0001213900-21-044233.txt : 20210823 0001213900-21-044233.hdr.sgml : 20210823 20210823120821 ACCESSION NUMBER: 0001213900-21-044233 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 76 CONFORMED PERIOD OF REPORT: 20210630 FILED AS OF DATE: 20210823 DATE AS OF CHANGE: 20210823 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOUNTAIN HEALTHY AGING, INC. CENTRAL INDEX KEY: 0001309251 STANDARD INDUSTRIAL CLASSIFICATION: TRANSPORTATION SERVICES [4700] IRS NUMBER: 861098668 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-123774 FILM NUMBER: 211195956 BUSINESS ADDRESS: STREET 1: 2764 LAKE SAHARA DRIVE STREET 2: SUITE 111 CITY: LAS VEGAS STATE: NV ZIP: 89117 BUSINESS PHONE: 604-331-1459 MAIL ADDRESS: STREET 1: 2764 LAKE SAHARA DRIVE STREET 2: SUITE 111 CITY: LAS VEGAS STATE: NV ZIP: 89117 FORMER COMPANY: FORMER CONFORMED NAME: IMMUREBOOST, INC. DATE OF NAME CHANGE: 20070824 FORMER COMPANY: FORMER CONFORMED NAME: eSavingsStore.com, Inc. DATE OF NAME CHANGE: 20060821 FORMER COMPANY: FORMER CONFORMED NAME: Celtic Cross Ltd. DATE OF NAME CHANGE: 20041119 10-Q 1 f10q0621_fountainhealthy.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2021

 

or

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number 333-123774

 

Fountain Healthy Aging, Inc.
(Exact name of registrant as specified in its charter)

 

Nevada   86-1098668
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

Room 601, Bldg. E,

No. 1, Huabao Fubao China Street,
Futian District

Shenzhen City, Guangdong Province

  518000
(Address of principal executive offices)   (Zip Code)

 

+86 185 6676 1769

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which
registered
None   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 last 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration statement was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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 Act). Yes ☐ No

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: 609,316,077 shares as of August 23, 2021.

 

 

 

 

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION  
     
Item 1. Financial Statements 1
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 2
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
     
Item 4. Controls and Procedures 9
     
PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 10
     
Item 1A. Risk Factors 10
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 10
     
Item 3. Defaults Upon Senior Securities 10
     
Item 4. Mine Safety Disclosures 10
     
Item 5. Other Information 10
     
Item 6. Exhibits 10
     
SIGNATURES 11

 

i

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

FOUNTAIN HEALTHY AGING, INC.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE SIX MONTHS ENDED

 

JUNE 30, 2021 (UNAUDITED)

 

 

 

 

 

 

 

 

 

1

 

 

FOUNTAIN HEALTHY AGING, INC.

TABLE OF CONTENTS

  

    Pages
Condensed Consolidated Balance sheets as of June 30, 2021 (Unaudited) and December 31, 2020 (Audited)   F-2
Condensed Consolidated Statements of Loss and Comprehensive Loss for the six months ended June 30, 2021 and 2020 (Unaudited)   F-3
Condensed Consolidated Statements of Changes in Equity (Deficit) for the six months ended June 30, 2021 and 2020 (Unaudited)   F-4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (Unaudited)   F-5
Notes to Condensed Consolidated Financial Statements for the six months ended June 30, 2021 (Unaudited)   F-6-F-14

 

F-1

 

 

FOUNTAIN HEALTHY AGING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In U.S. Dollars, except share data or otherwise stated)

AS OF JUNE 30, 2021 (UNAUDITED) AND DECEMBER 31, 2020 (AUDITED) 

 

   June 30,
2021
   December 31,
2020
 
   US$   US$ 
ASSETS        
Current assets:        
Cash and cash equivalents   1,193,010    61,517 
Accounts receivable   4,959,321    - 
Other receivables   136,579    101,432 
Inventory   4,746,249    66,037 
Prepayment   4,073    133,646 
Advance to suppliers   10,259,755    
-
 
Amount due from a related party   
-
    142,450 
Total current assets   21,298,987    505,082 
           
Non-current assets:          
Leasehold improvements and equipment, net   382,368    87,333 
Intangible assets   32,040    
-
 
Operating lease right-of-use assets   234,926    383,203 
Deferred tax assets   160,754    
-
 
Total non-current assets   810,088    470,536 
Total assets   22,109,075    975,618 
           
LIABILITIES AND EQUITY          
Current liabilities:          
Accounts payable   1,409,424    134,842 
Income tax payables   2,904,537    31,774 
Other payables and accruals   606,822    336,604 
Deferred revenue   277,854    27,648 
Amount due to related parties   106,636    1,097,152 
Current operating lease liabilities   208,922    319,697 
Total current liabilities   5,514,195    1,947,717 
           
Non-current liabilities:          
Deferred revenue   129,899    
-
 
Non-current operating lease liabilities   26,004    63,506 
Total non-current liabilities   155,903    63,506 
Total liabilities   5,670,098    2,011,223 
           
COMMITMENTS AND CONTINGENCIES   
 
    
 
 
           
EQUITY (DEFICIT)          
Share capital (750,000,000 shares of Common Stock, par value $0.00001 per share, authorized, of which 600,034,500 shares are issued and outstanding; and 100,000,000 shares of Series A Preferred Stock, par value $0.00001 per share, of which all 100,000,000 shares are issued and outstanding)   
 
    
 
 
Series A Preferred Stock   1,000    1,000 
Common Stock   6,000    6,000 
Additional paid in capital   10,215,520    (15,146)
Foreign currency translation reserves   (192,522)   (54,091)
Retained earnings (Accumulated deficit)   6,408,979    (973,368)
Total equity (deficit)   16,438,977    (1,035,605)
Total liabilities and equity   22,109,075    975,618 

 

The accompanying notes are an integral part of the financial statements.

 

F-2

 

 

FOUNTAIN HEALTHY AGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In U.S. Dollars, except share data or otherwise stated)

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (UNAUDITED)

 

  

Three months ended

June 30,

  

Six months ended

June 30,

 
   2021   2020   2021   2020 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
   US$   US$   US$   US$ 
Revenue   9,458,387    148,564    13,869,645    468,094 
Cost of revenue   (2,775,753)   (20,908)   (3,710,918)   (69,298)
Gross profit   6,682,634    127,656    10,158,727    398,796 
                     
Selling and marketing expenses   (136,865)   (36,864)   (173,344)   (59,144)
General and administrative expense   (293,764)   (386,035)   (561,564)   (579,784)
Total operating expenses   (430,629)   (422,899)   (734,908)   (638,928)
Operating profit (loss)   6,252,005    (295,243)   9,423,819    (240,132)
                     
Other income, net   6,149    1,066    5,970    1,220 
Profit (Loss) before income taxes   6,258,154    (294,177)   9,429,789    (238,912)
                     
Income taxes   (1,362,734)   17,615    (2,142,106)   - 
Net profit (loss) for the period   4,895,420    (276,562)   7,287,683    (238,912)
                     
Foreign currency translation differences   (116,902)   806    (138,431)   5,995 
Total comprehensive income (loss) for the period   4,778,518    (275,756)   7,149,252    (232,917)
                     
Earnings per share:                    
-  Basic   0.008    0.000    0.01    0.000 
-  Diluted   0.008    0.000    0.01    0.000 
                     
Weighted average number of shares used in computation:                    
-  Basic   600,034,500    600,034,500    600,034,500    600,034,500 
- Diluted   600,034,500    600,034,500    600,034,500    600,034,500 

 

The accompanying notes are an integral part of the financial statements.

 

F-3

 

 

FOUNTAIN HEALTHY AGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

(In U.S. Dollars, except share data or otherwise stated)

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (UNAUDITED)

 

   Share Capital       Foreign  

(Accumulated Deficit)

Retain Earnings

     
   Series A
preferred
Stock
   Common
Stock
   Additional
paid in
Capital
   Currency
Translation
Reserve
   Unrestricted   Statutory
Reserve
   Total
Equity
(Deficit)
 
   US$   US$   US$   US$   US$   US$   US$ 
Balance at January 1, 2020 (Audited)   1,000    6,000    (15,146)   4,547    (352,392)   6,894    (349,097)
Loss for the period   
-
    
 
    
-
    
-
    (238,912)   
-
    (238,912)
Other comprehensive income   
-
    
 
    
-
    5,995    
-
    
-
    5,995 
Balance at June 30, 2020 (Unaudited)   1,000    6,000    (15,146)   10,542    (591,304)   6,894    (582,014)
                                    
Balance at January 1, 2021 (Audited)   1,000    6,000    (15,146)   (54,091)   (980,262)   6,894    (1,035,605)
Business combination under common control   
-
    
-
    10,230,666    
-
    
-
    94,664    10,325,330 
Profit for the period   
-
         
-
    
-
    7,287,683    
-
    7,287,683 
Other comprehensive loss   
-
         
-
    (138,431)   
-
    
-
    (138,431)
Balance at June 30, 2021 (Unaudited)   1,000    6,000    10,215,520    (192,522)   6,309,421    101,558    16,438,977 

 

The accompanying notes are an integral part of the financial statements.

 

F-4

 

 

FOUNTAIN HEALTHY AGING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. Dollars, except share data or otherwise stated)

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (UNAUDITED)

 

   2021   2020 
   US$   US$ 
Cash flows from operating activities:        
Net profit (loss)   7,287,683    (238,912)
           
Adjustments for:          
Depreciation and amortization   25,907    16,049 
Impairment of intangible assets   -    49,947 
Changes in:          
Accounts receivable   (3,679,285)   (31,197)
Other receivables and prepayment   126,451    (199,815)
Inventory   (80,789)   7,641 
Advance to suppliers   (2,680,166)   - 
Deferred tax assets   (160,423)   - 
Accounts payable, other payables and accruals   (367,050)   54,939 
Income tax payables   1,456,149    205 
Deferred revenue   77,643    (119,163)
Amount due from/to related parties   (879,830)   456,607 
Net cash provided by (used in) operating activities   1,126,290    (3,699)
           
Cash flows from investing activities:          
Additions to leasehold improvements and equipment   (12,009)   (670)
Cash acquired from business combination   47,909    - 
Net cash provided by (used in) investing activities   34,170    (670)
           
Effect of exchange rate changes on cash and cash equivalents   (28,967)   (312)
           
Net increase (decrease) in cash and cash equivalents   1,131,493    (4,681)
Cash and cash equivalents at the beginning of year   61,517    23,046 
Cash and cash equivalents at the end of the year   1,193,010    18,365 
           
Supplemental disclosure of non-cash investing and financing activities:          
Income tax paid   748,885    - 
           
Right-of-use assets obtained in exchange for operating lease obligations   235,669    303,359 

 

The accompanying notes are an integral part of the financial statements.

 

F-5

 

 

FOUNTAIN HEALTHY AGING, INC.

CONDENSED CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 (UNAUDITED)

 

1.DESCRIPTION OF BUSINESS

 

Fountain Healthy Aging, Inc. and its subsidiaries (the “Company” or “FHAI”) are engaged in the business of wholesale distribution of “coffee tea” and wine products to retail partners and corporate customers, selling “coffee tea” and wine products to individual consumers and providing pre-opening assistance to retail partners to operate coffee and wine stores in the People’s Republic of China (“PRC” or “China”).

 

On June 2, 2021, FHAI’s wholly-owned subsidiary Shenzhen Wei Lian Jin Meng Electronic Commerce Limited (“Shenzhen Wei Lian”) entered into an equity transfer agreement with the owners (the “Sellers”) of Shenzhen Nainiang Wine Industrial Co,. Ltd. (“Nainiang Wine”), under which Shenzhen Wei Lian agreed to acquire 99% ownership of Nainiang Wine in exchange for causing FHAI to issue shares of its common stock to the Sellers at a later date (the “PRC Transaction”). The PRC Transaction closed on June 3, 2021. Among the Sellers is Ms. Zhu Hong, who is the sole officer and director of FHAI and the majority shareholder of FHAI.

 

On August 16, 2021, FHAI entered into a Share Exchange Agreement with Nainiang Wine and the Sellers pursuant to which FHAI agreed to issue 9,281,577 shares of its common stock (the “Exchange Shares”) to the Sellers (the “US Transaction,” and together with the PRC Transaction, the “Nainiang Wine Transaction”). The US Transaction closed on August 16, 2021, and the Exchange Shares were issued to the Sellers. For more information about the Nainiang Wine Transaction, please refer to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 16, 2021.

 

2.BASIS OF PRESENTATION

  

In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated in consolidation. However, the results of operations included in such financial statements may not necessarily be indicative of annual results.

 

The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on April 15, 2021 (“2020 Form 10-K”).

 

F-6

 

 

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(a)Use of estimates

 

The preparation of the consolidated financial statements in conformity with US 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 consolidated 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.

 

There is no change on the accounting policies from the year ended December 31, 2020.

 

(b)Revenue Recognition

 

The Company’s revenues primarily include Company sales, franchise fees and income and revenues from transactions with franchisees.

 

Product sales

 

Product sales represents the sale of “coffee tea” and wine products. Such revenue is recognized net of value-added taxes, upon delivery at such time that title passes to the customers.

 

Franchise fees and income

 

Franchise fees and income primarily include upfront franchise fees, such as initial fees, pre-opening assistance to operate wine stores, subsequent training provided to franchisees and renewal fees. The Company has determined that the services provided in exchange for upfront franchise fees are highly interrelated with the franchise rights. The franchise rights are accounted for as rights to access the Company’s symbolic intellectual property in accordance with ASC 606, and the Company recognizes upfront franchise fees received from a franchisee as revenue when performance obligations are satisfied in accordance with the franchise agreement or the renewal agreement. The franchise agreement term is typically 3 years.

 

Revenues from transactions with franchisees

 

Revenues from transactions with franchisees consist primarily of sales of wine products. The Company sells and delivers wine products to the franchisees. The performance obligations arising from such transactions are considered distinct from the franchise agreement as they are not highly dependent on the franchise agreement and the customer can benefit from the procurement service on its own. Revenue is recognized upon transfer of control over ordered items, generally upon delivery to the franchisees.

 

In determining the amount and timing of revenue from contracts with customers, the Company exercises significant judgment with respect to collectability of the amount; however, the timing of recognition does not require significant judgment, as it is based on either the franchise term or the date of product shipment, none of which require estimation.

 

The Company does not incur a significant amount of contract acquisition costs in conducting its franchising activities. The Company believes its franchising arrangements do not contain a significant financing component.

 

F-7

 

 

The Company’s revenue recognition policy is compliant with ASC 606, Revenue from Contracts with Customers, and revenue is recognized when a customer obtains control of promised goods and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount:

 

(i)identification of the goods and services in the contract;

 

(ii)determination of whether the goods and services are performance obligations, including whether they are distinct in the context of the contract;

 

(iii)measurement of the transaction price, including the constraint on variable consideration;

 

(iv)allocation of the transaction price to the performance obligations; and

 

(v)recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery or service being rendered.

 

For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.

 

(c)Accounts Receivable

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company assesses the probability of collection from each customer at the outset of the arrangement based on a number of factors, including the customer’s payment history and its current creditworthiness. If in management’s judgment collection is not probable, the Company does not record revenue until the uncertainty is removed.

 

Management performs ongoing credit evaluations, and the Company maintains an allowance for potential credit losses based upon its loss history and its aging analysis. The allowance for doubtful accounts is the Company’s best estimate of the amount of credit losses in existing accounts receivable. Management reviews the allowance for doubtful accounts each reporting period based on a detailed analysis of trade receivables. In the analysis, management primarily considers the age of the customer’s receivable, and also considers the creditworthiness of the customer, the economic conditions of the customer’s industry, general economic conditions and trends, and the business relationship and history with its customers, among other factors. If any of these factors change, the Company may also change its original estimates, which could impact the level of the Company’s future allowance for doubtful accounts. If judgments regarding the collectability of receivables were incorrect, adjustments to the allowance may be required, which would reduce profitability.

 

Accounts receivable are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful accounts receivable is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. No allowance for doubtful accounts was made for the three and six months ended June 30, 2021.

 

F-8

 

 

The following customers had an accounts receivable balance greater than 10% of total accounts receivable at June 30, 2021.

 

   Amount   % 
Customer A  $546,379    11%
Customer B   749,902    15%
   $1,296,281    26%

 

(d)Advance to suppliers

 

Advance to suppliers relate to refundable deposits paid to suppliers under secured supplies agreements in exchange for timely and sufficient supplies of products.

 

(e)Recently issued accounting pronouncements

 

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. On November 19, 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), finalized various effective date delays for private companies, not-for-profit organizations, and certain smaller reporting companies applying the credit losses (CECL), the revised effective date is January 2023.

 

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impacts of the provisions of ASU 2019-12 on its financial condition, results of operations, and cash flows.

 

4.RISKS AND UNCERTAINTIES

  

(a)Economic and Political Risks

 

The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

 

The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

 

(b)Foreign Currency Translation

 

The Company’s reporting currency is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries whose functional currencies are the RMB, all assets and liabilities are translated at exchange rates at the balance sheet date and revenue and expenses are translated at the average yearly exchange rates and equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustments to other comprehensive loss, a component of equity.

 

(c)Concentration of credit risk

 

Financial instruments that potentially expose the Company to significant concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable, other receivables and amounts due from related parties. As of June 30, 2021 and December 31, 2020, substantially all of the Company’s cash and cash equivalents were deposited with financial institutions with high-credit ratings and quality. The Company did not have any customers constituting 10% or more of the net revenue in the six months ended June 30, 2021 and 2020.

 

F-9

 

 

5. BUSINESS COMBINATION

 

On June 2, 2021, Shenzhen Wei Lian entered into an equity transfer agreement relating to the acquisition of 99% of the equity of Nainiang Wine in exchange for agreeing to cause the Company to issue 9,281,577 shares of its common stock to the Sellers. To determine the amount of shares that the Company issued to the Sellers, the Company converted the net asset value of Nainiang Wine as of June 3, 2021 to US Dollars, and then used a price per share for the Company’s common stock of US$1.10. The PRC Acquisition closed on June 3, 2021 and the results of operations of Nainiang Wine are included in the Company’s condensed consolidated financial statements beginning on June 3, 2021. The operational control of Nainiang Wine passed to FHAI and all assets of Nainiang Wine were acquired by FHAI effective June 3, 2021, the date that 99% of the outstanding equity of Nainiang Wine was transferred to Shenzhen Wei Lian. FHAI does not account for the remaining 1% non-controlling interest held by Ms. Zhu Hong, as Ms. Zhu Hong is the common controlling shareholder for both the acquirer and the acquiree.

 

Accordingly, the acquisition has been accounted for in accordance with ASC 805 guidelines, whereby FHAI recognized the assets and liabilities of Nainiang Wine transferred at their carrying amounts with a carry-over basis.

 

The following represents the purchase price allocation at the dates of the acquisition:

 

   June 3,
2021
 
Cash and cash equivalents  $48,689 
Other current assets   13,666,168 
Property, plant and equipment   310,631 
Current liabilities   (3,697,772)
Total purchase price  $10,327,716 

 

6. REVENUE

 

Revenue  For the Three months ended
June 30,
 
   2021   2020 
Product sales  $5,290,589   $148,564 
Franchise fees and income   98,805    
-
 
Revenues from transactions with franchisees   4,068,993    
-
 
   $9,458,387   $148,564 

 

Revenue  For the Six months ended
June 30,
 
   2021   2020 
Product sales  $5,436,720   $468,094 
Franchise fees and income   146,146    
-
 
Revenues from transactions with franchisees   8,286,779    
-
 
   $13,869,645   $468,094 

 

   As of
June 30,
   As of
December 31,
 
Contract liabilities  2021   2020 
Deferred revenue related to prepaid wine products  $163,408   $27,648 
Deferred revenue related to upfront franchise fees   244,345    
-
 
   $407,753   $27,648 

 

Contract liabilities primarily consist of deferred revenue related to prepaid wine products and upfront franchise fees. Deferred revenue related to prepaid wine products represents advance from franchisees for future supply of products which is expected to recognize as revenue in the next 12 months. Deferred revenue related to upfront franchise fees represents the training service to be delivered over the term of franchise agreement that as of June 30, 2021, the Company expects to recognize as revenue of $114,446 within the next 12 months and of $129,899 over 12 months.

 

The Company has elected, as a practical expedient, not to disclose the value of remaining performance obligations associated with the franchise agreement in exchange for franchise right and related training services. The remaining duration of the performance obligation is the remaining contractual term of each franchise agreement. Revenue from training services provided to franchisees is recognized upon the conduct and delivery of training.

 

7. OTHER RECEIVABLES

 

As of June 30, 2021 and December 31, 2020, other receivables mainly consist of employees advance to be spent for company purposes and refundable rental deposits. The balances are unsecured, non-interest bearing and repayable on demand.

 

F-10

 

 

8. INVENTORY

 

   As of
June 30,
   As of
December 31,
 
   2021   2020 
Raw materials (1)  $4,639,856   $51,521 
Finished goods   106,393    14,516 
   $4,746,249   $66,037 

 

(1) Raw materials mainly consist of unprocessed coffee tea beans, unprocessed wine and packaging materials

  

9. PREPAYMENT

 

As of June 30, 2021 and December 31, 2020, prepayment mainly consists of prepaid administrative expenses that has been utilized subsequently.

 

10. LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET

 

   As of
June 30,
   As of
December 31,
 
   2021   2020 
Leasehold improvement  $64,887   $64,191 
Equipment   20,937    16,653 
Machinery   32,916    32,563 
Computer equipment and software   41,297    20,355 
Motor vehicle   380,316    7,245 
   $540,353   $141,007 
Less: accumulated depreciation   (157,985)   (53,673)
   $382,368   $87,333 

 

Depreciation expense for the three and six months ended June 30, 2021 and 2020 was $10,238, $24,224, $6,125 and $14,421 respectively.

 

11. INTANGIBLE ASSETS

 

   As of
June 30,
   As of
December 31,
 
   2021   2020 
APP Platform  $33,726   $
-
 
Less: accumulated amortization   (1,686)   
-
 
   $32,040   $
-
 

 

Amortization expense for the three and six months ended June 30, 2021 and 2020 was $1,403, $1,683, $1,628 and $1,628, respectively. The Company recorded an impairment loss on intangible assets of $76,365 to write off the old APP Platform during the year ended December 31, 2020.

 

F-11

 

 

12. OTHER PAYABLES AND ACCRUALS

 

   As of
June 30,
   As of
December 31,
 
   2021   2020 
Accrued payroll and welfare payable  $100,277   $180,878 
VAT and other taxes payable   465,126    92,608 
Others (1)   41,419    63,118 
   $606,822   $336,604 

 

(1) As of June 30, 2021 and December 31, 2020, others mainly consist of the outstanding refundable balance upon termination of the cooperative agreement with one customer and payables for rental expenses.

 

13. INCOME TAXES

 

Fountain Healthy Aging, Inc. (“FHAI”) was incorporated in the State of Nevada. FHAI is an U.S. entity and is subject to the United States federal income tax. No provision for income taxes in the United States has been made as FHAI had no United States taxable income for the three and six months ended June 30, 2021 and 2020.

 

Wei Lian Jin Meng Group Limited (“WLJM Cayman”) was incorporated in Cayman Islands. Under the current tax laws of Cayman Islands, WLJM Cayman is not subject to tax on their income or capital gains. In addition, upon dividends being paid by WLJM Cayman to its shareholders, no Cayman Islands withholding tax will be imposed.

 

WLJM (Hong Kong) Limited (“WLJM HK”) was incorporated in Hong Kong and is subject to an income tax rate of 16.5% for taxable income generated from operations in Hong Kong.

 

Jin You Wei Meng (Shenzhen) Consulting Co., Ltd. (“JYWM WFOE”), Shenzhen Wei Lian Jin Meng Electronic Commerce Limited (“Shenzhen Wei Lian”), Dongguan Dishi Coffee Limited (“Dongguan Dishi”), Shenzhen Nainiang Coffee Art Museum Limited (“Nainiang Coffee”) and Nainiang Wine were incorporated in the PRC and they are subject to profits tax rate at 25% for income generated and operation in the country.

 

The full realization of the tax benefit associated with the losses carried forward depends predominantly upon the Company’s ability to generate taxable income during the carry forward period.

 

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 be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. 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.

 

The Company recorded deferred tax assets of $160,754 and $nil as of June 30, 2021 and December 31, 2020.

 

Income tax benefits

 

   For the three months ended
June 30,
 
   2021   2020 
Current tax expense  $1,563,121   $
- 
 
Deferred tax benefits   (200,387)   (17,615)
   $1,362,734   $(17,615)

 

F-12

 

 

   For the six months ended
June 30,
 
   2021   2020 
Current tax expense  $2,342,493   $
-
 
Deferred tax benefits   (200,387)   
-
 
   $2,142,106   $
-
 

 

A reconciliation of tax expense from 25% statutory tax rates for the three and six months ended June 30, 2021 and 2020 is as follows:

 

   For the three months ended
June 30,
 
   2021   2020 
Profit (Loss) before tax  $6,258,154   $(294,177)
Tax expense (benefit) calculated at statutory tax rate   25%   25%
Computed expected tax expense (benefit)   1,564,539    73,544 
Utilization of tax loss   (39,633)   
-
 
Movement in valuation allowance   (160,754)   
-
 
Others   (1,418)   (55,929)
   $1,362,734   $17,615 

 

    For the six months ended
June 30,
 
    2021     2020  
Profit (Loss) before tax   $ 9,429,789     $ (238,912 )
Tax benefit calculated at statutory tax rate     25 %     25 %
Computed expected tax expense (benefit)     2,357,447       (59,728 )
Utilization of tax loss     (39,633 )    
-
 
Movement in valuation allowance     (160,754 )    
-
 
Others     (14,954 )     59,728  
    $ 2,142,106     $
-
 

 

14. LEASES

 

The Company has leases for the office, factory and warehouse in the PRC, under operating leases expiring on various dates through September 2023, which is classified as operating leases. There are no residual value guarantees and no restrictions or covenants imposed by the leases. Lease liabilities are measured at present value of the sum of remaining rental payments as of June 30, 2021, with discounted rate of 4.75%. A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows. Rent expense for the three and six months ended June 30, 2021 and 2020 were $81,242, $159,838, $67,014 and $129,135, respectively.

 

The Company’s future minimum payments under long-term non-cancelable operating leases are as follows:

 

   As of
June 30,
2021
 
Within 1 year  $243,879 
After 1 year but within 5 years   29,527 
Total lease payments  $273,406 
Less: imputed interest   (38,480)
Total lease obligations   234,926 
Less: current obligations   (208,922)
Long-term lease obligations  $26,004 

 

Other information:

 

F-13

 

 

   For the six months ended
June 30,
 
   2021   2020 
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flow from operating leases  $159,838   $129,135 
Right-of-use assets obtained in exchange for operating lease liabilities   235,669    303,359 
Remaining lease term for operating leases (years)   2.25    3.25 
Weighted average discount rate for operating leases   4.75%   4.75%

 

15. RELATED PARTIES TRANSACTIONS

 

The Company had the following balances with related parties:

 

  (a) Amount due from a related party

 

      As of
June 30,
   As of
December 31,
 
   Relationship  2021   2020 
Ye Aiyun  Shareholder of the Company  $
-
   $142,450 

 

Amount due from a related party represents cash advance to Ye Aiyun, shareholder of the Company. The balance is unsecured, non-interest bearing and repayable on demand.

 

  (b) Amount due to related parties

 

      As of June,   As of
December 31,
 
   Relationship  2021   2020 
Zhu Hong  Shareholder of the Company  $35,434   $1,059,853 
Zhu Jian Yong  Shareholder of the Company   
-
    1,731 
Shenzhen Weilian Jin Meng Culture Spreading Limited  Zhu Hong is the shareholder   71,202    24,800 
Shenzhen Nainiang Wine Limited  Zhu Hong is the shareholder   
-
    10,768 
Total     $106,636   $1,097,152 

 

The balances represent cash advances to related parties, which were offset with the Company’s assets and expenses paid on behalf by the related parties. The balances with related parties are unsecured, non-interest bearing and repayable on demand.

 

16. COMMITMENTS AND CONTINGENCIES

 

Commitment consists of a non-cancelable consultancy service agreement entered with a third-party for the provision of services related to the US listing with a contract sum of $1,200,000. The outstanding committed contract amount is $120,000. The terms of the agreement are for various milestones stages to be completed within two years through 2021. Future commitments within one year as of June 30, 2021 was $120,000. No future commitments more than one year as of June 30, 2021.

 

There are no other material commitments except for the above and the lease commitment as disclosed at Note 14.

 

17. SUBSEQUENT EVENTS

 

No significant subsequent events have occurred that would require recognition or disclosure in the financial statements.

 

F-14

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

FORWARD-LOOKING STATEMENTS

 

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “pursue,” “expect,” “predict,” “project,” “goals,” “strategy,” “future,” “likely,” “forecast,” “potential,” “continue,” negatives thereof or similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding future acquisition or merger targets, business strategies, macro-economic and sector-specific trends, future cash flows, financing plans, plans and objectives of management and any other statements which are not statements of historical facts.

 

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual future results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, inability to successfully conclude acquisitions of target companies or assets which are reasonably capable of generating positive cash flow in the near future, legal and regulatory changes in the jurisdictions in which we operate, volatility or decline in our stock price, potential fluctuation of our quarterly and annual financial and operational results, rapid adverse changes in markets, decline in demand for our goods and services, insufficient revenues to cover our operating costs and such other factors as discussed throughout this section.

 

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.

 

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contain forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. For additional information regarding these risks and uncertainties, please see this Part I, Item 2 (“Management’s Discussion and Analysis of Financial Condition and Results of Operations”) of this Quarterly Report on Form 10-Q.

 

Overview

 

The Company is a U.S. holding company incorporated in Nevada on February 25, 2004, and operating through the Company’s wholly owned subsidiary, Wei Lian Jin Meng Group Limited (“WLJM Cayman”), a company incorporated under the laws of the Cayman Islands on June 30, 2020. The Company’s entire business, including operations, employees, sales and marketing and research and development, are all conducted through its subsidiaries located within the People’s Republic of China (“PRC”).

 

The following is the organization structure of the Company along with ownership detail of all companies:

 

WLJM Cayman was incorporated in the Cayman Islands on June 30, 2020. It is 100% owned by Fountain Healthy Aging, Inc.

 

WLJM (Hong Kong) Limited (“WLJM HK”), was established in the Hong Kong Special Administrative Region (“HKSAR”) of the PRC on August 5, 2020. It is 100% owned by WLJM Cayman.

 

2

 

 

Jin You Wei Meng (Shenzhen) Consulting Company Limited (“JYWM WFOE”) was established as a wholly foreign-owned enterprise on November 24, 2020, under the laws of the PRC. It is 100% owned by WLJM HK.

 

Shenzhen Wei Lian Jin Meng Electronic Commerce Limited (“Shenzhen Wei Lian”) was incorporated on October 17, 2017, under the laws of the PRC. It is 100% owned by JYWM WFOE.

 

Dongguan Dishi Coffee Limited (“Dongguan Dishi”) was incorporated on October 25, 2018, under the laws of the PRC. It is 100% owned by Shenzhen Wei Lian.

 

Shenzhen Nainiang Coffee Art Museum Limited (“Nainiang Coffee”) was incorporated on June 20, 2019, under the laws of the PRC. It is 100% owned by Shenzhen Wei Lian.

 

Shenzhen Nainiang Wine Industrial Co., Ltd. (“Nainiang Wine”) was incorporated on January 14, 2020, under the laws of the PRC. It is 99% owned by Shenzhen Wei Lian. 

 

The Company, through our subsidiaries, engaged in the business of wholesale distribution of “coffee tea” and wine products to retail partners and corporate customers, selling “coffee tea” and wine products to individual consumers and providing pre-opening assistance to retail partners to operate coffee and wine stores in the People’s Republic of China (“PRC” or “China”).

 

Critical Accounting Policies and Use of Estimates

 

We prepare our condensed consolidated financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and to apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed consolidated financial statements. Actual results could differ from those estimates made by management.

 

We believe that of our significant accounting policies, which are described in Note 3 to our condensed consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

 

Revenue Recognition

 

Our revenues primarily include product sales, franchise fees and income and revenues from transactions with franchisees.

 

Product sales

 

Product sales represents the sale of “coffee tea” and wine products. Such revenue is recognized net of value-added taxes, upon delivery at such time that title passes to the customers.

 

Franchise fees and income

 

Franchise fees and income primarily include upfront franchise fees, such as initial fees, pre-opening assistance to operate wine stores, subsequent training provided to franchisees and renewal fees. We have determined that the services provided in exchange for upfront franchise fees are highly interrelated with the franchise rights. The franchise rights are accounted for as rights to access our symbolic intellectual property in accordance with ASC 606, and we recognize upfront franchise fees received from a franchisee as revenue when performance obligations are satisfied in accordance with the franchise agreement or the renewal agreement. The franchise agreement term is typically 3 years.

 

3

 

 

Revenues from transactions with franchisees

 

Revenues from transactions with franchisees consist primarily of sales of wine products. We sell and deliver wine products to the franchisees. The performance obligations arising from such transactions are considered distinct from the franchise agreement as they are not highly dependent on the franchise agreement and the customer can benefit from the procurement service on its own. Revenue is recognized upon transfer of control over ordered items, generally upon delivery to the franchisees.

 

In determining the amount and timing of revenue from contracts with customers, we exercise significant judgment with respect to collectability of the amount; however, the timing of recognition does not require significant judgment, as it is based on either the franchise term or the date of product shipment, none of which require estimation.

 

We do not incur a significant amount of contract acquisition costs in conducting its franchising activities. We believe its franchising arrangements do not contain a significant financing component.

 

Our revenue recognition policy is compliant with ASC 606, Revenue from Contracts with Customers, and revenue is recognized when a customer obtains control of promised goods and is recognized in an amount that reflects the consideration that we expect to receive in exchange for those goods. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods. We apply the following five-step model in order to determine this amount:

 

  (i) identification of the goods and services in the contract;
     
  (ii) determination of whether the goods and services are performance obligations, including whether they are distinct in the context of the contract;
     
  (iii) measurement of the transaction price, including the constraint on variable consideration;
     
  (iv) allocation of the transaction price to the performance obligations; and
     
  (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

4

 

 

We only apply the five-step model to contracts when it is probable that we will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct. We recognize as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, our performance obligations are transferred to customers at a point in time, typically upon delivery or service being rendered.

 

For all reporting periods, we have not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.

 

Revenue  For the Six months ended
June 30,
 
   2021   2020 
Product sales  $5,436,720   $468,094 
Franchise fees and income   146,146    - 
Revenues from transactions with franchisees   8,286,779    - 
   $13,869,645   $468,094 

 

   As of
June 30,
   As of
December 31,
 
Contract liabilities  2021   2020 
Deferred revenue related to prepaid wine products  $163,408   $27,648 
Deferred revenue related to upfront franchise fees   244,345    - 
   $407,753   $27,648 

 

Contract liabilities primarily consist of deferred revenue related to prepaid wine products and upfront franchise fees. Deferred revenue related to prepaid wine products represents advance from franchisees for future supply of products which is expected to be recognized as revenue in the next 12 months. Deferred revenue related to upfront franchise fees represents the training service to be delivered over the term of franchise agreement that as of June 30, 2021, we expect to recognize revenue of $114,446 within the next 12 months and of $129,899 after the next 12 months to 24 months.

 

We have elected, as a practical expedient, not to disclose the value of remaining performance obligations associated with the franchise agreement in exchange for franchise right and related training services. The remaining duration of the performance obligation is the remaining contractual term of each franchise agreement. Revenue from training services provided to franchisees is recognized upon the conduct and delivery of training.

 

Concentrations of Credit Risk

 

Financial instruments that potentially expose us to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivable, other receivables, prepayment and advance to suppliers. As of June 30, 2021 and December 31, 2020, substantially all of our cash and cash equivalents were deposited with financial institutions with high-credit ratings and quality. The following customers had an accounts receivable balance greater than 10% of total accounts receivable at June 30, 2021.

 

   Amount   % 
Customer A  $546,379    11%
Customer B   749,902    15%
   $1,296,281    26%

 

We did not have customers constituting 10% or more of the net revenues in the three and six months ended June 30, 2021 and 2020.

 

Recently Issued and Adopted Accounting Pronouncements

 

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. On November 19, 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), finalized various effective date delays for private companies, not-for-profit organizations, and certain smaller reporting companies applying the credit losses (CECL), the revised effective date is January 2023.

 

5

 

 

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impacts of the provisions of ASU 2019-12 on its financial condition, results of operations, and cash flows.

 

Results of Operations

 

Comparison of Three Months Ended June 30, 2021 and 2020

 

 

The following discussion should be read in conjunction with the condensed consolidated financial statements of Fountain Healthy Aging, Inc. attached hereto for the three months ended June 30, 2021 and 2020.

 

Revenue

 

We generated $9,458,387 in revenue for the three months ended June 30, 2021 compared to $148,564 for the three months ended June 30, 2020. There was an increase in total revenues of $9,309,823 or 6,267% compared with the three months ended June 30, 2020.

 

Our business is gradually recovering from the COVID-19 pandemic which has been less severe than in 2020. The measures taken by the Chinese government to contain the virus have been effective, business has returned to normal and the market has substantially regained confidence. The recovery of the economy has positively affected our results, and we earned a significant portion of revenue from our new wine products that were launched in January 2021. In addition, we acquired Nainiang Wine on June 3, 2021, which contributed $4,643,590 to our consolidated revenue.

 

Cost of Revenue

 

Cost of revenue was $2,775,753 for the three months ended June 30, 2021 compared to $20,908 for the three months ended June 30, 2020. The increase of cost of revenue by $2,754,845 or 13,176% was relatively in line with the increase in revenue. The cost of revenue consists of the cost of raw materials and cost of manufactured goods sold to customers, including labor cost, rental expense, research, and development costs, etc.. The acquisition of Nainiang Wine contributed $1,694,550 to our consolidated cost of revenue.

 

Gross profit

 

Gross profit for the three months ended June 30, 2021 was $6,682,634 compared with $127,656 for the three months ended June 30, 2020. The decrease in gross profit margin of 71% for the three months ended June 30, 2021 compared to 86% for the three months ended June 30, 2020 was due to a lower margin for the new wine products and the lower gross profit margin from the acquisition of Nainiang Wine. The gross profit margin of Nainiang Wine was 62%.

 

Operating Expenses

 

Selling and marketing expenses

 

Our selling expenses for the three months ended June 30, 2021 and 2020 was $136,865 and $36,864, respectively. Selling expenses consist primarily of salary and welfare for sales staff, advertising expense and exhibition expense. The increase of selling and marketing expenses by $100,001 or 271% was relatively in line with the increase in revenue. In addition, the acquisition of Nainiang Wine contributed $28,248 to our consolidated general and administrative expenses.

 

6

 

 

General and administrative expense

 

By far the most significant component of our operating expenses for both the three months ended June 30, 2021 and 2020 was general and administrative expenses of $293,764 and $386,035, respectively. The following table sets forth the main components of our general and administrative expenses for the three months ended June 30, 2021 and 2020.

 

   For the three months ended June 30, 
   2021   2020 
   Amount
(US$)
   % of
Total
   Amount
(US$)
   % of
Total
 
General and administrative expense:                
Consultancy fee  $125,121    42%  $177,812    45%
Salary and welfare   37,653    13%   58,349    15%
Rental expenses   81,242    27%   67,014    17%
Research and development costs   22,265    8%   26,039    7%
Office expenses   4,336    1%   4,739    1%
Travel and accommodations   7,399    3%   7,475    2%
Entertainment   2,386    1%   1,809    0%
Others   13,362    5%   42,798    11%
Total general and administrative expenses  $293,764    100%  $386,035    100%

 

The $92,271, or 24%, decrease in general and administrative expenses, from $386,035 for the three months ended June 30, 2020 to $293,764 for the three months ended June 30, 2021, was mainly due to the decrease in consultant fees that was significantly incurred during the year of 2020 for the services provided by the Company’s consultants in connection with the reverse acquisition of WLJM Cayman. The acquisition of Nainiang Wine contributed $13,856 to our consolidated general and administrative expenses.

 

Net Profit

 

We reported a net profit of $4,895,420 for the three months ended June 30, 2021 compared to a net loss of $(276,562) for the three months ended June 30, 2020, an increase of $5,171,982 or 1,870%. The increase was primarily attributable to the fact that our revenue has increased significantly, whereas the increase in administrative expenses is lower than the increase of revenue, because the decrease in consultant fees and some expenses are fixed costs in nature. In addition, the acquisition of Nainiang Wine contributed $2,180,730 to our consolidated net profit.

 

Comparison of Six Months Ended June 30, 2021 and 2020

 

The following discussion should be read in conjunction with the condensed consolidated financial statements of Fountain Healthy Aging, Inc. attached hereto for the six months ended June 30, 2021 and 2020.

 

Revenue

 

We generated $13,869,645 in revenue for the six months ended June 30, 2021 compared to $468,094 for the six months ended June 30, 2020. There was an increase in total revenues of $13,401,551 or 2,862% compared with the six months ended June 30, 2020.

 

7

 

 

Our business is gradually recovering from the COVID-19 pandemic, which has been less severe than in 2020. The measures taken by the Chinese government to contain the virus have been effective, business has returned to normal and the market has substantially regained confidence. The recovery of the economy has positively affected our results, and we earned a significant portion of revenue from our new wine products that was launched in January 2021. In addition, we acquired Nainiang Wine on June 3, 2021, which contributed $4,643,590 to our consolidated revenue.

 

Cost of Revenue

 

Cost of revenue was $3,710,918 for the six months ended June 30, 2021 compared to $69,298 for the six months ended June 30, 2020. The increase of cost of revenue by $3,641,620 or 5,255% was relatively in line with the increase in revenue. The cost of revenue consists of the cost of raw materials and cost of manufactured goods sold to customers, including labor cost, rental expense, research, and development costs, etc.. The acquisition of Nainiang Wine contributed $1,694,550 to our consolidated cost of revenue.

 

Gross profit

 

Gross profit for the six months ended June 30, 2021 was $10,158,727 compared with $398,796 for the six months ended June 30, 2020. The decrease in gross profit margin of 73% for the six months ended June 30, 2021 compared to 85% for the six months ended June 30, 2020 was due to a lower margin for the new wine products and the lower gross profit margin from the acquisition of Nainiang Wine. The gross profit margin of Nainiang Wine was 62%.

 

Operating Expenses

 

Selling and marketing expenses

 

Our selling expenses for the six months ended June 30, 2021 and 2020 was $173,344 and $59,144, respectively. Selling expenses consist primarily of salary and welfare for sales staff, advertising expense and exhibition expense. The increase of selling and marketing expenses by $114,200 or 193% was relatively in line with the increase in revenue. In addition, the acquisition of Nainiang Wine contributed $28,248 to our consolidated general and administrative expenses.

 

General and administrative expense

 

By far the most significant component of our operating expenses for both the six months ended June 30, 2021 and 2020 was general and administrative expenses of $561,564 and $579,784, respectively. The following table sets forth the main components of our general and administrative expenses for the six months ended June 30, 2021 and 2020.

 

   For the six months ended June 30, 
   2021   2020 
   Amount
(US$)
   % of
Total
   Amount
(US$)
   % of
Total
 
General and administrative expense:                
Consultancy fee  $216,851    39%  $196,921    33%
Salary and welfare   88,137    16%   136,468    24%
Rental expenses   159,838    28%   129,135    22%
Research and development costs   44,261    8%   48,297    8%
Office expenses   13,211    2%   7,101    1%
Travel and accommodations   12,617    2%   8,840    2%
Entertainment   6,971    1%   3,729    1%
Others   19,678    4%   49,293    9%
Total general and administrative expenses  $561,564    100%  $579,784    100%

 

Decrease in general and administrative expenses by $18,220 or 3% from $579,784 for the six months ended June 30, 2020 to $561,564 for the six months ended June 30, 2021. The general and administrative expenses remained stable due to their fixed costs in nature. The acquisition of Nainiang Wine contributed $13,856 to our consolidated general and administrative expenses.

 

Net Profit

 

We incurred a net profit of $7,287,683 for the six months ended June 30, 2021 compared to a net loss of $(238,912) for the six months ended June 30, 2020, an increase of $7,526,595 or 3,150%. The increase was primarily attributable to the fact that our revenue has increased significantly, whereas the increase in administrative expenses is lower than the increase of revenue, because some expenses are fixed costs in nature. In addition, the acquisition of Nainiang Wine contributed $2,180,730 to our consolidated net profit.

 

Liquidity and Capital Resources

 

   June 30,   December 31, 
Working capital:  2021   2020 
Total current assets  $21,298,987   $505,082 
Total current liabilities   (5,514,195)   (1,947,717)
Working capital surplus (deficiency)  $15,784,792   $(1,442,635)

 

8

 

 

As of June 30, 2021, we had cash and cash equivalents of $1,193,010. To date, we have financed our operations primarily through working capital generated from our profitable business. The following table provides detailed information about our net cash flows for the six months ended June 30, 2021 and 2020:

 

Cash flows:  2021   2020 
Net cash provided by (used in) operating activities  $1,126,290    (3,699)
Net cash provided by (used in) investing activities   34,170    (670)
Effect of exchange rate changes on cash and cash equivalents   (28,967)   (312)
Net increase (decrease) in cash and cash equivalents   1,131,493    (4,681)
Cash and cash equivalents at the beginning of year   61,517    23,046 
Cash and cash equivalents at the end of the six-month period  $1,193,010    18,365 

 

Operating Activities

 

Net cash provided by operating activities was $1,126,290 for the six months ended June 30, 2021. The difference between our net profit of $7,287,683 and net cash provided by operating activities was mainly attributable to the depreciation of fixed assets and amortization of intangible assets of $25,907, and the decrease in other operating assets and liabilities of $6,187,300 which was generally due to the increase in income tax payables which offset with decrease in accounts receivables, advance to suppliers and amount due from/to related parties.

 

Investing Activities

 

Net cash provided by investing activities for the six months ended June 30, 2021 was $34,170, as compared net cash used in investing activities to $(670) for the six months ended June 30, 2020. The increase in cash provided by investing activities was mainly attributable to cash acquired from the acquisition of Nainiang Wine, which was offset by the decrease in cash from the acquisition of leasehold improvements and equipment during the six months ended June 30, 2021. We will evaluate and assess the COVID-19 pandemic impact to our business to determine the plan for increasing our capital expenditures in the future periods.

  

Contractual Obligations and Commercial Commitments

 

We had the following contractual obligations and commercial commitments as of June 30, 2021:

 

   Total   Less than
1 year
   1-5 years   More than
5 years
 
Operating lease  $273,406   $243,879   $29,527   $- 
Consultancy service   120,000    120,000    -    - 
    393,406    363,879    29,527    - 

 

For the six months ended June 30, 2021 and 2020, we entered into various operating lease agreement during the fiscal year 2018 and 2019, and expiring on varying dates through September 2023. The average monthly lease expense is approximately $26,640. The outstanding lease commitment as of June 30, 2021 was $273,406.

 

During 2019, we entered into a non-cancelable consultancy service agreement with a third-party for the provision of services related to the US listing with the contract amount of $1,200,000. The outstanding commitment as of June 30, 2021 was $120,000.

 

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

 

Management’s Report on Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer and principal financial officer) to allow for timely decisions regarding required disclosure.

 

As of the end of the quarter covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Our management’s relative inexperience with the reporting requirements of public companies under the Exchange Act, as recently evidenced by the long delay we experienced in reporting the acquisition of Nainiang Wine by Shenzhen Wei Lian, which closed on June 3, 2021 and which was reported in the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 16, 2021, is a source of substantial concern and risk, and considering all components of our assessment, our president (our principal executive officer and principal financial officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2021, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

9

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. Risk Factors

 

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

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On August 16, 2021, the Company issued 9,281,577 shares of the Company’s common stock to the owners (the “Sellers”) of Nainiang Wine, in exchange for the transfer by the Sellers of 99% of the equity ownership interests in Nainiang Wine (the “Acquisition”). The Company reported the Acquisition in its Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 16, 2021.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit
Number

  Description
31.1*   Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*   Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**   Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**   Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*   Inline XBRL Instance Document
101.SCH*   Inline XBRL Taxonomy Extension Schema Document
101.CAL*   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*   Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

* Filed herewith.
** Deemed furnished and not filed.

 

10

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Fountain healthy aging, inc.
  (Registrant)
   
Dated: August 23, 2021 /s/ Zhu Hong
  Zhu Hong
  President, Chief Executive Officer and Director
  (Principal Executive Officer)

 

 

11

 

BB false --12-31 Q2 2021 0001309251 0001309251 2021-01-01 2021-06-30 0001309251 2021-08-23 0001309251 2021-06-30 0001309251 2020-12-31 0001309251 us-gaap:SeriesAPreferredStockMember 2021-06-30 0001309251 us-gaap:SeriesAPreferredStockMember 2020-12-31 0001309251 2021-04-01 2021-06-30 0001309251 2020-04-01 2020-06-30 0001309251 2020-01-01 2020-06-30 0001309251 us-gaap:PreferredStockMember 2019-12-31 0001309251 us-gaap:CommonStockMember 2019-12-31 0001309251 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001309251 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001309251 us-gaap:RetainedEarningsMember 2019-12-31 0001309251 us-gaap:RetainedEarningsAppropriatedMember 2019-12-31 0001309251 2019-12-31 0001309251 us-gaap:PreferredStockMember 2020-01-01 2020-06-30 0001309251 us-gaap:CommonStockMember 2020-01-01 2020-06-30 0001309251 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-06-30 0001309251 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-06-30 0001309251 us-gaap:RetainedEarningsMember 2020-01-01 2020-06-30 0001309251 us-gaap:RetainedEarningsAppropriatedMember 2020-01-01 2020-06-30 0001309251 us-gaap:PreferredStockMember 2020-06-30 0001309251 us-gaap:CommonStockMember 2020-06-30 0001309251 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001309251 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001309251 us-gaap:RetainedEarningsMember 2020-06-30 0001309251 us-gaap:RetainedEarningsAppropriatedMember 2020-06-30 0001309251 2020-06-30 0001309251 us-gaap:PreferredStockMember 2020-12-31 0001309251 us-gaap:CommonStockMember 2020-12-31 0001309251 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001309251 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001309251 us-gaap:RetainedEarningsMember 2020-12-31 0001309251 us-gaap:RetainedEarningsAppropriatedMember 2020-12-31 0001309251 us-gaap:PreferredStockMember 2021-01-01 2021-06-30 0001309251 us-gaap:CommonStockMember 2021-01-01 2021-06-30 0001309251 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-06-30 0001309251 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-06-30 0001309251 us-gaap:RetainedEarningsMember 2021-01-01 2021-06-30 0001309251 us-gaap:RetainedEarningsAppropriatedMember 2021-01-01 2021-06-30 0001309251 us-gaap:PreferredStockMember 2021-06-30 0001309251 us-gaap:CommonStockMember 2021-06-30 0001309251 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001309251 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001309251 us-gaap:RetainedEarningsMember 2021-06-30 0001309251 us-gaap:RetainedEarningsAppropriatedMember 2021-06-30 0001309251 fhai:ShenzhenWeiLianMember 2021-06-02 0001309251 fhai:FHAIMember us-gaap:SubsequentEventMember 2021-08-16 0001309251 fhai:CustomerAMember 2021-01-01 2021-06-30 0001309251 fhai:CustomerBMember 2021-01-01 2021-06-30 0001309251 us-gaap:SalesRevenueNetMember 2021-01-01 2021-06-30 0001309251 us-gaap:SalesRevenueNetMember 2020-01-01 2020-06-30 0001309251 us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember 2021-06-02 0001309251 us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember 2021-05-22 2021-06-02 0001309251 fhai:ShenzhensWeiLianMember us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember 2021-06-02 0001309251 fhai:MsZhuHongAsMsZhuHongMember us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember 2021-06-02 0001309251 2021-06-03 0001309251 us-gaap:LeaseholdImprovementsMember 2021-06-30 0001309251 us-gaap:LeaseholdImprovementsMember 2020-12-31 0001309251 us-gaap:EquipmentMember 2021-06-30 0001309251 us-gaap:EquipmentMember 2020-12-31 0001309251 us-gaap:MachineryAndEquipmentMember 2021-06-30 0001309251 us-gaap:MachineryAndEquipmentMember 2020-12-31 0001309251 sic:Z3570 2021-06-30 0001309251 sic:Z3570 2020-12-31 0001309251 us-gaap:VehiclesMember 2021-06-30 0001309251 us-gaap:VehiclesMember 2020-12-31 0001309251 2020-01-01 2020-12-31 0001309251 country:HK 2021-01-01 2021-06-30 0001309251 country:CN 2021-01-01 2021-06-30 0001309251 fhai:YeAiyunMember 2021-01-01 2021-06-30 0001309251 fhai:YeAiyunMember 2021-06-30 0001309251 fhai:YeAiyunMember 2020-12-31 0001309251 fhai:ZhuHongMember 2021-01-01 2021-06-30 0001309251 fhai:ZhuHongMember 2021-06-30 0001309251 fhai:ZhuHongMember 2020-12-31 0001309251 fhai:ZhuJianYongMember 2021-01-01 2021-06-30 0001309251 fhai:ZhuJianYongMember 2021-06-30 0001309251 fhai:ZhuJianYongMember 2020-12-31 0001309251 fhai:ShenzhenWeilianJinMengCultureSpreadingLimitedMember 2021-01-01 2021-06-30 0001309251 fhai:ShenzhenWeilianJinMengCultureSpreadingLimitedMember 2021-06-30 0001309251 fhai:ShenzhenWeilianJinMengCultureSpreadingLimitedMember 2020-12-31 0001309251 fhai:ShenzhenNainiangWineLimitedMember 2021-01-01 2021-06-30 0001309251 fhai:ShenzhenNainiangWineLimitedMember 2021-06-30 0001309251 fhai:ShenzhenNainiangWineLimitedMember 2020-12-31 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure
EX-31.1 2 f10q0621ex31-1_fountain.htm CERTIFICATION

Exhibit 31.1

 

I, Zhu Hong, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 of Fountain Healthy Aging, Inc.;

 

2Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 23, 2021  
   
/s/ Zhu Hong  
Zhu Hong  
President, Chief Executive Officer and Director  
(Principal Executive Officer)  

 

EX-31.2 3 f10q0621ex31-2_fountain.htm CERTIFICATION

Exhibit 31.2

 

I, Zhu Hong, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 of Fountain Healthy Aging, Inc.;

 

2Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 23, 2021  
   
/s/ Zhu Hong  
Zhu Hong  
Chief Financial Officer, Treasurer and Director  
(Principal Financial Officer and
Principal Accounting Officer)
 

 

EX-32.1 4 f10q0621ex32-1_fountain.htm CERTIFICATION

Exhibit 32.1

 

SECTION 1350 CERTIFICATIONS

 

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

The undersigned, who is the Chief Executive Officer of Fountain Healthy Aging, Inc. (the “Company”), hereby certifies to his knowledge as follows:

 

The Quarterly Report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 23, 2021 /s/ Zhu Hong
  Zhu Hong
  President, Chief Executive Officer and Director
  (Principal Executive Officer)
  Fountain Healthy Aging, Inc.

 

EX-32.2 5 f10q0621ex32-2_fountain.htm CERTIFICATION

Exhibit 32.2

 

SECTION 1350 CERTIFICATIONS

 

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

The undersigned, who is the Chief Financial Officer of Fountain Healthy Aging, Inc. (the “Company”), hereby certifies to his knowledge as follows:

 

The Quarterly Report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 23, 2021 /s/ Zhu Hong
  Zhu Hong
  Chief Financial Officer, Treasurer and Director
 

(Principal Financial Officer and

Principal Accounting Officer)

  Fountain Healthy Aging, Inc.

 

EX-101.SCH 6 fhai-20210630.xsd XBRL SCHEMA FILE 001 - Statement - Condensed Consolidated Balance Sheets link:presentationLink link:definitionLink link:calculationLink 002 - Statement - Condensed Consolidated Balance Sheets (Parentheticals) link:presentationLink link:definitionLink link:calculationLink 003 - Statement - Condensed Consolidated Statements of Loss and Comprehensive Loss (Unaudited) link:presentationLink link:definitionLink link:calculationLink 004 - Statement - Condensed Consolidated Statements of Changes in Equity (Deficit) (Unaudited) link:presentationLink link:definitionLink link:calculationLink 005 - Statement - Condensed Consolidated Statements of Cash Flows (Unaudited) link:presentationLink link:definitionLink link:calculationLink 006 - Disclosure - Description of Business link:presentationLink link:definitionLink link:calculationLink 007 - Disclosure - Basis of Presentation link:presentationLink link:definitionLink link:calculationLink 008 - Disclosure - Summary of Significant Accounting Policies link:presentationLink link:definitionLink link:calculationLink 009 - Disclosure - Risks and Uncertainties link:presentationLink link:definitionLink link:calculationLink 010 - Disclosure - Business Combination link:presentationLink link:definitionLink link:calculationLink 011 - Disclosure - Revenue link:presentationLink link:definitionLink link:calculationLink 012 - Disclosure - Other Receivables link:presentationLink link:definitionLink link:calculationLink 013 - Disclosure - Inventory link:presentationLink link:definitionLink link:calculationLink 014 - Disclosure - Prepayment link:presentationLink link:definitionLink link:calculationLink 015 - Disclosure - Leasehold Improvement and Equipment, Net link:presentationLink link:definitionLink link:calculationLink 016 - Disclosure - Intangible Assets link:presentationLink link:definitionLink link:calculationLink 017 - Disclosure - Other Payables and Accruals link:presentationLink link:definitionLink link:calculationLink 018 - Disclosure - Income Taxes link:presentationLink link:definitionLink link:calculationLink 019 - Disclosure - Leases link:presentationLink link:definitionLink link:calculationLink 020 - Disclosure - Related Parties Transactions link:presentationLink link:definitionLink link:calculationLink 021 - Disclosure - Commitments and Contingencies link:presentationLink link:definitionLink link:calculationLink 022 - Disclosure - Subsequent Events link:presentationLink link:definitionLink link:calculationLink 023 - Disclosure - Accounting Policies, by Policy (Policies) link:presentationLink link:definitionLink link:calculationLink 024 - Disclosure - Summary of Significant Accounting Policies (Tables) link:presentationLink link:definitionLink link:calculationLink 025 - Disclosure - Business Combination (Tables) link:presentationLink link:definitionLink link:calculationLink 026 - Disclosure - Revenue (Tables) link:presentationLink link:definitionLink link:calculationLink 027 - Disclosure - Inventory (Tables) link:presentationLink link:definitionLink link:calculationLink 028 - Disclosure - Leasehold Improvement and Equipment, Net (Tables) link:presentationLink link:definitionLink link:calculationLink 029 - Disclosure - Intangible Assets (Tables) link:presentationLink link:definitionLink link:calculationLink 030 - Disclosure - Other Payables and Accruals (Tables) link:presentationLink link:definitionLink link:calculationLink 031 - Disclosure - Income Taxes (Tables) link:presentationLink link:definitionLink link:calculationLink 032 - Disclosure - Leases (Tables) link:presentationLink link:definitionLink link:calculationLink 033 - Disclosure - Related Parties Transactions (Tables) link:presentationLink link:definitionLink link:calculationLink 034 - Disclosure - Description of Business (Details) link:presentationLink link:definitionLink link:calculationLink 035 - Disclosure - Summary of Significant Accounting Policies (Details) link:presentationLink link:definitionLink link:calculationLink 036 - Disclosure - Summary of Significant Accounting Policies (Details) - Schedule of accounts receivable link:presentationLink link:definitionLink link:calculationLink 037 - Disclosure - Risks and Uncertainties (Details) link:presentationLink link:definitionLink link:calculationLink 038 - Disclosure - Business Combination (Details) link:presentationLink link:definitionLink link:calculationLink 039 - Disclosure - Business Combination (Details) - Schedule of represents the purchase price link:presentationLink link:definitionLink link:calculationLink 040 - Disclosure - Revenue (Details) link:presentationLink link:definitionLink link:calculationLink 041 - Disclosure - Revenue (Details) - Schedule of revenue link:presentationLink link:definitionLink link:calculationLink 042 - Disclosure - Revenue (Details) - Schedule of contract liabilities link:presentationLink link:definitionLink link:calculationLink 043 - Disclosure - Inventory (Details) - Schedule of Inventory link:presentationLink link:definitionLink link:calculationLink 044 - Disclosure - Leasehold Improvement and Equipment, Net (Details) link:presentationLink link:definitionLink link:calculationLink 045 - Disclosure - Leasehold Improvement and Equipment, Net (Details) - Schedule of leasehold improvement and equipment, net link:presentationLink link:definitionLink link:calculationLink 046 - Disclosure - Intangible Assets (Details) link:presentationLink link:definitionLink link:calculationLink 047 - Disclosure - Intangible Assets (Details) - Schedule of intangible assets link:presentationLink link:definitionLink link:calculationLink 048 - Disclosure - Other Payables and Accruals (Details) link:presentationLink link:definitionLink link:calculationLink 049 - Disclosure - Other Payables and Accruals (Details) - Schedule of other payables and accruals link:presentationLink link:definitionLink link:calculationLink 050 - Disclosure - Income Taxes (Details) link:presentationLink link:definitionLink link:calculationLink 051 - Disclosure - Income Taxes (Details) - Schedule of income tax expense (Benefits) link:presentationLink link:definitionLink link:calculationLink 052 - Disclosure - Income Taxes (Details) - Schedule of reconciliation of effective tax rates link:presentationLink link:definitionLink link:calculationLink 053 - Disclosure - Leases (Details) link:presentationLink link:definitionLink link:calculationLink 054 - Disclosure - Leases (Details) - Schedule of future minimum payments under long-term non-cancelable operating leases link:presentationLink link:definitionLink link:calculationLink 055 - Disclosure - Leases (Details) - Schedule of other information link:presentationLink link:definitionLink link:calculationLink 056 - Disclosure - Related Parties Transactions (Details) - Schedule of amount due from related parties link:presentationLink link:definitionLink link:calculationLink 057 - Disclosure - Related Parties Transactions (Details) - Schedule of amount due to related parties link:presentationLink link:definitionLink link:calculationLink 058 - Disclosure - Commitments and Contingencies (Details) link:presentationLink link:definitionLink link:calculationLink 000 - Document - Document And Entity Information link:presentationLink link:definitionLink link:calculationLink EX-101.CAL 7 fhai-20210630_cal.xml XBRL CALCULATION FILE EX-101.DEF 8 fhai-20210630_def.xml XBRL DEFINITION FILE EX-101.LAB 9 fhai-20210630_lab.xml XBRL LABEL FILE