EDGAR 10-K Filing

Company CIK: 1723059
Filing Year: 2021
Filename: 1723059_10-K_2021_0001213900-21-021486.json

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ITEM 1. BUSINESS
Item 1. Business
General Corporate History
We are an herbal health, diet, and nutrition company. The Company’s mission is to provide herbal health, diet and vitamin nutritional supplements through three (3) operational subsidiaries, as explained below.
Bio Essence Corp. (“we,” “us,” “Bio Essence,” or the “Company”) was incorporated in the State of California on January 1, 2000. On January 27, 2016, the Company had entered into a change of control whereby our controlling shareholder, Jian Yang, purchased a controlling interest in the Company. On that same date, Jian Yang entered into a stock purchase agreement with Fusion Diet Systems, Inc. a Utah corporation d/b/a Fusion Naturals (“FDS”). FDS was originally incorporated in Utah on April 20, 2010. On January 9, 2017, the Company created a new corporation in the State of California called Bio Essence Pharmaceutical, Inc. to serve as a health supplements manufacturer (“BEP”). Then, on January 12, 2017, the Company created its third subsidiary, Bio Essence Herbal Essentials Inc. (“BEH”). The Company serves as a holding corporation for these subsidiaries.
The primary focus of BEP is producing products for BEH and FDS, along with providing original equipment manufacturing and private label services to other companies. BEH targets and develops traditional Chinese medicines (“TCM”) in the form of single herbs, granules, pills, and tablets. It also offers special formulated dietary supplements and medical food. The Company intends to develop this subsidiary into one that is engaged in integrated health and to provide its customers to interact with dietitians, nutraceutical practitioners, and traditional integrative wellness doctors worldwide. FDS is developing a focus on mass market sales of its products. It currently offers functional supplements, beauty supplements and collagen products.
The Company sells its products through channels such as TCM practitioners, online websites, including its own proprietary website, and brick-and-mortar stores, such as GNC. Material sales have been made through these channels. The Company has conducted sales meetings with prospects through brokers and direct contacts to sell through other channels, including, Vitamin World, TJ Max, Home Goods, Marshalls, and Grocery Outlets, however as of the filing of this Registration Statement, the Company has not made any material sales through these channels.
The Company is headquartered at 8 Studebaker Drive in Irvine, California 92618 and the Company’s website is http://www.bioessencecorp.com. Our telephone number is (949) 706-9966. An organizational chart appearing on the next page provides an illustration of the relationship between the entities identified above.
Employees
The Company currently has 11 full-time employees.
Emerging Growth Company
We are an emerging growth company under the JOBS Act. We shall continue to be deemed an emerging growth company until the earliest of:
(a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
(b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;
(c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or
(d) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.
As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures. Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.
As an emerging growth company we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
Not applicable.

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ITEM 2. PROPERTIES
Item 2. Description of Property.
The Company maintains an office at 8 Studebaker Drive in Irvine, CA 92618. This location is the Company’s main headquarters and part of its production facilities. The production facility is approximately 15000 sq. ft and has the capacity to manage all of the Company’s operations. The Company estimates that 75% of its manufacturing is contracted out through third-party manufacturers, while the remainder is done in-house in its production facility and primarily consists of small batches. The Company relocated to this facility in or around 2018 after its former production facility was compromised by the Company’s former landlord-specifically, the landlord permitted other business to sublease the property, and those businesses posed a risk to the Company’s ability to maintain a sterile environment.
We do not own any properties. We currently have no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
The Company was involved in legal proceedings involving a lease with its former landlord, Harsch Investment Properties, LLC, an Oregon limited liability company (“Harsh”), and its former sublessor Topworth Holding LLC, a California limited liability company (“Topworth”). On December 9, 2016, the Company entered into a lease with Harsch for a warehouse facility at 2265 Polvorosa Ave., Unit 350 in San Leandro, California (the “Premises”). Then, on November 1, 2017, the Company entered into a sublease with Topworth, whereby Topworth would occupy a portion of the Premises.
Then, beginning in April of 2018, Topsworth began violating its sublease by failing to pay rent, utilities, and operating a cannabis operation in the Premises, which constituted a violation of the sublease. Harsch instructed the Company to evict Topworth. Thereafter, the Company was forced to leave the Premises because of Topworth’s activities.
Harsch initiated litigation against the Company seeking $2,088,030 in damages for lost rental profits. The Company filed a cross-complaint against Topworth for breach of the sublease agreement, seeking damages related to the Company’s breach of the lease, costs, and attorney’s fees.
On August 7, 2020, the Company entered into a Settlement Agreement and Release (“Settlement Agreement”) whereby the Company did not admit liability but agreed to make installment payments totaling $750,000 to Harsch for Harsch’s release of the Company. The Settlement Agreement is not recorded or public record. The Company’s claims against Topworth are not affected by the Settlement Agreement. The Company intends on continuing to pursue its claims against Topworth.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities.
Common Stock
The Company has 100,000,000 shares of authorized common stock (CUSIP# 09090C105), of which, as of the end of 2020, had 33,009,000 issued and outstanding. There is no market for the Company’s shares, though it is in the process of filing a Form 211 pursuant to SEC Rule 15c2-11 in an attempt to receive a trading symbol on the OTC Markets.
As of the most recent practicable date, there are 50 record holders of our common stock. The Company has not paid any cash dividends to date and may consider but no final decision has been made in paying dividends in the foreseeable future. We have no securities authorized for issuance under any Equity Compensation Plans.
On December 30, 2020, the SEC filed its Notice of Effectiveness regarding the Company’s Registration Statement on Form S-1, as amended. The Registration Statement registered 5,000,000 shares of the Company’s common stock, as well as 33,009,000 shares of the Company’s shareholders’ common stock. The offering commenced the same day. As of the date of this annual report, the offering has not terminated. The Company is not utilizing any underwriters. A total of 33,009,000 shares of common stock were registered, however no shares have been sold as of the date of this annual report.
Preferred Stock
We do not have a class of preferred stock.
Dividends
We have not paid any dividends on our common stock to date. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any will be within the discretion of our then Board of Directors (“BOD”). It is the present intention of our BOD to retain earnings, if any, for use in our business operations. However, the Board, anticipates declaring dividends in the foreseeable future.
Securities Authorized for Issuance under Equity Compensation Plans
The Company does not have any current equity compensation plans or any individual compensation arrangements with respect to its common stock or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our BOD, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
Business Overview
Bio Essence Corporation (“the Company” or “Bio Essence”) was incorporated in 2000 in the state of California. Fusion Diet Systems (“FDS”) was incorporated in 2010 in the state of Utah. Bio Essence and FDS were owned under common control since 2016. Bio Essence and FDS are mainly engaged in manufacturing and distributing health supplement products. In January 2017, Bio Essence incorporated two subsidiaries in the state of California: BEP and BEH, Bio Essence transferred its manufacturing operation into BEP, and transferred its distributing operation into BEH. On March 1, 2017, the 100% shareholder of FDS transferred all of her ownership in FDS into Bio Essence. As a result of the ownership restructure, FDS, BEP and BEH became wholly owned subsidiaries of Bio Essence, and Bio Essence serves as a holding corporation for these subsidiaries. The Company’s organizational chart is as follows:
The primary focus of BEP is producing products for BEH and FDS, along with providing original equipment manufacturing and private label services to other companies. BEH targets and develops traditional Chinese medicines (“TCM”) in the form of single herbs, granules, pills, and tablets. It also offers special formulated dietary supplements and medical food. The Company intends to develop this subsidiary into one that is engaged in integrated health and to provide its customers to interact with dietitians, nutraceutical practitioners, and traditional integrative wellness doctors worldwide. FDS is developing a focus on mass market sales of its products. It currently offers functional supplements, beauty supplements and collagen products.
The Company sells its products through channels such as TCM practitioners, online websites such as Amazon and its own proprietary website, and brick-and-mortar stores, such as Vitamin World, TJ Max, Home Goods, Marshalls, and Grocery Outlets.
In December 2019, a novel strain of coronavirus, causing a disease referred to as COVID-19, was firstly reported. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the pandemic has resulted in quarantines, travel restrictions, and the temporary closure of office buildings and facilities in the US. The state of California, where the Company is headquartered, has been affected by COVID-19.
The Company’s business and services and results of operations were affected and could continue to be affected by the COVID-19 pandemic. Some of the Company’s big retail customers decreased or cancelled their orders due to bankruptcy and slow-down of their business. Many of the Company’s individual customers lost their buying power or reduced their consumption towards unnecessary merchandise like the cosmetic-related products due to unemployment. On the other hand, the demand for the Company’s health care products such as vitamin supplements and Chinese herbs were increased; especially many doctors and practitioners increased their purchase orders to stock up the inventory and prepare for the epidemic, therefore the impact of COVID-19 on the Company’s revenue was mitigated.
The global economy has also been materially negatively affected by COVID-19 and there is continued uncertainty about the duration and intensity of its impacts. While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing the Company’s ability to access capital, which could negatively affect the Company’s liquidity.
Related Party Transactions
Loans from Officer
At December 31, 2020 and 2019, the Company had loans from one major shareholder (also the Company’s senior officer) of $1,108,008 and $650,699, respectively. There are no written loan agreements for these loans. These loans are unsecured, non-interest bearing and have no fixed terms of repayment, and therefore, deemed payable on demand.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements (“CFS”), which were prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in Note 2 to our CFS, we believe the following accounting policies are the most critical to assist you in fully understanding and evaluating this management discussion and analysis.
Basis of Presentation
These accompanying CFS were prepared in accordance with US GAAP and pursuant to the rules and regulations of the SEC for financial statements. The functional currency of Bio Essence is U.S. dollars (“USD’’). The accompanying financial statements are presented in U.S. dollars (“USD”).
Certain amounts in the prior year’s CFS and notes were revised to conform to the current year presentation.
Going Concern
The Company incurred net losses of $0.60 million and $1.70 million for the years ended December 31, 2020 and 2019, respectively. The Company also had an accumulated deficit of $6.71 million as of December 31, 2020. These conditions raise a substantial doubt about the Company’s ability to continue as a going concern. The Company plans to increase its income by strengthening its sales force, providing attractive sales incentive program, and increasing marketing and promotion activities. Management also intends to raise additional funds by way of a private or public offering, or by obtaining loans from banks or others. While the Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis of Consolidation
The CFS include the accounts of Bio Essence and, its subsidiaries, BEP, BEH and FDS as of December 31, 2020 and 2019. All significant inter-company accounts and transactions were eliminated in consolidation.
Use of Estimates
In preparing the CFS, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets as well as revenues and expenses during the year reported. Actual results may differ from these estimates.
Accounts Receivable
The Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of December 31, 2020 and 2019, the bad debt allowance was $151,372 and $149,500, respectively.
Revenue Recognition
In May 2014 the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry specific guidance. This new standard requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The FASB subsequently issued the following amendments to ASU No. 2014-09 that have the same effective date and transition date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company adopted these amendments with ASU 2014-09 (collectively, the new revenue standards).
Under the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.
Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.
Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers.
Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, returns and rebates. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company’s customer.
The Company’s return policy allows for the return of damaged or defective products and shipment errors. A notice of damage or wrong items should make within five days from receiving the goods, and actual return of the products must be completed within 30 days from the date of receiving the goods. Delayed notification for damaged or wrong products will not be accepted for return or exchange. Custom formulas and capsules are not returnable. The amount for return of products was immaterial for the years ended December 31, 2020 and 2019.
Results of operations
Comparison of the years ended December 31, 2020 and 2019
The following table sets forth the results of our operations for the periods indicated as a percentage of net sales. Certain columns may not add due to rounding.
% of Sales % of Sales Dollar Increase (Decrease) Percent Increase (Decrease)
Sales $ 958,700
$ 826,306
$ 132,394 16.02 %
Cost of goods sold 731,413 76.29 % 654,286 79.18 % 77,127 11.79 %
Gross profit 227,287 23.71 % 172,020 20.82 % 55,267 32.13 %
Selling expenses 150,093 15.66 % 231,137 27.97 % (81,044 ) (35.06 )%
Bad debts 1,872 0.20 % 149,500 18.10 % (147,628 ) (98.75 )%
General and administrative expenses 907,888 94.70 % 1,509,260 182.65 % (301,372 ) (39.85 )%
Operating expenses 1,059,853 110.56 % 1,889,897 228.72 % (830,044 ) (43.92 )%
Loss from operations (832,566 ) (86.85 )% (1,717,877 ) (207.90 )% (885,312 ) (51.54 )%
Other income, net 240,028 25.04 % 17,771 2.15 % 222,257 1,250.67 %
Loss before income taxes (592,538 ) (61.81 )% (1,700,106 ) (205.75 )% (1,107,568 ) (65.15 )%
Income tax expense 3,300 0.34 % 3,300 0.40 % - - %
Net loss $ (595,838 ) (62.15 )% $ (1,703,406 ) (206.15 )% $ (1,107,568 ) (65.02 )%
Sales
Sales for the years ended December 31, 2020 and 2019 were $958,700 and $826,306, respectively, an increase of $132,394 or 16.02%. The increase of sales is because the demand for our health care products such as vitamin supplements and Chinese herbs increased; especially many doctors and practitioners increased their purchases to stock up inventory and prepare for the Covid-19 pandemic.
Cost of sales
Cost of sales for the years ended December 31, 2020 and 2019 was $731,413 and 654,286, respectively, an increase of $77,127 or 11.79%. The increased cost of sales was due to increased sales and increased direct write-off of expired products by $84,077 even though we decreased inventory impairment provision by $12,840.
Gross profit
The gross profit for the years ended December 31, 2020 and 2019 was $227,287 and $172,020, respectively, an increase of $55,267 or 32.13%. The profit margin was 23.71% for 2020 compared to 20.82% for 2019, the increase was mainly due to increased sales and decreased cost of labor by $46,937, decreased inventory impairment provision by $12,840, decreased cost for material purchased and decreased cost for freight, custom and duty, even though we wrote off increased $84,077 expired products into cost of sales at the end of 2020 comparing with 2019.
Operating expenses
Selling expenses consist mainly of advertising, show expense, products marketing, shipping expense and promotion expenses. Selling expense was $150,093 for the year ended December 31, 2020, compared to $231,137 for the year ended December 31, 2019, a decrease of $81,044 or 35.06%, mainly resulting from decreased advertising expense by $45,300, decreased E-commerce market expense by $15,000 and decreased show expense by $48,700 which was partly offset by increased marketing fee by $25,900 and increased other expenses by $2,100.
Bad debt expense was $1,872 for the year ended December 31, 2020, compared to $149,500 for the year ended December 31, 2019.
General and administrative expenses consist mainly of employee salaries and welfare, business meeting, utilities and audit and legal expenses. General and administrative expenses were $907,888 for the year ended December 31, 2020, compared to $1,509,260 for the year ended December 31, 2019, a decrease of $601,372 or 39.85%, the decrease was mainly due to decreased salary expense by $25,200, decreased rent expense by $383,400, decreased professional expense by $44,000, decreased stock compensation expense by $69,700 and other miscellaneous expense by $79,000.
Other income, net
Other income was $240,028 for the year ended December 31, 2020, compared to $17,771 for the year ended December 31, 2019, an increase of $222,257 or 1,250.67%. The increase was mainly due to waiver of refund of $244,175 for a purchase deposit which was made by a customer of FDS a few years ago, despite increased interest expense by $41,905 in 2020.
Net loss
We had a net loss of $595,838 for the year ended December 31, 2020, compared to $1,703,406 for the year ended December 31, 2019, a decrease of $1,107,568 or 65.02%. The decrease in our net loss was mainly resulted from decreased operating expenses by $830,044 and increased other income by $222,257 as described above.
Liquidity and Capital Resources
As of December 31, 2020, we had cash and equivalents of $5,325, bank overdraft of $63,895, other current assets of $324,300, other current liabilities (excluding bank overdraft) of $1,830,996, working capital deficit of $1,565,266, a current ratio of 0.17:1. As of December 31, 2019, we had cash and equivalents of $16,161, bank overdraft of $35,271, other current assets of $583,620, other current liabilities (excluding bank overdraft) of $1,297,479, working capital deficit of $732,969, a current ratio of 0.45:1. ( The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2020 and 2019, respectively.
Net cash used in operating activities $ (732,744 ) $ (896,922 )
Net cash used in investing activities $ (7,365 ) $ (27,650 )
Net cash provided by financing activities $ 729,273 $ 931,063
Net cash used in operating activities
Net cash used in operating activities was $732,744 for the year ended December 31, 2020, compared to $896,922 in 2019. The decrease of cash outflow from operating activities for the year ended December 31, 2020 was principally attributable to increased cash inflow from inventory by $197,222, partly offset by decreased cash inflow from accounts receivable by $34,703.
Net cash used in investing activities
Net cash used in investing activities was $7,365 for the year ended December 31, 2020, compared to $27,650 in 2019. For the year ended December 31, 2020, we purchased fixed assets of $7,365. For the year ended December 31, 2019, we purchased fixed assets of $27,650.
Net cash provided by financing activities
Net cash provided by financing activities was $729,273 for the year ended December 31, 2020, compared to $931,063 in 2019. The net cash provided by financing activities in 2020 consisted of proceeds from government loans $343,340 due to the Covid-19 and loan from a major shareholder (also the senior officer) $457,309, but partly offset with return of investment to investor for $100,000. The net cash provided by financing activities in 2019 mainly consisted of proceeds from issuance of shares $361,140 and loan from a major shareholder (also the senior officer) $560,699.
Equity Financing
In May and June 2019, the Company sold 722,000 shares to individual investors at $0.50 per share through a private placement for proceeds of $361,000. In February 2020, with the Company’s consent, one investor returned 200,000 shares to the Company for $100,000 as a result of cancellation of the investment.
Our current liabilities exceed current assets at December 31, 2020, and we incurred substantial losses and cash outflows from operating activities in the periods presented. we may have difficulty to meet upcoming cash requirements. As of December 31, 2020, our principal source of funds was loans from officers (also are the Company’s major shareholders). As of December 31, 2020, we believe we will need $1.8 million cash to continue our current business for the next 12 months including pay potential damages from the pending litigation. In addition to our continuous effort to improve our sales and net profits, we have explored and continue to explore other options to provide additional financing to fund future operations as well as other possible courses of action. Such actions may include, but are not limited to, securing lines of credit, sales of debt or equity securities (which may result in dilution to existing shareholders), loans and cash advances from other third parties or banks, and other similar actions. There can be no assurance that we will be able to obtain additional funding (if needed), on acceptable terms or at all, through a sale of our common stock, loans from financial institutions, or other third parties, or any of the actions discussed above. If we cannot sustain profitable operations, and additional capital is unavailable, lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows.
Off-Balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
Please see the financial statements beginning on page located in this annual report on Form 10-K and incorporated herein by reference.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There are not and have not been any changes in or disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
The Company’s Chief Executive, Yin Yan, is responsible for establishing and maintaining disclosure controls and procedures for the Company.
Evaluation of Disclosure Controls and Procedures
For purposes of this Item 9A., the term disclosure controls and procedures means controls and other procedures of the Company (i) that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (15 U.S.C. 78a et seq. and hereinafter the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC, and (ii) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
On December 31, 2020, Ms. Yan reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report and has concluded that the Company’s disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC.
Report of Management on
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”), as defined in Exchange Act Rule 13a-15. Our ICFR is designed to provide reasonable assurance to our management and BOD regarding the preparation and fair presentation of published financial statements. Management conducted an assessment of our ICFR based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on the assessment, management concluded that, as of December 31, 2020, our ICFR were effective at the reasonable assurance level based on those criteria.
Our independent public accountant has not conducted an audit of our controls and procedures regarding ICFR and therefore expresses no opinion with regards to the effectiveness or implementation of our controls and procedures with regards to ICFR.
Changes in Internal Controls over Financial Reporting
There were no changes in our ICFR identified in connection with our evaluation of these controls as of the end of the fiscal year, December 31, 2020 as covered by this report that has materially affected, or is reasonably likely to materially affect, our ICFR.
Inherent Limitations on Effectiveness of Controls
The Company’s management does not expect that its disclosure controls or its ICFR will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
Not applicable.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
Pursuant to Item 401 of Regulation S-K, the names and ages of the directors and executive officers and directors of the Company, and their positions with the Company, are detailed in the table below.
Name Age Position Familial Relationships
Yin Yan Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of Directors None
Dr. Sia Fooladian Director None
Sharon Mair Director None
Simon Shavanson Director None
Yang Yang Huang Director None
Tuan Tran Vice President of Operations None
Yin Yan, Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of Directors
Ms. Yan serves as the Company’s Chief Executive Officer, Chief Financial Officer, and Chairman of the BOD. She began her career in 2002 at Intel Corp., a semiconductor designer and manufacturing company as automation project manager. From 2002 to 2004, Ms. Yan managed manufacturing automation and software as well as database development in computer infrastructure applications. From 2004 to present, she has been president of H&Y International, LLC, a real estate investment and brokerage company. Ms. Yan spends 20 hours per week on the affairs of H&Y International, LLC.
Dr. Sia Fooladian, Director
Sia Fooladian, MD, MPH is a board-certified Cardiac Anesthesiologist, Ironman triathlete, and a passionate advocate for a holistic, integrative approach to health and wellness. With over ten years of clinical experience caring for patients with an array of medical ailments, Dr. Fooladian understands the need for an integrative approach to health. He believes that optimal health can be achieved and maintained by holistic understanding of a patient’s mind, body, and spirit and thereby, merging the best of Eastern and Western modalities to treat the root cause of disease.
Dr. Sia has seen firsthand how opioid addiction and the opioid crisis have affected the well-being of his patients. He has also witnessed complications, in both young and elderly patients, such as reversible and irreversible kidney failure, gastrointestinal bleeding, and liver dysfunction from pharmaceutical alternatives to opioids-NSAIDS (ibuprofen, Motrin, Alleve, etc.) and Tylenol. An expert in alleviating his patients’ pain during and after surgery, Dr. Sia leveraged his medical knowledge and passion for creating impact to support integrative wellness. Dr. Fooladian maintains a daily practice of meditation and mindfulness, alongside nutraceutical supplementation and cold therapy in order to promote peak performance in his active lifestyle.
Dr. Fooladian holds a BA in history and education from UCLA. He received his MD and MPH in health management from The George Washington University School of Medicine and Health Sciences. He completed his residency and fellowship training at UCLA Medical Center, where he served as Chief Resident. He currently resides and practices in Orange County, California, and has done so for the past 10 years. The Company believes Dr. Fooladian’s experience in the medical field will greatly benefit the Company as it expands is business model.
Sharon Mair, Director
Sharon Mair is a seasoned Medical and Pharmaceutical Senior Manager. Sharon has worked in various positions including Sales, Business Development, Marketing, Reimbursement and Operations. Sharon has over 18 years’ experience in the Pharmaceutical supportive care space and was a part of the successful launch of several blockbuster products as well as a patient support division. She is currently employed by Otsuka Pharmaceutical Companies as a Senior Manager Field Operations where she has been working for 8 years.
Ms. Mair received her B.A. in Biology from the University of Southern California and a M.B.A. from Drexel University. The Company believes that Ms. Mair’s experience in pharmaceutical sales and business development will greatly help the Company in expanding its business plan.
Simon Shavanson, Director
Mr. Shavanson is the founder and CEO at Shavanson Enterprises Corp and its affiliated companies since June 2011. With over 25 years of experience in the CPG and Retail industry, Mr. Shavanson has led the development of a shared services platform that would take brands and products from “Concept to Consumer.” As a visionary and a passionate, relationship driven executive, he has created the platform with affiliated owned and partner companies to support brands as a turnkey solution for various needs including packaging components, R&D and formulation, fill-in & manufacturing, retail placement and staffing support for at-shelf demo and social & digital activation.
Mr. Shavanson started his career with his family business, First Quality back in February of 1994 and during his 18 years’ tenure at the company, he held various roles in business development, Sales Management & Marketing where he was an integral part of the culture and growth of the businesses from under $20 million when he joined First Quality to over $3 billion in annual revenue when he decided to venture out in 2012. His passion for people and his relationships and integrity are his most important assets. Simon is a great creative visionary that has always strive to offer solutions to make his industry partners differentiate while offering solutions to elevate their position in the marketplace.
For the past eight years, Mr. Shavanson has been a managing director and chief relationship officer for NuVu Group, managing and helping brands in retail placement, distribution and marketing. The Company believes Mr. Shavansan’s vast experience will assist the Company in numerous ways, including sales and research and development matters.
Yang Yang Huang, Director
Ms. Yang has served as a director of the Company since November 2017. She has served as the Chief Executive Officer and Chairman of Panjin Futian Petrochemical Industry Development Co., Ltd., since 2016. She has been previously employed by the People’s Bank of China from 2007 to 2016 as a principal staff member responsible for approval of international payments made by commercial banks and monitoring of foreign exchange transactions. Prior to her position at People’s Bank of China, Ms. Yang was employed by Industrial and Commercial Bank of China from 2005 to 2007 as a staff member. Ms. Yang holds a Ph.D. in finance from Dongbei University of Finance and Economics, a Masters in Management from the University of Leeds, and a B.A. in English and International Trade from Dalian University. The Company believes Ms. Yang’s experiences will greatly assist the Company as it expands and implements is business plan.
Tuan Tran, VP of Operations
Mr. Tuan Tran has over 20 years of experience in quality and operations working in the Nutrition, Dietary Supplements and OTC industries. Mr. Tran current responsibilities includes but are not limited Production, Warehouse & Distribution, Quality, Customer Service, R&D, Procurement, Human Resources, and Safety.
Mr. Tran has extensive knowledge in FDA regulations, GMPs, food safety, auditing, quality system, HACCP, Process Analytical Technology, CAPA, and Lean Manufacturing. Mr. Tran also specializes in crisis management, regulatory compliance, quality systems implementation, and supplier qualification.
Mr. Tran received his Bachelors of Science Degree in Public Health from Southern Connecticut State University. He holds certifications in Pharmaceutical Engineering, Six Sigma Green Belt, Food Safety, Technical Writing and HACCP. Mr. Tran is a senior member with the American Society for Quality.
B. Significant Employees.
None
C. Family Relationships.
None.
D. Involvement in Certain Legal Proceedings.
Except as otherwise disclosed, no officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
● Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
● Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
● Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and
● Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Audit Committee
The Company has no separate audit committee. The Company has no qualified financial expert at this time because it has not been able to hire a qualified candidate. Further, the Company believes that it has inadequate financial resources at this time to hire such an expert. The Company intends to continue to search for a qualified individual to hire.
Code of Ethics
We do not currently have a code of ethics. The Company is in the early stages of development and its chief executive officer, Ms. Yin, has not yet developed a code of ethics. The Company intends on developing one as the Company’s business expands.
Nominating Committee
We have not adopted any procedures by which security holders may recommend nominees to our BOD.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
The Company does not have employment contracts with its officers or directors. All employees of the Company are at-will employees. The Company’s principal executive and financial officer, Yin Yan, does not have a written employment agreement and does not earn a salary. Compensation for Ms. Yan and the Company’s two highest paid employees are detailed in the Summary Compensation table below. Tuan Tran, the Company’s Vice President of Operations, earns $100,000 annually, while Yuling Huang earns $52,000 for her role as the Company’s accounting manager.
Summary Compensation Table
Name and Principal Position Year Salary Bonus Stock Awards Option Awards Nonequity Incentive Plan Compensation Change in pension value and nonqualified deferred compensation earnings All Other Compensation Total
Yin Yan (PEO) $ - $ - $ - $ - $ - $ - $ - $ -
Tuan Tran $ 100,000 $ - $ - $ - $ - $ - $ - $ 100,000
Yuling Huang $ 52,000 $ - $ - $ - $ - $ - $ - $ 52,000
Outstanding Equity Awards at Fiscal Year-End
Option awards
Stock awards
Name
Number of securities underlying unexercised options
(#) exercisable
Number of securities
underlying
unexercised
options
(#) unexercisable
Equity
incentive
plan awards: Number of
securities
underlying
unexercised
unearned
options
(#)
Option
exercise price
($)
Option
expiration
date
Number of shares or units of stock that have not vested
(#)
Market value of shares of units of stock that have not vested
($)
Equity
incentive
plan awards: Number of
unearned
shares, units or other rights that have not vested
(#)
Equity
incentive
plan awards: Market or payout value of
unearned
shares, units or other rights that have not vested
($)
-
-
-
-
-
-
-
-
-
-
The Company does not have any outstanding equity awards for its employees.
Director Compensation
The following table provides information regarding the compensation of our named directors for the year ending December 31, 2020.
Name and Principal Position Salary Bonus Stock Awards Option Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings All Other Compensation Total
Yin Yan (Chief Executive Officer, Chief Financial Officer, and Director) $ - $ - $ - $ - $ - $ - $ - $ -
Yang Yang Huang (Director) $ - $ - $ - $ - $ - $ - $ - $ -
Dr. Sia Fooladian, MD* $ - $ - $ - $ - $ - $ - $ - $ -
Sharon Mair* $ - $ - $ - $ - $ - $ - $ - $ -
Simon Shavanson* $ - $ - $ - $ - $ - $ - $ - $ -
In June 2019, the Company entered a Board Director Agreement with four directors for retaining them as the Company’s independent directors for one year. The Company agreed to issue 10,000 shares of the Company’s restricted stock to each of the directors for their services annually. The Company issued each director 10,000 shares of restricted stock in June of 2019. The Company has not issued any additional stock pursuant to the Board Director Agreement. The directors did not receive compensation in 2020.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth the ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock as a group as of December 31, 2020. There are no pending arrangements that may cause a change in control. The information presented below has been presented in accordance with the rules of the SEC and is not necessarily indicative of ownership for any other purpose.
A person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner.
Title of Class Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class(3)
Common Stock Yin Yan(1) - 31921 Apuesto Way, Trabuco Canyon CA, 92679 9,000,000 shares-directly owned 23.7 %
Common Stock Jian Yang(2) - 2012 Paseo Del Mar, Palos Verdes Estates, CA 90274 21,000,000 shares-directly owned 55.3 %
(1) Yin Yan is the Company’s Chief Executive Officer, Chief Financial Officer, and Chairman of the BOD
(2) Jain Yang is the Company’s controlling shareholder and former director
(3) Assumes all 5,000,000 shares offered by the Company through the Registration Statement on Form S-1 are purchased, making the total number of shares of common stock issued and outstanding 38,009,000
This table is based upon information derived from our stock records. We believe that each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned.
Securities Authorized for Issuance Under Equity Compensation Plans
The following chart is provided pursuant to Item 201(d) of Regulation S-K:
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders N/A N/A N/A
Equity compensation plans not approved by security holders N/A N/A N/A
TOTAL

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions.
Except as otherwise indicated herein, there have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services.
Keith K. Zhen, CPA is the Company’s independent registered public accounting firm. At the end of 2020, the Company’s former independent registered public accountant, Kenne Ruan, CPA, separated from the Company on amicable terms as disclosed in the Form 8-K filed on April 13, 2021. Below are aggregate fees billed by Mr. Ruan for professional services rendered for the year ended December 31, 2020.
Audit Fees
The fees for the audit services billed and to be billed by Kenne Ruan for the year ended December 31, 2019 and interim period ended September 30, 2020 were $22,200. The fees for audit services billed and to be billed by Keith K. Zhen, CPA for the year ended December 31, 2020 amounted to $17,000.
Audit-Related Fees
None.
Tax Fees
There were no fees billed by Mr. Ruan or Mr. Zhen for professional services for tax compliance, tax advice, and tax planning for 2020.
All Other Fees
There were no fees billed by Mr. Ruan or Mr. Zhen for other products and services for 2020.
Audit Committee’s Pre-Approval Process
The BOD acts as the audit committee of the Company, and accordingly, all services are approved by all the members of the BOD.

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules.
(a) Exhibits:
Exhibit
Exhibit Description
Filed herewith
Form
Period ending
Exhibit
Filing date
3.1
Articles of Incorporation
S-1
3.1
7/26/2019
3.2
By-Laws
S-1
3.2
7/26/2019
3.3
Certificate of Amendment
S-1
3.3
7/26/2019
4.1
Specimen Stock Certificate
S-1
4.1
7/26/2019
31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
32.1
Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
32.2
Certification pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
99.1
Registration Statement
S-1/A
12/23/2020
(b) The following documents are filed as part of the report:
1. Financial Statements: Balance Sheet, Statement of Operations, Statement of Stockholder’s Equity, Statement of Cash Flows, and Notes to Financial Statements.