ITEM
1. FINANCIAL STATEMENTS
JIALIJIA
GROUP CORPORATION LIMITED
BALANCE
SHEETS
|
|
July 31,
2019
|
|
|
January 31,
|
|
|
|
(Unaudited)
|
|
|
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
Prepaid expenses
|
|
|
4,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
4,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
4,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued liabilities
|
|
$
|
10,825
|
|
|
$
|
—
|
|
Loan from related party
|
|
|
128,503
|
|
|
|
84,115
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
139,328
|
|
|
|
84,115
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
139,328
|
|
|
|
84,115
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, 1,000,000,000 shares authorized, 12,113,591 and 7,285,000 issued and outstanding at July 31, 2019 and January 31, 2019, respectively
|
|
|
12,114
|
|
|
|
7,285
|
|
Subscriptions receivable
|
|
|
(124,858
|
)
|
|
|
—
|
|
Additional paid-in capital
|
|
|
144,444
|
|
|
|
24,415
|
|
Accumulated deficit
|
|
|
(167,028
|
)
|
|
|
(105,815
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit
|
|
|
(135,328
|
)
|
|
|
(74,115
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities & Stockholders’ Deficit
|
|
$
|
4,000
|
|
|
$
|
10,000
|
|
The
accompanying notes are an integral part of these unaudited financial statements.
JIALIJIA
GROUP CORPORATION LIMITED
STATEMENTS
OF OPERATIONS
(UNAUDITED)
|
|
Three Months Ended
July 31,
|
|
|
Six Months Ended
July 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
|
|
Cost of Goods Sold
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gross Profit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
38,863
|
|
|
|
8,345
|
|
|
|
61,213
|
|
|
|
14,320
|
|
Total operating expenses
|
|
|
38,863
|
|
|
|
8,345
|
|
|
|
61,213
|
|
|
|
14,320
|
|
Net loss from operations
|
|
|
(38,863
|
)
|
|
|
(8,345
|
)
|
|
|
(61,213
|
)
|
|
|
(14,320
|
)
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net Loss
|
|
$
|
(38,863
|
)
|
|
$
|
(8,345
|
)
|
|
$
|
(61,213
|
)
|
|
$
|
(14,320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
Weighted average number of common shares outstanding - basic and diluted
|
|
|
8,315,390
|
|
|
|
7,285,000
|
|
|
|
7,811,518
|
|
|
|
7,285,000
|
|
The
accompanying notes are an integral part of these unaudited financial statements.
JIALIJIA
GROUP CORPORATION LIMITED
STATEMENTS
OF STOCKHOLDERS’ DEFICIT
(UNAUDITED)
|
|
Common Stock
|
|
|
Subscriptions
|
|
|
Additional
Paid in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Receivable
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance at January 31, 2019
|
|
|
7,285,000
|
|
|
$
|
7,285
|
|
|
$
|
—
|
|
|
$
|
24,415
|
|
|
$
|
(105,815
|
)
|
|
$
|
(74,115
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22,350
|
)
|
|
|
(22,350
|
)
|
Balance at April 30, 2019
|
|
|
7,285,000
|
|
|
$
|
7,285
|
|
|
|
—
|
|
|
$
|
24,415
|
|
|
$
|
(128,165
|
)
|
|
$
|
(96,465
|
)
|
Issuance of common stock
|
|
|
4,828,591
|
|
|
|
4,829
|
|
|
|
(124,858
|
)
|
|
|
120,029
|
|
|
|
—
|
|
|
|
—
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(38,863
|
)
|
|
|
(38,863
|
)
|
Balance at July 31, 2019
|
|
|
12,113,591
|
|
|
$
|
12,114
|
|
|
$
|
(124,858
|
)
|
|
$
|
144,444
|
|
|
$
|
(167,028
|
)
|
|
$
|
(135,328
|
)
|
|
|
Common Stock
|
|
|
Subscriptions
|
|
|
Additional
Paid in
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Receivable
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
Balance at January 31, 2018
|
|
|
7,285,000
|
|
|
$
|
7,285
|
|
|
$
|
—
|
|
|
$
|
24,415
|
|
|
$
|
(63,032
|
)
|
|
$
|
(31,332
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,975
|
)
|
|
|
(5,975
|
)
|
Balance at April 30, 2018
|
|
|
7,285,000
|
|
|
$
|
7,285
|
|
|
|
—
|
|
|
$
|
24,415
|
|
|
$
|
(69,007
|
)
|
|
$
|
(37,307
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,345
|
)
|
|
|
(8,345
|
)
|
Balance at July 31, 2018
|
|
|
7,285,000
|
|
|
$
|
7,285
|
|
|
$
|
—
|
|
|
$
|
24,415
|
|
|
$
|
(77,352
|
)
|
|
$
|
(45,652
|
)
|
The
accompanying notes are an integral part of these unaudited financial statements.
JIALIJIA GROUP CORPORATION LIMITED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
For the
Six Months Ended
July 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(61,213
|
)
|
|
$
|
(14,320
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
6,000
|
|
|
|
—
|
|
Accrued liabilities
|
|
|
10,825
|
|
|
|
381
|
|
Net cash used in operating activities
|
|
|
(44,388
|
)
|
|
|
(13,939
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from loan - related party
|
|
|
44,388
|
|
|
|
13,939
|
|
Net cash provided by financing activities
|
|
|
44,388
|
|
|
|
13,939
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
NON-CASH FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Subscriptions receivable for common shares issued
|
|
$
|
124,858
|
|
|
$
|
—
|
|
The
accompanying notes are an integral part of these unaudited financial statements.
JIALIJIA
GROUP CORPORATION LIMITED
NOTES
TO 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. The Company was in development stage and was seeking to acquire, through
a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, exchangeable share transaction or other similar
business transactions with one or more operating businesses or assets.
The
Company completed a reverse merger subsequent to July 31, 2019 pursuant to a share purchase/exchange agreement closed on August
29, 2019 (see Note 9). As a result of the completion of the reverse merger, the Company is no longer a development stage company.
Note
2. Going Concern
The
Company’s financial statements are prepared using generally accepted accounting principles in the United States of America
applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has incurred negative cash flows from operating activities, and continuing net losses and working
capital deficits that raise substantial doubt about its ability to continue as a going concern. The Company’s financial statements
do not reflect any adjustments that might result from the outcome of this uncertainty.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s
plans to obtain such resources for the Company include obtaining capital from the sale of its equity securities, and loans from
stockholders or other related party(ies) when needed. The Company believes its current and future plans enable it to continue
as a going concern. Management cannot provide assurance that the Company will be successful in accomplishing these plans. These
financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as
a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course
of business and at amounts which may differ from those in the accompanying financial statements.
Note
3. Summary of Significant Accounting Policies
The
management of the Company is responsible for the selection and use of appropriate accounting policies and their application. Critical
accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition
and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to
make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting
policies and practices are disclosed below as required by generally accepted accounting principles.
Basis
of Presentation
The
Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The
accompanying financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”)
and in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
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 and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using
the best information available at the time the estimates are made; however actual results could differ materially from those estimates.
Income
Taxes
The
Company accounts for income taxes as outlined in ASC 740, “Income Taxes”. Under the asset and liability method of
ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected
to be recovered or settled.
Loss
per Share Calculation
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. For the six months ended July 31, 2019 and 2018, 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.
Fair
Values of Financial Instruments
ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may
be used to measure fair value:
Level
1 – quoted prices in active markets for identical assets or liabilities.
Level
2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
There
were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as
of July 31, 2019 and January 31, 2019.
Recent
Accounting Pronouncements
In
August 2018, the FASB issued Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure
Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, which changes the fair value measurement
disclosure requirements of ASC 820. This update is effective for fiscal years beginning after December 15, 2019, and for interim
periods within those fiscal years. The Company does not expect the adoption of ASU 2018-13 to have a material impact on its financial
statements.
Note
4. Prepaid Expenses
As
of July 31, 2019 and January 31, 2019, the Company had $4,000 and $10,000 in prepaid expenses, respectively, which consisted of
prepaid professional service charges.
Note
5. Accrued Liabilities
As
of July 31, 2019 and January 31, 2019 the Company had $10,825 and $0 in accrued liabilities, respectively, which consisted of
accrued professional service charges.
Note
6. Income Tax
The
Company accounts for income taxes in accordance with FASB Codification Topic 740-10-25, Accounting for Uncertainty in Income Taxes,
which requires the use of an asset and liability approach in accounting for income taxes. Under this approach, deferred
tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities
measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse.
As
of July 31, 2019, the Company had a net operating loss carry-forward of $167,028 and a deferred tax asset of approximately $35,076 using
the statutory rate of 21%. The deferred tax asset may be recognized in future periods, but not exceeding 20 years. However,
the Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion
or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future
generation of taxable income during the periods in which temporary differences representing net future deductible amounts become
deductible. After consideration of all the information available, Management believes that significant uncertainty exists with
respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.
The
significant component of deferred income tax assets as of July 31, 2019 and January 31, 2019 is as follows:
|
|
July
31,
2019
|
|
|
January 31,
2019
|
|
|
|
|
|
|
|
|
Net operating loss carry-forward
|
|
$
|
35,076
|
|
|
$
|
22,221
|
|
Valuation allowance
|
|
|
(35,076
|
)
|
|
|
(22,221
|
)
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
The
difference between the effective rate reflected in the provision for income taxes on loss before taxes and the amounts determined
by applying the applicable statutory U.S. tax rate are analyzed below:
|
|
For the Six Months Ended
|
|
|
|
July
31,
2019
|
|
|
July
31,
2018
|
|
|
|
|
|
|
|
|
Statutory tax benefit
|
|
|
(21
|
)%
|
|
|
(21
|
)%
|
Change in deferred tax asset valuation allowance
|
|
|
21
|
%
|
|
|
21
|
%
|
Provision for income taxes
|
|
|
—
|
%
|
|
|
—
|
%
|
Note
7. Related Party Transactions
In
support of the Company’s nominal operation and cash requirements, the Company relies on advances from related parties until
when the Company can support its operations or attain 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. The advances from related
party represent the amounts paid by related party on behalf of the Company in satisfaction of liabilities. The advances are considered
temporary in nature and have not been formalized by a promissory note.
During
the six months ended July 31, 2019, the Company’s officer advanced $44,388 for operating expenses. The balances of the loan
from related party as of July 31, 2019 and January 31, 2019 were $128,503 and $84,115, respectively. The loan is non-interest
bearing, payable on demand and unsecured.
Note
8. Equity
The
Company has authorized 1,000,000,000 shares of Common Stock at par value of $0.001. As of July 31, 2019 and January 31, 2019,
the Company had 12,113,591 and 7,285,000 shares of common stock issued and outstanding, respectively.
On
May 15, 2019, the Company issued 817,108 shares of its common stock at a price per share of $0.02 to nine (9) subscribers. In
July, 2019, the Company revised the subscription agreements with each of the 9 subscribers to change the issuance price to $0.03
per share, and cancel 14,785 shares and issue additional 346,416 shares in aggregate. Such additional shares has been issued in
August, 2019.
In
July, 2019, the Company entered into a securities subscription agreement (the “Subscription Agreement”) with each
of fifty-four (54) investors (the “Investors”) who purchased an aggregate of 3,011,483 shares of the Company’s
common stock at a price of $0.03 per share. Pursuant to each of the Subscription Agreements, the Company issued its shares of
common stock to each Investor in the respective amounts as set forth in the Subscription Agreement.
In
addition, on July 24 2019, Ms. Na Jin, the Chief Executive Officer of the Company, purchased 1,000,000 shares of the Company’s
common stock at a price of $0.01 per share.
As
of July 31, 2019, the Company recorded the subscriptions receivable resulted from the aforementioned share issuances in the aggregate
amount of $124,858.
Note
9. Subsequent Events
On
July 10, 2019, the Company entered into a share purchase/exchange agreement (the “Exchange Agreement”) with Huazhongyun
Group Co., Limited (“Huazhongyun”), a company incorporated under the laws of Hong Kong, and Na Jin, the sole shareholder
of Huazhongyun (the “Shareholder”) and the Chief Executive Officer of the Company. Huazhongyun owns 6,000,000 shares
(the “Company Shares”) of the Company, which represented approximately 82% of the shares of the Company’s common
stock, issued and outstanding, at the time of execution of the Exchange Agreement. The Shareholder owns an aggregate of 10,000
ordinary shares of Huazhongyun (“Huazhongyun Shares”), which constitute all of the issued and outstanding shares of
Huazhongyun.
Pursuant
to the Exchange Agreement, among other matters, the Shareholder will sell and transfer all of the Huazhongyun Shares in exchange
for all of the Company Shares. As a result, the Shareholder will directly own the Company Shares, which represent approximately
82% of the issued and outstanding shares of the Company’s common stock at the time of execution of the Exchange Agreement
and Huazhongyun will become a wholly-owned subsidiary of the Company.
Jialijia
Jixiang Investment (Changzhou) Co., Ltd, (“Jialijia (Changzhou)”) is a company incorporated under the laws of the
PRC on June 13, 2017. Huazhongyun owned all of the equity interests in Jialijia Jixiang Investment (Changzhou) Co., Ltd. (“WFOE”),
a wholly-foreign owned entity formed under the laws of China. Rucheng Wenchuan Gas Co., Ltd. (“Rucheng Wenchuan”)
was incorporated under the laws of the People’s Republic of China (the “PRC”) on March 31, 2006.
On
January 7, 2019, Jialijia (Changzhou) entered into an equity transfer agreement (the “Equity Transfer”) with Mr. Jiannan
Wu, the shareholder who owned 94.77% of Rucheng Wenchuan’s outstanding shares. Pursuant to the Equity Transfer, Mr. Jiannan
Wu agreed to transfer 70% of his ownership of Rucheng Wenchuan to Jialijia (Changzhou), in exchange of RMB 1,000,000 and 2,860,000
common shares of the Company owned by Huazhongyun. Immediately after the equity transfer agreement, Jialijia (Changzhou) owns
70% of the ownership and becomes the controlling shareholder of Rucheng Wenchuan. Both Huazhongyun and Jialijia (Changzhou) are
holding companies and have not carried out substantive business operations of their own. Rucheng Wenchuan is primarily engaged
in the production and sale of gases for industrial and medical purposes, such as oxygen and nitrogen, in the PRC.
Pursuant
to the Exchange Agreement, on August 29, 2019 (the “Closing Date”), Na Jin sold and transferred all of the Huazhongyun
Shares to the Company in exchange for all of the Company Shares and the Company received all of the outstanding Huazhongyun Shares.
As a result, on the Closing Date, Na Jin directly owned Company Shares representing approximately 48% of the issued and outstanding
shares of the Company’s common stock, Huazhongyun became a wholly-owned subsidiary of the Company and the Company owned
70% of the outstanding equity interest in Rucheng Wenchuan through Huazhongyun and WFOE.
As
a result of the consummation of the above merger on August 29, 2019, the Company, through its subsidiaries, is engaged in the
production and sale of gases for industrial and medical purposes, such as oxygen and nitrogen, in the PRC. The Company’s
operating subsidiary, Rucheng Wenchuan, is in the process of improving its facilities and has not commenced its gas production
or generated any revenues.
The
Company has evaluated subsequent events through the date which the financial statements were available to be issued. All subsequent
events requiring recognition as of July 31, 2019 have been incorporated into these financial statements and there are no subsequent
events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
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 and has been inactive since our change in control on December 30, 2016. Following
our change, the Company now has only minimal assets and liabilities. Its operations are focused on seeking to acquire an operating
business with strong growth potential. From and after the change of control, unless and until the Company completes an acquisition,
its expenses are expected to consist solely of legal, accounting and compliance costs, including those related to complying with
reporting obligations under the Exchange Act.
In
December 2018, the Company identified, negotiated, and reached two business acquisition agreements with two target companies (see
“Material Agreements” below). Our principal business objective for the past 12 months, and beyond such time, have
been and will be to achieve long-term growth potential through acquisitions of these operating businesses.
On
July 10, 2019, the Company entered into a share purchase/exchange agreement (the “Share Exchange Agreement”) with
Huazhongyun Group Co., Limited (“Huazhongyun,” formerly known as “JLJ Group Corporation Limited”), a company
formed under the laws of the Hong Kong Special Administrative Region, and Na Jin, the sole shareholder of Huazhongyun and the
Chief Executive Officer and Chief Financial Officer of the Company. Na Jin, through Huazhongyun, owned 6,000,000 shares (the “Company
Shares”) of the Company, which represented approximately 82% of the shares of the Company’s common stock, issued and
outstanding, par value $0.001 per share, as of the date of execution of the Share Exchange Agreement. Na Jin owned an aggregate
of 10,000 ordinary shares of Huazhongyun (“Huazhongyun Shares”), which constituted all of the issued and outstanding
ordinary shares of Huazhongyun. On the date of execution of the Share Exchange Agreement, Huazhongyun owned all of the equity
interests in Jialijia Jixiang Investment (Changzhou) Co., Ltd. (“WFOE”), a wholly-foreign owned entity formed under
the laws of China, which in turn held seventy percent (70%) of the outstanding equity interest in Rucheng Wenchuan Gas Co., Ltd.
(the “Target” or “Target Company”), a company formed under the laws of China.
Pursuant
to the Exchange Agreement, on August 29, 2019 (the “Closing Date”), Na Jin sold and transferred all of the Huazhongyun
Shares to the Company in exchange for all of the Company Shares and the Company received all of the outstanding Huazhongyun Shares.
As a result, on the Closing Date, Na Jin directly owned Company Shares representing approximately 48% of the issued and outstanding
shares of the Company’s common stock, Huazhongyun became a wholly-owned subsidiary of the Company and the Company owned
70% of the outstanding equity interest in the Target Company through Huazhongyun and WFOE. The financial statements contained
herein do not reflect the reverse merger that was consummated after the period ended July 31, 2019.
From
July 22, 2019 to July 29, 2019, the Company entered into a securities subscription agreement (the “Subscription Agreement”)
with fifty-four (54) investors (the “Investors”) who reside outside the United States where the Investors purchased
an aggregate of 3,011,483 shares of the Company’s common stock, par value $0.001 per share, at a price of $0.03 per share.
Pursuant to each of the Subscription Agreements, the Company issued its shares of common stock to each Investor in the respective
amounts as set forth in the Subscription Agreement and received the funds in the corresponding amounts as set forth therein. In
addition, on April 20, 2019, Ms. Na Jin, the Chief Executive Officer of the Company, entered into a Subscription Agreement to
purchase 1,000,000 shares of the Company’s common stock at a price of $0.01 per share, and on July 24, 2019, wired the total
purchase price of $10,000 to the Company.
Results
of Operations for the Three and Six Months Ended July 31, 2019 Compared to the Three and Six Months Ended July 31, 2018
Revenues
The
Company did not engage in any business activities and did not generate any revenue for the six months ended July 31, 2019 and
2018.
Operating
Expenses
The
Company has had nominal operations and only incurred expenses relating to being a public reporting company and seeking a merger
and acquisition. The general and administrative expenses consisted primarily of professional fees and organization expenses. For
the three months ended July 31, 2019, the general and administrative expenses amounted to $38,863 as compared with $8,345 for
the three months ended July 31, 2018, an increase of $30,518, or 365.7%. For the six months ended July 31, 2019, the general and
administrative expenses amounted to $61,213 as compared with $14,320 for the six months ended July 31, 2018, an increase of $46,893
or 327.5%. The increase in the company’s operating expenses was primarily due to the increase in accounting, audit and legal
expenses.
Net
Loss
As
a result of the foregoing, for the three months ended July 31, 2019, net loss amounted to $38,863, as compared to $8,345 for the
three months ended July 31, 2018, an increase of $30,518,
or 365.7%; and for the six months ended July 31, 2019, net loss amounted to $61,213,
as compared to $14,231 for the six months ended July 31, 2018, an increase of $46,893, or 327.5%.
Liquidity
and Capital Resources
Working
Capital:
As
of July 31, 2019 and January 31, 2019, we had $0 cash and cash equivalents. As of July 31, 2019, we have incurred accumulated
deficit of $167,028. As of July 31, 2019, we have a working capital deficit of $135,328.
Cash
Flows:
Net
cash used in operating activities was $44,388 during the six months ended July 31, 2019, compared to $13,939 for the six months
ended July 31, 2018. The increase in the cash used in operating activities was primarily due to the increase in net loss
during the six months ended July 31, 2019, compared to the six months ended July 31, 2018.
Net
cash provided by financing activities was $44,388 during the six months ended July 31, 2019, compared to $13,939 for the six months
ended July 31, 2018. The increase in the cash provided by financing activities was primarily due to the increase of proceeds from
related party loan.
Going
Concern:
We
require additional funding to meet its ongoing obligations and to fund anticipated operating losses. Our auditor has expressed
substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on
raising capital to fund its initial business plan and ultimately to attain profitable operations. These financial statements do
not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification
of liabilities that might result from this uncertainty.
We
expect to incur marketing and professional and administrative expenses as well expenses associated with maintaining our filings
with the Commission. We will require additional funds during this time and will seek to raise the necessary additional capital.
If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities,
which could harm our business plans, financial condition and operating results. Additional funding may not be available on favorable
terms, if at all. We intend to continue to fund its business by way of equity or debt financing and advances from related parties.
Any inability to raise capital as needed would have a material adverse effect on our business, financial condition and results
of operations.
If
we cannot raise additional funds, we will have to cease business operations. As a result, our common stock investors would lose
all of their investment.
Critical
Accounting Policies
Our
financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods.
We
qualify as an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act, which became law in
April, 2012. Under the JOBS Act, “emerging growth companies”, can delay adopting new or revised accounting standards
until such time as those standards apply to private companies. We have elected not to avail ourselves of this exemption from new
or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public
companies that are not emerging growth companies
Use
of estimates
The
preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates
using the best information available at the time the estimates are made; however actual results could differ materially from those
estimates.
Income
Taxes
We
account for income taxes as outlined in ASC 740, “Income Taxes”. Under the asset and liability method of ASC 740,
deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected
to be recovered or settled.
Loss
per Share Calculation
We
comply with accounting and disclosure requirements of ASC 260, “Earnings Per Share.” Net loss per common share is
computed by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for
the period. For the three and six months ended July 31, 2019 and July 31, 2018, 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 (for example cash flow modeling inputs based on assumptions)
The
Company’s financial instruments primarily consist of cash and cash equivalents, other receivables, advances to suppliers,
accrued expenses, other payables, and related party borrowings. As of the balance sheet dates, the estimated fair values of the
financial instruments were not materially different from their carrying values as presented on the balance sheets. This is attributed
to the short maturities of the instruments and that interest rates on the borrowings approximate those that would have been available
for loans of similar remaining maturity and risk profile at respective balance sheet dates.
Recent
Accounting Pronouncements
In
August 2018, the FASB issued Accounting Standards Update (ASU) 2018-13, “Fair Value Measurement (Topic 820): Disclosure
Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, which changes the fair value measurement
disclosure requirements of ASC 820. This update is effective for fiscal years beginning after December 15, 2019, and for interim
periods within those fiscal years. The Company does not expect the adoption of ASU 2018-13 to have a material impact on its financial
statements.
Off-balance
Sheet Arrangements
As
of July 31, 2019 and January 31, 2019, there were no off-balance sheet arrangements.