UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMForm 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.1934
For the quarterly period ended OctoberMarch 31, 2017
OR2021
Or
☐ TRANSITION REPORT PURSUANT TOUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.1934
For the transition period from ________ to ________.To
Commission file number: File Number 333-209900
Rizzen Inc.JIALIJIA GROUP CORPORATION LIMITED
(Exact name of registrant as specified in its charter)
Nevada | 35-2544765 | |
(State or other jurisdiction | ||
of incorporation or organization) | (IRS Employer Identification |
Room 402, Unit B, Building 5,Guanghua Community, Guanghua Road, Tianning District, Changzhou, Jiangsu, China | ||
| ||
(Address of | (Zip Code) |
+86 (519) 8980-1180 |
(Registrant’s telephone number, including area code) |
N/A |
(Former name, former address and former fiscal year, if changed since last report) |
+86-755-2188-4466
(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act:
None
(Former name, former address and former fiscal year, if changed since last report)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NoYES ☐ NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes No ☒
Emerging Growth Company
If an emerging growth company, indicate by check mark if registrant has elected not to extended transition period for complying with any new of revise financial accounting standards provided pursuant to ‘Section 7(a)(2)(B) of the Security Act. YES ☐ NO ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | Smaller reporting company | ☒ | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ NoYES ☐ NO
AsThe number of December 18, 2017, there were 7,285,000 shares outstanding of the company’sregistrant’s common stock, par value $0.001$.001 per share, outstanding.
as of September 13, 2021, was 4,858,784.
i
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical facts, included in this Form 10-Q including, without limitation, statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); expansion and growth of the Company’s business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company’s expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “plans,” “may,” “will,” or similar terms. These statements appear in a number of places in this filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company’s financial condition or results of operations for its limited history; (ii) the Company’s business and growth strategies; and, (iii) the Company’s financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company’s limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to our filings with the SEC under the Exchange Act and the Securities Act of 1933, as amended, including the Risk Factors section of the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 22, 2020.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
ii
PART IJIALIJIA GROUP CORPORATION LIMITED
RIZZEN, INC. | ||||||||
Condensed Balance Sheets | ||||||||
October 31, | January 31, | |||||||
2017 | 2017 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | — | $ | — | ||||
Prepaid Expenses | — | — | ||||||
Total Current Assets | — | — | ||||||
TOTAL ASSETS | — | — | ||||||
LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 2,773 | $ | 765 | ||||
Loan from related parties | 23,367 | — | ||||||
Total Current Liabilities | 26,140 | 765 | ||||||
TOTAL LIABILITIES | 26,140 | 765 | ||||||
Commitments and Contingencies | $ | — | $ | — | ||||
Shareholders' Deficit: | ||||||||
Common stock, $.001 par value, 75,000,000 shares authorized, 7,285,000 issued and outstanding at October 31, 2017 and January 31, 2017 | 7,285 | 7,285 | ||||||
Additional paid-in capital | 24,415 | 24,415 | ||||||
Accumulated deficit | (57,840 | ) | (32,465 | ) | ||||
Total Stockholders’ Deficit | (26,140 | ) | (765 | ) | ||||
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | $ | — | $ | — |
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 13,880 | $ | 13,933 | ||||
Prepaid expenses and other current assets | 2,930 | 2,943 | ||||||
Total Current Assets | 16,810 | 16,876 | ||||||
Property, plant, and equipment, net | - | - | ||||||
Total Assets | $ | 16,810 | $ | 16,876 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Accrued expenses | $ | 116,720 | $ | 108,903 | ||||
Due to related parties | 3,232,954 | 3,235,771 | ||||||
Other current liabilities | 2,839 | 2,852 | ||||||
Total Current Liabilities | 3,352,513 | 3,347,526 | ||||||
Total Liabilities | 3,352,513 | 3,347,526 | ||||||
Deficit | ||||||||
Common stock, $.001 par value, 1,000,000,000 shares authorized, 647,705 shares issued and outstanding as of March 31, 2021 and December 31, 2020 | 647 | 647 | ||||||
Additional paid in capital | 2,609,532 | 2,609,532 | ||||||
Treasury stock | (120,000 | ) | (120,000 | ) | ||||
Accumulated deficit | (4,891,818 | ) | (4,875,603 | ) | ||||
Accumulated other comprehensive loss | (104,226 | ) | (112,951 | ) | ||||
Total Stockholders’ Deficit | (2,505,865 | ) | (2,498,375 | ) | ||||
Noncontrolling interests | (829,838 | ) | (832,275 | ) | ||||
Total Deficit | (3,335,703 | ) | (3,330,650 | ) | ||||
Total Liabilities and Deficit | $ | 16,810 | $ | 16,876 |
The accompanying notes are an integral part of these unaudited condensed financial statements
JIALIJIA GROUP CORPORATION LIMITED
(Unaudited) | (Unaudited) | |||||||||||||||
for the three months ended | for the nine months ended | |||||||||||||||
October 31, | October 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | 5,100 | ||||||||
Cost of Goods Sold | — | — | — | 3,570 | ||||||||||||
Gross Profit | — | — | — | 1,530 | ||||||||||||
Operating Expenses: | ||||||||||||||||
General administrative expense | 5,759 | 7,738 | 25,375 | 14,233 | ||||||||||||
Total operating expenses | 5,759 | 7,738 | 25,375 | 14,233 | ||||||||||||
Net loss from operations | (5,759 | ) | (7,738 | ) | (25,375 | ) | (12,703 | ) | ||||||||
Loss on Disposal of fixed assets | — | — | — | — | ||||||||||||
Loss before income taxes | (5,759 | ) | (7,738 | ) | (25,375 | ) | (12,703 | ) | ||||||||
Provision for income taxes | — | — | — | — | ||||||||||||
Net Loss | $ | (5,759 | ) | $ | (7,738 | ) | $ | (25,375 | ) | $ | (12,703 | ) | ||||
Basic and diluted loss per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average number of common shares outstanding basic and diluted | 7,285,000 | 7,285,000 | 7,285,000 | 6,554,708 |
(UNAUDITED)
For the Three Months Ended | ||||||||
March 31, | ||||||||
2021 | 2020 | |||||||
Net revenue | $ | - | $ | - | ||||
Cost of revenue | - | - | ||||||
Gross profit | - | - | ||||||
General and administrative expenses | 17,194 | 13,119 | ||||||
Total operating expense | 17,194 | 13,119 | ||||||
Loss from operations | (17,194 | ) | (13,119 | ) | ||||
Provision for income tax | - | - | ||||||
Net loss | (17,194 | ) | (13,119 | ) | ||||
Net loss attributable to noncontrolling interest | (979 | ) | (702 | ) | ||||
Net loss attributable to the Jialijia Group Corporation Ltd. | (16,215 | ) | (12,417 | ) | ||||
Net loss | (17,194 | ) | (13,119 | ) | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation gain | 12,141 | 55,516 | ||||||
Comprehensive (loss) income | (5,053 | ) | 42,397 | |||||
Comprehensive income attributable to noncontrolling interest | 2,437 | 14,288 | ||||||
Comprehensive (loss) income attributable to Jialijia Group Corporation Ltd. | $ | (7,490 | ) | $ | 28,109 | |||
Net Loss Per Common Share: | ||||||||
Net loss per common share - basic and diluted | $ | (0.03 | ) | $ | (0.02 | ) | ||
Weighted average shares outstanding: | ||||||||
Basic and diluted | 647,705 | 635,296 |
The accompanying notes are an integral part of these unaudited condensed financial statements
-4-
[Table of Contents]JIALIJIA GROUP CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT
(UNAUDITED)
(Unaudited) | ||||||||
for the nine months ended | ||||||||
October 31, | ||||||||
2017 | 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (25,375 | ) | $ | (12,703 | ) | ||
Adjustments to reconcile net loss to net | ||||||||
cash used in operating activities: | ||||||||
Depreciation expense | — | 416 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid legal | — | |||||||
Accounts payable | 2,008 | — | ||||||
Net cash used in operating activities | (23,367 | ) | (12,287 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | — | — | ||||||
Purchase of property plant and equipment | — | (2,500 | ) | |||||
Net cash used in investing activities | — | (2,500 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of common stock | — | 25,700 | ||||||
Payments on loan - related party | — | — | ||||||
Proceed from loan - related party | 23,367 | — | ||||||
Net cash provided by financing activities | 23,367 | 25,700 | ||||||
Net increase (decrease) in cash | (0 | ) | 10,913 | |||||
Cash at beginning of period | — | 6,060 | ||||||
Cash at end of period | $ | (0 | ) | $ | 16,973 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | — | — | ||||||
Cash paid for taxes | $ | — | $ | — |
Accumulated | ||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in | Subscriptions | Treasury | Accumulated | Other Comprehensive | Non- controlling | Total | |||||||||||||||||||||||||||||
Shares | Amount | Capital | Receivable | Stock | Deficit | Loss | interest | Deficit | ||||||||||||||||||||||||||||
Balance at December 31, 2020 | 647,705 | $ | 647 | $ | 2,609,532 | $ | - | $ | (120,000 | ) | $ | (4,875,603 | ) | $ | (112,951 | ) | $ | (832,275 | ) | $ | (3,330,650 | ) | ||||||||||||||
Foreign currency translation | - | - | - | - | - | - | 8,725 | 3,416 | 12,141 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (16,215 | ) | - | (979 | ) | (17,194 | ) | ||||||||||||||||||||||||
Balance at March 31, 2021 | 647,705 | $ | 647 | $ | 2,609,532 | $ | - | $ | (120,000 | ) | $ | (4,891,818 | ) | $ | (104,226 | ) | $ | (829,838 | ) | $ | (3,335,703 | ) |
Accumulated | ||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in | Subscription | Treasury | Accumulated | Other Comprehensive | Non- controlling | Total | |||||||||||||||||||||||||||||
Shares | Amount | Capital | Receivable | Stock | Deficit | Loss | interest | Deficit | ||||||||||||||||||||||||||||
Balance at December 31, 2019 | 635,296 | $ | 635 | $ | 2,602,099 | $ | (7,821 | ) | $ | (120,000 | ) | $ | (4,806,088 | ) | $ | 19,615 | $ | (777,210 | ) | $ | (3,088,770 | ) | ||||||||||||||
Foreign currency translation | - | - | - | - | - | - | 40,526 | 14,990 | 55,516 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (12,417 | ) | - | (702 | ) | (13,119 | ) | ||||||||||||||||||||||||
Balance at March 31, 2020 | 635,296 | $ | 635 | $ | 2,602,099 | $ | (7,821 | ) | $ | (120,000 | ) | $ | (4,818,505 | ) | $ | 60,141 | $ | (762,922 | ) | $ | (3,046,373 | ) |
The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements
RIZZEN INC.statements.
4
NOTES TO CONDENSED FINANCIAL STATEMENTSJIALIJIA GROUP CORPORATION LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
The summary of significant accounting policies are presented to assist in the understanding of the Company's financial statements. The financial statements and notes are representations of the Company's management, who is responsible for their integrity and objectivity.
The Company follows the accounting guidance outlined in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the instruction to Form 10-Q of Regulation S-K. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended January 31, 2017 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.
The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consisting primarily of normal recurring adjustments, have been made. Operating results for the nine months ended October 31, 2017 are not necessarily indicative of the results that may be expected for the year ending January 31, 2018.
For the Three Months Ended | ||||||||
March 31, | ||||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (17,194 | ) | $ | (13,119 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Accrued expenses and other current liabilities | 8,092 | 9,775 | ||||||
Net cash used in operating activities | (9,102 | ) | (3,344 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net proceeds from loans from related parties | 9,105 | 4,712 | ||||||
Net cash provided by financing activities | 9,105 | 4,712 | ||||||
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS | (56 | ) | (30 | ) | ||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (53 | ) | 1,338 | |||||
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE | 13,933 | 395 | ||||||
CASH AND CASH EQUIVALENTS, ENDING BALANCE | $ | 13,880 | $ | 1,733 | ||||
SUPPLEMENTAL DISCLOSURES: | ||||||||
Income tax paid | $ | - | $ | - | ||||
Interest paid | $ | - | $ | - |
DescriptionThe accompanying notes are an integral part of business. Rizzen Inc.these consolidated financial statements.
5
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, 2015,2015.
On July 10, 2019, the Company entered into a share purchase/exchange agreement (the “Exchange Agreement”) with Jialijia Zhongtai Chunfeng Group Co., Limited (“Jialijia Zhongtai Chunfeng”, formerly Huazhongyun Group Co., Limited), a company incorporated under the laws of Hong Kong, and has been inactive since our changeNa Jin, the sole shareholder of Jialijia Zhongtai Chunfeng (the “Shareholder”) and the Chief Executive Officer of the Company. Jialijia Zhongtai Chunfeng owned 300,000 shares (the “Company Shares”) of the Company, which represented approximately 82% of the shares of the Company’s common stock, issued and outstanding, at the time of execution of the Exchange Agreement. The Shareholder owned an aggregate of 10,000 ordinary shares of Jialijia Zhongtai Chunfeng (“Jialijia Zhongtai Chunfeng Shares”), which constituted all of the issued and outstanding shares of Jialijia Zhongtai Chunfeng.
Pursuant to the Exchange Agreement, among other matters, the Shareholder sold and transferred the Jialijia Zhongtai Chunfeng Shares in control reported on Form 8k filed December 30, 2016. We areexchange for all of the Company Shares. As a Shell company. Our prior business model was to provide vendingresult, the Shareholder directly owned the Company Shares, which represented approximately 82% of the issued and shipping servicesoutstanding shares of electronic toysthe Company’s common stock at the time of various kinds manufactured inexecution of the Exchange Agreement and Jialijia Zhongtai Chunfeng became a wholly-owned subsidiary of the Company.
Dajiwanqi Holding (Changzhou) Co., Ltd. (“Dajiwanqi (Changzhou)”, formerly Jialijia Jixiang Investment (Changzhou) Co., Ltd.) is a company incorporated under the laws of the People’s Republic of China (the “PRC”) on June 13, 2017. Jialijia Zhongtai Chunfeng owned all of the equity interests in Dajiwanqi (Changzhou) (“WFOE”), a wholly-foreign owned entity formed under the laws of PRC. Rucheng Wenchuan Gas Co., Ltd. (“Rucheng Wenchuan”) was incorporated under the laws of the PRC on March 30, 2006.
On January 7, 2019, Dajiwanqi (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 Dajiwanqi (Changzhou), in exchange of RMB 1,000,000 and 143,000 common shares of the Company owned by Jialijia Zhongtai Chunfeng. Immediately after the equity transfer agreement, Dajiwanqi (Changzhou) owns 70% of the ownership and becomes the controlling shareholder of Rucheng Wenchuan. Both Jialijia Zhongtai Chunfeng and Dajiwanqi (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 distribute electronic kids toysthe Exchange Agreement, on August 29, 2019 (the “Closing Date”), Na Jin sold and transferred the Jialijia Zhongtai Chunfeng Shares to the Company in exchange for all of various price categoriesthe Company Shares and the Company received all of the outstanding Jialijia Zhongtai Chunfeng 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, Jialijia Zhongtai Chunfeng became a wholly-owned subsidiary of the Company and the Company owned 70% of the outstanding equity interest in Rucheng Wenchuan through Jialijia Zhongtai Chunfeng and WFOE.
The acquisition of Jialijia Zhongtai Chunfeng and WFOE was treated as a reverse merger (the “Reverse Merger”) for accounting purposes. As a result of the consummation of the Reverse Merger on August 29, 2019, the Company, through its subsidiaries, entered into the business of producing and selling gases for industrial and medical purposes, such as oxygen and nitrogen, in the PRC. The Company has not commenced its gas production or generated any revenues.
On August 7, 2020, Jialijia Jixiang Investment (Changzhou) Co., Ltd. changed its name to both smallDajiwanqi Holding (Changzhou) Co., Ltd.
On August 28, 2020, Huazhongyun Group Co., Limited changed its name to Calico Darji Group Holdings Co., Limited and medium-sized vendors. We intendedthen to Jialijia Zhongtai Chunfeng Group Co., Limited on selling, importing,June 1, 2021.
On December 26, 2020, Jialijia Zhongtai Chunfeng entered into a share exchange agreement with Shenzhen Lintai Biotechnology Co., Limited (“Shenzhen Lintai”), a company incorporated under the laws of PRC; pursuant to which Jialijia Zhongtai Chunfeng agreed to exchange 26% of the Company’s common stock held by Jialijia Zhongtai Chunfeng for 100% of the equity interest of Shenzhen Lintai. As of March 31, 2021, this share exchange agreement has not been closed due to the required governmental procedures and marketing our businessdocuments necessary to Europeanconsider the share exchange completed have not been completed and North American markets.obtained by the Company.
On March 5, 2021, Jialijia Zhongtai Chunfeng formed a wholly-owned subsidiary, Zhongtai Chunfeng Wanqi (Chengdu) Industrial Group Co., Limited, under the laws of the PRC.
Note2. Basis of Presentation
FollowingThe accompanying unaudited interim consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the changeUnited States and in accordance with the SEC's regulations for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of control,the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the Company's financial position, results of operations, comprehensive income, cash flows, and stockholders’ equity for the periods presented. The results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.
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, 2020 filed with the Securities and Exchange Commission.
Note 3. Going Concern
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the Company’s accompanying consolidated financial statements, for the three months ended March 31, 2021, the Company had a net loss of $17,194. Additionally, the Company had an accumulated deficit of $4,891,818 and working capital deficit of $3,335,703 as of March 31, 2021, 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 seekingunable to acquire, throughsuccessfully commence its business operations in a merger,short period of time, or unable to raise additional capital stock exchange,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 consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset acquisition, stock purchase, reorganization, exchangeable share transactionamounts 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 similar business transaction with one or more operating businesses or assetsrelated party(ies). However, management cannot provide any assurance that we have not yet identified.the Company will be successful in accomplishing any of its plans.
Note 4. Summary of Significant Accounting Policies
Basis of Accounting
The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and accompanying notes are representations of management. Accounting policies adopted by the Company conform to U.S. GAAP and have been consistently appliedprepared in accordance with accounting principles generally accepted in the presentationUnited States of America (“GAAP”).
Principles of consolidation
The consolidated financial statements include the financial statements of Jialijia Group Corporation Limited, Jialijia Zhongtai Chunfeng, Dajiwanqi (Changzhou) and its 70% owned subsidiary, Rucheng Wenchuan Gas Co., Ltd., and Zhongtai Chunfeng Wanqi (Chengdu), All inter-company transactions and balances are eliminated in consolidation.
Use of Estimates
The preparation of financial statements. The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the SEC. Management believes that all adjustments have been made for the nine months ended October 31, 2017 and 2016
The Company complies with accounting and disclosure requirements of FASB ASC 260, “Earnings Per Share.” Net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. At October 31, 2017 and 2016, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted loss per common share is the same as basic loss per common share for the period.
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 and the reported amountsamount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; howevermade. However, actual results could differ materially from those estimates. 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.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation. Gains or losses on disposals are reflected as gain or loss in the period of disposal. All ordinary repair and maintenance costs are expensed as incurred.
Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
Useful Life | ||
Buildings | 20 years | |
Machinery and equipment | 10 years | |
Office equipment | 5 years | |
Vehicles | 5 years |
Costs incurred in constructing new facilities, including progress payments and other costs related to construction, are capitalized and transferred to property, plant and equipment on completion, at which time depreciation commences.
Impairment of Long-lived Assets
The Company doesevaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not expectbe recoverable through the adoptionestimated undiscounted cash flows expected to result from the use and eventual disposition of recently issued accounting pronouncementsthe assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to have a significant impactthe 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 Company’s results of operations, financial position or cash flow.
As of Octoberinformation available, judgments and projections are considered necessary. No impairment loss was recorded for the three months ended March 31, 2017,2021 and January 31, 2017 the Company had $2,773 and $765 in accrued liabilities,2020, 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. No impairment of goodwill was recorded for the three months ended March 31, 2021 and 2020, respectively.
Income Taxes
The Company accounts for income taxes under SFAS No. 109 (now containedusing 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 FASB Codification Topic 740-10-25, Accounting for Uncertainty in Income Taxes), which requiresfuture years. Under the asset and liability approach, to accountingdeferred 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 taxes. 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 method,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
The Company’s financial instruments primarily consist of cash and cash equivalents, other receivables, advances to suppliers, accrued expenses, other payables, and related party borrowings. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is attributed to the short maturities of the instruments and that interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective balance sheet dates.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued and their potential effect on the consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on its consolidated financial statements.
Note 5. Property, Plant, and Equipment, Net
Property, plant, and equipment consisted of the following:
March 31, 2021 | December 31, 2020 | |||||||
Machinery and equipment | $ | 1,682,822 | $ | 1,689,734 | ||||
Buildings | 33,465 | 33,602 | ||||||
1,716,287 | 1,723,336 | |||||||
Less: Accumulated depreciation | (1,249,507 | ) | (1,254,639 | ) | ||||
Less: Accumulated impairment | (466,780 | ) | (468,697 | ) | ||||
Property, plant, and equipment, net | $ | - | $ | - |
Depreciation expense for the three months ended March 31, 2021 and 2020 were $0 and $0, respectively.
Note 6. Accrued Expenses
Accrued expenses consist of the following:
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Accrued local taxes | $ | 57,248 | $ | 54,248 | ||||
Accrued professional fees | 57,572 | 54,471 | ||||||
Payroll and others | 1,900 | 184 | ||||||
$ | 116,720 | $ | 108,903 |
Note 7. Income Tax
United States
The Company was incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made, as there was no taxable income from U.S. operations for the three months ended March 31, 2021 and 2020. The U.S. Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21%.
PRC
The PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules impose a 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, the Company’s subsidiaries in PRC are subject to an enterprise income tax rate of 25%. The Company had recorded no income tax provisions for the three months ended March 31, 2021 and 2020.
Provision for income tax expense (benefit) consists of the following:
For the Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Current | ||||||||
USA | $ | - | $ | - | ||||
China | - | - | ||||||
Deferred | ||||||||
USA | - | - | ||||||
China | - | - | ||||||
Total provision for income tax expense (benefit) | $ | - | $ | - |
The following is a reconciliation of the statutory tax rate to the effective tax rate:
For the Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
U.S. statutory tax benefit | (21.0 | )% | (21.0 | )% | ||||
Change in deferred tax asset valuation allowance | 21.0 | % | 21.0 | % | ||||
PRC statutory tax benefit | (25.0 | )% | (25.0 | )% | ||||
Change in deferred tax asset valuation allowance | 25.0 | % | 25.0 | % | ||||
Effective income tax rate | 0.0 | % | 0.0 | % |
The Company periodically evaluates the likelihood of the realization of deferred tax assets, and liabilities are measuredadjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent that the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.
As of March 31, 2021 and December 31, 2020, based on differences between financial reportingthe weight of available evidence, including cumulative losses in recent years and tax basesexpectations of assets and liabilities measured using enacted tax rates and lawsfuture taxable income, the Company determined that are expected to be in effect when differences are expected to reverse. As of October 31, 2017, we had a net operating loss carry-forward of approximately $(57,840) and ait was more likely than not that its deferred tax asset of approximately $19,667 using the statutory rate of 34%. Theassets would not be realized and have a 100% valuation allowance associated with its deferred tax asset may be recognizedassets.
Note 8. Related Party Transactions and Balances
The related parties of the company with whom transactions are reported in future periods, notthese consolidated financial statements are as follows:
Name of entity or Individual | Relationship with the Company | |
Shenzhen Wenchuan Gas Co., Ltd. | Mr. Jiannan Wu is the legal representative and president of this entity | |
Rucheng County Minhang Special Gas Co., Ltd | Mr. Jiannan Wu is the legal representative and president of this entity | |
Jiannan Wu | Major shareholder of Rucheng Wenchuan | |
Dongzhi Zhang | Chairman of the Board | |
Na Jin | Shareholder, director, Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) |
Due to exceed 20 years. However, duerelated parties:
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Shenzhen Wenchuan Gas Co., Ltd. | $ | 2,599,864 | $ | 2,610,542 | ||||
Dongzhi Zhang | 441,681 | 433,034 | ||||||
Rucheng County Minhang Special Gas Co., Ltd. | 52,921 | 53,138 | ||||||
Na Jin | 121,393 | 121,892 | ||||||
Jiannan Wu | 17,095 | 17,165 | ||||||
$ | 3,232,954 | $ | 3,235,771 |
Due to the uncertainty of future events we have booked valuation allowance of $(19,667) FASB ASC 740 prescribes recognition threshold and measurement attributesrelated parties were advances from its related parties for the financial statement recognitionCompany’s purchase of equipment and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidancedaily operating expenses. The balances are unsecured, non-interest bearing, and payable on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At October 31, 2017, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
demand.
Note 9. Equity
October 31, 2017 | January 31, 2017 | |||||||
Deferred Tax Asset | $ | 19,667 | $ | 11,038 | ||||
Valuation Allowance | (19,667 | ) | (11,038 | ) | ||||
Deferred Tax Asset (Net) | $ | — | $ | — |
The Company has authorized 1,000,000,000 shares of Common Stock at par value of $0.001.
On DecemberMay 28, 2016,2020, by unanimous written consent in lieu of a meeting, the controlling shareholdersBoard adopted resolutions authorizing a one (1)-for-twenty (20) reverse stock split and on June 24, 2020 filed Articles of Rizzen Inc. (the “Company”), Alexander DeshinAmendment 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 Shuisheng Zhu soldearnings per share information has been retroactively adjusted to JLJ Group Corporation Limited, a Hong Kong registered corporation, (“JLJ”) 6 millionreflect the reverse stock split.
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 12,409 shares of the Company’s restricted common stock which had previously beenfor the purchase price of $0.6 per share. These shares were issued to Mr. Zhu and Mr. Deshin. The sale was the result of a privately negotiated transaction without the use of public dissemination of promotional or sales materials. The buyer represented that it was an accredited investor and as such could bear the risk of such investment for an indefinite period of time and to afford a complete loss thereof. on June 30, 2020.
This resulted in a change in control. We are inAs of March 31, 2021, Jialijia Zhongtai Chunfeng owned 300,000 shares of the processCompany. These shares have been reclassified and recorded as treasury stock at the cost of analyzing the effect on the deferred tax asset and the numbers above may change$0.4 per share, as a result howeverof the Deferred Tax Asset (net) will remain unchanged.Reverse Merger.
Note 10. Subsequent Events
In April and May 2021, the Company entered into stock subscription agreements with 200 individuals, pursuant to which the Company agreed to issue an aggregate of 2,278,373 shares of the Company’s common stock for the purchase price of $0.04 per share. In addition, the Company entered into stock subscription agreements with 10 individuals, pursuant to which the Company agreed to issue an aggregate of 1,932,706 shares of the Company’s common stock for the purchase price of $0.03 per share, of which 1,847,656 shares were subscribed by Dongzhi Zhang, the Company’s Chairman of the Board. All of these shares were issued in July 2021.
The Company files an income tax return in the U.S. federal jurisdiction and may file income tax returns in various U.S. states and foreign jurisdictions. Generally, the Company is subject to income tax examinations by major taxing authorities during the three year period prior to the period covered by these financial statements.
The Company does not currently engage in any business activities that provide cash flow. During the next 12 months, we anticipate incurring costs related to:
As of October 31, 2017, the Company had an accumulated deficit of $57,840. Management anticipates that fees associated with filing of Exchange Act reports including accounting fees and legal fees and payment of annual corporate fees will not exceed $75,000 within next 12 months. We do not currently intend to retain any entity to act as a "finder" to identify and analyze the merits of potential target businesses. Management intends to search for a business combination by contacting various sources including, but not limited to, our affiliates, lenders, investment banking firms, private equity funds, consultants and attorneys and does not plan to conduct a complete and exhaustive investigation and analysis of a business opportunity. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds, would be desirable. If the management can find a suitable target company, we will have to budget for additional fees relating to the investigation into the target company (including due diligence and possibly visiting the facilities) and consummating the reverse merger, which may cost between $125,000 to $150,000. We expect that the expenses for the next 12 months and beyond such time will be paid with amounts that may be loaned to or invested in us by our stockholders, management or other investors. Since we have minimal assets and will continue to incur losses due to the expenses associated with being a reporting company under the Exchange Act, we may cease business operations if we do not timely consummate a business combination.
Currently, our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going concern is also dependent upon our ability to find a suitable target company and enter into a possible reverse merger with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances. However, there is no assurance of additional funding being available, which raises substantial doubt about the company’s ability to continue as a going concern.
The Company has 75,000,000 shares of common stock authorized with a par value of $0.001 per share.
On January 13, 2016 the Company issued 5,000,000 shares of its common stock at $0.001 per share for total proceeds of $5,000. On January 26, 2016 the Company issued 1,000,000 shares of its common stock at $0.001 per share for total proceeds of $1,000. In June and July 2016, the Company issued 1,285,000 shares of its common stock at $0.02 per share for total proceeds of $25,700.
As of December 14, 2017, the Company had 7,285,000 shares issued and outstanding.
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by officers, directors, or shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
Since October 21, 2015 (inception) through December 28, 2016, the Company’s previous sole officer and director loaned the Company $1,042 to pay for incorporation costs and operating expenses. As of January 31, 2017, the amount outstanding was $0. During the period ending October 31, 2017 the company’s officers advanced $23,366 for operating expenses as of October 31, 2017 the outstanding amount owed was $23,366.
On December 28, 2016, the controlling shareholders of Rizzen Inc. (the “Company”), Alexander Deshin and Shuisheng Zhu sold to JLJ Group Corporation Limited, a Hong Kong registered corporation, (“JLJ”) 6 million shares of the Company’s restricted common stock which had previously been issued to Mr. Zhu and Mr. Deshin. The sale was the result of a privately negotiated transaction without the use of public dissemination of promotional or sales materials. The buyer represented that it was an accredited investor and as such could bear the risk of such investment for an indefinite period of time and to afford a complete loss thereof. This represented 82% of the outstanding common stock and resulted in a change in control
In accordance with ASC 855, the Company has analyzed its operationsevaluated subsequent to October 31, 2017events through the date thesewhich the consolidated financial statements were available to be issued and has determined that it does not have any materialno subsequent events to discloserequire disclosure in these financial statements.accordance with FASB ASC Topic 855, “Subsequent Events.”
Special Note Regarding Forward-Looking Statements
The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The Company will attempt
We are currently a “shell company” with no meaningful assets or operations other than our efforts to locateidentify and negotiatemerge with an operating company.
Our principal business is to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. Based on proposed business activities, we are a “blank check” company. We intend to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.
We are in active discussions with an operating business affiliated with our executive officers regarding potential acquisition. There is no assurance that we will be able to successfully acquire such company or any company in the near future.
Jialijia Group Corporation Limited, formerly known as Rizzen, Inc. (the “Company”) was incorporated as a corporation under the laws of the State of Nevada on October 21, 2015. On May 16, 2018, our Articles of Incorporation were amended to change our name to Jialijia Group Corporation Limited and increase the number of authorized shares the corporation from 75,000,000 to 1,000,000,000.
Effective as of December 15, 2018, the Company appointed: (i) Mr. Dongzhi Zhang as the Chairman of the Board; (ii) Mr. Jiannan Wu as the Company’s General Manager and Director; and (iii) Ms. Weixia Hu as the Company’s Chinese Region Chief Representative. Ms. Na Jin is our CEO, CFO, Secretary and a director.
On July 10, 2019, the Company entered into a share purchase/exchange agreement (the “Share Exchange Agreement”) with Huazhongyun Group Co., Limited (“Huazhongyun,” formerly known as “JLJ Group Corporation Limited”), a company formed under the laws of the Hong Kong Special Administrative Region, and Na Jin, the sole shareholder of Huazhongyun and the Chief Executive Officer and Chief Financial Officer of the Company. Na Jin, through Huazhongyun, owned 6,000,000 shares (or 300,000 post-reverse split) (the “Company Shares”) of the Company, which represented approximately 82% of the shares of the Company’s common stock, issued and outstanding, par value $0.001 per share, as of the date of execution of the Share Exchange Agreement. Na Jin owned an aggregate of 10,000 ordinary shares of Huazhongyun (“Huazhongyun Shares”), which constituted all of the issued and outstanding ordinary shares of Huazhongyun. On the date of execution of the Share Exchange Agreement, Huazhongyun owned all of the equity interests in Jialijia Jixiang Investment (Changzhou) Co., Ltd. (“WFOE”), a wholly-foreign owned entity formed under the laws of China, which in turn held seventy percent (70%) of the outstanding equity interest in Rucheng Wenchuan Gas Co., Ltd. (the “Rucheng Wenchuan”), a company formed under the laws of China.
Pursuant to the Share Exchange Agreement, on August 29, 2019 (the “Closing Date”), Na Jin sold and transferred all of the Huazhongyun Shares to the Company in exchange for all of the Company Shares and the Company received all of the outstanding Huazhongyun Shares. As a result, on the Closing Date, Na Jin directly owned Company Shares representing approximately 48% of the issued and outstanding shares of the Company’s common stock, Huazhongyun became a wholly-owned subsidiary of the Company, and the Company owned 70% of the outstanding equity interest in Rucheng Wenchuan through Huazhongyun and WFOE.
From July 22, 2019 to July 29, 2019, the Company entered into a securities subscription agreement (the “Subscription Agreement”) with fifty-four (54) investors (the “Investors”) who reside outside the United States where the Investors purchased an aggregate of 3,011,483 (or 150,574 post-reverse split) shares of the Company’s common stock, par value $0.001 per share, at a price of $0.03 ($0.60 post-reverse split) per share. Pursuant to each of the Subscription Agreements, the Company issued its shares of common stock to each Investor in the respective amounts as set forth in the Subscription Agreement and received the funds in the corresponding amounts as set forth therein. In addition, on April 20, 2019, Ms. Na Jin, the Chief Executive Officer of the Company, entered into a Subscription Agreement to purchase 1,000,000 (50,000 post-reverse split) shares of the Company’s common stock at a price of $0.01 ($0.20 post-reverse split) per share, for a total purchase price of $10,000, which purchase was consummated on July 24, 2019.
As a result of the consummation of the above merger on August 29, 2019, we entered into the business of producing and selling gases, such as oxygen and nitrogen, for industrial and medical purposes in the PRC. In 2020, the COVID-19 pandemic materially and adversely affected economic conditions and our operating results. As a result, we were unable to obtain the financing necessary to pursue this business.
Effective July15, 2020, we engaged in a one for twenty reverse stock split of our common stock whereby each twenty shares of common stock were reduced into one share of common stock with fractional shares rounded to one whole share. All descriptions of securities issuances occurring prior to such reverse stock split are provided on a pre-reverse and post-reverse basis.
On July 1, 2021, our Board of Directors approved the sale and issuance of an aggregate of: (i) 2,278,373 shares of our common stock at a per share price of $0.04 to approximately 200 non-US persons for aggregate gross proceeds of approximately $91,135; (ii) 1,932,706 shares of our common stock at a per share price of $0.03 to approximately 10 non-US persons for aggregate gross proceeds of approximately $57,981. The securities, aggregating 4,211,079 shares of Common Stock, were sold and issued in July and August 2021. The securities were sold pursuant to the exemption provided by Regulation S promulgated under the Securities Act of 1933, as amended.
Limited Operating History; Need for Additional Capital
We have had limited operations and have been issued a “going concern” opinion by our auditor, based upon our reliance on the sale of our common stock and loans from a related party, as the sole source of funds for our future operations.
There is no historical financial information about us upon which to base an evaluation of our performance. We have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the launching of our games and market or wider economic downturns. We do not believe we have sufficient funds to operate our business for the combination ofnext 12 months.
We have no assurance that target company withfuture 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 Company. The combination will normally take the form offuture, we may be unable to carry out our full business plan or we may be forced to cease operations.
Going Concern
Our consolidated financial statements have been prepared on a merger, stock-for-stock exchange or stock-for-assets exchange (the "business combination"). In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given thatgoing concern basis which assumes the Company will be successfulable to realize its assets and discharge its liabilities in locating or negotiating withthe normal course of business for the foreseeable future. As of March 31, 2021, the Company had working capital deficit of $3,335,703 and has incurred losses since its inception resulting in an accumulated deficit of $4,891,818. Further losses are anticipated in the development of the business, raising substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any target business.adjustment that might result from the outcome of this uncertainty.
The Company has not restricted its search for any specific kind of businesses, and it may acquireability to continue as a business whichgoing concern is in its preliminary stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict the status of any business in whichdependent upon the Company may become engaged,generating profitable operations in that suchthe future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business may needoperations when they come due. Management intends to seek additional capital, may desire to have its shares publicly traded, finance operating costs over the next twelve months with loans from directors and/or may seek other perceived advantages which the Company may offer.private placements of common stock.
In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity.
The Company will participate in a business combination only after the negotiation and execution of appropriate agreements. Negotiations with a target company will likely focus on the percentage of the Company which the target company shareholders would acquire in exchange for their shareholdings. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's shareholders at such time.
Results of Operations
Nine monthsFor The Three Months Ended OctoberMarch 31, 2017
Revenues
For2021 Compared to the three months periods ended OctoberThree Months Ended March 31, 2017 and 2016, our revenues were $0 and $0 respectively. We are completely dependent upon the willingness of our management to fund our initial operations by way of loans or capital contributions from our majority shareholders.
For the nine months periods ended October 31, 2017 and 2016, our revenues were $0 and $5,100 respectively. We are completely dependent upon the willingness of our management to fund our initial operations by way of loans or capital contributions from our majority shareholders.
Operating Expenses2020
ForThe following table sets forth selected financial information from our statements of comprehensive loss for the three months ended OctoberMarch 31, 20172021 and 2016, General2020:
For the three months Ended | ||||||||
March 31, | ||||||||
2021 | 2020 | |||||||
Net Revenue | $ | - | $ | - | ||||
Total Operating Expenses | 17,194 | 13,119 | ||||||
Net Loss | $ | (17,194 | ) | $ | (13,119 | ) |
Revenues
The Company did not commence operations and administrative expenses were $5,759 and $7,738 respectively.
For the nine months ended October 31, 2017 and 2016, General and administrative expenses were $25,375 and $14,233 respectively.
Net Loss
Fordid not generate any revenues for the three months ended OctoberMarch 31, 20172021 and 2016, our net losses were $5,759 and $7,738 respectively.2020.
For
Operating Expenses
Operating expenses for the ninethree months ended OctoberMarch 31, 20172021 and 2016, our2020, were $17,194 and $13,119, respectively. Operating expenses for the three months ended March 31, 2021 and 2020, consisted of general and administrative expenses of $17,194 and $13,119.
Net Loss
As a result of the above factors, the Company incurred a net losses were $25,375loss of $17,194 and $12,703$13,119 for the three months ended March 31, 2021 and 2020, respectively.
Foreign Currency Translation Gain (Loss)
The Company had $12,141 in foreign currency translation gain during the three months ended March 31, 2021 as compared to $55,516 in foreign currency translation gain during the three months ended March 31, 2020, reflecting a change of $43,375. Such decrease in foreign currency translation gain was primarily caused by the currency exchange rate fluctuation.
Liquidity and Capital Resources
The accompanying financial statementsfollowing summarizes the key component of our cash flows for the three months ended March 31, 2021 and 2020:
For the Three Months Ended | ||||||||
March 31, | ||||||||
2021 | 2020 | |||||||
Net cash used in operating activities | $ | (9,102 | ) | $ | (3,344 | ) | ||
Net cash provided by financing activities | 9,105 | 4,712 | ||||||
Net (decrease) increase in cash and cash equivalents | $ | (53 | ) | $ | 1,338 |
Net cash used in operating activities was $9,102 for the three months ended March 31, 2021, compared to that of $3,344 for the three months ended March 31, 2020. The increase of $5,758 or 172.2% of net cash used in operating activities was primarily due to the increase in net loss during the three months ended March 31, 2021.
Net cash provided by financing activities was $9,105 and $4,712 for the three months ended March 31, 2021 and 2020, respectively, representing an increase of $4,393 or 93.2%. The increase in net cash provided by financing activities was primarily attributable to the increase in advances from officers for working capital purpose.
Working Capital:
As of March 31, 2021 and December 31, 2020, we had cash and cash equivalent of $13,880 and $13,933, respectively. As of March 31, 2021, we have been prepared in conformity with generally accepted accounting principles, which contemplate continuationincurred accumulated operating losses of the Company$4,891,818 since inception. As of March 31, 2021 and December 31, 2020, we had working capital deficit of $3,335,703 and $3,330,650, 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. As of October 31, 2016, we had cash of $16,973 and total liabilities of $1,042. Our cash flows from operating activities for the nine months ended October 31, 2016 was $(12,287). Our cash flow provided by financing activities for the nine months ended October 31, 2016 was $25,700. The Company hadability to continue as a workinggoing concern is dependent on raising capital s of $15,931 and shareholders’ equity of $19,057 at October 31, 2016.
As of October 31, 2017, we had cash of $0 and total liabilities of $26,140. Our cash flows from operating activities for the nine months ended October 31, 2017 resulted in cash used of $23,367. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations. Our cash flow provided by financing activities for the nine months ended October 31, 2017 was $23,366. The Company has a working capital deficiency of $26,140 and a shareholders’ deficit of $26,140 at October 31, 2017.
Over the next 12 months we expect to expend approximately $10,000 in cash for legal, accounting and related services. Cash used for other expenditures is expected to be minimal. We hope to be able to attract suitable investors for ourits initial business plan which willand ultimately to attain profitable operations. These consolidated financial statements do not require usinclude any adjustments relating to use our cash, although there can be no assurancesthe recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that we will be successful in these efforts.might result from this uncertainty.
We expect to incur marketing and professional and administrative expenses as well expenses associated with maintaining our filings with the Commission. We will require additional funds during this time and will seek to raise the necessary additional capital. If we are unable to obtain additional financing, we may be ablerequired to secure capital throughreduce 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 our existing shareholder in order to pay expenses such as filing fees, accounting fees and legal fees. We believe it will be difficult to secure capital in the future because we have no assets to secure debt and there is currently no trading market for our securities. We will need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely.
Therelated parties. Any inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for acquiring suitable partners or otherwise curtail or discontinue our operations, which couldraise capital as needed would have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that
If we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If wecannot raise additional funds, through the issuance of debt securities, these securities maywe will have rights, preferences and privileges senior to holders ofcease business operations. As a result, our common stock investors would lose all of their investment.
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the termsreported amounts of such debtrevenues and expenses during the reporting periods.
Use of estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.differ materially from those estimates.
Operating Capital and Capital Expenditure Requirements
Our controlling shareholder expects to advance us additional funding for operating costs in order to implement our business plan on an as needed basis. As such, our operating capital is currently limited to the resources of our controlling shareholder and are subject to our shareholder’s continued willingness to provide additional loans. The loans from our controlling shareholder are unsecured and non-interest bearing and have no set terms of repayment. We anticipate receiving additional capital should we be able to have our securities actively trading on a public exchange.
Off-Balance Sheet ArrangementsIncome Taxes
We have not entered into any off-balance sheet arrangements that haveaccount for income taxes as outlined in ASC 740, “Income Taxes”. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
settled.
We comply with accounting and disclosure requirements of ASC 260, “Earnings Per Share.” Net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. For the three months ended March 31, 2021 and 2020, we did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of us. As a result, diluted loss per common share is the same as basic loss per common share for the periods.
Fair values of financial instruments
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 – | quoted prices in active markets for identical assets or liabilities. |
Level 2 – | quoted prices for similar assets and liabilities in active markets or inputs that are observable |
Level 3 – | inputs that are unobservable |
There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of March 31, 2021 and December 31, 2020.
Recent Accounting Pronouncements
Management has evaluated all the recently issued accounting pronouncements and does not believe that they will have a material effect on the Company’s financial position and results of operations.
Off-balance Sheet Arrangements
As of March 31, 2021 and December 31, 2020, there were no off-balance sheet arrangements.
Not applicable.Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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 October 31, 2017, 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, 2021. 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:
● | Because of the company’s limited resources, there are limited controls over information processing. |
● | There is an inadequate segregation of duties consistent with control objectives. Our Company’s management is composed of two persons, resulting in a situation where limitations on segregation of duties exist. In order to remedy this situation, we would need to hire additional staff to provide greater segregation of duties. Currently, it is not feasible to hire additional staff to obtain optimal segregation of duties. Management will reassess this matter in the following year to determine whether improvement in segregation of duty is feasible. |
● | The Company does not have a sitting audit committee financial expert, and thus the Company lacks the board oversight role within the financial reporting process. |
Limitations on the Effectiveness of Controls
● | There is a lack of formal policies and procedures necessary to adequately review significant accounting transactions. The Company utilizes a third-party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third-party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions. |
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 designedand our internal controls over financial reporting on an ongoing basis and is committed to provide reasonable assurance of achieving its objectives.
taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Changes in Internal Control Over Financial ReportingControls
There have not been anyno changes in the Company’sour 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 OctoberMarch 31, 20172021 that hashave materially affected, or isare reasonably likely to materially affect, the Company’sour internal control over financial reporting.
None.Item 1. Legal Proceedings
From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.
We are
As a smaller“smaller reporting company and, therefore,company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.Applicable.
None.
Number | Description | |
3.1 | Articles of Incorporation (1) | |
3.2 | Certificate of Amendment (2) | |
3.3 | Bylaws (1) | |
4.1 | Form of common stock certificate (3) | |
4.2 | Description of Securities (4) | |
21 | Subsidiaries (4) | |
31.1* | Certification of Chief Executive Officer | |
32.1** | Certification Pursuant To 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* Filed herewith.
* | Filed herewith. |
** | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-K and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act. |
(1) | Incorporated by reference to the exhibits to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 3, 2016. |
(2) | Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on May 25, 2018. |
(3) | Incorporated by reference to the Exhibits to Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 26, 2021. |
(4) | Incorporated by reference to the Exhibits to Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 16, 2021. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ||
(Registrant) | ||
Dated: | /s/ Na Jin | |
Chief Executive Officer, Chief Financial Officer, and Director | ||
(Principal Executive Officer) |
20
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