UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þForm 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 September 30, 2019March 31, 2020

orOr

☐ TRANSITION REPORT PURSUANT TOUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           

Commission File Number: 333-209900To           

Commission File Number Jialijia Group Corporation Limited333-209900

JIALIJIA GROUP CORPORATION LIMITED

(Exact name of registrant as specified in its charter)

Room 402, Unit B, Building 5, Guanghua Community

Guanghua Road, Tianning District, Changzhou City, Jiangsu Province, China 213000
(AddressSecurities registered pursuant to Section 12(b) of principal executive offices and zip code) the Act:

(86-519) 8980-1180
(Registrant’s telephone number, including area code) 

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.

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 ☒

Securities registered pursuant to Section 12(b) of the Act: None.APPLICABLE ONLY TO CORPORATE ISSUERS

StateIndicate the number of shares outstanding of each of the issuer’s classes of common equity,stock, as of the latest practicable date.

647,705 shares of common stock issued and outstanding as of July 12, 2021.

Jialijia Group Corporation Limited

TABLE OF CONTENTSCONTENTS.

PART I - FINANCIAL INFORMATIONCAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

ITEM 1. FINANCIAL STATEMENTSThis 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.

JIALIJIA GROUP CORPORATION LIMITEDThese 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.

CONSOLIDATED BALANCE SHEETS

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

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

JIALIJIA GROUP CORPORATION LIMITED

CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS AND COMPREHENSIVE INCOME (LOSS)LOSS

(UNAUDITED)

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

JIALIJIA GROUP CORPORATION LIMITED

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

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

JIALIJIA GROUP CORPORATION LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN EQUITY

(UNAUDITED)

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

JIALIJIA GROUP CORPORATION LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

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 6,000,000300,000 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 2,860,000143,000 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 iswas 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, is engaged inentered into the productionbusiness of producing and sale ofselling gases for industrial and medical purposes, such as oxygen and nitrogen, in the PRC. The Company is in the process of improving its facilities and has not commenced its gas production or generated any revenues.

Note2. Basis of Presentation

The consolidated balance sheets as of June 30, 2019March 31, 2020 and December 31, 20182019 and the consolidated statements of incomeoperations and comprehensive incomeloss for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 combine the historical consolidated statements of balance sheets and income and comprehensive incomeloss of the Company, Huazhongyun, Jialijia (Changzhou), and have been prepared as if the Reverse Merger had closed on January 1, 2018.2019. Both the Company, and Huazhongyun and WFOE are under common control.

The unaudited 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.

Note3. 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 2,860,000143,000 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:

During the ninethree months ended September 30,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 ninethree months ended September 30, 2019,March 31, 2020, the Company had a net loss of $4,238,556.$13,119. Additionally, the Company had an accumulated deficit of $4,281,680$4,818,505 and working capital deficit of $2,726,098$3,046,373 as of September 30, 2019,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, nothe Company has reserved allowance for advances to suppliers is required atin the amount of $100,549 as of December 31, 2019 and write off the balance sheet dates.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 yearperiod 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: 

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. There

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 no impairment reassessed and recorded by the management for the ninethree months ended September 30,March 31, 2020 and 2019, and 2018. 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 ninethree months ended September 30,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 during the nine months ended September 30, 2019.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

In August 2018,Management has considered all recent accounting pronouncements issued and their potential effect on the FASB issued Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, which changes the fair value measurement disclosure requirements of ASC 820. This update is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years.consolidated financial statements. The Company doesCompany’s management believes that these recent pronouncements will not expect the adoption of ASU 2018-13 to have a material impacteffect on its consolidated financial statements.

Note 6. Advance to Suppliers

The Company had advance to suppliers of $187,748 and $93,079 as of September 30, 2019 and December 31, 2018, respectively. Advance to suppliers was made related to the purchase of equipment.

Note 7.6. Property, Plant, and Equipment, Net

Property, plant, and equipment consisted of the following:

Depreciation expense for the ninethree months ended September 30,March 31, 2020 and 2019 were $0 and 2018 were $112,463 and $0,$38,517, respectively.

Note 8.7. Accrued Expenses

Accrued expenses consist of the following:

Note 9.8. 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 ninethree months ended September 30, 2019March 31, 2020 and 2018.2019. The U.S. Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Effective in 2018,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 subsidiarysubsidiaries in PRC are subject to an enterprise income tax rate of 25%. The Company had recorded no income tax provisions for the ninethree months ended September 30, 2019March 31, 2020 and 2018.2019.

Provision for income tax expense (benefit) consists of the following:

The following is a reconciliation of the statutory tax rate to the effective tax rate:

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.

At September 30, 2019As of March 31, 2020 and December 31, 2018,2019, 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 10.9. Related Party Transactions and Balances

The related parties of the company with whom transactions are reported in these consolidated financial statements are as follows:

Due to related parties:

Due to related parties were non-trade balances advancedadvances 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 11.10. 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 September 30, 2019March 31, 2020 and December 31, 2018,2019, the Company had 12,445,222635,296 and 7,285,000635,296 shares of common stock, issued and outstanding, respectively.

On May 15, 2019, the Company issued 817,10840,855 shares of its common stock at a price per share of $0.02$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 14,785739 shares and issued additional 346,41617,321 shares to the 9 subscribers. In addition, the Company revised the issuance price to $0.03$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 3,011,483150,574 shares of the Company’s common stock at a price of $0.03$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 1,000,00050,000 shares of the Company’s common stock at a price of $0.01$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 September 30, 2019,March 31, 2020, Huazhongyun owned 6,000,000300,000 shares of the Company. These shares have been reclassified and recorded as treasury stock at the cost of $0.02$0.4 per share, as a result of the Reverse Merger.

Note 12.11. 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 September 30, 2019March 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 OPERATIONSOverview

The following discussionWe 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 our financial condition and results of operations should also be readthe Exchange Act for so long as it is subject to those requirements. 

We are in conjunctionactive discussions with an operating business affiliated with our unaudited consolidated financial statements and the notes to those financial statements appearing elsewhere in this report. The following discussion contains forward-looking statements relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, thereexecutive officers regarding potential acquisition. There is no assurance that we will be able to successfully acquire such company or any company in the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report. 

Overviewnear future.

Jialijia Group Corporation Limited, (the “Company”), 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 “Exchange“Share Exchange Agreement”) with Huazhongyun Group Co., Limited (“Huazhongyun”Huazhongyun,” formerly known as “JLJ Group Corporation Limited”), a company incorporatedformed under the laws of the Hong Kong Special Administrative Region, and Na Jin, the sole shareholder of Huazhongyun (the “Shareholder”) and the Chief Executive Officer and Chief Financial Officer of the Company. Na Jin, through Huazhongyun, ownsowned 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, atpar value $0.001 per share, as of the timedate of execution of the Share Exchange Agreement. The Shareholder ownsNa Jin owned an aggregate of 10,000 ordinary shares of Huazhongyun (“Huazhongyun Shares”), which constituteconstituted all of the issued and outstanding ordinary shares of Huazhongyun.

Pursuant to On 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 timedate of execution of the Share 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.China, which in turn held seventy percent (70%) of the outstanding equity interest in Rucheng Wenchuan Gas Co., Ltd. (“Rucheng(the “Rucheng Wenchuan”) was incorporated, a company formed 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 2,860,000 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.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.

The acquisitionFrom 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 Huazhongyun3,011,483 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 WFOE is treatedreceived 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 reverse merger (the “Reverse Merger”)Subscription Agreement to purchase 1,000,000 shares of the Company’s common stock at a price of $0.01 per share, for accounting purposes. a total purchase price of $10,000, which purchase was consummated on July 24, 2019.

As a result of the consummation of the Reverse Mergerabove merger on August 29, 2019, we entered into the Company, through its subsidiaries, is engaged in the productionbusiness of producing and sale ofselling gases, such as oxygen and nitrogen, for industrial and medical purposes such as oxygen and nitrogen, in the PRC. The Company is inIn 2020, the process of improving its facilitiesCOVID-19 pandemic materially and has not commenced its gas production or generated any revenues.

Results of Operations for the Threeadversely affected economic conditions and Nine Months Ended September 30, 2019 Compared to the Three and Nine Months Ended September 30, 2018 

Revenues 

The Company did not engage in any business activities and did not generate any revenue for the nine months ended September 30, 2019 and 2018. 

Operating Expenses

The Company has had nominal operations and only incurred expenses relating to being a public reporting company and seeking a merger and acquisition. The general and administrative expenses consisted primarily of professional fees and organization expenses. For the three months ended September 30, 2019, the general and administrative expenses amounted to $90,717 as compared with $6,393 for the three months ended September 30, 2018, an increase of $84,324, or 1319.0%. For the nine months ended September 30, 2019, the general and administrative expenses amounted to $276,132 as compared with $21,613 for the nine months ended September 30, 2018, an increase of $254,519 or 1177.6%. The increase in the company’sour operating expenses was primarily due to the increase in accounting, audit and legal expenses.

Net Loss

results. As a result, ofwe were unable to obtain the foregoing, for the three months ended September 30, 2019, net loss amountedfinancing necessary to $90,717, as compared to $2,393 for the three months ended September 30, 2018, an increase of $84,324, or 1319.0%; and for the nine months ended September 30, 2019, net loss amounted to $4,238,556, as compared to $21,613 for the nine months ended September 30, 2018, an increase of $4,216,943, or 19511.1%. The increase in net loss for the nine months ended September 30, 2019 was a result of increase in operating expenses and full impairment charge of goodwill amounted to $3,962,424 as a result of the acquisition of Rucheng Wenchuan.

pursue this business.

Liquidity and Capital Resources 

Working Capital: 

AsEffective July15, 2020, we engaged in a one for twenty reverse stock split of September 30, 2019 and December 31, 2018, we had $38,547 cash and cash equivalents. Asour common stock whereby each twenty shares of September 30, 2019, we have incurred accumulated deficitcommon stock were reduced into one share of $4,281,680. Ascommon stock with fractional shares rounded to one whole share. All descriptions of September 30, 2019, we havesecurities issuances occurring prior to such reverse stock split are provided on a working capital deficit of $2,726,098. 

pre-reverse basis.

Cash Flows: 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.

Net cash used

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 operating activities was $142,108 duringour business operations. Our business is subject to risks inherent in the nine months ended September 30, 2019, comparedestablishment 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 $19,163operate our business for the nine months ended September 30, 2018. The increasenext 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 cash used in operating activities was primarily duefuture, we may be unable to the increase in net loss during the nine months ended September 30, 2019, comparedcarry out our full business plan or we may be forced to the nine months ended September 30, 2018. cease operations.

Net cash used in investing activities was $131,083 during the nine months ended September 30, 2019, compared to $0 for the nine months ended September 30, 2018. The increase in the cash used in investing activities was primarily due to the acquisition of Rucheng Wenchuan.

Going Concern

Net cash provided by financing activities was $310,979 during the nine months ended September 30, 2019, compared to $19,163 for the nine months ended September 30, 2018. The increase in the cash provided by financing activities was primarily due to the increase of proceeds from related party loan.

Going Concern

These consolidatedOur financial statements have been prepared on a going concern basis which contemplatesassumes the realization ofCompany will be able to realize its assets and the settlement ofdischarge its liabilities and commitments in the normal course of business. As reflected in the Company’s accompanying consolidated financial statements,business for the nine months ended September 30, 2019,foreseeable future. As of March 31, 2020, the Company had a net lossworking capital deficit of $4,238,556. Additionally, the Company had$3,046,373 and has incurred losses since its inception resulting in an accumulated deficit of $4,281,680 and working capital deficit of $2,726,098 as of September 30, 2019, and has not yet generated revenues. The ability$4,818,505. Further losses are anticipated in the development 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 raiseraising substantial doubt about the Company’s ability to continue as a going concern. The accompanyingfinancial 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

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.

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 beresult 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 should the Company beadditional 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 going concern.material adverse effect on our business, financial condition and results of operations.

In orderIf we cannot raise additional funds, we will have to continue ascease business operations. 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 saleresult, our common stock investors would lose all 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.their investment. 

Critical Accounting Policies

Basis of Accounting

TheOur financial statements and accompanying notes arehave been prepared in accordance with United States generally accepted 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

applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting principles generally acceptedrequires 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 United StatesJumpstart 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 Americathis 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, andas well as the amountreported 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,made; however actual results could differ materially from those results.estimates.

Cash and Cash EquivalentsIncome Taxes

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, no allowance for advances to suppliers is required at the balance sheet dates.

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 year 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: 

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. There was no impairment reassessed and recorded by the management for the nine months ended September 30, 2019 and 2018. 

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 nine months ended September 30, 2019, the goodwill, in amount of $3,962,424, as a result of the acquisition of Rucheng Wenchuan, was fully recognized as impairment.

Income Taxes

The CompanyWe 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 benefitsas outlined in future years.ASC 740, “Income Taxes”. Under the asset and liability approach,method of ASC 740, deferred taxestax assets and liabilities are providedrecognized for the netestimated future tax effects of temporaryconsequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities for financial reporting purposes and the amounts used for incometheir respective tax purposes. A valuation allowance is provided for deferredbases. Deferred tax assets if it is more likely than not these items will either expire beforeand liabilities are measured using enacted tax rates in effect for the Company is ableyear in which those temporary differences are expected to realize their benefits,be recovered or that future deductibility is uncertain.settled.

UnderLoss per Share Calculation

We comply with accounting and disclosure requirements of ASC 740, a tax position260, “Earnings Per Share.” Net loss per common share is recognized as a benefit only if it is “more likely than not”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 the tax position wouldcould, potentially, 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 appealsexercised 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 recognizedconverted into common stock and then share in the financial statements. A tax positionearnings of us. As a result, diluted loss per common share 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 meetsame as basic loss per common share for 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.periods.

Foreign Currency Translation

The Company uses the United States dollar (“U.S. dollars”) forFair values of 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 Instrumentsinstruments

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

In August 2018, the FASB issued Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - ChangesThere were no assets or liabilities measured at fair value on a recurring basis subject to the Disclosure Requirements for Fair Value Measurement”, which changes the fair value measurement disclosure requirements of ASC 820. This update is effective for fiscal years beginning after820 as of March 31, 2020 and December 15, 2019,31, 2019.

Recent Accounting Pronouncements

Management has evaluated all the recently issued accounting pronouncements and for interim periods within those fiscal years. The Company does not expect the adoption of ASU 2018-13 tobelieve that they will have a material impacteffect on itsthe Company’s financial statements.position and results of operations.

Off-balance Sheet Arrangements

As of September 30,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.

Not applicable. 

ITEM 4. CONTROLS AND PROCEDURES 

Evaluation of Disclosure Controls and Procedures

Based on an evaluationOur management is responsible for establishing and maintaining a system of the Company’s disclosure controls and procedures (as defined in RulesRule 13a-15(e) and 15d-15(e) ofunder the Exchange Act), as of September 30, 2019, that is designed to ensure that information required to be disclosed by us in the Company’s Chief Executive Officerreports that we file or submit under the Exchange Act is recorded, processed, summarized and Chief Financial Officer (itsreported, 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 accounting officer) haswith 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 the Company’sour disclosure controls and procedures were not effective atas 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 reasonable assurance level. result of the following material weaknesses:

Limitations on the Effectiveness of Controls 

A control system, no matter how well conceivedOur management will continue to monitor and operated, can provide only reasonable, not absolute, assurance thatevaluate the objectiveseffectiveness of the control system are met. Because of the inherent limitations in all controls systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosureour internal controls and procedures are designed to provide reasonable assurance of achieving its objectives. 

Changes in Internal Control Over Financial Reporting 

There have not been any changes in the Company’sand 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 duringin the Company’s fiscal quarter ended September 30, 2019March 31, 2020 that hashave materially affected, or isare reasonably likely to materially affect, the Company’sour 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 currently ainvolved 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 lawsuit or proceedingof our properties is subject, which in the opinion of management, iswould reasonably be likely to have a material adverse effect on us or our business. us.

ITEM 1A. RISK FACTORS As a “smaller reporting company”, we are not required to provide the information required by this Item.

Not applicable for smaller reporting companies. 

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. Applicable.

ITEM 5. OTHER INFORMATION 

None.

ITEM 6. EXHIBITS

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 hereuntothereunto duly authorized.