UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] ☒QUARTERLY REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2017September 30, 2021 or

[   ] ☐TRANSITION REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________________to _________

001-32522

Commission File Number: 1-32522file number

Trafalgar Resources, Inc.China Foods Holdings Ltd.

(Exact name of registrant as specified in its charter)

Utah(852) 3618-8608

91-0974149

(State or other jurisdiction of

(IRS Employer Identification No.)

incorporation or organization)

12587 S. 1745 E., Draper, Utah

84020

 (Address of principal executive offices)

(Zip Code)

(801) 748-1114

 (Registrant’sRegistrant’s telephone number, including area code)code

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐

 Yes [X]   No  [  ]

Indicate by check mark whether the registrant 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 registrant was required to submit and post such files). Yes [X] ☒ No [  ]☐

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

Large Accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer  ¨ (Do not check if a smaller reporting company) Smaller reporting company x

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. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Yes [X]   No  [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

IndicateState the number of shares outstanding of each of the issuer’sissuer’s classes of common equity, as of the latest practicable date.

5,251,309

Table of no par value common stock on February 12, 2018Contents

PartPART I -– FINANCIAL INFORMATION

Item 1. Financial Statements

Trafalgar Resources, Inc.

FINANCIAL STATEMENTSChina Foods Holdings Ltd.

(UNAUDITED)Condensed Consolidated Balance Sheets

December 31, 2017

The accompanying notes are an integral part of these financial statements included herein have been prepared by the Company, without audit, pursuant to the rules

China Foods Holdings Ltd.

Condensed Consolidated Statements of Operations and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made.  These financial statements should be read in conjunction with theComprehensive Loss

(Unaudited)

The accompanying notes and with the historicalare an integral part of these financial informationstatements

China Foods Holdings Ltd.

Condensed Consolidated Statements of the Company.Changes in Shareholders’ Equity

(Unaudited)

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

China Foods Holdings Ltd.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

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

China Foods Holdings Ltd.

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

TRAFALGAR RESOURCES, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

December 31,Nine Months ended September 30, 2021

NOTE 1 – NATURE OF OPERATIONS

China Foods Holdings Ltd. (the “Company”) was incorporated in Delaware on January 10, 2019. On July 9, 2020, the Company consummated the Share Exchange Agreement (“the “Share Exchange Agreement”) with Elite Creation Group Limited, a private limited company organized under the laws of British Virgin Islands (“ECGL”). As a result of the acquisition of ECGL, the Company entered into the healthcare product distributing and marketing industry, pursuing a new strategy of developing and distributing health related products, including supplements, across the globe with a focus on mainland China, Europe and Australia.

We are a health and wellness company that develops, markets, promotes and distributes a variety of customized health and wellness care products and services, including supplements, healthy snacks, meal replacements, skincare products, and nutritional consultation services to consumers in China. We work with certain licensed healthcare food factories to develop and manufacture products and services that are distributed conventionally through sales agents and also through a network of e-commerce and social media platforms.

In addition to products, we are committed to providing customized science based wellness consultation and service programs to customers. Our diverse products and services target health conscious customers and differentiate based upon age and gender and seek to manage different conditions. We reach out to customers fitting certain health and lifestyle profiles through our offline and online consultation services, and track eating habits and health indicators to provide customized products such as supplements. We believe this will facilitate the ability of customers to monitor, understand and adjust their health practices and lifestyle anytime and anywhere for increased customer engagement and retention.

We conduct our business through our wholly owned subsidiary Guangzhou Xiao Xiang Health Industry Company Limited, a limited liability company organized under the laws of China on March 8, 2017 and Alpha Wellness (HK) Limited, a limited liability company organized under the laws of Hong Kong on April 24, 2019. Elite Creation Group, a limited liability company formed under the laws of the British Virgin Islands formed on September 5, 2018, is holding companies without operations.

Note 1: SummaryNOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Significant Accounting Policiespresentation and consolidation

Organization and Operation

Trafalgar Resources, Inc. (the "Company") was incorporated under the lawsThe accompanying unaudited condensed consolidated financial statements of the State of Utah on October 25, 1972. The Company has not commenced operations that have resulted in significant revenue and the Company's efforts have been devoted primarily to activities related to raising capital and attempting to acquire an operating entity.

Unaudited Information

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles generally accepted in the United States of America(“GAAP”) for interim financial informationreporting, and in accordance with the instructions tofor Form 10-Q and Article 810 of Regulation S-X of the United States Securities and Exchange Commission.S-X. Accordingly, they do not include all of the information and footnote disclosures normally included in annual financial statements prepared in accordance withfootnotes required by generally accepted accounting principles.

principles for complete financial statements. In the opinion of management, the unaudited consolidated financial statements contained in this report reflect all adjustments (consisting ofthat are normal and recurring accruals)in nature and considered necessary to present fairlyfor a fair presentation of the financial position and the results of operations for the interim periods presented have been made. Thesepresented. The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The results of operations for the three months ending December 31, 2017,interim period are not necessarily indicative of the results expected for the full year. These unaudited consolidated financial statements, footnote disclosures and other information should be read in conjunction with the accompanyingfinancial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The unaudited condensed consolidated financial statements are presented in US Dollars and withinclude the historical financial informationaccounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. The results of subsidiaries acquired or disposed of during the years are not necessarily indicativeincluded in the consolidated statements of operations from the effective date of acquisition or up to the effective date of disposal.

The following table depicts the description of the results that may be expected for the year ending September 30, 2018.Company’s subsidiaries:

SCHEDULE OF SUBSIDIARIES INFORMATION

Cash and cash equivalents

Cash Equivalents

The Company considersand cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with maturitiesan original maturity of three months or less as of the purchase date of such investments.

Accounts receivable

Accounts receivable are recorded at the timeinvoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of purchaseservice. Credit is extended based on evaluation of a customer’s financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. At the end of fiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2021 and December 31, 2020, there was 0 allowance for doubtful accounts.

Inventories

Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a first-in-first-out method. Costs include material and manufacturing overhead costs. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of September 30, 2021 and December 31, 2020, the Company did not record an allowance for obsolete inventories, nor have there been any write-offs.

Plant and equipment

Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

SCHEDULE OF ESTIMATED USEFUL LIVES

Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Depreciation expense for the three months and nine months ended September 30, 2021 were $24,054 and $66,725, respectively, and three months and nine months ended September 30, 2020 were $18,022 and $50,731, respectively.

Intangible assets

Intangible assets represented trademarks of their products and are stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of their registrations on a straight-line basis, which is 10 years and will expire in 2028.

Amortization expense for the three months and nine months ended September 30, 2021 were $130 and $390, respectively.

Amortization expense for the three months and nine months ended September 30, 2020 were $120 and $360, respectively.

Impairment of long-lived assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment, as well as intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash equivalents.flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge for the periods presented.

Use

Revenue recognition

The Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of estimatesdistinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

These financial statementsThe Company recognizes revenue from the sale of their healthcare products upon delivery to the customers, whereas the title and risk of loss are prepared in conformity with accounting principles generally acceptedfully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and recorded no reserve for sales returns for three months and nine months ended September 30, 2021 and 2020.

Income taxes

The Company adopted the ASC 740 Income tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the United States of America and require that management make estimates and assumptions that affectcondensed consolidated financial statements. Under paragraph 740-10-25-13, the reported amounts of assets and liabilities andCompany may recognize the disclosure of contingent assets and liabilities. The use of estimates and assumptions may also affect the reported amounts of revenues and expenses. Actual results could differtax benefit from those estimates or assumptions.

Net loss per share of common stock

The loss per share of common stock is computed by dividing the net loss during the period presented by the weighted average number of shares outstanding during that same period.

Income taxes

We account for income taxes in accordance with FASB ASC 740-10-05, “Accounting for Income Taxes”. Deferredan uncertain tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets will be reflected on the balance sheet when it is determined thatposition only if it is more likely than not that the assettax position will be realized.  A valuation allowancesustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position should be measured based on the largest benefit that has currently been recordeda greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to reduce ourits liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assetassets recorded on its balance sheets and provides valuation allowances as management deems necessary.

Uncertain tax positions

The Company did not take any uncertain tax positions and had no adjustments to $0.its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the three months and nine months ended September 30, 2021 and 2020.

Foreign currencies translation

6

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the condensed consolidated statement of operations.

TRAFALGAR RESOURCES, INC.

Notes to Unaudited Financial Statements

December 31, 2017

(continued)

Note 1: SummaryThe reporting currency of Significant Accounting Policies (continued)

Revenue recognition

We will recognize revenuethe Company is United States Dollar (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company is operating in Hong Kong SAR and the People’s Republic of China and maintain its books and record in its local currency, Hong Kong Dollars (“HK$”) and Renminbi (“RMB”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with FASB ASC 605, “Revenue Recognition.Topic 830-30, “ Translation of Financial Statement”  Under FASB ASC 605, revenue is recognized, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changes in shareholders’ equity.

Translation of amounts from HK$ and RMB into US$ has been made at the pointfollowing exchange rates for the nine months ended September 30, 2021 and 2020:

SCHEDULE OF FOREIGN CURRENCIES TRANSLATION EXCHANGE RATES

Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of passage tocomprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the customeraccompanying condensed consolidated statements of titlechanges in stockholders’ equity, consists of changes in unrealized gains and risklosses on foreign currency translation. This comprehensive income is not included in the computation of loss, when there is persuasive evidenceincome tax expense or benefit.

Leases

The Company adopted Topic 842, Leases (“ASC 842”), using the modified retrospective approach through a cumulative-effect adjustment and utilizing the effective date of January 1, 2019 as its date of initial application, with prior periods unchanged and presented in accordance with the previous guidance in Topic 840, Leases (“ASC 840”).

At the inception of an arrangement, the sales priceCompany determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (“ROU”) assets, lease liabilities and long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued lease payments. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.

Lease expense is recognized on a straight-line basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited to the expected lease term.

The Company has elected a practical expedient to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

Related parties

The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.

Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitments and contingencies

The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and collectionmaterial, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the resulting receivable is reasonably assured.  We will recognize revenue as services are provided.  Revenues will be reflected netCompany’s business, financial position, and results of coupon discounts.operations or cash flows.

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of afair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial instrumentassets and liabilities fall within more than one level described above, the categorization is based on the amount at whichlowest level input that is significant to the instrument could be exchanged in a current transaction between willing parties.  fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, and other current assets, accounts payable, taxes payable, accrued expenses and other current liabilities, approximate their fair values because of the short maturity of these instruments.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Accounting Standards Adopted

In September 2018, the FASB issued ASU No. 2018-08, Not-For-Profit Entities – Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (“ASU 2018-08”). ASU 2018-08 clarifies how an entity determines whether a resource provider is participating in an exchange transaction by evaluating whether the resource provider is receiving commensurate value in return for the resources transferred. The guidance is effective for annual periods beginning after September 15, 2018, including interim periods within those annual periods, and has been adopted on a modified prospective basis. The modified prospective adoption is applied to agreements that are not completed as of the effective date, or entered into after the effective date. Under the modified prospective adoption approach, prior period results have not been restated and no cumulative-effect adjustment has been recorded. The Company does not expect this standard to have a material impact on its financial statements.

Accounting Standards Issued, Not Adopted

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning January 1, 2023. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company is currently evaluating the potential effect of this standard on its financial statements. The Company does not expect this standard to have a material impact on its financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendment is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact this will have on the financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (“ASU 2018-18”), which clarifies the interaction between ASC 808, Collaborative Arrangements and ASC 606, Revenue from Contracts with Customers. Certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. In addition, ASU 2018-18 precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue if the counterparty is not a customer for that transaction. ASU 2018-18 should be applied retrospectively to the date of initial application of ASC 606. This guidance is effective for interim and fiscal periods beginning after December 15, 2019. The Company is currently assessing the impact this will have on the financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. The Company does not expect the adoption of this standard to have a material impact on its financial position, results of operations or cash flows.

NOTE 3 - PREPAYMENTS AND OTHER RECEIVABLE

Prepayments and other receivable consisted of the following:

SCHEDULE OF PREPAYMENTS AND OTHER RECEIVABLE

Other receivables represented deposit payments made to suppliers for daily operation, procurement, which are interest-free, unsecured and received by the Company when corporation with suppliers are terminated.

NOTE 4 - INVENTORIES

Inventories consisted of the following:

SCHEDULE OF INVENTORIES

For the period ended September 30, 2021 and 2020, 0 allowance for obsolete inventories was recorded by the Company.

NOTE 5 - LEASE

The Company leased office and warehouse facilities under various non-cancelable operating leases expiring at the term of 2-5 years, through September 17, 2023 and December 31, 2026.

Right of use assets and lease liability – right of use are as follows:

SCHEDULE OF RIGHT OF USE ASSETS AND LIABILITY

The lease liability – right of use is as follows:

As of September 30, 2021, the operating lease payment of $119,417 will become matured in the next 12 months.

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

Depreciation expense for the three months and nine months ended September 30, 2021 were $24,054 and $66,725, respectively.

Depreciation expense for the three months and nine months ended September 30, 2020 were $18,022 and $50,731, respectively.

NOTE - 7 AMOUNTS DUE TO A DIRECTOR AND A RELATED COMPANY

As shown inof September 30, 2021 and December 31, 2020, the accompanying financial statements,amounts represented temporary advances to the Company had a deficit working capitalby its director and a retained deficit incurred through December 31, 2017its related company which raise substantial doubt aboutwere unsecured, interest-free and have no fixed terms of repayments.

NOTE 8 – SHAREHOLDERS’ EQUITY

Preferred Stock

The Company is not currently authorized to issue shares of preferred stock. The Certificate of Incorporation however, allows the Company’s abilityboard of directors to continue as a going concern.  The financial statements do not include any adjustments relating toauthorize the recoverability and classificationissuance of recorded assets,preferred stock with voting or conversion rights that could adversely affect the amounts and classificationvoting power or other rights of liabilities that might be necessarythe holders of the common stock in the event that shares of preferred stock are authorized in the Company cannot continuefuture. The issuance of preferred stock, while providing flexibility in existence.  Management intends to seek new capital fromconnection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a related party to provide needed funds.  

New accounting pronouncements

change in control of our company and may adversely affect the market price of our common stock and the voting and other rights of the holders of common stock. The Company has reviewed Accounting Standards Updates (“ASU”) through ASU No. 2016-20, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicabilityplans to issue any shares of preferred stock.

Common Stock

The Company is authorized, subject to limitations prescribed by Delaware law, to issue up to 100,000,000 shares of common stock with a nominal par value of $0.0001.

Dividend Rights

Subject to preferences that may apply to shares of preferred stock outstanding at the Company or their effecttime, the holders of outstanding shares of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and only then at the times and in the amounts that our board of directors may determine.

Voting Rights

Each holder of common stock is entitled to one vote for each share of common stock held on the financial statements wouldall matters submitted to a vote of stockholders. Under our Certificate of Incorporation, stockholders do not have been significant.the right to cumulate votes for the election of directors.

NOTE 2:     RELATED PARTY TRANSACTIONSNo Preemptive or Similar Rights

At December 31, 2017Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.

Right to Receive Liquidation Distributions

Upon our dissolution, liquidation or winding-up, the Company owed $110,239assets legally available for distribution to our stockholders are distributable ratably among the holders of interest and $220,000our common stock, subject to its President.  Note 1 is for $10,000 and bears interestprior satisfaction of 4.5% per year. Note 2 is for $10,000 and bears interest of 4.5% per year and $10,450 in interest and principal was due February 28, 2011. Note 3 is for $20,000 and bears interest of 4.5% per year.  $900 in interest was due on January 15, 2011, 2012, and 2013. $20,900 in interest and principal was due January 15, 2014. Note 1, 2 and 3 are in default resulting in an 18% default rate of interest accruing.

Note 4 is for $10,000 and bears interest of 4.5% per year. Interest of $450 was due on May 7, 2011, 2012, 2013, and 2014.  Interest and principal of $10,450 was due May 7, 2015. Note 4 is in default resulting in a 14% default rate of interest accruing.

7

TRAFALGAR RESOURCES, INC.

Notes to Unaudited Financial Statements

December 31, 2017

(continued)

NOTE 2:     RELATED PARTY TRANSACTIONS (continued)

Note 5 is for $20,000 and bears interest of 4.75% per year.  Interest of $950 was due on February 1, 2012, 2013, and 2014. Interest and principal of $20,950 was due on February 1, 2015. Note 5 is in default resulting in a 12% default rate of interest accruing.

Note 6 is for $20,000 and bears interest of 8.0% per year. Interest of $1,600 was due on February 1, 2013.  Interest and principal of $21,600 was due on February 1, 2014. Note 6 is in default resulting in a 12% default rate of interest.

Note 7 is for $20,000 and bears interest of 8.0% per year.  Interest of $1,600 was due on March 1, 2014.  Interest and principal of $21,600 was due on March 1, 2015. Note 7 is in default resulting in a 12% default rate of interest accruing.  

Note 8 is for $20,000 and bears interest of 8.0% per year.  Interest of $1,600 was due February 3, 2015.  Interest and principal of $21,600 was due on February 3, 2016. Note 8 is in default resulting in a 12% default rate of interest accruing.

Note 9 is for $30,000 and bears interest of 8.0% per year. Interest of $2,400 was due December 12, 2016.  Interest and principal of $32,400 was due December 12, 2016. Note 9 is in default resulting in a 12% default rate of interest accruing.

Note 10 is for $30,000 and bears interest of 8.0% per year.  Interest of $2,400 was due January 5, 2017.  Interest and principal of $32,400 is due January 5, 2018.  

Note 11 is for $30,000 and bears interest of 8.0%.  Interest of $2,400 was due December 27, 2017.  Interest and principal of $32,400 is due December 27, 2018.  

Related party notes payable are due as follows:

Year ending September 30,

2018: $190,000

2019: $30,000

NOTE 3:   INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assetsall outstanding debt and liabilities and their tax bases.  Deferred tax assets are reduced bythe preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

As of September 30, 2021 and December 31, 2020, a valuation allowance when,total of 20,252,309 outstanding shares of common stock were issued.

NOTE 9 - INCOME TAXES

The provision for income taxes consisted of the following:

SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE

The Company mainly operates in the opinionPRC that is subject to taxes in the governing jurisdictions in which it operates. The effective tax rate in the years presented is the result of management, itthe mix of income earned in various tax jurisdictions that apply a broad range of income tax rate, as follows:

BVI

Under the current BVI law, the Company is more likely than not that some portion or allsubject to tax on income.

The PRC

The Company’s subsidiary operating in the PRC is subject to the Corporate Income Tax Law of the People’s Republic of China at a unified income tax rate of 25%. The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2021 and 2020 is as follows:

SCHEDULE OF RECONCILIATION TAX RATE TO EFFECTIVE INCOME TAX RATE

Hong Kong

The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable profits arising in Hong Kong during the current year, after deducting a tax concession for the tax year. The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2021 and 2020 is as follows:

SCHEDULE OF RECONCILIATION TAX RATE TO EFFECTIVE INCOME TAX RATE

The following table sets forth the significant components of the deferred tax assets will not be realized.  Deferred tax assetsof the Company as of September 30, 2021 and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  Income tax periods 2014, 2015 and 2016 are open for examination by taxing authorities.

TRAFALGAR RESOURCES, INC.

Notes to Unaudited Financial Statements

December 31, 20172020:

(continued)SCHEDULE OF DEFERRED TAX ASSETS

NOTE 3:   INCOME TAXES 10 - RELATED PARTY TRANSACTIONS(continued)

From time to time, the Company’s director advanced funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

The income taxCompany has been provided free office space by its stockholder. The management determined that such cost is nominal and did not recognize the rent expense (benefit) for the quarter ended December 31, 2017 differsin its condensed consolidated financial statements.

Apart from the amount computed usingtransactions and balances detailed elsewhere in these accompanying consolidated financial statements, the federal statutory rates as follows:Company has no other significant or material related party transactions during the periods presented.

On December 22, 2017,NOTE 11 - CONCENTRATIONS OF RISK

The Company is exposed to the 2017 Tax Cutsfollowing concentrations of risk:

SCHEDULE OF CONCENTRATIONS OF RISK

For the three and Jobs Act (the Tax Act) was enacted into law including a one-time mandatory transition tax on accumulated foreign earningsnine months ended September 30, 2021 and a reduction2020, the customers who accounts for 10% or more of the corporate income tax rate to 21% effective January 1, 2018, among others. WeCompany’s revenues and its outstanding receivables balance as at period-end dates, are required to recognizepresented as follows:

The Company’s customers are located in the effectPeople’s Republic of China and Hong Kong.

For the three and nine months ended September 30, 2021, the Company has $0 of accounts payable.

For the three and nine months ended September 30, 2020, the Company has $0 of accounts payable.