CHINA FOODS HOLDINGS LTD. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

Special note regarding forward-looking statements



This Form 10-K contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. For this purpose, any
statements contained in this Form 10-K that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, words such as "may", "will", "expect", "believe", "anticipate",
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors, many of which are not within our control. These factors
include by are not limited to economic conditions generally and in the
industries in which we may participate; competition within our chosen industry,
including competition from much larger competitors; technological advances and
failure to successfully develop business relationships.



Plan of Operation


We are a health company that develops, markets, promotes and distributes a
variety of customized health care products and services, including supplements,
healthy snacks, meal replacements, and nutritional consultation services to
consumers in China. We work with certain licensed healthcare food factories to
develop and manufacture products and services that are distributed
conventionally through sales agents and also through a network of e-commerce and
social media platforms.



In addition to products, we are committed to providing customized science based
wellness consultation and service programs to customers. Our diverse products
and services target health conscious customers and differentiate based upon age
and gender and seek to manage different conditions. We reach out to customers
fitting certain health and lifestyle profiles through our offline and online
consultation services, and track eating habits and health indicators to provide
customized products such as supplements. We believe this will facilitate the
ability of customers to monitor, understand and adjust their health practices
and lifestyle anytime and anywhere for increased customer engagement and
retention.



We conduct our business through our wholly owned subsidiary Guangzhou Xiao Xiang
Health Industry Company Limited, a limited liability company organized under the
laws of China on March 8, 2017. Alpha Wellness (HK) Limited, a limited liability
company organized under the laws of Hong Kong on April 24, 2019, and Elite
Creation Group, a limited liability company formed under the laws of the British
Virgin Islands formed on September 5, 2018, are holding companies without
operations.



7






Our Products and Services



Our health products are designed to help enhance immunity and improve general
wellbeing. We provide the following categories of healthcare products and
customized healthcare consultation services in China: (i) Nutrition Catering
(ii) Special Health Food (iii) Health Supplement and (iv) Skincare. The products
target all age groups with different needs.



Product category      Representative Products   Description
Nutrition Catering    Jasmine Beauty            Meal replacement and healthy snacks
Series
Special Health Food   Power Centinent           Products that support a healthy active
Series                                          lifestyle and enhance Immunity
Health Supplement     Fuli Fruit Juice          Functional fruit beverages and dietary
Series                                          and nutritional supplements containing
                                                resveratrol, anthocyanin, superoxide
                                                enzyme
Skincare Series       Tightness                 Facial skin care and recovery



Our products are taken as health care supplements in accordance with the principles of traditional Chinese medicine, including the principle of complementary medicine and ideal ingredient ratios and combinations.


Markets and Regions



The Great Health Industry refers to production, operation, service and
information dissemination, maintenance, restoration, and promotions linked to
health. It covers medical products, health supplements, nutritional foods,
medical devices, health appliances, fitness, health management, health
consulting and many other production and service areas closely related to human
health. The Great Health Industry is an emerging industry with huge market
potential, especially in China.



According to the "China Great Health Industry Strategic Planning and Enterprise
Strategy Consulting Report" published by Qianzhan Industry Institute (???????),
the scale of the Great Health Industry in 2017 was USD 947.42 billion, which
increased to over USD 1,069.66 billion in 2018. The report predicted USD
1,341.66 billion volume for 2019 and forecast over USD 1,528.09 billion for
2020. In the years till 2023, the average annual compound growth rate will be
approximately 12.55%, and with the Great Health Industry reaching approximately
USD 2,153.08 billion in 2023.



Our Strategies



We are focused on achieving long-term growth in revenues, cash flow and profit.
We believe that we can achieve this by developing multiple distribution channels
and strengthening our marketing and promotions, leading to better product
turnover and revenue. We also expect to broaden our product range as well as
product differentiation in the future. Based on the business experience
accumulated over the years, we believe we can improve the efficiency of our
supply chain with time-saving and cost-saving supply chain management and
marketing planning for the target customer base with our one-stop service.

Our main objectives are (i) to enhance the marketability of our products; (ii) reduce logistics costs and time spent and (iii) further expand market share in
China. To this end, we plan to pursue the following business strategies:

? Collaborate with third-party e-commerce platforms to increase product exposure,

e.g. Tmall, Jingdong mall

? Provide health care knowledge and consultation service via social media and

us-media

? Build brand image and reputation through customer experience and word of mouth

? Increase the number of downstream distributors and wholesalers

? Strengthen relationships with manufacturers, suppliers, pharmaceutical agents and

    distributors
  ? Pursue strategic acquisitions and partnerships




We intend to develop both online and offline distribution channels to increase
sales volume and revenue. We expect to partner with third party e-commerce
platforms, social media and We-media such as Wechat, TikTok and Xiaohongshu to
build our online presence. We believe that online channels will allow us to
provide real-time nutrition and healthcare consultation services as well as
increase customer engagement and retention. Starting from the second half of
2020, we have launched our "nutrition consulting" support services using a major
social media software to allow customer groups to receive pre-purchase
consultation and after-sales service for products anytime and anywhere.



Our current offline sales channel relies on distributors and sales agents. To
enhance the visibility and marketability of our products and services and to
improve brand recognition and awareness, we hope to develop store-in-shop and
counter experiences. We also intend to partner with high-end gyms to form
nutrition clubs and hold weight-loss training camps, health assessment and
fitness training camps and other activities.



We intend to create a 'one-stop' solution for our customers by creating a
multi-channel health product supply and retail system. We not only provide
personalized consultation service to our customers, but also summarize and
analyze our customer feedback and experiences through our consultation service
and after-sales service. We intend to share this data with our manufacturers and
supply chain partners to develop products and services that better meet the
demands of our customers. By pooling and addressing the needs of downstream
businesses and combining it with the Consumer to Manufacturer model for upstream
transformation, we anticipate establishing a close relationship between
manufacturers and suppliers. We believe this model can also reduce circulation
costs and improve the efficiency of our supply chain.



8






Competition



We operate in a highly competitive and fragmented industry that is sensitive to
price and service. We compete with leading e-commerce companies such as Alibaba
(China) which may offer substantially the same or similar product offerings as
us. We also compete with businesses that focus on particular merchant categories
or markets such as UNI HEALTH (HK stock code: 02211) and ALI HEALTH (HK stock
code:0241). We also compete with traditional cash payments and other popular
online shopping websites and apps, and other traditional media companies that
provide discounts on products and services. We believe the principal competitive
factors in our market include the following:



  ? Breadth of member base and the products and services featured.
  ? Close and fast pre-sales and after-sales service response.
  ? Ability to reduce the product turnover time and inventory cost.
  ? Relationship and bargaining power with supplier and manufacturer.
  ? Healthcare product effectiveness and acceptance from customer.
  ? Local presence and understanding of local business trends.

? Ability to provide a high volume of relevant services and information to

    consumers.
  ? Ability to produce high purchase rates for products and services among
    members.
  ? Strength and recognition of our brand.




Although we believe we compete favorably on the factors described above, many of
our current and potential competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
larger product and services offerings, larger customer base and greater brand
recognition. These factors may allow our competitors to benefit from their
existing customer base with lower development costs or to respond more quickly
than we can to new or emerging technologies and changes in customer
requirements. These competitors may engage in more extensive research and
development efforts, undertake more far-reaching marketing campaigns and adopt
more aggressive pricing policies, which may allow them to build a larger
customer base more effectively than us. Our competitors may develop products or
services that are similar to our products and services or that achieve greater
market acceptance than our products and services. In addition, although we do
not believe that customer payment terms are a principal competitive factor in
our market, they may become such a factor, and we may be unable to compete
on
such terms.


Government and industry regulations

We are subject to the general laws in China governing businesses, including labor, occupational safety and health, general corporations, intellectual property and other similar laws.

Product liability and consumer protection

Product liability claims may arise if any of our healthcare products have a
harmful effect on a consumer, who may make a claim for damages or compensation
as an injured party. The General Principles of the Civil Law of the PRC, which
became effective in January 1987, state that manufacturers and sellers of
defective products causing property damage or injury shall incur civil
liabilities for such damage or injuries.



The Product Quality Law of the PRC was enacted in 1993 and amended in 2000 to
strengthen the quality control of products and protect consumers' rights and
interests. Under this law, manufacturers and distributors who produce or sell
defective products may be subject to confiscation of earnings from such sales,
revocation of business licenses and imposition of fines, and in severe
circumstances, may be subject to criminal liability.



The Law of the PRC on the Protection of the Rights and Interests of Consumers
was promulgated on October 31, 1993 and became effective on January 1, 1994 to
protect consumers when they purchase or use goods or services. All business
operators must comply with this law when they manufacture or sell goods and/or
provide services to customers. In extreme situations, product manufacturers and
distributors may be subject to criminal liability if their goods or services
lead to the death or injuries of customers or other third parties.



9





Summary of financial information



We have been significantly impacted by COVID-19 global pandemic. In addition to
the devastating effects on human life, the pandemic is having a negative ripple
effect on the global economy, leading to disruptions and volatility in the
global financial markets. China and many other countries have issued policies
intended to stop or slow the further spread of the disease.



COVID-19 and China's response to the pandemic are significantly affecting the
economy. There are no comparable events that provide guidance as to the effect
the COVID-19 pandemic may have, and, as a result, the ultimate effect of the
pandemic is highly uncertain and subject to change. We do not yet know the full
extent of the effects on the economy, the markets we serve, our business or
our
operations.


The following table presents certain operational data for the years ended
December 31, 2021 and 2020:

OPERATIONAL STATUS DATA:


                                                     For the Year          For the Year
                                                    Ended December        Ended December
                                                       31, 2021              31, 2020
Revenues                                           $         361,116     $       1,013,141
Cost of revenue                                             (121,690 )            (596,530 )
Gross profit                                                 239,426               416,611
Total operating expenses                                    (695,856 )            (887,426 )
Total other income                                             7,692                 9,554
Loss before income taxes                                    (448,738 )            (461,261 )
Income tax expense                                            (6,671 )              (8,215 )
Net loss                                                    (455,409 )            (469,476 )




Revenue. We generated revenues of $361,116 and $1,013,141 for the fiscal years
ended December 31, 2021 and 2020. All the major customers are located in the PRC
and Hong Kong. The significant decreases in the revenue due to the outbreak of
COVID-19, we expected the revenue would be increased in the future once an
efficacious COVID-19 vaccine emerges.



Over the years ended December 31, 2021and 2020, the nature of the activities and the segment was presented as follows:

Currently, the Company has two reportable business segments:

(i) Healthcare segment, mainly provides healthcare consulting services and

health and wellness products to customers; and (ii) the Wine segment, mainly provides wine products to customers.




In the following table, revenue is disaggregated by primary major product line,
and timing of revenue recognition. The table also includes a reconciliation of
the disaggregated revenue with the reportable segments.



                                           Year Ended December 31, 2021
                                   Healthcare
                                     Segment        Wine Segment        Total
Revenue from external customers:
Consulting service income          $   216,850     $            -     $  216,850
Sale of healthcare products             39,996                  -         39,996
Sale of wine products                        -            104,270        104,270
Total revenue                          256,846            104,270        361,116

Cost of sales:
Consulting service income              (31,315 )                -        (31,315 )
Sale of healthcare products            (32,064 )                -        (32,064 )
Sale of wine products                        -            (58,311 )      (58,311 )
Total cost of revenue                  (63,379 )          (58,311 )     (121,690 )

Gross profit                           193,467             45,959        239,426

Operating Expenses
Selling and distribution                     -             (5,076 )       (5,076 )
General and administrative            (690,780 )                -       (690,780 )
Total operating expenses              (690,780 )           (5,076 )     (695,856 )

Segment (loss) income              $  (497,313 )   $       40,883     $ (456,430 )




                                            Year Ended December 31, 2020
                                   Healthcare
                                     Segment        Wine Segment         Total
Revenue from external customers:
Consulting service income          $   221,041     $            -     $   221,041
Sale of healthcare products            564,814                  -         564,814
Sale of wine products                        -            227,286         227,286
Total revenue                          785,855            227,286       1,013,141

Cost of sales:
Consulting service income                    -                  -               -
Sale of healthcare products           (395,392 )                -        (395,392 )
Sale of wine products                        -           (201,138 )      (201,138 )
Total cost of revenue                 (395,392 )         (201,138 )      (596,530 )

Gross profit                           390,463             26,148         416,611

Operating Expenses
Selling and distribution                     -           (158,432 )      (158,432 )
General and administrative            (728,994 )                -        (728,994 )
Total operating expenses              (728,994 )         (158,432 )      (887,426 )

Segment (loss) income              $  (338,531 )   $     (132,284 )   $  (470,815 )




The below revenues are based on the countries in which the customer is located.
Summarized financial information concerning the geographic segments is shown in
the following tables:



              Years ended December 31,
                2021             2020

Hong Kong   $    216,851      $   221,041
China            144,265          792,100

            $    361,116      $ 1,013,141




10





Over the years ended December 31, 2021and 2020, the following customers represented 10% or more of our total net revenue:


                                                       Year ended
                                                    December 31, 2021                              December 31, 2021
                                                               Percentage of
                                             Revenues            revenues                         Accounts receivable
Simmax Supply Chian Limited                $     165,391                    46 %                  $                  -
Guangzhou Dexin Huamao Trading Co., Ltd.         103,072                    29 %                                     -
Tang Fung Limited                                 51,460                    14 %                                     -
TOTAL                                      $     319,923                    89 %        Total     $                  -




                                                  Year ended
                                               December 31, 2020                              December 31, 2020
                                                          Percentage of
                                        Revenues            revenues                         Accounts receivable
Guangdong Hualian Health Industry
Co., Ltd.                             $     394,158                    39 %                  $                  -
Huaye Little Elephant Health
Industry Co., Ltd.                          234,547                    23 %                                     -
TOTAL                                 $     628,705                    62 %        Total     $                  -




Cost of Revenue. Cost of revenue as a percentage of net revenue was
approximately 33.70% for the fiscal year ended December 31, 2021. Cost of
revenue as a percentage of net revenue was approximately 58.88% for the fiscal
year ended December 31, 2020. The decrease of cost of revenue as a percentage of
net revenue is attributable to a decrease in import of product from supplier and
manufacturer due to the COVID-19 global pandemic.



Over the years ended December 31, 2021 and 2020, the following suppliers accounted for 10% or more of our purchases:


11






                                                   Year ended
                                                December 31, 2021                              December 31, 2021
                                                           Percentage of
Vendor                                   Purchases           purchases                         Accounts payable
Guangzhou Jingdong Trading Co., Ltd.   $     195,152                    99
%       Total:     $                 -





                                                  Year ended
                                               December 31, 2020                              December 31, 2020
                                                          Percentage of
Vendor                                  Purchases           purchases                         Accounts payable

Zhejiang Hongshiliang Group Tiantai
Mountain Wuyao Co., Ltd.              $     219,007                    37 %                  $                 -
Tengfeng (China) Trading Co., Ltd.           71,616                    12 %                                    -
Guangzhou Zeli Pharmaceutical
Technology Co., Ltd.                         61,222                    10 %                                    -

                             Total:   $     351,845                    59 %       Total:     $                 -




Gross Profit. We achieved a gross profit of $239,426 and $416,611 for the fiscal
years ended December 31, 2021, and 2020, respectively. The decrease in gross
profit is primarily attributable to the decrease in revenue.



General and Administrative (“G&A”) Expenses. We incurred G&A costs of
$690,780 and $728,994 for closed fiscal years December 31, 2021and 2020, respectively.



Other Income, net. We incurred net other income of $7,692 for the fiscal year
ended December 31, 2021, as compared to a net other income of $9,554 for the
fiscal year ended December 31, 2020. Our net other income for the year ended
December 31, 2020 consisted of the subsidy funds from Government.



income tax expense. We recorded an income tax expense of $6,671 and $8,215 for closed fiscal years December 31, 2021 and 2020.



Net Loss. During the year ended December 31, 2021, we incurred a net loss of
$445,409, as compared to a net income $469,476 for the year ended December 31,
2020. The significant decreases due to a decrease in the revenue, cost of
revenue and selling and distribution expenses due to the outbreak of COVID-19.



12





Cash and capital resources

From December 31, 2021we had cash and cash equivalents of $609,434inventories of $327,551 right to use the assets of $350,563tax recoverable from $8,910 and advances and other receivables from $139,254.

From December 31, 2020we had cash and cash equivalents of $1,006,394inventories of $206,272and advances and other receivables from $121,501.

We believe that our current liquidity and the other sources of liquidity described below are sufficient to support general operations for at least the next 12 months.


                                                        Years Ended December 31,
                                                           2021             2020

Net cash (used in) provided by operating activities ($438,620) $343,657
Net cash used in investing activities

                        (27,358 )      (67,862 )
Net cash provided by financing activities                     50,319       
 45,862



Net cash (Used in) Generated from operating activities.

For the year ended December 31, 2021, net cash used in operating activities was
$438,620 which consisted primarily of the increase in accrued liabilities and
other payables of $48,884, increase in prepayment and other receivables of
$17,753, decrease in accounts payables of $7,827, decrease in tax payables of
$17,229, increase in inventories of $121,279, and decrease in customer deposit
of $69,141.



For the year ended December 31, 2020, net cash provided by operating activities
was $343,657, which consisted primarily of the decrease in prepayment and other
receivables of $199,317, decrease in accounts receivables of $530,196, increase
in accrued liabilities and other payables of $2,316, increase in accounts
payables of $7,827, increase in tax payables of $8,219, increase in inventories
of $94,655, increase in lease liabilities of $47, and increase in customer
deposit of $13,044.



However, we expect to continue to rely on cash generated from our existing shareholder financing and private placements of our securities to fund our future operations and acquisitions.

Net cash used In investment activities.

For the year ended December 31, 2021the net cash used in investing activities was
$27,358consisted primarily of leasehold improvements.

For the year ended December 31, 2020, net cash used in investing activities was
$67,862, consisted primarily of purchase of plant and equipment of $75,060, and
cash from acquisition of legal acquirer of $7,198.



Net cash generated by financing activities.



For the year ended December 31, 2021, net cash provided by financing activities
was $50,319, consisting primarily of advance from a related company of $150,508
and repayment of lease liabilities of $100,189.



For the year ended December 31, 2020, net cash provided by financing activities
was $45,862, consisting primarily of repayment to a related company of $3,038,
advance from a director 128,295 and repayment of lease liabilities of $79,395.



Material Commitments


As of the date of this annual report, we have no significant commitments.


13






Material Cash Requirements



We have not achieved profitability since our inception and we expect to continue
to incur net losses for the foreseeable future. We expect net cash expended in
2022 to be significantly higher than 2021. As of December 31, 2021, we had an
accumulated deficit of $918,195. Our material cash requirements are highly
dependent upon the additional financial support from our major shareholders
in
the next 12 - 18 months.



We had the following contractual obligations and commercial commitments as of
December 31, 2021:



                                                 Less                                          More
                                                 than                           3-5           than 5
  Contractual Obligations         Total         1 year       1-3 Years         Years           Years
                                    $              $             $               $               $
Amounts due to a related
company                            199,964       199,964              -               -               -
Amount due to a director           219,461       219,461              -               -               -
Operating lease obligations        360,154       114,132        246,022
Accrued liabilities and
other payables                      51,200        51,200              -               -               -
Customer deposits                  340,783       340,783
                                                                      -               -               -
Total obligations                1,171,562       925,540        246,022               -               -



Off-balance sheet arrangements.

The Company has no off-balance sheet arrangements and the Company is not expected to enter into any off-balance sheet arrangements.

Summary of Significant Accounting Policies



The Company's consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States (GAAP). Any
reference in these notes to applicable guidance is meant to refer to the
authoritative GAAP as found in the Accounting Standards Codification (ASC) and
Accounting Standards Update (ASU) of the Financial Accounting Standards Board
(FASB). All adjustments considered necessary for a fair presentation have been
included. These adjustments consist of normal and recurring accruals, as well as
non-recurring charges.



The consolidated financial statements are presented in US Dollars and include
the accounts of the Company and its subsidiaries. All significant inter-company
accounts and transactions have been eliminated in consolidation. The results of
subsidiaries acquired or disposed of during the periods are included in the
consolidated statements of operations from the effective date of acquisition or
up to the effective date of disposal.



Use of Estimates



The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.


Important areas where management uses estimates include:

? revenue recognition, ? impairment of assets, including goodwill and other indefinite life intangible assets

assets;

? sales returns and allowances;
? inventory;
? estimated lives for tangible and intangible assets;
? income tax valuation allowances; and




These estimates require the use of judgment as future events and the effect of
these events cannot be predicted with certainty. The estimates will change as
new events occur, as more experience is acquired and as more information is
obtained. We evaluate and update our assumptions and estimates on an ongoing
basis and we may consult outside experts to assist as considered necessary.

Segment Reporting



Accounting Standards Codification ("ASC") Topic 280, "Segment Reporting"
establishes standards for reporting information about operating segments on a
basis consistent with the Company's internal organization structure as well as
information about geographical areas, business segments and major customers in
consolidated financial statements. Currently, the Company operates in one
reportable operating segment in Hong Kong and China.



Cash and cash equivalents



Cash and cash equivalents are carried at cost and represent cash on hand, demand
deposits placed with banks or other financial institutions and all highly liquid
investments with an original maturity of three months or less as of the purchase
date of such investments.



Accounts receivable



Accounts receivable are recorded at the invoiced amount and do not bear
interest, which are due within contractual payment terms, generally 30 to 90
days from completion of service. Credit is extended based on evaluation of a
customer's financial condition, the customer credit-worthiness and their payment
history. Accounts receivable outstanding longer than the contractual payment
terms are considered past due. Past due balances over 90 days and over a
specified amount are reviewed individually for collectability. At the end of
fiscal year, the Company specifically evaluates individual customer's financial
condition, credit history, and the current economic conditions to monitor the
progress of the collection of accounts receivables. The Company will consider
the allowance for doubtful accounts for any estimated losses resulting from the
inability of its customers to make required payments. For the receivables that
are past due or not being paid according to payment terms, the appropriate
actions are taken to exhaust all means of collection, including seeking legal
resolution in a court of law. Account balances are charged off against the
allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. The Company does not have any
off-balance-sheet credit exposure related to its customers. As of December 31,
2021 and 2020, there was no allowance for doubtful accounts.



Inventories


Inventories are stated at the lower of cost or market value (net realizable
value), cost being determined on a first-in-first-out method. The Company
provides inventory allowances based on excess and obsolete inventories
determined principally by customer demand. As of December 31, 2021 and 2020, the
Company did not record an allowance for obsolete inventories, nor have there
been any write-offs.



14






Plant and equipment


Property, plant and equipment are recorded at cost less accumulated amortization and accumulated impairment losses, if any. Depreciation is calculated on a straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:



                                   Expected useful lives   Residual value
Furniture, fixture and equipment          3 years                        5
%
Motor vehicle                         3.33 to 4 years                    5 %
Leasehold improvement                     2 years                        5 %




Expenditures for repairs and maintenance are expensed as incurred. When assets
have been retired or sold, the cost and related accumulated depreciation are
removed from the accounts and any resulting gain or loss is recognized in the
results of operations.



Intangible assets



Intangible assets represented trademarks of their products and are stated at
cost less accumulated amortization and any recognized impairment loss.
Amortization is provided over the term of their registrations on a straight-line
basis, which is 10 years and will expire in 2028.



Impairment of long-lived assets

In accordance with the provisions of ASC Topic 360, "Impairment or Disposal of
Long-Lived Assets", all long-lived assets such as plant and equipment, as well
as intangible assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
evaluated by a comparison of the carrying amount of an asset to its estimated
future undiscounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amounts of the assets exceed the
fair value of the assets.



Revenue recognition


The Company adopted Accounting Standards Codification ("ASC") 606 - Revenue from
Contracts with Customers" ("ASC 606"). Under ASC 606, a performance obligation
is a promise within a contract to transfer a distinct good or service, or a
series of distinct goods and services, to a customer. Revenue is recognized when
performance obligations are satisfied and the customer obtains control of
promised goods or services. The amount of revenue recognized reflects the
consideration to which the Company expects to be entitled to receive in exchange
for goods or services. Under the standard, a contract's transaction price is
allocated to each distinct performance obligation. To determine revenue
recognition for arrangements that the Company determines are within the scope of
ASC 606, the Company performs the following five steps:



  ? identify the contract with a customer;
  ? identify the performance obligations in the contract;
  ? determine the transaction price;

? allocate the transaction price to the performance obligations of the contract; and

  ? recognize revenue as the performance obligation is satisfied.




15

Currently, the Company operates two business segments.

Healthcare Business mainly provides health consulting services and health and wellness products to customers.

Revenue is earned from the rendering of health consulting advisory services to
the customers. The Company recognizes services revenue over the period in which
such services are performed. Amounts expected to be recognized as revenue within
the 12 months following the balance sheet date are classified as current portion
of deferred revenue in the accompanying consolidated balance sheets. Amounts not
expected to be recognized as revenue within the 12 months following the balance
sheet date are classified as deferred revenue, net of current portion.



The sale and distribution of the healthcare products, such as (i) Nutrition
Catering (ii) Special Health Food (iii) Health Supplement and (iv) Skincare, is
the only performance obligation under the fixed-fee arrangements. Revenue is
recognized from the sale of their healthcare products upon delivery to the
customers, whereas the title and risk of loss are fully transferred to the
customers. The Company records its revenues, net of value added taxes ("VAT") on
the majority of the products at the rate of 17% on the invoiced value of sales.
The cost, such as shipping cost and material cost, is recognized when the
product delivered to the customers. The Company records its cost including
taxes.



Wine Business mainly provides the wine products to the customers. Revenue is
recognized from the sale of wine products upon delivery to the customers,
whereas the title and risk of loss are fully transferred to the customers. The
Company records its revenues, net of value added taxes ("VAT") on the majority
of the products at the rate of 17% on the invoiced value of sales. The Company
recorded product sales returns $148,208 and $0 for the years ended December 31,
2021 and 2020, respectively. The cost, such as shipping cost and material cost,
is recognized when the product delivered to the customers. The Company records
its cost including taxes.



Disaggregation of Revenue



16






Income taxes



The Company adopted the ASC 740 Income tax provisions of paragraph 740-10-25-13,
which addresses the determination of whether tax benefits claimed or expected to
be claimed on a tax return should be recorded in the consolidated financial
statements. Under paragraph 740-10-25-13, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax benefits recognized in
the consolidated financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty percent (50%)
likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13
also provides guidance on de-recognition, classification, interest and penalties
on income taxes, accounting in interim periods and requires increased
disclosures. The Company had no material adjustments to its liabilities for
unrecognized income tax benefits according to the provisions of paragraph
740-10-25-13.



The estimated future tax effects of temporary differences between the tax basis
of assets and liabilities are reported in the accompanying balance sheets, as
well as tax credit carry-backs and carry-forwards. The Company periodically
reviews the recoverability of deferred tax assets recorded on its balance sheets
and provides valuation allowances as management deems necessary.



Foreign Currency Conversion



Transactions denominated in currencies other than the functional currency are
translated into the functional currency at the exchange rates prevailing at the
dates of the transaction. Monetary assets and liabilities denominated in
currencies other than the functional currency are translated into the functional
currency using the applicable exchange rates at the balance sheet dates. The
resulting exchange differences are recorded in the consolidated statement of
operations.



17






The reporting currency of the Company is United States Dollar ("US$") and the
accompanying financial statements have been expressed in US$. In addition, the
Company is operating in Hong Kong SAR and the People's Republic of China and
maintain its books and record in its local currency, Hong Kong Dollars ("HK$")
and Renminbi ("RMB"), which is a functional currency as being the primary
currency of the economic environment in which their operations are conducted. In
general, for consolidation purposes, assets and liabilities of its subsidiaries
whose functional currency is not US$ are translated into US$, in accordance with
ASC Topic 830-30, "Translation of Financial Statement", using the exchange rate
on the balance sheet date. Revenues and expenses are translated at average rates
prevailing during the year. The gains and losses resulting from translation of
financial statements of foreign subsidiaries are recorded as a separate
component of accumulated other comprehensive income within the statements of
changes in shareholder's equity.



Net loss per share


The Company calculates net loss per share in accordance with ASC Topic 260,
"Earnings per Share." Basic income per share is computed by dividing the net
income by the weighted-average number of common shares outstanding during the
period. Diluted income per share is computed similar to basic income per share
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common stock
equivalents had been issued and if the additional common shares were dilutive.



Comprehensive income


ASC Topic 220, "Comprehensive Income", establishes standards for reporting and
display of comprehensive income, its components and accumulated balances.
Comprehensive income as defined includes all changes in equity during a period
from non-owner sources. Accumulated other comprehensive income, as presented in
the accompanying consolidated statements of changes in shareholders' equity,
consists of changes in unrealized gains and losses on foreign currency
translation. This comprehensive income is not included in the computation of
income tax expense or benefit.



Retirement plan costs



Contributions to retirement plans (which are defined contribution plans) are
charged to general and administrative expenses in the accompanying statements of
operation as the related employee service are provided.



18






Leases



The Company adopts the FASB Accounting Standards Update ("ASU") 2016-02 "Leases
(Topic 842)." for all periods presented.  This standard requires lessees to
recognize lease assets ("right of use") and related lease obligations ("lease
liabilities") on the balance sheet for leases with terms in excess of 12 months.



The Company determines whether an agreement is a lease at inception. Operating leases are included in right-of-use operating lease assets and operating lease liabilities on the Consolidated Balance Sheets. Finance leases are included in ROU finance lease assets and finance lease liabilities in the Consolidated Balance Sheets.

ROU assets represent the Company's right to use an underlying asset for the
lease term and lease liabilities represent the Company's obligation to make
lease payments arising from the lease. Operating lease and finance lease ROU
assets and liabilities are recognized at January 1, 2019 based on the present
value of lease payments over the lease term discounted using the rate implicit
in the lease. In cases where the implicit rate is not readily determinable, the
Company uses its incremental borrowing rate based on the information available
at commencement date in determining the present value of lease payments. Lease
expense for lease payments is recognized on a straight-line basis over the
lease
term.



Related parties


The Company follows ASC 850-10, Related party for the identification of related parties and the disclosure of related party transactions.

Pursuant to section 850-10-20 the related parties include: a) affiliates of the
Company; b) entities for which investments in their equity securities would be
required, absent the election of the fair value option under the Fair Value
Option Subsection of section 825-10-15, to be accounted for by the equity method
by the investing entity; c) trusts for the benefit of employees, such as pension
and Income-sharing trusts that are managed by or under the trusteeship of
management; d) principal owners of the Company; e) management of the Company; f)
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g) other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.



The financial statements shall include disclosures of material related party
transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of
transactions that are eliminated in the preparation of consolidated or combined
financial statements is not required in those statements. The disclosures shall
include: a) the nature of the relationship(s) involved; b) a description of the
transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are presented, and
such other information deemed necessary to an understanding of the effects of
the transactions on the financial statements; c) the dollar amounts of
transactions for each of the periods for which income statements are presented
and the effects of any change in the method of establishing the terms from that
used in the preceding period; and d) amount due from or to related parties as of
the date of each balance sheet presented and, if not otherwise apparent, the
terms and manner of settlement.



19






Commitments and contingencies



The Company follows the ASC 450-20, Commitments to report accounting for
contingencies. Certain conditions may exist as of the date the financial
statements are issued, which may result in a loss to the Company but which will
only be resolved when one or more future events occur or fail to occur. The
Company assesses such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against the Company or un-asserted claims
that may result in such proceedings, the Company evaluates the perceived merits
of any legal proceedings or un-asserted claims as well as the perceived merits
of the amount of relief sought or expected to be sought therein.



If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's financial statements.
If the assessment indicates that a potentially material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, and an estimate of the range of
possible losses, if determinable and material, would be disclosed.



Loss contingencies considered remote are generally not disclosed unless they
involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time that these
matters will have a material adverse effect on the Company's financial position,
results of operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company's business,
financial position, and results of operations or cash flows.



Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification
("Paragraph 820-10-35-37") to measure the fair value of its financial
instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards
Codification establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, paragraph 820-10-35-37 of the FASB
Accounting Standards Codification establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into
three (3) broad levels. The fair value hierarchy gives the highest priority to
quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs. The three (3) levels of fair
value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting
Standards Codification are described below:



Level 1 Quoted market prices available in active markets for identical or

liabilities at the closing date.

Level 2 Pricing inputs other than quoted prices in active markets included in

level 1, which are either directly or indirectly observable at

report date.

Level 3 Pricing inputs that are generally observable and unsubstantiated inputs

          by market data.




Financial assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.



The fair value hierarchy gives highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and lowest priority to unobservable inputs. If the inputs used to value the financial assets and financial liabilities fall under more than one level described above, the categorization is based on the lowest level that is significant for measuring the fair value of the instrument.


20





Recent accounting statements



From time to time, new accounting pronouncements are issued by the Financial
Accounting Standard Board ("FASB") or other standard setting bodies and 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 its financial position or
results of operations upon adoption.



From time to time, new accounting pronouncements are issued by the Financial
Accounting Standard Board ("FASB") or other standard setting bodies and 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 its financial position or
results of operations upon adoption.



In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260),
Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock
Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40), ("ASU 2021-04"). This ASU reduces diversity in an
issuer's accounting for modifications or exchanges of freestanding
equity-classified written call options (for example, warrants) that remain
equity classified after modification or exchange. This ASU provides guidance for
a modification or an exchange of a freestanding equity-classified written call
option that is not within the scope of another Topic. It specifically addresses:
(1) how an entity should treat a modification of the terms or conditions or an
exchange of a freestanding equity-classified written call option that remains
equity classified after modification or exchange; (2) how an entity should
measure the effect of a modification or an exchange of a freestanding
equity-classified written call option that remains equity classified after
modification or exchange; and (3) how an entity should recognize the effect of a
modification or an exchange of a freestanding equity-classified written call
option that remains equity classified after modification or exchange. This ASU
will be effective for all entities for fiscal years beginning after December 15,
2021. An entity should apply the amendments prospectively to modifications or
exchanges occurring on or after the effective date of the amendments. Early
adoption is permitted, including adoption in an interim period. The adoption of
ASU 2021-04 on January 1, 2022 did not have a material impact on the Company's
financial statements or disclosures.



The Company has reviewed all recently issued but not yet effective accounting pronouncements and does not believe that the future adoption of such pronouncements could have a material impact on its financial condition or results of operations.

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