BIMT Bitmis Corporation (CE)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2023

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ___ to ____

Commission file number 333-214469

CAMBELL INTERNATIONAL HOLDING CORP.

Formerly known as BITMIS CORP.

(Exact name of registrant as specified in its charter)

1-17-1 Zhaojia Road
Xinglongtai District 

Panjin City, Liaoning Province
Beijing, PRC 124000

(Address of principal executive offices, Zip Code)

+85 15842767931

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ 

As of November 14, 2023, there were 7,250,750 common shares issued and outstanding.

BITMIS CORP.

QUARTERLY REPORT ON FORM 10-Q

Table of Contents

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying interim financial statements of Cambell International Holding Corp., formerly known as Bitmis Corp. (“the Company”, “we”, “us” or “our”) have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted principles have been condensed or omitted pursuant to such rules and regulations.

The interim financial statements are condensed and should be read in conjunction with the company’s latest annual financial statements.

In the opinion of management, the financial statements contain all material adjustments, consisting only of normal adjustments considered necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.

CAMBELL INTERNATIONAL HOLDING CORP.

(FORMELY BITMIS HOLDING CORP.)

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2023 AND JUNE 30, 2023

(Expressed in U.S. dollar, except for the number of shares)

The accompanying notes are an integral part of these condensed consolidated financial statements.

CAMBELL INTERNATIONAL HOLDING CORP.

(FORMELY BITMIS HOLDING CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in U.S. dollar, except for the number of shares)

(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

CAMBELL INTERNATIONAL HOLDING CORP.

(FORMELY BITMIS HOLDING CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in U.S. dollar, except for the number of shares)

(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

CAMBELL INTERNATIONAL HOLDING CORP.

(FORMELY BITMIS HOLDING CORP.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(Expressed in U.S. dollars)

(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

CAMBELL INTERNATIONAL HOLDING CORP.

(FORMELY BITMIS HOLDING CORP.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

(Unaudited)

ITEM 2. MANAGEMENT’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENT NOTICE

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-Q and our financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended June 30, 2023 (the “2023 Form 10-K”).

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rates; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission. For more information, see our discussion of risk factors located at Part I, Item 1A of our 2019 Form 10-K.

Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. 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 as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

OVERVIEW

Corporate History and Structure

Cambell International Holding Corp., formerly known as Bitmis Corp.

Bitmis Corp. was founded in the State of Nevada on June 6, 2016. The Company originally intended to commence operations in the business of consulting in Thailand, but it was not successful. Thus, the Company became dormant in July 2020.

Custodianship. On April 12, 2022, the Eighth Judicial District Court in Clark County, Nevada Case No: A-22-849683-B appointed Custodian Ventures LLC, a Wyoming limited liability company of which Mr. David Lazar was managing member (“Custodian Ventures”), as the Company’s custodian. Upon Custodian Ventures’ appointment, all of the remaining former officers and directors of the Company resigned.

David Lazar, 31, a private investor, served as CEO and Chairman of the Company commencing December 9, 2021.

2022 Transaction. On September 22, 2022, as a result of a private transaction (the “2022 Transaction”), 10,000,000 shares of the Company’s series A preferred stock, $0.001 par value per share, were transferred from Custodian Ventures to Xiaoyan Yuan (the “Purchaser”) for a cash consideration of $430,000 constituting personal funds of the Purchaser. As a result, the Purchaser became the holder of 90% of the voting rights of the issued and outstanding share capital of the Company.

On September 22, 2022, David Lazar resigned from all of his positions with the Company. Concurrently, and effective on the date of the transfer, Xiaoyan Yuan consented to act as the Company’s Chief Executive Officer, President, Chief Financial Officer, and sole director and also assumed the positions of Secretary and Treasurer.

Share Exchange with Cambell International Holding Limited. On December 30, 2022, we entered into a share exchange agreement (“Share Exchange Agreement”) with (i) Cambell International Holding Limited (“Cambell International”), a limited liability company incorporated in the British Virgin Islands on September 23, 2020; (ii) the shareholders of Cambell International (the “Cambell Shareholders”); and (iii) Ms. Xiaoyan Yuan, the holder of all of our outstanding shares of preferred stock, to acquire all the issued and outstanding capital stock of Cambell International in exchange for the issuance to the Cambell Shareholders of an aggregate of 1,000,000 shares (the “Shares”) of our common stock and the transfer by Ms. Yuan to the Cambell Shareholders of 9,000,000 shares of our series A preferred stock owned by her (“Reverse Acquisition”). The Reverse Acquisition was closed on December 30, 2022.

Amendments to Articles of Incorporation

Name Change to Campbell International Holding Corp. Effective as of May 25, 2023, our Board of Directors and majority consenting shareholders signed a joint written consent (the “Campbell Joint Written Consent”), approving an amendment to our articles of incorporation to change our name and trading symbol. The Campbell Joint Written Consent was approved by all members of the Board of Directors and by a majority of our shareholders holding of record an aggregate of 10,406,400 shares of our common stock.

On June 29, 2023, an amendment to the articles of incorporation was filed with the Nevada Secretary of State (the “Campbell Certificate of Amendment”) to effect the change of name from “Bitmis Corp.” to “Campbell International Holding Corp.” (the “Campbell Company Name Change”). On July 10, 2023, the Company also filed an issuer notification form with FINRA (the “Issuer Notification”) reflecting the Campbell Company Name Change and requesting a change in its trading symbol from “BITM” to “KAFC” or such other trading symbol as may be available. The Campbell Certificate of Amendment to the Corporation’s Articles of Incorporation was effective as of the date of acceptance by the Secretary of State of the State of Nevada or June 29, 2023.

The foregoing description of the Campbell Certificate of Amendment and Campbell Joint Written Consent do not purport to be complete and are qualified in their entirety by reference to the full text of the Campbell Certificate of Amendment and Campbell Joint Written Consent, which were filed as Exhibit 3.1 and Exhibit 99.1, respectively, to the Current Report on Form 8-K with the Securities and Exchange Commission on July 11, 2023.

Name Change to Cambell International Holding Corp. Effective as of July 19, 2023, our Board of Directors and majority consenting shareholders signed a joint written consent (the “Cambell Joint Written Consent”), approving an amendment to the articles of incorporation to change the name of the Company and the Company’s trading symbol. The Cambell Joint Written Consent was approved by all members of our Board of Directors and by the majority of our shareholders holding of record an aggregate of 10,406,400 shares of our common stock.

On July 25, 2023, a further amendment to our articles of incorporation was filed with the Nevada Secretary of State to effect the change of name from “Campbell International Holding Corp.” to “Cambell International Holding Corp.” (the “Cambell Certificate of Amendment”). The Cambell Certificate of Amendment to our articles of incorporation was effective as of the date of acceptance by the Secretary of State of the State of Nevada on July 25, 2023.

The foregoing description of the Cambell Certificate of Amendment and Cambell Joint Written Consent do not purport to be complete and are qualified in their entirety by reference to the full text of the Cambell Certificate of Amendment and Cambell Joint Written Consent, which were filed as Exhibit 3.1 and Exhibit 99.1 to the Current Report on Form 8-K with the Securities and Exchange Commission on August 10, 2023.

Current Corporate Structure

Following the consummation of the Reverse Acquisition, we engage in the research and development of extraction processes of natural β -carotene, the planting and harvesting of raw materials as well as the production, distribution, marketing, and sales of natural β -carotene health food products. Natural β -carotene is a safe source of vitamin A which is an essential nurturant important for vision, growth, cell division, reproduction, and immunity as well as containing antioxidant properties which offer protection from diabetes, heart disease, and cancer.

The Company owns 100% of the issued and outstanding capital stock of Cambell International Holding Limited, which was incorporated on September 23, 2020 under the law of the British Virgin Islands. Cambell International Holding Limited is a holding company holding the following entities:

The following diagram illustrates our corporate structure as of the date of this Quarterly Report:

Contractual Arrangements among WFOE, Liaoning Kangbaier, and Liaoning Kangbaier’s Shareholders

Liaoning Kangbaier Biotechnology Development Co., Ltd

Liaoning Kangbaier Biotechnology Development Co., Ltd. (“Liaoning Kangbaier”), the VIE, was formed under the laws of the PRC on September 22, 2015. We operate our research, development, production, and marketing business of natural B-carotene based nutritional products through Liaoning Kangbaier and its wholly owned subsidiaries, Doron Kangbaier Biotechnology Co. Ltd., and Liaoning BaiJiaKang Health Technology Co. Ltd., in China.

Pursuant to PRC law, each entity formed under PRC law must have a business scope as submitted to the Administration for Market Regulation or its local counterpart. Depending on the particular business scopes, approval by the relevant competent regulatory agencies may be required prior to commencement of business operations. Since the sole business of our WFOE is to provide Liaoning Kangbaier with technical support, consulting services, and other management services relating to its day-to-day business operations and management in exchange for a service fee approximately equal to all pre-tax profits of Liaoning Kangbaier and its subsidiaries (minus any accumulated losses (if any) of Liaoning Kangbaier and its subsidiaries in the previous fiscal year, and the amount required for operating funds, expenditures, taxes, and other statutory contributions in any particular fiscal year), such business scope is appropriate under PRC law. Liaoning Kangbaier, on the other hand, is also able to, pursuant to its business scope, conduct the business of manufacturing nutritional products. Liaoning Kangbaier is approved by the Market Regulation Bureau of Panjin to engage in its business.

We control Liaoning Kangbaier through a series of contractual arrangements, or “VIE Agreements,” which are described under “Contractual Arrangements among WFOE, Liaoning Kangbaier, and Liaoning Kangbaier Shareholders.” The VIE Agreements are designed so that the operations of the VIE are solely for the benefit of WFOE and ultimately, the Company. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes only and must consolidate the VIE because we meet the conditions under the U.S. GAAP to consolidate the VIE.

While we do not have any equity interest in our consolidated affiliated entities, we have been and are expected to continue to be dependent on them to operate our business as long as there is limitation or prohibition in the interpretation and application by local governments of regulations concerning foreign investments in companies such as our consolidated affiliated entities. We rely on our consolidated affiliated entities to maintain or renew their respective qualifications, licenses, or permits necessary for our business in China. We believe that under the VIE Agreements, we have substantial control over our consolidated affiliated entities and their respective shareholders to renew, revise, or enter into new contractual arrangements prior to the expiration of the current arrangements on terms that would enable us to continue to operate our business in China after the expiration of the current arrangements, or pursuant to certain amendments and changes of the current applicable PRC laws, regulations, and rules on terms that would enable us to continue to operate our business in China legally. While we currently do not anticipate any changes to PRC laws in the near future that may impact our ability to carry out our business in China, no assurances can be made in this regard. See “Item 1A. Risk Factors-Risks Related to Doing Business in China.” For a detailed description of the risks associated with our corporate structure and the contractual arrangements that support our corporate structure, see “Item 1A. Risk Factors - Risks Relating to our Commercial Relationship with our VIE” in our 2023 Annual Report filed with the SEC on October 20, 2023.

The following is a summary of the VIE Agreements among the WFOE, Liaoning Kangbaier, and Liaoning Kangbaier’s Shareholders.

On November 27, 2022, Baijiakang Consulting, Liaoning Kangbaier, and Liaoning Kangbaier’s Shareholders. entered into a series of contractual agreements for Liaoning Kangbaier to qualify as a variable interest entity or VIE (the “VIE Agreements”). The VIE Agreements consist of the following:

Consulting Service Agreement. Pursuant to the terms of the Exclusive Consulting and Service Agreement dated November 27, 2022, between Baijiakang Consulting and Liaoning Kangbaier (the “Consulting Service Agreement”), Baijiakang Consulting is the exclusive consulting and service provider to Liaoning Kangbaier to provide business-related software research and development services; design, installation, and testing services; network equipment support, upgrade, maintenance, monitor, and problem-solving services; employees training services; technology development and sublicensing services; public relations services; market investigation, research, and consultation services; short to medium term marketing plan-making services; compliance consultation services; marketing events and membership related activities planning and organizing services; intellectual property permits; equipment and rental services; and business-related management consulting services. Pursuant to the Consulting Service Agreement, the service fee is the remaining amount after Liaoning Kangbaier’s profit before tax in the corresponding year deducts Liaoning Kangbaier’s losses, if any, in the previous year, the necessary costs, expenses, taxes, and fees incurred in the corresponding year, and the withdraws of the statutory provident fund. Liaoning Kangbaier agreed not to transfer its rights and obligations under the Consulting Service Agreement to any third party without prior written consent from Baijiakang Consulting. In addition, Baijiakang Consulting may transfer its rights and obligations under the Consulting Service Agreement to Baijiakang Consulting’s affiliates without Liaoning Kangbaier’s consent, but Baijiakang Consulting shall notify Liaoning Kangbaier of such transfer. This Agreement is valid for a term of 10 years subject to any extension requested by Baijiakang Consulting unless terminated by Baijiakang Consulting unilaterally prior to the expiration.

Business Operation Agreement. Pursuant to the terms of the Business Operation Agreement dated November 27, 2022, among Baijiakang Consulting, Liaoning Kangbaier, and the shareholders of Liaoning Kangbaier (the “Business Operation Agreement”), Liaoning Kangbaier has agreed to subject the operations and management of its business to the control of Baijiakang Consulting. According to the Business Operation Agreement, Liaoning Kangbaier is not allowed to conduct any transactions that has substantial impact upon its operations, assets, rights, obligations, and personnel without the Baijiakang Consulting’s written approval. The shareholders of Liaoning Kangbaier and Liaoning Kangbaier will take Baijiakang Consulting’s advice on appointment or dismissal of directors, employment of Liaoning Kangbaier’s employees, regular operation, and financial management of Liaoning Kangbaier. The shareholders of Liaoning Kangbaier have agreed to transfer any dividends, distributions, or any other profits that they receive as the shareholders of Liaoning Kangbaier to Baijiakang Consulting without consideration. The Business Operation Agreement is valid for a term of 10 years or longer upon the request of Baijiakang Consulting prior to the expiration thereof. The Business Operation Agreement may be terminated earlier by Baijiakang Consulting with a 30-day written notice.

Proxy Agreement. Pursuant to the terms of the Proxy Agreements dated November 27, 2022, among Baijiakang Consulting, and the shareholders of Liaoning Kangbaier (each, the “Proxy Agreement”, collectively, the “Proxy Agreements”), each shareholder of Liaoning Kangbaier has irrevocably entrusted his/her shareholder rights as Liaoning Kangbaier’s shareholder to Baijiakang Consulting, including but not limited to, proposing the shareholder meeting, accepting any notices with regard to the convening of shareholder meeting and any other procedures, conducting voting rights, and selling or transferring the shares held by such shareholder, for 10 years or earlier if the Business Operation Agreement was terminated for any reasons.

Equity Disposal Agreement. Pursuant to the terms of the Equity Disposal Agreement dated November 27, 2022, among Baijiakang Consulting, Liaoning Kangbaier, and the shareholders of Liaoning Kangbaier (the “Equity Disposal Agreement”), the shareholders of Liaoning Kangbaier granted Baijiakang Consulting or its designees an irrevocable and exclusive purchase option (the “Option”) to purchase Liaoning Kangbaier’s all or partial equity interests and/or assets at the lowest purchase price permitted by PRC laws and regulations. The option is exercisable at any time at Baijiakang Consulting’s discretion in full or in part, to the extent permitted by PRC law. The shareholders of Liaoning Kangbaier agreed to give Liaoning Kangbaier the total amount of the exercise price as a gift, or in other methods upon Baijiakang Consulting’s written consent to transfer the exercise price to Liaoning Kangbaier. The Equity Disposal Agreement is valid for a term of 10 years or longer upon the request of Baijiakang Consulting.

Equity Pledge Agreement. Pursuant to the terms of the Equity Pledge Agreement dated November 27, 2022, among Baijiakang Consulting and the shareholders of Liaoning Kangbaier (the “Pledge Agreement”), the shareholders of Liaoning Kangbaier pledged all of their equity interests in Liaoning Kangbaier to Baijiakang Consulting, including the proceeds thereof, to guarantee Liaoning Kangbaier’s performance of its obligations under the Business Operation Agreement, the Consulting Service Agreement and the Equity Disposal Agreement (each, an “Agreement”, collectively, the “Agreements”). If Liaoning Kangbaier or its shareholders breach its respective contractual obligations under any Agreements, or cause to occur one of the events regards as an event of default under any Agreements, Baijiakang Consulting, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interest in Liaoning Kangbaier. During the term of the Pledge Agreement, the pledged equity interests cannot be transferred without Baijiakang Consulting’s prior written consent. The Pledge Agreement is valid until all the obligations due under the Agreements have been fulfilled.

The foregoing summaries of the VIE Agreements do not purport to be complete and are subject to, and qualified in their entirety by, the respective VIE Agreement, which are filed as Exhibits 10.2 through 10.6 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on January 11, 2023.

See “Condensed Consolidating Schedule,” below and “Item 1. Financial Statements and Supplementary Data - Consolidated Financial Statements and Footnotes”.

CURRENT BUSINESS OPERATIONS

Our Products and Markets

We, through our China-based VIE, Liaoning Kangbaier and its subsidiaries, produce, market, and sell natural β -carotene-based health products. Natural β -carotene is a safe source of vitamin A and has high nutritional and medicinal value. A substantial amount of scientific research data, obtained through clinical trials at home and abroad have verified that natural β -carotene plays a significant role in supplementing vitamin A, acts as an antioxidant, maintains cell vitality, assists in cancer prevention, vision protection, blood glucose regulation, body immunity improvement, intestinal microecological protection, cardiovascular and cerebrovascular disease prevention, may delay the effects of aging, and provides other physical benefits.

Natural β -carotene is widely used in the health food, health products, dietary supplements, cosmetics and feed industries, and the global market application scale is steadily growing. According to Technavio data, the global β -carotene market size reached $370 million in 2015 and reached $460 million in 2020, with a compound annual growth rate of 4.5%. The market size is expected to reach $650 million by 2026.

We have developed a natural β -carotene series of health products, including natural β -carrot juice, natural β -carrot powder, and natural β -carotene noodles. In the future, we plan to develop a variety of other forms of carotene products, such as carotene milk, carotene biscuits, carotene jelly, carotene enzyme, and others, so that carotene products will become a staple of the Chinese diet.

As of September 30, 2023, we owned 25,000 mu of carrot planting base, with an annual output of 125,000 tons of carrots. For the quarters ended September 30, 2023 and September 30, 2022, our revenue is $348,628 and $68,035, respectively. The market repeat purchase rate is 80%. According to the consumer satisfaction survey in recent years, the satisfaction index of carotene series products is relatively high. According to consumer feedback, the product is excellent in improving vision, digestion, and immunity and in reducing the pain of chemoradiotherapy. Our products are mainly sold in the form of solid and liquid drinks.

Our β -Carotene Products

The following are some of our products:

Our main products are β-carotene series products. In order to introduce our products to the public quickly and widely, we have developed and designed various forms of products, such as liquid, powder, and pasta, taking into account the convenience of product transportation, appearance, and portability and catering to the different preferences of consumers. The amount of carotene in these different forms of products is slightly different. Our Natural Beta carotene drink contains 4mg of beta carotene per 100ml; the powdered beta-carotene content was ≥24.5mg per 100g.

While we strictly control the quality of our products, we will also continue to enrich the product categories. We will target the mass consumer market, covering different groups such as infants, young and middle-aged, and the elderly. In the next step, through the establishment of cooperation with China Polypeptide Industry Group, based on the cooperation of clear protein polypeptide powder, we are committed to the development of peptide products and other new products with carrot-based raw materials. In the future, through international product certification, we intend to enter the global market.

The Baijiakang Healthy Lifestyle Supermarket Concept

The Baijiakang Healthy Lifestyle Supermarket, offered as a franchise, is intended to serve the middle-aged and elderly residents in the community by providing a comprehensive platform for one-stop shopping, physiotherapy, integrated health evaluation and consultation, health therapy, health education, and related health services. The goal is to meet the basic needs of the residents for a healthy life including natural β -carotene series products. Each store is equipped with professional health testing instruments, so that customers can participate in health evaluations and consultations. A personal profile is created for each member, recording their personal health data in detail, which, together with an analysis of the results by health testing instruments, can provide health-related disease prevention recommendations and suggest health-related products.

BaiJiaKang APP (www.baijiakang.wx.chinakbegf.com), provides technical support for offline stores and enables customers to register free as “members” through the mobile link, purchase goods, and enjoy other benefits. The mobile link also connects supply chains, distributors, franchisees, allied merchants, and other users with sales volume, customers, distributors, revenue, channels, and valuable customers, Win&win, a sense of community, and an inter-connected system.

We will provide pre-sales and after-sales tracking, maintenance, feedback, and emergency response services for store members. A consumer satisfaction evaluation system is employed to continuously improve our customers’ shopping experience, strengthen customer retention, and increase customers’ repurchase rate.

RESULTS OF OPERATIONS

Three months ended September 30, 2023 compared to three months ended September 30, 2022

The following table sets forth key components of our results of operations during the three months ended September 30, 2023 and 2022, both in dollars and as a percentage of our revenue.

Revenues. Our revenues were $348,628 for the three months ended September 30, 2023 representing an increase of $280,593 or 412% from $68,035 for the three months ended September 30, 2022. There are two revenue streams within the Company’s operations: (1) normal product sales of carotene which constitutes the majority of the revenues, and (2) franchise fee, recognized averagely over the contract period. The increase was mainly due to product volumes and types increased rapidly as the recovering of the economic market after the release from COVID-19 during the three months ended September 30, 2023. The Company started recognized franchise fee for the three months ended September 30, 2023 as well.

The following table summarizes our revenues by revenue streams for the three months ended September 30, 2023 and 2022:

Cost of revenues. Our cost of revenues was $192,820 for the three months ended September 30, 2023 compared to $64,133 for the same period last year. Cost of revenue refers to the cost of material and labor cost, direct material and overhead costs. The increase was in line with the revenue.

Gross profit and gross margin. Our gross profit was $155,808 for the three months ended September 30, 2023 compared with a gross profit of $3,902 for the same period last year. The gross margin increased from 5.73% during 2022 to 44.69% during 2023. The increase was in line with the business rise.

Selling expenses. As shown below, our selling expenses consist primarily of compensation and benefits to our selling department and other expenses incurred in connection with general operations. Our selling expenses increased by $8,966 to $9,907 for the three months ended September 30, 2023 from $941 for the same period 2022. The increase was primarily due to the advertising fee increased by $5,565 for the three months ended September 30, 2023, as in line with the rise of revenue.

General and administrative expenses. As shown below, our general and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional fees and other expenses incurred in connection with general operations. Our general and administrative expenses decreased by $18,562 to $56,567 for the three months ended September 30, 2023 from $75,129 for the same period in 2022. The decrease was mainly due to the decline of salary and social insurance $15,042 for the three months ended September 30, 2023, resulting from reducing of one department vice manager.

Income tax expense. Our income tax expense was nil for the three months ended September 30, 2023 and 2022.

Net income (loss). As a result of the cumulative effect of the factors described above, our net income was $124,544 for the three months ended September 30, 2023 and a net loss $64,020 for the three months ended September 30, 2022.

Liquidity and Capital Resources

The Company’s primary need for liquidity stems from its need to fund working capital requirements of the Company’s businesses, its capital expenditures and its general operations, including debt repayment. The Company has historically financed its operations through short-term and long-term commercial bank loans from Chinese banks, as well as its ongoing operating activities by using funds from loans from directors and shareholders, and other third party. The Company routinely monitors current and expected operational requirements and financial market conditions to evaluate the use of available financing sources. Considering the existing working capital position and the ability to access debt funding sources, the management believes that the Company’s operations and borrowing resources are sufficient to provide for its current and foreseeable capital requirements to support its ongoing operations for the next twelve months.

The following table set forth a summary of its cash flows for the periods indicated:

Operating Activities

Net cash provided by operating activities was $259,178 for the three months ended September 30, 2023, as compared to net cash used in operating activities was $9,981,867 for the three months ended September 30, 2022.

The net cash provided by operating activities for the three months ended September 30, 2023 was mainly due to our net profit of $124,544, an increase in advance from customers of $226,383. The net cash provided by operating activities for the three months ended September 30, 2022 was mainly due to our net loss of $64,020, a decrease in advance from customers of $6,278,407 and a decrease in other payables of $3,759,841, partially offset by a decrease in other receivable of $49,825.

Investing Activities

Net cash provided by investing activities was $3,988 for the three months ended September 30, 2023, as compared to $47,807 net cash used in investing activities for the three months ended September 30, 2022. The net cash provided by investing activities was mainly attributable to disposal of property and equipment for the three months ended September 30, 2023. The net cash used in investing activities was mainly attributable to purchase of property and equipment for the three months ended September 30, 2022. 

Financing Activities

Net cash used in financing activities was $162,697 for the three months ended September 30, 2023, as compared to $10,003,998 net cash provided by financing activities for the three months ended September 30, 2022. The net cash used in financing activities was mainly attributable to repayment to related parties for the three months ended September 30, 2023. The net cash provided by financing activities was mainly attributable to advances from related parties for the three months ended September 30, 2022.

Contractual Obligations

The Company had no short-term and long-term bank loans as of September 30, 2023 and June 30, 2023.

Off-Balance Sheet Transactions

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Critical Accounting Policies

We regularly evaluate the accounting policies and estimates that we use to make budgetary and financial statement assumptions. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

See Note 2 to the financial statements included herewith.

Recent Accounting Pronouncements

See Note 2 to the financial statements included herewith.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None

ITEM 4. CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Controls over Financial Reporting

There was no change in the Company’s internal control over financial reporting during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not involved in any pending legal proceeding nor are we aware of any pending or threatened litigation against us.

ITEM 1A. RISK FACTORS

Not Applicable

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITES

None

ITEM 4. MINE SAFETY DISCLOSURES.

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The following exhibits are included as part of this report: