This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company and its subsidiaries for the fiscal years ended December 31, 2021, and 2020. The discussion and analysis that follows should be read together with the section entitled "Cautionary Note Concerning Forward-Looking Statements" and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on Form 10-K.

Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.

Currency and exchange rate

Unless otherwise noted, all currency figures quoted as "U.S. dollars", "dollars" or "US$" refer to the legal currency of the United States. References to "Hong Kong Dollar" are to the Hong Kong Dollar, the legal currency of the Hong Kong Special Administrative Region of the People's Republic of China. Throughout this report, assets and liabilities of the Company's subsidiaries are translated into U.S. dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders' equity.

Impact of COVID-19 on our business

The outbreak of COVID-19 that started in late January 2020 in the PRC has negatively affected our business. In March 2020, the World Health Organization declared COVID-19 as a pandemic and has resulted in quarantines, travel restrictions, and the temporary closure of stores and business facilities in China and the U.S. in the subsequent months. Given the rapidly expanding nature of the COVID-19 pandemic, and because substantially all of the Company's business operations and its workforce are concentrated in China, the Company's business, results of operations, and financial condition for calendar year 2020 have been adversely affected.

Management believes that COVID-19 could continue to have a material impact on its financial results for the first half of calendar year 2021 and could cause the potential impairment of certain assets. To mitigate the overall financial impact of COVID-19 on the Company's business, management has worked closely with its service centers to enhance their marketing and promotion activities during the second quarter of 2021 that were designed to generate sales in the second, third and fourth quarters of 2021.






         10

  Table of Contents




Results of Operations

We are not required to obtain permission from the Chinese authorities to operate or to issue securities to foreign investors.

We are at a development stage company and reported a net loss of $70,520 and a net income of $706,445 for the years ended December 31, 2021 and 2020, respectively. We had current assets of $832,598 and current liabilities of $78,120 as of December 31, 2021. As of December 31, 2020, our current assets and current liabilities were $832,151 and $4,918, respectively.

The success of our business strategy is dependent in part upon the availability of additional capital resources on terms satisfactory to management as we are not generating sufficient revenues from our business operations. Our sources of capital in the past have included advance from shareholders and affiliates. There can be no assurance that we can raise such additional capital resources on satisfactory terms. We believe that our current cash and other sources of liquidity discussed above are adequate to support operations for at least the next 12 months. We anticipate continuing to rely on equity sales of our common shares and shareholder loans in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our plan of operations.

Comparison of the years ended December 31, 2021 and December 31, 2020





The following table sets forth certain operational data for the years ended
December 31, 2021 and 2020:



                                      Years ended December 31,
                                        2020             2019
Revenues                            $    598,486     $  2,017,343
Cost of revenue                         (435,269 )     (1,141,823 )
Gross profit                             163,217          875,520
Total operating expenses                (235,027 )       (170,351 )
(Loss) Income before Income Taxes        (71,810 )        705,169
Income tax benefit                         1,271            1,276
Net (loss) income                        (70,539 )        706,445

Revenue. We generated revenues of $598,486 and $2,017,343 for the years ended December 31, 2021 and 2020. The decrease in revenue is attributable to the reduction in business volume due to the continuing pandemic effect.

During the year ended December 31, 2021, the following customers accounted for 10% or more of our total net revenues:





                                      Revenues       Percentages of          Accounts
                                        (US$)           Revenues         Receivable (US$)

Hu Cheng Jewellery (HK) Limited       $ 598,486                  100 %                   -

Total:                                $ 598,486                  100 %                   -

During the year ended December 31, 2020, there was no single customer who accounted for 10% or more of our total net revenues:





                                    Revenues        Percentages of           Accounts
                                      (US$)            Revenues          Receivable (US$)

Hu Cheng Jewellery (HK) Limited    $ 1,892,306                    94 %                   -

Total:                             $ 1,892,306                    94 %                   -

Cost of Revenue. Cost of revenue for the year ended December 31, 2021, was $435,269, and as a percentage of net revenue, approximately 72.7%. Cost of revenue for the year ended December 31, 2020, was $1,141,823, and as a percentage of net revenue, approximately 59.3%. Cost of revenue decreased primarily as a result of the decrease in our business volume.

During the year ended December 31, 2021, the following suppliers accounted for 10% or more of our total cost of revenues:





                                      Revenues       Percentages of          Accounts
                                        (US$)           Revenues         Receivable (US$)

Erica Jewellery Company Limited       $ 435,269                  100 %                   -

Total:                                $ 435,269                  100 %                   -





         11

  Table of Contents

During the year ended December 31, 2020, the following suppliers accounted for 10% or more of our total cost of revenues:





                                    Revenues        Percentages of           Accounts
                                      (US$)            Revenues          Receivable (US$)

Erica Jewellery Company Limited    $ 1,052,857                    92 %                   -

Total:                             $ 1,052,857                    92 %                   -

Gross Profit. We achieved a gross profit of $163,217 and $875,520 for the years ended December 31, 2021 and 2020, respectively. The decrease in gross profit is primarily attributable to the market downsize trend and weak economy under pandemic period.

Operating Expenses. We incurred operating expenses of $235,027 and $170,351 for the years ended December 31, 2021 and 2020, respectively. Operating expenses for the year ended December 31, 2021 consisted of sale and marketing of $145,100 and general and administrative expense of $89,927. The increase in general and administrative expenses is attributable to more spending in marketing campaign of $76,923 and consignment fee of $68,177 for the development and distribution of retailed shops in China.

Income Tax Credit (Expense). Our income tax credit for the year ended December 31, 2021 and 2020 were $1,271 and $1,276, respectively.

Net (Loss) Income. As a result of the above, we incurred a net loss of $70,539 and a net income of $706,445 for the years ended December 31, 2021 and 2020, respectively. The decrease in net income is primarily attributable to the decrease in our business volume and more expenditure in sale and marketing activities to extend the distribution network in China.

Liquidity and Capital Resources

As of December 31, 2021, we had cash and cash equivalents of $1,372, inventories of $731,038 and amount due from a shareholder of $100,188.

As of December 31, 2020, we had cash and cash equivalents of $832,151.

We expect to incur significantly greater expenses in the near future as we expand our business or enter into strategic partnerships. We also expect our business development, sales and marketing expenses to increase as we enhance our retailing distribution network and spend more efforts in building up customers and community and incur additional costs in investors and partnerships relationship for long-term corporate development in China.

During the year, we did not pay dividends on our Common Stock. Our present policy is to apply cash to investments in business development, acquisitions or expansion; consequently, we do not expect to pay dividends on Common Stock in the foreseeable future.

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.





                                                        Years ended December 31,
                                                           2021             2020

Net cash (used in) provided by operating activities $ (720,669 ) $ 811,862 Net cash used in investing activities

                              -              -
Net cash used in financing activities                       (100,070 )            -

Net Cash (Used in) Provided by Operating Activities.

For the year ended December 31, 2021, net cash used in operating activities was $720,669, which consisted primarily of net loss of $70,539, depreciation of plant and equipment of $7,704, an increase in inventories of $731,038, an increase in accrued liabilities and other payables of $74,500 and a decrease in deferred tax liabilities of $1,296.

For the year ended December 31, 2020, net cash provided by operating activities was $811,862, which consisted primarily of a net income of $706,445, depreciation of plant and equipment of $7,736, stock-based compensation for services of $129,600, offset by an increase in accrued liabilities and other payables of $30,643 and an increase in deferred tax liabilities of $1,276.

Net Cash Used In Investing Activities.

For the year ended December 31, 2021, there is no net cash used in investing activities.

For the year ended December 31, 2020, there is no net cash used in investing activities.






         12

  Table of Contents

Net Cash Used in Financing Activities.

For the year ended December 31, 2021, net cash used in financing activities was $100,070, which consisted primarily of advance to a shareholder of $100,070.

For the year ended December 31, there is no net cash used in financing activities.





Material Cash Requirements

We have not achieved profitability in 2021 and we expect to continue to incur net losses for the foreseeable future. We expect net cash expended in 2022 to be significantly higher than 2021. Our material cash requirements are highly dependent upon the additional financial support from our major shareholders in the next 12 - 18 months.

Off-Balance Sheet Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders' equity, or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Critical Accounting Policies and Estimates

We prepare our financial statements in conformity with accounting principles generally accepted by the United States of America ("U.S. GAAP"), which require us to make judgments, estimates, and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were no material changes made to the accounting estimates and assumptions in the past three years, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.

We believe that our accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly, the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations are summarized in "Note 3 - Summary of Significant Accounting Policies" in the notes to our consolidated financial statements.

Recent Accounting Pronouncements

See "Note 2 - Summary of Significant Accounting Policies" in the notes to our consolidated financial statements for a discussion of recent accounting pronouncements.

The Company believes that other recent accounting pronouncement will not have a material effect on the Company's consolidated financial position, results of operations and cash flows.

© Edgar Online, source Glimpses