Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Risks associated with the company's new, experimental business model in the garments & textiles industry.
• High research & development expenses and delayed profitability.
• Dependence on outside personnel and potential staff turnover.
• Potential challenges in establishing sufficient business partnerships.
• Risks associated with employees with a weak sense of moral hazard.
• Risks associated with future Chinese regulations.
• Risks associated with business partners' effectiveness in promoting the business.
• Challenges in increasing and maintaining brand influence.
• Risks associated with foreign exchange fluctuations and inflation in China.
• Dependence on the continued contributions of current officers.
• Risks associated with the illiquidity and volatility of the common stock.
• Potential significant dilution for shareholders through efforts to obtain financing.

Mitigation Strategies

• Establishing a series of policies to reduce the likelihood of employees disclosing confidential information.
• Developing strict guidelines for business partnerships.
• Continuously monitoring the quality of business partners.
• Organizing ethics training for all employees and establishing a comprehensive security system.
• Closely monitoring the timely collection of accounts and other receivables.
• CEO's intent and ability to provide additional equity financing.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Risks Associated with Our Company: Dependence on customer's ability to market and sell products, uncertainties and risks in future expansion plans, difficulties in attracting new business partners and clients due to brand influence, inability to adequately protect intellectual property, impacts from sourcing, distributing, and selling merchandise in China, potential price increases in raw materials or changes in supply, labor shortages, increased labor costs, impacts from vendors' ability to manufacture and deliver raw materials, competition from similar sized competitors offering lower prices, inability to attract additional customers, adverse impacts from third-party contractors, insufficient insurance, dependence on key executive officer, compliance or legal matters, liabilities relating to environmental protection and safety laws, risks associated with future Chinese regulations, need for additional financing, impacts from natural disasters, reduced disclosure requirements as an emerging growth company.
• General Risks Associated with Business Operations in China: Difficulty enforcing judgments, foreign exchange fluctuations, inflation, changes in PRC government policies, uncertainties regarding interpretation and enforcement of PRC laws, regulatory approval and review requirements for acquisitions, regulations regarding investments in offshore companies by PRC residents, treatment as a resident enterprise for PRC tax purposes, restrictions on currency exchange, lack of scrutiny of disclosures by PRC regulatory bodies, introduction of new laws or changes to existing laws.

Mitigation Strategies

• Closely monitoring the timely collection of accounts and other receivables. Conserving liquidity by working with major creditors to align repayment obligations with receivable collections. CEO providing financial support for operations and indicating intent and ability to provide additional equity financing.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Significant economic uncertainty in China increased client sensitivity to pricing.
• COVID-19 impacted logistics services deliveries.
• Significant price increase in nitrile gloves due to COVID-19 driven demand surge and raw material shortage resulted in significant loss.
• Heavy reliance on major suppliers for raw materials.
• Potential labor shortages, increased labor costs, or other factors affecting labor supply.
• High turnover rate in the textile industry and difficulty attracting and retaining qualified associates.
• Risks associated with third-party vendors' ability to manufacture and deliver raw materials timely, meet quality standards, and comply with laws and regulations.
• Competition from larger companies offering lower prices.
• Limited number of clients and customers.
• Reliance on third-party contractors for logistics services.
• Insufficient insurance coverage.
• Dependence on Mr. Hong Zhida's contributions as key executive officer.
• Complex compliance and litigation risks.
• Potential penalties for inadequate contributions to employee benefits plans.
• Uncertainties under PRC Securities Law relating to procedures and timing for U.S. securities regulatory agencies to conduct investigations and collect evidence within the PRC.
• Liabilities relating to environmental protection and safety laws and regulations.
• Risks associated with future Chinese regulations.
• Need for additional financing in the future.
• Potential impact of natural disasters and other events beyond control.
• Reduced disclosure requirements applicable to emerging growth companies may make common stock less attractive to investors.
• Difficulty enforcing judgments against the company due to its location and assets being primarily outside the United States.
• Foreign exchange fluctuations.
• Inflation.
• Changes in PRC government policies.
• Uncertainties regarding the interpretation and enforcement of PRC laws, rules, and regulations.
• PRC regulations regarding acquisitions impose significant regulatory approval and review requirements.
• PRC regulations relating to investments in offshore companies by PRC residents may subject beneficial owners or subsidiaries to liability or penalties.
• Potential treatment as a resident enterprise for PRC tax purposes, leading to PRC income tax on global income.
• Restrictions on currency exchange may limit the ability to utilize PRC revenue effectively.
• Disclosures in reports and filings with the SEC are not subject to scrutiny of PRC regulatory bodies.
• Introduction of new laws or changes to existing laws by the PRC government.

Mitigation Strategies

• Adopting an operating cost reduction strategy and conserving liquidity by working with major creditors to align repayment obligations with receivable collections (COVID-19).
• Closely monitoring the timely collection of accounts and other receivables (operating cash flow improvement).
• CEO has indicated intent and ability to provide additional equity financing (going concern).
• Reviewing inventory levels to identify slow-moving materials and broken assortments.
• Maintaining good relationships with suppliers.
• Outsourcing some logistics business to maximize capacity and maintain flexibility.
• Engaging third-party contractors with strong reputations and track records.
• Hiring highly professional employees and establishing strong internal information management systems to reduce ethical risks.
• Establishing policies to reduce the likelihood of breaches of trust.
• Periodically filing and updating foreign exchange registration on behalf of certain employee shareholders who are PRC residents (SAFE Circular 37 compliance).

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Risks associated with doing business in China (political instability, health hazards, environmental hazards, natural disasters, trade duties, sanctions, taxes, evolving legal and regulatory matters, currency exchange volatility, local business practices, shipping and transportation disruptions, labor disputes, product safety expectations).
• Reliance on third-party transportation providers for product shipments.
• Fluctuations in raw material prices and supply.
• Fluctuations in epidemic prevention supplies costs and demand.
• Heavy reliance on major customers for revenue.
• Heavy reliance on major suppliers for raw materials.
• Labor shortages, increased labor costs.
• Limited operating history for property management and subleasing business.
• Vulnerability to natural disasters and public health crises.
• Potential reputational damage.
• Dependence on key executive officer, Mr. Hong Zhida.
• Compliance and legal risks.
• Potential penalties for inadequate contributions to employee benefits plans.
• Uncertainties related to SEC, PCAOB, and HFCAA regulations.
• Uncertainties under PRC Securities Law regarding investigations and evidence collection.
• Liabilities related to environmental protection and safety laws.
• Risks associated with future Chinese regulations.
• Need for additional financing.
• Vulnerability to natural disasters and other uncontrollable events.
• Reduced disclosure requirements as an emerging growth company.
• Difficulty enforcing judgments against the company.
• Foreign exchange fluctuations.
• Inflation.
• Uncertainties regarding interpretation and enforcement of PRC laws.
• PRC regulations regarding acquisitions.
• PRC regulations relating to investments in offshore companies by PRC residents.
• Potential treatment as a PRC tax resident enterprise.
• Restrictions on currency exchange.
• Lack of scrutiny of disclosures by PRC regulatory bodies.
• Introduction of new laws or changes to existing laws by the PRC government.
• Uncertainties regarding the interpretation and implementation of the Foreign Investment Law.
• Reliance on dividends from PRC subsidiaries.
• PRC regulation of loans and direct investment.
• Market price volatility of shares.
• Inability to pay dividends.
• Potential significant dilution of shares through financing efforts.

Mitigation Strategies

• Outsourcing logistics to maximize capacity and flexibility.
• Cautious acceptance of sales orders to ensure profitability.
• Cost reduction strategies and liquidity conservation.
• Monitoring timely collection of accounts receivable.
• Maintaining good relationships with suppliers and customers.
• Hiring highly professional employees and establishing strong internal information management systems.
• Establishing policies to reduce ethical risks.
• CEO's intent and ability to provide additional equity financing.

Supply Chain Management

Climate-Related Risks & Opportunities