NOTES
TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1.
ORGANIZATION AND DESCRIPTION OF BUSINESS
Chengdu
Aixintang Pharmacy Co., Ltd and its branches and affiliates, totaled nine pharmacies (the “Company” or “Aixintang Pharmacies”),
were legally registered and have been validly existing in Chengdu, Mianyang and other cities of Sichuan Province in the PRC since 2016.
Each of the pharmacies engages in the retail sale of pharmaceuticals; sales of pre-packaged food and bulk food, health food, dairy products,
cosmetics, electronic products, disinfecting supplies, class-I, and class-II medical equipment and the staff at each pharmacy consults
with customers regarding common nutrition and health issues, though they are not licensed to make a diagnosis and when appropriate refer
customers to a physician.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying combined financial statements are
prepared in conformity with U.S. Generally Accepted Accounting Principles (“US GAAP”). The functional currency of the
Company is Chinese Renminbi (“RMB”). The accompanying financial
statements are translated from RMB and presented in U.S. dollars (“USD”).
Covid
– 19
On
March 11, 2020, the World Health Organization announced that infections caused by the corona virus disease of 2019 (“COVID-19”)
had become pandemic. The Government of China has adopted various regulations and orders, including mandatory quarantines, limits on the
number of people that may gather in one location, closing non-essential businesses and travel bans to limit the spread of the disease.
Many of these measures have been relaxed due to the decrease in the prevalence of Covid-19 in China. To date, the ongoing operations
of the Company have not been materially adversely effected by the measures taken to limit the spread of the disease in China.
Financial
impacts related to COVID-19, including the Company’s actions and costs incurred in response to the pandemic, were not material
to the Company’s financial position, results of operations or cash flows for the three months ended March 31, 2021. The Company
has implemented procedures to promote employee and customer safety. These measures will not significantly increase its operating costs.
While
the Company continues to operate substantially in the normal course, it cannot forecast with any certainty whether and to what degree
the disruptions caused by the COVID-19 pandemic will increase, or the extent to which the disruption may materially impact its financial
position, results of operations, and cash flows in fiscal 2021.
Basis
of Combination
The
combined financial statements include the accounts of Chengdu Aixintang
Pharmacy Co., Ltd and its affiliates, including Chengdu Beibang Pharmacy, Co., Ltd., Chengdu Xindu District Cundetang Pharmacy Co., Ltd.,
Chengdu Aixintang Liucheng Pharmacy Co., Ltd., Chengdu Wenjiang Aixinhui Pharmacy Co., Ltd., and Qionglai Weide Pharmacy. These
companies are under common control and ownership. All significant intercompany accounts and transactions are eliminated.
Use
of Estimates
In
preparing combined financial statements in
conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the dates of the combined financial statements,
as well as the reported amounts of revenues and expenses during the reporting period.
Significant
estimates, required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve
for obsolete and slow-moving inventories. Actual results could differ from those estimates.
Cash
and Cash Equivalents
For
financial statement purposes, the Company considers all highly liquid investments with an original maturity of three months or less to
be cash and cash equivalents.
Accounts
Receivable
Accounts
receivable mainly consist of amounts due from the Social Security Bureau and Health Care Administration governed by local government.
The Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition
of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends
and changes in customer payment patterns to evaluate the adequacy of these reserves. As of March 31, 2021 and December 31, 2020, there
was no bad debt allowance.
Inventory
Inventories
are valued at the lower of cost or net realizable value using the weighted average cost method. Physical inventory counts are taken on
a regular basis in each retail store. Management compares the cost of inventories with the net realizable value and an allowance is made
for writing down inventories to market value, if lower. The Company recorded no inventory impairment for the three months ended March
31, 2021 and 2020.
Property
and Equipment
Property
and equipment are stated at cost, less accumulated depreciation, and impairment losses, if any. Major repairs and betterments that significantly
extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs
are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation
are removed from the respective accounts, and any gain or loss is included in operations. Depreciation
of property and equipment is provided using the straight-line method for substantially all assets with 5% salvage value and estimated
lives as follows:
|
Furniture
and Equipment
|
2~5
years
|
Impairment
of Long-Lived Assets
Long-lived
assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable, but at least annually.
Recoverability
of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future
cash flows expected to be generated by it. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an
impairment charge is recognized by the amount by which the carrying amount of the asset exceeds its fair value. Fair value is generally
determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review,
the Company believes that, as of March 31, 2021 and December 31, 2020, there were no significant impairments of its long-lived assets.
Income
Taxes
Income
taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences
in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The
Company follows Accounting Standards Codification (“ASC”) Topic 740, which prescribes a more-likely-than-not threshold for
financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides
guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities,
accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.
Under
ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that
meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of
being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken
that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance
sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated
with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative
expenses in the statement of income.
At
March 31, 2021 and December 31, 2020, the Company did not take any uncertain positions that would necessitate recording a tax related
liability.
Revenue
Recognition
In
accordance with ASC 606, revenue is recognized upon the transfer of control of promised goods or services to customers in an amount that
reflects the consideration we expect to receive in exchange for those products or services.
Revenue
from sale of goods under Topic 606 is recognized in a manner that reasonably reflects the delivery of the Company’s products
and services to customers in return for expected consideration and includes the following elements:
|
|
●
|
executed
contract(s) with customers that the Company believes is legally enforceable;
|
|
|
●
|
identification
of performance obligation in the respective contract;
|
|
|
●
|
determination
of the transaction price for each performance obligation in the respective contract;
|
|
|
●
|
allocation
of the transaction price to each performance obligation; and
|
|
|
●
|
recognition
of revenue only when the Company satisfies each performance obligation.
|
The
Company’s retail drugstores recognize revenue at the time the customer takes possession of the merchandise. For pharmacy sales,
each prescription claim is its own arrangement with the customer and is a performance obligation.
The
Company generally receives payments from customers as it satisfies its performance obligations. The Company records a receivable when
it has an unconditional right to receive payment and only the passage of time is required before payment is due.
Sales
revenue represents the invoiced value of goods, net of value-added taxes (“VAT”). All of the Company’s products sold
in China are subject to the PRC VAT of 0% as the Company qualifies for small businesses. The VAT may be offset by VAT paid by the Company
on inventories and products purchased in China. The Company records VAT payable and VAT receivable net of payments in the financial statements.
The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and
paid as the Company acts as an agent for the government.
Cost
of Revenue
Cost
of revenue consists primarily of the cost of products sold during the reporting period. Reserve for inventory allowance due to lower
of cost or market is also recorded in cost of goods sold.
Concentration
of Credit Risk
The
operations of the Company are in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may
be influenced by the political, economic, and legal environments in the PRC, and by the general state of the PRC economy.
The
Company has cash on hand and demand deposits in accounts maintained with state-owned banks within the PRC. Cash in state-owned banks
is covered by insurance up to RMB 500,000 ($72,500) per bank. The Company has not experienced any losses in such accounts and believes
they are not exposed to any risks on its cash in these bank accounts.
Leases
ASC
Topic 842, “Leases,” requires recognition of leases on the combined balance sheets as right-of-use (“ROU”)
assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities
represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease
liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. The
Company’s future minimum based payments used to determine the Company’s lease liabilities mainly include minimum based rent
payments. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing
rate based on the information available at commencement date in determining the present value of lease payments.
Operating
lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and
administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized
as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur.
Statement
of Cash Flows
In
accordance with ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated
based on the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on
the combined statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
Fair
Value of Financial Instruments
The
carrying amounts of certain of the Company’s financial instruments, including cash and equivalents, accrued liabilities and accounts
payable, approximate their fair value due to their short maturities. FASB ASC Topic 825, “Financial Instruments,”
requires disclosure of the fair value of financial instruments held by the Company. The carrying amounts reported in the balance sheets
for current liabilities each qualify as financial instruments and are a reasonable estimate of their fair value because of the short
period of time between the origination of such instruments and their expected realization and the current market rate of interest.
Fair
Value Measurements and Disclosures
ASC
Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, and establishes a three-level valuation
hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The three levels are
defined as follow:
|
|
●
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
|
●
|
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
As
of March 31, 2021 and December 31, 2020, the Company did not identify any assets and liabilities that are required to be presented on
the balance sheet at fair value.
Foreign
Currency Translation and Comprehensive Income (Loss)
The
functional currency of the Company is RMB. For financial reporting purposes, RMB is translated into USD as the reporting currency. Assets
and liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated at the
average rate of exchange prevailing during the reporting period.
Translation
adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’
equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included
in income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.
The
Company uses FASB ASC Topic 220, “Comprehensive Income”. Comprehensive loss is comprised of net loss and all changes
to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions
to stockholders. Comprehensive income (loss) for the year ended December
31, 2020 and 2019 consisted of net income (loss) and foreign currency translation adjustments.
Earnings
per Share
The
Company is a limited Company (“LC”) formed under the laws of the PRC. Like limited liability company in the US, limited company
in the PRC do not issue shares to the owners. The owners however, are called shareholders. Ownership interest is determined in proportion
to capital contributed. Accordingly, earnings per share data is not presented.
Segment
Reporting
ASC
Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting.
The management approach model is based on the way a company’s chief operating decision maker organizes segments within the Company
for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services,
geography, legal structure, management structure, or any other manner in which management disaggregates a company.
Management
determined the Company’s operations constitute a single reportable segment in accordance with ASC 280. The Company operates exclusively
in one business and industry segment: retail pharmacy.
New
Accounting Pronouncements
In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial
assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its financial
statements.
In
March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 contains practical
expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU
2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues to evaluate the impact
of the guidance and may apply the elections as applicable as changes in the market occur.
3.
OTHER RECEIVABLES AND PREPAID EXPENSES
The
Company had other receivables and prepaid expenses of $84,100 and $76,408 as of March 31, 2021 and December 31, 2020, respectively. Prepaid
expenses primarily consist of rent and other services to be expensed over the contracted period.
4.
INVENTORY
Inventory
consisted of the following at March 31, 2021 and December
31, 2020:
|
|
|
March
31, 2021
|
|
|
December 31, 2020
|
|
|
Drugs, pharmaceutical and nutritional products
|
|
$
|
107,980
|
|
|
$
|
109,808
|
|
5.
PROPERTY AND EQUIPMENT, NET
Property
and equipment consisted of the following at March 31,2021 and December 31, 2020:
|
|
|
March
31,2021
|
|
|
December
31, 2020
|
|
|
Furniture and office equipment
|
|
$
|
14,240
|
|
|
$
|
14,298
|
|
|
Less: Accumulated depreciation
|
|
|
(7,717
|
)
|
|
|
(6,368
|
)
|
|
Property and equipment, net
|
|
$
|
6,523
|
|
|
$
|
7,930
|
|
Depreciation
expense for the three months ended March 31, 2021 and 2020 was $1,390 and $87, respectively.
6.
ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued
liabilities and other payables consisted of the following at March 31, 2021 and December
31, 2020:
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
Accrued payroll
|
|
$
|
47,406
|
|
|
$
|
17,780
|
|
|
Other payables
|
|
|
35,511
|
|
|
|
36,490
|
|
|
Total
|
|
$
|
82,917
|
|
|
$
|
54,270
|
|
7.
LEASE
The
Company leases its retail pharmacy stores under operating lease arrangements, typically with initial terms of 2 to 5 years.
Balance
sheet information related to the Company’s leases is presented below:
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
Operating Leases
|
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets
|
|
$
|
227,685
|
|
|
$
|
270,432
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities - current
|
|
$
|
84,787
|
|
|
$
|
104,234
|
|
|
Operating lease liabilities – non-current
|
|
|
142,898
|
|
|
|
166,198
|
|
|
Total operating lease liabilities
|
|
$
|
227,685
|
|
|
$
|
270,432
|
|
The
following provides details of the Company’s lease expenses:
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2021
|
|
|
March 31, 2020
|
|
|
Operating lease expenses
|
|
$
|
43,481
|
|
|
$
|
37,258
|
|
Other
information related to leases is presented below:
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2021
|
|
|
March 31, 2020
|
|
|
Cash Paid For Amounts Included In Measurement of Liabilities:
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
43,481
|
|
|
$
|
37,258
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term:
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
2.82 years
|
|
|
|
2.86 years
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Discount Rate:
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
4.75
|
%
|
|
|
4.75
|
%
|
Maturities
of lease liabilities were as follows:
|
For the year ending December 31,
|
|
|
|
|
2021 (excluding the three months ended March 31, 2021)
|
|
$
|
68,946
|
|
|
2022
|
|
|
85,746
|
|
|
2023
|
|
|
72,717
|
|
|
2024
|
|
|
15,121
|
|
|
Total lease payments
|
|
|
242,530
|
|
|
Less: imputed interest
|
|
|
(14,845
|
)
|
|
Total lease liabilities
|
|
|
227,685
|
|
|
Less: current portion
|
|
|
(84,787
|
)
|
|
Lease liabilities – non-current portion
|
|
$
|
142,898
|
|
8.
RELATED PARTY TRANSACTIONS
Due
to related parties are unsecured, bear no interest and payable upon demand.
Due
to related parties
|
|
|
March 31, 2021
|
|
|
December 31, 2020
|
|
|
Quanzhong Lin
|
|
$
|
1,231,943
|
|
|
$
|
1,109,376
|
|
|
Branch manager
|
|
|
28,485
|
|
|
|
28,602
|
|
|
Chengdu AiXin Zhonghong Biological Technology Co., Ltd. (“Aixin Zhonghong”)
|
|
|
-
|
|
|
|
12,991
|
|
|
Chengdu AiXin E-Commence Co., Ltd.
|
|
|
9,280
|
|
|
|
9,318
|
|
|
Chengdu AiXin International Travel Service Co., Ltd.
|
|
|
1,407
|
|
|
|
1,412
|
|
|
Total
|
|
$
|
1,271,115
|
|
|
$
|
1,161,699
|
|
Mr.
Quanzhong Lin is the major shareholder and Chairman of Aixintang Pharmacies. All of the related
party entities are controlled by Mr. Quanzhong Lin. The advances are for working capital purpose, payable on demand and bear no interest.
The
balances due to one branch manager were for working capital purpose, payable on demand and bear no interest.
9.
INCOME TAXES
The
Company is governed by the Income Tax Laws of the PRC and various local tax laws. Effective January 1, 2008, China adopted a uniform
tax rate of 25% for all enterprises (including foreign-invested enterprises).
The
following table reconciles the PRC statutory rates to the Company’s effective tax rate for three months ended March 31, 2021 and
2020:
|
|
|
2021
|
|
|
2020
|
|
|
Income tax (benefit) at PRC statutory rate
|
|
|
(25.0
|
)%
|
|
|
(25.0
|
)%
|
|
Change in deferred tax asset valuation allowance
|
|
|
25.0
|
%
|
|
|
25.0
|
%
|
|
Other
|
|
|
-
|
%
|
|
|
0.07
|
%
|
|
Effective combined tax rate
|
|
|
-
|
%
|
|
|
0.07
|
%
|
For
the three months ended March 31, 2021 and 2020, the change in valuation allowance is mainly from the tax benefit on net operating loss
carry forward for PRC operations.
10.
STATUTORY RESERVES
Pursuant
to the PRC corporate law, the Company is now only required to maintain one statutory reserve by appropriating from its after-tax profit
before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.
Surplus
reserve fund
The
Company is now required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory surplus
reserve fund until such reserve balance reaches 50% of the Company’s registered capital. During the three months ended March 31,
2021 and 2020, the Company made $0 to its statutory reserve fund due to its accumulated deficit.
The
surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any,
and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion
to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance
after such issue is not less than 25% of the registered capital.
Common
welfare fund
Common
welfare fund is a voluntary fund to which the Company can elect to transfer 5% to 10% of its net income, as determined under PRC accounting
rules and regulations. The Company did not make any contribution to this fund during the three months ended March 31, 2021 and 2020.
This
fund can only be utilized on capital items for the collective benefit of the Company’s employees, such as construction of dormitories,
cafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than upon liquidation.
11.
OPERATING CONTINGENCIES
The
Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies
in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments
and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect
to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among
other things.
The
Company’s sales, purchases and expenses are denominated in RMB and all of the Company’s assets and liabilities are also denominated
in RMB. The RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are
required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain
supporting documentation to affect the remittance.
The
Company is, from time to time, involved in litigation incidental to the conduct of its business regarding merchandise sold, employment
matters, and litigation regarding intellectual property rights.
The
Company believes that current pending litigation will not have a material adverse effect on its financial position, results of operations
or cash flows.
12.
SUBSEQUENT EVENT
On
June 2, 2021, HK Aixin International Group Co., Limited (“HK Aixin”), a wholly owned subsidiary of Aixin Life International,
Inc. (“Aixin Life”), entered into an Equity Transfer Agreement (the “Transfer Agreement”) with Quanzhong Lin,
major shareholder, the Chairman and President of Aixin Life, Ting Li and Xiao Ling Li. Pursuant to the Transfer Agreement, HK Aixin has
agreed to purchase Chengdu Aixintang Pharmacy Co., Ltd. and certain affiliated entities, each of which operates a pharmacy.
Under
the terms of the Transfer Agreement, HK Aixin agreed to purchase all of the outstanding equity of Aixintang Pharmacies for an aggregate
purchase price of RMB 34,635,845 or US$5,308,257 based on an exchange rate of RMB/ US$ 6.5249 yuan per dollar on December 31, 2020.
The
purchase price will be reduced by an amount equal to any amounts paid or distributed by any of the Aixintang Pharmacies to Mr. Lin or
Ting Li and Xiao Ling Li after December 31, 2020 and increased by an amount equal to any monies they contributed to any of the Aixintang
Pharmacies after such date. Mr. Lin owns in excess of 95% of the outstanding equity the Aixintang Pharmacies. The remaining equity interest
is owned by Ting Li and Xiao Ling Li.
Management
has evaluated subsequent events through the date which the financial statements were available to be issued. All subsequent events requiring
recognition as of March 31, 2021 have been incorporated into these financial statements and there are no subsequent events that require
disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”
