SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This periodic report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
the financial condition, results of operations, business strategies, operating
efficiencies or synergies, competitive positions, growth opportunities for
existing products, plans and objectives of management. Statements in this
periodic report that are not historical facts are hereby identified as
forward-looking statements. Our Company and our representatives may from time to
time make written or oral statements that are "forward-looking," including
statements contained in this Quarterly Report and other filings with the
Securities and Exchange Commission and in reports to our Company's stockholders.
Management believes that all statements that express expectations and
projections with respect to future matters, as well as from developments beyond
our Company's control including changes in global economic conditions are
forward-looking statements within the meaning of the Act. These statements are
made on the basis of management's views and assumptions, as of the time the
statements are made, regarding future events and business performance. There can
be no assurance, however, that management's expectations will necessarily come
to pass. Factors that may affect forward-looking statements include a wide range
of factors that could materially affect future developments and performance,
including the following:
Changes in Company-wide strategies, which may result in changes in the types or
mix of businesses in which our Company is involved or chooses to invest; changes
in U.S., global or regional economic conditions; changes in U.S. and global
financial and equity markets, including significant interest rate fluctuations,
which may impede our Company's access to, or increase the cost of, external
financing for our operations and investments; increased competitive pressures,
both domestically and internationally; legal and regulatory developments, such
as regulatory actions affecting environmental activities; the imposition by
foreign countries of trade restrictions and changes in international tax laws or
currency controls; adverse weather conditions or natural disasters, such as
hurricanes and earthquakes; and labor disputes, which may lead to increased
costs or disruption of operations.
This list of factors that may affect future performance and the accuracy of
forward-looking statements are illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.
Business Overview
We are a health and wellness company that develops, markets, promotes and
distributes a variety of customized health and wellness care products and
services, including supplements, healthy snacks, meal replacements, skincare
products, and nutritional consultation services to consumers in China. We work
with certain licensed healthcare food factories to develop and manufacture
products and services that are distributed conventionally through sales agents
and also through a network of e-commerce and social media platforms.
In addition to products, we are committed to providing customized science based
wellness consultation and service programs to customers. Our diverse products
and services target health conscious customers and differentiate based upon age
and gender and seek to manage different conditions. We reach out to customers
fitting certain health and lifestyle profiles through our offline and online
consultation services, and track eating habits and health indicators to provide
customized products such as supplements. We believe this will facilitate the
ability of customers to monitor, understand and adjust their health practices
and lifestyle anytime and anywhere for increased customer engagement and
retention.
We conduct our business through our wholly owned subsidiary Guangzhou Xiao Xiang
Health Industry Company Limited, a limited liability company organized under the
laws of China on March 8, 2017 and Alpha Wellness (HK) Limited, a limited
liability company organized under the laws of Hong Kong on April 24, 2019. Elite
Creation Group, a limited liability company formed under the laws of the British
Virgin Islands formed on September 5, 2018, is holding companies without
operations.
19
RESULTS OF OPERATIONS
We have been significantly impacted by COVID-19 global pandemic. In addition to
the devastating effects on human life, the pandemic is having a negative ripple
effect on the global economy, leading to disruptions and volatility in the
global financial markets. China and many other countries have issued policies
intended to stop or slow the further spread of the disease.
COVID-19 and China's response to the pandemic are significantly affecting the
economy. There are no comparable events that provide guidance as to the effect
the COVID-19 pandemic may have, and, as a result, the ultimate effect of the
pandemic is highly uncertain and subject to change. We do not yet know the full
extent of the effects on the economy, the markets we serve, our business or our
operations.
The following table sets forth certain operational data for the three months
ended March 31, 2022 and 2021:
Three Months Ended Three Months Ended
March 31, 2022 March 31, 2021
Revenue, net $ 68,799 $ 167,643
Cost of revenue (18,837 ) (153,684 )
Gross profit 49,962 13,959
Total operating expenses (124,937 ) (225,825 )
Total other income 419 6,799
Loss before income tax (74,556 ) (205,067 )
Income tax expenses (2,268 ) -
Net loss (76,824 ) (205,067 )
Revenue. For the three months ended March 31, 2022, we generated revenues of
$68,799 and three months ended March 31, 2021, we generated revenues of $167,643
from our current business operations, respectively. The significant decrease due
to the significant drop in the sales in PRC. The major customer are located in
the HK during the period ended March 31, 2022, while all the major customers are
located in the PRC during the period ended March 31, 2021.
Cost of Revenue. For the three months ended March 31, 2022, the cost of revenue
was $18,837 and as a percentage of net revenue, approximately 27.38%. Cost of
revenue for the three months ended March 31, 2021 was $153,684, and as a
percentage of net revenue, approximately 91.67%. The cost of revenue decreased
due to a significant drop in the sales in PRC.
Operation expenses. In the three months ended March 31, 2022, the operation cost
was $124,937 and while for the three months ended March 31, 2021 was $225,825.
The operation expenses decreased due to a decrease in administrative expenses
Other income. In the three months ended March 31, 2022, the other income was
$419 and while for the three months ended March 31, 2021 was $6,799. The other
income decreased due to a salary subsidy during the period ended March 31,2021.
Net Loss. For the three months ended March 31, 2022, we incurred a net loss of
$74,556, compared for the three months ended March 31, 2021. we incurred a net
loss of $205,067. The net loss is primarily attributable to the decrease in
administrative expenses and decrease in revenue.
Liquidity and Capital Resources
As of March 31, 2022, we had cash and cash equivalents of $493,683, inventories
of $332,093, right of use assets of $320,942, tax recoverable of $8,846, and
prepayments and other receivables of $160,133.
As of December 31, 2021, we had cash and cash equivalents of $609,434,
inventories of $327,551 operating right of use assets of $350,563, tax
recoverable of $8,910 and prepayments and other receivables of $139,254.
We believe that our current cash and other sources of liquidity discussed below
are adequate to support general operations for at least the next 12 months.
Three Months Ended March 31,
2022 2021
Net cash provided by (used in) operating activities $ (140,655 ) $ (298,968 )
Net cash used in investing activities
- -
Net cash provided by financing activities 29,153 20,611
Net Cash Provided By (Used In) Operating Activities.
For the three months ended March 31, 2022, net cash used in operating activities
was $140,655, which consisted primarily of the decrease in prepayment and other
receivables of $20,879, decrease in inventories of $4,542, increase in accrued
liabilities and other payables of $329, increase in income tax payable of 65,
decrease in customers deposit of $63,732, and increase in lease liabilities of
$26,377.
For the three months ended March 31, 2021, net cash used in operating activities
was $298,968, which consisted primarily of the increase in accounts receivables
of $164,682, decrease in prepayment and other receivables of $7,978, decrease in
inventories of $39,122, increase in accrued liabilities and other payables of
$41,482, decrease in accounts payable of $7,827, decrease in income tax payable
of $1,806, decrease in customers deposit of $49,191, and increase in lease
liabilities of $225.
We expect to continue to rely on cash generated through financing from our
existing shareholders and private placements of our securities, however, to
finance our operations and future acquisitions.
Net Cash Used In Investing Activities.
For the three months ended March 31, 2022, there is no net cash provided by
investing activities.
For the three months ended March 31, 2021, there is no net cash provided by
investing activities.
Net Cash Provided By Financing Activities.
For the three months ended March 31, 2022 net cash provided by financing
activities was $$29,153, which consisted primarily of advance from a director of
$29,153.
For the three months ended March 31, 2021 net cash provided by financing
activities was $$20,611, which consisted primarily of advance from a director of
$37,960 and repayment of lease liabilities of $17,349
20
Off Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements and it is not
anticipated that the Company will enter into any off-balance sheet arrangements.
Critical Accounting Policies, Judgments and Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires our management to make
assumptions, estimates and judgments that affect the amounts reported, including
the notes thereto, and related disclosures of commitments and contingencies, if
any. We have identified certain accounting policies that are significant to the
preparation of our financial statements. These accounting policies are important
for an understanding of our financial condition and results of operations.
Critical accounting policies are those that are most important to the
presentation of our financial condition and results of operations and require
management's subjective or complex judgment, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods. Certain accounting estimates are particularly
sensitive because of their significance to financial statements and because of
the possibility that future events affecting the estimate may differ
significantly from management's current judgments. We believe the following
accounting policies are critical in the preparation of our financial statements.
The Company's accounting policies are more fully described in Note 1 and 2 of
the financial statements. As discussed in Note 1 and 2, the preparation of
financial statements and related disclosures in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions about the future events that affect
the amounts reported in the financial statements and the accompanying notes.
Management bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances. Actual
differences could differ from these estimates under different assumptions or
conditions. The Company believes that the following addresses the Company's most
critical accounting policies.
Deferred tax assets and liabilities are measured using enacted tax rates in
effect for the year in which the differences are expected to reverse. Deferred
tax assets will be reflected on the balance sheet when it is determined that it
is more likely than not that the asset will be realized. A valuation allowance
has currently been recorded to reduce our deferred tax asset to $0.
Forward-looking Statements
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe
harbor for forward-looking statements made by or on behalf of our Company. Our
Company and our representatives may from time to time make written or oral
statements that are "forward-looking," including statements contained in this
report and other filings with the Securities and Exchange Commission and in
reports to our Company's stockholders. Management believes that all statements
that express expectations and projections with respect to future matters, as
well as from developments beyond our Company's control including changes in
global economic conditions are forward-looking statements within the meaning of
the Act. These statements are made on the basis of management's views and
assumptions, as of the time the statements are made, regarding future events and
business performance. There can be no assurance, however, that management's
expectations will necessarily come to pass. Factors that may affect
forward-looking statements include a wide range of factors that could materially
affect future developments and performance, including the following:
Changes in Company-wide strategies, which may result in changes in the types or
mix of businesses in which our Company is involved or chooses to invest; changes
in U.S., global or regional economic conditions; changes in U.S. and global
financial and equity markets, including significant interest rate fluctuations,
which may impede our Company's access to, or increase the cost of, external
financing for our operations and investments; increased competitive pressures,
both domestically and internationally; legal and regulatory developments, such
as regulatory actions affecting environmental activities; the imposition by
foreign countries of trade restrictions and changes in international tax laws or
currency controls; adverse weather conditions or natural disasters, such as
hurricanes and earthquakes; and labor disputes, which may lead to increased
costs or disruption of operations.
This list of factors that may affect future performance and the accuracy of
forward-looking statements is illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.
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