROGRESS (“CIP”)

As of June 30, 2021 and December 31, 2020, the Company had CIP of $1,291,020 and $141,846, respectively. The CIP was mainly for Qinghai Zhongli’s Adsorption Station Project, which is the early stage of an integrated lithium carbonate production system. The adsorption station is equipped with a liquid storage tank for the adsorption material to be placed inside, and its function is to preliminarily extract lithium mother solution from brine for initial purification; the lithium mother solution will go into evaporation shed for refining and concentration; and the concentrated mother solution (also called lithium water saturated solution) is then sent to the production workshop for precipitation and drying to form the finished product of lithium carbonate. As of June 30, 2021, the Company spent $1,291,020 for constructing the adsorption station; as of this report date, the Company completed the construction of No. 1 adsorption stations, and is currently doing the technological transformation for No. 2 refining station for adding the adsorption tank to increase daily production. The Company was committed to pay $196,000 based on the various construction - related contracts entered as of June 30, 2021.

9. TAXES PAYABLE

Taxes payable consisted of the following June 30, 2021 and December 31, 2020, respectively:

	2021		2020
Other	$	22,395	$	18,331
VAT		136,578		88,320
Taxes payable	$	158,973	$	106,651

10. ACCRUED LIABILITIES AND OTHER PAYABLES 

Accrued liabilities and other payables consisted of the following at June 30, 2021 and December 31, 2020, respectively:

	2021		2020
Advances from third parties	$	17,194	$	6,035
Other		615,000		561,000
Accrued salary		943,237		955,312
Total	$	1,575,431	$	1,522,347

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

As of March 31, 2021 and December 31, 2020, other mainly consisted of 1) dividend payable to Northtech of $550,000 and $500,000, respectively; and 2) payables for professional fees and other miscellaneous expenses of $65,000 and $61,000, respectively. 

As of June 30, 2021, accrued salary of $943,237 included $840,000 accrued salary for the three senior officers. As of December 31, 2020, accrued salary of $955,312 included $840,000 accrued salary for three senior officers.

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11. RELATED PARTY TRANSACTIONS

Due from related parties

Technology purchased raw material boron rock from Qinghai Mining (owned by three major shareholders of the Company); in addition, Technology received no-interest short-term advances from Qinghai Mining for daily operational needs. As of June 30, 2021 and December 31, 2020, due from Qinghai Mining was $3.48 million and $3.11 million (the net amount of intercompany transactions between Technology and Qinghai Mining), respectively. Technology purchased boron ore of $648,840 and $594,526 from Qinghai Mining during the six months ended June 30, 2021 and 2020, respectively. Technology purchased boron ore of $387,582 and $480,998 from Qinghai Mining during the three months ended June 30, 2021 and 2020, respectively.

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

In September 2020, Technology sold the Test and Experimental Plant I to Qinghai Mining at cost of RMB 11.41 million ($1.77 million). The payment term is five years with annual interest of 4.75%.  The first payment of $340,552 is due September 30, 2021. As of June 30, 2021, the future minimum payments for next five years is: $340,552, $340,552, $340,552, $340,552 and $404,398.  Qinghai Mining guarantees payment with its accounts receivables, and has the right to repay the purchase price in full any time before the maturity date.

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

Due to related parties

Technology used equipment for production that belongs to Qinghai Province Dachaidan Zhongtian Resources Development Co., Ltd (“Zhongtian Resources”, which is owned by the Chairman and his brother who are also two major shareholders of the Company). The depreciation of these fixed assets had an impact on the production costs of boric acid of the Company and was included in the Company’s cost of sales. The depreciation of these fixed assets for the six months ended June 30, 2021 and 2020 was $10,122 and $12,620, respectively. The depreciation of these fixed assets for the three months ended June 30, 2021 and 2020 was $4,536 and $6,357, respectively. Due to Zhongtian Resources resulting from using its equipment and payment of worker’s compensation made by Zhongtian Resource for Technology was $90,245 and $79,309 at June 30, 2021 and December 31, 2020, respectively.

Technology sold boric acid to Qinghai Dingjia Zhixin Trading Co., Ltd (“Dingjia”) which is 90% owned by the son of the Company’s major shareholder and Chairman. For the six months ended June 30, 2021, the Company’s sales to Dingjia was $0. For the six and three months ended June 30, 2020, the Company’s sales to Dingjia was $101,560 and $101,560, respectively. At June 30, 2021 and December 31, 2020, payable to Dingjia was $20,970 and $20,762, respectively.

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($619,185) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($380,442) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($228,266) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 2.5 million ($380,442) at June 30, 2021; in addition, the Company borrowed additional RMB 2 million ($309,593) with the same terms during the second quarter of 2021 under the oral agreement. The Company recorded $16,539 capitalized interest on CIP as of June 30, 2021.

In addition, at June 30, 2021 and December 31, 2020, the Company had $1,236,591 and $1,014,591 due to another major shareholder of the Company and Chief Executive Officer, resulting from certain Company operating expenses of the US parent company such as legal and audit fees that were paid by him on behalf of the Company. This short-term advance bore no interest, and was payable upon demand.

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

	Related party name	2021			2020
Due from	Qinghai Mining including $1.77 million sale of CIP	$	4,613,977		$	3,457,488
Due to	Qinghai Mining		(1,129,136	)		(350,438	)
Due from Xi'an Jinzang (NCI of the JV)			-			76,630
Due from, net (current and noncurrent)		$	3,484,841		$	3,183,680
Due to	Dingjia	$	20,970		$	20,762
Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest		945,317			-
Due to	Zhongtian Resources		90,245			79,309
Due to	A major shareholder		1,236,591			1,014,591
Due to, total		$	2,293,123		$	1,114,662

12. DEFERRED INCOME

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

The detail of deferred income for the Company’s special projects at June 30, 2021 is:

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	340,552	8/1/2013		10	$	269,604	$	70,948
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		77,398	5/1/2015		10		47,729		29,669
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,547,964	1/1/2018		10		541,787		1,006,177
Project of high value utilization of magnesium-rich waste liquid		309,593	7/9/2019		10		252,628		56,965
Total	$	2,275,507				$	1,111,748	$	1,163,759

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

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	337,170	8/1/2013		10	$	250,068	$	87,102
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		76,629	5/1/2015		10		43,422		33,207
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,532,591	1/1/2018		10		459,778		1,072,813
Project of high value utilization of magnesium-rich waste liquid		306,518	7/9/2019		10		246,594		59,924
Total	$	2,252,908				$	999,862	$	1,253,046

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13. SUBSIDY INCOME

Subsidy income consisted of amortization of deferred income for declared special projects and government’s general incentive fund (recorded as income upon receipt) for the six and three months ended June 30, 2021 and 2020, respectively:

	Six Months Ended June 30
	2021		2020
Technology upgrade for using lean ore to produce magnesium sulfate	$	16,997	$	15,643
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		3,863		3,555
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		77,258		71,105
Project of high value utilization of magnesium-rich waste liquid		3,554		3,271
Subsidy for resuming work		-		2,061
Total	$	101,672	$	95,635

	Three Months Ended June 30,
	2021		2020
Technology upgrade for using lean ore to produce magnesium sulfate	$	8,515	$	7,762
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		1,935		1,764
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		38,704		35,283
Project of high value utilization of magnesium-rich waste liquid		1,781		1,624
Subsidy for resuming work		-		2,061
Total	$	50,935	$	48,494

14. DEFERRED TAX ASSETS

As of June 30, 2021 and December 31, 2020, respectively, deferred tax assets consisted of the following:

	2021			2020
Deferred tax asset –NOL of US parent company	$	1,129,304		$	1,081,844
Less: valuation allowance		(1,129,304	)		(1,081,844	)
Deferred tax assets, net	$	-		$	-

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

15. INCOME TAXES

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

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

The U.S. parent company, was incorporated in the U.S. and has net operating losses (“NOLs”) for income tax purposes, under the 2018 Tax Reform, the NOLs arising in tax years beginning after 2017 may reduce 80% of a taxpayer’s taxable income, and be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The U.S. parent Company has NOLs carry forwards for income taxes of approximately $5.38 million at June 30, 2021. Management believes the realization of benefits from these losses remains uncertain due to the parent Company’s limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance was provided. 

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

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

	2021			2020
Tax (benefit) at U.S. federal statutory rates	$	50,410		$	(34,588	)
Foreign income taxed at different rates		18,642			8,681
Tax holiday in PRC		(46,605	)		(21,701	)
Other		9,820			-
Valuation allowance		59,680			73,541
Tax expense per financial statements	$	91,947		$	25,933

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

	2021			2020
Tax at U.S. federal statutory rates	$	74,393		$	13,844
Foreign income taxed at different rates		17,326			11,858
Tax holiday in PRC		(43,315	)		(29,644	)
Other		6,338			-
Valuation allowance		25,747			29,875
Tax expense per financial statements	$	80,489		$	25,933

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

	2021		2020
Income tax expense – current	$	91,947	$	25,933
Income tax expense – deferred		-		-
Total income tax expense	$	91,947	$	25,933

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

	2021		2020
Income tax expense – current	$	80,489	$	25,933
Income tax expense – deferred		-		-
Total income tax expense	$	80,489	$	25,933

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16. MAJOR CUSTOMERS AND VENDORS 

The following table sets forth information as to the Company’s customers that accounted for 10% or more of the Company’s sales for the six and three months ended June 30, 2021 and 2020.

Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
Customer	Percentage of Total Sales			Customer	Percentage of Total Sales
A		13	%	A		12	%
B		11	%	B		-	%
C		-	%	C		15	%
D		-	%	D		12	%
E		-	%	E		10	%

Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
Customer	Percentage of Total Sales			Customer	Percentage of Total Sales
A		15	%	A		15	%
B		12	%	B		-	%
C		11	%	C		-	%
D		-	%	D		15	%
E		-	%	E		11	%
F		-	%	F		10	%

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

Technology purchased all of its boron ore raw material of $648,840 and $594,526 from Qinghai Mining during the six months ended June 30, 2021 and 2020, respectively. Technology purchased boron ore of $387,582 and $480,998 from Qinghai Mining during the three months ended June 30, 2021 and 2020, respectively.

The following table sets forth information as to the Company’s suppliers that accounted for 10% or more of the Company’s total purchases for the six and three months ended June 30, 2021 and 2020.

Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		42	%	A – Qinghai Mining		29	%
B		18	%	B		-	%
C		15	%	C		14	%

Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		46	%	A – Qingai Mining		28	%
B		14	%	B		-	%
C		11	%	C		-	%
D		16	%	D		14	%

The Company had two suppliers that accounted for 10% or more of the Company’s accounts payable as of June 30, 2021. The accounts payable to these suppliers was $77,454 and $31,859 as of June 30, 2021, respectively.

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

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17. STATUTORY RESERVES AND RESTRICTED NET ASSETS

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

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

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

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

According to Administrative Measures for the Collection and Utilization of Enterprise Work Safety Funds issued by the PRC Ministry of Finance and the State Administration of Work Safety, for the companies with dangerous goods production or storage, the company is required to make a special reverse for the use of enhancing and improving its safe production conditions. Under PRC GAAP, the reserve is recorded as cost of sales; however, under US GAAP, since the expense has not been incurred and the Company already recorded cost of sales for safety related expenses when incurred, this special reserve was recorded as an appropriation of its after-tax income. At June 30, 2021, the Company had $110,725 production safety related reserve, which was included in $257,742 statutory reserve in the balance sheet. The reserve is calculated at regressive rates levied on revenue in excess of specific amounts as follows: 

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

18. COMMITMENTS

Capital Contribution

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

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19. CONTINGENCIES

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

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

20. SUBSEQUENT EVENTS

The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company has the following material subsequent events:

Beginning in July 2021, Management of Technology began shifting suppliers to third parties in order to fulfil what management believes will be a short term reliance on ore for the production of boric acid. Management of Technology expects that it will source all material and compounds that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval from the relevant governmental authorities.  Management of the Company believes  that the change in suppliers is consistent with the Company’s long term plans to obtain all raw materials from brine process which will be consistent with environmental policies and the long term business plan of the Company.

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

Overview

The Company currently produces boric acid in the Peoples Republic of China (“PRC”) and plans to expand its manufacturing facilities through a Joint Venture (“JV”) to produce up to 30,000 tonnes of lithium carbonate annually for the electric vehicle battery market in China, subject to funding. We sold our plate heat exchangers and heat pump operations on September 30, 2019.

On December 31, 2018 (the "Closing Date"), we entered into a Share Exchange Agreement and Plan of Reorganization, as amended January 24, 2019 (the “Share Exchange Agreement”) with Mid-Heaven Sincerity International Resources Investment Co., Ltd (Mid-heaven BVI) and its shareholders Mao Zhang, Jian Zhang, and Ying Zhao, constituting all of the shareholders of Mid-heaven BVI (the “Mid-heaven Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the shareholders of Mid-heaven BVI delivered all of the issued and outstanding shares of capital stock of Mid-Heaven BVI to SmartHeat, for 106,001,971 shares of our Common Stock. Mid-heaven BVI, through two subsidiaries, Qinghai Mid-Heaven Sincerity Technology Co., Ltd (“Sincerity”) and Qinghai Mid-Heaven Sincerity Salt-Lake R&D Co., Ltd (“Salt-Lake”) owns 100% of Qing Hai Mid-Heaven Boron & Lithium Technology Company, Ltd. (“Technology”).

The Acquisition was structured as a tax-free reorganization. As a result of the Share Exchange Agreement, Mid-heaven BVI’s shareholders own approximately 57% of the combined company.  For accounting purposes, the transaction was accounted for as a reverse acquisition of the Company by Mid-heaven BVI.

The main operating entity, Technology was incorporated on December 18, 2018. The business of Technology was carved out of the business of Qinghai Zhongtian Boron & Lithium Mining Co., Ltd (“Qinghai Mining”) on December 20, 2018. Qinghai Mining was founded March 6, 2001, and manufactures and wholesales boric acid and related compounds for industrial and consumer usage. Technology obtains its brine exclusively from Qinghai Mining and currently processes boric acid by crushing and processing ore from third party suppliers. Technology previously purchased ore from Qinghai Mining; however, Technology recently shifted suppliers to third parties in order to fulfil what management believes will be a short term reliance on ore for the production of boric acid. Management of Technology expects that it will source all material and compounds that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval from the relevant governmental authorities. 

On September 30, 2019, Heat HP, Inc. and Heat PHE, Inc, our wholly owned subsidiaries, sold their respective equity interests in Jinhui, SmartHeat Investment, SmartHeat Trading, SmartHeat Pump and Heat Exchange for $353. The equity interests were sold to individuals and businesses in the PRC. Each subsidiary was sold for nominal cash consideration as below and, as the transactions were structured as purchases of equity interests, the subsidiary companies retained all liabilities when sold.

SmartHeat Jinhui (Beijing) Energy Technology Ltd - 100 RMB

SmartHeat (China) Investment Ltd - 400 RMB

SmartHeat (Shanghai) Trading Co., Ltd - 400 RMB

SmartHeat (Shenyang) Heat Pump Technology Co., Ltd - 400 RMB

SanDeKe Co., Ltd - 600 RMB

SmartHeat Heat Exchange Equipment Co - 600 RMB

On October 23, 2019, we filed a certificate of amendment to its certificate of incorporation to change its name from “SmartHeat, Inc.” to “Lithium & Boron Technology, Inc.” to better reflect the operations of the Company.

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

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

Related Party Transactions

Due from related parties

Technology purchased raw material boron rock from Qinghai Mining (owned by three major shareholders of the Company); in addition, Technology received no-interest short-term advances from Qinghai Mining from time to time for daily operational needs. As of June 30, 2021 and December 31, 2020, due from Qinghai Mining was $3.48 million and $3.11 million, respectively (the net amount of intercompany transactions between Technology and Qinghai Mining). Qinghai Technology purchased boron ore at a cost of $648,840 and $594,526 from Qinghai Mining during the six months ended June 30, 2021 and 2020, respectively. Qinghai Technology purchased boron ore at a cost of $387,582 and $480,998 from Qinghai Mining during the three months ended June 30, 2021 and 2020, respectively.

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

In September 2020, Technology sold the Test and Experimental Plant I to Qinghai Mining at cost of RMB 11.41 million ($1.77 million). The payment term is five years with annual interest of 4.75%.  The first payment of $340,552 is due September 30, 2021. Qinghai Mining guarantees payment with its accounts receivable, and has the right to repay the purchase price in full any time before the maturity date.

Due to related parties

Technology uses equipment that belongs to Qinghai Province Dachaidan Zhongtian Resources Development Co., Ltd (“Zhongtian Resources”) for production which is owned by our Chairman and his brother who are two major shareholders of the Company. The depreciation of these fixed assets had an impact on the production costs of boric acid of the Company and was included in the Company’s cost of sales. The depreciation of these fixed assets for the six months ended June 30, 2021and 2020 was $10,122 and $12,620, respectively. The depreciation of these fixed assets for the three months ended June 30, 2021and 2020 was $4,536 and $6,357, respectively. Due to Zhongtian Resources resulting from using its equipment and payment of worker’s compensation made by Zhongtian Resource for Technology was $90,245 and $79,309 at June 30, 2021 and December 31, 2020, respectively.

Technology sold boric acid to Qinghai Dingjia Zhixin Trading Co., Ltd (“Dingjia”) which is 90% owned by the son of the Company’s major shareholder and Chairman. For the six months ended June 30, 2021 and 2020, the Company’s sales to Dingjia was $0 and $101,560, respectively. For the three months ended June 30, 2021 and 2020, the Company’s sales to Dingjia was $0 and $101,560, respectively. At June 30, 2021 and December 31, 2020, outstanding payable to Dingjia was $20,970 and $20,762, respectively.

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During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($619,185) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($380,442) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($228,266) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 2.5 million ($380,442) at June 30, 2021; in addition, the Company borrowed additional RMB 2 million ($309,593) with same terms during the second quarter of 2021 under the oral agreement. The Company recorded $16,539 capitalized interest on CIP as of June 30, 2021.

In addition, at June 30, 2021 and December 31, 2020, the Company had $1,236,591 and $1,014,591 due to another major shareholder and Chief Executive Officer of the Company, resulting from certain of the Company’s operating expenses such as legal and audit fees that were paid by him on behalf of the Company. This short-term advance bore no interest, and payable upon demand.

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

	Related party name	2021			2020
Due from	Qinghai Mining including $1.77 million sale of CIP	$	4,613,977		$	3,457,488
Due to	Qinghai Mining		(1,129,136	)		(350,438	)
Due from Xi'an Jinzang (NCI of the JV)			-			76,630
Due from, net (current and noncurrent)		$	3,484,841		$	3,183,680
Due to	Dingjia	$	20,970		$	20,762
Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest		945,317			-
Due to	Zhongtian Resources		90,245			79,309
Due to	A major shareholder		1,236,591			1,014,591
Due to, total		$	2,293,123		$	1,114,662

Significant Accounting Policies

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

Basis of Presentation

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

Principles of Consolidation

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

Use of Estimates

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

Accounts Receivable

We maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, we had bad debt allowance for accounts receivable of $19,969 and $19,770 at June 30, 2021 and December 31, 2020.

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Revenue Recognition

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

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

Deferred Income

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

Foreign Currency Translation and Comprehensive Income (Loss)

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

Noncontrolling Interests

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

The net income (loss) attributed to NCIs was separately designated in the accompanying statements of operation and comprehensive income (loss). Losses attributable to NCIs in a subsidiary may exceed an NCIs interests in the subsidiary’s equity. The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCIs balance.

On April 15, 2020, Technology and Xi’an Jinzang formed a JV company Qinghai Zhongli to process brine supplied by Technology. Technology owns 51% of the JV and Xi’an Jinzang owns the remaining 49%. During the six and three months ended June 30, 2021, the Company had loss of $39,920 and $29,987 that were attributable to the NCI. During the six and three months ended June 30, 2020, the Company had loss of $2,745 and $2,745 that were attributable to the NCI. 

Recent Accounting Pronouncements

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

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

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

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

Results of Operations

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

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

	2021			% of Sales			2020			% of Sales
Sales	$	4,007,849					$	3,329,890
Cost of sales		3,292,926			82.2	%		2,904,535			87.2	%
Gross profit		714,923			17.8	%		425,355			12.8	%
Selling expenses		46,057			1.1	%		85,549			2.6	%
General and administrative expenses		531,953			13.3	%		613,995			18.4	%
Total operating expenses		578,010			14.4	%		699,544			21.0	%
Income (loss) from operations		136,913			3.4	%		(274,189	)		(8.2	)%
Other income		103,132			2.6	%		109,483			3.3	%
Income (loss) before income taxes		240,045			6.0	%		(164,706	)		(4.9	)%
Income tax expense		91,947			2.3	%		25,933			0.8	%
Income (loss) before noncontrolling interest		148,098			3.7	%		(190,639	)		(5.7	)%
Less: loss attributable to noncontrolling interest		(39,920	)		(1.0	)%		(2,745	)		(0.1	)%
Net income (loss) to the Company	$	188,018			4.7	%	$	(187,894	)		(5.6	)%

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Sales

Sales for the six months ended June 30, 2021 and 2020 was $4,007,849 and $3,329,890, respectively, an increase of $677,959 or 20.4%. The increase in sales was mainly due to an 8% increase in sales quantity, a 2% increase in average unit selling price and a 10% increase due to change in exchange rate.  In the comparable period of 2020, due to the outbreak of COVID-19 and related logistic restriction, our sales decreased, especially in the first quarter of 2020.

Cost of sales

Cost of sales (“COS”) for the six months ended June 30, 2021 and 2020 was $3,292,926 and $2,904,535, respectively, an increase of $388,391 or 13.4%. The increase was mainly due to increased sales and production. The COS as a percentage of sales was 82.2% for the six months ended June 30, 2021 compared with 87.2% for 2020. The decrease in COS as a percentage of sales was mainly due to decreased average cost of production. In the comparable period of 2020, we had abnormal high COS as a percentage of sales; due to COVID19 outbreak, our factory was reopened one month later than originally planned, and we did not resume the production one week after the factory reopened due to the drought of master liquid pool resulting from the longer period of shutdown of the machine, we spent additional days and had extra acid and mineral consumption to cultivate the concentration level of master liquid pool. 

Gross profit

Gross profit for the six months ended June 30, 2021 and 2020 was $714,923 and $425,355, respectively, an increase of $289,568 or 68.1%. The profit margin was 17.8% for the six months ended June 30, 2021 compared to 12.8% for the six months ended June 30, 2020, the increase in profit margin was mainly due to decreased production cost as described above.

Operating expenses

Selling expenses consist mainly of salespersons’ salaries and freight out. Selling expense were $46,057 for the six months ended June 30, 2021, compared to $85,549 for the six months ended June 30, 2020, a decrease of $39,492 or 46.2%, mainly resulting from decreased salespersons’ salaries by $40,980 resulting from restructure of our sales department for improving its efficiency and cost-saving which was partly offset by increased other selling expenses by $1480.

General and administrative expenses consist mainly of salary, R&D, office, welfare, business meeting, maintenance, and utilities. General and administrative expenses were $531,953 for the six months ended June 30, 2021, compared to $613,995 for the six months ended June 30 2020, a decrease of $82,042 or 13.4%, mainly resulting from decreased officer salary expense by $240,000, which was partly offset by increased business entertainment expense by $65,470 increased R&D Expense by $25,120, increased vehicle expense by $16,330, increased consulting expense by $10,480, increased office expense by $9,230, increased welfare expense by $8,470 and increased other G&A expenses by $22,860.

Other income

Other income was $103,132 for the six months ended June 30, 2021, compared to $109,483 for the six months ended June 30, 2020, a decrease of $6,351 or 5.8%. For the six months ended June 30, 2021, other income mainly consisted of subsidy income of $101,672 and interest income $1,176. For the six months ended June 30, 2020, other income mainly consisted of subsidy income of $95,635 and other non-operating income of $13,405.

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

Net income (loss)

We had net income of $188,018 for the six months ended June 30, 2021, compared to net loss of $187,894 for the six months ended June 30, 2020, an increase in net income by $375,912 or 200.1%. The increase in our net income mainly resulted from increased sales and decreased operating expenses as described above.  

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Results of Operations

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

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

	2021			% of Sales			2020			% of Sales
Sales	$	2,179,469					$	2,319,392
Cost of sales		1,596,808			73.3	%		1,973,791			85.1	%
Gross profit		582,661			26.7	%		345,601			14.9	%
Selling expenses		23,002			1.1	%		29,344			1.3	%
General and administrative expenses		257,582			11.8	%		326,993			14.1	%
Total operating expenses		280,584			12.9	%		356,337			15.4	%
Income (loss) from operations		302,077			13.9	%		(10,736	)		(0.5	)%
Other income		52,167			2.4	%		76,658			3.3	%
Income before income taxes		354,244			16.3	%		65,922			2.8	%
Income tax expense		80,489			3.7	%		25,933			1.1	%
Income before noncontrolling interest		273,755			12.6	%		39,989			1.7	%
Less: loss attributable to noncontrolling interest		(29,987	)		(1.3	)%		(2,745	)		(0.1	)%
Net income	$	303,742			13.9	%	$	42,734			1.8	%

Sales

Sales for the three months ended June 30, 2021 and 2020 was $2,179,469 and $2,319,392, respectively, a decrease of $139,923 or 6.0%. The decrease in sales was mainly due to a decreased sales quantity of 16% resulting from 1) less boric acid inventory carried over from prior periods, and 2) temporary decreased mine production resulting from rectifying the mines in the area by the authority for environment protection. but was partly offset by a 3% increase in average unit selling price and a 7% increase due to change in exchange rate.

Cost of sales

Cost of sales (“COS”) for the three months ended June 30, 2021 and 2020 was $1,596,808 and $1,973,791, respectively, a decrease of $376,983 or 19.1%. The decrease was mainly due to decreased sales and production. The COS as a percentage of sales was 73.3% for the three months ended June 30, 2021 compared with 85.1% for 2020. The decrease in COS as a percentage of sales was mainly due to decreased average cost of production. In the second quarter of 2020, we had abnormal high COS as a percentage of sales resulting from delayed factory reopening due to COVID-19, and extra cost spent for to cultivating the concentration level of master liquid pool which was drought due to the longer period of shutdown of the machine. 

Gross profit

Gross profit for the three months ended June 30, 2021 and 2020 was $582,661 and $345,601, respectively, an increase of $237,060 or 68.6%. The profit margin was 26.7% for the three months ended June 30, 2021 compared to 14.9% for the three months ended June 30, 2020, the increase in profit margin was mainly due to decreased production cost as described above.

Operating expenses

Selling expenses consist mainly of salespersons’ salaries and freight out. Selling expense were $23,002 for the three months ended June 30, 2021, compared to $29,344 for the three months ended June 30, 2020, a decrease of $6,342 or 21.6%, mainly resulting from decreased freight expense by $7,605 which was partly offset by increased other selling expenses by $1,260.

General and administrative expenses consist mainly of salary, R&D, office, welfare, business meeting, maintenance, and utilities. General and administrative expenses were $257,582 for the three months ended June 30, 2021, compared to $326,993 for the three months ended June 30 2020, a decrease of $69,411 or 21.2%, mainly resulting from decreased salary expense by $120,000 and decreased other G&A expenses by $11,050, which was partly offset by increased business entertainment expense by $61,640.

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Other income

Other income was $52,167 for the three months ended June 30, 2021, compared to $76,658 for the three months ended June 30, 2020, a decrease of $24,491 or 31.9%. For the three months ended June 30, 2021, other income mainly consisted of subsidy income of $50,935 and interest income of $699. For the three months ended June 30, 2020, other income mainly consisted of subsidy income of $48,494 and non-operating income of $27,754.

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

Net income

We had net income of $303,742 for the three months ended June 30, 2021, compared to $42,734 for the three months ended June 30, 2020, an increase of $261,008 or 610.8%. The increase in our net income mainly resulted from increased gross profit and decreased operating expenses as described above.  

Liquidity and Capital Resources

As of June 30, 2021, we had cash and equivalents of $2,285,657. Working capital was $46,179 at June 30, 2021. The ratio of current assets to current liabilities was 1.01:1 at June 30, 2021.  

The following is a summary of cash provided by or used in each of the indicated types of activities during six months ended June 30, 2021 and 2020:

	2021			2020
Cash provided by (used in):
Operating activities	$	1,741,547		$	960,967
Investing activities		(1,347,055	)		(289,423	)
Financing activities		906,989			327,119

Net cash provided by operating activities was $1,741,547 for the six months ended June 30, 2021, compared to $960,967 for the six months ended June 30, 2020. The increase of cash inflow from operating activities the six months ended June 30, 2021 compared to the six months ended June 30, 2020 was principally attributable to increased cash inflow from unearned revenue by $551,716, increased cash inflow form taxes payable by $38,117, increased cash inflow from accounts receivable by $77,444, and decreased cash outflow from advance to suppliers by $180,536, which was partly offset by decreased cash inflow from inventory by $91,401.

Net cash used in investing activities was $1,347,055 for the six months ended June 30, 2021, compared to $289,423 for the six months ended June 30, 2020. Net cash used in investing activities in 2021 mainly consisted of purchase of property and equipment of $146,967, purchase of intangible asset of $54,413, and $1,145,675 payment for constructing the absorption station for preliminarily extract lithium ion from brine for further concentration and purification. Net cash used in investing activities in 2020 was mainly consisted of purchase of property and equipment of $287,221.

Net cash provided by financing activities was $906,989 for the six months ended June 30, 2021, compared to $327,119 for the six months ended June 30, 2020. The net cash provided by financing activities in 2021 consisted of amount due to other related parties of $1,175,728 include loans from Xi’an Jinzang described below, but partly offset by increase in due from Qinghai Mining of $268,739. The net cash provided by financing activities in 2020 consisted of capital contribution from noncontrolling interest Qinghai Zhongli by $711,044, and increase in amount due to other related parties of $256,233, but partly offset by increase in due from Qinghai Mining of $640,158.

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($619,185) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($380,442) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($228,266) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 2.5 million ($380,442) at June 30, 2021; in addition, the Company borrowed additional RMB 2 million ($309,593) with same terms during the second quarter of 2021 under the oral agreement. The Company recorded $16,539 capitalized interest on CIP as of June 30, 2021.

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Dividend Distribution

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

Off-Balance Sheet Arrangements

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

33

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, our principal executive officer and principal financial officer, respectively, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021, our disclosure controls and procedures were not effective as of such date because of a material weakness identified in our internal control over financial reporting related to our internal level of US GAAP expertise. We lack sufficient personnel with the appropriate level of knowledge, experience and training in US GAAP for the preparation of financial statements in accordance with US GAAP. None of our internal accounting staff, including our Chief Financial Officer, that are primarily responsible for the preparation of our books and records and financial statements in compliance with US GAAP holds a license such as Certified Public Accountant in the US, nor have any attended US institutions or extended educational programs that would provide enough of the relevant education relating to US GAAP.

Changes in Internal Control over Financial Reporting.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

34

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

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

None.

Item 3. Defaults Upon Senior Securities.

None. 

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information

None.

Item 6. Exhibits

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

EXHIBIT INDEX

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

† Filed herewith

35

SIGNATURES

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

	LITHIUM & BORON TECHNOLOGY, INC.
	(Registrant)
Date: August 23, 2021	By:	/s/ Jimin Zhang
		Mr. Jimin Zhang Chief Executive Officer (Principal Executive Officer and Duly Authorized Signatory)

36

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, Jimin Zhang, certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2021, of Lithium & Boron Technology, Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a.           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 23, 2021	By:	/s/ Jimin Zhang
		Mr. Jimin Zhang Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302(a)

OF THE SARBANES-OXLEY ACT OF 2002

I, Xudong Wang, certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2021, of Lithium & Boron Technology, Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a.           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 23, 2021	By:	/s/ Xudong Wang
		Xudong Wang Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jimin Zhang, hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Lithium & Boron Technology, Inc. for the quarterly period ended June 30, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Lithium & Boron Technology, Inc.

Date: August 23, 2021	By:	/s/ Jimin Zhang
		Mr. Jimin Zhang Chief Executive Officer

I, Xudong Wang, hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Lithium & Boron Technology, Inc. for the quarterly period ended June 30, 2021, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Lithium & Boron Technology, Inc.

Date: August 23, 2021	By:	/s/ Xudong Wang
		Xudong Wang Chief Financial Officer

The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not to be incorporated by reference into any filing of Lithium & Boron Technology, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 16, 2021
Document Information Line Items
Entity Registrant Name	LITHIUM & BORON TECHNOLOGY, INC.
Trading Symbol	LBTI
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		185,986,370
Amendment Flag	false
Entity Central Index Key	0001384135
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Jun. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-34246
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	98-0514768
Entity Address, Address Line One	60 East Ren-Min Road Dachaidan
Entity Address, City or Town	XaiXi
Entity Address, Country	CN
Entity Address, Postal Zip Code	817000
City Area Code	24
Local Phone Number	2519-7699
Title of 12(b) Security	Common Stock, par value $0.001
Security Exchange Name	NONE
Entity Interactive Data Current	Yes

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CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2021	Dec. 31, 2020
CURRENT ASSETS
Cash and equivalents	$ 2,285,657	$ 972,066
Accounts receivable, net	13,704	223,194
Prepaid expenses	4,028	0
Advances to suppliers, net	117,669	242,311
Other receivables	192,004	60,226
Notes receivable	32,507	96,367
Due from related parties	2,058,787	1,771,789
Inventories	346,084	1,179,387
Total current assets	5,050,440	4,545,340
NONCURRENT ASSETS
Due from related party	1,426,054	1,411,891
Property and equipment, net	1,500,522	1,488,783
Intangible asset, net	54,279	0
Construction in progress	1,291,020	141,846
Total noncurrent assets	4,271,875	3,042,520
TOTAL ASSETS	9,322,315	7,587,860
CURRENT LIABILITIES
Accounts payable	334,944	525,775
Unearned revenue	641,790	64,190
Accrued liabilities and other payables	1,575,431	1,522,347
Taxes payable	158,973	106,651
Due to related parties	2,293,123	1,114,662
Total current liabilities	5,004,261	3,333,625
DEFERRED INCOME	1,163,759	1,253,046
TOTAL LIABILITIES	6,168,020	4,586,671
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 500,000,000 shares authorized, 185,968,370 shares issued and outstanding	185,968	185,968
Paid-in capital deficiency	(6,666,351)	(6,666,351)
Statutory reserves	257,742	177,843
Accumulated other comprehensive income	271,469	223,922
Retained earnings	8,386,855	8,328,736
TOTAL COMPANY STOCKHOLDERS' EQUITY	2,435,683	2,250,118
Noncontrolling interest	718,612	751,071
TOTAL EQUITY	3,154,295	3,001,189
TOTAL LIABILITIES AND EQUITY	$ 9,322,315	$ 7,587,860

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CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	185,968,370	185,968,370
Common stock, shares outstanding	185,968,370	185,968,370

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Sales	$ 2,179,469	$ 2,217,832	$ 4,007,849	$ 3,228,330
Sales - related party	0	101,560	0	101,560
Total sales	2,179,469	2,319,392	4,007,849	3,329,890
Cost of sales	1,596,808	1,973,791	3,292,926	2,904,535
Gross profit	582,661	345,601	714,923	425,355
Operating expenses
Selling	23,002	29,344	46,057	85,549
General and administrative	257,582	326,993	531,953	613,995
Total operating expenses	280,584	356,337	578,010	699,544
Income (loss) from operations	302,077	(10,736)	136,913	(274,189)
Non-operating income
Financial expense	(202)	0	(391)	0
Other income	735	27,754	675	13,405
Interest income	699	410	1,176	443
Subsidy income	50,935	48,494	101,672	95,635
Total non-operating income, net	52,167	76,658	103,132	109,483
Income (loss) before income tax	354,244	65,922	240,045	(164,706)
Income tax expense	80,489	25,933	91,947	25,933
Income (loss) before noncontrolling interest	273,755	39,989	148,098	(190,639)
Less: loss attributable to noncontrolling interest	(29,987)	(2,745)	(39,920)	(2,745)
Net income (loss) to the Company	303,742	42,734	188,018	(187,894)
Other comprehensive items
Foreign currency translation income (loss) attributable to the Company	80,904	(57,766)	47,547	(116,962)
Foreign currency translation income attributable to noncontrolling interest	12,634	1,542	7,461	1,542
Comprehensive income (loss) attributable to the Company	384,646	(15,032)	235,565	(304,856)
Comprehensive loss attributable to noncontrolling interest	$ (17,353)	$ (1,203)	$ (32,459)	$ (1,203)
Basic and diluted weighted average shares outstanding (in Shares)	185,968,370	185,968,370	185,968,370	185,968,370
Basic and diluted net income (loss) per share (in Dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.00

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STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings, Appropriated [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2019	$ 185,968	$ (6,666,351)	$ 71,252	$ (14,600)	$ 8,765,225		$ 2,341,494
Balance (in Shares) at Dec. 31, 2019	185,968,370
Net income (loss)					(230,628)		(230,628)
Dividend accrued					(25,000)		(25,000)
Foreign currency translation loss				(59,196)			(59,196)
Balance at Mar. 31, 2020	$ 185,968	(6,666,351)	71,252	(73,796)	8,509,597		2,026,670
Balance (in Shares) at Mar. 31, 2020	185,968,370
Balance at Dec. 31, 2019	$ 185,968	(6,666,351)	71,252	(14,600)	8,765,225		2,341,494
Balance (in Shares) at Dec. 31, 2019	185,968,370
Net income (loss)							(187,894)
Balance at Jun. 30, 2020	$ 185,968	(6,666,351)	135,676	(131,562)	8,462,907	$ 703,538	1,986,638
Balance (in Shares) at Jun. 30, 2020	185,968,370
Balance at Mar. 31, 2020	$ 185,968	(6,666,351)	71,252	(73,796)	8,509,597		2,026,670
Balance (in Shares) at Mar. 31, 2020	185,968,370
Net income (loss)					42,734	(2,745)	42,734
Capital contribution						704,741
Statutory reserve			64,424		(64,424)
Dividend accrued					(25,000)		(25,000)
Foreign currency translation loss				(57,766)		1,542	(57,766)
Balance at Jun. 30, 2020	$ 185,968	(6,666,351)	135,676	(131,562)	8,462,907	703,538	1,986,638
Balance (in Shares) at Jun. 30, 2020	185,968,370
Balance at Dec. 31, 2020	$ 185,968	(6,666,351)	177,843	223,922	8,328,736	751,071	$ 2,250,118
Balance (in Shares) at Dec. 31, 2020	185,968,370						185,968,370
Net income (loss)					(115,724)	(9,933)	$ (115,724)
Statutory reserve			20,620		(20,620)
Dividend accrued					(25,000)		(25,000)
Foreign currency translation loss				(33,357)		(5,173)	(33,357)
Balance at Mar. 31, 2021	$ 185,968	(6,666,351)	198,463	190,565	8,167,392	735,965	2,076,037
Balance (in Shares) at Mar. 31, 2021	185,968,370
Balance at Dec. 31, 2020	$ 185,968	(6,666,351)	177,843	223,922	8,328,736	751,071	$ 2,250,118
Balance (in Shares) at Dec. 31, 2020	185,968,370						185,968,370
Net income (loss)							$ 188,018
Balance at Jun. 30, 2021	$ 185,968	(6,666,351)	257,742	271,469	8,386,855	718,612	$ 2,435,683
Balance (in Shares) at Jun. 30, 2021	185,968,370						185,968,370
Balance at Mar. 31, 2021	$ 185,968	(6,666,351)	198,463	190,565	8,167,392	735,965	$ 2,076,037
Balance (in Shares) at Mar. 31, 2021	185,968,370
Net income (loss)					303,742	(29,987)	303,742
Statutory reserve			59,279		(59,279)
Dividend accrued					(25,000)		(25,000)
Foreign currency translation loss				80,904		12,634	80,904
Balance at Jun. 30, 2021	$ 185,968	$ (6,666,351)	$ 257,742	$ 271,469	$ 8,386,855	$ 718,612	$ 2,435,683
Balance (in Shares) at Jun. 30, 2021	185,968,370						185,968,370

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)	6 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) including noncontrolling interest	$ 148,098	$ (190,639)
Adjustments to reconcile income (loss) including noncontrolling interest to net cash provided by operating activities:
Depreciation and amortization	181,292	151,543
Changes in deferred income	(101,672)	(93,573)
(Increase) decrease in assets and liabilities:
Accounts receivable	211,346	133,902
Prepaid expenses	(1,960)	(15,501)
Advances to suppliers	95,939	(84,597)
Other receivables	(133,001)	(2,526)
Inventories	843,603	935,004
Accounts payable	(131,038)	(32,999)
Unearned revenue	575,912	24,196
Accrued liabilities and other payables	1,869	123,115
Taxes payable	51,159	13,042
Net cash provided by operating activities	1,741,547	960,967
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(146,967)	(287,221)
Purchase of intangible asset	(54,413)	0
Construction in progress	(1,145,675)	(2,202)
Net cash used in investing activities	(1,347,055)	(289,423)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution from noncontrolling interest	0	711,044
Changes in due from related parties	(268,739)	(640,158)
Changes in due to related parties	1,175,728	256,233
Net cash provided by financing activities	906,989	327,119
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND EQUIVALENTS	12,110	(9,048)
NET INCREASE IN CASH AND EQUIVALENTS	1,313,591	989,615
CASH AND EQUIVALENTS, BEGINNING OF PERIOD	972,066	160,024
CASH AND EQUIVALENTS, END OF PERIOD	2,285,657	1,149,639
Supplemental cash flow data:
Income tax paid	0	0
Interest paid	0	0
Supplemental disclosure of non-cash investing activities
Transfer of advance to suppliers to intangible asset	$ 30,903	$ 0

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ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Nature of Operations [Text Block]

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

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

On December 31, 2018 (the “Closing Date”), the Company entered into and closed a Share Exchange Agreement and Plan of Reorganization, as amended on January 24, 2019 (the “Share Exchange Agreement”) with Mid-Heaven Sincerity International Resources Investment Co., Ltd (Mid-heaven BVI) and its shareholders Mao Zhang, Jian Zhang, and Ying Zhao, constituting all the shareholders of Mid-heaven BVI (the “Mid-heaven Shareholders”). Pursuant to the terms of the Share Exchange Agreement, the shareholders of Mid-Heaven BVI delivered all issued and outstanding shares of capital stock of Mid-Heaven BVI to the Company, for 106,001,971 shares of the Company’s Common Stock. Mid-heaven BVI, through two subsidiaries, Qinghai Mid-Heaven Sincerity Technology Co., Ltd (“Sincerity”) and Qinghai Mid-Heaven Sincerity Salt-Lake R&D Co., Ltd (“Salt-Lake”) owns 100% of Qing Hai Mid-Heaven Boron & Lithium Technology Company, Ltd. (“Technology”).

The acquisition was structured as a tax-free reorganization. As a result of the Share Exchange Agreement, Mid-heaven BVI’s shareholders own approximately 57% of the combined company.  For accounting purposes, the transaction was accounted for as a reverse acquisition of the Company by Mid-heaven BVI.

The main operating entity, Technology was incorporated December 18, 2018. The business of Technology was carved out of the business of Qinghai Zhongtian Boron & Lithium Mining Co., Ltd (“Qinghai Mining”) on December 20, 2018. Qinghai Mining was founded March 6, 2001, and manufactures and wholesales boric acid and related compounds for industrial and consumer use. Technology obtains its raw material brine exclusively from Qinghai Mining and currently processes boric acid by crushing and processing ore from third party suppliers. Technology previously purchased ore from Qinghai Mining; however, Technology recently shifted suppliers to third parties in order to fulfil what management believes will be a short term reliance on ore for the production of boric acid. Management of Technology expects that it will source all material that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval from the relevant governmental authorities.

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

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

The interim consolidated financial information as of June 30, 2021 and for the six and three-month periods ended June 30, 2021 and 2020 was prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, which are normally included in CFS prepared in accordance with U.S. GAAP were not included. The interim consolidated financial information should be read in conjunction with the CFS and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on April 15, 2021.

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

Principles of Consolidation 

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

Use of Estimates

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

Cash and Equivalents

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

Accounts Receivable, net

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, the Company had allowance of $19,969 and $19,770 at June 30, 2021 and December 31, 2020, respectively.

Advances to Suppliers, net

The Company makes advances to certain vendors to purchase raw material, tools and equipment for production. The advances are interest-free and unsecured. As of June 30, 2021 and December 31, 2020, the Company had gross advance to suppliers of $120,443 and $245,058 respectively, and the Company had allowance for advances to suppliers of $2,774 and $2,747, respectively.

Inventories, net

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

Property and Equipment, net

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

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

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

Impairment of Long-Lived Assets

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

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

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

Deferred Income

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

Unearned Revenue

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

Revenue Recognition

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

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

Cost of Sales

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

Research and Development Costs

Research and development (“R&D”) costs are expensed as incurred and included in general and administrative expenses. These costs primarily consist of cost of materials used, salaries paid for the Company’s development department and fees paid to third parties. R&D costs for the six and three months ended June 30, 2021 and 2020 were immaterial.

Share-Based Compensation

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

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

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

Income Taxes

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

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

Under the provisions of FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of operations.  At June 30, 2021 and December 31, 2020, the Company did not take any uncertain positions that would necessitate recording a tax related liability.   

Noncontrolling Interests

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

The net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss). Losses attributable to NCI in a subsidiary may exceed a NCIs interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCIs balance.

On April 15, 2020, Technology and Xi’an Jinzang formed a JV, Qinghai Zhongli, to process brine supplied by Technology. Technology owns 51% of the JV and Xi’an Jinzang owns the remaining 49%. During the six and three months ended June 30, 2021, the Company had loss of $39,920 and $29,987 attributable to the NCI. During the six and three months ended June 30, 2020, the Company had loss of $2,745 and $2,745 attributable to the NCI. 

Concentration of Credit Risk

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

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

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

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

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

Foreign Currency Translation and Comprehensive Income (Loss)

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

Statement of Cash Flows

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

Fair Value of Financial Instruments

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

Fair Value Measurements and Disclosures

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

● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

● Level 3 inputs to the valuation methodology are unobservable and significant to the FV measurement.

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

As of June 30, 2021 and December 31, 2020, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at FV. 

Leases

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

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

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

Operating leases are included in operating lease ROU assets and operating lease liabilities (current and non-current), on the consolidated balance sheets.  The Company did not have any leases as of June 30, 2021.

Related Parties

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

Segment Reporting

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

Reclassification

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

New Accounting Pronouncements 

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

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

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

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

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

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INVENTORIES, NET

6 Months Ended

Jun. 30, 2021

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

3. INVENTORIES, NET 

Inventories at June 30, 2021 and December 31, 2020, respectively, were as follows: 

	2021		2020
Raw materials	$	221,837	$	275,416
Finished goods		124,247		903,971
Total	$	346,084	$	1,179,387

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NOTES RECEIVABLE - BANK ACCEPTANCES

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

4. NOTES RECEIVABLE – BANK ACCEPTANCES

The Company sold goods to its customers and received notes (bank acceptances) from them in lieu of payment. These bank acceptances were issued by customers to the Company and would be honored by the applicable bank. The Company may hold a bank acceptance until maturity for full payment, or have the bank acceptance cashed by the bank at a discount at an earlier date, or transfer the bank acceptance to its vendors in lieu of payment for their own obligations. As of June 30, 2021 and December 31, 2020, the Company had notes receivable of $32,507 and $96,367, respectively; and at June 30, 2021, the Company had $0.65 million notes receivable endorsed to its vendors, in lieu of payment. The Company was contingently liable for these notes receivable until paid.

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OTHER RECEIVABLES

6 Months Ended

Jun. 30, 2021

Disclosure Text Block Supplement [Abstract]

Other Current Assets [Text Block]

5. OTHER RECEIVABLES

Other receivables consisted of the following at June 30, 2021 and December 31, 2020:

	2021		2020
VAT receivable	$	175,920	$	57,364
Prepaid rent (short term)		774		2,043
Other		15,310		819
Total	$	192,004	$	60,226

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PROPERTY AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

6. PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following at June 30, 2021 and December 31, 2020, respectively:

	2021			2020
Building structures and improvements	$	601,862		$	481,270
Production equipment		2,937,119			2,880,146
Vehicle		105,892			70,836
Equipment		269,915			267,235
Total		3,914,788			3,699,487
Less: accumulated depreciation		(2,414,266	)		(2,210,704	)
Property and equipment, net	$	1,500,522		$	1,488,783

In May 2021, the Company acquired RMB 1.1 million ($170,270) of land and building structures from a bankrupt company, of which, $115,760 was for building structures including workshop and office, $54,510 was for the land use right (see Note 7). The Company prepaid RMB 200,000 ($30,960) in March 2020, and paid remaining balance of RMB 900,000 ($139,310) in May 2021.

Depreciation for the six months ended June 30, 2021 and 2020 was $181,059 and $151,543, respectively. Depreciation for the three months ended June 30, 2021 and 2020 was $90,525 and $75,197, respectively. 

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INTANGIBLE ASSET, NET

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

7. INTANGIBLE ASSET, NET

Intangible asset consisted of the following at June 30, 2021:

Land use right	$	54,512
Less: accumulated amortization		(233	)
Intangible asset, net	$	54,279

The Company acquired land use right of $54,512 from a bankrupt company in May 2021, the transfer of Land Use Right Certificate was in process as of this report date. The Company has the right to use the land for 37 years and eight months and is amortizing such rights on a straight-line basis.

Amortization for the six months and three months ended June 30, 2021 was $233 and $233, respectively. Annual amortization for the next five years from June 30, 2021, is expected to be $1,442 for each year.

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CONSTRUCTION IN PROGRESS ("CIP")

6 Months Ended

Jun. 30, 2021

Disclosure Text Block Supplement [Abstract]

Other Assets Disclosure [Text Block]

8. CONSTRUCTION IN PROGRESS (“CIP”)

As of June 30, 2021 and December 31, 2020, the Company had CIP of $1,291,020 and $141,846, respectively. The CIP was mainly for Qinghai Zhongli’s Adsorption Station Project, which is the early stage of an integrated lithium carbonate production system. The adsorption station is equipped with a liquid storage tank for the adsorption material to be placed inside, and its function is to preliminarily extract lithium mother solution from brine for initial purification; the lithium mother solution will go into evaporation shed for refining and concentration; and the concentrated mother solution (also called lithium water saturated solution) is then sent to the production workshop for precipitation and drying to form the finished product of lithium carbonate. As of June 30, 2021, the Company spent $1,291,020 for constructing the adsorption station; as of this report date, the Company completed the construction of No. 1 adsorption stations, and is currently doing the technological transformation for No. 2 refining station for adding the adsorption tank to increase daily production. The Company was committed to pay $196,000 based on the various construction - related contracts entered as of June 30, 2021.

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TAXES PAYABLE

6 Months Ended

Jun. 30, 2021

Tax Disclosure [Abstract]

Tax Disclosure [Text Block]

9. TAXES PAYABLE

Taxes payable consisted of the following June 30, 2021 and December 31, 2020, respectively:

	2021		2020
Other	$	22,395	$	18,331
VAT		136,578		88,320
Taxes payable	$	158,973	$	106,651

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ACCRUED LIABILITIES AND OTHER PAYABLES

6 Months Ended

Jun. 30, 2021

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

10. ACCRUED LIABILITIES AND OTHER PAYABLES 

Accrued liabilities and other payables consisted of the following at June 30, 2021 and December 31, 2020, respectively:

	2021		2020
Advances from third parties	$	17,194	$	6,035
Other		615,000		561,000
Accrued salary		943,237		955,312
Total	$	1,575,431	$	1,522,347

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

As of March 31, 2021 and December 31, 2020, other mainly consisted of 1) dividend payable to Northtech of $550,000 and $500,000, respectively; and 2) payables for professional fees and other miscellaneous expenses of $65,000 and $61,000, respectively. 

As of June 30, 2021, accrued salary of $943,237 included $840,000 accrued salary for the three senior officers. As of December 31, 2020, accrued salary of $955,312 included $840,000 accrued salary for three senior officers.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

11. RELATED PARTY TRANSACTIONS

Due from related parties

Technology purchased raw material boron rock from Qinghai Mining (owned by three major shareholders of the Company); in addition, Technology received no-interest short-term advances from Qinghai Mining for daily operational needs. As of June 30, 2021 and December 31, 2020, due from Qinghai Mining was $3.48 million and $3.11 million (the net amount of intercompany transactions between Technology and Qinghai Mining), respectively. Technology purchased boron ore of $648,840 and $594,526 from Qinghai Mining during the six months ended June 30, 2021 and 2020, respectively. Technology purchased boron ore of $387,582 and $480,998 from Qinghai Mining during the three months ended June 30, 2021 and 2020, respectively.

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

In September 2020, Technology sold the Test and Experimental Plant I to Qinghai Mining at cost of RMB 11.41 million ($1.77 million). The payment term is five years with annual interest of 4.75%.  The first payment of $340,552 is due September 30, 2021. As of June 30, 2021, the future minimum payments for next five years is: $340,552, $340,552, $340,552, $340,552 and $404,398.  Qinghai Mining guarantees payment with its accounts receivables, and has the right to repay the purchase price in full any time before the maturity date.

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

Due to related parties

Technology used equipment for production that belongs to Qinghai Province Dachaidan Zhongtian Resources Development Co., Ltd (“Zhongtian Resources”, which is owned by the Chairman and his brother who are also two major shareholders of the Company). The depreciation of these fixed assets had an impact on the production costs of boric acid of the Company and was included in the Company’s cost of sales. The depreciation of these fixed assets for the six months ended June 30, 2021 and 2020 was $10,122 and $12,620, respectively. The depreciation of these fixed assets for the three months ended June 30, 2021 and 2020 was $4,536 and $6,357, respectively. Due to Zhongtian Resources resulting from using its equipment and payment of worker’s compensation made by Zhongtian Resource for Technology was $90,245 and $79,309 at June 30, 2021 and December 31, 2020, respectively.

Technology sold boric acid to Qinghai Dingjia Zhixin Trading Co., Ltd (“Dingjia”) which is 90% owned by the son of the Company’s major shareholder and Chairman. For the six months ended June 30, 2021, the Company’s sales to Dingjia was $0. For the six and three months ended June 30, 2020, the Company’s sales to Dingjia was $101,560 and $101,560, respectively. At June 30, 2021 and December 31, 2020, payable to Dingjia was $20,970 and $20,762, respectively.

During the first quarter of 2021, Qinghai Zhongli and Xi’an Jinzang entered three loan contracts for Qinghai Zhongli borrowing RMB 4 million ($619,185) with an annual interest of 6.8% from Xi’an Jinzang. The fund was used for the production and operation activities of Qinghai Zhongli. The Company was to repay RMB 2.5 million ($380,442) with accrued interest by June 30, 2021 and repay the remaining RMB 1.5 million ($228,266) with accrued interest by December 31, 2021. A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time. The Company did not repay the RMB 2.5 million ($380,442) at June 30, 2021; in addition, the Company borrowed additional RMB 2 million ($309,593) with the same terms during the second quarter of 2021 under the oral agreement. The Company recorded $16,539 capitalized interest on CIP as of June 30, 2021.

In addition, at June 30, 2021 and December 31, 2020, the Company had $1,236,591 and $1,014,591 due to another major shareholder of the Company and Chief Executive Officer, resulting from certain Company operating expenses of the US parent company such as legal and audit fees that were paid by him on behalf of the Company. This short-term advance bore no interest, and was payable upon demand.

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

	Related party name	2021			2020
Due from	Qinghai Mining including $1.77 million sale of CIP	$	4,613,977		$	3,457,488
Due to	Qinghai Mining		(1,129,136	)		(350,438	)
Due from Xi'an Jinzang (NCI of the JV)			-			76,630
Due from, net (current and noncurrent)		$	3,484,841		$	3,183,680
Due to	Dingjia	$	20,970		$	20,762
Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest		945,317			-
Due to	Zhongtian Resources		90,245			79,309
Due to	A major shareholder		1,236,591			1,014,591
Due to, total		$	2,293,123		$	1,114,662

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DEFERRED INCOME

6 Months Ended

Jun. 30, 2021

Deferred Income [Abstract]

Deferred Income [Text Block]

12. DEFERRED INCOME

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

The detail of deferred income for the Company’s special projects at June 30, 2021 is:

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	340,552	8/1/2013		10	$	269,604	$	70,948
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		77,398	5/1/2015		10		47,729		29,669
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,547,964	1/1/2018		10		541,787		1,006,177
Project of high value utilization of magnesium-rich waste liquid		309,593	7/9/2019		10		252,628		56,965
Total	$	2,275,507				$	1,111,748	$	1,163,759

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

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	337,170	8/1/2013		10	$	250,068	$	87,102
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		76,629	5/1/2015		10		43,422		33,207
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,532,591	1/1/2018		10		459,778		1,072,813
Project of high value utilization of magnesium-rich waste liquid		306,518	7/9/2019		10		246,594		59,924
Total	$	2,252,908				$	999,862	$	1,253,046

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SUBSIDY INCOME

6 Months Ended

Jun. 30, 2021

Other Income and Expenses [Abstract]

Other Income and Other Expense Disclosure [Text Block]

13. SUBSIDY INCOME

Subsidy income consisted of amortization of deferred income for declared special projects and government’s general incentive fund (recorded as income upon receipt) for the six and three months ended June 30, 2021 and 2020, respectively:

	Six Months Ended June 30
	2021		2020
Technology upgrade for using lean ore to produce magnesium sulfate	$	16,997	$	15,643
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		3,863		3,555
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		77,258		71,105
Project of high value utilization of magnesium-rich waste liquid		3,554		3,271
Subsidy for resuming work		-		2,061
Total	$	101,672	$	95,635

	Three Months Ended June 30,
	2021		2020
Technology upgrade for using lean ore to produce magnesium sulfate	$	8,515	$	7,762
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		1,935		1,764
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		38,704		35,283
Project of high value utilization of magnesium-rich waste liquid		1,781		1,624
Subsidy for resuming work		-		2,061
Total	$	50,935	$	48,494

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DEFERRED TAX ASSETS

6 Months Ended

Jun. 30, 2021

Deferred Tax Assets (Liabilities), Net Disclosure [Abstract]

Deferred Tax Assets (Liabilities), Net Disclosure [Text Block]

14. DEFERRED TAX ASSETS

As of June 30, 2021 and December 31, 2020, respectively, deferred tax assets consisted of the following:

	2021			2020
Deferred tax asset –NOL of US parent company	$	1,129,304		$	1,081,844
Less: valuation allowance		(1,129,304	)		(1,081,844	)
Deferred tax assets, net	$	-		$	-

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

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INCOME TAXES

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

15. INCOME TAXES

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

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

The U.S. parent company, was incorporated in the U.S. and has net operating losses (“NOLs”) for income tax purposes, under the 2018 Tax Reform, the NOLs arising in tax years beginning after 2017 may reduce 80% of a taxpayer’s taxable income, and be carried forward indefinitely. However, the coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) issued in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. The U.S. parent Company has NOLs carry forwards for income taxes of approximately $5.38 million at June 30, 2021. Management believes the realization of benefits from these losses remains uncertain due to the parent Company’s limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance was provided. 

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

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

	2021			2020
Tax (benefit) at U.S. federal statutory rates	$	50,410		$	(34,588	)
Foreign income taxed at different rates		18,642			8,681
Tax holiday in PRC		(46,605	)		(21,701	)
Other		9,820			-
Valuation allowance		59,680			73,541
Tax expense per financial statements	$	91,947		$	25,933

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

	2021			2020
Tax at U.S. federal statutory rates	$	74,393		$	13,844
Foreign income taxed at different rates		17,326			11,858
Tax holiday in PRC		(43,315	)		(29,644	)
Other		6,338			-
Valuation allowance		25,747			29,875
Tax expense per financial statements	$	80,489		$	25,933

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

	2021		2020
Income tax expense – current	$	91,947	$	25,933
Income tax expense – deferred		-		-
Total income tax expense	$	91,947	$	25,933

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

	2021		2020
Income tax expense – current	$	80,489	$	25,933
Income tax expense – deferred		-		-
Total income tax expense	$	80,489	$	25,933

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MAJOR CUSTOMERS AND VENDORS

6 Months Ended

Jun. 30, 2021

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

16. MAJOR CUSTOMERS AND VENDORS 

The following table sets forth information as to the Company’s customers that accounted for 10% or more of the Company’s sales for the six and three months ended June 30, 2021 and 2020.

Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
Customer	Percentage of Total Sales			Customer	Percentage of Total Sales
A		13	%	A		12	%
B		11	%	B		-	%
C		-	%	C		15	%
D		-	%	D		12	%
E		-	%	E		10	%

Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
Customer	Percentage of Total Sales			Customer	Percentage of Total Sales
A		15	%	A		15	%
B		12	%	B		-	%
C		11	%	C		-	%
D		-	%	D		15	%
E		-	%	E		11	%
F		-	%	F		10	%

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

Technology purchased all of its boron ore raw material of $648,840 and $594,526 from Qinghai Mining during the six months ended June 30, 2021 and 2020, respectively. Technology purchased boron ore of $387,582 and $480,998 from Qinghai Mining during the three months ended June 30, 2021 and 2020, respectively.

The following table sets forth information as to the Company’s suppliers that accounted for 10% or more of the Company’s total purchases for the six and three months ended June 30, 2021 and 2020.

Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		42	%	A – Qinghai Mining		29	%
B		18	%	B		-	%
C		15	%	C		14	%

Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		46	%	A – Qingai Mining		28	%
B		14	%	B		-	%
C		11	%	C		-	%
D		16	%	D		14	%

The Company had two suppliers that accounted for 10% or more of the Company’s accounts payable as of June 30, 2021. The accounts payable to these suppliers was $77,454 and $31,859 as of June 30, 2021, respectively.

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

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STATUTORY RESERVES AND RESTRICTED NET ASSETS

6 Months Ended

Jun. 30, 2021

Statutory Reserves Disclosure [Abstract]

Statutory Reserves Disclosure [Text Block]

17. STATUTORY RESERVES AND RESTRICTED NET ASSETS

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

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

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

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

According to Administrative Measures for the Collection and Utilization of Enterprise Work Safety Funds issued by the PRC Ministry of Finance and the State Administration of Work Safety, for the companies with dangerous goods production or storage, the company is required to make a special reverse for the use of enhancing and improving its safe production conditions. Under PRC GAAP, the reserve is recorded as cost of sales; however, under US GAAP, since the expense has not been incurred and the Company already recorded cost of sales for safety related expenses when incurred, this special reserve was recorded as an appropriation of its after-tax income. At June 30, 2021, the Company had $110,725 production safety related reserve, which was included in $257,742 statutory reserve in the balance sheet. The reserve is calculated at regressive rates levied on revenue in excess of specific amounts as follows: 

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

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COMMITMENTS

6 Months Ended

Jun. 30, 2021

Disclosure Text Block Supplement [Abstract]

Commitments Disclosure [Text Block]

18. COMMITMENTS

Capital Contribution

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

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CONTINGENCIES

6 Months Ended

Jun. 30, 2021

Loss Contingency [Abstract]

Contingencies Disclosure [Text Block]

19. CONTINGENCIES

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

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

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2021

Subsequent Events [Abstract]

Subsequent Events [Text Block]

20. SUBSEQUENT EVENTS

The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company has the following material subsequent events:

Beginning in July 2021, Management of Technology began shifting suppliers to third parties in order to fulfil what management believes will be a short term reliance on ore for the production of boric acid. Management of Technology expects that it will source all material and compounds that will be used for both boric acid and lithium carbonate production from Qinghai Mining once the brine processing process receives approval from the relevant governmental authorities.  Management of the Company believes  that the change in suppliers is consistent with the Company’s long term plans to obtain all raw materials from brine process which will be consistent with environmental policies and the long term business plan of the Company.

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

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

The interim consolidated financial information as of June 30, 2021 and for the six and three-month periods ended June 30, 2021 and 2020 was prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, which are normally included in CFS prepared in accordance with U.S. GAAP were not included. The interim consolidated financial information should be read in conjunction with the CFS and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on April 15, 2021.

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

Consolidation, Policy [Policy Text Block]

Principles of Consolidation 

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

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

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

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Equivalents

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

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Accounts Receivable, net

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, the Company had allowance of $19,969 and $19,770 at June 30, 2021 and December 31, 2020, respectively.

Advances to Suppliers [Policy Text Block]

Advances to Suppliers, net

The Company makes advances to certain vendors to purchase raw material, tools and equipment for production. The advances are interest-free and unsecured. As of June 30, 2021 and December 31, 2020, the Company had gross advance to suppliers of $120,443 and $245,058 respectively, and the Company had allowance for advances to suppliers of $2,774 and $2,747, respectively.

Inventory, Policy [Policy Text Block]

Inventories, net

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

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment, net

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

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

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

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets

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

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

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

Deferred Charges, Policy [Policy Text Block]

Deferred Income

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

Long-Duration Contracts Revenue Recognition, Policy [Policy Text Block]

Unearned Revenue

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

Revenue [Policy Text Block]

Revenue Recognition

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

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

Cost of Goods and Service [Policy Text Block]

Cost of Sales

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

Research and Development Expense, Policy [Policy Text Block]

Research and Development Costs

Research and development (“R&D”) costs are expensed as incurred and included in general and administrative expenses. These costs primarily consist of cost of materials used, salaries paid for the Company’s development department and fees paid to third parties. R&D costs for the six and three months ended June 30, 2021 and 2020 were immaterial.

Share-based Payment Arrangement [Policy Text Block]

Share-Based Compensation

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

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

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

Income Tax, Policy [Policy Text Block]

Income Taxes

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

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

Under the provisions of FASB ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of operations.  At June 30, 2021 and December 31, 2020, the Company did not take any uncertain positions that would necessitate recording a tax related liability.   

Consolidation, Subsidiaries or Other Investments, Consolidated Entities, Policy [Policy Text Block]

Noncontrolling Interests

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

The net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss). Losses attributable to NCI in a subsidiary may exceed a NCIs interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCIs balance.

On April 15, 2020, Technology and Xi’an Jinzang formed a JV, Qinghai Zhongli, to process brine supplied by Technology. Technology owns 51% of the JV and Xi’an Jinzang owns the remaining 49%. During the six and three months ended June 30, 2021, the Company had loss of $39,920 and $29,987 attributable to the NCI. During the six and three months ended June 30, 2020, the Company had loss of $2,745 and $2,745 attributable to the NCI. 

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk

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

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

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

Earnings Per Share, Policy [Policy Text Block]

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

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

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation and Comprehensive Income (Loss)

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

Statement of Cash Flows [Policy Text Block]

Statement of Cash Flows

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

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

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

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements and Disclosures

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

● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

● Level 3 inputs to the valuation methodology are unobservable and significant to the FV measurement.

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

As of June 30, 2021 and December 31, 2020, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at FV. 

Lessee, Leases [Policy Text Block]

Leases

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

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

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

Operating leases are included in operating lease ROU assets and operating lease liabilities (current and non-current), on the consolidated balance sheets.

Related Parties, Policy [Policy Text Block]

Related Parties

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

Segment Reporting, Policy [Policy Text Block]

Segment Reporting

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

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassification

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

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements 

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

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

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

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

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2021

Property and Equipment, Useful Lives [Member]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) [Line Items]

Property, Plant and Equipment [Table Text Block]

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

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

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INVENTORIES, NET (Tables)

6 Months Ended

Jun. 30, 2021

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

Inventories at June 30, 2021 and December 31, 2020, respectively, were as follows:

	2021		2020
Raw materials	$	221,837	$	275,416
Finished goods		124,247		903,971
Total	$	346,084	$	1,179,387

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OTHER RECEIVABLES (Tables)

6 Months Ended

Jun. 30, 2021

Disclosure Text Block Supplement [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Other receivables consisted of the following at June 30, 2021 and December 31, 2020:

	2021		2020
VAT receivable	$	175,920	$	57,364
Prepaid rent (short term)		774		2,043
Other		15,310		819
Total	$	192,004	$	60,226

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PROPERTY AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment, Net [Member]

PROPERTY AND EQUIPMENT, NET (Tables) [Line Items]

Property, Plant and Equipment [Table Text Block]

Property and equipment consisted of the following at June 30, 2021 and December 31, 2020, respectively:

	2021			2020
Building structures and improvements	$	601,862		$	481,270
Production equipment		2,937,119			2,880,146
Vehicle		105,892			70,836
Equipment		269,915			267,235
Total		3,914,788			3,699,487
Less: accumulated depreciation		(2,414,266	)		(2,210,704	)
Property and equipment, net	$	1,500,522		$	1,488,783

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INTANGIBLE ASSET, NET (Tables)

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

Intangible asset consisted of the following at June 30, 2021:

Land use right	$	54,512
Less: accumulated amortization		(233	)
Intangible asset, net	$	54,279

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TAXES PAYABLE (Tables)

6 Months Ended

Jun. 30, 2021

Tax Disclosure [Abstract]

Schedule of Taxes Payable [Table Text Block]

Taxes payable consisted of the following June 30, 2021 and December 31, 2020, respectively:

	2021		2020
Other	$	22,395	$	18,331
VAT		136,578		88,320
Taxes payable	$	158,973	$	106,651

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ACCRUED LIABILITIES AND OTHER PAYABLES (Tables)

6 Months Ended

Jun. 30, 2021

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

Accrued liabilities and other payables consisted of the following at June 30, 2021 and December 31, 2020, respectively:

	2021		2020
Advances from third parties	$	17,194	$	6,035
Other		615,000		561,000
Accrued salary		943,237		955,312
Total	$	1,575,431	$	1,522,347

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RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

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

	Related party name	2021			2020
Due from	Qinghai Mining including $1.77 million sale of CIP	$	4,613,977		$	3,457,488
Due to	Qinghai Mining		(1,129,136	)		(350,438	)
Due from Xi'an Jinzang (NCI of the JV)			-			76,630
Due from, net (current and noncurrent)		$	3,484,841		$	3,183,680
Due to	Dingjia	$	20,970		$	20,762
Due to	Xi'an Jinzang (NCI of the JV) with 6.8% interest		945,317			-
Due to	Zhongtian Resources		90,245			79,309
Due to	A major shareholder		1,236,591			1,014,591
Due to, total		$	2,293,123		$	1,114,662

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DEFERRED INCOME (Tables)

6 Months Ended

Jun. 30, 2021

Deferred Income [Abstract]

Schedule of Other Nonoperating Income, by Component [Table Text Block]

The detail of deferred income for the Company’s special projects at June 30, 2021 is:

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	340,552	8/1/2013		10	$	269,604	$	70,948
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		77,398	5/1/2015		10		47,729		29,669
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,547,964	1/1/2018		10		541,787		1,006,177
Project of high value utilization of magnesium-rich waste liquid		309,593	7/9/2019		10		252,628		56,965
Total	$	2,275,507				$	1,111,748	$	1,163,759

	Government subsidy amount		Project completion date	Useful life in years		Accumulated amortization		Net
Technology upgrade for using lean ore to produce magnesium sulfate	$	337,170	8/1/2013		10	$	250,068	$	87,102
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		76,629	5/1/2015		10		43,422		33,207
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		1,532,591	1/1/2018		10		459,778		1,072,813
Project of high value utilization of magnesium-rich waste liquid		306,518	7/9/2019		10		246,594		59,924
Total	$	2,252,908				$	999,862	$	1,253,046

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SUBSIDY INCOME (Tables)

6 Months Ended

Jun. 30, 2021

Other Income and Expenses [Abstract]

Schedule of Other Nonoperating Income (Expense) [Table Text Block]

Subsidy income consisted of amortization of deferred income for declared special projects and government’s general incentive fund (recorded as income upon receipt) for the six and three months ended June 30, 2021 and 2020, respectively:

	Six Months Ended June 30
	2021		2020
Technology upgrade for using lean ore to produce magnesium sulfate	$	16,997	$	15,643
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		3,863		3,555
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		77,258		71,105
Project of high value utilization of magnesium-rich waste liquid		3,554		3,271
Subsidy for resuming work		-		2,061
Total	$	101,672	$	95,635

	Three Months Ended June 30,
	2021		2020
Technology upgrade for using lean ore to produce magnesium sulfate	$	8,515	$	7,762
Technical transformation for boric acid and magnesium sulfate produced from low grade ore		1,935		1,764
Project of comprehensive utilization of DaChaiDan Solid Boron Mine		38,704		35,283
Project of high value utilization of magnesium-rich waste liquid		1,781		1,624
Subsidy for resuming work		-		2,061
Total	$	50,935	$	48,494

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DEFERRED TAX ASSETS (Tables)

6 Months Ended

Jun. 30, 2021

Deferred Tax Assets (Liabilities), Net Disclosure [Abstract]

Summary of Deferred Tax Liability Not Recognized [Table Text Block]

As of June 30, 2021 and December 31, 2020, respectively, deferred tax assets consisted of the following:

	2021			2020
Deferred tax asset –NOL of US parent company	$	1,129,304		$	1,081,844
Less: valuation allowance		(1,129,304	)		(1,081,844	)
Deferred tax assets, net	$	-		$	-

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

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

	2021			2020
Tax (benefit) at U.S. federal statutory rates	$	50,410		$	(34,588	)
Foreign income taxed at different rates		18,642			8,681
Tax holiday in PRC		(46,605	)		(21,701	)
Other		9,820			-
Valuation allowance		59,680			73,541
Tax expense per financial statements	$	91,947		$	25,933

	2021			2020
Tax at U.S. federal statutory rates	$	74,393		$	13,844
Foreign income taxed at different rates		17,326			11,858
Tax holiday in PRC		(43,315	)		(29,644	)
Other		6,338			-
Valuation allowance		25,747			29,875
Tax expense per financial statements	$	80,489		$	25,933

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	2021		2020
Income tax expense – current	$	91,947	$	25,933
Income tax expense – deferred		-		-
Total income tax expense	$	91,947	$	25,933

	2021		2020
Income tax expense – current	$	80,489	$	25,933
Income tax expense – deferred		-		-
Total income tax expense	$	80,489	$	25,933

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MAJOR CUSTOMERS AND VENDORS (Tables)

6 Months Ended

Jun. 30, 2021

Customer Concentration Risk [Member] | Revenue Benchmark [Member]

MAJOR CUSTOMERS AND VENDORS (Tables) [Line Items]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

The following table sets forth information as to the Company’s customers that accounted for 10% or more of the Company’s sales for the six and three months ended June 30, 2021 and 2020.

Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
Customer	Percentage of Total Sales			Customer	Percentage of Total Sales
A		13	%	A		12	%
B		11	%	B		-	%
C		-	%	C		15	%
D		-	%	D		12	%
E		-	%	E		10	%

Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
Customer	Percentage of Total Sales			Customer	Percentage of Total Sales
A		15	%	A		15	%
B		12	%	B		-	%
C		11	%	C		-	%
D		-	%	D		15	%
E		-	%	E		11	%
F		-	%	F		10	%

Supplier Concentration Risk [Member] | Cost of Goods and Service Benchmark [Member]

MAJOR CUSTOMERS AND VENDORS (Tables) [Line Items]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

The following table sets forth information as to the Company’s suppliers that accounted for 10% or more of the Company’s total purchases for the six and three months ended June 30, 2021 and 2020.

Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		42	%	A – Qinghai Mining		29	%
B		18	%	B		-	%
C		15	%	C		14	%

Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
Supplier	Percentage of Total Purchases			Supplier	Percentage of Total Purchases
A – Qinghai Mining		46	%	A – Qingai Mining		28	%
B		14	%	B		-	%
C		11	%	C		-	%
D		16	%	D		14	%

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STATUTORY RESERVES AND RESTRICTED NET ASSETS (Tables)

6 Months Ended

Jun. 30, 2021

Statutory Reserves Disclosure [Abstract]

Reserve [Table Text Block]

The reserve is calculated at regressive rates levied on revenue in excess of specific amounts as follows:

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

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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) ¥ in Millions	Apr. 15, 2020 USD ($)	Apr. 15, 2020 CNY (¥)	Mar. 27, 2020	Dec. 31, 2018 shares	Aug. 23, 2013
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Number of Wholly Owned Subsidiaries Created					2
Proceeds from Contributed Capital	$ 19,746,000	¥ 140
Qinghai Technology [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Agreement, Description			The Company currently produces boric acid in the PRC and plans to expand its manufacturing facilities through a joint venture (“JV”) to produce up to 30,000 tonnes of lithium carbonate annually for the electric vehicle battery market in China, subject to funding
Equity Method Investment, Ownership Percentage	51.00%	51.00%
Xi'an Jinzang Membrane Environmental Protection Technology Co., Ltd. (Xi'an Jinzang) [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Equity Method Investment, Ownership Percentage	49.00%	49.00%
Mid-Haven Sincerity International Resources Investment Co., Ltd (Mid-Haven) [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Stock Issued During Period, Shares, Acquisitions (in Shares)				106,001,971
Number of Subsidiaries				2
Equity Method Investment, Ownership Percentage				57.00%
Mid-Haven Sincerity International Resources Investment Co., Ltd (Mid-Haven) [Member] | Qing Hai Mid-Haven Boron & Lithium Technology Company, Ltd. ("Qing Hai Technology") [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Equity Method Investment, Ownership Percentage				100.00%
Date of Registration and Establishment of JV [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Proceeds from Contributed Capital	$ 5,077,000	¥ 36
Payment before July 31, 2020 [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Proceeds from Contributed Capital	10,155,000	72
Payment before October 31, 2020 [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Proceeds from Contributed Capital	4,513,000	32
Initial Capital Contribution [Member]
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) [Line Items]
Proceeds from Contributed Capital	$ 710,000	¥ 5

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 CNY (¥)	Dec. 31, 2020 USD ($)	Apr. 15, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Accounts Receivable, Allowance for Credit Loss	$ 19,969,000,000		$ 19,969,000,000			$ 19,770
Other Inventory, Purchased Goods, Gross	120,443		120,443			245,058
Allowance for Advances to Suppliers	2,774		2,774			$ 2,747
Net Income (Loss) Attributable to Noncontrolling Interest	(29,987)	$ (2,745)	(39,920)	$ (2,745)
Cash, FDIC Insured Amount	$ 500,000		$ 500,000		¥ 77,000
Number of Operating Segments			1
Qinghai Technology [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent							51.00%
Xi'an Jinzang Membrane Environmental Protection Technology Co., Ltd. (Xi'an Jinzang) [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent							49.00%
Minimum [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Property, Plant and Equipment, Salvage Value, Percentage	3.00%		3.00%		3.00%
Maximum [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Property, Plant and Equipment, Salvage Value, Percentage	10.00%		10.00%		10.00%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Estimated Useful Lives of Property, Plant and Equipment	6 Months Ended
	Jun. 30, 2021
Building [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	20 years
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	5 years
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	5 years
Minimum [Member] | Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	4 years
Minimum [Member] | Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	4 years
Minimum [Member] | Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	3 years
Maximum [Member] | Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	20 years
Maximum [Member] | Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	8 years
Maximum [Member] | Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Useful Life	10 years

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INVENTORIES, NET (Details) - Schedule of Inventories - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Schedule of Inventories [Abstract]
Raw materials	$ 221,837	$ 275,416
Finished goods	124,247	903,971
Total	$ 346,084	$ 1,179,387

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NOTES RECEIVABLE - BANK ACCEPTANCES (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Receivables [Abstract]
Financing Receivable, after Allowance for Credit Loss, Current	$ 32,507	$ 96,367
Bank Acceptances Executed and Outstanding	$ 650,000

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OTHER RECEIVABLES (Details) - Schedule of Receivables, Prepayments and Deposits - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Schedule of Receivables, Prepayments and Deposits [Abstract]
VAT receivable	$ 175,920	$ 57,364
Prepaid rent (short term)	774	2,043
Other	15,310	819
Total	$ 192,004	$ 60,226

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PROPERTY AND EQUIPMENT, NET (Details)	1 Months Ended				3 Months Ended		6 Months Ended
	May 31, 2021 USD ($)	May 31, 2021 CNY (¥)	Mar. 31, 2021 USD ($)	Mar. 31, 2021 CNY (¥)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)
PROPERTY AND EQUIPMENT, NET (Details) [Line Items]
Payments to Acquire Property, Plant, and Equipment	$ 139,310	¥ 900,000	$ 30,960	¥ 200,000			$ 146,967	$ 287,221
Depreciation					$ 90,525	$ 75,197	$ 181,059	$ 151,543
Land and Building [Member]
PROPERTY AND EQUIPMENT, NET (Details) [Line Items]
Payments to Acquire Property, Plant, and Equipment	170,270	¥ 1,100,000
Building [Member]
PROPERTY AND EQUIPMENT, NET (Details) [Line Items]
Payments to Acquire Property, Plant, and Equipment	115,760
Land [Member]
PROPERTY AND EQUIPMENT, NET (Details) [Line Items]
Payments to Acquire Property, Plant, and Equipment	$ 54,510

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PROPERTY AND EQUIPMENT, NET (Details) - Schedule of Property, Plant and Equipment - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property & equipment, gross	$ 3,914,788	$ 3,699,487
Less: accumulated depreciation	(2,414,266)	(2,210,704)
Property and equipment, net	1,500,522	1,488,783
Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property & equipment, gross	601,862	481,270
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property & equipment, gross	2,937,119	2,880,146
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property & equipment, gross	105,892	70,836
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property & equipment, gross	$ 269,915	$ 267,235

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INTANGIBLE ASSET, NET (Details) - USD ($)	1 Months Ended	6 Months Ended
	May 31, 2021	Jun. 30, 2021	Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Payments to Acquire Land Held-for-use	$ 54,512
Property, Plant and Equipment, Useful Life	37 years
Amortization of Intangible Assets		$ 233	$ 233
Finite-Lived Intangible Asset, Expected Amortization, Year One		$ 1,442

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INTANGIBLE ASSET, NET (Details) - Schedule of Finite-Lived Intangible Assets	Jun. 30, 2021 USD ($)
Schedule of Finite-Lived Intangible Assets [Abstract]
Land use right	$ 54,512
Less: accumulated amortization	(233)
Intangible asset, net	$ 54,279

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CONSTRUCTION IN PROGRESS ("CIP") (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Disclosure Text Block Supplement [Abstract]
Construction in Progress, Gross	$ 1,291,020	$ 141,846
Construction in Progress Expenditures Incurred but Not yet Paid	$ 196,000

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TAXES PAYABLE (Details) - Schedule of Taxes Payable - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Schedule of Taxes Payable [Abstract]
Other	$ 22,395	$ 18,331
VAT	136,578	88,320
Taxes payable	$ 158,973	$ 106,651

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ACCRUED LIABILITIES AND OTHER PAYABLES (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
ACCRUED LIABILITIES AND OTHER PAYABLES (Details) [Line Items]
Accrued Salaries, Current	$ 943,237	$ 955,312
Northtech [Member]
ACCRUED LIABILITIES AND OTHER PAYABLES (Details) [Line Items]
Dividends Payable	550,000	500,000
Accounts Payable, Other	65,000	61,000
Qinghai Technology [Member]
ACCRUED LIABILITIES AND OTHER PAYABLES (Details) [Line Items]
Accrued Salaries, Current	$ 840,000	$ 840,000
Number of Officers	3	3

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ACCRUED LIABILITIES AND OTHER PAYABLES (Details) - Schedule of Accrued Liabilities and Other Payables - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Schedule of Accrued Liabilities and Other Payables [Abstract]
Advances from third parties	$ 17,194	$ 6,035
Other	615,000	561,000
Accrued salary	943,237	955,312
Total	$ 1,575,431	$ 1,522,347

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RELATED PARTY TRANSACTIONS (Details)							1 Months Ended		3 Months Ended										6 Months Ended
	Dec. 31, 2021 USD ($)	Dec. 31, 2021 CNY (¥)	Jun. 30, 2021 USD ($)	Jun. 30, 2021 CNY (¥)	Jul. 01, 2019 USD ($)	Jul. 01, 2019 CNY (¥)	Sep. 30, 2020 USD ($)	Sep. 30, 2020 CNY (¥)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Mar. 31, 2021 CNY (¥)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 CNY (¥)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2020 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 CNY (¥)	Jun. 30, 2021 USD ($)	Jun. 30, 2021 CNY (¥)	Jun. 30, 2020 USD ($)
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due from Related Parties			$ 3,484,841						$ 3,484,841					$ 3,183,680					$ 3,484,841		$ 3,183,680
Due to Related Parties			2,293,123						2,293,123					1,114,662					2,293,123		1,114,662
Depreciation									90,525					75,197					181,059		151,543
Revenue from Related Parties									0					101,560					0		101,560
Interest Income, Related Party																			$ 16,539
Qinghai Technology and Qinghai Mining Boron Ore Purchase Contract [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Description of Transaction					Qinghai Mining was to supply Technology boron ore based on Technology’s monthly production plan at RMB 62 ($9.10) per tonne. The price was adjustable if there a significant fluctuation of the market price for boron ore.	Qinghai Mining was to supply Technology boron ore based on Technology’s monthly production plan at RMB 62 ($9.10) per tonne. The price was adjustable if there a significant fluctuation of the market price for boron ore.
Related Party Transaction, Amounts of Transaction					$ 9.10	¥ 62									$ 11.10	¥ 77.5	$ 10.21	¥ 70.46
Qinghai Technology and Qinghai Mining Slag Purchase Contract [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Amounts of Transaction															$ 4.41	¥ 30
Property, Plant and Equipment, Disposals							$ 1,770,000	¥ 11,410,000
Related Party Transaction, Rate							4.75%	4.75%
Due from Related Parties							$ 340,552
Qinghai Mining [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Number of Investors																			3	3
Related Party Transaction, Due from (to) Related Party			3,480,000						3,480,000			$ 3,110,000							$ 3,480,000
Related Party Transaction, Purchases from Related Party									387,582					480,998					648,840		594,526
Due from Related Parties			4,613,977						4,613,977					3,457,488					4,613,977		3,457,488
Due to Related Parties			1,129,136						1,129,136					350,438					1,129,136		350,438
Xi'an Jinzang Membrane Environmental Protection Technology Co., Ltd. (Xi'an Jinzang) [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due from Related Parties			0						0					76,630					0		76,630
Due to Related Parties			945,317						945,317					0					945,317		0
Origination of Notes Receivable from Related Parties												$ 76,630	¥ 500,000
Equity Method Investment, Ownership Percentage												49.00%
Zhongtian Resources [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Due from (to) Related Party			(90,245)						(90,245)			$ (79,309)							(90,245)
Due to Related Parties			90,245						90,245					79,309					90,245		79,309
Depreciation									4,536					6,357					10,122		12,620
Dingjia [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Due from (to) Related Party			20,970						20,970			(20,762)							20,970
Due to Related Parties			$ 20,970						$ 20,970					20,762					$ 20,970		20,762
Equity Method Investment, Ownership Percentage			90.00%						90.00%										90.00%
Revenue from Related Parties														101,560					$ 0		101,560
Qinghai Zhongli [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Rate										6.80%	6.80%
Proceeds from Related Party Debt										$ 619,185	¥ 4,000,000								309,593	¥ 2,000,000
Debt Instrument, Periodic Payment	$ 228,266	¥ 1,500,000	$ 380,442	¥ 2,500,000
Debt Instrument, Fee	A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time.	A late fee of 1/1000 of outstanding balance per day will be charged if the Company is not able to repay the loan on time.
Majority Shareholder [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due to Related Parties			1,236,591						$ 1,236,591			$ 1,014,591		$ 1,014,591					1,236,591		$ 1,014,591
Due Year One [Member] | Qinghai Technology and Qinghai Mining Slag Purchase Contract [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due from Related Parties			340,552						340,552										340,552
Due Year Two [Member] | Qinghai Technology and Qinghai Mining Slag Purchase Contract [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due from Related Parties			340,552						340,552										340,552
Due Year Three [Member] | Qinghai Technology and Qinghai Mining Slag Purchase Contract [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due from Related Parties			340,552						340,552										340,552
Due Year Four [Member] | Qinghai Technology and Qinghai Mining Slag Purchase Contract [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due from Related Parties			340,552						340,552										340,552
Due Year Five [Member] | Qinghai Technology and Qinghai Mining Slag Purchase Contract [Member]
RELATED PARTY TRANSACTIONS (Details) [Line Items]
Due to Related Parties			$ 404,398						$ 404,398										$ 404,398

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RELATED PARTY TRANSACTIONS (Details) - Schedule of Related Party Transactions - USD ($)	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Related Party Transaction [Line Items]
Due from	$ 3,484,841		$ 3,183,680
Due to	2,293,123		1,114,662
Due to	(2,293,123)		(1,114,662)
Qinghai Mining [Member]
Related Party Transaction [Line Items]
Due from	4,613,977		3,457,488
Due to	1,129,136		350,438
Due to	(1,129,136)		(350,438)
Xi'an Jinzang Membrane Environmental Protection Technology Co., Ltd. (Xi'an Jinzang) [Member]
Related Party Transaction [Line Items]
Due from	0		76,630
Due to	945,317		0
Due to	(945,317)		0
Dingjia [Member]
Related Party Transaction [Line Items]
Due to	20,970		20,762
Due to	(20,970)		(20,762)
Zhongtian Resources [Member]
Related Party Transaction [Line Items]
Due to	90,245		79,309
Due to	(90,245)		(79,309)
Majority Shareholder [Member]
Related Party Transaction [Line Items]
Due to	1,236,591	$ 1,014,591	1,014,591
Due to	$ (1,236,591)	$ (1,014,591)	$ (1,014,591)

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DEFERRED INCOME (Details) - Schedule of Other Nonoperating Income, by Component - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
DEFERRED INCOME (Details) - Schedule of Other Nonoperating Income, by Component [Line Items]
Government subsidy amount	$ 2,275,507	$ 2,252,908
Amortization	1,111,748	999,862
Net	1,163,759	1,253,046
Technology upgrade for using lean ore to produce magnesium sulfate [Member]
DEFERRED INCOME (Details) - Schedule of Other Nonoperating Income, by Component [Line Items]
Government subsidy amount	$ 340,552	$ 337,170
Project completion date	Aug. 01, 2013	Aug. 01, 2013
Useful life in years	10 years	10 years
Amortization	$ 269,604	$ 250,068
Net	70,948	87,102
Technical transformation for boric acid and magnesium sulfate produced from low grade ore [Member]
DEFERRED INCOME (Details) - Schedule of Other Nonoperating Income, by Component [Line Items]
Government subsidy amount	$ 77,398	$ 76,629
Project completion date	May 01, 2015	May 01, 2015
Useful life in years	10 years	10 years
Amortization	$ 47,729	$ 43,422
Net	29,669	33,207
Project of comprehensive utilization of DaChaiDan Solid Boron Mine [Member]
DEFERRED INCOME (Details) - Schedule of Other Nonoperating Income, by Component [Line Items]
Government subsidy amount	$ 1,547,964	$ 1,532,591
Project completion date	Jan. 01, 2018	Jan. 01, 2018
Useful life in years	10 years	10 years
Amortization	$ 541,787	$ 459,778
Net	1,006,177	1,072,813
Project of high value utilization of magnesium-rich waste liquid [Member]
DEFERRED INCOME (Details) - Schedule of Other Nonoperating Income, by Component [Line Items]
Government subsidy amount	$ 309,593	$ 306,518
Project completion date	Jul. 09, 2019	Jul. 09, 2019
Useful life in years	10 years	10 years
Amortization	$ 252,628	$ 246,594
Net	$ 56,965	$ 59,924

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SUBSIDY INCOME (Details) - Schedule of Other Nonoperating Income (Expense) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
SUBSIDY INCOME (Details) - Schedule of Other Nonoperating Income (Expense) [Line Items]
Other Income	$ 50,935	$ 48,494	$ 101,672	$ 95,635
Technology upgrade for using lean ore to produce magnesium sulfate [Member]
SUBSIDY INCOME (Details) - Schedule of Other Nonoperating Income (Expense) [Line Items]
Other Income	8,515	7,762	16,997	15,643
Technical transformation for boric acid and magnesium sulfate produced from low grade ore [Member]
SUBSIDY INCOME (Details) - Schedule of Other Nonoperating Income (Expense) [Line Items]
Other Income	1,935	1,764	3,863	3,555
Project of comprehensive utilization of DaChaiDan Solid Boron Mine [Member]
SUBSIDY INCOME (Details) - Schedule of Other Nonoperating Income (Expense) [Line Items]
Other Income	38,704	35,283	77,258	71,105
Project of high value utilization of magnesium-rich waste liquid [Member]
SUBSIDY INCOME (Details) - Schedule of Other Nonoperating Income (Expense) [Line Items]
Other Income	1,781	1,624	3,554	3,271
Subsidy for resuming work [Member]
SUBSIDY INCOME (Details) - Schedule of Other Nonoperating Income (Expense) [Line Items]
Other Income	$ 0	$ 2,061	$ 0	$ 2,061

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DEFERRED TAX ASSETS (Details)	6 Months Ended
	Jun. 30, 2021
Deferred Tax Assets (Liabilities), Net Disclosure [Abstract]
Deferred Tax Assets Valuation Allowance, Percentage	100.00%

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DEFERRED TAX ASSETS (Details) - Schedule of Deferred Tax Liability - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Schedule of Deferred Tax Liability [Abstract]
Deferred tax asset –NOL of US parent company	$ 1,129,304	$ 1,081,844
Less: valuation allowance	(1,129,304)	(1,081,844)
Deferred tax assets, net	$ 0	$ 0

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INCOME TAXES (Details) - USD ($) $ in Thousands			6 Months Ended	12 Months Ended
	Jan. 01, 2018	Dec. 31, 2017	Jun. 30, 2021	Dec. 31, 2019
INCOME TAXES (Details) [Line Items]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	35.00%
Reduction to Taxable Income, Percent				80.00%
Operating Loss Carryforwards (in Dollars)			$ 5,380
Deferred Tax Assets Valuation Allowance, Percentage			100.00%
Foreign Tax Authority [Member] | Mid-Haven Sincerity International Resources Investment Co., Ltd (Mid-Haven) [Member]
INCOME TAXES (Details) [Line Items]
Effective Income Tax Rate Reconciliation, Percent			25.00%
Foreign Tax Authority [Member] | SmartHeat (Shanghai) Trading Co., Ltd. [Member]
INCOME TAXES (Details) [Line Items]
Effective Income Tax Rate Reconciliation, Percent			25.00%
Foreign Tax Authority [Member] | Qing Hai Mid-Haven Boron & Lithium Technology Company, Ltd. ("Qing Hai Technology") [Member]
INCOME TAXES (Details) [Line Items]
Effective Income Tax Rate Reconciliation, Foreign Income Tax Rate Differential, Percent			15.00%

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INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Schedule of Effective Income Tax Rate Reconciliation [Abstract]
Tax benefit at U.S. federal statutory rates	$ 74,393	$ 13,844	$ 50,410	$ (34,588)
Foreign income taxed at different rates	17,326	11,858	18,642	8,681
Tax holiday in PRC	(43,315)	(29,644)	(46,605)	(21,701)
Other	6,338	0	9,820	0
Valuation allowance	25,747	29,875	59,680	73,541
Tax expense per financial statements	$ 80,489	$ 25,933	$ 91,947	$ 25,933

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INCOME TAXES (Details) - Schedule of Components of Income Tax Expense - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Schedule of Components of Income Tax Expense [Abstract]
Income tax expense – current	$ 80,489	$ 25,933	$ 91,947	$ 25,933
Income tax expense – deferred	0	0	0	0
Total income tax expense	$ 80,489	$ 25,933	$ 91,947	$ 25,933

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MAJOR CUSTOMERS AND VENDORS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
MAJOR CUSTOMERS AND VENDORS (Details) [Line Items]
Payments to Suppliers	$ 387,582	$ 480,998	$ 648,840	$ 594,526
Accounts Payable					$ 240,504
Supplier #1 [Member]
MAJOR CUSTOMERS AND VENDORS (Details) [Line Items]
Accounts Payable	77,454		77,454
Supplier #2 [Member]
MAJOR CUSTOMERS AND VENDORS (Details) [Line Items]
Accounts Payable	31,859		31,859
Customer Concentration Risk [Member]
MAJOR CUSTOMERS AND VENDORS (Details) [Line Items]
Accounts Receivable, after Allowance for Credit Loss	$ 0	$ 211,134	$ 0	$ 211,134

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MAJOR CUSTOMERS AND VENDORS (Details) - Schedules of Concentration of Risk, by Risk Factor - Customer Concentration Risk [Member] - Revenue Benchmark [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Customer A [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	15.00%	15.00%	13.00%	12.00%
Customer B [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	12.00%		11.00%
Customer C [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	11.00%			15.00%
Customer D [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage		15.00%		12.00%
Customer E [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage		11.00%		10.00%
Customer F [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage		10.00%

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MAJOR CUSTOMERS AND VENDORS (Details) - Schedules of Concentration of Risk, by Risk Factor - Supplier Concentration Risk [Member] - Cost of Goods and Service Benchmark [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Supplier A [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	46.00%	28.00%	42.00%	29.00%
Supplier B [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	14.00%		18.00%
Supplier C [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	11.00%		15.00%	14.00%
Supplier D [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	16.00%	14.00%

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STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) [Line Items]
After-Tax Income, Percentage, Appropriations	10.00%
Retained Earnings, Appropriated	$ 257,742	$ 177,843
Foreign Invested Enterprise [Member]
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) [Line Items]
Statutory Reserves, Description	An FIE is required to allocate at least 10% of its annual after-tax profit to the surplus reserve until such reserve reaches 50% of its respective registered capital based on the FIE’s PRC statutory accounts.
Domestic Enterprise [Member]
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) [Line Items]
Statutory Reserves, Description	Additionally, in accordance with the Company Laws of the PRC, a domestic enterprise is required to provide surplus reserve at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts.
Production Safety [Member]
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) [Line Items]
Retained Earnings, Appropriated	$ 110,725

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STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - Reserve	6 Months Ended
	Jun. 30, 2021
Less than RMB 10 million ($1.41 million) [Member]
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - Reserve [Line Items]
Reserve Ratio	4.00%
Over RMB 10 million ($1.41 million), but less than RMB 100 million ($14.13 million) [Member]
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - Reserve [Line Items]
Reserve Ratio	2.00%
Over RMB 100 million ($14.13 million), but less than RMB 1 billion ($141.25 million) [Member]
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - Reserve [Line Items]
Reserve Ratio	0.50%
Over RMB 1 billion ($141.25 million) [Member]
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - Reserve [Line Items]
Reserve Ratio	0.20%