Sunshine Agri-Tech Inc. — Management Reports 2025

May 28, 2025

SUNSHINE AGRI-TECH INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS

March 31, 2025

(Prepared by Management)

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General

The following Management Discussion and Analysis of the results of operations and financial condition ("MD&A") of Sunshine Agri-Tech Inc. ("Sunshine"), prepared as of May 28, 2025, should be read in conjunction with audited consolidated financial statements for the periods ended March 31, 2025 and 2024. Additional information relating to Sunshine Agri-Tech Inc., including its interim financial statements can be found on the SEDAR website for Canadian regulatory filings at www.sedar.com.

Except where otherwise indicated, all financial information reflected herein is expressed in Canadian dollars and have been prepared using International Financial Reporting Standards ("IFRS") for publicly accountable enterprises as issued by the International Accounting Standards Board ("IASB"). Throughout this MD&A references are made to "LBITDA" and "gross margin". A description of these measures and their limitations are discussed below under "Non-GAAP Measures".

At May 28, 2025, Sunshine has 72,006,250 common shares outstanding.

Cautionary Note Regarding Forward Looking Statements

This MD&A contains forward-looking statements that reflect Sunshine's expectations regarding the future growth, results of operation, performance, business prospects and opportunities. Forward-looking statements may contain such words as "anticipate", "believe", "continue", "could", "expects", "intend", "plans", "will" or similar expressions suggesting future conditions or events. Such forward looking statements reflect Sunshine's current beliefs and are based on information currently available to us. A variety of inherent risks, uncertainties and factors, many of which are beyond Sunshine's control, affect the operations, performance and results of Sunshine and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. Some of these risks, uncertainties and factors include the impact or unanticipated impact of: legislative or regulatory developments in the jurisdictions where Sunshine operates, in particular in China; change in or application of tax laws; political conditions and developments; intensifying competition from established competitors; technological change; currency value fluctuation and changes in foreign exchange restrictions; changes in Chinese government support or restrictions on foreign investment; current economic conditions on the demands of Sunshine's products, working capital, capital expenditure requirements and capital resources; Sunshine's success in developing and introducing new products and services, constructing and operating new manufacturing facilities, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels.

Although the forward-looking statements contained in this MD&A are based on what Sunshine believes to be reasonable assumptions, Sunshine cannot assure readers that actual results will be consistent with these forward-looking statements and Sunshine undertakes no obligation to update such statements except as expressly required by law. Readers are cautioned not to put undue reliance on forward-looking statements.

Overview

Sunshine Agri-Tech Inc. (the "Company" or "Sunshine"), was incorporated under the laws of the Province of British Columbia on May 28, 2009 as Osia Ventures Ltd. ("Osia"), a Capital Pool Company. On July 27, 2010, Osia completed a qualifying transaction ("QT") by acquiring all of the issued and outstanding common shares in the capital of Health China Capital Limited ("Health HK") (formerly Sunscape (Hong Kong) Limited), a private company incorporated on August 22, 2007 under the Companies Ordinance of Hong Kong, by issuing 45,000,000 common shares in the capital of the Company to the shareholders of Sunscape on a pro-rata basis. The acquisition was accomplished through an exchange of shares which resulted in the former shareholders of Sunscape obtaining control of the Company. Accordingly, this transaction was recorded as a reverse takeover ("RTO") and Sunscape was deemed to be the accounting acquirer. Concurrent with this transaction, the Company changed its name from Osia Ventures Ltd. to Sunshine Agri-Tech Inc.

Health HK is a holding company that holds all of the issued and outstanding shares of Dalian Sunshine Agri-Tech Co., Ltd. ("Dalian Sunshine"), which is a wholly foreign owned enterprise incorporated on September 29, 2009 under the business laws of the People's Republic of China ("PRC" or "China") and based in the City of Dalian, PRC. Dalian Sunshine owns 100% of Changchun Sunshine Bio-Feed Co., Ltd. ("Changchun Sunshine") through a corporate reorganization in July 2012. Changchun Sunshine was previously a special purpose entity under 100% control of Dalian

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Sunshine. Changchun Sunshine was incorporated on December 4, 2006 under the business laws of the PRC and is based in the City of Changchun, PRC.

On August 31, 2012, the Company acquired 51% interest in Changchun Grain Bio-Tech Co., Ltd. (“Changchun Grain”). The acquisition is considered to be an acquisition of manufacturing and office facilities, machinery and equipment, and the assumption of related liabilities for accounting purposes.

On July 20, 2018, the Company closed a transaction in accordance with an equity transfer agreement, pursuant to which the Company has agreed to sell its 100% ownership of Changchun Sunshine to a third party. The selling price is $1,583,514 (RMB 8,200,000). As at December 31, 2018, the payment has been received. Changchun Sunshine was not previously classified as held for sale or as a discontinued operation. As at December 31, 2018, Changchun Sunshine is classified as discontinued operation.

On September 30, 2018, the Company entered into an equity transfer agreement, pursuant to which the Company has agreed to sell its 21% ownership of Changchun Grain to its non-controlling shareholder and remaining 30% ownership to a third party (collectively, the “Purchasers”). The aggregate consideration from the Purchasers is $695,957 (RMB 3,700,000). As of September 30, 2018, the Company had lost its control in Changchun Grain. As at December 31, 2018, the Company retained its ownership in Changchun Grain and the subsidiary was classified as assets held for sale-investment in Changchun Grain. As at August 23, 2019, the transaction was approved by the TSX Venture Exchange and as a result the sale of Changchun Grain was completed. The Company recorded a gain on disposal of Changchun Grain in the amount of $523,536. As at December 31, 2019, the Company received 395,640 (RMB 2,100,000) from its non-controlling shareholder and recorded 298,402 (RMB 1,600,000) in other receivable for the outstanding consideration payment from the third party purchaser. Subsequent to year-end, the Company received 157,171 (RMB 800,000) from the third party purchaser.

During the year ended December 31, 2018, an inter-company asset transfer agreement (the “Asset Transfer Agreement”) was entered into between Dalian Sunshine and Sino-Grain, pursuant to which Dalian Sunshine would transfer all of its operation-related assets and liabilities, operation and employees to Sino-Grain for consideration of $913,329 (RMB 4,605,794).

At the time that the Asset Transfer Agreement was executed, Sino-Grain was a wholly-owned subsidiary of Dalian Sunshine. The operation of Dalian Sunshine continues to operate under Sino-Grain after the transfer and Dalian Sunshine’s operation is not included in the discontinued operation disclosure as at December 31, 2018. Following the execution of the Asset Transfer Agreement, the 100% interest in Sino-Grain was transferred from Dalian Sunshine to LeHealth, a 100% owned subsidiary under Health HK. This transaction resulted in Sino-Grain becoming a wholly owned subsidiary of LeHealth. Sino-Grain continues to carry out the business in manufacturing of, and research on, the livestock feed additive.

Subsequently, a share transfer agreement (the “Dalian Sunshine Transfer Agreement”) dated December 25, 2018 was entered into between Health HK and a third party pursuant to which Health HK would sell its 100% ownership in Dalian Sunshine to this third party for a price of $844,642 (RMB 4,500,000). The consideration was fully received during the year ended December 31, 2019. The transaction is subject to approval of the Company’s shareholders and final acceptance by the TSX Venture Exchange. Dalian Sunshine was reclassified to assets held for sale as of December 31, 2018. For the year ended December 31, 2019, the Company received the approval of such transaction from both shareholders and TSX Venture Exchange. The sale of Dalian Sunshine was completed. The Company recorded a gain on disposal of Dalian Sunshine in the amount of $244,304.

On October 15, 2020, the Company entered into an equity transfer agreement, pursuant to which the Company agreed to sell its 100% ownership in Health HK to a third party (the “Purchaser”) for a price of CAD 1,100,000. As at December 21, 2020, the Company transferred their ownership to Purchaser and lost its control in Health HK. The transaction has been approved by TSX subsequent to December 31, 2020. As at December 31, 2020, the Company recorded a gain on disposal of Health HK in amount of $126,112 and it is included in net income from discontinued operations in statement of income (loss) and comprehensive income (loss).

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Highlights for the period ended March 31, 2025:

Net loss for the period ended March 31, 2025 was $12,631 compared with $10,685 in the period ended March 31, 2024. This Increase in net loss was primarily due to the Company reported filling expenses for the period ended March 31, 2025.

Selected Annual Financial Data

The following chart summarizes selected annual financial information:

	Year Ended December 31, 2023	Year Ended December 31, 2023	Year Ended December 31, 2022
Balance Sheet:
Total assets	9,737	12,043	18,876
Operation:
Net income (loss)	(37,223)	(22,529)	(22,518)
Basic and diluted earnings (loss) per hare	(0.00)	(0.00)	(0.00)
Dividend per share	-	-	-

For further financial information, please refer to the annual audited financial statements.

Results of Operations

Operating Expenses from operations

	Note	2025 $	2024 $
Expenses
Office and administration
Filing expenses		4,054	2,107
Professional fees		8,560	8,560
Interest and finance expenses		17	18
Net loss		12,631	10,685

Overall, operating expenses increased compare with period March 31, 2024, which was primarily due to the Company reported higher filling expenses for the period ended March 31, 2025.

Summary of Quarterly Results

The following table sets out selected unaudited financial information of the Company on a consolidated basis for the last eight quarters.

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	Q1 2025	Q4 2024	Q3 2024	Q2 2024	Q1 2024	Q4 2023	Q3 2023	Q2 2023
								$
Operating expenses	(12,631)	(19,864)	(2,132)	(4,542)	(10,685)	(9,625)	(1,240)	(8,210)
Net income (loss) for the period	(12,631)	(19,864)	(2,132)	(4,542)	(10,685)	(9,625)	(1,240)	(8,210)
Earnings (loss) per share - basic and diluted	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
Weighted average number of shares
Basic	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250
Diluted	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250	72,006,250

Liquidity and Capital Resource

Liquidity

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. At March 31, 2025 and December 31, 2024, the Company had a working capital deficit of $183,503 and $170,872 respectively.

As at March 31, 2025, the Company had cash and GST receivables of $3,481 and $2,027 respectively. Cash used in operation activities for the year ended March 31, 2025 was $18.

The following tables detail the remaining contractual maturities at the respective reporting dates of the Company’s non-derivative financial liabilities, which are based on contractual undiscounted cash flows and the earliest date the Company can be required to pay:

Contractual obligations	Payments Due by Period
	Total $	Year $	1-3 years $	4-5 years $
Accounts payable and accrued liabilities	52,731	52,731	-	-
Due to related parties	141,122	141,122	-	-
Total contractual obligations	193,853	193,853	-	-

Capital Resources

The Company’s objective is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

The Company has defined its capital as common shares, reserves and accumulated deficit.

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern, to maintain appropriate cash reserves on hand to support continued operations and shareholder returns, maintain capital structure while keeping capital costs at a minimum, and to invest cash on hand in highly liquid, highly rated financial instruments. The company is not exposed to externally imposed capital restrictions, and the Company’s objectives and strategies described above have not changed during the year. These objectives and strategies are reviewed on a continuous basis.

Capital Structure

As at the date of this report, there were 72,006,250 common shares outstanding and there were no stock options outstanding.

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Off-Balance Sheet Arrangement

Sunshine does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of its operations or financial condition including, without limitation, such considerations as liquidity and capital resources that have not previously been discussed.

Related Party Transactions

The following is a summary of balances and transactions with a director, an officer and companies controlled by officers and directors of the Company:

	2025	2024
	$	$
Balances:
Loan payable to a company controlled by CEO	61,257	61,257
Amounts owing to CEO	79,865	79,865
Total	141,122	141,122

As of March 31, 2025, there was a balance owing to a company controlled by the Chief Executive Officer (“CEO”) in the amount of $61,257 (December 31, 2024 - $61,257), and a balance owing to CEO in the amount of $79,865 (December 31, 2024 - $79,865). These balances are unsecured, non-interest bearing and due on demand.

The Company has identified its directors and key officers, including the Chief Executive Officer and Chief Financial Officer, as its key management personnel. No compensation were made during the years ended March 31, 2025 and 2024.

Transactions incurred in fiscal period ended March 31, 2025

None.

Critical Accounting Estimates

The preparation of these consolidated financial statements requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses for the periods reported. The estimates and associated assumptions are based on historical experience, current and future economic conditions and various other factors including expectations of future events that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis, and may change if new information becomes available. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods if the revision affects both the current and future periods.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Critical accounting estimates

i. Current and deferred taxes

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Estimations of the tax asset or liability require assessments to be made based on the potential tax treatment of certain items that will only be resolved once finally agreed with the relevant tax authorities.

Critical accounting judgments

ii. the evaluation of the Company’s ability to continue as a going concern

Management has applied judgements in the assessment of the Company's ability to continue as a going concern when preparing its consolidated financial statements for the period ended March 31, 2025. Management prepares the consolidated financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management considered a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing.

Changes in Accounting Policies

This MD&A should be read in conjunction with the audited Consolidated Financial Statements and related notes as at and for the year ended March 31, 2025 and the notes thereto. Those Consolidated Financial Statements outline the accounting principles and policies used to prepare the Company’s financial statements. Accounting policies are critical if they rely on a substantial amount of judgment in their application or if they result from a choice between accounting alternatives and that choice has a material impact on reported results or financial position.

Adoption of new accounting standards and future changes in accounting policies

In April 2024, the IASB issued IFRS 18 – Presentation and Disclosure in Financial Statements which will replace IAS 1, Presentation of Financial Statements. The new standard on presentation and disclosure in financial statements focuses on updates to the statement of earnings (loss). The key new concepts introduced in IFRS 18 relate to the structure of the statement of earnings (loss), required disclosures in the financial statements for certain earnings or loss performance measures that are reported outside an entity’s financial statements and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. Many of the other existing principles in IAS 1 are retained, with limited changes. IFRS 18 will apply for reporting periods beginning on or after January 1, 2027, and also applies to comparative information. The Company is still in the process of assessing the impact of this standard

Other new standards and interpretations with future effective dates are either no applicable or not expected to have a significant impact on the Company’s financial statements.

Fair value of financial instruments

The Company classifies its fair value measurements in accordance with the three level fair value hierarchies as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value of cash, accounts payable and accrued liabilities and due to related parties approximates their carrying values as at the reporting date due to the short-term maturities of these instruments. The fair value of the loans payable approximates its carrying value as the interest rates applied to the loans are not considered to be materially different from market rates. The non-current portion of due from Changchun Grain has been discounted.

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The Company has the following financial instruments as of March 31, 2025 and December 31, 2024:

Financial assets	Categories	2025 $	2024 $
Cash	Amortized cost	3,481	3,499
Financial liabilities
Accounts payable and accrued liabilities	Amortized cost	52,731	39,487
Due to related parties	Amortized cost	141,122	141,122

Financial risk management objectives and policies

The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. Management monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

a) Foreign currency risk

Foreign currency exchange risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. The majority of the Company's business is transacted outside of Canada through subsidiaries operating in China. However, most of the transactions occurred are denominated in the functional currency of the subsidiaries and the Company is not significantly exposed to foreign currency exchange risk.

b) Interest rate risk

The Company is exposed to interest rate risk on the variable rate of interest earned on bank deposits. The interest rate risk on bank deposits is insignificant as the deposits are short term.

c) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash held in bank accounts. The cash is deposited in a bank account in Canada. As most of the Company's cash is held by one bank there is a concentration of credit risk. This risk is managed by using a bank that is a high credit quality financial institution as determined by rating agencies. Credit risk on cash is assessed as low.

d) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. As of March 31, 2025, the Company has a working capital deficiency of $183,503. At present, the Company's operations do not generate positive cash flow and the Company relies on loans from related parties to settle financial obligations as they fall due. Despite previous success in securing the loan financing, there is no guarantee of obtaining future financings.

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Company Risk Factors

Execution of the Business Plan

Although management of the Company has developed a business plan, there can be no assurance that the business plan will succeed in whole or in part. The Company continues to plan to undertake expansion of its business. There can be no assurance that the Company will be able to complete the planned expansion within the expected timeframe or for the estimated costs set out in the Feasibility Study. Further, there can be no assurance that the Company will be able to successfully construct the new production facility on terms acceptable to the Company.

In order to implement its expansion plans, the Company will likely require additional funds and, accordingly, will require additional financing. There can be no assurance that the Company will be able to secure financing.

Future Capital Requirements

The development of the business of the Company will require substantial additional financing. The Company’s future capital requirements will depend upon many factors, including maintenance, plant and product expansion and expansion of its sales and marketing efforts. Failure to obtain sufficient financing may result in delay, scale back, elimination, or indefinite postponement of, future programs. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable to the Company. Lending may be obtained from major shareholders or other debt markets; however, there can be no assurance such loans will be obtained. In addition, there can be no assurance that the Company’s business will generate sufficient cash flow from operations in the future to make necessary capital expenditures, in which case the Company may seek additional financing.

Operating risk

We are still on the process of looking for business investment opportunity for the Company. There is no assurance that suitable business will be located for the Company in the near future. Therefore, the Company will remain its current status as an inactive company with no business.

We are dependent on our key personnel. Our success depends on our key executives and the loss of the service of one or more of such key management personnel could have a material adverse effect on the Company.

Outlook

Annual purchases by farmers usually start to occur in the second quarters of each fiscal year, and feed and feed additives consumption in China and Southeast Asia is expected to continue to increase. With highly favourable government policies, including significant government support for green technologies, the opportunities for Sunshine to grow market share in China and Southeast Asia is considerable.

Other MD&A Requirements

Additional information relating to the Company is available on SEDAR at www.sedar.com.