Consolidated Balance Sheet Data:
|
|
As of September 30, 2020
|
|
|
As of December 31, 2019
|
|
|
|
US$
|
|
|
US$
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
100,705
|
|
|
|
23,046
|
|
Accounts receivable
|
|
|
137,268
|
|
|
|
-
|
|
Other receivables
|
|
|
243,285
|
|
|
|
78,385
|
|
Inventory
|
|
|
61,781
|
|
|
|
69,518
|
|
Prepayment
|
|
|
51,244
|
|
|
|
129,879
|
|
Amount due from related parties
|
|
|
73,632
|
|
|
|
57,446
|
|
Total current assets
|
|
|
667,915
|
|
|
|
358,274
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
Leasehold improvements and equipment, net
|
|
|
88,569
|
|
|
|
104,432
|
|
Intangible assets
|
|
|
-
|
|
|
|
76,546
|
|
Operating lease right-of-use assets
|
|
|
406,299
|
|
|
|
613,831
|
|
Total non-current assets
|
|
|
494,868
|
|
|
|
794,809
|
|
Total assets
|
|
|
1,162,783
|
|
|
|
1,153,083
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
124,003
|
|
|
|
131,247
|
|
Income tax payables
|
|
|
5,956
|
|
|
|
5,808
|
|
Other payables and accruals
|
|
|
349,128
|
|
|
|
181,942
|
|
Advance from customers
|
|
|
260,880
|
|
|
|
458,165
|
|
Amount due to related parties
|
|
|
942,296
|
|
|
|
95,772
|
|
Current operating lease liabilities
|
|
|
270,484
|
|
|
|
243,959
|
|
Total current liabilities
|
|
|
1,952,747
|
|
|
|
1,116,893
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
Non-current operating lease liabilities
|
|
|
135,815
|
|
|
|
369,872
|
|
Total non-current liabilities
|
|
|
135,815
|
|
|
|
369,872
|
|
Total liabilities
|
|
|
2,088,562
|
|
|
|
1,486,765
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Share capital ($0.00001 par value, 1,000,000,000 shares issued and outstanding for the year ended December 31, 2019 and 2018)
|
|
|
10,000
|
|
|
|
10,000
|
|
Additional paid in capital
|
|
|
(2,731
|
)
|
|
|
(2,731
|
)
|
Foreign currency translation reserves
|
|
|
(20,969
|
)
|
|
|
4,547
|
|
Accumulated deficit
|
|
|
(912,079
|
)
|
|
|
(345,498
|
)
|
Total equity (deficit)
|
|
|
(925,779
|
)
|
|
|
(333,682
|
)
|
Total liabilities and equity
|
|
|
1,162,783
|
|
|
|
1,153,083
|
|
Management’s discussion and analysis
of financial condition and results of operation
This section contains “forward-looking
statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,”
“believe,” “estimate,” “intend,” “could,” “should,” “would,”
“may,” “seek,” “plan,” “might,” “will,” “pursue,” “expect,”
“predict,” “project,” “goals,” “strategy,” “future,” “likely,”
“forecast,” “potential,” “continue,” negatives thereof or similar references to future periods.
Examples of forward-looking statements include, among others, statements we make regarding future acquisition or merger targets,
business strategies, macro-economic and sector-specific trends, future cash flows, financing plans, plans and objectives of management
and any other statements which are not statements of historical facts.
Forward-looking statements are neither
historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions
regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and
other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual future
results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should
not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition
to differ materially from those indicated in the forward-looking statements include, among others, inability to successfully conclude
acquisitions of target companies or assets which are reasonably capable of generating positive cash flow in the near future, legal
and regulatory changes in the jurisdictions in which we operate, volatility or decline in our stock price, potential fluctuation
of our quarterly and annual financial and operational results, rapid adverse changes in markets, decline in demand for our goods
and services, insufficient revenues to cover our operating costs and such other factors as discussed throughout this section.
Except as required by applicable law,
including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform
these statements to actual results.
You should read
the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated
financial statements and the related notes included elsewhere in this report. Our consolidated financial statements have been
prepared in accordance with U.S. GAAP. In addition, our consolidated financial statements and the financial data included in this
Current Report on Form 8-K reflect our reorganization and have been prepared as if our current corporate structure had been in
place throughout the relevant periods. The following discussion and analysis contain forward-looking statements that involve risks
and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. For additional
information regarding these risks and uncertainties, please see “Risk Factors”.
Overview
Unless the context
requires otherwise, references to the “Company,” “we,” “us,” “our,” “FHAI”
refer specifically to Fountain Healthy Aging, Inc. in this section.
The Company is a
US holding company incorporated in Nevada on February 25, 2004, which now operates through the Company’s wholly owned subsidiary
Wei Lian Jin Meng Group Limited. (“WLJM Cayman”), a company incorporated under the laws of the Cayman Islands on June
30, 2020.
The following is
the organization structure of the WLJM Group along with ownership detail and its subsidiaries:
WLJM Cayman was
incorporated in the Cayman Islands on June 30, 2020. It is 100% owned by Fountain Healthy Aging, Inc.
Wei Lian Jin Meng
(Hong Kong) Company Limited (“WLJM HK”), was established in the Hong Kong Special Administrative Region (“HKSAR”)
of the PRC on August 5, 2020. It is 100% owned by WLJM Cayman.
Jin You Wei Meng
(Shenzhen) Consulting Company Limited (“JYWM WFOE”) was established as a wholly foreign owned enterprise on November
24, 2020, under the laws of the PRC. It is 100% owned by WLJM HK.
Shenzhen Wei Lian
Jin Meng Electronic Commerce Limited (“Shenzhen Wei Lian”) was incorporated on October 17, 2017, under the laws of
the PRC. It is 100% owned by JYWM WFOE.
Dongguan Dishi Coffee
Limited (“Dongguan Dishi”) was incorporated on October 25, 2018, under the laws of the PRC. It is 100% owned by Shenzhen
Wei Lian.
Shenzhen Nainiang
Coffee Art Museum Limited (“Shenzhen Nainiang”) was incorporated on June 20, 2019, under the laws of the PRC. It is
100% owned by Shenzhen Wei Lian.
On February 1, 2021, the Company entered into a definitive Share
Exchange Agreement with Wei Lian Jin Meng Group Limited (“WLJM Cayman”) and the shareholders of WLJM Cayman (the “Sellers”),
whereby we acquired all of the outstanding common stock of WLJM Cayman in exchange for the issuance of 600,000,000 shares of Common
Stock to the Sellers on a pro rata basis based on their percentage ownership of WLJM Cayman. On February 2, 2021 (the “Closing
Date”), WLJM Cayman became our wholly-owned subsidiary and the Sellers became the owners of approximately 99.8% of our Common
Stock (controlling approximately 6% of the voting rights of our shareholders). The acquisition of WLJM Cayman by us will be accounted
for as a reverse merger because on a post-merger basis, the former shareholders of WLJM Cayman held a majority of our outstanding
Common Stock on a fully-diluted basis.
WLJM Cayman was incorporated in the Cayman
Islands under the Cayman Islands Companies Law on June 30, 2020. The Company does not conduct any substantive operations on its
own but instead conducts its business operations through its subsidiaries in in the Peoples’ Republic of China (the “PRC”).
Shenzhen Wei Lian Jin Meng Electronic Commerce Limited (“Shenzhen Wei Lian”), Dongguan Dishi Coffee Limited (“Dongguan
Dishi”) and Shenzhen Nainiang Coffee Art Museum Limited (“Shenzhen Nainiang”) are the operating subsidiaries
in the PRC engaged in trading of coffee beans and selling cups of coffee.
We are a manufacturing
company developing, producing and selling “coffee tea” products, which represent drinks made from a mixture of coffee
and tea, as well as black coffee products and other coffee products. We sell our products to consumers in the PRC. We adopt “online
to offline” mode (i.e. selling products online and deliver products through offline channels), committing to building the
first brand of “coffee tea” culture in the PRC.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our financial
statements in conformity with U.S. GAAP, which requires management to make certain estimates and to apply judgments. We base our
estimates and judgments on historical experience, current trends and other factors that management believes to be important at
the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied
and disclosed in our condensed financial statements. Actual results could differ from those estimates made by management.
We believe that of
our significant accounting policies, which are described in note 2 to our consolidated financial statements, the following accounting
policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical
to aid in fully understanding and evaluating our financial condition and results of operations.
Revenue Recognition
We recognize revenue
from coffee bean sales, net of value-added taxes, upon delivery at such time title passes to the customer.
Our revenue recognition
policy is in compliance with ASU No. 2014-09, Revenue from Contracts with Customers that revenue is recognized when a customer
obtains control of promised goods and is recognized in an amount that reflects the consideration that the Company expects to receive
in exchange for those goods. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue
and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the
Company expects to receive in exchange for those goods. We apply the following five-step model in order to determine this amount:
|
(i)
|
identification of the services
in the contract;
|
|
|
|
|
(ii)
|
determination of whether the services are performance
obligations, including whether they are distinct in the context of the contract;
|
|
|
|
|
(iii)
|
measurement of the transaction price, including
the constraint on variable consideration;
|
|
|
|
|
(iv)
|
allocation of the transaction price to the performance
obligations; and
|
|
|
|
|
(v)
|
recognition of revenue when (or as) the Company
satisfies each performance obligation.
|
We only apply the
five-step model to contracts when it is probable that we will collect the consideration it is entitled to in exchange for the
goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception,
we review the contract to determine which performance obligations we must deliver and which of these performance obligations are
distinct. We recognize as revenues the amount of the transaction price that is allocated to the respective performance obligation
when the performance obligation is satisfied or as it is satisfied. Generally, our performance obligations are transferred to
customers at a point in time, typically upon delivery.
For all reporting
periods, we have not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original
expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
Concentrations of Credit Risk
Financial instruments
that potentially expose us to significant concentration of credit risk consist primarily of cash and cash equivalents. As of December
31, 2019, substantially all of the Company’s cash and cash equivalents were deposited with financial institutions with high-credit
ratings and quality. We did not have any customers constituting 10% or more of the net revenues in the fiscal years 2019 and 2018.
Recently Issued and Adopted Accounting
Pronouncements
Recent accounting pronouncements adopted
In May 2014, the FASB
issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 requires revenue recognition
to depict the transfer of goods or services to customers in an amount that reflects the consideration that a company expects to
be entitled to in exchange for the goods or services. To achieve this principle, a company must apply five steps including identifying
the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating
the transaction price to the performance obligations, and recognizing revenue when (or as) the company satisfies the performance
obligations. Additional quantitative and qualitative disclosure to enhance the understanding about the nature, amount, timing,
and uncertainty of revenue and cash flows is also required. ASU 2014-09 is effective for fiscal years, and interim periods within
those years, beginning after December 15, 2017. In April 2016, the FASB issued ASU 2016-10, “Identifying Performance Obligations
and Licensing.” ASU 2016-10 clarifies the following two aspects of ASU 2014-09: identifying performance obligations and
licensing implementation guidance. The effective date of ASU 2016-10 is the same as the effective date of ASU 2014-09. We adopted
this ASU on January 1, 2018 and determined it had no impact on our consolidated financial statements as of December 31, 2019 and
2018.
In January 2016, the
FASB issued a new pronouncement ASU 2016-01 Financial Instruments-Overall: Recognition and Measurement of Financial Assets and
Financial Liabilities. The ASU requires equity investments (except those accounted for under the equity method of accounting or
those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net
income. The ASU also requires an entity to present separately in other comprehensive income the portion of the total change in
the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure
the liability at fair value in accordance with the fair value option for financial instruments.
ASU 2016-01 was further
amended in February 2018 by ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments—Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. This update was issued to
clarify certain narrow aspects of guidance concerning the recognition of financial assets and liabilities established in ASU 2016-01.
This includes an amendment to clarify that an entity measuring an equity security using the measurement alternative may change
its measurement approach to a fair valuation method in accordance with Topic 820, Fair Value Measurement, through an irrevocable
election that would apply to that security and all identical or similar investments of the same issued.
ASU 2016-01 and ASU
2018-03 are effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within
those fiscal years. Adoption of the amendment must be applied by means of a cumulative-effect adjustment to the balance sheet
as of the beginning of the fiscal year of adoption, except for amendments related to equity instruments that do not have readily
determinable fair values which should be applied prospectively. We adopted this ASU on January 1, 2018 and determined it had no
impact on our consolidated financial statements as of December 31, 2019 and 2018.
In February 2016,
the FASB issued ASU 2016-02, Leases (Topic 842). The guidance supersedes existing guidance on accounting for leases with the main
difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease
liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less,
a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public business
entities, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those
fiscal years. Early application of the guidance is permitted. In transition, entities are required to recognize and measure leases
at the beginning of the earliest period presented using a modified retrospective approach. We early adopted this standard for
the fiscal year 2018, resulted in the recognition of right-of-use assets of $613,831 and $70,412 as of December 31, 2019 and 2018,
respectively; and the recognition of operating lease liabilities of $613,831 and $70,412 as of December 31, 2019 and 2018, respectively.
In November 2016,
the FASB issued ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this Update require that
a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described
as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash
equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total
amounts shown on the statement of cash flows. The amendments in this Update do not provide a definition of restricted cash or
restricted cash equivalents. The amendments in this ASU on update are effective for public business entities for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption
in an interim period. The amendments in this Update should be applied using a retrospective transition method each period presented.
We adopted this ASU on January 1, 2018 and determined it had no impact on our consolidated financial statements as of December
31, 2019 and 2018.
In January 2017, the
FASB issued ASU 2017-01: Business Combinations (Topic 805): Clarifying the Determination of Business. The Update requires that
when substantially all of the fair value of the gross assets acquired (or dispose of) is concentrated in a single identifiable
asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that
need to be further evaluated. If the screen is not met, the amendments in this ASU on update (1) required that to be considered
a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the
ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. Public
business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, including interim
period within those periods. Early adoption of the amendments in this Update is allowed. The amendments in this Update should
be applied prospectively on or after the effective date. No disclosure are required at transition. We adopted this pronouncement
on its consolidated financial statements as of and for the year ended December 31, 2019 and 2018.
Recently issued accounting pronouncements
not yet adopted
In June 2016, the
FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements.
This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net
amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost
basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.
This Accounting Standards Update affects entities holding financial assets and net investment in leases that are not accounted
for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases,
off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have
the contractual rights to receive cash. For public business entities, the amendments in this Update are effective for fiscal years
beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments
in this Update 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). We are in the process of evaluating the impact of
the adoption of this pronouncement on its consolidated financial statements.
We review new accounting
standards as issued. We have not identified any other new standards that it believes will have a significant impact on our financial
statements.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the consolidated financial statements of WLJM Cayman found at Item 9.01(a) “Financial Statements of Businesses Acquired”
of this Current Report on Form 8-K for the year ended December 31, 2019 and for the nine-month period ended September 30, 2020.
For the Year Ended December 31,
2019.
Revenue
We generated $2,107,465
in revenue for the year ended December 31, 2019 compared to $nil for the year ended December 31, 2018 We did not generate any
revenues in the fiscal year 2018 was our business preparation stage that we commenced our business and started generating revenues
in March 2019.
Cost of Revenue
Cost of revenue was
$275,916 for the year ended December 31, 2019 compared to $nil for the year ended December 31, 2018. As we did not earn any revenue,
we did not incur any cost of revenue during the fiscal year 2018.
Gross profit
Gross profit for the
year ended December 31, 2019 was $1,831,549 compared with $nil for the year ended December 31, 2018. Gross profit accounted for
87% of our revenue for the year ended December 31, 2019.
Operating Expenses
By far the most significant
component of our operating expenses for both the year ended December 31, 2019 and 2018 was general and administrative expenses
($1,917,263 and $39,334, respectively). The following table sets forth the main components of our general and administrative expenses
for the years ended December 31, 2019 and 2018.
|
|
For the year ended December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Amount
(US$)
|
|
|
% of
Total
|
|
|
Amount
(US$)
|
|
|
% of
Total
|
|
General and administrative expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consultancy fee
|
|
$
|
758,237
|
|
|
|
39.6
|
%
|
|
$
|
-
|
|
|
|
-
|
%
|
Salary and welfare
|
|
|
500,380
|
|
|
|
26.2
|
%
|
|
|
12,623
|
|
|
|
32.1
|
%
|
Rental expenses
|
|
|
208,949
|
|
|
|
10.9
|
%
|
|
|
17,310
|
|
|
|
44.0
|
%
|
Research and development costs
|
|
|
99,687
|
|
|
|
5.2
|
%
|
|
|
-
|
|
|
|
-
|
%
|
Exhibition costs
|
|
|
65,045
|
|
|
|
3.4
|
%
|
|
|
-
|
|
|
|
-
|
%
|
Office expenses
|
|
|
52,000
|
|
|
|
2.7
|
%
|
|
|
65
|
|
|
|
0.1
|
%
|
Travel and accommodations
|
|
|
38,833
|
|
|
|
2.0
|
%
|
|
|
99
|
|
|
|
0.3
|
%
|
Entertainment
|
|
|
38,786
|
|
|
|
2.0
|
%
|
|
|
-
|
|
|
|
-
|
%
|
Others
|
|
|
155,346
|
|
|
|
8.1
|
%
|
|
|
9,237
|
|
|
|
23.5
|
%
|
Total general and administrative expenses
|
|
$
|
1,917,263
|
|
|
|
100
|
%
|
|
$
|
39,334
|
|
|
|
100
|
%
|
Significant increase
in general and administrative expenses by $1,877,929 or 4774.3% from $39,334 for the years ended December 31, 2018 to $1,917,263
for the years ended 2019 was due to we had no business operations in 2018 and we commenced our business in March 2019 and started
incurring operating expenses.
Net Loss
We had a net loss
of $285,756 for the year ended December 31, 2019 compared to a net loss of $39,334 for the year ended December 31, 2018, an increase
of $246,422 or 626.5%. The increase was primarily attributable to the fact that we commenced our business in the fiscal year 2019
and we incurred expenses amounting to $672,094 on consultancy services in connection with the reverse acquisition transaction.
Liquidity and Capital Resources
Working capital:
|
|
2019
|
|
|
2018
|
|
Total current assets
|
|
$
|
358,274
|
|
|
$
|
36,227
|
|
Total current liabilities
|
|
|
1,116,893
|
|
|
|
86,669
|
|
Working capital deficiency
|
|
$
|
(758,619
|
)
|
|
$
|
(50,442
|
)
|
As of December 31,
2019, we had cash and cash equivalents of $23,046. To date, we have financed our operations primarily through advance from customers
and borrowings from related parties. The following table provides detailed information about our net cash flows for the year ended
December 31, 2019 and 2018:
Cash flows:
|
|
2019
|
|
|
2018
|
|
Net cash provided by (used in) operating activities
|
|
$
|
211,725
|
|
|
$
|
(3,229
|
)
|
Net cash used in investing activities
|
|
|
(190,895
|
)
|
|
|
(4,465
|
)
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
7,269
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(203
|
)
|
|
|
162
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
20,627
|
|
|
|
(263
|
)
|
Cash and cash equivalents at the beginning of year
|
|
|
2,419
|
|
|
|
2,682
|
|
Cash and cash equivalents at the end of year
|
|
$
|
23,046
|
|
|
$
|
2,419
|
|
Operating Activities
Net cash used in operating
activities was $190,895 for the year ended December 31, 2019, as compared to net cash provided by operating activities of $2,804
for the year ended December 31, 2018. The increase in net cash used in operating activities was mainly attributable to we commenced
our business in the fiscal year 2019 that more expenses were incurred for the operation during the year ended December 31, 2019.
Investing Activities
Net cash used in investing
activities for the year ended December 31, 2019 was $190,895, as compared to $4,465 for the year ended December 31, 2018. The
increase in net cash used in investing activities was mainly attributable to the acquisition of leasehold improvements, equipment
and intangible assets.
Financing Activities
Net cash provided
by financing for the year ended December 31, 2019 was $nil, as compared to $7,269 for the year ended December 31, 2018. The increase
of net cash provided by financing activities was mainly attributable to the capital contributions from our existing stockholders
of the Company to finance our operations.
Capital Expenditures
Capital expenditures
for the year ended December 31, 2019 and 2018 were $197,078 and $12,242, respectively. The increase in capital expenditures was
due to the acquisition of leasehold improvements, equipment and intangible assets. We anticipate continue increasing our capital
expenditures in the 2020 fiscal year.
Contractual Obligations and Commercial
Commitments
We had the following
contractual obligations and commercial commitments as of December 31, 2019:
|
|
Total
|
|
|
Less than
1 year
|
|
|
1-5 years
|
|
|
More than
5 years
|
|
Operating lease
|
|
$
|
645,935
|
|
|
$
|
265,154
|
|
|
$
|
380,781
|
|
|
$
|
-
|
|
Consultancy service
|
|
|
484,821
|
|
|
|
444,821
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
|
1,130,756
|
|
|
|
709,975
|
|
|
|
420,781
|
|
|
|
-
|
|
For the years ended
December 31, 2019 and 2018, we entered into various operating lease agreement commencing in the fiscal year 2019 and 2018, and
expiring on variance dates through September 2023. The average monthly lease expense is approximately $22,388. The outstanding
lease commitment as of December 31, 2019 was $645,935.
For the year ended
December 31, 2019, we entered into a non-cancelable consultancy service agreement with a third-party for the provision of services
related to the US listing with the contract amount of $1,200,000. The outstanding commitment as of December 31, 2019 was $484,821.
For the Nine Months Ended
September 30, 2020.
Revenue
We generated $927,889
in revenue for the nine months ended September 30, 2020 compared to $1,271,032 for the nine months ended September 30, 2019. The
COVID-19 pandemic has developed rapidly in 2020. The resulting impact of the virus on the operations and measures taken by the
Chinese government to contain the virus have negatively affected our results in 2020, which lead to a decline in revenues of $343,143
or 30.0% compared with the same nine-month period in 2019.
Cost of Revenue
Cost of revenue was
$155,541 for the nine months ended September 30, 2020 compared to $177,073 for the nine months ended September 30, 2019. The decrease
of cost of revenue by $21,532 or 12.2% was a result of the negative impact from the COVID-19 pandemic. The cost of revenue consists
of the cost of raw materials and cost of manufactured goods sold to customers, including labor cost, rental expense, research
and development costs, etc. The decrease in cost of raw materials is relatively in line with the decrease of revenue, whereas
the decrease in cost of manufactured goods to customers is significantly lower than the decrease of revenue because of the fixed
costs in nature.
Gross profit
Gross profit for the
nine months ended September 30, 2020 was $772,348 compared with $1,093,959 for the nine months ended September 30, 2019. Gross
profit accounted for 83.2% of our revenue for the nine months ended September 30, 2020.
Operating Expenses
By far the most significant
component of our operating expenses for both the nine months ended September 30, 2020 and 2019 was general and administrative
expenses ($1,256,113 and $1,306,051, respectively). The following table sets forth the main components of our general and administrative
expenses for the nine months ended September 30, 2020 and 2019.
|
|
For the nine months ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
Amount
(US$)
|
|
|
% of
Total
|
|
|
Amount
(US$)
|
|
|
% of
Total
|
|
General and administrative expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consultancy fee
|
|
$
|
447,375
|
|
|
|
35.6
|
%
|
|
$
|
584,898
|
|
|
|
44.8
|
%
|
Salary and welfare
|
|
|
269,339
|
|
|
|
21.4
|
%
|
|
|
332,402
|
|
|
|
25.5
|
%
|
Rental expenses
|
|
|
196,005
|
|
|
|
15.6
|
%
|
|
|
164,579
|
|
|
|
12.6
|
%
|
Research and development costs
|
|
|
49,986
|
|
|
|
4.0
|
%
|
|
|
38,334
|
|
|
|
2.9
|
%
|
Exhibition costs
|
|
|
30,140
|
|
|
|
2.4
|
%
|
|
|
61,472
|
|
|
|
4.7
|
%
|
Office expenses
|
|
|
6,493
|
|
|
|
0.5
|
%
|
|
|
45,406
|
|
|
|
3.5
|
%
|
Travel and accommodations
|
|
|
17,560
|
|
|
|
1.4
|
%
|
|
|
6,708
|
|
|
|
0.5
|
%
|
Entertainment
|
|
|
10,833
|
|
|
|
0.9
|
%
|
|
|
13,347
|
|
|
|
1.0
|
%
|
Impairment losses on long-lived assets
|
|
|
76,199
|
|
|
|
6.1
|
%
|
|
|
-
|
|
|
|
-
|
%
|
Others
|
|
|
152,183
|
|
|
|
12.1
|
%
|
|
|
58,905
|
|
|
|
4.5
|
%
|
Total general and administrative expenses
|
|
$
|
1,256,113
|
|
|
|
100
|
%
|
|
$
|
1,306,051
|
|
|
|
100
|
%
|
The decrease in general
and administrative expenses by $49,938 or 3.8% from $1,306,051 for the nine months ended September 30, 2019 to $1,256,113 for
the nine months ended 2020 was due to the negative impact from the COVID-19 pandemic. The decrease is not in line and significantly
lower than the decrease of revenue was due to the fixed costs in nature.
Net Loss
We had a net loss
of $566,581 for the nine months ended September 30, 2020 compared to a net loss of $293,851 for the nine months ended September
30, 2019, an increase of $272,730 or 92.8%. The increase was primarily attributable to the fact that our revenue dropped by 30.0%
whereas our costs were steadily incurred during the COVID-19 pandemic.
Liquidity and Capital Resources
Working capital:
|
|
As of September 30, 2020
|
|
|
As of December 31, 2019
|
|
Total current assets
|
|
$
|
667,915
|
|
|
$
|
358,274
|
|
Total current liabilities
|
|
|
1,952,747
|
|
|
|
1,116,893
|
|
Working capital deficiency
|
|
$
|
(1,284,832
|
)
|
|
$
|
(758,619
|
)
|
As of September 30,
2020, we had cash and cash equivalents of $100,705. To date, we have financed our operations primarily through advance from customers
and borrowings from related parties. The following table provides detailed information about our net cash flows for the nine months
ended September 30, 2020 and 2019:
|
|
For the nine months ended September 30,
|
|
Cash flows:
|
|
2020
|
|
|
2019
|
|
Net cash used in operating activities
|
|
$
|
74,823
|
|
|
$
|
158,434
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(140,096
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
2,836
|
|
|
|
(835
|
)
|
Net increase in cash and cash equivalents
|
|
|
77,659
|
|
|
|
17,503
|
|
Cash and cash equivalents at the beginning of year
|
|
|
23,046
|
|
|
|
2,419
|
|
Cash and cash equivalents at the end of year
|
|
$
|
100,705
|
|
|
$
|
19,922
|
|
Operating Activities
Net cash used in operating
activities was $74,823 for the nine months ended September 30, 2020, as compared to $158,434 for the nine months ended September
30, 2019. The decrease in net cash used in operating activities was mainly attributable to the increase in accounts receivables
by $133,260 in the nine-month period 2020 as compared to $nil in the same period 2019.
Investing Activities
Net cash used in investing
activities for the nine months ended September 30, 2020 was $nil, as compared to $140,096 for the nine months ended September
30, 2019. The decrease in net cash used in investing activities was mainly attributable to no acquisition of leasehold improvements,
equipment and intangible assets incurred during the nine-month period 2020.
Capital Expenditures
Capital expenditures
for the nine months ended September 30, 2020 and 2019 were $nil and $140,096, respectively. The decrease in capital expenditures
was due to no acquisition of leasehold improvements, equipment and intangible assets. We will evaluate and assess the COVID-19
pandemic impact to our business to determine the plan for increasing our capital expenditures in the 2021 fiscal year.
Contractual Obligations and Commercial
Commitments
We had the following
contractual obligations and commercial commitments as of September 30, 2020:
|
|
Total
|
|
|
Less than
1 year
|
|
|
1-5 years
|
|
|
More than
5 years
|
|
Operating lease
|
|
$
|
455,551
|
|
|
$
|
293,891
|
|
|
$
|
161,660
|
|
|
$
|
-
|
|
Consultancy service
|
|
|
120,000
|
|
|
|
120,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
575,551
|
|
|
|
413,891
|
|
|
|
161,660
|
|
|
|
-
|
|
We entered into various
operating lease agreement commencing in the fiscal year 2019 and 2018, and expiring on variance dates through September 2023.
The average monthly lease expense is approximately $22,388. The outstanding lease commitment as of September 30, 2020 was $455,551.
During the fiscal
year 2019, we entered into a non-cancelable consultancy service agreement with a third-party for the provision of services related
to the US listing with the contract amount of $1,200,000. The outstanding commitment as of September 30, 2020 was $120,000.
Off-Balance Sheet Arrangements
We do not have any
off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition,
changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources
that is material to investors.
Going Concern Consideration
We incurred a net
loss of $305,081 and $39,338 during the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, and 2018,
we had net current liability of $758,619 and $50,442, respectively, and a deficit on total equity of $333,692 and $31,555, respectively.
We incurred a net
loss of $566,581 and $293,851 during the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020,
we had net current liability of $1,284,832 and a deficit on total equity of $925,779.
The ability to continue
as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the necessary
financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These
consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts
and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company expects
to finance operations primarily through cash flow from revenue and capital contributions from the shareholders of the Company.
In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future
operations as well as to achieve our strategic objectives, the shareholders of the Company indicated the intent and ability to
provide additional equity financing.
These conditions raise
substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going
concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional equity or
alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be
no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing
on acceptable terms, or if at all. The consolidated financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Properties
Our mailing address
is Room 601, Bldg. E, No. 1, Huabao Fubao China Street, Futian District, Shenzhen City, Guangdong Province, People’s Republic
of China 518000.
Security Ownership of Certain Beneficial
Owners and Management
The following table
sets forth certain information regarding beneficial ownership of our common stock as of the Closing Date (after giving effect
to the Acquisition) by (i) each person (or group of affiliated persons) who is known by us to own more than five percent of the
outstanding shares of our common stock, (ii) each director, executive officer and director nominee, and (iii) all of our directors,
executive officers and director nominees as a group. As of the Closing Date, we had 600,034,500 shares of common stock issued
and outstanding and 100,000,000 shares of Series A Preferred Stock issued and outstanding.
Beneficial ownership
is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Unless
otherwise noted, the principal address of each of the stockholders, directors and officers listed below is Room 601, Bldg. E,
No. 1, Huabao Fubao China Street, Futian District, Shenzhen City, Guangdong Province, People’s Republic of China 518000.
All share ownership
figures include shares of our common stock issuable upon securities convertible or exchangeable into shares of our common stock
within sixty (60) days of the Closing Date, which are deemed outstanding and beneficially owned by such person for purposes of
computing his or her percentage ownership, but not for purposes of computing the percentage ownership of any other person.
Name and Address of Beneficial Owner, Officers and Directors
|
|
Amount and
Nature of
Beneficial
Ownership
|
|
|
Percent of
Class(1)
|
|
ZHU Hong, Chief Executive Officer, Chief Financial Officer, Secretary and Director(2)
|
|
|
120,000,000
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
Total Held by Officers and Directors as a Group (1 person):
|
|
|
120,000,000
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
Five Percent Shareholders
|
|
|
|
|
|
|
|
|
Sunshine Technology Limited(3)
|
|
|
240,000,000
|
|
|
|
40
|
%
|
Sunshine Power Limited(4)
|
|
|
234,000,000
|
|
|
|
39
|
%
|
Sunshine Beauty Limited(5)
|
|
|
120,000,000
|
|
|
|
20
|
%
|
(1)
|
Based on 600,034,500 shares of common stock outstanding on the
Closing Date. Includes, where applicable, shares of common stock issuable upon the exercise of warrants and conversion of
debt held by such person that may be exercised within 60 days after the Closing Date. Unless otherwise indicated, we believe
that all persons named in the table above have sole voting power and/or investment power with respect to all shares of common
stock beneficially, warrants and convertible debt owned by them.
|
|
|
(2)
|
Our CEO, Ms. Zhu Hong, beneficially owns 120,000,000 shares
of common stock through Sunshine Beauty Limited. She also owns all 100,000,000 shares of Series A Preferred Stock, which enjoy
100 votes per share, but which are not convertible into Common Stock.
|
|
|
(3)
|
Sunshine Technology Limited is a British Virgin Islands company
wholly owned by Ye Aiyun.
|
|
|
(4)
|
Sunshine Power Limited is a British Virgin Islands company wholly
owned by Zhu Jianyong. Zhu Jianyong is the father of our CEO, Ms. Zhu Hong.
|
|
|
(5)
|
Sunchine Beauty Limited is a British Virgin Islands company
wholly owned by our CEO, Ms. Zhu Hong.
|
Description of Securities
Common Stock
We have 750,000,000 authorized shares of common stock, $0.00001
par value per share, of which 600,034,500 shares of common stock are issued and outstanding. Each holder of shares of common stock
is entitled to one vote per share at stockholders’ meetings. Our Articles of Incorporation do not provide for cumulative
voting for the election of directors. Holders of shares of common stock are entitled to receive, pro rata, such dividends as may
be declared by the Board of Directors out of funds legally available therefor, and are also entitled to share, pro rata, in any
other distributions to the stockholders. Upon any liquidation, dissolution or winding-up, holders of shares of common stock are
entitled to share rateably in all assets remaining after payment of liabilities. Holders of shares of common stock do not have
any preemptive rights or other rights to subscribe for additional shares. The outstanding shares of common stock are paid for,
fully paid and non-assessable.
Series A Preferred Stock
We have 100,000,000
authorized shares of preferred stock, $0.00001 par value per share, of which 100,000,000 shares are designated Series A Preferred
Stock, of which 100,000,000 shares are issued and outstanding and held by our CEO, Ms. Zhu Hong. The company designated the Series
A Preferred Stock in a Certificate of Designation filed with the Nevada Secretary of State on September 16, 2019. Each holder
of shares of Series A Preferred Stock is entitled to 100 votes per share at stockholders’ meetings. The Series A Preferred
Stock is not convertible into shares of common stock and are not redeemable. The Series A Preferred Stock is entitled to receive
dividends on a pari passu basis with the common stock and enjoys a liquidation preference senior to the common stock. The
outstanding shares of Series A Preferred Stock are paid for, fully paid and non-assessable.
Market Price of and Dividends on
Common Equity and Other Shareholder Matters.
There is no change
in the market for our securities as a result of the Acquisition. Our common stock, par value $0.00001, is quoted via the OTC Pink
Sheets under the ticker symbol “FHAI”. There is no active trading market in our securities.
The quotation of
our common share does not assure a meaningful, consistent and liquid trading market currently exist. We cannot predict whether
a more active market for our common share will develop in the future. In absence of an active trading market,
|
(1)
|
Investors may have difficulty buying or selling or obtaining
market quotation,
|
|
|
|
|
(2)
|
Market visibility of our common share may be limited which may
have a depressive effect on the market price for our common share.
|
As of February 2, 2021, there were twelve holders of record
of our Common Stock.
To our knowledge,
we have never paid any dividends and we plan to retain earnings, if any, for use in the development of the business. Payment of
future dividends, if any, will be at the discretion of the Board of Directors after taking into account various factors, including
current financial condition, operating results and current and anticipated cash needs.
Indemnification of Directors and
Officers
Our officers and
directors are indemnified as provided by the Nevada Revised Statutes and our bylaws.
Under the NRS, director
immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically
limited by a company’s articles of incorporation that is not the case with our articles of incorporation. Excepted from
that immunity are:
|
(1)
|
a willful failure to deal fairly with the company or its shareholders
in connection with a matter in which the director has a material conflict of interest;
|
|
|
|
|
(2)
|
a violation of criminal law (unless the director had reasonable
cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful);
|
|
|
|
|
(3)
|
a transaction from which the director derived an improper personal
profit; and
|
|
|
|
|
(4)
|
willful misconduct.
|
Our Articles of
Incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted
by Nevada law. Consequently, our directors and officers will not be personally liable to us or our stockholders for monetary damages
for any breach of fiduciary duties as directors or officers, except liability for any act or omission not in good faith or that
involves intentional misconduct or a knowing violation of law.
Our Articles of
Incorporation and Bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest extent
permitted by Nevada law. Our Bylaws also provide that we may advance expenses incurred by a director or officer in advance of
the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee
or other agent for any liability arising out of his, her or its actions in that capacity regardless of whether we would otherwise
be permitted to indemnify him, her or it under Nevada law.
We believe that
these provisions in our Articles of Incorporation and Bylaws are necessary to attract and retain qualified persons as directors
and officers. This description of the limitation of liability and indemnification provisions of our Articles of Incorporation
and Bylaws is qualified in its entirety by reference to these documents, each of which is included as an exhibit to this Report.
Indemnification against Public Policy
Insofar as indemnification
by us for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling the
company pursuant to provisions of our Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us
in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection
with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
The effect of indemnification
may be to limit the rights of the Company and the shareholders (through shareholders’ derivative suits on behalf of the
Company) to recover monetary damages and expenses against a director for breach of fiduciary duty.
Legal Proceedings
In the normal course
of business, we are subject to claims and litigation. We are not a party to any material legal proceedings nor are we aware of
any circumstance that may reasonably lead a third party to initiate legal proceedings against us.
Directors, Executive Officers, and Corporate
Governance
Set forth below
are the names and ages of our current directors and executive officers and their principal occupations at present and for at least
the past five years.
Name
|
|
Age
|
|
Positions and
Offices to be Held
|
|
Date Appointed
Director
|
Zhu Hong
|
|
27
|
|
President, CEO, Sole Director, CFO, Treasurer, Secretary
|
|
October 4, 2019
|
Our directors are
appointed for an indefinite term to hold office until the next annual general meeting of our shareholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the
board. All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until
their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. Our
Board of Directors appoints officers from time to time and each Executive Officer serves at the discretion of our Board of Directors.
The following is
a brief description of the background on our officers and directors.
Ms. ZHU Hong,
age 27, has been the Chief Executive Officer and a Director of the Company since October 4, 2019. Ms. Zhu also served as our President,
Treasurer, Chief Financial Officer and Secretary since October 4, 2019. Ms. Zhu graduated from Huangshan Ruiyuan foreign language
school in 2012. From 2012 till 2014, Ms. Zhu Participated in International trading of leather goods in family business. She was
responsible for chose product selection, price negotiation and sales. From 2015 to 2016, she is involved in assistant for Jilin
yunshang Health Food Co., Ltd in order to assist the president in his work, including advice, implementation, coordination, assistant
management. In early 2017, she quitted her job and started marketing research for six months, and then entered the coffee industry
and established Shenzhen Weilian Jinmeng E-Commerce Technology Co., Ltd. in October of that year. With sufficient experience in
planning and management work, Ms. Zhu has been appointed as a Chief Executive Officer, President, Chief Financial Officer, Secretary,
Treasurer and the sole Director of the Company in October 2019.
There are no family
relationships between any of the executive officers and directors.
We believe that all
of our executive officers and directors are qualified to serve on our Board of Directors or their respective offices based upon
their business and management experience.
Term of Office
Our sole director
holds her position until the next annual meeting of shareholders and until her successor is elected and qualified by our shareholders,
or until earlier death, retirement, resignation or removal.
Family Relationships
There are no family
relationships between the Company and any of our current and proposed directors or executive officers.
Corporate Governance
Our board of directors
has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committee
performing a similar function. The functions of those committees are being undertaken by our board. Because we do not have any
independent directors, our board believes that the establishment of committees of our board would not provide any benefits to
our company and could be considered more form than substance.
We do not have a
policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum
qualifications for director candidates, nor has our officers and directors established a process for identifying and evaluating
director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates
by our stockholders, including the procedures to be followed. Our officers and directors have not considered or adopted any of
these policies as we have never received a recommendation from any stockholder for any candidate to serve on our board of directors.
Given our relative
size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will
make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event
such a proposal is made, all current members of our board will participate in the consideration of director nominees.
As with most small
companies until such time as we further develop our business, achieve a stronger revenue base and have sufficient working capital
to purchase directors’ and officers’ insurance, we do not have any immediate prospects to attract independent directors.
When we are able to expand our board to include one or more independent directors, we intend to establish an audit committee of
our board of directors. It is our intention that one or more of these independent directors will also qualify as an audit committee
financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our board members be independent
and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our board of directors
include “independent” directors, nor are we required to establish or maintain an audit committee or other committee
of our board.
Communications with the Board of Directors
Stockholders with
questions about the Company are encouraged to contact the Company by sending communications to the attention of the Chief Executive
Officer at Room 601, Bldg. E, No. 1, Huabao Fubao China Street, Futian District, Shenzhen City, Guangdong Province, People’s
Republic of China 518000. Stockholders may communicate with the Board of Directors by sending their communications to the Board
of Directors, c/o the Chief Executive Officer at the same address.
Director Compensation
Our current sole
director is an employee of the Company. She has not received and will not receive compensation for his service outside the compensation
set forth in the Summary Compensation Table below.
If our board consists
of any non-employee directors in the future, we may compensate our non-employee directors for their service in the future. We
also intend to allow our non-employee directors to participate in any equity compensation plans that we adopt in the future.
Director Independence
None of our directors
qualified as an “independent director” under the rules of NASDAQ, Marketplace Rule 4200(a).
Audit Committee
We do not presently
have an audit committee. Our Board of Directors currently acts as our nominating committee.
Nominating Committee
We do not presently
have a nominating committee. Our Board of Directors currently acts as our nominating committee.
Procedures for Nominating Directors
There have been
no material changes to the procedures by which security holders may recommend nominees to the Board during the quarter ended December
31, 2019.
Involvement in Certain Legal Proceedings
During the past ten years, to our knowledge,
no current or incoming director, executive officer, promoter or control person of the Company has been involved in the following:
(1) A petition under
the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar
officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner
at or within two years before the time of such filing, or any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;
(2) Such person was
convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other
minor offenses) ;
(3) Such person was
the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i. Acting as a futures
commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of
any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice
in connection with such activity;
ii. Engaging in any
type of business practice; or
iii. Engaging in
any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal
or State securities laws or Federal commodities laws;
(4) Such person was
the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority
barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in
paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was
found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities
law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was
found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any
Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not
been subsequently reversed, suspended or vacated;
(7) Such person was
the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of:
i. Any Federal or
State securities or commodities law or regulation; Or
ii. Any law or regulation
respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order
of disgorgement or restitution, civil money penalty or temporary or permanent cease and desist order, or removal or prohibition
order; Or
iii. Any law or regulation
prohibiting mail or wire fraud or fraud in connection with any business entity; Or
(8) Such person was
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in
Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization
that has disciplinary authority over its members or persons associated with a member.
Executive Compensation
The following table
sets forth information concerning the total compensation paid or accrued by us during the two fiscal years ended December 31,
2018 and 2019 to (i) all individuals that served as our principal executive officer or acted in a similar capacity for us at any
time during the two fiscal years ended December 31, 2018 and 2019 and (ii) all individuals that served as executive officers of
ours at any time during the two fiscal years ended December 31, 2018 and 2019 that received annual compensation during the two
fiscal year ended December 31, 2018 and 2019 in excess of $100,000. None of our executive officers received annual compensation
during the two fiscal years ended December 31, 2018 and 2019 in excess of $100,000.
Summary Compensation Table
Name & Principal Position
|
|
Fiscal
Year
ended
July 31,
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan Compensation
|
|
|
Non-Qualified
Deferred
Compensation
Earnings ($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
ZHU Hong (1),
|
|
2018
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
CEO, CFO
|
|
2019
|
|
|
38,227
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
38,227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Lazar (2),
|
|
2018
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
CEO, CFO
|
|
2019
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
(1)
|
ZHU Hong has served as our Chief Executive Officer from October
4, 2019 through the present. ZHU Hong has also served as our Chief Financial Officer from October 4, 2019 through the present.
|
(2)
|
David Lazar served as our Chief Executive Officer and Chief
Financial Officer from April 11, 2019 to October 4, 2019.
|
We do not currently
pay any other compensation to our executive officers except for an annual cash compensation of US$38,227 to Ms. ZHU Hong.
Employment Agreements with Executive
Officers
At this time, we do not have any written employment agreement
or other formal compensation agreements with our officers and director. Compensation arrangements are the subject of ongoing development
and we will make appropriate additional disclosures as they are further developed and formalized.
Outstanding Equity Awards at December
31, 2019
At this time, we
do not have any outstanding equity awards and do not have any equity incentive, option or similar plans.
Policy Regarding Transactions with
Related Persons
We do not have a
formal, written policy for the review, approval or ratification of transactions between us and any director or executive officer,
nominee for director, 5% stockholder or member of the immediate family of any such person that are required to be disclosed under
Item 404(a) of Regulation S-K.
Certain Relationships and Related Transactions,
Director Independence
SEC rules require
us to disclose any transaction or currently proposed transaction in which we were a participant and in which any related person
has or will have a direct or indirect material interest involving the lesser of $120,000 or 1% of the average of our total assets
as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or
holder of 5% or more of our Common Stock, or an immediate family member of any of those persons.
Transactions with related persons, promoters
and certain control persons
Related Party Transactions
As at December 31,
2019 and December 31, 2018, the Company had balances due from related parties of $57,446 and $18,586, respectively. The balances
due to related parties were $95,722 and $18,586. As at December 31, 2019 and December 31, 2018, the Company had the following
transactions with related parties. These receivables and payables are due on demand, are non-interest bearing, and have no maturity
date.
|
|
For the years ended
December 31,
|
|
Cash advance from related parties
|
|
2019
|
|
|
2018
|
|
Zhu Jian Yong
|
|
|
1,623
|
|
|
|
-
|
|
Total
|
|
$
|
1,623
|
|
|
$
|
-
|
|
|
|
For the years ended
December 31,
|
|
Cash advance to related parties
|
|
2019
|
|
|
2018
|
|
Zhu Hong
|
|
|
1,858,057
|
|
|
|
56,404
|
|
Ye Aiyun
|
|
|
57,446
|
|
|
|
-
|
|
Total
|
|
$
|
1,915,503
|
|
|
$
|
56,404
|
|
|
|
For the years ended
December 31,
|
|
Cash repayment from related parties
|
|
2019
|
|
|
2018
|
|
Zhu Hong
|
|
|
1,505,893
|
|
|
|
8,572
|
|
Total
|
|
$
|
1,505,893
|
|
|
$
|
8,572
|
|
|
|
For the years ended
December 31,
|
|
Assets purchased on behalf by related parties
|
|
2019
|
|
|
2018
|
|
Zhu Hong
|
|
|
45,806
|
|
|
|
8,444
|
|
Total
|
|
$
|
45,806
|
|
|
$
|
8,444
|
|
|
|
For the years ended
December 31,
|
|
Expense paid on behalf by related parties
|
|
2019
|
|
|
2018
|
|
Zhu Hong
|
|
|
360,737
|
|
|
|
16,619
|
|
Total
|
|
$
|
360,737
|
|
|
$
|
16,619
|
|
|
|
For the years ended
December 31,
|
|
Advance from customers received on behalf by related parties
|
|
2019
|
|
|
2018
|
|
Zhu Hong
|
|
|
498,775
|
|
|
|
-
|
|
Total
|
|
$
|
498,775
|
|
|
$
|
-
|
|
|
|
For the years ended
December 31,
|
|
Advance from customers refunded on behalf by related parties
|
|
2019
|
|
|
2018
|
|
Zhu Hong
|
|
|
557,861
|
|
|
|
-
|
|
Total
|
|
$
|
557,861
|
|
|
$
|
-
|
|
As at September 30,
2020, the Company had balance due from related parties of $73,632. The balance due to related parties was $942,296. As at September
30, 2020 and 2019, the Company had the following transactions with related parties. These receivables and payables are due on
demand, are non-interest bearing, and have no maturity date.
|
|
For the nine months ended September 30,
|
|
Cash advance from related parties
|
|
2020
|
|
|
2019
|
|
Zhu Jian Yong
|
|
|
29,494
|
|
|
|
1,581
|
|
Total
|
|
$
|
29.494
|
|
|
$
|
-
|
|
|
|
For the nine months ended September 30,
|
|
Cash advance to related parties
|
|
2020
|
|
|
2019
|
|
Zhu Hong
|
|
|
31,903
|
|
|
|
1,504,947
|
|
Shenzhen Nainiang Wine Limited
|
|
|
14,726
|
|
|
|
-
|
|
Total
|
|
$
|
46,629
|
|
|
$
|
1,504,947
|
|
|
|
For the nine months ended September 30,
|
|
Cash repayment from related parties
|
|
2020
|
|
|
2019
|
|
Zhu Hong
|
|
|
830,554
|
|
|
|
1,092,098
|
|
Total
|
|
$
|
830,554
|
|
|
$
|
1,092,098
|
|
|
|
For the nine months ended September 30,
|
|
Assets purchased on behalf by related parties
|
|
2020
|
|
|
2019
|
|
Zhu Hong
|
|
|
-
|
|
|
|
44,239
|
|
Total
|
|
$
|
-
|
|
|
$
|
44,239
|
|
|
|
For the nine months ended September 30,
|
|
Expense paid on behalf by related parties
|
|
2020
|
|
|
2019
|
|
Zhu Hong
|
|
|
16,964
|
|
|
|
332,790
|
|
Shenzhen Weilian Jin Meng Culture Spreading Limited
|
|
|
399
|
|
|
|
-
|
|
Total
|
|
$
|
17,363
|
|
|
$
|
332,790
|
|
|
|
For the nine months ended September 30,
|
|
Advance from customers received on behalf by related parties
|
|
2020
|
|
|
2019
|
|
Zhu Hong
|
|
|
758
|
|
|
|
192,150
|
|
Total
|
|
$
|
758
|
|
|
$
|
192,150
|
|
|
|
For the nine months ended September 30,
|
|
Advance from customers refunded on behalf by related parties
|
|
2020
|
|
|
2019
|
|
Zhu Hong
|
|
|
-
|
|
|
|
538,783
|
|
Total
|
|
$
|
-
|
|
|
$
|
538,783
|
|
Recent Sales of Unregistered Securities
On or about April
24, 2019, we issued 205,000,000 shares of our Common Stock to Custodian Ventures, LLC at $0.001 per share, which purchase price
was tendered from Custodian Ventures, LLC by cash it advanced on behalf of and for the benefit of the Company and a promissory
note issued by Custodian Ventures, LLC in favor of the Company in the principal amount of $173,950.
On or about September
24, 2019, we redeemed from Custodian Ventures, LLC 105,000,000 shares of our Common Stock, for $105,000, which was paid by reduction
in the balance due under certain promissory issued by Custodian Ventures, LLC to the Company.
On or about September
24, 2019, we redeemed from Custodian Ventures, LLC 105,000,000 shares of our Common Stock and issued to Custodian Ventures, LLC
105,000,000 shares of our Series A Preferred Stock as consideration.
On October 4, 2019,
as a result of a private transaction, 100,000,000 shares of our Series A Preferred Stock (the “Shares”) were transferred
from Custodian Ventures, LLC to ZHU Hong, making ZHU Hong become a 99.0% holder of the voting rights of the Company at the time.
The consideration paid for the Shares, which represented 49.5% of the issued and outstanding share capital of the Company on a
fully-diluted basis, was $175,000. The source of the cash consideration for the Shares was personal funds of the purchaser.
On February 2, 2021, we consummated the Acquisition, and the
Company acquired all the issued and outstanding capital stock of WLJM Cayman in exchange for the issuance to the shareholders of
WLJM Cayman of an aggregate of 600,000,000 restricted shares of our common stock, which were issued on February 2, 2021.