U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
Commission file number:
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(Company’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Indicate by check mark if the Company is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the Company is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Company 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 Company has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Company was required to submit and post such files). Yes ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
(Do not check if a 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 Company is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value of voting stock held by non-affiliates of the Company as of the last business day of the Company’s most recently complete second fiscal quarter was $
As of April 11, 2022,
Documents Incorporated By Reference: None
TABLE OF CONTENTS
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PART I
Item 1. Business.
As used in this Annual Report on Form 10-K (this “Report”), references to the “Company,” the “Company,” “we,” “our” or “us” refer to MakingORG, Inc., unless the context otherwise indicates.
Forward-Looking Statements
Certain statements contained in this report, including statements regarding our business, financial condition, our intent, belief or current expectations, primarily with respect to the future operating performance of the Company and other statements contained herein regarding matters that are not historical facts, are “forward-looking” statements. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of these similar terms. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.
All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law.
Overview
The Company was incorporated in the State of Nevada on August 10, 2012 to be in the power sports business.
On July 29, 2014, Vladimir Nedrygaylo, the principal shareholder of Drimex Inc. consummated the transactions contemplated by the Stock Purchase Agreement dated as of June 24, 2014 which provided for the sale of 5,000,000 shares of common stock (not adjusted for the forward split described below) of the Company (the “Shares”) to Juanzi Cui. The consideration paid for the Shares, which represented 84.7% of the issued and outstanding share capital of the Company on a fully-diluted basis, was $325,000. The source of the cash consideration for the Shares was the personal funds of Mrs. Cui. In connection with the transaction, Mr. Nedrygaylo released the Company from all debts owed to him.
Mrs. Cui became the Company’s sole officer and director.
On August 22, 2014, the Company amended and restated Articles of Incorporation, changed the name of the Company from “Drimex, Inc.” to “MakingORG, Inc.” and increased the amount of authorized shares of common stock from 75,000,000 to 150,000,000, with a par value of $0.001 per share.
Effective August 22, 2014, the Company effected a 6 for 1 forward split on its common stock outstanding in the form of a dividend, under which each stockholder of record on that date received 5 additional shares of the Corporation’s $0.001 par value common stock for every 1 share owned. All share and per share amounts presented in this Annual Report and the financial statements and notes thereto have been adjusted for the stock split.
On September 1, 2016, the Company entered into a Convertible Note Agreement in the principal amount of $200,000 with an unrelated party. The note bears interest at 12% per annum and the holder is able to convert all unpaid interest and principal into common shares at $3.50 per share. The note matures on September 1, 2018. The Company recognized a discount on the note of $38,857 at the agreement date. The interest expense was due every six months commencing of March 1, 2017 until the principal amount of this convertible note was paid in full.
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On September 1, 2018, the Company entered into an Amended and Restated 12% Convertible Promissory Note. Pursuant to an Amended and Restated 12% Convertible Promissory Note, both parties agreed to extend a Convertible Note Agreement to September 1, 2019 with no additional consideration.
On September 1, 2019, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2020 with no additional consideration. The Company recognized a discount on the note of $54,400 at the amended agreement date. Since the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
On October 20, 2017, the Company filed documents registering their intention to transact interstate business in the state of California in the United States. Juanzi Cui, who took control of the Company as described above, intended that the Company open a line of organic food stores or stores-in-stores within the Asian communities in the United States.
On November 29, 2016, the Company incorporated HK Feng Wang Group Limited (“HKFW”) under the laws of Hong Kong. On August 22, 2017, HKFW incorporated Chongqing Beauty Kenner Biotechnology Co., Ltd (“CBKB”) under the laws of the People’s Republic of China (“PRC”).
The Company and its subsidiaries purchase Acer truncatum bunge seed oil from China, outsource to third parties to manufacture Acer truncatum bunge related health product, and sell to end users and distributors in the United States and PRC.
CBKB entered into a Strategic Cooperation Framework Agreement with Hangzhou Life Century Hualian Supermarket Chain Co., Ltd. (“HLCH”), dated May 25, 2018, pursuant to which the Company agreed to assist HLCH in identifying brand-specific, high tech characteristics products, such as acer truncatum nervonic acid oil, acer truncatum seed oil capsule, acer truncatum edible oil, acer truncatum oil with nervonic acid formula, acer truncatum coffe, acer truncatum tea, canned acer truncatum, acer truncatum cosmetics, acer truncatum skin care products, hair wash products and acer trunncatrum food. At such time, the Company ceased being a shell company.
Competition
The Company is an insignificant participant among firms which engage in business combinations with development stage enterprises. There are many established management and financial consulting companies and venture capital firms which have significantly greater financial and personnel resources, technical expertise and experience than the Company. In view of the Company’s limited financial resources and management availability, the Company will continue to be at a significant competitive disadvantage vis-a-vis the Company’s competitors.
Regulation and Taxation
The Investment Company Act of 1940 defines an “investment company” as an issuer which is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading of securities. While the Company does not intend to engage in such activities, the Company could become subject to regulation under the Investment Company Act of 1940 in the event the Company obtains or continues to hold a minority interest in a number of development stage enterprises. The Company could be expected to incur significant registration and compliance costs if required to register under the Investment Company Act of 1940. Accordingly, management will continue to review the Company’s activities from time to time with a view toward reducing the likelihood the Company could be classified as an “investment company.”
The Company intends to structure a merger or acquisition in such manner as to minimize Federal and state tax consequences to the Company and to any target company.
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Employees
The Company currently has two full-time employees. All functions including development, strategy, negotiations and administration are currently being provided by Mrs. Cui, our sole executive officer and director, on a voluntary basis.
Item 1A. Risk Factors
Smaller reporting companies are not required to provide the information required by this Item 1A.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
The Company had an operating lease for its office space from a third party in the United States. The Company determined if an arrangement is a lease inception of the contract and whether a contract is or contains a lease by determining whether it conveys the right to control the use of identified asset for a period of time. The contact provides the right to substantially all the economic benefits from the use of the identified asset and the right to direct use of the identified asset, we consider it to be, or contain, a lease. Leases is classified as operating at inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Because the leases do not provide an explicit or implicit rate of return, the Company determines incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 7.33%. Lease expense for the lease is recognized on a straight-line basis over the lease term. The lease does not contain any residual value guarantees or material restrictive covenants. Leases with a lease term of 12 months or less are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term. The lease expired on August 31, 2020. Rental expenses for the years ended December 31, 2021 and 2020 were $0 and $6,448, respectively.
The Company signed a lease agreement with a related party in China in June 2020, an entity in which CBKB’s supervisor is a shareholder. It calls for a monthly rent of RMB40,000 (approximately $6,200). The lease was for one year and was subject to renewal at the Company’s discretion. This lease was classified as operating at inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease terms of the commencement date. The leases did not provide an explicit or implicit rate of return, the Company determined incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The incremental borrowing rate fora lease was the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 5.25%. The lease does not contain any residual value guarantees or material restrictive covenants. The Company keeps leasing the property month by month after the lease term ended. Therefore, based on the lease agreement, we did the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Refer to Note 8 – Lease for details. The Company currently has no finance leases.
Item 3. Legal Proceedings
There is no pending legal proceeding to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
On April 8, 2014, we became listed on the OTCQB under the symbol “DRIM”. As of August 25, 2014, the trading symbol of the Company became “CQCQ”. The Company is now quoted on the OTC Pink Sheets. The high and low sales prices as reported on the OTC as of the end of each quarter commencing on January 1, 2021 through December 31, 2021 was $4.20 to $0.75. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
The last reported sales price of our common stock on the OTCMarkets on April 11, 2022, was $0.75
Dividend Policy
We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends.
Holders
As of April 11, 2022, there were 35,540,000 shares of common stock issued and outstanding, which were held by 312 stockholders of record.
Equity Compensation Plans
We do not have any equity compensation plans.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
On September 1, 2016, the Company entered into a Convertible Note Agreement in the principal amount of $200,000 with an unrelated party. The note bears interest at 12% per annum and the holder is able to convert all unpaid interest and principal into common shares at $3.50 per share. The note matures on September 1, 2018. The Company recognized a discount on the note of $38,857 at the agreement date. The interest expense was due every six months commencing on March 1, 2017 until the principal amount of this convertible note is paid in full.
On September 1, 2018, the Company entered into an Amended and Restated 12% Convertible Promissory Note. Pursuant to an Amended and Restated 12% Convertible Promissory Note, both parties agreed to extend a Convertible Note Agreement to September 1, 2019 with no additional consideration.
On September 1, 2019, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2020 with no additional consideration. The Company recognized a discount on the note of $54,400 at the amended agreement date. Since the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a BCF. A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
On September 1, 2020, the Company entered an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2022 with no additional consideration. The Company recognized a discount on the note of $0 at the amended agreement date.
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The Company recognized interest expense related to the convertible note of $24,000 and $98,000 for the years ended December 31, 2021 and 2020, respectively. The unamortized debt discount as of December 31, 2021 and 2020 was $0 and $0, respectively. As of December 31, 2021, and 2020, net balance of the convertible note amounted to $200,000 and $200,000, respectively.
Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers
None.
Item 6. Selected Financial Data.
Smaller reporting companies are not required to provide the information required by this Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the Company’s consolidated financial statements, which are included elsewhere in this Form 10-K.
Overview
MakingORG, Inc. (“MakingORG”) was incorporated under the laws of the State of Nevada on August 10, 2012. The trading symbol of the Company is “CQCQ” and the fiscal year end is December 31. On October 20, 2016, MakingORG filed documents registering its intention to transact interstate business in the state of California. On November 29, 2016, MakingORG incorporated HK Feng Wang Group Limited (“HKFW”) under the laws of Hong Kong. On August 22, 2017, HKFW incorporated Chongqing Beauty Kenner Biotechnology Co., Ltd (“CBKB”) under the laws of the People’s Republic of China (“PRC”).
On November 29, 2016, the Company incorporated HK Feng Wang Group Limited (“HKFW”) under the laws of Hong Kong. On August 22, 2017, HKFW incorporated Chongqing Beauty Kenner Biotechnology Co., Ltd (“CBKB”) under the laws of the People’s Republic of China (“PRC”).
The Company and its subsidiaries purchase Acer truncatum bunge seed oil from China, outsource to third parties to manufacture Acer truncatum bunge related health product, and sell to distributors in PRC.
CBKB entered into a Strategic Cooperation Framework Agreement with Hangzhou Life Century Hualian Supermarket Chain Co., Ltd. (“HLCH”), dated May 25, 2018, pursuant to which the Company agreed to assist HLCH in identifying brand-specific, high tech characteristics products, such as acer truncatum nervonic acid oil, acer truncatum seed oil capsule, acer truncatum edible oil, acer truncatum oil with nervonic acid formula, acer truncatum coffe, acer truncatum tea, canned acer truncatum, acer truncatum cosmetics, acer truncatum skin care products, hair wash products and acer trunncatrum food. This agreement did not continue due to HLCH did not operate well in the year 2019.
In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. China governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. As a result, we closed our China operations from the end of January 2020 to the end of March 2020.
The ultimate impact of the COVID-19 pandemic on the Company’s operations is still unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations.
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Plan of Operation
Our sole officer and director intends to sell Acer truncatum bunge related health product in the United States and PRC, we might just identify and negotiate with another company for the business combination or merger of that entity with and into our company. We would seek, investigate and, if such investigation warrants, acquire an interest in one or more business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of a publicly held corporation. At this time, we have no plan, proposal, agreement, understanding or arrangement to acquire or merge with any specific business or company, and the Company has not identified any specific business or company for investigation and evaluation. No member of management or promoter of the Company has had any material discussions with any other company with respect to any acquisition of that company.
We will not restrict our search for another target company to any specific business, industry or geographical location, and the Company may participate in a business venture of virtually any kind or nature. The discussion of the proposed plan of operation under this caption and throughout this Annual Report is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities.
The extent of the impact of COVID-19 on our business and financial results will depend on future developments, including the duration and spread of the outbreak within the markets in which we operate, the related impact on our customers and suppliers and the possibility of an economic recession after the virus has subsided, all of which are highly uncertain and ever-changing. Any of these factors could materially increase our costs, negatively impact our sales and damage our results of operations and liquidity. The severity and duration of any such impacts, including after the virus has subsided, cannot be predicted.
Sources of Opportunities
The Company anticipates that business opportunities for possible acquisition will be referred by various sources, including its officers and directors, professional advisers, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals.
The Company will seek a potential business opportunity from all known sources but will rely principally on personal contacts of its officer and director and consultants as well as indirect associations between them and other business and professional people. It is not presently anticipated that the Company will engage professional firms specializing in business acquisitions or reorganizations.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or under the supervision of the officer and director of the Company. Management intends to concentrate on identifying prospective business opportunities which may be brought to its attention through present associations with management. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operation, if any; prospects for the future; present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition or acceptance of products, services or trades; name identification; and other relevant factors. The officer and director of the Company will meet personally with management and key personnel of the firm sponsoring the business opportunity as part of her investigation. To the extent possible, the Company intends to utilize written reports and personal investigation to evaluate the above factors. The Company will not acquire or merge with any company for which audited consolidated financial statements cannot be obtained.
It may be anticipated that any opportunity in which the Company participates will present certain risks. Many of these risks cannot be adequately identified prior to selection of the specific opportunity, and the Company’s stockholders must, therefore, depend on the ability of management to identify and evaluate such risk. In the case of some of the opportunities available to the Company, it may be anticipated that the promoters thereof have been unable to develop a going concern or that such business is in its development stage in that it has not generated significant revenues from its principal business activities prior to the Company’s anticipation. There is a risk, even after the Company’s participation in the activity and the related expenditure of the Company’s funds that the combined enterprises will still be unable to become a going concern or advance beyond the development stage. Many of the opportunities may involve new and untested products, processes, or market strategies which may not succeed. Such risks will be assumed by the Company and, therefore, its stockholders.
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The Company will not restrict its search for any specific kind of business but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is currently impossible to predict the status of any business in which the Company may become engaged, in that such business may need additional capital, may merely desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity. It may also purchase stock or assets of an existing business. On the consummation of a transaction, it is possible that the present management and shareholders of the Company will not be in control of the Company. In addition, the Company’s officer and director may, as part of the terms of the acquisition transaction, resign and be replaced by new officers and directors without a vote of the Company’s stockholders.
It is anticipated that any securities issued in any such reorganization would be issued in reliance on exemptions from registration under applicable Federal and state securities laws. In some circumstances, however, as a negotiated element of this transaction, the Company may agree to register such securities either at the time the transaction is consummated, under certain conditions, or at specified time thereafter. The issuance of substantial additional securities and their potential sale into any trading market which may develop in the Company’s common stock may have a depressive effect on such market. While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so called “tax free” reorganization under Sections 368(a) (1) or 351 of the Internal Revenue Code of 1986, as amended (the “Code”). In order to obtain tax free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, the shareholders of the Company, including investors in this offering, would retain less than 20% of the issued and outstanding shares of the surviving entity, which could result in significant dilution in the equity of such shareholders.
As part of the Company’s investigation, the officer and director of the Company will meet personally with management and key personnel, may visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other reasonable investigative measures, to the extent of the Company’s limited financial resources and management expertise.
The manner in which each Company participates in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Company and other parties, the management of the opportunity, and the relative negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target company management will be expected to focus on the percentage of the Company which target company shareholders would acquire in exchange for their stockholdings in the target company. Depending upon, among other things, the target company’s assets and liabilities, the Company’s stockholders will in all likelihood hold a lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company’s then stockholders.
The Company will not have sufficient funds (unless it is able to raise funds in a private placement) to undertake any significant development, marketing and manufacturing of any products which may be acquired.
Accordingly, following the acquisition of any such product, the Company will, in all likelihood, be required to either seek debt or equity financing or obtain funding from third parties, in exchange for which the Company would probably be required to give up a substantial portion of its interest in any acquired product. There is no assurance that the Company will be able either to obtain additional financing or interest third parties in providing funding for the further development, marketing and manufacturing of any products acquired.
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It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity the costs therefore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in a loss to the Company of the related costs incurred.
Management believes that the Company may be able to benefit from the use of “leverage” in the acquisition of a business opportunity. Leveraging a transaction involves the acquisition of a business through incurring significant indebtedness for a large percentage of the purchase price for that business.
Through a leveraged transaction, the Company would be required to use less of its available funds for acquiring the business opportunity and, therefore, could commit those funds to the operations of the business opportunity, to acquisition of other business opportunities or to other activities. The borrowing involved in a leveraged transaction would ordinarily be secured by the assets of the business opportunity to be acquired. If the business opportunity acquired is not able to generate sufficient revenues to make payments on the debt incurred by the Company to acquire that business opportunity, the lender would be able to exercise the remedies provided by law or by contract. These leveraging techniques, while reducing the amount of funds that the Company must commit to acquiring a business opportunity, may correspondingly increase the risk of loss to the Company. No assurance can be given as to the terms or the availability of financing for any acquisition by the Company. During periods when interest rates are relatively high, the benefits of leveraging are not as great as during periods of lower interest rates because the investment in the business opportunity held on a leveraged basis will only be profitable if it generates sufficient revenues to cover the related debt and other costs of the financing. Lenders from which the Company may obtain funds for purposes of a leveraged buy-out may impose restrictions on the future borrowing, distribution, and operating policies of the Company. It is not possible at this time to predict the restrictions, if any, which lenders may impose or the impact thereof on the Company.
Critical Accounting Policies and Estimates
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new revenue recognition standard provides a five-step analysis of contracts to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB deferred the effective date of ASU No. 2014-09 for all entities by one year to annual reporting periods beginning after December 15, 2017. The FASB has issued several updates subsequently, including implementation guidance on principal versus agent considerations, on how an entity should account for licensing arrangements with customers, and to improve guidance on assessing collectability, presentation of sales taxes, noncash consideration, and contract modifications and completed contracts at transition. In general, the Company’s performance obligation is to transfer it products to its end user or distributor. Revenues from product sales are recognized when the customer obtains control of the Company’s finished goods product, which occurs at a point in time, typically upon delivery to the customer.
Prior to the adoption of ASC 842 on January 1, 2019:
Leases, mainly leases of offices, where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Payments made under operating leases are recognized as an expense on a straight-line basis over the lease term. The Company had no finance leases for any of the periods stated herein.
Upon and thereafter the adoption of ASC 842 on January 1, 2019:
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11, Targeted Improvements; and ASU 2019-01, Codification Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of income.
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The new standard was effective for the Company on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company adopted the new standard on January 1, 2019 and used the effective date as its date of initial application. Consequently, prior period financial information has not been recast and the disclosures required under the new standard have not been provided for dates and periods before January 1, 2019.
The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements, the latter not being applicable to the Company. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, it has not recognized ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for all of its leases.
The Company believe the most significant effects of the adoption of this standard relate to (1) the recognition of new ROU assets and lease liabilities on its consolidated balance sheet for its office operating leases and (2) providing new disclosures about its leasing activities. There was no change in its leasing activities as a result of adoption.
Upon adoption, as of January 1, 2019, the Company recognized operating lease liabilities of $14,079 based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases, as well as corresponding ROU assets of $13,454, the $625 difference attributable to the offset of the deferred rent existing as of January 1, 2019.
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.
Results of Operations
For the years ended December 31, 2021 and December 31, 2020
|
| Years Ended December 31, |
|
|
|
|
| |||||||||
|
| 2021 |
|
| 2020 |
|
| Change |
|
| Percent |
| ||||
Net Sales |
| $ | 611,328 |
|
| $ | 238,587 |
|
| $ | 372,741 |
|
|
| 156 | % |
Cost of Sales |
|
| 397,120 |
|
|
| 145,470 |
|
|
| 251,650 |
|
|
| 173 | % |
Gross Profit |
|
| 214,208 |
|
|
| 93,117 |
|
|
| 121,091 |
|
|
| 130 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
| 102,297 |
|
|
| 97,191 |
|
|
| 5,106 |
|
|
| 5 | % |
Professional fees |
|
| 88,248 |
|
|
| 92,996 |
|
|
| (4,748 | ) |
|
| -5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
| 190,545 |
|
|
| 190,187 |
|
|
| 358 |
|
|
| 0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 2 |
|
|
| 288 |
|
|
| (286 | ) |
|
| -99 | % |
Interest expense |
|
| (24,000 | ) |
|
| (60,267 | ) |
|
| 36,267 |
|
|
| -60 | % |
Other income |
|
| 1,348 |
|
|
| 3,948 |
|
|
| (2,600 | ) |
|
| -66 | % |
Loss on inventory write-down |
|
| - |
|
|
| (9,420 | ) |
|
| 9,420 | ) |
|
| 100 | % |
Total other income (expenses) |
|
| (22,650 | ) |
|
| (65,451 | ) |
|
| 42,801 |
|
|
| 65 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) before income taxes |
|
| 1,013 |
|
|
| (162,521 | ) |
|
| 163,534 |
|
|
| -101 | % |
Income tax expense |
|
| 1,627 |
|
|
| 3,329 |
|
|
| (1,702 | ) |
|
| -51 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| $ | (614 | ) |
| $ | (165,850 | ) |
| $ | 165,236 |
|
|
| -100 | % |
| 11 |
| Table of Contents |
Sales, cost of sales and gross profit
The Company consolidated sales for the year ended December 31, 2021 was $611,328, an increase of $372,741 or 156% from the sales of $238,587 for the year ended December 31, 2020. Cost of sales for the years ended December 31, 2021 was $397,120, an increase of $251,650 or 173% from cost of sales $145,470 for the year ended December 31, 2020. It resulted in a gross profit of $214,208 for the year ended December 31, 2021, an increase of $121,091 or 130% from the gross profit of $93,117 for the years ended December 31, 2020, respectively. The increase in sales, cost and gross profit was due to the increase sales in PRC because the COVID-19 was affecting less in people’s life in 2021 compared to 2020, when it started to burst out.
Total operating expenses
For the year ended December 31, 2021, total operating expenses were $190,545, which consisted of professional fees of $88,248, China rent expense of $66,448, China salary, office expense and miscellaneous expense of $35,849. For the year ended December 31, 2020, total operating expenses were $190,187, which consisted of professional fees of $92,996, rent expenses of $46,329, China salary and office expense of $44,084, miscellaneous expenses of $6,778. Total operating expenses increased $358, or 0.2%.
Total other income (expense)
For the year ended December 31, 2021, total other expenses were $22,650, which consisted of interest expense of $24,000, interest income of $2 and other income of $1,348. For the year ended December 31, 2020, total other expenses were $65,451, which consisted of interest expense of $60,267, interest income of $288, other income of $3,948 and loss on inventory write-down of $9,420. Total other expense decreased $42,801, or 65% for the year ended December 31, 2021 from the year ended December 31, 2020, primarily due to the decrease in interest expense for beneficial conversion feature and the decrease of loss on inventory write-off.
Net loss
For the year ended December 31, 2021, the Company had a loss of $614, a decrease of loss of $165,236 or 100% from the net loss of $165,850 for the year ended December 31, 2020. The decrease of net loss was due to the reasons stated above.
| 12 |
| Table of Contents |
Liquidity and Capital Resources
As of December 31, 2021, the Company had cash and cash equivalents and total assets of $108,356 and $220,204, compared to the cash and cash equivalents and total assets of $30,700 and $192,543, respectively as of December 31, 2020. As of December 31, 2021, the Company had total liabilities of $756,823, of which $$200,000 is convertible note payable, $128,000 is interest payable, $11,234 is accrued liabilities, $31,171 is lease liabilities and $386,418 is due to our sole officer and director as an unsecured, non-interest-bearing demand loan. As of December 31, 2020, the Company had total liabilities of $732,323, of which $200,000 is convertible note payable and $340,286 is due to our sole officer and director as an unsecured, non-interest-bearing demand loan. As of December 31, 2021, and 2020, the Company had negative working capital amount of $536,619 and $425,677, respectively.
Other than an oral agreement with Mrs. Cui to fund the expenses of the Company, we currently have no agreements and arrangements with any party to obtain funds through bank loans, lines of credit or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.
Our operations may be affected by the ongoing COVID-19 pandemic. The ultimate disruption that may result from the virus is uncertain, but it may result in a material adverse impact on our financial position, operations and cash flows.
Cash Flows from Operating Activities
For the year ended December 31, 2021, net cash flows provide by operating activities is $29,748, resulting from a net loss of $614, a net increase of $137,086 or 128% from the net cash used in operating activities of $107,338 for the year ended December 31, 2020. It caused by the decrease of loss of $165,236 or 99%, increase by accounts receivable change of $95,796 or 207%, amortization of right-of-use of assets of $69,352, accrued liabilities change of $16,811, etc, offset by the decrease caused by Prepaid expenses change of $110,093, lease liabilities of $42,475, amortization of debt discount of $36,267, inventory of $34,442, etc. For the year ended December 31, 2020, net cash flows used in operating activities was $107,338, resulting from a net loss of $165,850, an increase by inventory write-down of $9,420, an increase in amortization of debt discount of $36,267, decreased by amortization of right-of-use of assets of $250, decreased by lease liabilities of $14,534, decreased by changes in accounts receivable of $46,292, accrued liability of $10,403 and customer deposit of $6,741, increased by inventory, prepaid expenses and interest payable of $91,045.
Cash Flows from Investing Activities
For the year ended December 31, 2021, no cash flow from investing activity, while the cash flow used in investing activities was $11,594 for the year ended December 31, 2020, which was caused by the loan payment to related party.
Cash Flows from Financing Activities
The Company financed the operations primarily from the advances from the its sole officer and director. For the year ended December 31, 2021 and 2020, cash flows provided by advances from the Company’s sole officer and director of $$46,132 and 54,417, respectively, a decrease of $8,285 or 15%.
Going Concern Consideration
The Company had net losses of $614 and $165,850 for the years ended December 31, 2021 and 2020 respectively. In addition, the Company had an accumulated deficits of $1,162,307 and $1,161,693 and generated not enough/negative cash flows from operating activities as of and for the years ended December 31, 2021 and 2020, respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital. The Company’s consolidated financial statements do not include any adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to repay its debt obligations, to obtain necessary equity financing to continue operations, and the attainment of profitable operations. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company may seek additional funding through additional issuance of common stock and/or borrowings from financial institutions or the majority shareholder to support its normal business operations. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 13 |
| Table of Contents |
Convertible Note Payable
On September 1, 2016, the Company entered into a Convertible Note Agreement in the principal amount of $200,000 with an unrelated party. The note bears interest at 12% per annum and the holder is able to convert all unpaid interest and principal into common shares at $3.50 per share. The note matures on September 1, 2018. The Company recognized a discount on the note of $38,857 at the agreement date. The interest expense was due every six months commencing on March 1, 2017 until the principal amount of this convertible note is paid in full.
On September 1, 2018, the Company entered into an Amended and Restated 12% Convertible Promissory Note. Pursuant to an Amended and Restated 12% Convertible Promissory Note, both parties agreed to extend a Convertible Note Agreement to September 1, 2019 with no additional consideration. The Company recognized a discount on the note of $40,000 at the amended agreement date.
On September 1, 2019, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2020 with no additional consideration. The Company recognized a discount on the note of $54,400 at the amended agreement date. Since the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
On September 1, 2020, the Company entered an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2022 with no additional consideration. The Company recognized a discount on the note of $0 at the amended agreement date.
The Company recognized interest expense related to the convertible note of $24,000 and $54,267 for the years ended December 31, 2021 and 2020, respectively. There was no unamortized debt discount as of December 31, 2021 and 2020 respectively. As of December 31, 2021, and 2020, net balance of the convertible note were $200,000.
Operating Lease
The Company has an operating lease for its office space from a third party in the United States. The Company determined if an arrangement is a lease inception of the contract and whether a contract is or contains a lease by determining whether it conveys the right to control the use of identified asset for a period of time. The contact provides the right to substantially all the economic benefits from the use of the identified asset and the right to direct use of the identified asset, we consider it to be, or contain, a lease. Leases is classified as operating at inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Because the leases do not provide an explicit or implicit rate of return, the Company determines incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 7.33%. Lease expense for the lease is recognized on a straight-line basis over the lease term. The lease does not contain any residual value guarantees or material restrictive covenants. Leases with a lease term of 12 months or less are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term. The lease expired on August 31, 2020.
| 14 |
| Table of Contents |
The Company signed a lease agreement with a related party in China in June 2020, an entity in which CBKB’s supervisor is a shareholder. It called for a monthly rent of RMB40,000 (approximately $6,000). The lease was for one year and was subject to renewal. The lease was classified as operating at inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease terms of the commencement date. Because the leases do not provide an explicit or implicit rate of return, the Company determines incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The incremental borrowing rate fora lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 5.25%. The lease did not contain any residual value guarantees or material restrictive covenants. The Company currently had no finance leases.
As of December 31, 2021, total future minimum annual lease payments under operating lease were as follows, by years:
Ending December 31, |
| Operating Leases |
| |
2022 |
| $ | 31,471 |
|
Total lease payments |
|
| 31,471 |
|
Less: Interest |
|
| (300 | ) |
Present value of lease liabilities |
| $ | 31,171 |
|
Material Definitive Agreement
MakingOrg, Inc.’s subsidiary, Chongqing Beauty Kenner Biotechnology Co., Ltd., entered into a Strategic Cooperation Framework Agreement (the “Agreement”) with Hangzhou Life Century Hualian Supermarket Chain Co., Ltd. (“HLCH”), dated May 25, 2018, pursuant to which the Company agreed to assist HLCH in identifying brand-specific, high tech characteristics products, such as acer truncatum nervonic acid oil, acer truncatum seed oil capsule, acer truncatum edible oil, acer truncatum oil with nervonic acid formula, acer truncatum coffe, acer truncatum tea, canned acer truncatum, acer truncatum cosmetics, acer truncatum skin care products, hair wash products and acer trunncatrum food. The Company has initiated the marketing effort per agreement, however, the result has not met the expectation and the Company is still finding solutions.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
| 15 |
| Table of Contents |
Item 8. Financial Statements.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
MakingORG, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of MakingORG, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operation, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, has a net capital deficiency, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue recognition
As described in Note 2 and 6 to the consolidated financial statements, the Company generates its revenue from sales of acer truncatum bunge related health products exclusively from one customer. The Company evaluates its product sales contracts and determines the contracts with its customer are distinct and contain one performance obligation. Performance obligation is satisfied when finished goods delivered to the customer.
We identified the revenue recognition as a critical audit matter. Auditor judgement is involved in performing our audit procedures to evaluate whether the timing and amount of revenue recognition was appropriately stated.
The primary procedures we performed to address this critical audit matter included:
| · | We evaluated the relationship between the Company and the customer, and the reasonableness of the key terms of product sales contracts. |
|
|
|
| · | We evaluated the performance obligations identified by the Company against the five-step model prescribed at ASC 606, Revenue form Contracts with Customers, and evaluated the management’s conclusion. |
|
|
|
| · | We tested the accuracy and cutoff of the revenue recognized by management through verifying the evidence of deliveries and value-added invoices issued. |
|
|
|
/s/
(PCAOB #
April 15, 2022
We have served as the Company’s auditor since 2016.
| F-1 |
| Table of Contents |
MAKINGORG, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
| December 31, 2021 |
|
| December 31, 2020 |
| ||
|
|
|
|
| ||||
ASSETS | ||||||||
Current Assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Accounts receivable – related party |
|
|
|
|
|
| ||
Advances to vendor and others |
|
|
|
|
|
| ||
Due from related party |
|
|
|
|
|
| ||
Right-of-use assets - operating leases |
|
|
|
|
|
| ||
Total Current Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Right-of-use assets - operating leases |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total Assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities |
|
|
|
|
|
|
|
|
Convertible note payable |
| $ |
|
| $ |
| ||
Interest payable |
|
|
|
|
|
| ||
Accrued liabilities |
|
|
|
|
|
| ||
Lease liabilities - operating leases |
|
|
|
|
|
| ||
Due to related party |
|
|
|
|
|
| ||
Total Current Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Long-Term Liabilities |
|
|
|
|
|
|
|
|
Convertible note payable, noncurrent |
|
|
|
|
|
| ||
Lease liabilities – operating lease, noncurrent |
|
|
|
|
|
| ||
Total Long-term Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitment and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
|
|
Preferred stock, par value $ |
|
|
|
|
|
| ||
Common stock, par value $ |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated other comprehensive income |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total Stockholders’ Deficit |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit |
| $ |
|
| $ |
| ||
See accompanying notes to consolidated financial statements.
| F-2 |
| Table of Contents |
MAKINGORG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
| For the years ended December 31, |
| |||||
|
| 2021 |
|
|
| 2020 |
| |
|
|
|
|
|
|
|
| |
REVENUE – RELATED PARTY |
| $ |
|
| $ |
| ||
COST OF REVENUE |
|
|
|
|
|
| ||
GROSS PROFIT |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
| ||
Professional fees |
|
|
|
|
|
| ||
TOTAL OPERATING EXPENSES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM OPERATIONS |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
| ||
Interest expense |
|
| ( | ) |
|
| ( | ) |
Other income, net |
|
|
|
|
|
| ||
Loss on inventory write-down |
|
| - |
|
|
| ( | ) |
TOTAL OTHER EXPENSE, NET |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAX |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Income tax |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET LOSS |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE ITEM: |
|
|
|
|
|
|
|
|
Foreign currency translation income |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE LOSS |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE: BASIC AND DILUTED |
| $ | ( | ) |
| $ | ( | ) |
|
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|
|
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|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED |
|
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| ||
See accompanying notes to consolidated financial statements.
| F-3 |
| Table of Contents |
MAKINGORG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
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| Accumulated |
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| Additional |
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| Other |
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| Total |
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| Common Stock |
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| Paid-in |
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| Comprehensive |
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| Accumulated |
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| Stockholders’ |
| |||||||||
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| Shares |
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| Amount |
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| Capital |
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| Income |
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| Deficit |
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| Deficit |
| ||||||
Balance, December 31, 2019 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||
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Foreign currency translation loss |
|
| - |
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Net loss |
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| - |
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| ( | ) |
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Balance, December 31, 2020 |
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Foreign currency translation loss |
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| - |
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Net loss |
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| - |
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| ( | ) |
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Balance, December 31, 2021 |
|
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| $ |
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| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||
See accompanying notes to consolidated financial statements.
| F-4 |
| Table of Contents |
MAKINGORG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| For the years ended December 31, |
| |||||
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| 2021 |
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| 2020 |
| ||
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| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
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| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Loss on inventories write-down |
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Amortization of debt discount |
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Changes in assets and liabilities: |
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Accounts receivable |
|
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| ( | ) | |
Inventories |
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Prepaid expenses and other current assets |
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| ( | ) |
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| |
Interest payable |
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Accrued liabilities |
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| ( | ) | |
Customer deposit - related party |
|
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| ( | ) | |
Lease liabilities |
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| ( | ) | ||
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES |
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| ( | ) | |
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CASH FLOWS FROM/USED BY INVESTING ACTIVITIES |
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Loan to related party |
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| ( | ) | |
CASH FLOWS USED IN INVESTING ACTIVITIES |
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| ( | ) | |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Loan from related party |
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CASH FLOWS PROVIDED BY FINANCING ACTIVITIES |
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EFFECT OF EXCHANGE RATE CHANGES ON CASH |
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NET CHANGE IN CASH AND CASH EQUIVALENTS |
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| ( | ) | |
Cash and cash equivalents, beginning of period |
|
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| ||
Cash and cash equivalents, end of period |
| $ |
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| $ |
| ||
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SUPPLEMENTAL CASH FLOW INFORMATION: |
|
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Interest paid |
| $ |
|
| $ |
| ||
Income taxes paid |
| $ |
|
| $ |
| ||
See accompanying notes to consolidated financial statements.
| F-5 |
| Table of Contents |
MAKINGORG, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
MakingORG, Inc. (“MakingORG”) was incorporated under the laws of the State of Nevada on August 10, 2012. The trading symbol is “CQCQ” and the fiscal year end is December 31. On October 20, 2016, MakingORG filed documents registering its intention to transact interstate business in the state of California. On November 29, 2016, MakingORG incorporated HK Feng Wang Group Limited (“HKFW”) under the laws of Hong Kong. On August 22, 2017, HKFW incorporated Chongqing Beauty Kenner Biotechnology Co., Ltd (“CBKB”) under the laws of the People’s Republic of China (“PRC”).
MaingORG, Inc. and subsidiaries (“the Company”) purchase Acer truncatum bunge seed oil from China, outsource to third party to manufacture Acer truncatum bunge related health products, and sell to end user and distributor in the United States and PRC.
In January 2020, the World Health Organization declared an outbreak of the coronavirus (“COVID-19”) to be a Public Health Emergency of International Concern, subsequently declared COVID-19 a global pandemic, and recommended containment and mitigation measures worldwide on March 11, 2020. The Company had experienced some adverse impacts on its business in the PRC Segment, such as limited access to its staff in the PRC in the beginning of the outbreak and restrictions on business travel within the PRC and between USA and PRC. Even though the operations in the PRC segment fully resumed in the third quarter of 2020, the pandemic has created global economic uncertainties and led to negative impact on the financial markets. The extent of the COVID-19 impact to the Company will depend on numerous factors and developments related to COVID-19. Consequently, any potential impacts of COVID-19 remain highly uncertain and cannot be predicted with confidence.
NOTE 2 – GOING CONCERN
Pursuant to ASU 2014-15, the Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these consolidated financial statements. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. The Company currently suffered recurring loss from operations, generated negative cash flow from operating activities and has an accumulated deficit and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period. These conditions raise substantial doubt as to its ability to continue as a going concern. These consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company had net losses of $
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company may seek additional funding through additional issuance of common stock and/or borrowings from financial institutions or the majority shareholder to support its normal business operations. Considering management’s efforts, there is no assurance that the Company will be successful in this or any of its endeavors or become financially viable to continue as a going concern.
| F-6 |
| Table of Contents |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Company’s consolidated financial statements refer to MakingORG, Inc. and its subsidiaries. All intercompany transactions and balances were eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Company’s consolidated financial statement date and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of cash on deposit with banks and financial institutes and petty cash on hands.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivables are reported realizable value, net of allowance for contractual credits and doubtful accounts, which are recognized in the period the related revenue is recorded. Accounts receivable consists principally of receivables from distributor or end user, arising from the sale of the Company’s product. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Management evaluated that there was no allowance for doubtful accounts as of December 31, 2021 and 2020, respectively.
Inventories
Inventories consist of (a) packing materials (b) raw materials and (b) finished goods, which are stated at the lower of cost or net realizable value under the first-in-first-out method. The Company reviews its inventories periodically for possible excess and obsolescence to determine if any reserves are necessary. As of December 31, 2021 and 2020, there were no inventory held on hands.
Revenue Recognition
The Company adopted Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method on January 1, 2018. In general, the Company’s performance obligation is to transfer it products to its end user or distributor. Revenues from product sales are recognized when the customer obtains control of the Company’s finished goods product, which occurs at a point in time, typically upon delivery to the customer.
The Company’s revenue mainly generates from sale of acer truncatum bunge related health products, such as Nervonic Acid Oil, coffee and tea. The Company evaluates its product sales contracts and determined that those contracts are generally capable of being distinct and accounted for as separate performance obligations. Performance obligation is satisfied when the finished goods product delivered to the customer.
Shipping and handling costs paid by the Company are included in cost of sales.
Advertising Expenses
Advertising costs are expensed as incurred. There were no advertising expenses for the years ended December 31, 2021 and 2020.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are using enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for deferred tax assets that, based on available evidence, if more likely than not that the company will not realize tax assets through future operation.
| F-7 |
| Table of Contents |
The 2017 Tax Reform Act permanently reduces the U.S. corporate income tax rate to a flat
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Foreign Currency Transactions
The functional currency for MakingORG and HKFW is US dollar. The functional currency for the China subsidiary (CBKB) is the Renminbi (RMB). Assets and liabilities of the China operation are translated from RMB into U.S. dollars at period-end rates, while the statements of operations and cash flows are translated at the weighted-average exchange rates for the period. The related translation adjustments are reflected as a foreign currency translation adjustment in accumulated other comprehensive income/(loss) within shareholders’ deficit.
The Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into U.S. dollars are recorded in stockholders’ equity as part of accumulated other comprehensive income. The exchange rates used for financial statements are as follows:
|
| Average Rate for the Twelve Months Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
China yuan (RMB) |
| RMB |
|
| RMB |
| ||
United States dollar ($) |
| $ |
|
| $ |
| ||
|
| Exchange Rate at |
| |||||
|
| December 31, 2021 |
|
| December 31, 2020 |
| ||
China yuan (RMB) |
| RMB |
|
| RMB |
| ||
United States dollar ($) |
| $ |
|
| $ |
| ||
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Lease
The Company adopted new lease accounting – ASC 842 on January 1,2019. The Company determines if an arrangement is or contains a lease at inception. Operating leases with lease terms of more than 12 months are included in operating lease assets, accrued and other current liabilities, and long-term operating lease liabilities on its consolidated balance sheet. Operating lease assets represent its right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments over the lease term. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using its incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term.
| F-8 |
| Table of Contents |
Segment Reporting
The Company follows Financial Accounting Standards Board (“FASB”) ASC Topic 280, “Segment Reporting” for its segment reporting. The Company aggregates its operating segments into one reporting segment, as management believes that its operating segments have similar operating characteristics and similar long-term operating performance.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the Company’s own credit risk.
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The carrying amounts of financial assets and liabilities in the consolidated balance sheets for cash and cash equivalents, advances to vendor, accrued expenses, interest payable and due to related party approximate their fair value due to the short-term duration of those instruments. Convertible notes payable is recorded at agreed values.
Recently Issued Accounting Pronouncement Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, (FASB ASC Topic 326), Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments which amends the current accounting guidance and requires the use of the new forward-looking “expected loss” model, which requires all expected losses to be determined based on historical experience, current conditions and reasonable and supportable forecasts, rather than the “incurred loss” model. This guidance amends the accounting for credit losses for most financial assets and certain other instruments including trade and other receivables, held-to-maturity debt securities, loans and other instruments. The effective date of ASU No. 2016-13 for smaller reporting companies is postponed to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company believes the adoption of ASU No. 2016-13 will not have a material impact on its financial position and results of operations.
The management does not believe that other than disclosed above, the recently issued but not yet adopted accounting pronouncements will have a material impact on its financial position results of operations or cash flows.
NOTE 4 – ADVANCES TO VENDOR AND OTHERS
Advances to vendors and others include primarily $
NOTE 5 – RELATED PARTY TRANSACTIONS
Due to Related Party
The Company lent RMB 80,000 (approximately $
| F-9 |
| Table of Contents |
As of December 31, 2021 and 2020, due to related party were nil and $
Due from Related Party
During the years ended December 31, 2021 and 2020, the Company’s Chief Executive Officer (“CEO”) lent the Company $
Sales to Related Party
The Company sells product to its related party, the Entity A. For the years ended December 31, 2021 and 2020, the Company total revenue generated from the transaction with the related party were $
Lease Agreement
On June 1, 2020, the Company entered into
NOTE 6 – BUSINES CONCENTRATION AND RISKS
Concentration of Risk
The Company maintains cash with banks in the USA, People’s Republic of China (“PRC” or “China”), and Hong Kong. Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In China, a depositor has up to RMB
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. As of December 31, 2021 and 2020, the Company’s cash and cash equivalents were fully insured.
Major customer
For the years ended December 31, 2021 and 2020, the Company generated revenues exclusively from one customer – Entity A in the amounts of $
| F-10 |
| Table of Contents |
Major vendors
For the years ended December 31, 2021 and 2020, the Company’s purchase from the vendors accounted more than 10% of total purchase were:
|
| Years Ended December 31, |
| |||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||
|
| Amount |
|
| % of Total Purchase |
|
| Amount |
|
| % of Total Purchase |
| ||||
Vendor A |
| $ |
|
|
| % |
| $ |
|
|
| % | ||||
Vendor B |
| $ | |
|
|
| | % |
| $ | |
|
|
| | % |
Vendor C |
| $ | |
|
|
| | % |
| $ | - |
|
|
| - | % |
NOTE 8 – CONVERTIBLE NOTE PAYABLE
On September 1, 2016, the Company entered into a Convertible Note Agreement in the principal amount of $
On September 1, 2018,
On September 1, 2019,
On September 1, 2020, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend
The Company recognized interest expense related to the convertible note of $
NOTE 9 – LEASE
The Company adopted ASC 842 on January 1, 2019. The Company entered an operating lease for its China office with Entity A with monthly rent of RMB40,000 (approximately $
|
|
|
| Years Ended December 31, |
| |||||
|
| Classification |
| 2021 |
|
| 2020 |
| ||
Operating lease cost |
| Selling, General & Administrative expenses |
| $ |
|
| $ |
| ||
| F-11 |
| Table of Contents |
Balance sheet information related to leases consists of the following:
|
| Classification |
| December 31, 2021 |
|
| December 31, 2020 |
| ||
Assets |
|
|
|
|
|
|
|
| ||
Operating lease ROU assets |
| Right-of-use assets |
| $ |
|
| $ |
| ||
Liabilities |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
| Current portion |
| $ |
|
| $ |
| ||
Operating lease liabilities |
| Long-term portion |
|
|
|
|
|
| ||
Total lease liabilities |
|
|
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
|
|
|
|
| ||
|
|
|
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|
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|
|
Weighted average discount rate |
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
| % |
| % | |||
Cash flow information related to leases consists of the following:
|
| Years Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
| ||
Operating cash flows from operating leases |
| $ |
|
| $ |
| ||
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
Operating leases |
|
|
|
|
|
| ||
As previously discussed, the Company adopted Topic 842 by applying the guidance at adoption date, January 1, 2019. As required, the following disclosure is provided for periods prior to adoption, which continue to be presented in accordance with ASC 840.
Future minimum lease payment under non-cancellable lease as of December 31, 2021 was as follows:
|
| Operating Leases |
| |
Year ending December 31, 2022 |
| $ |
| |
Less: Interest |
|
| ( | ) |
Present value of lease liabilities |
| $ |
| |
| F-12 |
| Table of Contents |
NOTE 9 – STOCKHOLDERS’ DEFICIT
Common Stock
No common stock was issued in 2021 and 2020. As of December 31, 2021 the Company had
NOTE 10 – INCOME TAXES
The Company accounts for income taxes under ASC 740, “Income Taxes”. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company is subject to taxation in the United States and certain state jurisdictions. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of
The Company’s income tax expense is mainly contributed by its subsidiary in PRC.
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 currently in the gross income of the CFCs’ U.S. shareholder income. GILTI is the excess of the shareholder’s net CFC tested income over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. For the years ended December 31, 2021 and 2020, no GILTI tax obligation existed and the GILTI tax expense was nil.
Provision (benefit) for income tax for the year ended December 31, 2021 consisted of:
Year ended December 31, 2021 |
| Federal |
|
| State |
|
| Foreign |
|
| Total |
| ||||
Current |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Deferred |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Provision (benefit) for income tax for the year ended December 31, 2020 consisted of:
Year ended December 31, 2020 |
| Federal |
|
| State |
|
| Foreign |
|
| Total |
| ||||
Current |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Deferred |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Net deferred tax assets consist of the following components as of:
|
| December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Deferred tax asset: |
|
|
|
|
|
| ||
Net operating loss carry forwards |
| $ |
|
| $ |
| ||
Valuation allowance |
|
| ( | ) |
|
| ( | ) |
Net deferred tax asset |
| $ |
|
| $ |
| ||
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately $
| F-13 |
| Table of Contents |
NOTE 11 – SEGMENT REPORTING
The geographical distributions of the Company’s financial information for the years ended December 31, 2021 and 2020 were as follows:
|
| For the Years ended December 31, |
| |||||
Geographic Areas |
| 2021 |
|
| 2020 |
| ||
Revenue |
|
|
|
|
|
| ||
PRC |
|
|
|
|
|
| ||
USA |
|
|
|
|
|
| ||
Total Revenue |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations |
|
|
|
|
|
|
|
|
PRC |
| $ | ( | ) |
| $ |
| |
USA |
|
|
|
|
| ( | ) | |
Total Loss from operations |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
|
|
|
|
|
|
|
PRC |
| $ |
|
| $ |
| ||
USA |
|
| ( | ) |
|
| ( | ) |
Total Net Loss |
| $ | ( | ) |
| $ | ( | ) |
The geographical distribution of the Company’s financial information as of December 31, 2021 and 2020 were as follows:
|
| For the Years ended December 31, |
| |||||
Geographic Areas |
| 2021 |
|
| 2020 |
| ||
Reportable Assets |
|
|
|
|
|
| ||
PRC |
|
|
|
|
|
| ||
USA |
|
|
|
|
|
| ||
Elimination |
|
| ( | ) |
|
| ( | ) |
Total Reportable Assets |
| $ |
|
| $ |
| ||
NOTE 12 – SUBSEQUENT EVENT
The Company has evaluated all subsequent events through the date the consolidated financial statements were issued and determine that there were no subsequent events or transactions that require recognition or disclosures in the consolidated financial statements.
| F-14 |
| Table of Contents |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There were no changes in or disagreements with accountants on accounting and financial disclosure for the year ended December 31, 2021 and 2020.
Item 9A. Controls and Procedures
EVALUATION OF DISCLOSURE CONTROLS
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the Company conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2019. Based on this evaluation, our principal executive officer and principal financial officer has concluded that, because of the material weaknesses in our internal control over financial reporting due to lack of segregation of duties discussed below, the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports filed or submitted under 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 the Company’s disclosure and controls are designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Notwithstanding the material weaknesses discussed below, our principal executive officer and principal financial officer has concluded that the consolidated financial statements included in this Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements and that receipts and expenditures of company assets are made in accordance with management authorization; and (iii) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2021 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on management’s assessment, including consideration of the control deficiencies discussed below, management has concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2021 due to the fact that there was a material weakness in its internal control over financial reporting. Specifically, through the investigation discussed above, management identified a lack of segregation of duties as well as errors in financial statement presentation and disclosure.
The specific material weaknesses identified by our management were as follows:
| · | Lack of Segregation of Duties |
| · | Lack of well-established procedures to identify, approve and report related party transaction |
| 16 |
| Table of Contents |
Management is aware that there is a lack of segregation of duties and lack of well-established procedures to identify, approve and report related party transaction at the Company due to the lack of employees dealing with general administrative and financial matters. However, at this time management has decided that considering the abilities of the employees now involved and the control procedures in place, the risks associated with such lack of segregation are low and the potential benefits of hiring employees to clearly segregate duties do not justify the substantial expenses associated with such increases. Management will periodically reevaluate this situation.
In order to mitigate the foregoing material weakness, we have engaged an outside accounting consultant with significant experience in the preparation of financial statements in conformity with U.S. GAAP to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity to U.S. GAAP. Management believes that this will lessen the possibility that a material misstatement of our annual or interim financial statements will be prevented or detected on a timely basis, and we will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the exemption provided to issuers that are not “large accelerated filers” nor “accelerated filers” under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
| 17 |
| Table of Contents |
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Directors and Executive Officers
Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current director and executive officer.
Name |
| Age | Position | |
| ||||
Juanzi Cui |
| 51 |
| President, Chief Executive Officer, Chief Financial Officer and Secretary and as a director |
Juanzi Cui, age 51, has been the President of the Chongqing Municipal Health Management Association since March of 2014. Since 2011 she has been the Chairman of the Chongqing Huang Xin Technology Limited Liability Corporation. Since 2007 she has been the Vice President and Secretary General of Dietitians Association of Chongqing. Since 2006 she is the Chief Executive Officer and President of the Chongqing City Ziman Nutrition and Health Vocational Training School.
The director of the Company serves for a term of one year or until the successor is elected at the Company’s annual stockholders’ meeting and is qualified, subject to removal by the Company’s stockholders. The officer serves, at the pleasure of the board of directors, for a term of one year and until the successor is elected at the annual meeting of the board of directors.
There are no familial relationships among any of our officers or directors. None of our directors or officers is a director in any other reporting companies. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last ten years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or has a material interest adverse to the Company.
Code of Ethics; Financial Expert
Because of the small size and limited resources of the Company, we do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have a “financial expert” on the board or an audit committee or nominating committee.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors of the Company and persons who own more than 10% of a registered class of the Company’s equity securities to file reports of ownership and changes in their ownership with the Securities and Exchange Commission, and forward copies of such filings to the Company. Our sole executive officer and director complied with the Section 16(a) filing requirements since she acquired control of the Company.
Involvement in Certain Legal Proceedings
There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.
| 18 |
| Table of Contents |
Item 11. Executive Compensation.
Summary Compensation
Since our incorporation in August 2012, no compensation has been paid to our directors or executive officers in consideration for their services rendered to our Company in their capacity as such. We have no employment agreements with any of our directors or executive officers. We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans
Since our incorporation, no stock options or stock appreciation rights were granted to any of our directors or executive officers. We have no equity incentive plans.
Outstanding Equity Awards
Since our incorporation, none of our directors or executive officers has held unexercised options, stock that had not vested, or equity incentive plan awards.
Compensation of Directors
Since the incorporation in August 2012, no compensation has been paid to any of our directors in consideration for their services rendered in their capacity as directors. No arrangements are presently in place regarding compensation to directors for their services as directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table lists, as of April 11, 2019, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each executive officer and director of our Company; and (iii) all executive officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 35,540,000 shares of our common stock issued and outstanding as of April 15, 2022. We do not have any outstanding options, warrants or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Making ORG, Inc., 385 S. Lemon Avenue #E 301, Walnut, CA 91789
Name of Beneficial Owner |
| Amount and Nature of Beneficial Ownership |
|
| Percent of Class |
| ||
|
|
|
|
|
|
| ||
Juanzi Cui |
|
| 25,421,468 |
|
|
| 71.53 | % |
|
|
|
|
|
|
|
|
|
Directors and officers as a group (1 person) |
|
| 25,421,468 |
|
|
| 71.53 | % |
| 19 |
| Table of Contents |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
During the years ended December 31, 2021 and 2020, the Company’s sole officer loaned the Company $53,332 and $54,417, respectively. As of December 31, 2021 and 2020, the Company was obligated to the officer, for an unsecured, non-interest bearing demand loan with a balance of $393,618 and $340,286, respectively.
Director Independence
We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.”
Item 14. Principal Accounting Fees and Services.
Our principal independent accountant is Simon & Edward, LLP. Their pre-approved fees billed to the Company are set forth below:
|
| Year Ended December 31, 2021 |
|
| Year Ended December 31, 2020 |
| ||
Audit Fees |
| $ | 24,500 |
|
| $ | 22,000 |
|
Audit Related Fees |
| $ | 0 |
|
| $ | 0 |
|
Tax Fees |
| $ | 3,500 |
|
| $ | 2,000 |
|
All Other Fees |
| $ | 0 |
|
| $ | 0 |
|
As of December 31, 2021, the Company did not have a formal documented pre-approval policy for the fees of the principal accountant. The Company does not have an audit committee. The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.
| 20 |
| Table of Contents |
PART IV
Item 15. Exhibits. Financial Statement Schedules.
Exhibits
Exhibit No. |
| Description |
| ||
| Amended and Restated Articles of Incorporation of MakingORG, Inc. (1) | |
| ||
| ||
| ||
| ||
| ||
|
_______
* | Filed herewith |
| |
(1) | Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K filed on August 22, 2014. |
(2) | Incorporated by reference to the corresponding exhibit to the Company’s registration statement on Form S-1 on filed on February 8, 2013. |
(3) | Incorporated by reference to the corresponding exhibit to the Company’s Current Report on Form 8-K filed on May 29, 2018. |
| 21 |
| Table of Contents |
SIGNATURES
Purusant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MAKINGORG, INC. | ||
|
| ||
Dated: April 15, 2022 | By: | /s/ Juanzi Cui | |
| Name: | Juanzi Cui | |
| Title: | President, Chief Executive Officer, Chief Financial Officer and Secretary and Director (Principal Executive, Financial and Accounting Officer) | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
Dated: April 15,2022 | By: | /s/ Juanzi Cui | |
| Name: | Juanzi Cui | |
| Title: | President, Chief Executive Officer, Chief Financial Officer and Secretary and as a director (Principal Executive, Financial and Accounting Officer) |
|
| 22 |
EXHIBIT 31.1
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL ACCOUNTING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Juanzi Cui, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of MakingORG, Inc. (the “Registrant”): |
|
| |
| 2. | Based 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 13-a13a-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. |
| Dated: April 15, 2022 | By: | /s/ Juanzi Cui | |
|
| Juanzi Cui | ||
|
| Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of MakingOrg, Inc. (the “Company”) on Form 10-K for the year ended December 31, 20210 (the “Report”), I, Juanzi Cui, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
|
| |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: April 15, 2022 | By: | /s/ Juanzi Cui | |
|
| Juanzi Cui | ||
|
| Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of MakingOrg, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2021 (the “Report”), I, Juanzi Cui, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
|
| |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: April 15, 2022 | By: | /s/ Juanzi Cui | |
|
| Juanzi Cui | ||
|
| Chief Financial Officer (Principal Accounting Officer) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||
| Preferred stock, shares par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, shares par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 150,000,000 | 150,000,000 |
| Common stock, shares issued | 35,540,000 | 35,540,000 |
| Common stock, shares outstanding | 35,540,000 | 35,540,000 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT - USD ($) |
Total |
Common Stock |
Additional Paid-In Capital |
Accumulated other comprehensive Income |
Accumulated Deficit |
|---|---|---|---|---|---|
| Balance, shares at Dec. 31, 2019 | 35,430,000 | ||||
| Balance, amount at Dec. 31, 2019 | $ (379,303) | $ 35,430 | $ 583,882 | $ (2,882) | $ (995,843) |
| Foreign currency translation loss | 5,373 | 0 | 0 | 5,373 | 0 |
| Net loss | (165,850) | $ 0 | 0 | 0 | (165,850) |
| Balance, shares at Dec. 31, 2020 | 35,430,000 | ||||
| Balance, amount at Dec. 31, 2020 | (539,780) | $ 35,430 | 583,882 | 2,491 | (1,161,693) |
| Foreign currency translation loss | 3,775 | 0 | 0 | 3,775 | 0 |
| Net loss | (614) | $ 0 | 0 | 0 | (614) |
| Balance, shares at Dec. 31, 2021 | 35,540,000 | ||||
| Balance, amount at Dec. 31, 2021 | $ (536,619) | $ 35,540 | $ 583,882 | $ 6,266 | $ (1,162,307) |
ORGANIZATION AND NATURE OF BUSINESS |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| ORGANIZATION AND NATURE OF BUSINESS | |
| NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS | NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
MakingORG, Inc. (“MakingORG”) was incorporated under the laws of the State of Nevada on August 10, 2012. The trading symbol is “CQCQ” and the fiscal year end is December 31. On October 20, 2016, MakingORG filed documents registering its intention to transact interstate business in the state of California. On November 29, 2016, MakingORG incorporated HK Feng Wang Group Limited (“HKFW”) under the laws of Hong Kong. On August 22, 2017, HKFW incorporated Chongqing Beauty Kenner Biotechnology Co., Ltd (“CBKB”) under the laws of the People’s Republic of China (“PRC”).
MaingORG, Inc. and subsidiaries (“the Company”) purchase Acer truncatum bunge seed oil from China, outsource to third party to manufacture Acer truncatum bunge related health products, and sell to end user and distributor in the United States and PRC.
In January 2020, the World Health Organization declared an outbreak of the coronavirus (“COVID-19”) to be a Public Health Emergency of International Concern, subsequently declared COVID-19 a global pandemic, and recommended containment and mitigation measures worldwide on March 11, 2020. The Company had experienced some adverse impacts on its business in the PRC Segment, such as limited access to its staff in the PRC in the beginning of the outbreak and restrictions on business travel within the PRC and between USA and PRC. Even though the operations in the PRC segment fully resumed in the third quarter of 2020, the pandemic has created global economic uncertainties and led to negative impact on the financial markets. The extent of the COVID-19 impact to the Company will depend on numerous factors and developments related to COVID-19. Consequently, any potential impacts of COVID-19 remain highly uncertain and cannot be predicted with confidence. |
GOING CONCERN |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| GOING CONCERN | |
| NOTE 2 - GOING CONCERN | NOTE 2 – GOING CONCERN
Pursuant to ASU 2014-15, the Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these consolidated financial statements. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. The Company currently suffered recurring loss from operations, generated negative cash flow from operating activities and has an accumulated deficit and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period. These conditions raise substantial doubt as to its ability to continue as a going concern. These consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company had net losses of $614 and $165,850 for the years ended December 31, 2021 and 2020 respectively. In addition, the Company had an accumulated deficit of $1,162,307 and $1,161,693, respectively, and generated not enough/negative cash flows from operating activities as of and for years ended December 31, 2021 and 2020, respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital. The Company’s consolidated financial statements do not include any adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company may seek additional funding through additional issuance of common stock and/or borrowings from financial institutions or the majority shareholder to support its normal business operations. Considering management’s efforts, there is no assurance that the Company will be successful in this or any of its endeavors or become financially viable to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Company’s consolidated financial statements refer to MakingORG, Inc. and its subsidiaries. All intercompany transactions and balances were eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Company’s consolidated financial statement date and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of cash on deposit with banks and financial institutes and petty cash on hands.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivables are reported realizable value, net of allowance for contractual credits and doubtful accounts, which are recognized in the period the related revenue is recorded. Accounts receivable consists principally of receivables from distributor or end user, arising from the sale of the Company’s product. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Management evaluated that there was no allowance for doubtful accounts as of December 31, 2021 and 2020, respectively.
Inventories
Inventories consist of (a) packing materials (b) raw materials and (b) finished goods, which are stated at the lower of cost or net realizable value under the first-in-first-out method. The Company reviews its inventories periodically for possible excess and obsolescence to determine if any reserves are necessary. As of December 31, 2021 and 2020, there were no inventory held on hands.
Revenue Recognition
The Company adopted Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method on January 1, 2018. In general, the Company’s performance obligation is to transfer it products to its end user or distributor. Revenues from product sales are recognized when the customer obtains control of the Company’s finished goods product, which occurs at a point in time, typically upon delivery to the customer.
The Company’s revenue mainly generates from sale of acer truncatum bunge related health products, such as Nervonic Acid Oil, coffee and tea. The Company evaluates its product sales contracts and determined that those contracts are generally capable of being distinct and accounted for as separate performance obligations. Performance obligation is satisfied when the finished goods product delivered to the customer.
Shipping and handling costs paid by the Company are included in cost of sales.
Advertising Expenses
Advertising costs are expensed as incurred. There were no advertising expenses for the years ended December 31, 2021 and 2020.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are using enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for deferred tax assets that, based on available evidence, if more likely than not that the company will not realize tax assets through future operation. The 2017 Tax Reform Act permanently reduces the U.S. corporate income tax rate to a flat 21% rate. In addition, the 2017 Tax Reform 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 tax law in PRC applies an income tax rate of 25% to all enterprises. The Company’s subsidiary does not receive any preferential tax treatment from local government. 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.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
Foreign Currency Transactions
The functional currency for MakingORG and HKFW is US dollar. The functional currency for the China subsidiary (CBKB) is the Renminbi (RMB). Assets and liabilities of the China operation are translated from RMB into U.S. dollars at period-end rates, while the statements of operations and cash flows are translated at the weighted-average exchange rates for the period. The related translation adjustments are reflected as a foreign currency translation adjustment in accumulated other comprehensive income/(loss) within shareholders’ deficit.
The Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into U.S. dollars are recorded in stockholders’ equity as part of accumulated other comprehensive income. The exchange rates used for financial statements are as follows:
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Lease
The Company adopted new lease accounting – ASC 842 on January 1,2019. The Company determines if an arrangement is or contains a lease at inception. Operating leases with lease terms of more than 12 months are included in operating lease assets, accrued and other current liabilities, and long-term operating lease liabilities on its consolidated balance sheet. Operating lease assets represent its right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments over the lease term. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using its incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term. Segment Reporting
The Company follows Financial Accounting Standards Board (“FASB”) ASC Topic 280, “Segment Reporting” for its segment reporting. The Company aggregates its operating segments into one reporting segment, as management believes that its operating segments have similar operating characteristics and similar long-term operating performance.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the Company’s own credit risk.
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The carrying amounts of financial assets and liabilities in the consolidated balance sheets for cash and cash equivalents, advances to vendor, accrued expenses, interest payable and due to related party approximate their fair value due to the short-term duration of those instruments. Convertible notes payable is recorded at agreed values.
Recently Issued Accounting Pronouncement Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, (FASB ASC Topic 326), Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments which amends the current accounting guidance and requires the use of the new forward-looking “expected loss” model, which requires all expected losses to be determined based on historical experience, current conditions and reasonable and supportable forecasts, rather than the “incurred loss” model. This guidance amends the accounting for credit losses for most financial assets and certain other instruments including trade and other receivables, held-to-maturity debt securities, loans and other instruments. The effective date of ASU No. 2016-13 for smaller reporting companies is postponed to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company believes the adoption of ASU No. 2016-13 will not have a material impact on its financial position and results of operations.
The management does not believe that other than disclosed above, the recently issued but not yet adopted accounting pronouncements will have a material impact on its financial position results of operations or cash flows. |
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ADVANCES TO VENDOR AND OTHERS |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| ADVANCES TO VENDOR AND OTHERS | |
| NOTE 4 - ADVANCES TO SUPPLIER | NOTE 4 – ADVANCES TO VENDOR AND OTHERS
Advances to vendors and others include primarily $78,677 and nil advance for purchasing of packaging materials out of $80,677 and $2,000 balances as of December 31, 2021 and 2020, respectively. |
RELATED PARTY TRANSACTIONS |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| RELATED PARTY TRANSACTIONS | |
| NOTE 6 - RELATED PARTY TRANSACTIONS | NOTE 5 – RELATED PARTY TRANSACTIONS
Due to Related Party
The Company lent RMB 80,000 (approximately $12,209) to the Entity A, a related party whose shareholder is a board member of CBKB, and the landlord of the office space CBKB leased in China. The loan has a term of six months and matured on March 31, 2021, with a monthly interest rate of 1%. According to the loan agreement, the loan principal could be applied to the monthly lease payment for two months (RMB 40,000 per month). The related party was not able to pay back the loan on the maturity date and CBKB withheld April and May 2021 lease payments to offset with the loan principal due. The Entity A paid the entire interests of RMB 4,800 back on April 1, 2021. As of December 31, 2021 and 2020, due to related party were nil and $12,256, respectively.
Due from Related Party
During the years ended December 31, 2021 and 2020, the Company’s Chief Executive Officer (“CEO”) lent the Company $46,132 and $54,417, respectively, with the loan balances totaling $386,418 and $340,286 as of December 31,2021 and 2020. The loans are unsecured, non-interest bearing and due on demand.
Sales to Related Party
The Company sells product to its related party, the Entity A. For the years ended December 31, 2021 and 2020, the Company total revenue generated from the transaction with the related party were $611,328 and $238,587, respectively. As of December 31, 2021 and 2020, accounts receivable due from Entity A were $nil and $48,934, respectively.
Lease Agreement
On June 1, 2020, the Company entered into a lease agreement with Entity A in Chongqing, China for the period from June 1, 2020 to May 31, 2021. Pursuant to the lease agreement, the monthly rent was RMB40,000 (approximately $6,000) which should be paid quarterly. The lease had a one-year term and the Company had the priority to renew the lease. The Company was still leasing the property after the lease term ended and paying the rent quarterly. Refer to Note 8 – Lease for details. |
BUSINES CONCENTRATION AND RISKS |
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| NOTE 7 - BUSINES CONCENTRATION AND RISKS | NOTE 6 – BUSINES CONCENTRATION AND RISKS
Concentration of Risk
The Company maintains cash with banks in the USA, People’s Republic of China (“PRC” or “China”), and Hong Kong. Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In China, a depositor has up to RMB 500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”). In Hong Kong, a depositor has up to HKD 500,000 insured by Hong Kong Deposit Protection Board (“DPB”). In the United States, the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”).
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. As of December 31, 2021 and 2020, the Company’s cash and cash equivalents were fully insured.
Major customer
For the years ended December 31, 2021 and 2020, the Company generated revenues exclusively from one customer – Entity A in the amounts of $611,328 and $238,587, respectively.
Major vendors
For the years ended December 31, 2021 and 2020, the Company’s purchase from the vendors accounted more than 10% of total purchase were:
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CONVERTIBLE NOTE PAYABLE |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| CONVERTIBLE NOTE PAYABLE | |
| NOTE 8 - CONVERTIBLE NOTE PAYABLE | NOTE 8 – CONVERTIBLE NOTE PAYABLE
On September 1, 2016, the Company entered into a Convertible Note Agreement in the principal amount of $200,000 with an unrelated party. The note bears interest at 12% per annum and the holder is able to convert all unpaid interest and principal into common shares at $3.50 per share. The note matures on September 1, 2018. The Company recognized a discount on the note of $38,857 at the agreement date. The interest expense was due every six months commencing on March 1, 2017 until the principal amount of this convertible note is paid in full.
On September 1, 2018, the Company entered into an Amended and Restated 12% Convertible Promissory Note. Pursuant to an Amended and Restated 12% Convertible Promissory Note, both parties agreed to extend a Convertible Note Agreement to September 1, 2019 with no additional consideration. The Company recognized a discount on the note of $40,000 at the amended agreement date.
On September 1, 2019, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2020 with no additional consideration. The Company recognized a discount on the note of $54,400 at the amended agreement date. Since the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
On September 1, 2020, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2022 with no additional consideration. The Company recognized a discount on the note of $0 at the amended agreement date.
The Company recognized interest expense related to the convertible note of $24,000 and $54,267, respectively, for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, and 2020, the Company had $128,000 and $104,000 interest payable associated with the $200,000 convertible note, respectively. |
LEASE |
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| NOTE 9 - LEASE | NOTE 9 – LEASE
The Company adopted ASC 842 on January 1, 2019. The Company entered an operating lease for its China office with Entity A with monthly rent of RMB40,000 (approximately $6,100) on June 1, 2020. The lease was for one year and the Company renewed the lease. Leases was classified as operating at the inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease terms of the commencement date. Because the leases do not provide an explicit or implicit rate of return, the Company determines incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 5.25%. The lease does not contain any residual value guarantees or material restrictive covenants. The remaining term including the renewal term as of December 31, 2021 was five months. The Company has no finance lease. The components of lease expense consist of the following:
Balance sheet information related to leases consists of the following:
Cash flow information related to leases consists of the following:
As previously discussed, the Company adopted Topic 842 by applying the guidance at adoption date, January 1, 2019. As required, the following disclosure is provided for periods prior to adoption, which continue to be presented in accordance with ASC 840.
Future minimum lease payment under non-cancellable lease as of December 31, 2021 was as follows:
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STOCKHOLDERS DEFICIT |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| STOCKHOLDERS DEFICIT | |
| NOTE 10 - STOCKHOLDERS DEFICIT | NOTE 9 – STOCKHOLDERS’ DEFICIT
Common Stock
No common stock was issued in 2021 and 2020. As of December 31, 2021 the Company had 35,540,000 shares of common stock issued and outstanding. |
INCOME TAXES |
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| NOTE 11 - INCOME TAXES | NOTE 10 – INCOME TAXES
The Company accounts for income taxes under ASC 740, “Income Taxes”. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company is subject to taxation in the United States and certain state jurisdictions. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes. HKFW in Hong Kong are governed by the Inland Revenue Ordinance Tax Law of Hong Kong, and are generally subject to a profits tax at the rate of 16.5% on the estimated assessable profits. CBNB in the PRC is governed by the Income Tax Law of the PRC concerning the private enterprises, which are generally subject to tax at 25% on income reported in the statutory financial statements after appropriated adjustments. PRC also give tax discount to small enterprise whose annual taxable income exceeding 1 million but not exceeding 3 million.
The Company’s income tax expense is mainly contributed by its subsidiary in PRC.
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 currently in the gross income of the CFCs’ U.S. shareholder income. GILTI is the excess of the shareholder’s net CFC tested income over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. For the years ended December 31, 2021 and 2020, no GILTI tax obligation existed and the GILTI tax expense was nil.
Provision (benefit) for income tax for the year ended December 31, 2021 consisted of:
Provision (benefit) for income tax for the year ended December 31, 2020 consisted of:
Net deferred tax assets consist of the following components as of:
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately $481,000, which expires in 2032, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years. Tax filings for the Company for the years after 2015 are available for examination by state tax jurisdictions and federal tax purposes. |
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| NOTE 12 - SEGMENT REPORTING | NOTE 11 – SEGMENT REPORTING
The geographical distributions of the Company’s financial information for the years ended December 31, 2021 and 2020 were as follows:
The geographical distribution of the Company’s financial information as of December 31, 2021 and 2020 were as follows:
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SUBSEQUENT EVENT |
12 Months Ended |
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Dec. 31, 2021 | |
| SUBSEQUENT EVENT | |
| NOTE 13 - SUBSEQUENT EVENT | NOTE 12 – SUBSEQUENT EVENT
The Company has evaluated all subsequent events through the date the consolidated financial statements were issued and determine that there were no subsequent events or transactions that require recognition or disclosures in the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of Consolidation | The Company’s consolidated financial statements refer to MakingORG, Inc. and its subsidiaries. All intercompany transactions and balances were eliminated in consolidation. |
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| Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Company’s consolidated financial statement date and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. |
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| Cash and Cash Equivalents | Cash and cash equivalents primarily consist of cash on deposit with banks and financial institutes and petty cash on hands. |
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| Accounts Receivable and Allowance for Doubtful Accounts | Accounts receivables are reported realizable value, net of allowance for contractual credits and doubtful accounts, which are recognized in the period the related revenue is recorded. Accounts receivable consists principally of receivables from distributor or end user, arising from the sale of the Company’s product. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Management evaluated that there was no allowance for doubtful accounts as of December 31, 2021 and 2020, respectively. |
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| Inventories | Inventories consist of (a) packing materials (b) raw materials and (b) finished goods, which are stated at the lower of cost or net realizable value under the first-in-first-out method. The Company reviews its inventories periodically for possible excess and obsolescence to determine if any reserves are necessary. As of December 31, 2021 and 2020, there were no inventory held on hands. |
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| Revenue Recognition | The Company adopted Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method on January 1, 2018. In general, the Company’s performance obligation is to transfer it products to its end user or distributor. Revenues from product sales are recognized when the customer obtains control of the Company’s finished goods product, which occurs at a point in time, typically upon delivery to the customer.
The Company’s revenue mainly generates from sale of acer truncatum bunge related health products, such as Nervonic Acid Oil, coffee and tea. The Company evaluates its product sales contracts and determined that those contracts are generally capable of being distinct and accounted for as separate performance obligations. Performance obligation is satisfied when the finished goods product delivered to the customer.
Shipping and handling costs paid by the Company are included in cost of sales. |
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| Advertising Expenses | Advertising costs are expensed as incurred. There were no advertising expenses for the years ended December 31, 2021 and 2020. |
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| Income Taxes | Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are using enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for deferred tax assets that, based on available evidence, if more likely than not that the company will not realize tax assets through future operation. The 2017 Tax Reform Act permanently reduces the U.S. corporate income tax rate to a flat 21% rate. In addition, the 2017 Tax Reform 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 tax law in PRC applies an income tax rate of 25% to all enterprises. The Company’s subsidiary does not receive any preferential tax treatment from local government. 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. |
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| Basic Income (Loss) Per Share | Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. |
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| Foreign Currency Transactions | The functional currency for MakingORG and HKFW is US dollar. The functional currency for the China subsidiary (CBKB) is the Renminbi (RMB). Assets and liabilities of the China operation are translated from RMB into U.S. dollars at period-end rates, while the statements of operations and cash flows are translated at the weighted-average exchange rates for the period. The related translation adjustments are reflected as a foreign currency translation adjustment in accumulated other comprehensive income/(loss) within shareholders’ deficit.
The Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into U.S. dollars are recorded in stockholders’ equity as part of accumulated other comprehensive income. The exchange rates used for financial statements are as follows:
|
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| Related Parties | The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. |
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| Lease | The Company adopted new lease accounting – ASC 842 on January 1,2019. The Company determines if an arrangement is or contains a lease at inception. Operating leases with lease terms of more than 12 months are included in operating lease assets, accrued and other current liabilities, and long-term operating lease liabilities on its consolidated balance sheet. Operating lease assets represent its right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments over the lease term. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using its incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term. |
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| Segment Reporting | The Company follows Financial Accounting Standards Board (“FASB”) ASC Topic 280, “Segment Reporting” for its segment reporting. The Company aggregates its operating segments into one reporting segment, as management believes that its operating segments have similar operating characteristics and similar long-term operating performance. |
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| Fair Value of Financial Instruments | Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the Company’s own credit risk.
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The carrying amounts of financial assets and liabilities in the consolidated balance sheets for cash and cash equivalents, advances to vendor, accrued expenses, interest payable and due to related party approximate their fair value due to the short-term duration of those instruments. Convertible notes payable is recorded at agreed values. |
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| Recently Issued Accounting Pronouncement Not Yet Adopted | In June 2016, the FASB issued ASU No. 2016-13, (FASB ASC Topic 326), Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments which amends the current accounting guidance and requires the use of the new forward-looking “expected loss” model, which requires all expected losses to be determined based on historical experience, current conditions and reasonable and supportable forecasts, rather than the “incurred loss” model. This guidance amends the accounting for credit losses for most financial assets and certain other instruments including trade and other receivables, held-to-maturity debt securities, loans and other instruments. The effective date of ASU No. 2016-13 for smaller reporting companies is postponed to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company believes the adoption of ASU No. 2016-13 will not have a material impact on its financial position and results of operations.
The management does not believe that other than disclosed above, the recently issued but not yet adopted accounting pronouncements will have a material impact on its financial position results of operations or cash flows. |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Foreign Currency Transactions |
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BUSINES CONCENTRATION AND RISKS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINES CONCENTRATION AND RISKS (Tables) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of major vendor |
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of provision (benefit) for income tax |
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| Schedule of net deferred tax assets |
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LEASE (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of components of lease expense |
|
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| Schedule of balance sheet information related to leases |
|
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| Schedule of cash flow information related to leases |
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| Schedule of future minimum lease payment |
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SEGMENT REPORTING (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT REPORTING | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of segment reporting information |
|
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| Schedule of segment reporting financial information |
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GOING CONCERN (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| GOING CONCERN | ||
| Net loss | $ (614) | $ (165,850) |
| Accumulated Deficit | $ (1,162,307) | $ (1,161,693) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
12 Months Ended | |||||
|---|---|---|---|---|---|---|
|
Dec. 31, 2021
¥ / shares
|
Dec. 31, 2021
¥ / shares
$ / shares
|
Dec. 31, 2020
¥ / shares
|
Dec. 31, 2020
$ / shares
¥ / shares
|
Dec. 31, 2021
$ / shares
|
Dec. 31, 2020
$ / shares
|
|
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
| Average Rate China yuan (RMB) | ¥ / shares | ¥ 6.452480 | ¥ 6.900133 | ||||
| Average Rate United States dollar | $ / shares | $ 1.000000 | $ 1.000000 | ||||
| Exchange Rate China yuan (RMB) | ¥ / shares | ¥ 6.527650 | $ 6.527650 | ¥ 6.355095 | $ 6.355095 | ||
| Exchange Rate United States dollar | $ / shares | $ 1.000000 | $ 1.000000 | ||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) |
1 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 22, 2017 |
Dec. 31, 2021 |
|
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
| Statutory federal income tax rate | 21.00% | 25.00% |
ADVANCES TO VENDOR AND OTHERS (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| GOING CONCERN | ||
| Advances to vendor and others include primarily | $ 78,677 | $ 0 |
| Advances to vendor and others | $ 80,677 | $ 2,000 |
RELATED PARTY TRANSACTIONS (Details Narrative) |
12 Months Ended | ||
|---|---|---|---|
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2021
CNY (¥)
|
Dec. 31, 2020
USD ($)
|
|
| Net Sales-Related Party | $ 611,328 | $ 238,587 | |
| Accounts receivable - related party | 0 | 48,934 | |
| Loan from related party | 0 | 12,256 | |
| Due to related party | 386,418 | 340,286 | |
| Loan from related party | 46,132 | 54,417 | |
| Lease Agreement [Member] | |||
| Monthly rent | 6,100 | ||
| Officers [Member] | |||
| Due to related party | 386,418 | 340,286 | |
| Loan from related party | $ 46,132 | $ 54,417 | |
| On June 1, 2020 [Member] | Lease Agreement [Member] | |||
| Lease term descriptions | a lease agreement with Entity A in Chongqing, China for the period from June 1, 2020 to May 31, 2021. | a lease agreement with Entity A in Chongqing, China for the period from June 1, 2020 to May 31, 2021. | |
| Monthly rent | $ 6,000 | ||
| Lease term | 1 year | 1 year | |
| CBKB's [Member] | April 1, 2021 [Member] | |||
| Lease term descriptions | the loan principal could be applied to the monthly lease payment for two months (RMB 40,000 per month). | the loan principal could be applied to the monthly lease payment for two months (RMB 40,000 per month). | |
| Interest rate of loan | 1.00% | 1.00% | |
| Due to related party | $ 12,209 | ||
| Loan from related party | ¥ | ¥ 4,800 | ||
BUSINES CONCENTRATION AND RISKS (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Net Sales-Related Party | $ 611,328 | $ 238,587 |
| Vendor C [Member] | ||
| Concentration risk percentage | 13.00% | 0.00% |
| Net Sales-Related Party | $ 57,071 | |
| Vendor A [Member] | ||
| Concentration risk percentage | 52.00% | 82.00% |
| Net Sales-Related Party | $ 231,280 | $ 65,948 |
| Vendor B [Member] | ||
| Concentration risk percentage | 25.00% | 9.00% |
| Net Sales-Related Party | $ 108,770 | $ 7,328 |
BUSINES CONCENTRATION AND RISKS (Details Narrative) |
12 Months Ended | ||||
|---|---|---|---|---|---|
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2021
CNY (¥)
|
Dec. 31, 2021
HKD ($)
|
Dec. 31, 2021
USD ($)
|
|
| FDIC limit | $ 250,000 | ||||
| Net Sales-Related Party | $ 611,328 | $ 238,587 | |||
| HKD [Member] | |||||
| FDIC limit | $ 500,000 | ||||
| RMB [Member] | |||||
| FDIC limit | ¥ | ¥ 500,000 | ||||
CONVERTIBLE NOTE PAYABLE (Details Narrative) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Interest expense | $ 24,000 | $ 60,267 |
| Convertible note payable, net of discount current | 200,000 | 0 |
| Convertible Note Agreement [Member] | ||
| Interest expense | 24,000 | 54,267 |
| Convertible note payable | 200,000 | |
| Unamortized debt discount | 128,000 | $ 104,000 |
| Convertible Note Agreement [Member] | September 1, 2016 [Member] | ||
| Principal amount | $ 200,000 | |
| Maturity date | Sep. 01, 2018 | |
| Interest rate | 12.00% | |
| Share price | $ 3.50 | |
| Discount on convertible note payable | $ 38,857 | |
| Convertible Note Agreement [Member] | September 1, 2018 [Member] | ||
| Convertible note payable, net of discount current | $ 40,000 | |
| Amended agreement description | the Company entered into an Amended and Restated 12% Convertible Promissory Note. Pursuant to an Amended and Restated 12% Convertible Promissory Note, both parties agreed to extend a Convertible Note Agreement to September 1, 2019 with no additional consideration | |
| Convertible Note Agreement [Member] | September 1, 2020 [Member] | ||
| Convertible note payable, net of discount current | $ 0 | |
| Amended agreement description | the convertible note agreement to September 1, 2022 with no additional consideration | |
| Convertible Note Agreement [Member] | September 1, 2019 [Member] | ||
| Convertible note payable, net of discount current | $ 54,400 | |
| Amended agreement description | the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2020 with no additional consideration | |
LEASE (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| LEASE | ||
| Operating lease cost | $ 70,848 | $ 46,329 |
LEASE (Details 1) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Assets | ||
| Operating lease ROU assets | $ 31,171 | $ 98,653 |
| Current portion | ||
| Operating lease liabilities | 31,171 | 70,534 |
| Non-current portion | ||
| Operating lease liabilities | 0 | 12,756 |
| Total lease liabilities | $ 31,171 | $ 83,290 |
| Weighted average remaining lease term Operating leases | 5 months 1 day | 1 year 5 months 1 day |
| Weighted average discount rate Operating leases | 5.25% | |
| Minimum [Member] | ||
| Non-current portion | ||
| Weighted average discount rate Operating leases | 5.25% | |
| Maximum [Member] | ||
| Non-current portion | ||
| Weighted average discount rate Operating leases | 7.33% | |
LEASE (Details 2) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Cash paid for amounts included in the measurement of lease liabilities: | ||
| Operating cash flows from operating leases | $ 37,195 | $ 47,027 |
| Right-of-use assets obtained in exchange for lease obligations: | ||
| Operating leases | $ 71,066 | $ 139,275 |
LEASE (Details 3) |
Dec. 31, 2021
USD ($)
|
|---|---|
| LEASE | |
| Year ending December 31, 2022 | $ 31,471 |
| Less: Interest | (300) |
| Present value of lease liabilities | $ 31,171 |
LEASE (Details Narrative) - Lease Agreement [Member] |
12 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
| |
| Monthly rent | $ 6,100 |
| Lease rate of interest | 5.25% |
| Remaining lease term | 5 months |
STOCKHOLDERS DEFICIT (Details Narrative) - shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| STOCKHOLDERS DEFICIT | ||
| Common stock issued | 35,540,000 | 35,540,000 |
| Common stock outstanding | 35,540,000 | 35,540,000 |
INCOME TAXES (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Current | $ 1,627 | $ 3,329 |
| Deferred | 0 | 0 |
| Total | 1,627 | 3,329 |
| Federal [Member] | ||
| Current | 0 | 0 |
| Total | 0 | 0 |
| Deferred | 0 | 0 |
| State [Member] | ||
| Current | 800 | 800 |
| Total | 800 | 800 |
| Deferred | 0 | 0 |
| Foreign [Member] | ||
| Current | 827 | 2,529 |
| Total | 827 | 2,529 |
| Deferred | $ 0 | $ 0 |
INCOME TAXES (Details 1) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Deferred tax asset: | ||
| Net operating loss carry forwards | $ 182,688 | $ 159,635 |
| Valuation allowance | (182,688) | (159,635) |
| Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES (Details Narrative) - USD ($) |
1 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 22, 2017 |
Dec. 31, 2021 |
|
| Operating loss carry forwards | $ (481,000) | |
| Operating loss carry forwards expiration year | 2032 | |
| Statutory federal income tax rate | 21.00% | 25.00% |
| USA [Member] | ||
| Statutory federal income tax rate | 21.00% | |
| PRC [Member] | ||
| Statutory federal income tax rate | 25.00% |
SEGMENT REPORTING (Details) - USD ($) |
12 Months Ended | |
|---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
| Net Sales-Related Party | $ 611,328 | $ 238,587 |
| Income (Loss) from Operations | 1,013 | (162,521) |
| Net loss | (614) | (165,850) |
| USA [Member] | ||
| Net Sales-Related Party | 0 | 0 |
| Income (Loss) from Operations | 91,036 | (102,947) |
| Net loss | (115,834) | (173,432) |
| PRC [Member] | ||
| Net Sales-Related Party | 611,328 | 238,587 |
| Income (Loss) from Operations | (114,699) | 5,877 |
| Net loss | 115,220 | 7,582 |
| Total [Member] | ||
| Net Sales-Related Party | 611,328 | 238,587 |
| Income (Loss) from Operations | (23,663) | (97,070) |
| Net loss | $ (614) | $ (165,850) |
SEGMENT REPORTING (Details 1) - USD ($) |
Dec. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Total Reportable Assets | $ 220,204 | $ 192,543 |
| Eliminiation [Member] | ||
| Total Reportable Assets | (148,187) | (25,757) |
| USA [Member] | ||
| Total Reportable Assets | 44,498 | 47,384 |
| PRC [Member] | ||
| Total Reportable Assets | $ 323,893 | $ 170,916 |