UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended |
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
_________________
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging Growth Company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of June 30, 2023, there were shares outstanding of the registrant’s common stock.
As of June 30, 2023, there were 500,000 shares outstanding of the registrant’s Convertible Series A Preferred Stock.
Item 1. Financial Statements.
CHINA DE XIAO QUAN CARE GROUP CO., LTD.
FINANCIAL STATEMENTS
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CHINA DE XIAO QUAN CARE GROUP CO., LTD.
BALANCE SHEETS
| As at | ||||||||
June 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Total current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Payables and accrued interests | $ | $ | ||||||
| Notes payable in default | ||||||||
| Total current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS' DEFICIT | ||||||||
| Common stock, $ par value; shares authorized, issued and outstanding | ||||||||
| Convertible Series A Preferred Stock, $ par value; shares designated, issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS' DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements
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CHINA DE XIAO QUAN CARE GROUP CO., LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| OTHER INCOME/(EXPENSE) | ||||||||||||||||
| Interest expense | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Gain on debt forgiveness | ||||||||||||||||
| Total other income/(expense) | ( | ) | ( | ) | ||||||||||||
| Net income /(loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Earnings per share – basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Earnings per share –diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Weighted average number of common shares-basic | ||||||||||||||||
| Weighted average number of common shares-diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
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CHINA DE XIAO QUAN CARE GROUP CO., LTD.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
| Three months ended June 30, 2023 and 2022 | ||||||||||||||||||||||||||||
| Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Six months ended June 30, 2023 and 2022 | ||||||||||||||||||||||||||||
| Series A Preferred Stock | Common Stock | Additional Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net income | – | – | ||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
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CHINA DE XIAO QUAN CARE GROUP CO., LTD.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Gain on debt forgiveness | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Payables and accrued interests | ||||||||
| Cash used in operating activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from notes payable | ||||||||
| Proceeds from notes payable-related party | ||||||||
| Principal payments on notes payable | ||||||||
| Issued preferred stock | ||||||||
| Cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements
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CHINA DE XIAO QUAN CARE GROUP CO., LTD.
Notes to the Unaudited Financial Statements
June 30, 2023
Note 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
China De Xiao Quan Care Group Co., Ltd. (“CDXQ” or the “Company”), FKA Nhale Inc, before September 2022, was incorporated as GankIt Corporation in the state of Nevada on March 8, 2012, with a fiscal year end of December 31 since 2019. Its SEC symbol was changed from NHLE to CDXQ.
On May 12, 2014, the control block of stock, 20,000,000 shares of restricted common stock were purchased resulting in a change of control. The Company then ceased to operate its e-commerce website and abandoned that business model, and re-focused on the development, branding, and distribution of non-flame smoking devices. The Company changed its name at this time to Nhale, Inc.
Business operations for Nhale Inc. was abandoned by former management and a custodianship action, as described in the subsequent paragraph, was commenced in 2020.
On November 24. 2020, the Eighth District Court of Clark County, Nevada granted the Application for Appointment of Custodian as a result of the absence of a functioning board of directors and the revocation of the Company’s charter. The order appointed Small Cap Compliance, LLC (“SCC”, the “Custodian”) custodian with the right to appoint officers and directors, negotiate and compromise debt, execute contracts, issue stock, and authorize new classes of stock.
Upon appointment as the Custodian of NHLE and under its duties stipulated by the Nevada court, SCC took initiative to organize the business of the issuer. As Custodian, the duties were to conduct daily business, hold shareholder meetings, appoint officers and directors, reinstate the company with the Nevada Secretary of State. SCC also had authority to enter into contracts and find a suitable merger candidate. SCC was compensated for its role as custodian in the amount of 500,000 shares of Convertible Series A Preferred Stock.
On January 20, 2021, SCC entered into a Stock Purchase Agreement with Bridgeview Capital Partners, LLC, whereby Bridgeview Capital Partners, LLC purchased 500,000 shares of Convertible Series A Preferred Stock. These shares represent the controlling block of stock.
Bridgeview Capital Partners, LLC entered into a Stock Purchas Agreement with Yang Chongyi whereby Yang Chongyi purchased 500,000 shares of Convertible Series A Preferred Stock. Yang Chongyi was appointed as its CEO, Treasurer, Secretary, and Director of the Company.
The Company focused on from the development, branding and distribution of non-flame smoking devices to the development, sales and service of computer software, network software; elder care services, development, and management, and related commodity sales etc. The Company is not actively trading during the current reporting period.
The Company’s elderly care system incorporates integrated control of community elderly care; standardization of home elderly care services; traceable tracking of financial income and expenditure; big data monitoring of health management; big data support of user portrait; convenient and barrier-free operation mode.
On March 15, 2023, there was a change in control. Chongyi Yang sold the control block of Preferred A Stock to the persons as follows:
Chunsheng Qin purchased shares
Yangtenglie Quin purchased shares
Fugui Xie purchased shares
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The
purchase price was $
On March 27, 2023, China De Xiao Quan Care Group Co., Ltd. (“CDXQ”) entered into a Non-Binding Letter of Intent (the “LOI”) in which the Company would acquire all of the issued and outstanding securities of China Care Holding Group Inc., a Cayman corporation (“China Care”). Mr. Chunsheng Qin is the sole owner of China De Xiao Quan Care Group Co., Ltd.
The LOI contemplates the acquisition of China Care, by CDXQ. China Care, which owns and operates Jiangsu De Xiao Quan Technology Group, a pioneer in elderly caring industry, combining new generation of cloud intelligence with human-focused management. The company has self-developed an intelligent caring system based on big data analysis and artificial intelligence, strengthening better care and tracking management for the elderly. The LOI was entered into following arm’s length negotiations.
The LOI proposes that CDXQ would acquire 51% of the issued and outstanding stock of China Care in exchange for the newly issued CDXQ stock issuance to the shareholders of 70 million shares of newly issued unregistered shares of common stock, par value $0.0001 per share, with no expiration date on the conversion.
Completion of the transaction is subject to, among other matters, the completion of due diligence, the negotiation of a definitive agreement providing for the transaction and employment agreements, satisfaction of the conditions negotiated therein and approval of the transaction by CDXQ’s board of directors, and all applicable state and federal law. No assurance can be given that the parties will be able to negotiate and execute a definitive agreement or that the transactions herein contemplated will close. CDXQ will file notice of such agreement with the Securities and Exchange Commission on form 8-K when and if any such agreement is reached.
On March 31, 2023, Chongyi Yang resigned his position of officer and director and appointed Chunsheng Qin as President, CEO, Treasurer, Secretary and Director.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The unaudited financial statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair statement of the financial statements have been included. Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
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Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.
The carrying amount of the Company’s financial liabilities, such as payables and accrued expenses approximate their fair value because of the short maturity of those instruments.
Income taxes
The Company follow ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.
On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. In addition, the 2017 Tax Act also creates a new requirement that certain income (i.e., Global Intangible Low-Taxed Income (“GILTI”)) earned by controlled foreign corporations (“CFCs”) must be included in the gross income of the CFCs’ U.S. shareholder income. The Company has been in loss position for years and zero balances of tax provisions, deferred tax assets and liabilities as of the reporting periods ended. The tax reforms have no significant impacts on the Company.
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
For the six months ended June 30, 2023 and 2022, there are outstanding common shares and potentially dilutive shares, respectively, from convertible preferred stock. one (1) share of the as Convertible Series A Preferred Stock shall be converted into one thousand () shares of common stock of the Corporation and entitled to one thousand (1,000) votes of common stock for every one (1) share of as Convertible Series A Preferred Stock owned. The holders of the Convertible Series A Preferred Stock shall not be entitled to receive dividends.
However, these shares have not been considered in the weighted average share calculation as their inclusion would be anti-dilutive due to the net loss position for the years then ended.
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Related parties
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
Recently issued accounting pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The Company’s financial statements are prepared
using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization
of assets and liquidation of liabilities in the normal course of business. The Company has yet established any source of revenue to cover
its operating costs and has an accumulated deficit of $
In addition to operational expenses, as the Company executes its business plan, it is incurring expenses related to complying with its public reporting requirements. In order to finance these expenditures, the Company has raised capital in the form of debt, which will have to be repaid, as discussed in detail below. The Company has depended on loans from private investors and outside investors for most of its operating capital. The Company will need to raise capital in the next twelve months in order to remain in business.
Management anticipates that significant dilution will occur as a result of any future sales of the Company’s common stock, and this will reduce the value of its outstanding shares. The Company cannot project the future level of dilution that will be experienced by investors as a result of its future financings, but it will significantly affect the value of its shares.
The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
NOTE 4 – PAYABLES AND ACCRUED INTERESTS
| Schedule of payables | June 30, 2023 | December 31, 2022 | ||||||
| Other payables | $ | $ | ||||||
| Accrued Interest | ||||||||
| Total | $ | $ | ||||||
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NOTE 5 – NOTES PAYABLE
During 2013 - 2016 the Company borrowed an aggregate
amount of $1,240,000 through 24 promissory notes maturing various within 2015 to 2018. As at June 30, 2023 and December 31, 2022, there
were 23 promissory notes with an aggregated amount of $
For debts in default taken out in Nevada, the
statutes of limitations on debt collection for written contracts are 6 years. The Company engages an attorney, who issued an opinion of
debt forgiveness on April 13, 2023 to clear out the debts in default more than six years in accordance with the law of State of Nevada
above. Based on the attorney letter, for all the notes payable in default for more than 6 years as of June 30, 2023 and December 31, 2022,
the Company recognized gain on debt forgiveness totaling $
As of June 30, 2023 and December 31, 2022,
the Company held $
Weighted average interest rate of default was
15.0%-25.0% for the six months ended June 30, 2023 and 2022. The Company accrued interest expenses of $
NOTE 6 – INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used due to the new tax law recently enacted.
Deferred income taxes reflect the tax consequences
on future years of differences between the tax bases. As of June 30, 2023 and December 31, 2022, deferred tax assets resulted from NOLs
of approximately $
NOTE 7 – COMMITMENTS AND CONTINGENCIES
On March 27, 2023, China De Xiao Quan Care Group Co., Ltd (“CDXQ”) entered into a Non-Binding Letter of Intent (the “LOI”) in which the Company would acquire all of the issued and outstanding securities of China Care Holding Group Inc, a Cayman corporation (“China Care”). The LOI was entered into following arm’s length negotiations.
The LOI proposes that CDXQ would acquire 51% of the issued and outstanding stock of China Care in exchange for the newly issued CDXQ stock issuance to the shareholders of 70 million shares of newly issued unregistered shares of common stock, par value $0.0001 per share, with no expiration date on the conversion.
Completion of the transaction is subject to, among other matters, the completion of due diligence, the negotiation of a definitive agreement providing for the transaction and employment agreements, satisfaction of the conditions negotiated therein and approval of the transaction by CDXQ’s board of directors, and all applicable state and federal law. No assurance can be given that the parties will be able to negotiate and execute a definitive agreement or that the transactions herein contemplated will close. CDXQ will file notice of such agreement with the Securities and Exchange Commission on form 8-K when and if any such agreement is reached. As of the reporting date, CDXQ is in the process of negotiating and signing the agreement.
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated all subsequent events through the date these financial statements were issued and determined that there were no subsequent events or transactions that require recognition or disclosures in the financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis (“MD&A”) should be read in conjunction with financial statements of China De Xiao Quan Care Group Co., Ltd for the three and six months ended June 30, 2023 and 2022, and the notes thereto.
Safe Harbor for Forward-Looking Statements
Certain statements included in this MD&A constitute forward-looking statements, including those identified by the expressions anticipate, believe, plan, estimate, expect, intend, and similar expressions to the extent they relate to China De Xiao Quan Care Group Co., Ltd or its management. These forward-looking statements are not facts, promises, or guarantees; rather, they reflect current expectations regarding future results or events. These forward-looking statements are subject to risks and uncertainties that could cause actual results, activities, performance, or events to differ materially from current expectations. These include risks related to revenue growth, operating results, industry, products, and litigation, as well as the matters discussed in China De Xiao Quan Care Group Co., Ltd.’s MD&A. Readers should not place undue reliance on any such forward-looking statements. China De Xiao Quan Care Group Co., Ltd disclaims any obligation to publicly update or to revise any such statements to reflect any change in the Company’s expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this report.
Three Months and Six Months Ended June 30, 2023 and 2022
Revenue
For the three and six months ended June 30, 2023 and 2022, the Company had not generated any revenues.
Operating Expenses
For the three and six months ended June 30, 2023 and 2022, the Company had no operating expenses.
Other Income and Expenses
Other income for the three months ended June 30, 2023 was $1,006,721, a net off of gain on debt forgiveness of 1,021,630 and interest expense of $14,909, compared to a loss of $70,238 for the three months ended June 30, 2022.
Other income for the six months ended June 30, 2023 was $970,108, a net off of gain on debt forgiveness of 1,021,630 and interest expense of $51,522, compared to a loss of $140,475 for the six months ended June 30, 2022.
Net Income (Loss)
For the three months ended June 30, 2023, the Company had a net income of $1,006,721 compared to the three months ended June 30, 2022 a net loss of $70,238.
For the six months ended June 30, 2023, the Company had a net income of $970,108 compared to the six months ended June 30, 2022 a net loss of $140,475.
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Liquidity and Capital Resources
As of June 30, 2023, we had no cash and a working capital deficit of $960,236.
Operating Activities
No operating activities occurred during the three and six months ended June 30, 2023 and 2022.
Investing Activities
No investing activities occurred during the three and six months ended June 30, 2023 and 2022.
Financing Activities
No financing activities occurred during the three and six months ended June 30, 2023 and 2022.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements with any party.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial condition are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The accounting policies that we follow are set forth in Note 2 to our financial statements as included in the SEC report filed. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item.
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Item 4. Controls and Procedures
Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reason described below.
Because of our limited operations, we have limited number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations, we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material or legal proceeding, and, to our knowledge, none is contemplated or threatened.
Item 1A. Risk Factors
We are a smaller reporting company and, as a result, are not required to provide the information under this item. Please review the risk factors identified in Item 1.A of our 2021 Form 10.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the six months ended June 30, 2023, the Company did not sell any unregistered securities.
Item 3. Defaults Upon Senior Securities
There have been no defaults upon senior securities.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item.
Item 6. Exhibits
| No. | Description | |
| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | |
| 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | |
| 32.1 | Section 1350 Certification of Chief Executive Officer | |
| 32.2 | Section 1350 Certification of Chief Financial Officer | |
| 101 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in inline XBRL, include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements. |
| 15 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| August 21, 2023 | China De Xiao Quan Care Group Co., Ltd | |
| By: | /s/ Chunsheng Qin | |
| Name: Chunsheng Qin Title: Chief Executive Officer | ||
| 16 |