COMMITMENTS AND CONTINGENCIES	12 Months Ended
Dec. 31, 2025
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES	NOTE 13 - COMMITMENTS AND CONTINGENCIES Commitments On January 5, 2022, Funan Modern Recycling Agriculture Investment Co., Ltd. (“FMRA”) signed an agreement with AUFP to fund AUFP 115 million RMB ($18.09 million) on the expansion of composting facilities including 6 bunkers and 22 tunnels. According to the agreement, AUFP transfers the land use right of 46,393square meters which the composting facilities will be constructed on to FMRA and starts to pay rent for 10 years after FMRA delivers the facilities to AUFP legally and in writing. Once Rents and Principal are paid off, FMRA will transfer the land use right and the deed of the composting facilities back to AUFP. All the costs related to the transfer of land use right are paid by FMRA. The overall economic substance of the arrangement is that of a construction financing arrangement; accordingly, the land use right was not derecognized from the balance sheet, which amounted to $623,515. Rent payment method: the calculations will start from the date of the delivery of the facilities and rent will be paid quarterly. The principal amount will be determined and confirmed in writing by both parties at the time of the facilities delivery; if the parties cannot reach an agreement, the agreement will prevail if there is provisions in the agreement; if there is no agreement, the confirmation by a third-party audit will prevail. AUFP will repay the principal and pay rent on an annual basis. For the first to fifth years, AUFP will pay 4.32% of the total investment (principal amount confirmed) as annual rent to FMRA. From the sixth to the tenth year, AUFP will pay 20% of the determined principal amount each year to repurchase 20% of the shares in the platform company (incorporated by FMRA to own the composting facilities). After AUFP’s payment, FMRA will complete the necessary changes to the industrial and commercial registration of the platform company within one month. Once AUFP starts the payment of principal, the rent will be 4.32% of the remaining principal that AUFP has not pay, as the annual rent. The facilities were under operative testing in 2024. FMRA has not met the conditions of delivery as of December 31, 2025 and the date these consolidated financial statements are issued. Legal Proceedings The Company’s PRC operating subsidiaries and affiliates have been involved in several disputes with suppliers arising from unpaid amounts owed to raw material vendors following the suspension of production and related liquidity constraints. These matters primarily involve claims by suppliers of chicken manure, straw, and other production inputs, and several have been resolved through court-mediated settlements or judgments requiring staged payments or confirming liability. In Fengyang Leqi Trading Co., Ltd. v. Anhui Allied United Mushroom Technology Co., Ltd. and Funan Allied United Farmer Products Co., Ltd., the plaintiff sought payment of RMB 252,780 for unpaid raw-material purchases consisting of rice husk chicken manure, plus interest, attorneys’ fees, and court costs. The Funan County People’s Court issued a civil mediation statement under case number (2025)Wan1225 MinChu No.13121, pursuant to which the defendants agreed to pay the RMB 252,780 in installments through January 30, 2026, with default interest at 3% per annum on any unpaid balance. In Funan Yihe Agricultural Machinery Specialized Cooperative v. Anhui Allied United Mushroom Technology Co., Ltd., Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd., the plaintiff claimed unpaid straw purchase amounts of RMB 1,620,456.3, plus interest and related costs. The Funan County People’s Court issued a civil mediation statement under case number (2025)Wan1225 Min Chu No.7019, pursuant to which the defendants agreed to pay RMB 820,000, with the remaining RMB 800,000 to be paid in installments. In Mengcheng Shunjie Straw Recycling Co., Ltd. v. Anhui Allied United Mushroom Technology Co., Ltd., the plaintiff sought payment of RMB 1,154,204.5 for unpaid straw deliveries, plus interest and preservation costs, and the defendant disputed the amount and asserted quality-related defenses. After the plaintiff received straw to offset the account payable under try-parties agreement, the case was closed. In Funan County Jieyu Agricultural Machinery Specialized Cooperative v. Anhui Allied United Mushroom Technology Co., Ltd., Anhui Allied United Mushroom Co., Ltd., Funan Allied United Farmer Products Co., Ltd., Zhang Zhen and Yang Shoubin (“Jieyu Case”), the plaintiff sought RMB 866,279.8 for unpaid straw purchase amounts, plus interest and other costs. By civil judgment under case number (2025)Wan1225Mi Min Chu No.10471, the Funan County People’s Court held that Anhui Allied United Mushroom Technology Co., Ltd. was liable for RMB 859,129.3 plus interest, and further held that Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd. were jointly and severally liable, while dismissing the claims against the two individual employee defendants. In Meng Jie v. Anhui Allied United Mushroom Technology Co., Ltd. (“Mengjie Case”), the asserted payable was approximately RMB 162,566 and related to a straw-pellet supplier. The parties reached a settlement agreement. Hefei Wuxing Junye filed an execution-related matter against Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd. (“Wuxing Case”) concerning a deposit refund originally in the amount of RMB 2,000,000 under case number (2025)Wan1225 Min Chu No.8232. The remaining balance of RMB 237,729.27 is to be paid by June 30, 2026. On December 2, 2022, Liu Pengpeng filed a lawsuit against AUFP for $66,066. Liu Pengpeng signed a contract with AUFP on installation work and drainage construction. Liu Pengpeng breached the contract and failed to complete the construction work on time which caused a loss to AUFP. On July 7, 2023, Liu Pengpeng withdrew the lawsuit. On November 20, 2023, Liu Pengpeng filed a lawsuit for the same claim. In 2024, the lawsuit was settled and $65,263 of settlement payment was paid. AUFP filed a lawsuit against Heng Guang Sheng Construction Corporation in 2024. AUFP post advances to suppliers on wrong suppliers and caused overpayment of $280,144 made in 2019. The verdict was ordered and favored AUFP in December of 2024 for the full amount. AUFP collected $104,315 in April, 2025. As of the date of this report, all the liabilities above were accrued, the Company believes that these matters arose in the ordinary course of business in connection with supplier and contract payment disputes following the suspension of the PRC mushroom operations. The Company is monitoring compliance with the applicable settlements, judgments and related payment obligations, and evaluating any further enforcement exposure.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2025

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Commitments

On January 5, 2022, Funan Modern Recycling Agriculture Investment Co., Ltd. (“FMRA”) signed an agreement with AUFP to fund AUFP 115 million RMB ($18.09 million) on the expansion of composting facilities including 6 bunkers and 22 tunnels. According to the agreement, AUFP transfers the land use right of 46,393square meters which the composting facilities will be constructed on to FMRA and starts to pay rent for 10 years after FMRA delivers the facilities to AUFP legally and in writing. Once Rents and Principal are paid off, FMRA will transfer the land use right and the deed of the composting facilities back to AUFP. All the costs related to the transfer of land use right are paid by FMRA. The overall economic substance of the arrangement is that of a construction financing arrangement; accordingly, the land use right was not derecognized from the balance sheet, which amounted to $623,515. Rent payment method: the calculations will start from the date of the delivery of the facilities and rent will be paid quarterly. The principal amount will be determined and confirmed in writing by both parties at the time of the facilities delivery; if the parties cannot reach an agreement, the agreement will prevail if there is provisions in the agreement; if there is no agreement, the confirmation by a third-party audit will prevail. AUFP will repay the principal and pay rent on an annual basis. For the first to fifth years, AUFP will pay 4.32% of the total investment (principal amount confirmed) as annual rent to FMRA. From the sixth to the tenth year, AUFP will pay 20% of the determined principal amount each year to repurchase 20% of the shares in the platform company (incorporated by FMRA to own the composting facilities). After AUFP’s payment, FMRA will complete the necessary changes to the industrial and commercial registration of the platform company within one month. Once AUFP starts the payment of principal, the rent will be 4.32% of the remaining principal that AUFP has not pay, as the annual rent. The facilities were under operative testing in 2024. FMRA has not met the conditions of delivery as of December 31, 2025 and the date these consolidated financial statements are issued.

Legal Proceedings

The Company’s PRC operating subsidiaries and affiliates have been involved in several disputes with suppliers arising from unpaid amounts owed to raw material vendors following the suspension of production and related liquidity constraints. These matters primarily involve claims by suppliers of chicken manure, straw, and other production inputs, and several have been resolved through court-mediated settlements or judgments requiring staged payments or confirming liability.

In Fengyang Leqi Trading Co., Ltd. v. Anhui Allied United Mushroom Technology Co., Ltd. and Funan Allied United Farmer Products Co., Ltd., the plaintiff sought payment of RMB 252,780 for unpaid raw-material purchases consisting of rice husk chicken manure, plus interest, attorneys’ fees, and court costs. The Funan County People’s Court issued a civil mediation statement under case number (2025)Wan1225 MinChu No.13121, pursuant to which the defendants agreed to pay the RMB 252,780 in installments through January 30, 2026, with default interest at 3% per annum on any unpaid balance.

In Funan Yihe Agricultural Machinery Specialized Cooperative v. Anhui Allied United Mushroom Technology Co., Ltd., Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd., the plaintiff claimed unpaid straw purchase amounts of RMB 1,620,456.3, plus interest and related costs. The Funan County People’s Court issued a civil mediation statement under case number (2025)Wan1225 Min Chu No.7019, pursuant to which the defendants agreed to pay RMB 820,000, with the remaining RMB 800,000 to be paid in installments.

In Mengcheng Shunjie Straw Recycling Co., Ltd. v. Anhui Allied United Mushroom Technology Co., Ltd., the plaintiff sought payment of RMB 1,154,204.5 for unpaid straw deliveries, plus interest and preservation costs, and the defendant disputed the amount and asserted quality-related defenses. After the plaintiff received straw to offset the account payable under try-parties agreement, the case was closed.

In Funan County Jieyu Agricultural Machinery Specialized Cooperative v. Anhui Allied United Mushroom Technology Co., Ltd., Anhui Allied United Mushroom Co., Ltd., Funan Allied United Farmer Products Co., Ltd., Zhang Zhen and Yang Shoubin (“Jieyu Case”), the plaintiff sought RMB 866,279.8 for unpaid straw purchase amounts, plus interest and other costs. By civil judgment under case number (2025)Wan1225Mi Min Chu No.10471, the Funan County People’s Court held that Anhui Allied United Mushroom Technology Co., Ltd. was liable for RMB 859,129.3 plus interest, and further held that Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd. were jointly and severally liable, while dismissing the claims against the two individual employee defendants.

In Meng Jie v. Anhui Allied United Mushroom Technology Co., Ltd. (“Mengjie Case”), the asserted payable was approximately RMB 162,566 and related to a straw-pellet supplier. The parties reached a settlement agreement.

Hefei Wuxing Junye filed an execution-related matter against Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd. (“Wuxing Case”) concerning a deposit refund originally in the amount of RMB 2,000,000 under case number (2025)Wan1225 Min Chu No.8232. The remaining balance of RMB 237,729.27 is to be paid by June 30, 2026.

On December 2, 2022, Liu Pengpeng filed a lawsuit against AUFP for $66,066. Liu Pengpeng signed a contract with AUFP on installation work and drainage construction. Liu Pengpeng breached the contract and failed to complete the construction work on time which caused a loss to AUFP. On July 7, 2023, Liu Pengpeng withdrew the lawsuit. On November 20, 2023, Liu Pengpeng filed a lawsuit for the same claim. In 2024, the lawsuit was settled and $65,263 of settlement payment was paid.

AUFP filed a lawsuit against Heng Guang Sheng Construction Corporation in 2024. AUFP post advances to suppliers on wrong suppliers and caused overpayment of $280,144 made in 2019. The verdict was ordered and favored AUFP in December of 2024 for the full amount. AUFP collected $104,315 in April, 2025.

As of the date of this report, all the liabilities above were accrued, the Company believes that these matters arose in the ordinary course of business in connection with supplier and contract payment disputes following the suspension of the PRC mushroom operations. The Company is monitoring compliance with the applicable settlements, judgments and related payment obligations, and evaluating any further enforcement exposure.