UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
(Mark
One)
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended March 31, 2020
Or
☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from To
Commission
File Number 333-209900
JIALIJIA
GROUP CORPORATION LIMITED
(Exact
name of registrant as specified in its charter)
Nevada
|
|
35-2544765
|
(State or other jurisdiction
of
incorporation or organization)
|
|
(IRS Employer
Identification
No.)
|
Room
402, Unit B, Building 5,Guanghua Community,
Guanghua
Road, Tianning District,
Changzhou,
Jiangsu, China
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
+86
(519) 8980-1180
|
(Registrant’s
telephone number, including area code)
|
|
N/A
|
(Former
name, former address and former fiscal year, if changed since last report)
|
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
|
|
Trading
Symbol(s)
|
|
Name
of each exchange on which registered
|
N/A
|
|
N/A
|
|
N/A
|
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
|
|
Emerging growth company
|
☐
|
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
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each
of the issuer’s classes of common stock, as of the latest practicable date.
647,705 shares of common stock issued and outstanding
as of July 12, 2021.
TABLE
OF CONTENTS.
CAUTIONARY
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are not historical
facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical facts, included in this Form 10-Q including, without limitation, statements in the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business
strategy and the plans and objectives of management for future operations, events or developments which the Company expects or anticipates
will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); expansion
and growth of the Company’s business and operations; and other such matters are forward-looking statements. These statements are
based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current
conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether
actual results or developments will conform with the Company’s expectations and predictions is subject to a number of risks and
uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented
to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These
forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,”
“anticipates,” “expects,” “estimates,” “plans,” “may,”
“will,” or similar terms. These statements appear in a number of places in this filing and include statements regarding
the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i)
trends affecting the Company’s financial condition or results of operations for its limited history; (ii) the Company’s business
and growth strategies; and, (iii) the Company’s financing plans. Investors are cautioned that any such forward-looking statements
are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual
results and performance include, but are not limited to, the Company’s limited operating history, potential fluctuations in quarterly
operating results and expenses, government regulation, technological change and competition. For information identifying important factors
that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to our filings
with the SEC under the Exchange Act and the Securities Act of 1933, as amended, including the Risk Factors section of the Company’s
Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 22, 2020.
Consequently,
all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will
have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update
any such forward-looking statements.
JIALIJIA
GROUP CORPORATION LIMITED
CONSOLIDATED
BALANCE SHEETS
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,733
|
|
|
$
|
395
|
|
Advance to suppliers, net
|
|
|
-
|
|
|
|
-
|
|
Prepaid expenses and other current assets
|
|
|
2,817
|
|
|
|
2,873
|
|
Total Current Assets
|
|
|
4,550
|
|
|
|
3,268
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
4,550
|
|
|
$
|
3,268
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
68,418
|
|
|
$
|
61,818
|
|
Due to related parties
|
|
|
2,980,068
|
|
|
|
3,027,733
|
|
Other current liabilities
|
|
|
2,437
|
|
|
|
2,487
|
|
Total Current Liabilities
|
|
|
3,050,923
|
|
|
|
3,092,038
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
3,050,923
|
|
|
|
3,092,038
|
|
|
|
|
|
|
|
|
|
|
Equity (Deficit)
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, 1,000,000,000 shares authorized, 635,296 shares issued and outstanding as of March 31, 2020 and December 31, 2019
|
|
|
635
|
|
|
|
635
|
|
Additional paid-in capital
|
|
|
2,602,099
|
|
|
|
2,602,099
|
|
Subscription receivable
|
|
|
(7,821
|
)
|
|
|
(7,821
|
)
|
Treasury stock
|
|
|
(120,000
|
)
|
|
|
(120,000
|
)
|
Accumulated deficit
|
|
|
(4,818,505
|
)
|
|
|
(4,806,088
|
)
|
Accumulated other comprehensive income
|
|
|
60,141
|
|
|
|
19,615
|
|
Total Stockholders’ Deficit
|
|
|
(2,283,451
|
)
|
|
|
(2,311,560
|
)
|
Noncontrolling interests
|
|
|
(762,922
|
)
|
|
|
(777,210
|
)
|
Total Deficit
|
|
|
(3,046,373
|
)
|
|
|
(3,088,770
|
)
|
Total Liabilities and Deficit
|
|
$
|
4,550
|
|
|
$
|
3,268
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
JIALIJIA
GROUP CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
Cost of revenue
|
|
|
-
|
|
|
|
-
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
General and administrative expenses
|
|
|
13,119
|
|
|
|
81,809
|
|
Goodwill impairment
|
|
|
-
|
|
|
|
3,962,424
|
|
Total operating expense
|
|
|
13,119
|
|
|
|
4,044,233
|
|
Loss from operations before income taxes
|
|
|
(13,119
|
)
|
|
|
(4,044,233
|
)
|
Provision for income tax
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
(13,119
|
)
|
|
|
(4,044,233
|
)
|
Net loss attributable to noncontrolling interest
|
|
|
(702
|
)
|
|
|
(18,243
|
)
|
Net loss attributable to the Jialijia Group Corporation Ltd.
|
|
|
(12,417
|
)
|
|
|
(4,025,990
|
)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(13,119
|
)
|
|
|
(4,044,233
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss)
|
|
|
55,516
|
|
|
|
(50,757
|
)
|
Comprehensive income (loss)
|
|
|
42,397
|
|
|
|
(4,094,990
|
)
|
Comprehensive income (loss) attributable to noncontrolling interest
|
|
|
14,288
|
|
|
|
(32,610
|
)
|
Comprehensive income (loss) attributable to Jialijia Group Corporation Ltd.
|
|
$
|
28,109
|
|
|
$
|
(4,062,380
|
)
|
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share:
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(11.10
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
635,296
|
|
|
|
364,250
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
JIALIJIA
GROUP CORPORATION LIMITED
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Subscriptions
|
|
|
Treasury
|
|
|
Accumulated
|
|
|
Accumulated
Other
Comprehensive
|
|
|
Non-controlling
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Receivable
|
|
|
Stock
|
|
|
Deficit
|
|
|
Income
(Loss)
|
|
|
interest
|
|
|
Deficit
|
|
Balance at December 31, 2019
|
|
|
635,296
|
|
|
$
|
635
|
|
|
$
|
2,602,099
|
|
|
$
|
(7,821
|
)
|
|
$
|
(120,000
|
)
|
|
$
|
(4,806,088
|
)
|
|
$
|
19,615
|
|
|
$
|
(777,210
|
)
|
|
$
|
(3,088,770
|
)
|
Foreign currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,526
|
|
|
|
14,990
|
|
|
|
55,516
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(12,417
|
)
|
|
|
-
|
|
|
|
(702
|
)
|
|
|
(13,119
|
)
|
Balance at March 31, 2020
|
|
|
635,296
|
|
|
$
|
635
|
|
|
$
|
2,602,099
|
|
|
$
|
(7,821
|
)
|
|
$
|
(120,000
|
)
|
|
$
|
(4,818,505
|
)
|
|
$
|
60,141
|
|
|
$
|
(762,922
|
)
|
|
$
|
(3,046,373
|
)
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Subscriptions
|
|
|
Treasury
|
|
|
Accumulated
|
|
|
Accumulated
Other
Comprehensive
|
|
|
Non-controlling
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Receivable
|
|
|
Stock
|
|
|
Deficit
|
|
|
Income
(Loss)
|
|
|
interest
|
|
|
Deficit
|
|
Balance at December 31, 2018
|
|
|
364,250
|
|
|
$
|
364
|
|
|
$
|
38,691
|
|
|
$
|
-
|
|
|
$
|
(120,000
|
)
|
|
$
|
(90,824
|
)
|
|
$
|
(44
|
)
|
|
$
|
-
|
|
|
$
|
(171,813
|
)
|
Effect of restructuring
|
|
|
-
|
|
|
|
-
|
|
|
|
2,431,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(593,760
|
)
|
|
|
1,837,240
|
|
Foreign currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,390
|
)
|
|
|
(14,367
|
)
|
|
|
(50,757
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,025,990
|
)
|
|
|
-
|
|
|
|
(18,243
|
)
|
|
|
(4,044,233
|
)
|
Balance at March 31, 2019
|
|
|
364,250
|
|
|
$
|
364
|
|
|
$
|
2,469,691
|
|
|
$
|
-
|
|
|
$
|
(120,000
|
)
|
|
$
|
(4,116,814
|
)
|
|
$
|
(36,434
|
)
|
|
$
|
(626,370
|
)
|
|
$
|
(2,429,563
|
)
|
The
accompanying notes are an integral part of these consolidated financial statements.
JIALIJIA
GROUP CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net loss
|
|
$
|
(13,119
|
)
|
|
$
|
(4,044,233
|
)
|
Depreciation
|
|
|
-
|
|
|
|
38,517
|
|
Goodwill impairment
|
|
|
-
|
|
|
|
3,962,424
|
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
-
|
|
|
|
3,000
|
|
Accrued expenses and other payable
|
|
|
9,775
|
|
|
|
2,787
|
|
Net cash used in operating activities
|
|
|
(3,344
|
)
|
|
|
(37,505
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Acquisition of subsidiary equity interest, net of cash acquired
|
|
|
-
|
|
|
|
(141,578
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(141,578
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net proceeds from loans from related parties
|
|
|
4,712
|
|
|
|
179,179
|
|
Net cash provided by financing activities
|
|
|
4,712
|
|
|
|
179,179
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS
|
|
|
(30
|
)
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH & CASH EQUIVALENTS
|
|
|
1,338
|
|
|
|
396
|
|
CASH & CASH EQUIVALENTS, BEGINNING BALANCE
|
|
|
395
|
|
|
|
13
|
|
CASH & CASH EQUIVALENTS, ENDING BALANCE
|
|
$
|
1,733
|
|
|
$
|
409
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
|
|
|
|
Income tax paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
JIALIJIA
GROUP CORPORATION LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note
1. Organization and Business
Jialijia
Group Corporation Limited (the “Company”), formerly known as Rizzen, Inc., was incorporated as a corporation under
the laws of the State of Nevada on October 21, 2015.
On
July 10, 2019, the Company entered into a share purchase/exchange agreement (the “Exchange Agreement”) with Huazhongyun
Group Co., Limited (“Huazhongyun”), a company incorporated under the laws of Hong Kong, and Na Jin, the sole shareholder
of Huazhongyun (the “Shareholder”) and the Chief Executive Officer of the Company. Huazhongyun owns 300,000 shares
(the “Company Shares”) of the Company, which represented approximately 82% of the shares of the Company’s common
stock, issued and outstanding, at the time of execution of the Exchange Agreement. The Shareholder owns an aggregate of 10,000 ordinary
shares of Huazhongyun (“Huazhongyun Shares”), which constitute all of the issued and outstanding shares of Huazhongyun.
Pursuant
to the Exchange Agreement, among other matters, the Shareholder will sell and transfer all of the Huazhongyun Shares in exchange for
all of the Company Shares. As a result, the Shareholder will directly own the Company Shares, which represent approximately 82% of the
issued and outstanding shares of the Company’s common stock at the time of execution of the Exchange Agreement and Huazhongyun
will become a wholly-owned subsidiary of the Company.
Jialijia
Jixiang Investment (Changzhou) Co., Ltd, (“Jialijia (Changzhou)”) is a company incorporated under the laws of the PRC on
June 13, 2017. Huazhongyun owned all of the equity interests in Jialijia Jixiang Investment (Changzhou) Co., Ltd. (“WFOE”),
a wholly-foreign owned entity formed under the laws of China. Rucheng Wenchuan Gas Co., Ltd. (“Rucheng Wenchuan”) was incorporated
under the laws of the People’s Republic of China (the “PRC”) on March 31, 2006.
On
January 7, 2019, Jialijia (Changzhou) entered into an equity transfer agreement (the “Equity Transfer”) with Mr. Jiannan
Wu, the shareholder who owned 94.77% of Rucheng Wenchuan’s outstanding shares. Pursuant to the Equity Transfer, Mr. Jiannan Wu
agreed to transfer 70% of his ownership of Rucheng Wenchuan to Jialijia (Changzhou), in exchange of RMB 1,000,000 and 143,000 common
shares of the Company owned by Huazhongyun. Immediately after the equity transfer agreement, Jialijia (Changzhou) owns 70% of the ownership
and becomes the controlling shareholder of Rucheng Wenchuan. Both Huazhongyun and Jialijia (Changzhou) are holding companies and have
not carried out substantive business operations of their own. Rucheng Wenchuan is primarily engaged in the production and sale of gases
for industrial and medical purposes, such as oxygen and nitrogen, in the PRC.
Pursuant
to the Exchange Agreement, on August 29, 2019 (the “Closing Date”), Na Jin sold and transferred all of the Huazhongyun
Shares to the Company in exchange for all of the Company Shares and the Company received all of the outstanding Huazhongyun Shares. As
a result, on the Closing Date, Na Jin directly owned Company Shares representing approximately 48% of the issued and outstanding shares
of the Company’s common stock, Huazhongyun became a wholly-owned subsidiary of the Company and the Company owned 70% of the outstanding
equity interest in Rucheng Wenchuan through Huazhongyun and WFOE.
The
acquisition of Huazhongyun and WFOE was treated as a reverse merger (the “Reverse Merger”) for accounting purposes.
As a result of the consummation of the Reverse Merger on August 29, 2019, the Company, through its subsidiaries, entered into the business
of producing and selling gases for industrial and medical purposes, such as oxygen and nitrogen, in the PRC. The Company has not commenced
its gas production or generated any revenues.
Note 2.
Basis of Presentation
The
consolidated balance sheets as of March 31, 2020 and December 31, 2019 and the consolidated statements of operations and comprehensive
loss for the three months ended March 31, 2020 and 2019 combine the historical consolidated statements of balance sheets and income and
comprehensive loss of the Company, Huazhongyun, Jialijia (Changzhou), and have been prepared as if the Reverse Merger had closed on January
1, 2019. Both the Company, and Huazhongyun and WFOE are under common control.
The
consolidated financial information was prepared using the acquisition method of accounting in accordance with Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.
The
acquisition of Rucheng Wenchuan by Jialijia (Changzhou) is accounted for under the acquisition method of accounting in accordance with
Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”) with Jialijia (Changzhou)
as the acquiring entity. In business combination transactions in which the consideration given is not in the form of cash (that is, in
the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based
on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident
and, thus, more reliably measurable.
Under
ASC 805, all of the Rucheng Wenchuan assets acquired and liabilities assumed in this business combination are recognized at their acquisition-date
fair value. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated
to goodwill.
These
unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements
and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange
Commission on April 26, 2021.
Note 3.
Purchase Price
In
connection with the acquisition of Rucheng Wenchuan, Jialijia (Changzhou) entered into an equity transfer agreement (the “Equity
Transfer”) with Mr. Jiannan Wu, the shareholder who owned 94.77% of Rucheng Wenchuan’s outstanding shares on January 7, 2019.
Pursuant to the Equity Transfer, Mr. Jiannan Wu agreed to transfer 70% of his ownership of Rucheng Wenchuan to Jialijia (Changzhou),
in exchange of RMB 1,000,000, approximately $145,983, and 143,000 common shares of the Company owned by Huazhongyun. Immediately after
the equity transfer agreement, Jialijia (Changzhou) owns 70% of the ownership and becomes the controlling shareholder of Rucheng Wenchuan.
Goodwill
as a result of the acquisition of Rucheng Wenchuan is calculated as follows:
Purchase consideration:
|
|
|
|
Cash and cash equivalents
|
|
$
|
145,983
|
|
Common stock (1)
|
|
|
2,431,000
|
|
Total consideration
|
|
|
2,576,983
|
|
Estimated Fair Value of Assets Acquired:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,822
|
|
Advance to supplier
|
|
|
101,811
|
|
Other current assets
|
|
|
2,909
|
|
Property and equipment
|
|
|
492,413
|
|
Total assets acquired
|
|
|
605,955
|
|
Estimated Fair Value of Liabilities Assumed:
|
|
|
|
|
Due to related parties
|
|
|
2,552,596
|
|
Accrued expenses and other current liabilities
|
|
|
32,560
|
|
Total liabilities assumed
|
|
|
2,585,156
|
|
Total net assets
|
|
|
(1,979,201
|
)
|
Noncontrolling interests
|
|
|
(593,760
|
)
|
Total net assets acquired
|
|
|
(1,385,441
|
)
|
Goodwill as a result of the acquisition
|
|
$
|
3,962,424
|
|
(1)
|
143,000
shares of the Company’s common stock to be issued to Mr. Jiannan Wu in connection with the Equity Transfer. Those shares were valued
at $17 per share, the closing share price of the Company on January 7, 2019.
|
During
the three months ended March 31, 2019, the Company has recorded goodwill impairment in full amount.
Note
4. Going Concern
These
consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. As reflected in the Company’s accompanying consolidated financial
statements, for the three months ended March 31, 2020, the Company had a net loss of $13,119. Additionally, the Company had an accumulated
deficit of $4,818,505 and working capital deficit of $3,046,373 as of March 31, 2020, and has not yet generated revenues. The ability
of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it
becomes profitable. The Company can give no assurances that any additional capital that it is able to obtain, if any, will be sufficient
to meet its needs.
If
the Company is unable to successfully commence its business operations in a short period of time, or unable to raise additional capital
or secure additional lending, the Company may need to curtail or cease its operations. The Company believes that these matters raise
substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include
any adjustments relating 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.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management plans to obtain
such resources for the Company include obtaining capital from the sale of its equity, and short-term and long-term borrowings from banks,
stockholders or other related party(ies). However, management cannot provide any assurance that the Company will be successful in
accomplishing any of its plans.
Note
5. Summary of Significant Accounting Policies
Basis
of Accounting
The
financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States
of America (“GAAP”).
Principles
of consolidation
The
consolidated financial statements include the financial statements of Jialijia Group Corporation Limited, Huazhongyun Group Co., Limited,
Jialijia Jixiang Investment (Changzhou) Co., Ltd and its 70% owned subsidiary, Rucheng Wenchuan Gas Co., Ltd. All inter-company transactions
and balances are eliminated in consolidation.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the amount of revenues and expenses during the reporting periods.
Management makes these estimates using the best information available at the time the estimates are made. However, actual results could
differ materially from those results.
Cash
and Cash Equivalents
The
Company considers all cash on hand and in banks, certificates of deposit with banks and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents. There is no insurance securing these deposits in the PRC. The
Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
Advances
to Suppliers
The
Company advances funds to certain suppliers for the purchase of machinery and equipment. Based on management’s evaluation,
the Company has reserved allowance for advances to suppliers in the amount of $100,549 as of December 31, 2019 and write off the balance
in full amount as of March 31, 2020.
Property
and Equipment
Property
and equipment are recorded at cost less accumulated depreciation. Gains or losses on disposals are reflected as gain or loss in the period
of disposal. All ordinary repair and maintenance costs are expensed as incurred.
Depreciation
for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
|
Estimated
Useful
Life
|
|
Buildings
|
20 years
|
|
Machinery and equipment
|
10 years
|
|
Office equipment
|
5 years
|
|
Vehicles
|
5 years
|
|
Costs
incurred in constructing new facilities, including progress payments and other costs related to construction, are capitalized and transferred
to property, plant and equipment on completion, at which time depreciation commences.
Impairment
of Long-lived Assets
The
Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of
the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds
the fair value.
Assets
are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other
groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment
and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If
the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment
by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected
future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information
available, judgments and projections are considered necessary. No impairment loss was recorded for the three months ended March 31, 2020
and 2019, respectively.
Impairment
of Goodwill
Goodwill
represents the excess of the purchase price over the fair value of net assets acquired in business combinations under the purchase method
of accounting. Goodwill is assessed for impairment annually or if an event occurs or circumstances change that would indicate the carrying
amount may be impaired. The impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. During the three months ended March 31, 2019, the goodwill, in amount of $3,962,424, as a result of the acquisition
of Rucheng Wenchuan (see Note 3), was fully recognized as impairment.
Income
Taxes
The
Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred
tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred
taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more
likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is
uncertain.
Under
ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would
be sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process.
The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the
resolution of any related appeals or litigations based on the technical merits of that position. The second step is to measure a tax
position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements.
A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.
Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent
period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should
be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred
related to underpayment of income tax are classified as income tax expense in the year incurred.
Foreign
Currency Translation
The
Company uses the United States dollar (“U.S. dollars”) for financial reporting purposes. The functional currency of the Company
and its subsidiaries is the Chinese Yuan or Renminbi (“RMB”). The Company’s subsidiaries maintain their books and records
in their functional currency, being the primary currency of the economic environment in which their operations are conducted. For the
Company and its subsidiaries whose functional currencies are other than the U.S. dollar, all asset and liability accounts were translated
at the exchange rate on the balance sheet date; stockholders’ equity is translated at the historical rates and items in the income
statement and cash flow statements are translated at the average rate in each applicable period. Translation adjustments resulting from
this process are included in accumulated other comprehensive income in the statement of shareholders’ equity. The resulting translation
gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency
are included in the results of operations as incurred.
Fair
Values of Financial Instruments
ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level
1 – quoted prices in active markets for identical assets or liabilities.
Level
2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The
Company’s financial instruments primarily consist of cash and cash equivalents, other receivables, advances to suppliers, accrued
expenses, other payables, and related party borrowings. As of the balance sheet dates, the estimated fair values of the financial instruments
were not materially different from their carrying values as presented on the balance sheets. This is attributed to the short maturities
of the instruments and that interest rates on the borrowings approximate those that would have been available for loans of similar remaining
maturity and risk profile at respective balance sheet dates.
Recent
Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued and their potential effect on the consolidated financial statements. The Company’s
management believes that these recent pronouncements will not have a material effect on its consolidated financial statements.
Note
6. Property, Plant, and Equipment, Net
Property,
plant, and equipment consisted of the following:
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
Machinery and equipment
|
|
$
|
1,553,196
|
|
|
$
|
1,583,716
|
|
Buildings
|
|
|
30,887
|
|
|
|
31,494
|
|
|
|
|
1,584,083
|
|
|
|
1,615,210
|
|
Less: Accumulated depreciation
|
|
|
(1,153,258
|
)
|
|
|
(1,175,920
|
)
|
Less: Accumulated impairment
|
|
|
(430,825
|
)
|
|
|
(439,290
|
)
|
Property, plant, and equipment, net
|
|
$
|
-
|
|
|
$
|
-
|
|
Depreciation
expense for the three months ended March 31, 2020 and 2019 were $0 and $38,517, respectively.
Note
7. Accrued Expenses
Accrued
expenses consist of the following:
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
Accrued local taxes
|
|
$
|
43,128
|
|
|
$
|
41,646
|
|
Accrued professional fees
|
|
|
25,290
|
|
|
|
20,000
|
|
Other
|
|
|
-
|
|
|
|
172
|
|
|
|
$
|
68,418
|
|
|
$
|
61,818
|
|
Note
8. Income Tax
United
States
The
Company was incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes
have been made, as there was no taxable income from U.S. operations for the three months ended March 31, 2020 and 2019. The U.S. Tax
Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Effective in December 31, 2019, the Tax Act reduces
the U.S. statutory tax rate from 35% to 21%.
PRC
Effective
on January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules impose an unified enterprise income tax rate of
25% on all domestic-invested enterprises and foreign investment enterprises in PRC, unless they qualify under certain limited exceptions.
As such, starting from January 1, 2008, the Company’s subsidiaries in PRC are subject to an enterprise income tax rate of 25%.
The Company had recorded no income tax provisions for the three months ended March 31, 2020 and 2019.
Provision
for income tax expense (benefit) consists of the following:
|
|
For the Three Months Ended
March 31,
|
|
|
|
|
2020
|
|
|
|
2019
|
|
Current
|
|
|
|
|
|
|
|
|
USA
|
|
$
|
-
|
|
|
$
|
-
|
|
China
|
|
|
-
|
|
|
|
-
|
|
Deferred
|
|
|
|
|
|
|
|
|
USA
|
|
|
-
|
|
|
|
-
|
|
China
|
|
|
-
|
|
|
|
-
|
|
Total provision for income tax expense (benefit)
|
|
$
|
-
|
|
|
$
|
-
|
|
The
following is a reconciliation of the statutory tax rate to the effective tax rate:
|
|
For the Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
U.S. statutory tax benefit
|
|
|
(21.0
|
)%
|
|
|
(21.0
|
)%
|
Change in deferred tax asset valuation allowance
|
|
|
21.0
|
%
|
|
|
21.0
|
%
|
PRC statutory tax benefit
|
|
|
(25.0
|
)%
|
|
|
(25.0
|
)%
|
Net permanent differences
|
|
|
25.0
|
%
|
|
|
25.0
|
%
|
Effective income tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred
tax assets by the valuation allowance to the extent that the future realization of the deferred tax assets is not judged to be more likely
than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including
its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods
available to the Company for tax reporting purposes, and other relevant factors.
As
of March 31, 2020 and December 31, 2019, based on the weight of available evidence, including cumulative losses in recent years and expectations
of future taxable income, the Company determined that it was more likely than not that its deferred tax assets would not be realized
and have a 100% valuation allowance associated with its deferred tax assets.
Note
9. Related Party Transactions and Balances
The
related parties of the company with whom transactions are reported in these consolidated financial statements are as follows:
Name of entity or Individual
|
|
Relationship with the Company
|
Shenzhen
Wenchuan Gas Co., Ltd.
|
|
Mr. Jiannan Wu is the legal
representative and president of this entity
|
Rucheng
County Minhang Special Gas Co., Ltd
|
|
Mr. Jiannan Wu is the legal
representative and president of this entity
|
Jiannan Wu
|
|
Major shareholder of Rucheng
Wenchuan
|
Dongzhi Zhang
|
|
Chairman of the Board
|
Na Jin
|
|
Shareholder, director,
Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”)
|
Due
to related parties:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Shenzhen Wenchuan Gas Co., Ltd.
|
|
$
|
2,399,598
|
|
|
$
|
2,446,750
|
|
Dongzhi Zhang
|
|
|
415,771
|
|
|
|
414,714
|
|
Rucheng County Minhang Special Gas Co., Ltd.
|
|
|
48,845
|
|
|
|
49,804
|
|
Na Jin
|
|
|
100,076
|
|
|
|
100,376
|
|
Jiannan Wu
|
|
|
15,778
|
|
|
|
16,089
|
|
|
|
$
|
2,980,068
|
|
|
$
|
3,027,733
|
|
Due
to related parties were advances from its related parties for the Company’s purchase of equipment and daily operating expenses.
The balances are unsecured, non-interest bearing, and payable on demand.
Note
10. Equity
The
Company has authorized 1,000,000,000 shares of Common Stock at par value of $0.001.
On
May 28, 2020, by unanimous written consent in lieu of a meeting, the Board adopted resolutions authorizing a one (1)-for-twenty (20)
reverse stock split and on June 24, 2020 filed Articles of Amendment to effect the reverse stock split with the Secretary of State of
the State of Nevada. The reverse stock split becomes effective on June 19, 2020. All share and earnings per share information has been
retroactively adjusted to reflect the reverse stock split.
As
of March 31, 2020 and December 31, 2019, the Company had 635,296 and 635,296 shares of common stock, issued and outstanding, respectively.
On
May 15, 2019, the Company issued 40,855 shares of its common stock at a price per share of $0.4 to nine (9) subscribers. From July 22,
2019 to July 29, 2019, the Company revised the subscription agreements with the 9 subscribers, which cancelled 739 shares and issued
additional 17,321 shares to the 9 subscribers. In addition, the Company revised the issuance price to $0.6 per share.
In July, 2019, the Company entered into a securities subscription agreement (the “Subscription Agreement”) with each
of fifty-four (54) investors (the “Investors”) who purchased an aggregate of 150,574 shares of the Company’s
common stock at a price of $0.6 per share. Pursuant to each of the Subscription Agreements, the Company issued its shares of common stock
to each Investor in the respective amounts as set forth in the Subscription Agreement.
In
addition, on July 24, 2019, Ms. Na Jin, the Chief Executive Officer of the Company, purchased 50,000 shares of the Company’s common
stock at a price of $0.2 per share.
During
the year ended December 31, 2019, the Company entered into stock subscription agreements with 26 individuals, pursuant to which the Company
agreed to issue an aggregate of 13,035 shares of the Company’s common stock for the purchase price of $0.6 per share. These shares
were issued on November 24, 2019 and recorded as subscriptions receivable as of March 31, 2020 and December 31, 2019.
As
of March 31, 2020, Huazhongyun owned 300,000 shares of the Company. These shares have been reclassified and recorded as treasury stock
at the cost of $0.4 per share, as a result of the Reverse Merger.
Note
11. Subsequent Events
On
August 7, 2020, Jialijia Jixiang Investment (Changzhou) Co., Ltd. changed its name to Dajiwanqi Holding (Changzhou) Co., Ltd.
On
June 30, 2020, the Company entered into stock subscription agreements with 7 individuals, pursuant to which the Company agreed to issue
an aggregate of 12,410 shares of the Company’s common stock for the purchase price of $0.6 per share. These shares were issued
on June 30, 2020.
The
Company has evaluated subsequent events through the date which the consolidated financial statements were available to be issued. All
subsequent events requiring recognition as of March 31, 2020 have been incorporated into these consolidated financial statements and
there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”
Item 2.
|
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|
Overview
We
are currently a “shell company” with no meaningful assets or operations other than our efforts to identify and merge
with an operating company.
Our
principal business is to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings.
Based on proposed business activities, we are a “blank check” company. We intend to comply with the periodic reporting
requirements of the Exchange Act for so long as it is subject to those requirements.
We
are in active discussions with an operating business affiliated with our executive officers regarding potential acquisition. There is
no assurance that we will be able to successfully acquire such company or any company in the near future.
Jialijia
Group Corporation Limited, formerly known as Rizzen, Inc. (the “Company”) was incorporated as a corporation under
the laws of the State of Nevada on October 21, 2015. On May 16, 2018, our Articles of Incorporation were amended to change our name to
Jialijia Group Corporation Limited and increase the number of authorized shares the corporation from 75,000,000 to 1,000,000,000.
Effective
as of December 15, 2018, the Company appointed: (i) Mr. Dongzhi Zhang as the Chairman of the Board; (ii) Mr. Jiannan Wu as the Company’s
General Manager and Director; and (iii) Ms. Weixia Hu as the Company’s Chinese Region Chief Representative. Ms. Na Jin is our CEO,
CFO, Secretary and a director.
On
July 10, 2019, the Company entered into a share purchase/exchange agreement (the “Share Exchange Agreement”) with
Huazhongyun Group Co., Limited (“Huazhongyun,” formerly known as “JLJ Group Corporation Limited”), a company
formed under the laws of the Hong Kong Special Administrative Region, and Na Jin, the sole shareholder of Huazhongyun and the Chief Executive
Officer and Chief Financial Officer of the Company. Na Jin, through Huazhongyun, owned 6,000,000 shares (the “Company Shares”)
of the Company, which represented approximately 82% of the shares of the Company’s common stock, issued and outstanding, par value
$0.001 per share, as of the date of execution of the Share Exchange Agreement. Na Jin owned an aggregate of 10,000 ordinary shares of
Huazhongyun (“Huazhongyun Shares”), which constituted all of the issued and outstanding ordinary shares of Huazhongyun. On
the date of execution of the Share Exchange Agreement, Huazhongyun owned all of the equity interests in Jialijia Jixiang Investment (Changzhou)
Co., Ltd. (“WFOE”), a wholly-foreign owned entity formed under the laws of China, which in turn held seventy percent (70%)
of the outstanding equity interest in Rucheng Wenchuan Gas Co., Ltd. (the “Rucheng Wenchuan”), a company formed under
the laws of China.
Pursuant
to the Share Exchange Agreement, on August 29, 2019 (the “Closing Date”), Na Jin sold and transferred all of the Huazhongyun
Shares to the Company in exchange for all of the Company Shares and the Company received all of the outstanding Huazhongyun Shares. As
a result, on the Closing Date, Na Jin directly owned Company Shares representing approximately 48% of the issued and outstanding shares
of the Company’s common stock, Huazhongyun became a wholly-owned subsidiary of the Company, and the Company owned 70% of the outstanding
equity interest in Rucheng Wenchuan through Huazhongyun and WFOE.
From
July 22, 2019 to July 29, 2019, the Company entered into a securities subscription agreement (the “Subscription Agreement”)
with fifty-four (54) investors (the “Investors”) who reside outside the United States where the Investors purchased
an aggregate of 3,011,483 shares of the Company’s common stock, par value $0.001 per share, at a price of $0.03 per share. Pursuant
to each of the Subscription Agreements, the Company issued its shares of common stock to each Investor in the respective amounts as set
forth in the Subscription Agreement and received the funds in the corresponding amounts as set forth therein. In addition, on April 20,
2019, Ms. Na Jin, the Chief Executive Officer of the Company, entered into a Subscription Agreement to purchase 1,000,000 shares of the
Company’s common stock at a price of $0.01 per share, for a total purchase price of $10,000, which purchase was consummated on
July 24, 2019.
As
a result of the consummation of the above merger on August 29, 2019, we entered into the business of producing and selling gases, such
as oxygen and nitrogen, for industrial and medical purposes in the PRC. In 2020, the COVID-19 pandemic materially and adversely affected
economic conditions and our operating results. As a result, we were unable to obtain the financing necessary to pursue this business.
Effective
July15, 2020, we engaged in a one for twenty reverse stock split of our common stock whereby each twenty shares of common stock were
reduced into one share of common stock with fractional shares rounded to one whole share. All descriptions of securities issuances occurring
prior to such reverse stock split are provided on a pre-reverse basis.
Limited
Operating History; Need for Additional Capital
We
have had limited operations and have been issued a “going concern” opinion by our auditor, based upon our reliance
on the sale of our common stock and loans from a related party, as the sole source of funds for our future operations.
There
is no historical financial information about us upon which to base an evaluation of our performance. We have not generated any revenues
from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources, possible delays in the launching of our games and market
or wider economic downturns. We do not believe we have sufficient funds to operate our business for the next 12 months.
We
have no assurance that future financing will be available to us on acceptable terms, or at all. If financing is not available on satisfactory
terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing
shareholders. If we are unable to raise additional capital to maintain our operations in the future, we may be unable to carry out our
full business plan or we may be forced to cease operations.
Going
Concern
Our
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. As of March 31, 2020, the Company had working capital deficit
of $3,046,373 and has incurred losses since its inception resulting in an accumulated deficit of $4,818,505. Further losses are anticipated
in the development of the business, raising substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustment that might result from the outcome of this uncertainty.
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 finance operating costs over the next twelve months with loans from directors and/or private placements of common
stock.
Results
of Operations
Three
Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019
The
following table provides selected financial data about our company as of March 31, 2020 and 2019.
Results
of Operations for the
|
|
For the Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net Revenue
|
|
$
|
–
|
|
|
$
|
–
|
|
Total Operating Expenses
|
|
|
13,119
|
|
|
|
4,044,233
|
|
Net Loss
|
|
$
|
13,119
|
|
|
$
|
4,044,233
|
|
Revenues
The
Company did not commence operations and did not generate any revenues for the three months ended March 31, 2020 and 2019.
Operating
Expenses
Operating
expenses for the three months ended March 31, 2020 and 2019, were $13,119 and $4,044,233, respectively. Operating expenses for the three
months ended March 31, 2020, consisted solely of general and administrative expenses of $13,119. Operating expenses for the three months
ended March 31, 2019, consisted primarily of goodwill impairment of $3,962,424 arising from the acquisition of Rucheng Wenchuan, general
and administrative expenses of $81,809.
Net
Loss
As
a result of the above factors, the Company incurred a net loss of $13,119 and $4,044,233 for the three months ended March 31, 2020 and
2019, respectively.
Foreign
Currency Translation Gain (Loss)
The
Company had $55,516 in foreign currency translation gain during the three months ended March 31, 2020 as compared to $50,757 in foreign
currency translation loss during the three months ended March 31, 2019, reflecting a change of $106,273. Such increase in foreign currency
translation gain was primarily caused by the currency exchange rate fluctuation.
Liquidity
and Capital Resources
The
following summarizes the key component of our cash flows for the three months ended March 31, 2020 and 2019.
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net cash used in operating activities
|
|
$
|
(3,344
|
)
|
|
$
|
(37,505
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(141,578
|
)
|
Net cash provided by financing activities
|
|
|
4,712
|
|
|
|
179,179
|
|
Net increase in cash and cash equivalents
|
|
$
|
1,338
|
|
|
$
|
396
|
|
Net
cash used in operating activities was $3,344 for the three months ended March 31, 2020, compared to that of $37,505 for the three months
ended March 31, 2019. The decrease of $34,161 or 91.08% of net cash used in operating activities was primarily due to the decrease in
net loss and non-cash items including depreciation and goodwill impairment during the three months ended March 31, 2020.
Net
cash used in investing activities was $0 and $141,578 for the three months ended March 31, 2020 and 2019, respectively. Net cash used
during the three months ended March 31, 2019, was attributable to the acquisition of our subsidiary.
Net
cash provided by financing activities was $4,712 and $179,179 for the three months ended March 31, 2020 and 2019, respectively, representing
a decrease of $174,467 or 97.37%. The decrease in net cash provided by financing activities was primarily attributable to the decrease
in advances from officers for working capital purpose.
Working
Capital:
As
of March 31, 2020 and December 31, 2019, we had cash and cash equivalent of $1,733 and $395, respectively. As of March 31, 2020, we have
incurred accumulated operating losses of $4,818,505 since inception. As of March 31, 2020 and December 31, 2019, we had working capital
deficits of $3,046,373 and $3,088,770, respectively.
Going
Concern:
We
require additional funding to meet its ongoing obligations and to fund anticipated operating losses. Our auditor has expressed substantial
doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on raising capital to
fund its initial business plan and ultimately to attain profitable operations. These financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might
result from this uncertainty.
We
expect to incur marketing and professional and administrative expenses as well expenses associated with maintaining our filings with
the Commission. We will require additional funds during this time and will seek to raise the necessary additional capital. If we are
unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm
our business plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all.
We intend to continue to fund its business by way of equity or debt financing and advances from related parties. Any inability to raise
capital as needed would have a material adverse effect on our business, financial condition and results of operations.
If
we cannot raise additional funds, we will have to cease business operations. As a result, our common stock investors would lose all of
their investment.
Critical
Accounting Policies
Our
financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting periods.
We
qualify as an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act, which became law in
April, 2012. Under the JOBS Act, “emerging growth companies”, can delay adopting new or revised accounting standards
until such time as those standards apply to private companies. We have elected not to avail ourselves of this exemption from new or revised
accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are
not emerging growth companies
Use
of estimates
The
preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements,
as well as the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best
information available at the time the estimates are made; however actual results could differ materially from those estimates.
Income
Taxes
We
accounts for income taxes as outlined in ASC 740, “Income Taxes”. Under the asset and liability method of ASC 740,
deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Loss
per Share Calculation
We
comply with accounting and disclosure requirements of ASC 260, “Earnings Per Share.” Net loss per common share is computed
by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. For
the three months ended March 31, 2020 and 2019, we did not have any dilutive securities and other contracts that could, potentially,
be exercised or converted into common stock and then share in the earnings of us. As a result, diluted loss per common share is the same
as basic loss per common share for the periods.
Fair
values of financial instruments
ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level
1 – quoted prices in active markets for identical assets or liabilities.
Level
2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 – inputs that are unobservable
There
were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of March
31, 2020 and December 31, 2019.
Recent
Accounting Pronouncements
Management
has evaluated all the recently issued accounting pronouncements and does not believe that they will have a material effect on the Company’s
financial position and results of operations.
Off-balance
Sheet Arrangements
As
of March 31, 2020 and December 31, 2019, there were no off-balance sheet arrangements.
Item 3.
|
Quantitative and Qualitative
Disclosures About Market Risk
|
As
a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4.
|
Controls and Procedures
|
Evaluation
of Disclosure 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 March 31, 2020. 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 as a result of the following material weaknesses:
|
●
|
Because of the company’s limited resources, there
are limited controls over information processing.
|
|
●
|
There is an inadequate segregation of duties consistent
with control objectives. Our Company’s management is composed of two persons, resulting in a situation where limitations on
segregation of duties exist. In order to remedy this situation, we would need to hire additional staff to provide greater segregation
of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will reassess
this matter in the following year to determine whether improvement in segregation of duty is feasible.
|
|
●
|
The Company does not have a sitting audit committee
financial expert, and thus the Company lacks the board oversight role within the financial reporting process.
|
|
●
|
There is a lack of formal policies and procedures necessary
to adequately review significant accounting transactions. The Company utilizes a third-party independent contractor for the preparation
of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal
policy to review significant accounting transactions and the accounting treatment of such transactions. The third-party independent
contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely
basis to allow for adequate reporting/consideration of certain transactions.
|
Our
management will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls
over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements,
as necessary and as funds allow.
Changes
in Internal Controls
There
have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph
(d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended March 31, 2020 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
PART
II - OTHER INFORMATION
|
Item 1.
|
Legal Proceedings
|
From
time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business.
We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating
any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material
adverse effect on us.
As
a “smaller reporting company”, we are not required to provide the information required by this Item.
|
Item 2.
|
Unregistered Sales of
Equity Securities and Use of Proceeds
|
None.
|
Item 3.
|
Defaults Upon Senior
Securities
|
None.
|
Item 4.
|
Mine Safety Disclosures
|
Not
Applicable.
|
Item 5.
|
Other Information
|
None.
|
**
|
In
accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and
32.2 herewith are deemed to accompany this Form 10-K and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such
certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.
|
|
(1)
|
Incorporated
by reference to the exhibits to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March
3, 2016.
|
|
(2)
|
Incorporated by reference
to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on May 25, 2018.
|
|
(3)
|
Incorporated by reference
to the Exhibits to Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 26, 2021.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
|
Jialijia
Group Corporation Limited
|
|
(Registrant)
|
|
|
Dated:
July 12, 2021
|
/s/
Na Jin
|
|
Na JIn
|
|
Chief Executive Officer,
Chief Financial Officer, and Director
|
|
(Principal Executive Officer)
|
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