Item
1. Financial Statements
China
Foods Holdings Ltd.
Balance
Sheets
|
|
June
30, 2020
|
|
|
December 31, 2019
|
|
|
|
$
|
|
|
$
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Bank balance
|
|
|
7,198
|
|
|
|
12,328
|
|
Total Current Assets
|
|
|
7,198
|
|
|
|
12,328
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
7,198
|
|
|
|
12,328
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Other payables
|
|
|
6,958
|
|
|
|
6,633
|
|
Income taxes payable
|
|
|
100
|
|
|
|
100
|
|
Amount due to a director
|
|
|
5 80,697
|
|
|
|
92,122
|
|
Amount due to the holding company
|
|
|
5 71,669
|
|
|
|
30,000
|
|
Total Current Liabilities and Total Liabilities
|
|
|
159,424
|
|
|
|
128,855
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
Common stock ($0.0001 par value, 100,000,000 shares authorized, 5,252,309 shares issued and outstanding)
|
|
|
525
|
|
|
|
525
|
|
Additional paid-in capital
|
|
|
136,988
|
|
|
|
136,988
|
|
Other reserve
|
|
|
350,547
|
|
|
|
350,547
|
|
Accumulated deficit
|
|
|
(640,286
|
)
|
|
|
(604,587
|
)
|
Total Stockholders’ Deficit
|
|
|
(152,226
|
)
|
|
|
(116,527
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
7,198
|
|
|
|
12,328
|
|
The
accompanying notes are an integral part of these unaudited condensed financial statements
China
Foods Holdings Ltd.
Statements
of Operations
(Unaudited)
|
|
For the three months ended June 30, 2020
|
|
|
For the three months ended June 30, 2019
|
|
|
For the six months ended June 30, 2020
|
|
|
For the six months ended June 30, 2019
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
General and administrative expense
|
|
|
23,829
|
|
|
|
44,643
|
|
|
|
35,699
|
|
|
|
68,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(23,829
|
)
|
|
|
(44,643
|
)
|
|
|
(35,699
|
)
|
|
|
(68,116
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(23,829
|
)
|
|
|
(44,643
|
)
|
|
|
(35,699
|
)
|
|
|
(68,116
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)*
|
|
$
|
(0.01
|
)*
|
|
$
|
(0.01
|
)*
|
|
$
|
(0.01
|
)*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
5,252,309
|
|
|
|
5,252,309
|
|
|
|
5,252,309
|
|
|
|
5,252,309
|
|
*denotes
net loss per common share of less than $0.01 per share.
The
accompanying notes are an integral part of these financial statements
CHINA
FOODS HOLDINGS LTD.
Statements
of Shareholders’ Deficit
(Unaudited)
|
|
Common Stock
|
|
|
Additional paid-in
|
|
|
Other
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Share
|
|
|
Amount
|
|
|
capital
|
|
|
Reserve
|
|
|
Deficit
|
|
|
Deficit
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2019
|
|
|
5,252,309
|
|
|
|
525
|
|
|
|
136,988
|
|
|
|
350,547
|
|
|
|
(604,587
|
)
|
|
|
(116,527
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,870
|
)
|
|
|
(11,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at March 31, 2020
|
|
|
5,252,309
|
|
|
|
525
|
|
|
|
136,988
|
|
|
|
350,547
|
|
|
|
(616,457
|
)
|
|
|
(128,397
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(23,829
|
)
|
|
|
(23,829
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at June 30, 2020
|
|
|
5,252,309
|
|
|
|
525
|
|
|
|
136,988
|
|
|
|
350,547
|
|
|
|
(640,286
|
)
|
|
|
(152,226
|
)
|
|
|
Common Stock
|
|
|
Merger Reserve
|
|
|
Other Reserve
|
|
|
Accumulated
|
|
|
Total
stockholders’
|
|
|
|
Share
|
|
|
Amount
|
|
|
(Note a)
|
|
|
(Note b)
|
|
|
Deficit
|
|
|
deficit
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2018
|
|
|
5,251,309
|
|
|
|
137,413
|
|
|
|
-
|
|
|
|
350,547
|
|
|
|
(511,785
|
)
|
|
|
(23,825
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(23,473
|
)
|
|
|
(23,473
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger transaction
|
|
|
1,000
|
|
|
|
(136,888
|
)
|
|
|
136,988
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at March 31, 2019
|
|
|
5,252,309
|
|
|
|
525
|
|
|
|
136,988
|
|
|
|
350,547
|
|
|
|
(535,258
|
)
|
|
|
(47,198
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(44,643
|
)
|
|
|
(44,643
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at June 30, 2019
|
|
|
5,252,309
|
|
|
|
525
|
|
|
|
136,988
|
|
|
|
350,547
|
|
|
|
(579,901
|
)
|
|
|
(91,841
|
)
|
Notes
(a)
|
Merger
reserve represent the difference between the nominal value of the share capital of the
merged company and the cost of investment.
|
(b)
|
Other
reserve represent the waiver of an aggregated principal and interest of $350,547 by the
president of Trafalgar Resources, Inc.
|
The
accompanying notes are an integral part of these financial statements.
China
Foods Holdings Ltd.
Statements
of Cash Flows
(Unaudited)
|
|
For the six months
ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
$
|
|
|
|
$
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(35,699
|
)
|
|
|
(68,116
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase in other payables
|
|
|
325
|
|
|
|
4,501
|
|
Decrease in prepayment
|
|
|
-
|
|
|
|
(1,250
|
)
|
(Decrease) increase in amount due to a director
|
|
|
(11,425
|
)
|
|
|
64,865
|
|
Increase in amount due to the holding company
|
|
|
41,669
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED BY OPERATING ACTIVITIES
|
|
|
(5,130
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH
|
|
|
(5,130
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH at beginning of period
|
|
|
12,328
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH at end of period
|
|
|
7,198
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
-
|
|
|
|
-
|
|
Taxes paid
|
|
|
-
|
|
|
|
100
|
|
The
accompanying notes are an integral part of these financial statements
China
Foods Holdings Ltd.
Notes
to the Unaudited Condensed Financial Statements
June
30, 2020
NOTE
1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION
China
Foods Holdings Ltd. (the “Company”) was incorporated in Delaware on January 10, 2019. On January 23, 2019, the Company
entered into an Agreement and Plan of Merger (the “Agreement”) with Trafalgar Resources, Inc., a Utah corporation
(“Trafalgar”). Pursuant to the Agreement, the Company merged with Trafalgar (the “Merger”) with the Company
as the surviving entity. Prior to the Merger, Trafalgar had not commenced operations for several years that had resulted in significant
revenue and Trafalgar’s efforts had been devoted primarily to activities related to raising capital and attempting to acquire
an operating entity.
Prior
to the Merger, Trafalgar’s majority stockholder who owned 5,000,000 shares (approximately 95.2%) of the 5,251,309 outstanding
shares of Trafalgar’s common stock, par value $0.0001, signed a written consent approving the Merger and the related transactions.
Such approval and consent were sufficient under Utah law and Trafalgar’s Bylaws to approve the Merger. The boards of directors
and shareholders of the Company and Trafalgar approved the Merger.
Pursuant
to the Merger, each share of Trafalgar’s common stock was converted into one share of the Company’s common stock.
After the Merger, HY (HK) Financial Investments Co., Ltd. owns 5,001,000 shares of common stock of the Company.
The
Merger was effective on March 13, 2019.
On
December 11, 2019, the Board of Directors approved a change to its fiscal year-end from September 30 to December 31. As a result
of this change, the fiscal year is a 3 months transition period beginning October 1, 2019 through December 31, 2019.
Basis
of Presentation
The
financial statements present the balance sheets, statements of operations, statements of shareholders’ deficit and statements
of cash flows of the Company. These financial statements are presented in the United States dollars and have been prepared in
accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”).
Unaudited
Financial Statements
The
accompanying unaudited condensed financial statements have been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission, or the SEC, including the instruction to Form 10-Q and Article 8 of Regulation S-X. In the opinion of
Management, all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the
six months ended June 30, 2020, have been made. Operating results for the six months ended June 30, 2020 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2020. They do not include all of the information and footnotes
required by United States generally accepted accounting principles for complete financial statements.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUTING POLICIES
Net
Loss per Common Share
Loss
per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number
of common shares outstanding during the reporting period. Diluted loss per share is calculated by dividing the Company’s
net loss available to common shareholders by the diluted weighted average number of shares outstanding during the reporting period.
The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially
dilutive debt or equity. There are no such common stock equivalents outstanding as of June 30, 2020.
Income
Taxes
The
Company accounts for income taxes pursuant to FASB ASC 740-10-05, “Accounting for Income Taxes”. Deferred tax assets
and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse.
Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset
will be realized. A valuation allowance has currently been recorded to reduce our deferred tax asset to $0.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be
cash equivalents.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist of bank balance, other payables, amount due to a director and amount due to the
holding company. The carrying amount of these financial instruments approximated fair value due to the length of maturity or interest
rates that approximate prevailing market rates.
Use
of Estimates
The
presentation of the condensed financial statements and related disclosures in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities. Certain significant accounting policies that contain subjective management estimates and assumptions include
those related to going concern and valuation allowance on deferred income tax. Operating results in the future could vary from
the amounts derived from management’s estimates or assumptions.
Recently
Issued Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards
that are not yet effective will not have a material impact on the Company’s financial position or results of operations
upon adoption.
NOTE
3 - GOING CONCERN
The
financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses resulting
in an accumulated deficit of $640,286 and net stockholders’ deficit of $152,226 as of June 30, 2020, and has negative cash
flow from operations. The ability to continue as a going concern is dependent upon the Company generating profitable operations
in the future and, or, to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. Management intends to see new capital from director and the holding company to provide
needed funds. The financial statements do not include any adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might result from this uncertainty.
NOTE
4 – INCOME TAXES
Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating
loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment. Income tax periods 2017, 2018 and 2019 are open for examination by taxing authorities.
The
income tax expense for the period ended June 30, 2020 differs from the amount computed using the federal statutory rates as follows:
|
|
Six months ended
June 30, 2020
|
|
|
Six months ended
June 30 2019
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Income tax benefit at Federal tax rate of 21% for 2020 and 2019
|
|
$
|
(7,497
|
)
|
|
$
|
(14,304
|
)
|
Valuation allowance
|
|
|
7,497
|
|
|
|
14,304
|
|
|
|
|
-
|
|
|
|
-
|
|
At
June 30, 2020 the Company had a net operating loss carry forward. These losses will start to expire in the year 2020 through 2039.
No tax benefit has been reported in the financial statements because the Company believes that it is more likely than not that
the carryforwards will expire unused. The utilization of future losses may be limited under various provisions of the Internal
Revenue Code pertaining to continuity of business operations limits and substantial changes in ownership. Accordingly, the potential
tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. The Company has no tax positions
at June 30, 2020 and December 31, 2019 for which the ultimate deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility.
NOTE
5 - AMOUNT DUE TO A DIRECTOR / THE HOLDING COMPANY
|
|
June 30,2020
|
|
|
December 31,2019
|
|
|
|
$
|
|
|
$
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
|
|
|
|
|
|
Amount due to a director
|
|
|
|
|
|
|
|
|
Mr. Kong Xiao Jun
|
|
|
80,697
|
|
|
|
92,122
|
|
|
|
|
|
|
|
|
|
|
Amount due to the holding company
|
|
|
|
|
|
|
|
|
HY (HK) Financial Investments Co., Ltd.
|
|
|
71,669
|
|
|
|
30,000
|
|
NOTE
6: SUBSEQUENT EVENTS
On
June 8, 2020, the Company executed a Share Exchange Agreement (“the “Share Exchange Agreement”) with Elite Creation
Group Limited(“ECGL”), a private limited company incorporated under the laws of British Virgin Islands, and the shareholders
of ECGL. Pursuant to the Share Exchange Agreement, the Company purchased Fifty Thousand (50,000) shares of ECGL (the “ECGL
Shares”), representing all of the issued and outstanding shares of common stock of ECGL. As consideration, the Company agreed
to issue to the shareholders of ECGL Fifteen Million (15,000,000) shares of the Company’s common stock, at a value of US$0.32
per share, for an aggregate value of US$4,800,000.
On
July 9, 2020, the Company completed the acquisition of ECGL. As a result of the acquisition, the Company is no longer a shell
company as defined in Rule 12b-2 under the Securities Exchange Act of 1934. Ms. Yang Liu resigned from her position as a director
and Ms. Cheng Ni Hu was appointed to fill the vacancy caused by Ms. Yang Liu’s resignation.
Item
2. Management’s Discussion and Analysis or Plan of Operation.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies,
competitive positions, growth opportunities for existing products, plans and objectives of management. Statements in this periodic
report that are not historical facts are hereby identified as forward-looking statements. Our Company and our representatives
may from time to time make written or oral statements that are “forward-looking,” including statements contained in
this Quarterly Report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders.
Management believes that all statements that express expectations and projections with respect to future matters, as well as from
developments beyond our Company’s control including changes in global economic conditions are forward-looking statements
within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time
the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s
expectations will necessarily come to pass. Factors that may affect forward-looking statements include a wide range of factors
that could materially affect future developments and performance, including the following:
Changes
in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or
chooses to invest; changes in U.S., global or regional economic conditions; changes in U.S. and global financial and equity markets,
including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external
financing for our operations and investments; increased competitive pressures, both domestically and internationally; legal and
regulatory developments, such as regulatory actions affecting environmental activities; the imposition by foreign countries of
trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters,
such as hurricanes and earthquakes; and labor disputes, which may lead to increased costs or disruption of operations.
This
list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative, but by no
means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.
Business
Overview
China
Foods Holdings Ltd. (the “Company”) was incorporated in Delaware on January 10, 2019. Currently, the Company is in
the process of investigating potential business ventures which, in the opinion of management, will provide a source of eventual
profit to the Company. Such involvement may take many forms, including the acquisition of an existing business or the acquisition
of assets to establish subsidiary businesses. All risks inherent in new and inexperienced enterprises are inherent in the Company’s
business. Currently, the Company has no business operations.
The
selection of a business opportunity in which to participate is complex and risky. Additionally, even the Company has only limited
resources, experienced management team continue to explore good opportunities. There can be no assurance that the Company will
be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its shareholders.
The Company will select any potential business opportunity based on management’s business judgment.
The
activities of the Company are subject to several significant risks which arise primarily as a result of the fact that the Company
has no specific business and may acquire or participate in a business opportunity based on the decision of management which potentially
could act without the consent, vote, or approval of the Company’s stockholders. The risks faced by the Company are further
increased as a result of its lack of resources and its inability to provide a prospective business opportunity with significant
capital.
Merger
with Trafalgar Resources, Inc.
On
January 23, 2019, the Company entered into an Agreement and Plan of Merger (the “Agreement”) with Trafalgar Resources,
Inc., an Utah corporation (“Trafalgar”). Pursuant to the Agreement, the Company merged with Trafalgar (the “Merger”)
with the Company as the surviving entity. Prior to the Merger, Trafalgar had not commenced operations that had resulted in significant
revenue and Trafalgar’s efforts had been devoted primarily to activities related to raising capital and attempting to acquire
an operating entity. The purpose of the Merger is to change the Company’s jurisdiction of incorporation from Utah to Delaware,
which the Company’s management and board of directors believe is a more favorable domicile for the Company to pursue its
new strategy of development and distribution of health related products, including supplements, across the global with a focus
on opportunities in mainland China, Europe, and Australia.
Prior
to the Merger, Trafalgar’s majority stockholder who owned 5,000,000 shares (approximately 95.2%) of the 5,251,309 outstanding
shares of Trafalgar’s common stock, par value $0.0001, signed a written consent approving the Merger and the related transactions.
Such approval and consent were sufficient under Utah law and Trafalgar’s Bylaws to approve the Merger. The boards of directors
and shareholders of the Company and Trafalgar approved the Merger.
Pursuant
to the Merger, each share of Trafalgar’s common stock was converted into one share of the Company’s common stock.
After the Merger, HY (HK) Financial Investments Co., Ltd. owns 5,001,000 shares of common stock of the Company.
Previous
Operations of Trafalgar Resources, Inc.
Trafalgar
was incorporated under the laws of the state of Utah on October 25, 1972, under the name of Electronic Agricultural Machinery
Development Corporation. The entity changed its name three times: In 1974, it changed its name to Zenith Development Corporation.
In 1980, Zenith Development Corporation changed its name to Alternative Energy Resources, Inc., and in 2004, Alternative Energy
Resources, Inc. changed its name to Trafalgar Resources, Inc.
Initially,
Trafalgar sought to develop and market inventions, including an asparagus harvester, a hot water saving device and a gas alert
signal. Ultimately, none of the inventions were successful and they were abandoned. Trafalgar ceased to conduct any business and
has not conducted any business during the last three years.
Critical
Accounting Policies, Judgments and Estimates
The
preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited
Financial Statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions
or conditions. The Company believes there have been no significant changes during the six months period ended June 30, 2020, to
the items disclosed as significant accounting policies since the Company’s last audited financial statements for the year
ended December 31, 2019.
The
Company’s accounting policies are more fully described in Notes 1 and 2 of the financial statements. As discussed in Notes
1 and 2, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions about the future events that affect the
amounts reported in the financial statements and the accompanying notes. Management bases its estimates on historical experience
and on various other assumptions that are believed to be reasonable under the circumstances. Actual differences could differ from
these estimates under different assumptions or conditions. The Company believes that the following addresses the Company’s
most critical accounting policies.
Deferred
tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that
the asset will be realized. A valuation allowance has currently been recorded to reduce our deferred tax asset to $0.
Discussion
and Analysis of Financial Condition and Results of Operations
The
Company is in the process of looking for potential business ventures. Even the Company possesses limited funds, experienced management
team of the Company will continue to locate potential business situations for investigation. The Company intends to commence,
on a limited basis, the process of investigating possible merger and acquisition candidates, and believes that the Company’s
status as a publicly-held corporation will enhance its ability to locate such potential business ventures. No assurance can be
given as to when the Company may locate suitable business opportunities and such opportunities may be difficult to locate; however,
the Company intends to actively search for potential business ventures for the foreseeable future.
Management
anticipates that due to its lack of funds, and the limited amount of its resources, the Company may be restricted to participation
in only one potential business venture. This lack of diversification should be considered a substantial risk because it will not
permit the Company to offset potential losses from one venture against gains from another.
Business
opportunities, if any arise, are expected to become available to the Company principally from the personal contacts of its officers
and directors. While it is not expected that the Company will engage professional firms specializing in business acquisitions
or reorganizations, such firms may be retained if funds become available in the future, and if deemed advisable. Opportunities
may thus become available from professional advisors, securities broker-dealers, venture capitalists, members of the financial
community, and other sources of unsolicited proposals.
In
certain circumstances, the Company may agree to pay a finder’s fee or other form of compensation, including perhaps one-time
cash payments, payments based upon a percentage of revenues or sales volume, and/or payments involving the issuance of securities,
for services provided by persons who submit a business opportunity in which the Company shall decide to participate, although
no contracts or arrangements of this nature presently exist. The Company is unable to predict at this time the cost of locating
a suitable business opportunity.
The
analysis of business opportunities will be undertaken by or under the supervision of the Company’s management. Among the
factors which management will consider in analyzing potential business opportunities are the available technical, financial and
managerial resources; working capital and financial requirements; the history of operation, if any; future prospects; the nature
of present and anticipated competition; potential for further research, developments or exploration; growth and expansion potential;
the perceived public recognition or acceptance of products or services; name identification, and other relevant factors.
It
is not possible at present to predict the exact manner in which the Company may participate in a business opportunity. Specific
business opportunities will be reviewed and, based upon such review, the appropriate legal structure or method of participation
will be decided upon by management. Such structures and methods may include, without limitation, leases, purchase and sale agreements,
licenses, joint ventures; and may involve merger, consolidation or reorganization. The Company may act directly or indirectly
through an interest in a partnership, corporation or reorganization. However, it is most likely that any acquisition of a business
venture the Company would make would be by conducting a reorganization involving the issuance of the Company’s restricted
securities. Such a reorganization may involve a merger (or combination pursuant to state corporate statutes, where one of the
entities dissolves or is absorbed by the other), or it may occur as a consolidation, where a new entity is formed and the Company
and such other entity combine assets in the new entity. A reorganization may also occur, directly or indirectly, through subsidiaries,
and there is no assurance that the Company would be the surviving entity. Any such reorganization could result in loss of control
of a majority of the shares. The Company’s present directors may be required to resign in connection with a reorganization.
The
Company may choose to enter into a venture involving the acquisition of or merger with a company which does not need substantial
additional capital but desires to establish a public trading market of its securities. Such a company may desire to consolidate
its operations with the Company through a merger, reorganization, asset acquisition, or other combination, in order to avoid possible
adverse consequences of undertaking its own public offering. Such consequences might include expense, time delays or loss of voting
control. In the event of such a merger, the Company may be required to issue significant additional shares, and it may be anticipated
that control over the Company’s affairs may be transferred to others.
As
part of their investigation of acquisition possibilities, the Company’s management may meet with executive officers of the
business and its personnel; inspect its facilities; obtain independent analysis or verification of the information provided, and
conduct other reasonable measures, to the extent permitted by the Company’s limited resources and management’s limited
expertise. Generally, the Company intends to analyze and make a determination based upon all available information without reliance
upon any single factor as controlling.
The
Company’s management expects to be experienced in the areas in which potential businesses will be investigated and in which
the Company may make an acquisition or investment. Thus, it may become necessary for the Company to retain consultants or outside
professional firms to assist management in evaluating potential investments. The Company can give no assurance that it will be
able to find suitable consultants or managers. The Company has no policy regarding the use of consultants, however, if management,
in its discretion, determines that it is in the best interests of the Company, management may seek consultants to review potential
merger or acquisition candidates.
It
may be anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial management time and attention, and substantial
costs for accountants, attorneys and others. Should a decision thereafter be made not to participate in a specific business opportunity,
it is likely that costs already expended would not be recoverable. It is likely, in the event a transaction should eventually
fail to be consummated, for any reason, that the costs incurred by the Company would not be recoverable. The Company’s officers
and directors are entitled to reimbursement for all expenses incurred in their investigation of possible business ventures on
behalf of the Company, and no assurance can be given that if the Company has available funds they will not be depleted in such
expenses.
Based
on current economic and regulatory conditions, management believes that it is possible, if not probable, for a company like the
Company, without many assets or many liabilities, to negotiate a merger or acquisition with a viable private company. The opportunity
arises principally because of the high legal and accounting fees and the length of time associated with the registration process
of “going public”. However, should any of these conditions change, it is very possible that there would be little
or no economic value for anyone taking over control of the Company.
Liquidity
and Capital Resources
As
of June 30, 2020, the Company had $7,198 in current assets and $159,424 in current liabilities resulting in a negative working
capital as of June 30, 2020 of $152,226. The Company has only incidental ongoing expenses primarily associated with maintaining
its corporate status and maintaining the Company’s reporting obligations to the Securities and Exchange Commission. Although
not required or under any contractual commitment, current management has indicated a willingness to help support the Company’s
ongoing expenses through the purchase of securities of the Company or loans to the Company. Existing liabilities are related to
loans by management to help fund ongoing expenses.
For
the three and six months ended June 30, 2020, the Company had $23,829 and $35,699 in general and administrative expense related
to maintaining its corporate status, and paying accounting and legal fees. Management anticipates only nominal continuing expenses
related to investigating business opportunities and legal and accounting costs. For the three and six months ended June 30, 2020,
the Company had a net loss of $23,829 and $35,699, respectively, compared to a loss of $44,643 and $68,116 for the three and six
months ended June 30, 2019.
The
principal stockholder has undertaken to finance the Company in cash for a “reasonable” period of time for the Company
to continue as a going concern, assuming that in such a period of time the Company would be able to restructure its business and
restart on a revenue-generating operation to support its continuation. However, it is uncertain as for how long or to what extent
such a period of time would be “reasonable”, and there can be no assurance that the financing from the principal stockholder
will not be discontinued.
These
uncertainties may result in adverse effects on continuation of the Company as a going concern. The accompanying financial statements
do not include or reflect any adjustments that might result from the outcome of these uncertainties.
RESULTS
OF OPERATIONS
The
Company has not had any significant revenues. The Company continues to suffer a loss related to maintaining its corporate status
and reporting obligations. For the three and six months ended June 30, 2020, the Company had a net loss of $23,829 and $35,699,
respectively.
Going
Concern
These
condensed financial statements have been prepared on a going concern basis. The Company has incurred net operating losses of $35,699
from inception through June 30, 2020 and has not yet established on going source of revenues sufficient to cover its operating
costs and allow it continue as a going concern. As of June 30, 2020, we had an accumulated deficit totaling $640,286. The ability
of the Company to continue as a going concern is dependent on the Company obtaining the adequate capital to fund operating losses
until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. This
raises substantial doubts about our ability to continue as a going concern.
Forward-looking
Statements
The
Private Securities Litigation Reform Act of 1995 (the “Act”) provides a safe harbor for forward-looking statements
made by or on behalf of our Company. Our Company and our representatives may from time to time make written or oral statements
that are “forward-looking,” including statements contained in this report and other filings with the Securities and
Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations
and projections with respect to future matters, as well as from developments beyond our Company’s control including changes
in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis
of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance.
There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect
forward-looking statements include a wide range of factors that could materially affect future developments and performance, including
the following:
Changes
in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or
chooses to invest; changes in U.S., global or regional economic conditions; changes in U.S. and global financial and equity markets,
including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external
financing for our operations and investments; increased competitive pressures, both domestically and internationally; legal and
regulatory developments, such as regulatory actions affecting environmental activities; the imposition by foreign countries of
trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters,
such as hurricanes and earthquakes; and labor disputes, which may lead to increased costs or disruption of operations.
This
list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means
exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.