Exhibit 99.1
FRESH2 GROUP LIMITED
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
FRESH2 GROUP LIMITED
(FORMERLY ANPAC BIO-MEDICAL SCIENCE CO., LTD.)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)
| December 31 | June 30 | June 30 | ||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Prepayment | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Accounts receivable-related party | ||||||||||||
| Amounts due from related parties, net | ||||||||||||
| Inventories, net | ||||||||||||
| Other current assets, net | ||||||||||||
| Current assets held for sale | ||||||||||||
| Total current assets | ||||||||||||
| Long term -prepayment | ||||||||||||
| Property and equipment, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Goodwill | ||||||||||||
| Right of use assets | ||||||||||||
| Long-term investments, net | ||||||||||||
| Noncurrent assets held for sale | ||||||||||||
| TOTAL ASSETS. | ||||||||||||
| LIABILITIES AND EQUITY/(DEFICIT) | ||||||||||||
| Current liabilities: | ||||||||||||
| Short-term debts | ||||||||||||
| Accounts payable | ||||||||||||
| Advance from customers | ||||||||||||
| Amounts due to related parties | ||||||||||||
| Lease liability-current | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Current liabilities held for sale | ||||||||||||
| Total current liabilities | ||||||||||||
| Deferred tax liabilities | ||||||||||||
| Lease liability-non-current | ||||||||||||
| Other long-term liabilities | ||||||||||||
| Noncurrent liabilities held for sale | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders’ equity (deficit): | ||||||||||||
| Class A Ordinary shares ((US$ | ||||||||||||
| Class B Ordinary shares ((US$ | ||||||||||||
| Treasury shares (1) | ( | ) | ||||||||||
| Additional paid-in capital | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive income | ||||||||||||
| Total Fresh2 Group Limited shareholders’ equity (deficit) | ( | ) | ||||||||||
| Non-controlling interest | ||||||||||||
| Total equity (deficit) | ( | ) | ||||||||||
| TOTAL LIABILITIES AND EQUITY (DEFICIT) | ||||||||||||
| (1): |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
F-2
FRESH2 GROUP LIMITED
(FORMERLY ANPAC BIO-MEDICAL SCIENCE CO., LTD.)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
| Six Months Ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Total revenues | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ||||||||
| Gross Profit | ||||||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Non-operating income and expenses: | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Foreign exchange loss, net | ( | ) | ||||||||||
| Share of net loss in equity method investments | ( | ) | ( | ) | ||||||||
| Change in fair value of convertible debt | ||||||||||||
| Other income, net | ||||||||||||
| Loss from continuing operations before income taxes | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit | ||||||||||||
| Loss from continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Loss from discontinued operations, net of taxes | ( | ) | ( | ) | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Net loss from discontinued operations attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ||||||
| Net loss attributable to ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive (loss) income, net of tax: | ||||||||||||
| Foreign currency translation differences | ( | ) | ||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Total comprehensive loss attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ||||||
| Total comprehensive loss attributable to ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Amounts attributable to ordinary shareholders: | ||||||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Net loss from discontinued operations | ( | ) | ( | ) | ( | ) | ||||||
| Net loss attributable to ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Loss per Class A and B ordinary shares - basic and diluted | ||||||||||||
| ( | ) | ( | ) | ( | ) | |||||||
| ( | ) | ( | ) | ( | ) | |||||||
| ( | ) | ( | ) | ( | ) | |||||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
FRESH2 GROUP LIMITED
(FORMERLY ANPAC BIO-MEDICAL SCIENCE CO., LTD.)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
SHAREHOLDERS’ EQUITY/(DEFICIT)
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
| Class
A Ordinary Shares | Class
B Ordinary Shares | Treasury shares | Additional Paid-in | Accumulated | Accumulated Other (Loss) | Total
Fresh2 Group Limited Shareholders’ Equity | Non-controlling | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Income | (Deficit) | interest | (Deficit) | |||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2022 | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of shares in private placements, net of offering costs | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance shares for exercise of share option | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance shares reserved for convertible loan | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance shares for service | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of convertible loans | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 (unaudited) | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||
| Class
A Ordinary Shares | Class
B Ordinary Shares | Treasury shares | Additional Paid-in | Accumulated | Accumulated Other (Loss) | Total Fresh2 Group Limited Shareholders’ Equity | Non-controlling | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Income | (Deficit) | interest | (Deficit) | |||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of shares in private placements, net of offering costs | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance shares for exercise of share options | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance shares for exercise of warrants | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance shares for acquisition | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance shares for service | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in private placement, cancelled subsequently | — | — | ( | ) | — | |||||||||||||||||||||||||||||||||||||||||||
| Canceled treasure shares | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Share based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Disposition of Changwei | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation differences | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 (unaudited) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 (US$) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
FRESH2 GROUP LIMITED
(FORMERLY ANPAC BIO-MEDICAL SCIENCE CO., LTD.)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
| Six Months Ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Operating activities: | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Less: net loss from discontinued operations | ( | ) | ( | ) | ( | ) | ||||||
| Net loss from continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Share of net loss in equity method investments | ||||||||||||
| Share-based compensation | ||||||||||||
| Amortization of right of use assets | ||||||||||||
| Change in fair value of convertible debt | ( | ) | ||||||||||
| Deferred tax benefits | ( | ) | ( | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Prepayment | ( | ) | ( | ) | ( | ) | ||||||
| Accounts receivable | ( | ) | ( | ) | ||||||||
| Accounts receivable-related party | ||||||||||||
| Inventories | ( | ) | ( | ) | ||||||||
| Other current assets | ||||||||||||
| Accounts payable | ( | ) | ( | ) | ||||||||
| Advance from customers | ||||||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||||||
| Lease liabilities | ( | ) | ( | ) | ||||||||
| Net cash used in operating activities – continuing operations | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities –discontinued operations | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Investing activities: | ||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||||||
| Purchases of intangible assets | ( | ) | ( | ) | ||||||||
| Cash acquired from acquisition | ||||||||||||
| Long-term investment | ( | ) | ( | ) | ||||||||
| Net cash used in investing activities – continuing operations | ( | ) | ( | ) | ||||||||
| Net cash (used in) provided by investing activities –discontinued operations | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Financing activities: | ||||||||||||
| Proceeds from private placement | ||||||||||||
| Proceeds from exercising of warrants | ||||||||||||
| Proceeds from exercising of options | ||||||||||||
| Other long-term liabilities | ||||||||||||
| Payment to related parties | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by financing activities – continuing operations | ||||||||||||
| Net cash used in financing activities –discontinued operations | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||||||
| Cash and cash equivalents at beginning of period | ||||||||||||
| Cash and cash equivalents at end of period | ||||||||||||
| Supplemental disclosure of non-cash activities: | — | — | — | |||||||||
| Conversion of convertible loans | ||||||||||||
| Right of use assets obtained in exchange for lease liabilities | ||||||||||||
| Receivable from issuance shares for private placement | ||||||||||||
| Issuances of shares for services | ||||||||||||
| Issuances of shares for acquisitions | ||||||||||||
| Additions to intangible assets through accrued expenses and other current liabilities | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
FRESH2 GROUP LIMITED
(FORMERLY ANPAC BIO-MEDICAL SCIENCE CO., LTD.)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of RMB and US$, except for number of shares and per share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Fresh2 Group Limited (Formerly AnPac Bio-Medical
Science Co., Ltd., the “Company”) was incorporated in the British Virgin Islands (“the BVI”) in January 2010.
The Company incorporated a new subsidiary, Fresh2 Technology Inc. (“Fresh2”) on October 4, 2022. On February 1, 2023, the
Group acquired GISN (HK) LIMITED (“GISN”), a technical solution and outsourcing consulting services provider focused on the
digital, internet and Web 3 business transformation for start-ups and traditional enterprises. This acquisition is a critical initiative
for the Company to improve the efficiency of its e-commerce operations. On February 8, 2023, the Group acquired Fresh 2 Ecommerce Inc.
(“Fresh2 Ecommerce”), a business-to-business e-commerce platform focused on connecting Asian food suppliers and restaurants
and other retail customers in the U.S. Fresh2 Ecommerce provides an online direct selling platform for food suppliers such as food companies,
manufacturers, agents, importers, and wholesalers to restaurants and other retail customers. On March 31, 2023, the Group closed an asset
purchase with Easy Hundred Inc. (“Easy Hundred”), a U.S.-based e-commerce startup company in the foodservice industry. On
July 17, 2023, the Group entered into a definitive Share Purchase Agreement to purchase
The Company and its subsidiaries (collectively, the “Group”) provides a business-to-business e-commerce platform focused on connecting Asian food suppliers and restaurants and other retail customers in the U.S.
Effective on July 28, 2023, the Group disposed its multi-cancer screening and detection test business (the “CDA Business”) in the People’s Republic of China (the “PRC” or “China”). The Group determined that the disposal of the CDA Business met the criteria to be classified as a discontinued operation (see Note 4) and, as a result, the CDA business’s historical financial results are reflected in the Group’s unaudited condensed consolidated financial statements as a discontinued operation.
| Major subsidiaries | Percentage of Ownership | Date of Acquisition | Place of Incorporation | Major Operation | ||||||
| Changhe Bio-Medical Technology (Yangzhou) Co., Ltd. * | % | |||||||||
| AnPac Bio-Medical Technology (Lishui) Co., Ltd. (“AnPac Lishui”) * | % | |||||||||
| AnPac Bio-Medical Technology (Shanghai) Co., Ltd.* | % | |||||||||
| AnPac Technology USA Co., Ltd. (“AnPac US”) * | % | |||||||||
| Lishui AnPac Medical Laboratory Co., Ltd.* | % | |||||||||
| Shiji (Hainan) Medical Technology Ltd.* | % | |||||||||
| Shanghai Muqing AnPac Health Technology Co., Ltd. (“AnPac Muqing”) (i)* | % | |||||||||
| Anpai (Shanghai) Healthcare Management and Consulting Co., Ltd.* | % | |||||||||
| Fresh 2 Group Inc | % | |||||||||
| Fresh 2 Technology Inc (“Fresh2”) | % | |||||||||
| Fresh 2 Logistics Inc. | % | |||||||||
| Fresh 2 HF Inc | % | |||||||||
| Foodbase Group Inc | % | |||||||||
| Fresh 2 EZ Inc | % | |||||||||
| Fresh 2 information Inc (ii) | % | |||||||||
| Fresh 2 Ecommerce (“Fresh2 Ecommerce”) | % | |||||||||
| GISN (HK) Limited (“GISN”) | % | |||||||||
| Hua You Sheng Future (Beijing) Technology Co., Ltd. | % | |||||||||
| Guanshi Technology (Beijing) Co., Ltd. | % | |||||||||
| * | |
| (i) | |
| (ii) |
F-6
2. LIQUIDITY AND GOING CONCERN UNCERTAINTIES
The Group’s principal sources of liquidity
have been cash generated from financing and operating activities. As of June 30, 2023, the Group had RMB
On September 25, 2023, the Company entered into
an agreement with an institutional investor to purchase up to US$
The Group can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to the Group, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a material adverse effect on the Group and its financial statements.
The unaudited condensed consolidated financial statements have been prepared assuming that the Group will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
3. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
(a) Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for financial reporting and pursuant to the applicable rules and regulations of the SEC pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for the full year. The information included in this report should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in the Group’s annual financial statements for the fiscal year ended December 31, 2022 filed with the SEC on May 16, 2023.
(b) Principles of consolidation
The accompanying unaudited condensed consolidated financial statements include the financial statements of the Group. All inter-company transactions and balances between the Company and its subsidiaries are eliminated upon consolidation.
Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of the board of directors, or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
F-7
(c) Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Areas where management uses subjective judgement include, but are not limited to allowance for doubtful accounts, share-based compensation, deferred tax and uncertain tax position, useful lives of intangible assets and property and equipment, impairment of long-lived assets, goodwill and long-term investments and the purchase price allocation with respect to business combinations. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences could be material to the unaudited condensed consolidated financial statements.
(d) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and demand deposits placed with banks which are unrestricted as to withdrawal or use and have original maturities less than three months. All highly liquid investments with a stated maturity of 90 days or less from the date of purchase are classified as cash equivalents.
(e) Accounts receivable and allowance for credit losses
Accounts receivable represents the amounts that the Group has an unconditional right to consideration and is recorded net of allowance for credit losses.
In 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), which amends previously issued guidance regarding the impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred losses. The Group has adopted this ASC Topic 326 and several associated ASUs on January 1, 2023 using a modified retrospective approach. The adoption has no material impact to the Company’s consolidated financial statements. The Group estimated allowance for credit losses to reserve for potentially uncollectible receivable amounts periodically, considering factors in assessing the collectability of its accounts receivable, such as historical distribution of the age of the amounts due, payment history, creditworthiness, forward-looking factor, historical collections data of the customers, to assess the credit risk characteristics. If there is strong evidence indicating that the accounts receivable is likely to be unrecoverable, the Group also makes specific allowance in the period in which a loss is determined to be probable. Accounts receivable are considered impaired and written-off when it is probable that all contractual payments due will not be collected after all collection efforts have been exhausted.
(f) Convenience translation
Amounts in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$1.00 to RMB7.2513 on June 30, 2023, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be converted, realized or settled into US$ at such rate or at any other rate.
(g) Long-term investments
The Group’s long-term investments include equity method investments and equity investments without readily determinable fair values.
Investments in entities in which the Group can exercise significant influence but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Group initially records its investment at cost and the difference between the cost of the equity investee and the amount of the underlying equity in the net assets of the equity investee is accounted for as if the investee were a consolidated subsidiary. The share of earnings or losses of the investee are recognized in the unaudited condensed consolidated statements of operations and comprehensive loss. Equity method adjustments include the Group’s proportionate share of investee income or loss, adjustments to recognize certain differences between the Group’s carrying value and its equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. The Group assesses its equity investment for other-than-temporary impairment by considering factors as well as all relevant and available information including, but not limited to, current economic and market conditions, the operating performance of the investees including current earnings trends, the general market conditions in the investee’s industry or geographic area, factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and cash burn rate and other company-specific information.
F-8
Investments in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss is recognized in the unaudited condensed consolidated statements of operations and comprehensive loss equal to the amount by which the carrying value exceeds the fair value of the investment. No impairment on its long-term investments was recognized for the six months ended June 30, 2022 and 2023.
(h) Business combinations
The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of the cost of the acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the identifiable net assets of the acquiree, the difference is recognized directly in earnings.
The determination and allocation of fair values to the identifiable net assets acquired, liabilities assumed and noncontrolling interest is based on various assumptions and valuation methodologies requiring considerable judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Group determines discount rates to be used based on the risk inherent in the acquiree’s current business model and industry comparisons. Although the Group believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from forecasted amounts and the differences could be material.
(i) Asset Acquisition
We evaluate acquisitions pursuant to ASC 805, “Business Combinations,” to determine whether the acquisition should be classified as either an asset acquisition or a business combination. Acquisitions for which substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets are accounted for as an asset acquisition.
For asset acquisitions, a cost accumulation model is used to determine the cost of an asset acquisition. Common stock issued as consideration in an asset acquisition is generally measured based on the acquisition date fair value of the equity interests issued. Direct transaction costs are recognized as part of the cost of an asset acquisition. The cost of an asset acquisition, including transaction costs, are allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis. Goodwill is not recognized in an asset acquisition. Any difference between the cost of an asset acquisition and the fair value of the net assets acquired is allocated to the non-monetary identifiable assets based on their relative fair values. However, as of the date of acquisition, if certain assets are carried at fair value under other applicable GAAP, the consideration is first allocated to those assets with the remainder allocated to the non-monetary identifiable assets based on relative fair value basis.
(j) Goodwill
Goodwill is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. Goodwill is not subject to amortization, but rather is evaluated for impairment at least annually. The Group evaluates its goodwill for impairment during the fourth quarter of its fiscal year or more frequently if indicators of potential impairment exist, in accordance with ASC 350, Intangibles - Goodwill and Other. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit (generally defined as the businesses for which financial information is available and reviewed regularly by management) with its respective carrying value. If the estimated fair value exceeds the carrying value, goodwill at the reporting unit level is not deemed to be impaired. However, if the estimated fair value is below carrying value, further analysis is required to determine the amount of the impairment.
In the course of evaluating the potential impairment of goodwill, the Group may perform either a qualitative or a quantitative assessment. The Group’s qualitative assessment of potential impairment may result in the determination that a quantitative impairment analysis is not necessary. Under this elective process, the Group assesses qualitative factors to determine whether the existence of events or circumstances leads the Company to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If after assessing the totality of events and circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing a quantitative analysis is not required. However, if the Group concludes otherwise, then the Group performs a quantitative impairment analysis.
If the Group either chooses not to perform a qualitative assessment, or the Group chooses to perform a qualitative assessment but is unable to qualitatively conclude that no impairment has occurred, then the Group performs a quantitative evaluation. In the case of a quantitative assessment, the Group estimates the fair value of the reporting unit with which the goodwill that is subject to the quantitative analysis is associated and compares it to the carrying value. If the estimated fair value of a reporting unit is less than its carrying value, the excess is recorded as a goodwill impairment, which is limited to the total amount of goodwill allocated to that reporting unit.
F-9
For the six months ended June 30, 2022 and 2023, the Group performed a qualitative assessment for the reporting unit. Based on the requirements of ASC 350-20, the Group evaluated all relevant qualitative and quantitative factors, weighed all factors in their entirety and concluded that it was not more-likely-than-not that the fair value of the reporting unit was less than its carrying amount. Therefore, no goodwill impairment was recognized for the six months ended June 30, 2022 and 2023.
(k) Discontinued operations
A component of a reporting entity or a group of components of a reporting entity that are disposed or meet the criteria to be classified as held for sale, such as the management, having the authority to approve the action, commits to a plan to sell the disposal group, should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Discontinued operations are reported when a component of an entity comprising operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity is classified as held for disposal or has been disposed of, if the component either (1) represents a strategic shift or (2) have a major impact on an entity’s financial results and operations. Included in the unaudited condensed consolidated statements of income and comprehensive income, result from discontinued operations is reported separately from the income and expenses from continuing operations and prior periods are presented on a comparative basis. In order to present the financial effects of the continuing operations and discontinued operations, revenues and expenses arising from intra-group transactions are eliminated except for those revenues and expenses that are considered to continue after the disposal of the discontinued operations.
(l) Fair value of financial instruments
The Group applies ASC 820, Fair Value Measurements and Disclosures, (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.
ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs which are supported by little or no market activity.
ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
The Group’s financial instruments include cash and cash equivalents, accounts receivables, accounts payable, other receivables, other payables and short-term debt. The carrying values of these financial instruments approximate their fair values due to their short-term maturities.
The Group elected the fair value option to account
for its convertible loans. The Group engaged an independent valuation firm to perform the valuation. The fair value of the convertible
loans as of December 31, 2022 and June 30, 2023 was RMB
As the inputs used in developing the fair value for level 3 instruments are unobservable, and require significant management estimate, a change in these inputs could result in a significant change in the fair value measurement.
F-10
| December 31 | June 30 | June 30 | ||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Opening balance | ||||||||||||
| Conversion of convertible loans | ( | ) | ||||||||||
| Loss (gain) on change in fair value of convertible loan | ( | ) | ||||||||||
| Other comprehensive income -foreign exchange translations | ||||||||||||
| Total | ||||||||||||
(m) Property and equipment
| Category | Estimated useful life | |
| Furniture, fixtures and equipment | ||
| Motor vehicles |
(n) Intangible assets
The Company’s intangible assets mainly include acquired software from business acquisition and asset acquisition. In business combinations, identifiable intangible assets acquired are measured separately at their fair value as of the acquisition date. For asset acquisitions, the cost of the asset acquisition is allocated to identifiable assets acquired based on a relative fair value basis. Intangible assets with finite lives are carried at cost less accumulated amortization. All intangible assets with finite lives are amortized using the straight-line method over the estimated useful lives.
| Category | Estimated useful life | |
| Software |
(o) Impairment of Long-Lived Assets
The Company evaluates the recoverability of its long-lived assets, including property and equipment and the intangible assets and for impairment whenever events or changes in circumstances indicate that the carrying amount of its asset may not be fully recoverable. When these events occur, the Company measures impairment by comparing the carrying amount of the assets to the estimated undiscounted future cash flows expected to result from the use of the asset and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the asset, the Company recognizes an impairment loss based on the excess of the carrying amount of the asset over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the asset when the market prices are not readily available. The adjusted carrying amount of the asset is the new cost basis and is depreciated over the asset’s remaining useful life. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. No impairment of long-lived assets was recognized for the six months ended June 30, 2022 and 2023, respectively.
(p) Treasury shares
The Company accounts for treasury share using the cost method. Under this method, the cost incurred to purchase the shares is recorded in the treasury shares account on the unaudited condensed consolidated balance sheets. At retirement of the treasury shares, the ordinary shares account is charged only for the aggregate par value of the shares. The excess of the acquisition cost of treasury shares over the aggregate par value is allocated between additional paid in capital (up to the amount credited to the additional paid in capital upon original issuance of the shares) and retained earnings.
F-11
(q) Revenue recognition
The Group applies the ASU 2014-09, Revenue from Contracts with Customers — Topic 606 for its revenue recognition for all periods presented. The majority of the Group’s revenue comes from product sales of Asia food and consumable through its software application (“APP”). Revenue is recognized when the Group satisfies the performance obligations in an amount of consideration to which the Group expects to be entitled to in exchange for those goods. The Group evaluates the presentation of revenue on a gross or net basis based on whether it controls the goods provided to customers and is the principal (i.e., “gross”), or the Group arranges for other parties to provide the goods to the customers and is an agent (i.e., “net”).
The Group sells food and consumable products through its own APP. The Group utilizes external delivery service providers to deliver goods to its customers. The customers pay for the goods in advance. The Group recognizes product sales made through APP on a gross basis because the Group is acting as a principal in these transactions as the Company (i) is responsible for fulfilling the promise to provide the specified goods, (ii) takes on inventory risk and (iii) has discretion in establishing price. Revenues are recognized when control is transferred, which typically happens upon delivery. The Group’s contracts with customer are primarily on a fixed-price basis. Discounts and allowances provided to customers are recognized as a reduction in net sales as control of the products is transferred to customers.
The Group generally allows customers to return non-food items within 30 days of receipt of proof that the products are unused and included in the original package. For food products, the Group does not accept returns. Customers may be qualified to receive a refund for food products received with unacceptable quality within 2 to 30 days from the date of delivery. The Group estimates returns of the products and refund, which are deducted from sales in the period in which the related revenue is recognized. The determination of the Group’s product returns and refund accruals is based on historical experience with the sales of such products. The Group estimates and adjusts these accruals at each balance sheet date in accordance with changes in these factors
Contract balances
Contract assets relate to the Group’s conditional right to consideration for completed performance obligations under the contract. Accounts receivable are recorded when the right to consideration becomes unconditional. The Group does not have contract assets for the periods presented. In instances where the timing of revenue recognition differs from the timing of invoicing, the Group has determined that its contracts generally do not include a significant financing component.
Contract liabilities represent considerations
received from customers in advance of satisfying the Group’s performance obligations under the contract, which are presented in
“advance from customers” in the unaudited condensed consolidated balance sheets. The Group classifies contract liabilities
as current based on the timing of when we expect to recognize revenue, which typically occurs within one year. Revenue recognized that
was included in contract liabilities at the beginning of the period was for the six months ended June 30, 2022 and 2023, respectively.
As of December 31, 2022 and June 30, 2023, contract liabilities amounted to and RMB
Practical expedients
The Group has applied the following practical expedients:
| (i) | The transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied has not been disclosed, as substantially all of the Group’s contracts have a duration of one year or less. |
| (ii) | The Group recognizes incremental costs to obtain a contract as expenses when incurred because the amortization period would be one year or less. These costs are recorded within sales and marketing expenses. |
(r) Research and development expenses
Research and development expenses primarily are comprised of costs incurred in performing research and development activities, including related personnel and consultant’s compensation, benefits, share-based compensation and related materials and supplies costs. The Group expenses research and development expenses as they are incurred.
F-12
(s) Leases
The Group adopted ASU No. 2016-02—Leases (Topic 842) as of January 1, 2022, using a modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities on the consolidated balance sheets. The standard did not materially impact our unaudited condensed consolidated net earnings and cash flows.
Right-of-use (“ROU”) assets represent the Group’s rights to use underlying assets for the lease term and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term, reduced by lease incentives received, plus any initial direct costs, using the discount rate for the lease at the commencement date. As the implicit rate in lease is not readily determinable for the Group’s operating leases, the Group generally use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The Group’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Group will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Group accounts for lease and non-lease components separately. the Group has no finance leases for any of the periods presented.
Prior to the adoption of ASU No. 2016-02, leases
were classified at the inception date as either a capital lease or an operating lease. The Group assesses a lease to be a capital lease
if any of the following conditions exist: (a) ownership is transferred to the lessee by the end of the lease term, (b) there is a bargain
purchase option, (c) the lease term is at least
(t) Warrants
The Group accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) ASC 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Group’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Group’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent annual period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. All warrants outstanding as of June 30, 2023 and December 31, 2022 do not meet the definition of a liability pursuant to ASC 480 and meet all of the requirements for equity classification under ASC 815 and therefore, classified as equity.
(u) Share-based compensation
The Group accounts for share-based compensation in accordance with ASC 718, Compensation – Stock Compensation (“ASC 718”). In accordance with ASC 718, the Group determines whether an award should be classified and accounted for as a liability award or an equity award. All the Group’s share-based awards were classified as equity awards and are recognized in the unaudited condensed consolidated financial statements based on their grant date fair values.
The Group has elected to recognize share-based compensation using the straight-line method for all share-based awards granted with graded vesting based on service conditions. The Group accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting. The Black-Scholes Model were applied in determining the estimated fair value of the options granted to employees and non-employees.
(v) Income taxes
The Group follows the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.
F-13
The Group accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the unaudited condensed consolidated statements of operations and comprehensive loss as income tax expenses.
For the six months ended June 30, 2022 and 2023, the Group did not have any significant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognized tax benefits. The Group does not believe that its uncertain tax benefits position will materially change over the next twelve months.
(w) Comprehensive loss
Comprehensive loss is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income, requires that all items that are required to be recognized under current accounting standards as components of comprehensive loss be reported in a financial statement that is displayed with the same prominence as other financial statements. For each of the periods presented, the Group’s comprehensive loss includes net loss and foreign currency translation differences, and is presented in the unaudited condensed consolidated statements of operations and comprehensive loss.
(x) Segment reporting
After the Group discontinued CDA business, the Group operates and manages its business as a single segment and the Group’s primary revenue are generated in the U.S. The Group has only one reportable segment for the six months ended June 30, 2023, in accordance with ASC 280, Segment Reporting. The Group’s Chief Executive Officer is the chief operating decision-maker that review the unaudited condensed consolidated financial results when making decisions about allocating resources and assessing the performance of the Group as a whole.
(y) Loss per share
Loss per share is calculated in accordance with ASC 260, Earnings per Share. Basic loss per ordinary share is computed by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
Diluted loss per share is calculated by dividing net loss attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of the share options, using the treasury share method. Ordinary share equivalents are excluded from the computation of diluted loss per share if their effects would be anti-dilutive. Basic and diluted loss per ordinary share is presented in the Group’s unaudited condensed consolidated statements of operations and comprehensive loss.
The rights, including the liquidation and dividend rights, of the holders of our Class A and Class B ordinary shares are identical, except with respect to voting. Each Class A ordinary share is entitled to one vote; and each Class B ordinary share is entitled to ten votes and is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. For the six months ended June 30, 2022 and 2023, the net loss per share amounts are the same for Class A and Class B common ordinary shares because the holders of each class are entitled to equal per share dividends or distributions in liquidation.
The Group did not include share options, convertible debt and warrants in the computation of diluted earnings per share for the six months ended June 30, 2022 and 2023, because those were anti-dilutive for loss per share.
(z) Risks, Uncertainties and Concentrations
Concentration of credit risk
Financial instruments that potentially subject
the Group to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivables. As of December
31, 2022 and June 30, 2023, the aggregate amounts of cash and cash equivalents of RMB
F-14
As of December 31, 2022, no customer accounted
for more than
Business, customer, supplier, political and economic risks
The Group’s e-commerce food-related business has a limited operating history. The recently acquired operations are subject to all of the risks inherent in the initial expenses, challenges, complications, and delays frequently encountered in connection with the formation of any new business.
The Group participates in a dynamic industry and believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations or cash flows: changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in industry standards; changes in certain strategic relationships or customer relationships; regulatory considerations; intellectual property considerations; and risks associated with the Group’s ability to attract and retain employees necessary to support its growth.
For the six months ended June 30, 2022, no customer
accounted for more than
For the six months ended June 30, 2022, no supplier
accounted for more than for
As of December 31, 2022, no supplier accounted
for more than
(aa) Recent accounting pronouncements
The Group is an emerging growth company (“EGC”) as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides that an EGC can take advantage of extended transition periods for complying with new or revised accounting standards. This allows an EGC to delay adoption of certain accounting standards until those standards would otherwise apply to private companies. The Group elected to take advantage of the extended transition periods. However, this election will not apply should the Group cease to be classified as an EGC.
In August 2020, the FASB issued ASU No. 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”). ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective January 1, 2024, for the Group. Early adoption is permitted. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the unaudited condensed consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for fiscal years beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Group does not expect the adoption of ASU 2021-04 will have a material effect on the unaudited condensed consolidated financial statements.
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Group adopts as of the specified effective date. Unless otherwise discussed, the Group does not believe that the impact of recently issued standards that are not yet effective will have a material impact on its financial position or results of operations upon adoption.
F-15
4. ACQUSITIONS
Business Combinations
The Group accounted the following acquisitions as business combinations in accordance with ASC 805. Acquisition-related costs incurred for the acquisitions are not material.
GISN acquisition
On January 28, 2023, the Company, through its subsidiary
Fresh2, entered into a Share Purchase Agreement to acquire GISN (HK) LIMITED, a Hong Kong corporation (“GISN”). GISN and its
subsidiaries provide technical solution and outsourcing consulting services provider focused on the digital, internet and Web 3 business
transformation for start-ups and traditional enterprises. This acquisition is a critical initiative for the Group’s efficiency in
its e-commerce operations. The acquisition closed on February 1, 2023. The Company issued
| Amount | ||||
| RMB | ||||
| Total consideration | ||||
| Assets acquired and liabilities assumed: | ||||
| Cash acquired | ||||
| Accounts receivable | ||||
| Accounts receivable-related parties | ||||
| Other current assets | ||||
| Right of use assets | ||||
| Property and equipment | ||||
| Intangible assets | ||||
| Advance from customer | ( | ) | ||
| Accrued expenses and other current liabilities | ( | ) | ||
| Lease liabilities | ( | ) | ||
| Deferred tax liability | ( | ) | ||
| Total net assets acquired | ||||
| Goodwill | ||||
The intangible assets are mainly attributable
to software acquired through the acquisition, which are amortized over
| Unaudited Pro Forma | ||||||||
| For the six months ended June 30, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Revenue | ||||||||
| Net losses | ( | ) | ||||||
For the six months ended June 30, 2023, the revenue contributed by
GISN was RMB
F-16
Fresh2 acquisition
On February 7, 2023, the Company, through its
subsidiary Fresh2, entered into a Share Purchase Agreement (the “Ecommerce Agreement”) to acquire Fresh 2 Ecommerce Inc, a
Delaware corporation (“Fresh2 Ecommerce”), from Mr. Haohan Xu, the Company’s Co-CEO and Co-Chairman of the board of
directors. Fresh2 Ecommerce is a business-to-business e-commerce platform focused on connecting Asian food suppliers and restaurants well
as other retail customers in the U.S. Fresh2 Ecommerce provides an online direct selling platform for food suppliers such as food companies,
manufacturers, agents, importers, and wholesalers to restaurants and other retail customers. The acquisition was closed on February 8,
2023. The Company issued
| Amount | ||||
| RMB | ||||
| Total consideration | ||||
| Assets acquired and liabilities assumed: | ||||
| Cash acquired | ||||
| Other current assets | ||||
| Accounts payables | ( | ) | ||
| Accrued expenses and other current liabilities | ( | ) | ||
| Total net assets acquired | ( | ) | ||
| Goodwill | ||||
None of the goodwill is expected to be deductible
for income tax purposes. For the six months ended June 30, 2023, Fresh2 Ecommerce contributed revenue of
Asset acquisition
On March 31, 2023, the Group closed an asset purchase
with Easy Hundred Inc. (“Easy Hundred”), a U.S.-based e-commerce startup company in the foodservice industry. Pursuant to
the Asset Purchase Agreement (the “EZ Agreement”), the Group acquired certain fixed assets of Easy Hundred and Easy Hundred’s
intellectual property relating to ez100, 2Supply and 100WAY systems with total consideration consisting of RMB
| Amount | ||||
| RMB | ||||
| Property and equipment- furniture, fixtures and equipment | ||||
| Property and equipment- motor vehicles | ||||
| Intangible assets- software* | ||||
| Total consideration | ||||
| * |
F-17
5. DISCONTINUED OPERATION
In July, 2023, the Board approved the sale of
its early cancer screening and detection business (the “CDA Business”), comprised of (i) AnPac Bio-Medical Technology (Lishui)
Co., Ltd. (“AnPac Lishui”), a subsidiary based in Lishui, China, (ii) Anpac Technology USA CO., LTD. (“AnPac USA”),
a subsidiary based in Pennsylvania and California, and (iii) Changhe Bio-Medical Technology (Yangzhou) Co., Ltd.(“Changhe”),
a subsidiary based in Yangzhou, China. Accordingly, on July 28, 2023, the Group entered into Share purchase agreements with New-Horizon
Bio-Medical Science Co., Ltd. (“New-Horizon”), a Hong Kong company focused on bio-medical technology, under which the Group
agreed to sell
The Group determined that the disposal of CDA Business met the criteria to be classified as a discontinued operation and, as a result, CDA business’s historical financial results are reflected in the Group’s unaudited condensed consolidated financial statements as a discontinued operation. The disposal of CDA Business represents a strategic shift that has a significant effect on the Group’s operations and financial results, which trigger discontinued operations accounting in accordance with ASC 205-20-45. The assets and liabilities related to the discontinued operations were retroactively classified as assets/liabilities held for sale, while results of operations related to the discontinued operations, including comparatives, were retroactively reported as income (loss) from discontinued operations for the six months ended June 30, 2022 and 2023, respectively.
| Six Months Ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Revenues: | ||||||||||||
| Revenues-third parties | ||||||||||||
| Revenues-related parties | ||||||||||||
| Total revenues | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross Profit | ||||||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Impairment of intangible assets | ( | ) | ||||||||||
| Impairment of goodwill | ( | ) | ||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Non-operating income and expenses: | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Foreign exchange gain, net | ||||||||||||
| Share of net loss in equity method investments | ( | ) | ( | ) | ( | ) | ||||||
| Other income, net | ||||||||||||
| Loss from operations for discontinued operations | ( | ) | ( | ) | ( | ) | ||||||
| Loss from disposal of a subsidiary | ( | ) | ( | ) | ||||||||
| Loss from discontinued operations before income taxes | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit | ||||||||||||
| Net Loss from discontinued operations | ( | ) | ( | ) | ( | ) | ||||||
F-18
| December 31 | June 30 | June 30 | ||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Prepayment | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Amounts due from related parties, net | ||||||||||||
| Inventories, net | ||||||||||||
| Other current assets, net | ||||||||||||
| Total current assets held for sale | ||||||||||||
| Property and equipment, net | ||||||||||||
| Land use rights, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Goodwill | ||||||||||||
| Right of use assets | ||||||||||||
| Long-term investments, net | ||||||||||||
| Total noncurrent assets held for sale | ||||||||||||
| TOTAL ASSETS HELD FOR SALE | ||||||||||||
| LIABILITIES | ||||||||||||
| Current liabilities: | ||||||||||||
| Short-term debts | ||||||||||||
| Accounts payable | ||||||||||||
| Advance from customers | ||||||||||||
| Amounts due to related parties | ||||||||||||
| Lease liability-current | ||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Total current liabilities held for sale | ||||||||||||
| Deferred tax liabilities | ||||||||||||
| Lease liability-non-current | ||||||||||||
| Other long-term liabilities | ||||||||||||
| Total noncurrent liabilities held for sale | ||||||||||||
| TOTAL LIABILITIES HELD FOR SALE | ||||||||||||
6. ACCOUNTS RECEIVABLE, NET
| December 31 | ||||||||||||
| 2022 | June 30 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Accounts receivable | ||||||||||||
| Allowance for credit losses | ||||||||||||
| Balance at end of year | ||||||||||||
F-19
7. OTHER CURRENT ASSETS, NET
| December 31, | ||||||||||||
| 2022 | June 30, 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Deposits | ||||||||||||
| Receivable from private placement investors | ||||||||||||
| Loan to third-parties | ||||||||||||
| Total | ||||||||||||
| Allowance for credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Other current assets, net | ||||||||||||
8. PROPERTY AND EQUIPMENT, NET
| December 31, | ||||||||||||
| 2022 | June 30 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Furniture, fixtures and equipment | ||||||||||||
| Motor vehicles | ||||||||||||
| Total | ||||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||||||
| Property and equipment, net | ||||||||||||
Depreciation expense was and RMB
9. INTANGIBLE ASSETS, NET
| December 31, | ||||||||||||
| 2022 | June 30 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Software | ||||||||||||
| Total | ||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||||||
| Intangible assets, net | ||||||||||||
F-20
| Twelve months ending June 30, | RMB | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total | ||||
10. LONG-TERM INVESTMENTS, NET
| December 31, | ||||||||||||
| 2022 | June 30, 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Equity method investments | ||||||||||||
| Advanced Life Therapeutics Co., Ltd. (“Advanced Life”) | ||||||||||||
| Nassau Enterprises LLC (“Nassau”). | ||||||||||||
| Total | ||||||||||||
| Less: Impairment | ||||||||||||
| Long-term investments, net | ||||||||||||
Equity method investments
Advanced Life
On May 15, 2021, the Company and other third parties
established Advanced Life Therapeutics Co., Ltd. (“Advanced Life”), of which the Company owned a
Nassau
On May 24, 2023, the Company, through its subsidiary
Foodbase Group Inc. (“Foodbase”), entered into a purchase agreement (the “Nassau Investment Agreement”) with Mr.
Haohan Xu (“Mr. Xu”), the CEO of the Company, and Nassau Enterprises LLC, a Delaware limited liability company that was established
to engage in real estate development (“Nassau”). Mr. Xu was the sole shareholder and CEO of Nassau prior to the Company’s
investment. The Group’s investment in Nassau consisted of a capital injection of RMB
The Group recorded its share of loss in this investment
of RMB
F-21
11. SHORT-TERM DEBTS
| December 31, | ||||||||||||
| 2022 | June 30, 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Convertible loan (“CL”) (i) | ||||||||||||
| Total | ||||||||||||
| (i) |
For the six months ended June 30, 2022 and 2023,
the Company recognized change in fair value of the Convertible Debenture of RMB
12. LEASES
The Group has several operating leases for offices. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Effective on January 1, 2022, the Group adopted the new lease accounting standard using a modified retrospective transition method which allowed the Group not to recast comparative periods presented in its consolidated financial statements. In addition, the Group elected the package of practical expedients, which allowed the Group to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Group has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Group combines the lease and non-lease components in determining the ROU assets and related lease obligation. Adoption of this standard resulted in the recording of operating lease ROU assets and corresponding operating lease liabilities as disclosed below and had no impact on accumulated deficit as of January 1, 2022. ROU assets and related lease obligations are recognized at commencement date based on the present value of remaining lease payments over the lease term.
| December 31, | ||||||||||||
| 2022 | June 30, 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Right-of-use assets, net | ||||||||||||
| Operating lease liabilities - current | ||||||||||||
| Operating lease liabilities - non-current | ||||||||||||
| Total operating lease liabilities | ||||||||||||
F-22
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % |
| Twelve months ending June 30, | RMB | |||
| 2024 | ||||
| 2025 | ||||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | ||||
13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| December 31 | ||||||||||||
| 2022 | June 30, 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Salary and welfare payable | ||||||||||||
| Accrued expenses (1) | ||||||||||||
| Payable for property and equipment | ||||||||||||
| Other payables | ||||||||||||
| Total | ||||||||||||
| (1): |
14. SHAREHOLDERS’ EQUITY
Ordinary Shares
On October 14, 2022, the Company amended and restated
its memorandum and articles of association to increase the maximum number of authorized shares to
On February 14, 2023, the Company amended and
restated its memorandum and articles of association to increase the maximum number of authorized shares from
As of December 31, 2022 and June 30, 2023,
Completion of IPO
On January 30, 2020, the Company completed its IPO on the Nasdaq Share Exchange. In November 2022, the Company adopted an ordinary share / ADS ratio change from one (1) Class ‘A’ ordinary share being equal to one (1) ADS to 20 Class ‘A’ ordinary shares being equal to one (1) ADS).
F-23
Conversion of convertible loans
On July 22, 2021, the Company issued convertible
debentures (the “Convertible Debentures”) to certain investors in a registered direct offering in an aggregate principal amount
of US$
On May 31, 2021, the Company issued a convertible
note in the principal amount of RMB
Shares issued for services
On June 1, 2022, the Company entered into a service
agreement with a public relations firm. Pursuant to the service agreement, the Group was required to pay US$
On August 31, 2022, the Company granted
On April 20, 2023, the Company entered into a
service agreement with a finance service firm, Pursuant to the service agreement, the Company was required to pay
Shares issued for reserve
As of December 31, 2022, the Group had
Private placements
On March 16, 2022, the Company entered into a
share subscription agreement with a third-party investor, pursuant to which the Company issued
On March 29, 2022, the Company entered into a
share subscription agreement with a third-party Chinese investor, pursuant to which the Company issued
F-24
On May 27, 2022, the Company entered into investment
agreements with nine third-party investors. The investors agreed to invest up to RMB
On September 2, 2022, the Company entered into
investment agreements with three third-party investors (the “September 2, 2022 private placement”). The investors agreed to
purchase an aggregate of
On September 26, 2022, the Company entered into
investment agreements with nine third-party investors, pursuant to which the Company issued
In December 2022 and March 2023, the Company signed
investment agreements with several third-party investors (the “March 2023 private placement”) to sell
F-25
Shares issued for acquisitions
In connection with the GISN acquisition on February
1, 2023, the Company issued
In connection of the Fresh2 acquisition on February
8, 2023, the Company issued
In connection of the assets acquisition from Easy
Hundred on March 31, 2023, the Company issued
Warrants
| Weighted average exercise price per share | Weighted | |||||||||||
Number of warrants | US$ per share | average life Years | Expiration dates | |||||||||
| Balance of warrants outstanding and exercisable as of December 31, 2022 | ||||||||||||
| —warrants issued in connection with the March 2023 private placement | ||||||||||||
| —warrants issued in connection with the April 2023 private placement | ||||||||||||
| —warrants issued in connection with the June 2023 private placement | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Balance of warrants outstanding and exercisable as of June 30, 2023 | ||||||||||||
F-26
15. SHARE BASED COMPENSATION
On October 31, 2019, the Board and the Company’s
shareholders approved the 2019 Share Incentive Plan (“2019 Plan”) which authorized the compensation committee or such other
committee to grant share options to purchase
On January 6, 2023, the Company’s Board
approved and adopted the 2023 Share Incentive Plan (the “2023 Plan”) providing for the grant of restricted share unit (“RSU”)
of
Employees-options
| Weighted | ||||||||||||||||||||
| Weighted | Weighted | Average | ||||||||||||||||||
| Average | Average | Remaining | Aggregate | |||||||||||||||||
| Number of | Exercise | Grant date | Contractual | Intrinsic | ||||||||||||||||
| Options | Price | Fair Value | Term | Value | ||||||||||||||||
| US$ per | US$ per | |||||||||||||||||||
| option | option | Years | US$ | |||||||||||||||||
| Share options outstanding at December 31, 2022 | ||||||||||||||||||||
| Granted | ||||||||||||||||||||
| Exercised | ( | ) | ||||||||||||||||||
| Share options outstanding at June 30, 2023 | ||||||||||||||||||||
| Vested and exercisable at June 30, 2023 | ||||||||||||||||||||
The aggregate intrinsic value in the table above represents the difference between the exercise price of the awards and the fair value of the underlying ordinary shares at each reporting date for those awards that had exercise price below the estimated fair value of the relevant Class A ordinary shares.
For the
six months ended June 30, 2022 and 2023, the total fair value of the equity awards vested were RMB
F-27
Nonemployees-options
| Weighted | ||||||||||||||||||||
| Weighted | Weighted | Average | ||||||||||||||||||
| Average | Average | Remaining | Aggregate | |||||||||||||||||
| Number of | Exercise | Grant date | Contractual | Intrinsic | ||||||||||||||||
| Options | Price | Fair Value | Term | Value | ||||||||||||||||
| US$ per | US$ per | |||||||||||||||||||
| option | option | Years | US$ | |||||||||||||||||
| Share options outstanding at December 31, 2022 | ||||||||||||||||||||
| Granted | ||||||||||||||||||||
| Exercised | ( | ) | ||||||||||||||||||
| Forfeited | ( | ) | ||||||||||||||||||
| Share options outstanding at June 30, 2023 | ||||||||||||||||||||
| Vested and exercisable at June 30, 2023 | ||||||||||||||||||||
The aggregate intrinsic value in the table above represents the difference between the exercise price of the awards and the fair value of the underlying ordinary shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant Class A ordinary shares.
The total fair value of the equity awards vested
during the six months ended June 30, 2022 and 2023 were RMB
Fair value of options
| For the six months ended June 30, | ||||||||
| 2022 | 2023 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility range | % | % | ||||||
| Fair market value per ordinary share as at grant dates | US$ | |||||||
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Selling and marketing expenses | ||||||||||||
| Research and development expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Total share-based compensation expenses | ||||||||||||
F-28
16. INCOME TAXES
BVI
The Company is incorporated in the BVI and conducts its primary business operations through the subsidiaries in the U.S. and PRC Under the current laws of the BVI, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed.
Hong Kong
GISN (HK) Limited is a holding company registered in Hong Kong and had no operating profit and no taxable income for the six months ended June 30, 2023.
PRC
The Group’s subsidiaries in the PRC are
subject to tax at the statutory rate of
Dividends, interests, rent and royalties payable
by the Group’s PRC subsidiaries, to non-PRC resident enterprises, and proceeds from any such non-resident enterprise
investor’s disposition of assets (after deducting the net value of such assets) shall be subject to
United States
The Group’s subsidiaries in the U.S. are
subject to the U.S. federal corporate income tax and New York as well as Delaware state income tax at a rate of
The Group’s Chinese subsidiaries tax returns filed with Chinese governments for the years after 2019 remain open for statutory examination by PRC tax authorities. The Group’s US subsidiaries tax returns filed with governments remain open for statutory examination by tax authorities in the future.
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Non-US | ( | ) | ( | ) | ( | ) | ||||||
| US | ( | ) | ( | ) | ||||||||
| Total | ( | ) | ( | ) | ( | ) | ||||||
F-29
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Current tax expense | ||||||||||||
| Deferred tax benefit | ||||||||||||
| Total | ||||||||||||
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit computed at the statutory income tax rate at | ( | ) | ||||||||||
| International rate differences | ( | ) | ( | ) | ||||||||
| Change in valuation allowance | — | ( | ) | ( | ) | |||||||
| Income tax benefit | — | |||||||||||
Deferred Taxes
| As of December 31, | ||||||||||||
| December 31, | June 30, | |||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Deferred tax assets: | ||||||||||||
| Net loss carryforward | ||||||||||||
| Valuation allowance | ( | ) | ( | ) | ( | ) | ||||||
| Total deferred tax assets. | ||||||||||||
| Deferred tax liabilities: | ||||||||||||
| Long-lived assets arising from acquisitions | ||||||||||||
| Total deferred tax liabilities. | ||||||||||||
The Group operates through several subsidiaries. Valuation allowance is considered for each of the entities.
Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss carry forwards. The Group evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of December 31, 2022 and June 30, 2023, the Company and all of its subsidiaries were in a cumulative loss position, valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized.
F-30
As of June 30, 2023, the Group had PRC net operating
losses of RMB
17. RELATED PARTY TRANSACTIONS AND BALANCES
Parties are considered to be related if one party
has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial
and operational decisions.
| Related Party | Nature of the party | Relationship with the Group | ||
| Haohan Xu | ||||
| Apifiny Inc. | ||||
| Roxe Holding Inc. | ||||
| Dr. Chris Chang Yu* | ||||
| CRS Holdings Inc. | ||||
| Jiaxing Zhijun Sihang Investment Partnership Enterprises (limited partnership) (“Jiaxing Zhijun”) |
| * |
| As of December 31, | As of June 30, | |||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Due from related parties: | ||||||||||||
| Apifiny Inc. | ||||||||||||
| Roxe Holding Inc. | ||||||||||||
| Dr. Chris Chang Yu | ||||||||||||
| Due from related parties, net | ||||||||||||
| As of December 31, | As of June 30, | |||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Due to related parties: | ||||||||||||
| CRS Holdings Inc. | ||||||||||||
| Jiaxing Zhijun | ||||||||||||
| Due to related parties | ||||||||||||
F-31
| As of December 31, | As of June 30, | |||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Accounts receivables-related parties: | ||||||||||||
| Apifiny Inc. | ||||||||||||
| Roxe Holding Inc. | ||||||||||||
| Accounts Receivables-related parties, net | ||||||||||||
Accounts receivables-related parties represented receivables from Apifiny Inc. and Roxe Holding Inc. for research and development services provided by the Group’s subsidiaries before the GISN acquisition.
Related party transactions
| For the six months ended June 30, | ||||||||||||
| 2022 | 2023 | 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Fixed assets purchased from Apifiny Inc. | ||||||||||||
| Consulting service received from Roxe Holding Inc. | ||||||||||||
| Rent expense incurred with Apifiny Inc. | ||||||||||||
Acquisition, investment and divestitures
The Group completed one acquisition from a related party – Mr. Xu (details refer to Note 4) and completed divestiture transaction with a related party Dr. Chris Yu on July 28, 2023 (details refer to Note 5). On May 24, 2023, the Group completed equity investment in Nassau, controlled by a related party - Mr. Xu (details refer to Note 10).
18. COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of the business, the Group is subject to periodic legal or administrative proceedings. As of December 31, 2022 and June 30, 2023, there was no contingent liability accrued relating to legal or administrative proceedings.
19. SUBSEQUENT EVENTS
Recent Development
The Company announced that as of June 30, 2023, it no longer qualified as a Foreign Private Issuer, as defined in Rule 405 of Regulation C under the Securities Act of 1933 and Rule 3b-4 under the Securities Exchange Act of 1934. The Company will take all necessary actions to comply with the requirements for a domestic issuer under the federal securities laws, as of January 1, 2024.
On July 21, 2023, the Company appointed Mr. Yidong Hu as the Chief Strategy Officer of the Company.
On August 25, 2023, Mr. Edwards Jinqiu Tang resigned as the Co-Chief Financial Officer of the Company. Mr. Tang’s resignation did not result from any disagreement with the Company or its management.
F-32
Divestiture
On July 28, 2023, the Group entered into agreements to sell its CDA Business (details refer to Note 5).
Acquisition
On July 17, 2023, the Group entered into a definitive
share purchase agreement with Immensus LLC, Zero2First Capital Limited, Future Capital Tech Pte. Ltd (Singapore), River Hill China Capital
Ltd (collectively, the “Sellers”) and Roxe Holding Inc. (“Roxe”) under which Fresh2 Technology purchased
On July 28, 2023, the Company, through its subsidiary, Foodbase Group Inc. agreed to acquire 100% of the equity interest in Windfall SLV Development LLC and SLV Windfall Management LLC, from XHome Group Inc, a company controlled by Mr. Haohan Xu, for a nominal price. Windfall SLV Development LLC and SLV Windfall Management LLC have not begun operations as yet.
On November 4, 2023 the Company and Fresh2 Technology
entered into a definitive Share Purchase Agreement to purchase
Financing activities
On September 25, 2023, the Company entered into
an agreement with an institutional investor to purchase up to US$
F-33