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.
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Discussion and Analysis of Financial Condition and Results of Operations
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 and six
months ended June 30, 2022 and 2021:
Three Months Ended Three Months Ended
June 30, 2022 June 30, 2021
Revenue, net $ 94,835 $ 266,926
Cost of revenue (28,474 ) (59,284 )
Gross profit 66,361 207,642
Total operating expenses (110,404 ) (173,363 )
Total other income 10,625 391
(Loss) income before income tax (33,418 ) 34,670
Income tax expenses (4,305 ) -
Net (loss) income (37,723 ) 34,670
Six Months Ended Six Months Ended
June 30, 2022 June 30, 2021
Revenue, net $ 163,634 $ 434,569
Cost of revenue (47,311 ) (212,968 )
Gross profit 116,323 221,601
Total operating expenses (235,341 ) (399,188 )
Total other income 11,044 7,190
Loss before income tax (107,974 ) (170,397 )
Income tax expenses (6,573 ) -
Net loss (114,547 ) (170,397 )
Revenue. For the three and six months ended June 30, 2022, we generated revenues
of $94,835 and $163,634, respectively. For the comparative three and six months
ended June 30, 2021, we generated revenues of $266,926 and $434,569,
respectively. The significant decrease in revenue because a significant drop in
the sales of $240,747 in the PRC. The major customers are located in Hong Kong
during the period ended June 30, 2022, while the major customers are located in
the PRC during the period ended June 30, 2021.
Cost of Revenue. For the three and six months ended June 30, 2022, the cost of
revenue was $28,474 and $47,311, respectively, and as a percentage of net
revenue, approximately 30% and 29%. Cost of revenue for the three and six months
ended June 30, 2021 was $59,284 and $212,968, respectively, and as a percentage
of net revenue, approximately 22% and 49%, respectively. The cost of revenue
decreased due to a significant drop in the sales in the PRC and the major income
was from Hong Kong mentioned above.
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Operation expenses. For the three and six months ended June 30, 2022, the
operation cost was $110,404 and $235,341, respectively, and while for the three
and six months ended June 30, 2021 was $173,363 and $399,188, respectively. The
operation expenses decreased due to a decrease in administrative expenses.
Other income. For the three and six months ended June 30, 2022, the other income
was $10,625 and $11,044, respectively and while for the three and six months
ended June 30, 2021 was $391 and $7,190, respectively. The other income
increased due to receipt of government subsidies during the period ended June
30, 2022.
Net Loss. For the three and six months ended June 30, 2022, we incurred a net
loss of $37,723 and $114,547, respectively and while for the three and six
months ended June 30, 2021, we incurred a net income of $34,670 and net loss of
$170,397, respectively. The decrease in net loss is primarily attributable to
the decrease in administrative expenses and decrease in revenue.
Liquidity and Capital Resources
As of June 30, 2022, we had cash and cash equivalents of $477,214, inventories
of $300,521, right-of-use assets of $278,235, tax recoverable of $70, and
prepayments and other receivables of $123,956.
As of December 31, 2021, we had cash and cash equivalents of $609,434,
inventories of $327,551, 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.
Six Months Ended June 30,
2022 2021
Net cash used in operating activities $ (126,912 ) $ (277,780 )
Net cash used in investing activities - -
Net cash (used in) provided by financing activities (4,796 ) 50,178
Net Cash Used In Operating Activities.
For the six months ended June 30, 2022, net cash used in operating activities
was $126,912, which consisted primarily of decrease in prepayments and other
receivables of $15,298, decrease in inventories of $27,030, increase in accrued
liabilities and other payables of $7,139, increase in income tax payable of
8,840, decrease in customers deposits of $93,832, and decrease in lease
liabilities of $49,104.
For the six months ended June 30, 2021, net cash used in operating activities
was $277,780, which consisted primarily of the increase in accounts receivables
of $167,223, increase in prepayments and other receivables of $9,185, decrease
in inventories of $65,411, increase in accrued liabilities and other payables of
$46,084, decrease in accounts payable of $7,827, increase in income tax payable
of 7,305, decrease in customers deposits of $128,499, and increase in lease
liabilities of $36,135.
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 six months ended June 30, 2022, there is no net cash used in investing
activities.
For the six months ended June 30, 2021, there is no net cash used in investing
activities.
Net Cash (Used In) Provided By Financing Activities.
For the six months ended June 30, 2022, net cash used in financing activities
was $4,796, which consisted primarily of repayment to a director of $4,796
For the six months ended June 30, 2021, net cash provided by financing
activities was $50,178, which consisted primarily of advance from a director of
$81,899 and repayment of lease liabilities of $31,721.
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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 2 of the
financial statements. As discussed in Note 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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