This discussion summarizes the significant factors affecting the operating
results, financial condition, liquidity and cash flows of the Company and its
subsidiaries and VIE 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
"Chinese Yuan" or "Renminbi ("RMB")" are to the Chinese Yuan, the legal currency
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 had
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 have been adversely
affected. For the years ended December 31, 2021 and 2020, the Company had a net
losses of approximately $7.0 and $15.0 million, respectively. At December 31,
2021, the Company has a significant working capital deficiency of approximately
$3.3 million, and a shareholders' deficit of approximately $12.4 million. These
conditions raise substantial doubt about the Company's ability to continue

as a
going concern.



To mitigate the overall financial impact of COVID-19 on the Company's business,
management introduced cost containment and staff reduction measures, revised
product selection and incentive programs and worked with its service centers
continuously to enhance their marketing and promotion activities. Management
believes that COVID-19 will continue to have a material impact on its financial
results for the first half of 2022 and could cause the potential impairment of
certain assets. Accordingly, we expect to continue implementing cost containment
measures, work closely with our service centers with offline, online and virtual
marketing and promotion activities, as well as actively recruit key sales
members and obtain product and service collaborations. While the Company cannot
accurately predict the full impact of COVID-19 on its business in 2022,
management believes that its business will gradually stabilize in 2022 as market
conditions in China continue to improve.



Results of Operations




Our consolidated financial statements have been prepared on a going concern
basis, which assumes that we will be able to continue to operate in the future
in the normal course of business. In our consolidated financial statements for
the year ended December 31, 2021 and 2020, it has included a note about our
ability to continue as a going concern due to our negative operating cash flows
and significant operating losses in 2021 and 2020 as a result of COVID-19.
Business closures in the PRC and limitations on business operations arising from
COVID-19 has significantly disrupted our ability to generate revenues and
operating cash flows 2021 and 2020.







  27







While the Company cannot accurately predict the full impact of COVID-19 on its
business in 2022, management believes that its business will gradually stabilize
in 2022 as market conditions in China continue to improve. In assessing the
Company's liquidity, management monitors and analyzes its cash on hand and its
operating expenses, and existing regulatory obligations and commercial
commitments. Based on its latest sales and cash flows projection, management
believes that the Company should be able to generate sufficient cash flows from
operations to meet its working capital requirements for the next twelve months;
and that its capital resources are currently sufficient to maintain its business
operations for the next twelve months.

Comparison for the Years Ended December 31, 2021 and 2020





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



                                            For the Year Ended December 31,                     Percentage
                                         2021                             2020                    Change
                                Dollars            %             Dollars            %               %
Revenues                      $  2,521,427          100.0     $     675,435          100.0            273.3
Cost of revenues                (2,201,201 )        (87.3 )      (1,802,493 )       (266.9 )           22.1
Gross profit (loss)                320,226           12.7        (1,127,058 )       (166.9 )         (128.4 )

General and administrative
expenses                         2,660,402          105.5         7,319,709        1,083.7            (63.7 )
Selling expenses                 1,877,877           74.5         2,418,217          358.0            (22.3 )
Finance (income) expenses,
net                                 38,634            1.5          (189,759 )        (28.1 )         (120.4 )
Total operating expenses         4,576,913          181.5         9,548,167

       1,413.6            (52.1 )

Operating (loss)                (4,256,687 )       (168.8 )     (10,675,225 )     (1,580.5 )          (60.1 )

Other expenses, net             (2,605,599 )       (103.3 )      (4,430,599 )       (656.0 )          (41.2 )
(Income)/Loss from equity
investment                         (15,014 )         (0.6 )          84,828           12.6           (117.7 )

Total other expenses, net (2,620,613 ) (103.9 ) (4,345,771 ) (643.4 ) (39.7 )



(Loss) before provision for
income taxes                    (6,877,300 )       (272.8 )     (15,020,996       (2,223.9 )          (54.2 )
Provision for income taxes               -              -                 -

             -

Net (loss)                    $ (6,877,300 )       (272.8 )   $ (15,020,996       (2,223.9 )          (54.2 )

Foreign currency
translation adjustment            (212,362 )         (8.4 )        (166,580 )        (24.7 )           27.5

Comprehensive (loss)          $ (7,089,662 )       (281.2 )   $ (15,187,576       (2,248.6 )          (53.3 )





Revenues: Revenues were approximately $2.5 million and $.7 million for the year
ended December 31, 2021 and 2020, respectively. The increase in revenues of
approximately $1.8 million or 273.3% is due primarily to business recovery from
COVID-19 in 2021. During the years ended December 31, 2021 and 2020, all
revenues were generated in the PRC. During the year ended December 31, 2021,
revenues were mainly attributable to the sales of smart watches, health foods
and cold gel, representing 5.1%, 42% and 44.3% of revenues, respectively. During
the year ended December 31, 2020, revenues were mainly attributable to the sales
of smart watches, health foods and cold gel, representing 22.1%, 26.1% and 34.9%
of revenues, respectively. During the year ended December 31, 2021 and 2020, no
customers accounted for 10% or more of our total net revenues. During the years
ended December 31, 2021 and 2020, all revenues were generated in the PRC. The
revenue of the health food and cold gel increased 463% and 344% to approximately
$1.1 million and $1.1 million for the year ended December 31, 2021 from
approximately $176,000 and $235,000 in the same period of 2020, respectively.
The increase was due primarily to business recovery from COVID-19 in 2021. Also,
health foods was one of the Company's main product and the Company increased the
publicity of online promotion to increase the sales in 2021. We began selling
the cold gel product in September 2020, thus resulting in the difference between
the year of 2021 and 2020. Revenue from sales of smart watches decreased 20%
from $149,000 for the year ended December 31, 2020 to approximately $128,000 in
the same period of 2021 due to a decrease in the Company's promotional efforts
of the smart watch.





  28






Cost of revenues: Cost of revenues consists primarily of the cost of merchandise
sold, delivery cost, service fees, sales incentives and commissions that are
directly attributable to the sale of certain designated products as well as
allowance for and write-down of slow-moving inventories. Cost of revenues was
approximately $2.2 million for the year ended December 31, 2021 including a
provision for slow moving inventories of approximately $.8 million. Cost of
revenues of approximately $1.8 million for the year ended December 31, 2020
including a provision for slow-moving inventory of approximately $1.3 million.
The increase in cost of revenues of approximately $399.000 or 22.1% from the
comparable period of 2020 was due mainly to the increase in product sales as a
result of business recovery from COVID-19 in 2021.



There was one supplier (Baoqing Meilai Modern Agricultural Service Co., Ltd.)
that accounted for 97% of total purchases, for the year ended December 31, 2021.
There were three suppliers that accounted for more than 10% of total purchases
for the year ended December 31, 2020. One supplier (Shandong Kangqi Wood
Industry Co. Ltd.) accounted for 50%, one supplier (Harbin Xinyue Technology Co.
Ltd.) accounted for 21% and the other (Suzhou Jianli Kongjian Health Technology
Co. Ltd.) accounted for 20% for the year ended December 31, 2020.



Gross (Loss) Profit. Gross profit for the year ended December 31, 2021 of
approximately $320,000 was attributed mainly to revenues of approximately $2.5
million. Gross loss for the year ended December 31, 2020 of approximately $1.1
million was attributed mainly to the provision for slowing-moving inventory of
approximately $1.3 million. The increase in gross profit of approximately $1.4
million or 128.4% from the comparable period of 2020 was due mainly to the
increase in product sales as a result of business recovery from COVID-19 in
2021.



General and Administrative Expenses. General and administrative expenses ("G&A
expenses") consist mainly of payroll and related costs for employees involved in
general corporate functions, including accounting, finance, tax, legal and human
resources, professional fees and other general corporate expenses as well as
costs associated with the use by these functions of facilities and equipment,
such as depreciation and rental expenses. G&A expenses decreased 63.7% or
approximately $4.7 million to approximately $2.7 million for the year ended
December 31, 2021 from approximately $7.3 million in the same period of 2020.
The decrease was due primarily to the decrease in professional fees, and salary
and benefits.



Selling Expenses. Selling expenses consist mainly of payroll and benefits for
employees involved in the sales and distribution functions, meeting/event fees,
advertising, and marketing and selling expenses that are related to events and
activities at the Company's service centers designed to promote product sales.
Selling expenses decreased by 22.3% or approximately $.5 million to
approximately $1.9 million in the year ended December 31, 2021 from
approximately $2.4 million in the same period of 2020. The decrease was due
mainly to fewer events and lower travel expenses because of the negative impact
of COVID-19.




Finance (loss) Income, net. For the years ended December 31, 2021 and 2020,
payment processing fees amounted to $25,897 and $9,911, respectively. For years
ended December 31, 2021 and 2020, interest expense amounted to $16,973 and
$30,920, respectively. For the years ended December 31, 2021 and 2020, interest
income amounted to $4,236 and $230,590, respectively. The decrease in net
finance income in 2021 was due mainly to the decrease of the interest income, as
the Company redeemed a financial investment with interest income of $217,000
(RMB 1.4 million) on January 31, 2020.



Operating (loss). The operating loss was approximately $4.3 million for the year
ended December 31, 2021, compared to approximately $10.7 million for the same
period of 2020. The decrease in operating loss in 2021 was due primary to the
increase in revenues due to the business recovery from COVID-19 in 2021 and the
reduction in our operating expenses as discussed above.



Total Other Expenses, net. Other expenses consist mainly of estimated tax
penalties and charitable contributions. Total net other expenses were
approximately $2.6 million for the year ended December 31, 2021, compared to
approximately $4.4 million for the same period of 2020. The decrease in total
net other expenses was due primary to a donation to the Binzhou Red Cross
Society for approximately $1.9 million in 2020. The overdue fine for value-added
tax and income tax was approximately $3.2 million and $2.3 million for the years
ended December 31, 2021 and 2020, respectively.

Provision for Income Taxes. There was no provision for income taxes due the loss for the years ended December 31, 2021 and 2020.

Net (loss) Income. As a result of the factors described above, net loss was approximately $6.9 million for the year ended December 31, 2021, a decrease of $8.1 million from net income $15.0 million for the same period of 2020.





Comprehensive Loss (Income). Comprehensive loss was approximately $7.1 million
for the year ended December 31, 2021, as compared to approximately $15.2 million
for the year ended December 31, 2020.











  29

Liquidity and Capital Resources

As of December 31, 2021 and December 31, 2020 we had cash and cash equivalents of approximately $839,000 and $2.7 million, respectively.





The following table sets forth a summary of our cash flows for the periods as
indicated:



                                                                For the Years ended
                                                                    December 31,
                                                               2021             2020

Net cash (used in) provided by operating activities $ (2,319,184 ) $ (22,538,913 Net cash (used in) investing activities

$   (139,985 )   $  (1,671,064 )
Net cash (used in) financing activities                    $          -     $  (1,974,343 )
Effect of exchange rate changes on cash, cash
equivalents and restricted cash                            $     41,014

$ 521,508 Net (decrease) increase in cash, cash equivalents and restricted cash

$ (2,418,155 )

$ (25,662,812 ) Cash, cash equivalents and restricted cash at beginning of year

$  3,257,005     $  28,919,817
Cash, cash equivalents and restricted cash at end of
year                                                       $    838,850     $   3,257,005

The following table sets forth a summary of our working capital:





                                  As of December 31,
                                2021              2020            Variation          %
Total Current Assets        $   1,319,947     $  11,435,892     $ (10,115,945 )     (88.5 )
Total Current Liabilities   $  34,453,169     $  31,307,498     $   3,145,671        10.0
Working Capital             $ (33,133,222 )   $ (19,871,606 )   $ (13,262,616 )      66.7

Working Capital. The deterioration in the Company's working capital was due mainly to continuing net losses generated as a result of COVID-19.


For the year ended December 31, 2021, cash used in operating activities was
approximately $2.3 million, compared with cash used in operating activities was
approximately $22.5 million for year ended December 31, 2020. The key factors
accounting for the net cash outflows of approximately $2.3 million in 2021
include: net loss of approximately $6.9 million, adjusted by depreciation and
amortization of $0.3 million, provision for slow-moving inventories of $0.8
million; changes in operating assets and liabilities, mainly including decrease
in inventory of approximately $0.5 million and prepayments and other current
assets of approximately $0.3 million and taxes payable approximately $0.3
million, and offset by the increase in other payables and other current
liabilities of approximately $2.6 million and and advance from customers of
approximately $0.3 million.

For the year ended December 31, 2020, cash used in operating activities was approximately $22.5 million. The key factors attributing to the net cash outflows of approximately $22.5 million in 2020 include: net loss of approximately $15.0 million due mainly to drop in revenues and increase in advance to suppliers of approximately $6.2 million.





Net cash used in investing activities was approximately $139,985 for the year
ended December 31, 2021, as compared to $1.7 million for the year ended December
31, 2020. The change of approximately $1.5 million was due primarily to the less
of purchases of property and equipment.



Net cash used in financing activities was approximately $nil and $2.0 million
for the year ended December 31, 2021 and 2020, respectively. The cash outflow
consisted mainly net repayment of loans from related parties and third parties
of approximately $1.2 million plus dividends of approximately $0.7 million in
2020. Net cash used in financing activities was approximately $2.0 million for
the year ended December 31, 2020, that consisted mainly net repayment of loans
from related parties and third parties of approximately $1.2 million plus
dividends of approximately $0.7 million.









  30

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





Basis of Presentation



The accompanying consolidated financial statements and related notes have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("US GAAP") and pursuant to the rules and regulations
of the U.S. Securities and Exchange Commission ("SEC"). Certain prior year
balances have been reclassified to conform to the current year's presentation.



Principles of Consolidation



The accompanying consolidated financial statements include the financial
statements of the Company, its wholly-owned subsidiaries, and the VIE and its
subsidiary. All inter-company transactions and balances have been eliminated
upon consolidation.

VIE Agreements with Beijing Hanze


The Company does not have a direct equity ownership interest in Beijing VIE but
relies on the VIE Agreements to control and receive the economic benefits of
Beijing VIE's business. The Company relies on contractual arrangements with its
variable interest entity to operate its online to office (O2O) business in the
PRC in which foreign investment is restricted or prohibited. The O2O platform
integrates the Company's e-commerce platform with physical outlets (service
centers) to connect consumers and merchants in a dynamic marketplace. Pursuant
to the VIE Agreements, the Company, through Beijing Hanze, is able to exercise
effective control over, bears the risks of and enjoys substantially all of the
economic benefits its VIE and its subsidiary and has an exclusive option to
purchase all or part of the equity interests in the VIE when and to the extent
permitted by PRC law. The Company's management concluded that Beijing VIE and
its subsidiary are variable interest entities of the Company and Beijing Hanze
is the primary beneficiary of Beijing VIE and its subsidiary. As such, the
financial statements of the VIE and its subsidiary are included in the
consolidated financial statements of the Company.

During the year ended December 31, 2020 and 2019, HanJiao, Luji Technology and Inooka did not have any business activities.





Use of Estimates




The preparation of consolidated financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.



Significant accounting estimates reflected in the Company's consolidated
financial statements include the allowance for doubtful accounts and slow-moving
inventory, and the useful lives of property and equipment. Since the use of
estimates is an integral component of the financial reporting process, actual
results could differ from those estimates.





  31

Fair Value of Financial Instruments





The Company follows Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") FASB ASC Section 820, "Fair Value Measurements
and Disclosures." ASC 820 clarifies the definition of fair value, prescribes
methods for measuring fair value, and establishes a fair value hierarchy to
classify the inputs used in measuring fair value as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2 applies to assets or liabilities for which there are inputs, other than
quoted prices in level 1, that are observable for the asset or liability such as
quoted prices for similar assets or liabilities in active markets; quoted prices
for identical assets or liabilities in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived principally from, or
corroborated by, observable market data.



Level 3 applies to assets or liabilities for which there are unobservable inputs
to the valuation methodology that are significant to the measurement of the fair
value of the asset or liability.

The carrying value of financial instruments included in current assets and liabilities approximate their fair values because of the short-term nature of these instruments.





Risks and Uncertainties



The outbreak of COVID-19 that started in late January 2020 in the PRC had
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 the year ended
December 31, 2020 were adversely affected. There is an uncertainty around the
breadth and duration of business disruptions related to COVID-19, as well as its
impact on the Company's business. Based on management's assessment of the
current economic environment in the PRC, the Company's recent sales trend, and
the possible negative impact from a prolonged pandemic in the PRC, management
believes that the Company's revenues and operating cash flows will continue to
be negatively impacted in 2022. To mitigate the overall financial impact of
COVID-19 on the Company's business, management continues to explore
opportunities to reduce its operating overhead and works closely with its
service centers to develop promotional activities that will hopefully generate
additional sales in 2022.



The outbreak of COVID-19 that started in late January 2020 in the PRC had
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 the year ended
December 31, 2020 have been adversely affected. There is an uncertainty around
the breadth and duration of business disruptions related to COVID-19, as well as
its impact on the Company's business. Based on management's assessment of the
current economic environment in the PRC, the Company's recent sales trend, and
the possible negative impact from a prolonged pandemic in the PRC, management
believes that the Company's revenues and operating cash flows may be lower than
expected 2021. To mitigate the overall financial impact of COVID-19 on the
Company's business, management continues to explore opportunities to reduce its
operating overhead and works closely with its service centers to develop
promotional activities that will hopefully generate additional sales in 2022.

Inventories




Inventories consist of finished goods that  are stated at the lower of cost or
net realizable value. Cost is determined using the weighted average method. The
Company periodically evaluates its inventories and will record an allowance for
inventories that are either slow-moving, may not be saleable or whose cost
exceeds its net realizable value. For year ended December 31, 2021 and 2020, the
provision for slow-moving inventory amounted to approximately $768,095 and
$1,284,221, respectively.











  32






Advance to Suppliers



Advance to suppliers consists of payments to suppliers for finished goods that
have not been delivered to the Company. The Company periodically evaluates and
reviews its advance to suppliers to determine whether its carrying value has
been impaired. As of December 31, 2021, advances to suppliers and non-current
advance to supplier were $189,294 and $6.1 million, respectively. As of December
31, 2020, advances to suppliers and non-current advance to suppliers were $6.4
million, the amount mainly include the prepayment of the 5 million kg of
selenium enriched rice for RMB 40 million (approximately $6 million) in 2020.



Long-term Investment



Long-term investment consists of the Company's equity investment for strategic
and business development purposes. The Company applies the equity method of
accounting for its equity investment, according to FASB ASC 323
"Investment-Equity Method and Joint Ventures," over which it has significant
influence but does not own a majority equity interest or otherwise control.
Under the equity method, the Company's share of the profits or losses of the
equity investees are recorded in its consolidated statements of comprehensive
income (loss).




The Company reviews its investment at least annually to determine whether a
decline in fair value to below the carrying value is other-than-temporary. The
primary factors the Company considers in its determination are the duration and
severity of the decline in fair value; the financial condition, operating
performance and the prospects of the equity investee; and other company specific
information such as recent financing activities. If the decline in fair value is
deemed to be other-than-temporary, the carrying value of the investment will be
written down to its fair value.

No events have occurred that indicated an impairment in fair value for the year ended December 31, 2020.





Property and Equipment, Net



Property and equipment are carried at cost and are depreciated on the
straight-line basis over the estimated useful lives of the underlying assets.
The cost of repairs and maintenance is expensed as incurred; major replacements
and improvements are capitalized. When their assets are retired or disposed of,
the cost and accumulated depreciation and amortization are removed from the
accounts, and any resulting gains or losses are included in income in the year
of disposition. The Company examines the possibility of decreases in the value
of its property and equipment, when events or changes in circumstances reflect
the fact that their recorded value may not be recoverable.



Estimated useful lives are as follows, taking into account the assets' estimated
residual value:



Classification           Estimated useful lives
Property                 20 years
Vehicles                 10 years
Office equipment         3 years
Furniture and fixtures   3 years
Software                 3 years




Long-lived Assets



Finite-lived assets and intangibles are reviewed for impairment testing when
circumstances require. For purposes of evaluating the recoverability of
long-lived assets, when undiscounted future cash flows will not be sufficient to
recover an asset's carrying amount, the asset is written down to its fair value.
The long-lived assets of the Company that are subject to evaluation consist
primarily of property and equipment, and long-term investment. For the year
ended December 31, 2020 and 2019, the Company did not recognize any impairment
of its long-lived assets.







  33






Leases



In January 2016, the FASB issued ASU 2016-02, "Leases" ("ASU 2016-02") requiring
leases to be recognized on the balance sheet as a right-of-use asset and lease
liability for all long-term leases and requiring disclosure of key information
about leasing arrangements in order to increase transparency and comparability
among organizations.



Effective July 1, 2020, the Company adopted ASU 2016-02, "Leases" (Topic 842),
and elected the practical expedients that do not require it to reassess: (1)
whether any expired or existing contracts are, or contain, leases, (2) lease
classification for any expired or existing leases and (3) initial direct costs
for any expired or existing leases. The Company also adopted the practical
expedient that allows lessees to treat the lease and non-lease components of a
lease as a single lease component.



The Company measures the lease liability based on the present value of the lease
payments discounted by the relevant borrowing rate and reduces the carrying
value of the lease liability for lease payments made. Leases with an initial
expected term of 12 months or less are considered short-term and are not
recorded on the Company's consolidated balance sheets. The Company recognizes
lease expense for these leases on a straight-line basis over the expected lease
term.



Revenue Recognition

The Company follows FASB ASC 606, Revenue from Contracts with Customers.


The core principle underlying the revenue recognition standard is that the
Company will recognize revenue to represent the transfer of products or services
to customers in an amount that reflects the consideration to which the Company
expects to be entitled in such exchange. This will require the Company to
identify contractual performance obligations and determine whether revenue
should be recognized at a point in time or over time, based on when control of
the product or the benefit of the services transfers to the customer. Under the
guidance of ASC 606, the Company is required to (a) identify the contract with a
customer, (b) identify the performance obligations in the contract,
(c) determine the transaction price, (d) allocate the transaction price to the
performance obligations in the contract and (e) recognize revenue when (or as)
the Company satisfies its performance obligations.



Product Sales: Beijing VIE, the Company's VIE, is primarily engaged in the sale
of healthcare and other products (such as nutrition or dietary supplements;
water or air purifiers and smart watches) to the middle aged and elderly market
segments in the PRC. Beijing VIE sells these products under its own "Fozgo"
brand and related healthcare products for other vendors through its internet
platform and offline service centers. Revenue from product sales is recognized
when control passes to the customer, which generally occurs at a point in time
when products are delivered. Allowance for sales returns, that reduces revenues,
are estimated based on historical experience. Revenues are recorded net of
value-added taxes, business taxes, discounts and surcharges and allowance for
returns.



Beijing VIE collects cash from customers before or upon delivery of products
mainly through banks and third-party online payment platforms (such as Alipay).
Cash collected from customers before product delivery is recognized as advance
from customers.



Cost of Revenues



Cost of revenues consists primarily of the cost of merchandise sold, delivery
cost, service fees, sales incentives and commissions that are directly
attributable to the sale of certain designated products as well as allowance for
and write-down of slow-moving inventories.

General and Administrative Expenses





General and administrative expenses consist mainly of payroll and related costs
for employees involved in general corporate functions, including accounting,
finance, tax, legal and human resources, professional fees and other general
corporate expenses as well as costs associated with the use by these functions
of facilities and equipment, such as depreciation and rental expenses.





  34






Selling Expenses



Selling expenses consist mainly of payroll and benefits for employees involved
in the sales and distribution functions, meeting/event fees, advertisement,
marketing and selling expenses that are related to events and activities at the
Company's service centers designed to promote product sales as well as operating
expenses related to the service centers.



Finance Expenses (Income)

Finance expenses consist mainly of service fees related to the use of third-party online payment platforms, bank fees and interest expense related to borrowings; net of interest income from bank and related bank products, if any.





For the years ended December 31, 2021 and 2020, payment processing fees amounted
to $25,897 and $9,911, respectively. For year ended December 31, 2021 and 2020,
interest expense amounted to $16,973 and $30,920, respectively. For the years
ended December 31, 2021 and 2020, interest income amounted to $4,236 and
$230,590, respectively.



Other Income (Expenses)



Other income consists primarily of income from the administration of Beijing
Yingjun's online marketplace. For the years ended December 31, 2021, online
market income amounted to $7,335. Other expenses consist mainly of estimated tax
penalties and charitable contributions.



Income Taxes




The Company follows FASB ASC Topic 740, "Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Deferred tax assets are also
recognized for operating losses that are available to offset the future taxable
income. Valuation allowances are established when deemed necessary to reduce net
deferred tax assets to the amount expected to be realized.



The Company follows FASB ASC 740-10-25, "Accounting for Uncertainty in Income
Taxes", which requires income tax positions to meet a more-likely-than-not
recognition threshold to be recognized in the financial statements. Under ASC
740-10-25, tax positions that previously failed to meet the more-likely-than-not
threshold should be recognized in the first subsequent financial reporting
period in which that threshold is met. Previously recognized tax positions that
no longer meet the more-likely-than-not threshold should be derecognized in the
first subsequent financial reporting period in which that threshold is no longer
met. The Company believes that it does not have any uncertain tax positions. It
is not expected that there will be any uncertain tax position within the year
ending December 31, 2022.




The application of tax laws and regulations is subject to legal and factual
interpretation, judgment and uncertainty. Tax laws and regulations themselves
are subject to change as a result of changes in fiscal policy, changes in
legislation, the evolution of regulations and court rulings. Therefore, the
actual liability may be materially different from our estimates, which could
result in the need to record additional tax liabilities or potentially reverse
previously recorded tax liabilities or the deferred tax asset valuation
allowance. The Company's VIE in the PRC had total net operating loss carry
forwards of approximately $6.9 million and the deferred tax assets was
approximately $1 million as of December 31, 2021. A valuation allowance is
considered on each individual subsidiary or VIE that was provided against net
deferred tax assets as it is considered more likely than not that the relevant
deferred tax assets will not be realized in the foreseeable future. As of
December 31, 2021, the Company recognized a 100% valuation allowance.



Enterprise Income Tax



Under the Provisional Regulations of the PRC concerning income tax on
enterprises promulgated by the PRC (the "EIT Law"), the Company was qualified as
a high and new technology enterprise starting in 2018, and enjoys a preferential
tax rate of 15% for 3 years expired in 2020. The Company submitted the applying
documents to qualify for the same preferential tax rate in 2021 and obtained the
qualification in October, 2021. An entity can re-apply to be a high and new
technology enterprise when the prior certificate expires.





  35






Value-Added Tax



The VAT rate for revenue generated from providing products is 13%. VAT is
reported as a reduction of revenue when incurred. Entities that are VAT general
taxpayers are allowed to offset qualified input VAT paid to suppliers against
their output VAT liabilities. The net VAT balance between input VAT and output
VAT is recorded in taxes payable.



Foreign Currency Translation



The functional currency of the Company's operations in the PRC is the Chinese
Yuan or Renminbi ("RMB"). The financial statements are translated into U.S.
dollars ("USD") using the period end rates of exchange for assets and
liabilities, equity is translated at historical exchange rates, and average
rates of exchange (for the period) are used for revenues and expenses and cash
flows. As a result, amounts relating to assets and liabilities reported on the
statements of cash flows may not necessarily agree with the changes in the
corresponding balances on the balance sheets. Translation adjustments resulting
from the process of translating the local currency financial statements into USD
are included in determining comprehensive income (loss). Transactions
denominated in foreign currencies are translated into the functional currency at
the exchange rates prevailing on the transaction dates. Assets and liabilities
denominated in foreign currencies are translated into the functional currency at
the exchange rates prevailing at the balance sheet date with any transaction
gains and losses that arise from exchange rate fluctuations on transactions
denominated in a currency other than the functional currency are included in the
results of operations as incurred.



All of the Company's revenue transactions are transacted in its functional
currency. The Company does not enter into any material transaction in foreign
currencies. Transaction gains or losses have not had, and are not expected to
have, a material effect on the results of operations of the Company.

The exchange rates as of December 31, 2021 and 2020 and for the year ended December 31, 2021 and 2020 are as follows:





                                                                                        Year ended
                                     December 31,         December 31,                 December 31,
                                         2021                 2020                2021               2020
Foreign currency                    Balance Sheet        Balance Sheet        Profits/Loss       Profits/Loss
RMB:1USD                                     6.3757               6.5249             6.4515             6.8976




Comprehensive Income (Loss)



Comprehensive income (loss) consists of two components, net income (loss) and
other comprehensive income (loss). Other comprehensive income (loss) refers to
revenue, expenses, gains and losses that under GAAP are recorded as an element
of shareholders' equity but are excluded from net income (loss). Other
comprehensive income (loss) consists entirely of foreign currency translation
adjustments resulting from the Company's translation of its financial statements
from its functional currency into USD.



Earnings (loss) Per Share



Basic earnings (loss) per share is computed by dividing net income (loss) by the
weighted-average number of ordinary shares outstanding during the period.
Diluted earnings per share is computed by dividing net income by the
weighted-average number of ordinary shares plus dilutive potential ordinary
shares outstanding during the period. When the Company has a loss, the potential
ordinary shares are not included since their inclusion would be anti-dilutive.
For the year ended December 31, 2021 and 2020, there were no potential ordinary
shares, such as options, warrants or conversion rights, that would have a
dilutive effect on the Company's earnings per share.











  36

Recent Accounting Pronouncements





In June 2016, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit
Losses (Topic 326). The amendments in this Update require a financial asset (or
a group of financial assets) measured at amortized cost basis to be presented at
the net amount expected to be collected. The amendments broaden the information
that an entity must consider in developing its expected credit loss estimate for
assets measured either collectively or individually. The use of forecasted
information incorporates more timely information in the estimate of expected
credit loss, which will be more decision useful to users of the financial
statements. This ASU was initially to be effective for annual and interim
periods beginning after December 15, 2019 for issuers and December 15, 2020 for
non-issuers. In May 2019, the FASB issued ASU 2019-05, Financial
Instruments-Credit Losses (Topic 326): Targeted Transition Relief. This ASU
added optional transition relief for entities to elect the fair value option for
certain financial assets previously measured at amortized cost basis to increase
comparability of similar financial assets. The ASUs should be applied through a
cumulative-effect adjustment to retained earnings as of the beginning of the
first reporting period in which the guidance is effective (that is, a modified
retrospective approach). On November 19, 2019, the FASB issued ASU 2019-10 to
amend the effective date for ASU 2016-13 to be fiscal years beginning after
December 15, 2022 and interim periods therein. The Company is still evaluating
the impact of accounting standard of credit losses on the Company's consolidated
financial statements and related disclosures.



In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) to
simplify accounting for income taxes. This ASU removes certain exceptions to the
general principles in Topic 740 and amends existing guidance to improve
consistent application. ASU 2019-12 is effective for fiscal years beginning
after December 15, 2020 and interim periods within those fiscal years, with
early adoption permitted. The Company adopted this ASU within annual reporting
period of December 31, 2021  and expects that the adoption of this ASU will not
have a material impact on the Company's consolidated financial statements.



In October 2020, the FASB issued ASU 2020-10, "Codification Improvements". The
amendments in this Update represent changes to clarify the Codification or
correct unintended application of guidance that is not expected to have a
significant effect on current accounting practices or create a significant
administrative cost to most entities. The amendments in this Update affect a
wide variety of Topics in the Codification and apply to all reporting entities
within the scope of the affected accounting guidance. ASU 2020-10 is effective
for annual periods beginning after July 1, 2021 for public business entities.
Early application is permitted. The amendments in this Update should be applied
retrospectively. The Company believes the adoption of this new standard will not
have a material impact on Company's consolidated financial statements and
related disclosures.



The Company does not believe that other recently issued accounting standards, if
currently adopted, will have a material effect on the Company's consolidated
financial statements.

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