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)


Delaware84-1735478

State or other jurisdiction

of incorporation or organization

(I.R.S. Employer

Identification No.)

Suite 3102, Everbright Center,

108 Gloucester Road

Wanchai, Hong Kong

0000
(Address of principal executive offices)(Zip Code)

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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

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 issuersissuer’s classes of common equity, as of the latest practicable date.

5,251,309

ClassOutstanding November 15, 2021
Common Stock, with $0.0001 par value20,252,309 shares

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


Page
No.
PART I – FINANCIAL INFORMATION3
Item 1.Condensed Consolidated Financial Statements (Unaudited) Notes to Condensed Consolidated Financial Statements3
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations17
Item 3.Quantitative and Qualitative Disclosures about Market Risk21
Item 4.Controls and Procedures21
PART II – OTHER INFORMATION22
Item 1.Legal Proceedings22
Item 1A.Risk Factors22
Item 2.Unregistered Sales of Equity Securities and Proceeds22
Item 3.Defaults Upon Senior Securities22
Item 4.Mine Safety Disclosure22
Item 5.Other Information22
Item 6.Exhibits23
SIGNATURES24

2

PartPART I - FINANCIAL INFORMATION


Item 1. Financial Statements

Trafalgar Resources, Inc.

FINANCIAL STATEMENTSChina Foods Holdings Ltd.

(UNAUDITED)Condensed Consolidated Balance Sheets

December 31, 2017

  

September 30,

2021

  December 31,
2020
 
  $  $ 
  (Unaudited)  (Audited) 
ASSETS        
         
Current Assets        
Cash and cash equivalents  656,671   1,006,394 
Trade receivables  167,183   - 
Prepayments and other receivables  130,193   121,501 
Inventories  199,237   206,272 
Right-of-use assets  375,567   - 
Total Current Assets  1,528,851   1,334,167 
         
Non-Current Assets        
Plant and equipment  155,512   193,621 
Intangible assets  4,012   4,353 
Total Non-Current Assets  159,524   197,974 
         
TOTAL ASSETS  1,688,375   1,532,141 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
Current Liabilities        
Accounts payable  -   7,827 
Accrued liabilities and other payables  50,521   2,316 
Customer deposits  275,590   409,924 
Lease liabilities  111,714   - 
Amount due to a director  181,106   68,953 
Amount due to a related company  199,964   199,964 
Tax payable  3,261   8,319 
Total Current Liabilities  822,156   697,303 
         
Non-Current Liabilities        
Lease liabilities  270,835   - 
Total Non-Current Liabilities  270,835   - 
         
Total Liabilities  1,092,991   697,303 
         
Stockholders’ Equity        
Common stock $0.0001 par value, 100,000,000 shares authorized, 20,252,309 shares issued and outstanding  2,025   2,025 
Additional paid-in capital  1,290,355   1,290,355 
Accumulated other comprehensive income  17,977   5,244 
Accumulated deficit  (714,973)  (462,786)
Total Shareholders’ Equity  595,384   834,838 
         
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  1,688,375   1,532,141 


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

3

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)

  Three Months Ended
September 30, 2021
  Three Months Ended
September 30, 2020
  Nine Months Ended
September 30, 2021
  Nine Months Ended
September 30, 2020
 
             
Revenue, net  69,726   299,426   504,295   435,682 
                 
Cost of revenue  10,462   (285,746)  (202,506)  (354,705)
                 
Gross profit  80,188   13,680   301,789   80,977 
                 
Operating expenses                
Selling and distribution expenses  148   7,677   14,360   15,967 
General and administrative expenses  162,077   157,838   547,053   422,889 
Total operating expenses  162,225   165,515   561,413   438,856 
                 
Loss from Operation  (82,037)  (151,835)  (259,624)  (357,879)
                 
Other Income                
Interest income  5,447   (420)  6,318   1,955 
Sundry income  (5,200)  4,474   1,119   5,133 
Total other income  247   4,054   7,437   7,088 
                 
Income before income tax  (81,790)  (147,781)  (252,187)  (350,791)
                 
Income tax expenses   -   -   -   - 
                 
Net loss  (81,790)  (147,781)  (252,187)  (350,791)
                 
Other comprehensive (loss) income                
Foreign currency adjustment gain (loss)  (1,160)  

 

40,670 

   12,733   

 

22,216

 
                 
Comprehensive loss  (82,950)  (107,111)  (239,454)  (328,575)
                 
Net loss per common share                
Basic and diluted**$(0.00) $(0.01) $(0.00) $(0.02)
                 
Weighted average number of common share                
Basic and diluted  20,252,309   19,795,586   20,252,309   16,610,197 

*denotes net loss per common share of less than $0.01 per share.

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

4

China Foods Holdings Ltd.

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




Trafalgar Resources, Inc.

 BALANCE SHEETS

 

December 31, 2017

 

September 30, 2017

 

(Unaudited)

 

 

   ASSETS

 

 

 

     CURRENT ASSETS

 

 

 

        Cash

 $                  9,972

 

$                 15,140

        Prepaid Expenses

                     2,500

 

                    3,333

 

 

 

 

     TOTAL CURRENT ASSETS

                   12,472

 

                    18,473

 

 

 

 

   TOTAL ASSETS

 $                12,472

 

 $                 18,473

 

 

 

 

   LIABILITIES AND STOCKHOLDERS' (DEFICIT)

 

 

 

     CURRENT LIABILITIES

 

 

 

        Accounts payable

 $                     632

 

 $                      632

        Interest payable - related party

                 110,239

 

                  103,589

        Income taxes payable

                        100

 

                         100

        Note Payable – Related Party – Current

                 220,000

 

                  190,000

 

 

 

 

     TOTAL CURRENT LIABILITIES

                 330,971

 

                  294,321

 

 

 

 

     LONG-TERM LIABILITIES

 

 

 

        Note payable -- Related party (Note 2)

                   -

 

                    30,000

 

 

 

 

     TOTAL LIABILITIES

                 330,971

 

                  324,321

 

 

 

 

     STOCKHOLDERS' (DEFICIT)

 

 

 

 

 

 

 

        Common stock no par value, 100,000,000 shares

          authorized, 5,251,309 shares issued and

          outstanding                                                 

                 137,413

 

                  137,413

        Retained (Deficit)

               (455,912)

 

               (443,261)

 

 

 

 

 

 

 

 

     TOTAL STOCKHOLDERS' (DEFICIT)

               (318,499)

 

                (305,848)

 

 

 

 

   TOTAL LIABILITIES AND

      STOCKHOLDERS' (DEFICIT)

 $                12,472

 

 $                 18,473

 

 

 

 


(Unaudited)

                         
  Common Stock  Additional paid-in  Accumulated  Accumulated other
comprehensive
  Total shareholders’ 
  Share  Amount  capital  deficit  income  Equity 
       $   $   $   $   $ 
                         
Balance at January 1, 2021  20,252,309   2,025   1,290,355   (462,786)  5,244   834,838 
                         
Net loss for the period  -   -   -   (205,067)  -   (205,067)
Share issued for acquisition of legal acquirer                        
Share issued for acquisition of legal acquirer, shares                        
                         
Foreign currency translation adjustment  -   -   -   -   1,856   1,856 
                         
Balance at March 31, 2021  20,252,309   2,025   1,290,355   (667,853)  7,100   631,627 
                         
Net income for the period  -   -   -   34,670   -   34,670 
                         
Foreign currency translation adjustment  -   -   -   -   12,037   12,037 
                         
Balance at June 30, 2021  20,252,309   2,025   1,290,355   (633,183)  19,137   678,334 
                         
Net loss for the period  -   -   -   (81,790)  -   (81,790)
                         
Foreign currency translation adjustment  -   -   -   -   (1,160)  (1,160)
                         
Balance at September 30, 2021  20,252,309   2,025   1,290,355   (714,973)  17,977   595,384 

  Common Stock  Additional paid-in  Retained  Accumulated other
comprehensive
  Total shareholders’ 
  Share  Amount  capital  earnings  loss  Equity 
       $   $   $   $   $ 
                         
Balances at January 1, 2020 (restated)  15,000,000   1,500   1,290,355   159,441   (54,001)  1,397,295 
                         
Net loss for the period  -   -   -   (130,897)  -   (130,897)
                         
Foreign currency translation adjustment  -   -   -   -   (21,035)  (21,035)
                         
Balances at March 31, 2020  15,000,000   1,500   1,290,355   28,544   (75,036)  1,245,363 
                         
Net loss for the period  -   -   -   (72,113)  -   (72,113)
                         
Foreign currency translation adjustment  -   -   -   -   2,581   2,581 
                         
Balances at June 30, 2020  15,000,000   1,500   1,290,355   (43,569)  (72,455)  1,175,831 
                         
Net loss for the period  -   -   -   (147,781)  -   (147,781)
Net income (loss)  -   -   -   (147,781)  -   (147,781)
                         
Shares issued for acquisition of legal acquirer  5,252,309   525   -   -   -   525 
                         
Foreign currency translation adjustment  -   -   -   -   40,670   40,670 
                         
Balances at September 30, 2020  20,252,309   2,025   1,290,355   (191,350)  (31,785)  1,069,245 

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




5


Trafalgar Resources, Inc.

STATEMENTS OF OPERATIONS

(Unaudited)

 

Three Months Ended December 31, 2017

 

Three Months Ended December 31, 2016

Statement of Income

 

 

 

   Revenue

$                     -

 

$                       -

   Cost of Sales

 -

 

 -

 

 

 

 

   GROSS PROFIT

 -

 

 -

 

 

 

 

   Expenses

 

 

 

     General and Administrative

      6,001

 

          10,865

   Total Expenses

6,001

 

          10,865

 

 

 

 

   Other Income and (Expenses)

 

 

 

     Interest (Expense)

(6,650)

 

         (5,751)

     Other Income

-

 

              -

   Total other Income and (Expense)

(6,650)

 

         (5,751)

 

 

 

 

   (LOSS) BEFORE TAXES

(12,651)

 

       (16,616)

 

 

 

 

   PROVISION FOR TAXES

-

 

                -

 

 

 

 

   NET (LOSS)

$           (12,651)

 

 $        (16,616)

 

 

 

 

   (LOSS) PER COMMON SHARE

 

 

 

   Basic and fully diluted loss per weighted average

     common share outstanding

$                (0.00)

 

$             (0.00)

 

 

 

 

   Weighted average number of common shares

     outstanding

5,251,309

 

5,251,309



China Foods Holdings Ltd.


Condensed Consolidated Statements of Cash Flows

(Unaudited)

         
  Nine Months Ended 
  September 30, 2021  September 30, 2020 
Cash flows from operating activities:        
Net loss $(252,187) $(350,791)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities        
Depreciation  66,725   50,731 
Amortization  390   360 
Non-cash lease expense  11,934   56,068 
Total adjustments to reconcile net income to net cash generated from operating activities  (173,138)  (243,632)
Change in operating assets and liabilities:        
Accounts receivables  (167,183)  530,196 
Prepayments and other receivable  (8,692)  213,152 
Inventories  7,035   (171,500)
Accrued liabilities and other payables  48,205   42,247 
Accounts payable  (7,827)  - 
Tax payable  (5,058)  583 
Customer deposit  (134,334)  84,097 
Lease liabilities  63,522   (59,445)
Net cash (used in) provided by operating activities  (377,470)  355,588 
         
Cash flows from investing activities        
Addition of plant and equipment  (27,358)  (70,063)
Cash from acquisition of legal acquirer  -   7,198 
Net cash used in investing activities  (27,358)  (62,865)
         
Cash flows from financing activities:        
Repayment of lease liabilities  (68,481)  - 
Repayment to a related company  -   (3,038)
Advances from a director  112,153   6,153 
Net cash provided by financing activities  43,672   3,115 
         
Foreign currency translation adjustment  11,433   19,053 
         
Net change in cash and cash equivalents  (349,723)  354,418 
         
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  1,006,394   634,492 
         
CASH AND CASH EQUIVALENTS, END OF PERIOD $656,671  $988,910 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION        
Cash paid for interest $-  $- 
Cash paid for income taxes $-  $- 

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




6



Trafalgar Resources, Inc.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended December 31, 2017

 

Three Months Ended December 31, 2016

OPERATING ACTIVITIES

 

 

 

 

     NET (LOSS)

$

(12,651)

$

(16,616)

     Adjustments to reconcile net (loss) to net cash

     (used) by operating activities:

 

 

 

 

 

 

 

 

 

        Changes in operating assets and liabilities:

 

 

 

 

          (Increase)/Decrease Prepaid Expenses

 

833

 

(8,125)

          Increase/(Decrease) Interest payable

 

6,650

 

5,751

          Increase/(Decrease) Income taxes payable

 

-

 

(100)

 

 

 

 

 

   NET CASH (USED) BY OPERATING ACTIVITIES

 

(5,168)

 

(19,090)

 

 

 

 

 

   FINANCING ACTIVITIES

 

 

 

 

     Loans - Notes payable - Related party

 

-

 

30,000

 

 

 

 

 

   NET CASH PROVIDED BY FINANCING

    ACTIVITIES

 

-

 

30,000

 

 

 

 

 

   NET INCREASE (DECREASE) IN CASH

 

(5,168)

 

10,910

 

 

 

 

 

   CASH AT BEGINNING OF PERIOD

 

15,140

 

15,191

 

 

 

 

 

   CASH AT END OF PERIOD

$

9,972

$

26,101

 

 

 

 

 

   CASH PAID FOR TAXES

$

100

$

100

 

 

 

 

 

   CASH PAID FOR INTEREST

$

 -

$

 -


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

NamePlace of incorporation
and kind of
legal entity
Principal activitiesParticulars of registered/
paid up share capital
Effective interest
held
Elite Creation Group Limited (1)BVI, a limited liability companyInvestment holding50,000 issued shares of US$1each100%
Alpha Wellness (HK) Limited (1)Hong Kong, a limited liability companyInvestment holding300,000 issued shares for HK$300,000100%
Guangzhou Xiao Xiang Health Industry Company Limited (1)The PRC, a limited liability companySales of healthcare productsRMB 8,300,000100%

(1)Wholly owned subsidiary of CFOO since July 9, 2020.

 

7

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

Expected useful livesResidual value
Furniture, fixture and equipment3 years5%
Motor vehicle3.33 to 4 years5%
Leasehold improvement2 years5%

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.

8

 

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:


identify the contract with a customer;
identify the performance obligations in the contract;
determine the transaction price;
allocate the transaction price to performance obligations in the contract; and
recognize revenue as the performance obligation is satisfied.

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

  2021  2020 
Period-end HK$:US$ exchange rate  0.12843   0.12903 
Period average HK$:US$ exchange rate  0.12875   0.12891 
Period-end RMB:US$ exchange rate  0.15480   0.14693 
Period average RMB:US$ exchange rate  0.15460   0.14301 

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.

9

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.

10

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:

Level 1Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3Pricing inputs that are generally observable inputs and not corroborated by market data.

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.

11

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

  September 30, 2021  December 31, 2020 
       
Prepayments $817  $7,712 
Other deposits  34,018   119 
Other receivables  95,358   113,670 
Prepayments and other receivable $130,193  $121,501 

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

  September 30, 2021  December 31, 2020 
       
Packing materials $-  $21,527 
Finished goods  199,237   184,745 
Inventories  $199,237  $206,272 

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

  September 30, 2021  December 31, 2020 
                  
Right-of-use assets $375,567  $- 

The lease liability – right of use is as follows:

  September 30, 2021  December 31, 2020 
       
Current portion  111,714          - 
Non-current portion  270,835   - 
         
Total $382,549  $- 

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

 

12

Going concern


NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

  September 30, 2021  December 31, 2020 
       
Motor vehicle $311,343  $311,343 
Furniture, fixture and equipment $15,465  $15,465 
Leasehold improvement $27,358   - 
Foreign translation adjustment $13,181  $10,471 
  $367,347  $337,279 
         
Less: accumulated depreciation  (204,271)  (137,546)
Foreign translation adjustment $(7,564) $(6,112)
 Plant and equipment, net $155,512  $193,621 

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.

13

NOTE 9 - INCOME TAXES

The provision for income taxes consisted of the following:

SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE

  2021  2020 
  Nine months ended September 30 
  2021  2020 
       
Current tax $-  $- 
Deferred tax  -   - 
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

  2021  2020 
  Nine months ended September 30, 
  2021  2020 
       
Loss before income taxes $(357,648) $(359,427)
Statutory income tax rate  25%  25%
Income tax expense at statutory rate  (89,412)  (89,856)
Net operating loss  89,412   89,856 
Income tax expense $-  $- 

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

  2021  2020 
  Nine months ended September 30, 
  2021  2020 
       
Loss before income taxes $151,621  $11,260 
Statutory income tax rate  8.25%  8.25%
Income tax expense at statutory rate  12,508   928 
Tax adjustments  -   (3,626)
Net operating loss  (12,508)  2,698 
Income tax expense $-  $- 

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


  September 30, 2021  December 31, 2020 
       
Deferred tax assets:        
Net operating loss carryforwards        
- United States $35,025   31,454 
- Hong Kong  -   - 
- PRC  209,915   120,503 
   244,940   151,957 
Less: valuation allowance  (244,940)  (151,957)
Deferred tax assets, net $-  $- 

14

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.


 

Quarter Ended

December 31, 2017

 

Quarter Ended

December 31, 2016

Income tax expense (benefit) at

$(4,428)

 

$(5,816)

Valuation allowance

4,428

 

5,816

 

--

 

--


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

(a)Major customers

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:

  Three Months ended
September 30, 2021
  September 30,
2021
 
Customer Revenues  Percentage of revenues  Accounts
receivable
 
          
Customer C $64,373   91%  - 
                 
Total: $64,373   91%  - 

  

Nine Months ended

September 30, 2021

  September 30,2021 
Customer Revenues  Percentage of
revenues
  Accounts
receivable
 
          
Customer C $229,887   45%  - 
Customer D 99,239   10%  167,183
Customer E  147,802   29%  - 
                 
Total: $476,928   94%Total: 167,183

  Three Months ended
September 30, 2020
  September 30,
2020
 
Customer Revenues  Percentage of revenues  Accounts
receivable
 
          
Customer B $211,034   71%  - 
Customer A  87,880   29%  - 
                 
Total: $298,914   100%  - 

  

Nine Months ended

September 30, 2020

  September 30,
2020
 
Customer Revenues  Percentage of revenues  Accounts receivable 
          
Customer B $211,034   71%  - 
Customer A  87,880   29%  - 
                 
Total: $298,914   100%  - 

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

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(a)Major vendors

For the three and nine months ended September 30, 2021 and 2020, the vendor who accounts for 10% or more of the tax law changesCompany’s purchases as at period-end dates, are presented as follows:

  

Three months ended

September 30, 2021

    

Nine months ended

September 30, 2021

 
Customer Purchases  Percentage of
revenues
  Customer Purchases  Percentage of revenues 
               
Vendor B  1,966   92% Vendor B  195,152   100%
                   
Total: $1,966   92% Total: $195,152   100%

  Three months ended September 30, 2020    Nine months ended September 30, 2020 
Customer Purchases  Percentage of revenues  Customer Purchases  Percentage of revenues 
               
Vendor A $183,346   55% Vendor A $-   -%
Vendor C 68,219   20% Vendor C 68,219   72%
Vendor D  55,774   17% Vendor D  -   - %
                   
Total: $307,339   92% Total: $68,219   72%

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.

All of the Company’s vendors are located in the periodPeople’s Republic of enactment, such as determiningChina.

(c) Credit risk

Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the transition tax, remeasuring our U.S. deferred tax assetsconcentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities.relatively short collection terms. The Company does not have any foreign earningsgenerally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

(d) Economic and political risk

The Company’s major operations are conducted in the People’s Republic of China. Accordingly, the political, economic, and legal environments in PRC, as well as the general state of PRC’s economy may influence the Company’s business, financial condition, and results of operations.

(e) Exchange rate risk

The Company cannot guarantee that the current exchange rate will remain steady; therefore we do not anticipatethere is a possibility that the impactCompany could post the same amount of a transition tax. We have remeasured our U.S. deferred tax assets at a statutory income taxprofit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of 21%. SinceRMB converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

NOTE 12 COMMITMENTS AND CONTINGENCIES

As of September 30, 2021, the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of any transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period inCompany has no material commitments or contingencies.

NOTE 13 SUBSEQUENT EVENTS

In accordance with SAB 118.


Deferred tax assetsASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for the quarter ending December 31, 2017 are comprised primarilyand disclosure of the following:


Net Operating Loss Carryforward

$                51,477

Related Party Interest

$                23,150

Valuation Allowance

 (74,627)

Total deferred tax asset

-


At December 31, 2017, the Company had a net operating loss carry forward of approximately $220,000events that may be offset against future taxable income through 2036.  These losses will start to expire in the year 2016 through 2036.  No tax benefit has been reported in the financial statements because the Company believes that it is more likely than not that the carryforwards will expire unused.  The utilization of future losses may be limited under various provisions of the Internal Revenue Code pertaining to continuity of business operations limits and substantial changes in ownership.  Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount.  The valuation allowance decreased during the period ended December 31, 2017 by approximately $45,300 due to changes in enacted tax rates related to the Tax Act as mentioned above.  Deferred tax assets related to operating loss carryforwards and related party interest decreased by approximately $32,200 and $13,100, respectively, due to the Tax Act.

Note 4:  SUBSEQUENT EVENTS


The Company has evaluated subsequent events fromoccur after the balance sheet date andbut before financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2021 up through the date the Company issued the audited consolidated financial statements were issued.statements. During thisthe period, the Company did not have any material recognizable subsequent events.


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Item 2. Management’s Discussion and Analysis or Plan of Financial Condition and Results of OperationsOperation.


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) with respect to the financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities for existing products, plans and objectives of management. The Act provides a safe harbor for forward-looking statements made by or on behalf of our Company. Statements in this periodic report that are not historical facts are hereby identified as forward-looking statements. Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,”forward-looking, including statements contained in this Quarterly Reportreport and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect forward-looking statements include a wide range of factors that could materially affect future developments and performance, including the following:


Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions; changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally; legal and regulatory developments, such as regulatory actions affecting environmental activities; the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes; and labor disputes, which may lead to increased costs or disruption of operations.


This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Business Overview

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.

Our Products and Services

Our health products are designed to help enhance immunity and improve general wellbeing. We provide the following categories of healthcare products and customized healthcare consultation services in China: (i) Nutrition Catering (ii) Special Health Food (iii) Health Supplement and (iv) Skincare. The products target all age groups with different needs.

Product categoryRepresentative ProductsDescription
Nutrition Catering SeriesJasmine BeautyMeal replacement and healthy snacks
Special Health Food SeriesPower CentinentProducts that support a healthy active lifestyle and enhance Immunity
Health Supplement SeriesFuli Fruit JuiceFunctional fruit beverages and dietary and nutritional supplements containing resveratrol, anthocyanin, superoxide enzyme
Skincare SeriesTightnessFacial skin care and recovery

Our products are taken as healthcare supplements in accordance with the principles of traditional Chinese medicine including the principle complementary medicine and ideal ratios and combinations of ingredients.

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Markets and Regions

The Great Health Industry refers to production, operation, service and information dissemination, maintenance, restoration, and promotions linked to health. It covers medical products, health supplements, nutritional foods, medical devices, health appliances, fitness, health management, health consulting and many other production and service areas closely related to human health. The Great Health Industry is an emerging industry with huge market potential, especially in China.

According to the “China Great Health Industry Strategic Planning and Enterprise Strategy Consulting Report” published by Qianzhan Industry Institute (前瞻產業研究院), the scale of the Great Health Industry in 2017 was RMB6.2 trillion, which increased to over RMB7 trillion in 2018. The report predicted RMB8.78 trillion volume for 2019 and forecast over RMB10 trillion for 2020. In the years till 2023, the average annual compound growth rate will be approximately 12.55%, and with the Great Health Industry reaching approximately RMB14.09 trillion in 2023.

Our Strategies

We are focused on achieving long-term growth in revenues, cash flow and profit. We believe that we can achieve this by developing multiple distribution channels and strengthening our marketing and promotions, leading to better product turnover and revenue. We also expect to broaden our product range as well as product differentiation in the future. Based on the business experience accumulated over the years, we believe we can improve the efficiency of our supply chain with time-saving and cost-saving supply chain management and marketing planning for the target customer base with our one-stop service.

Our primary aims are (i) to strengthen our product saleability; (ii) to cut logistics cost and time spent and (iii) to further expand the market share in China. Toward this end, we plan to pursue the following business strategies:

Collaborate with third-party e-commerce platforms to boost product exposure, e.g. Tmall, Jingdong mall
Deliver healthcare knowledge and consultation service via social media and We-media
Build brand image and reputation through customer experience and word of mouth
Increase the number of downstream distributors and wholesalers
Strengthen the relationship with manufacturers, suppliers, drug agents and distributors
Pursue strategic acquisitions and partnerships

We intend to develop both online and offline distribution channels to increase sales volume and revenue. We expect to partner with third party e-commerce platforms, social media and We-media such as Wechat, TikTok and Xiaohongshu to build our online presence. We believe that online channels will allow us to provide real-time nutrition and healthcare consultation services as well as increase customer engagement and retention. Starting from the second half of 2020, we plan to launch our “nutrition consulting” support services using a major social media software to allow customer groups to receive pre-purchase consultation and after-sales service for products anytime and anywhere.

Our current offline sales channel relies on distributors and sales agents. To enhance the visibility and marketability of our products and services and to improve brand recognition and awareness, we hope to develop store-in-shop and counter experiences. We also intend to partner with high-end gyms to form nutrition clubs and hold weight-loss training camps, health assessment and fitness training camps and other activities.

We intend to create a ‘one-stop’ solution for our customers by creating a multi-channel health product supply and retail system. We not only provide personalized consultation service to our customers, but also summarize and analyze our customer feedback and experiences through our consultation service and after-sales service. We intend to share this data with our manufacturers and supply chain partners to develop products and services that better meet the demands of our customers. By pooling and addressing the needs of downstream businesses and combining it with the Consumer to Manufacturer model for upstream transformation, we anticipate establishing a close relationship between manufacturers and suppliers. We believe this model can also reduce circulation costs and improve the efficiency of our supply chain.

Competition

We operate in a highly competitive and fragmented industry that is sensitive to price and service. We compete with leading e-commerce companies such as Alibaba (China) which may offer substantially the same or similar product offerings as us. We also compete with businesses that focus on particular merchant categories or markets such as UNI HEALTH (HK stock code: 02211) and ALI HEALTH (HK stock code: 0241). We also compete with traditional cash payments and other popular online shopping websites and apps, and other traditional media companies that provide discounts on products and services. We believe the principal competitive factors in our market include the following:

Breadth of member base and the products and services featured.

Close and fast pre-sales and after-sales service response.

Ability to reduce the product turnover time and inventory cost.

Relationship and bargaining power with supplier and manufacturer.

Healthcare product effectiveness and acceptance from customer.

Local presence and understanding of local business trends.

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Ability to deliver a high volume of relevant services and information to consumers.

Ability to produce high purchase rates for products and services among members.

Strength and recognition of our brand.

Although we believe we compete favorably on the factors described above, many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources, larger product and services offerings, larger customer base and greater brand recognition. These factors may allow our competitors to benefit from their existing customer base with lower development costs or to respond more quickly than we can to new or emerging technologies and changes in customer requirements. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build a larger customer base more effectively than us. Our competitors may develop products or services that are similar to our products and services or that achieve greater market acceptance than our products and services. In addition, although we do not believe that customer payment terms are a principal competitive factor in our market, they may become such a factor, and we may be unable to compete on such terms.

Government and Industry Regulations

We are subject to the general laws in China governing businesses including labor, occupational safety and health, general corporations, intellectual property and other similar laws.

Product Liability and Consumers Protection

Product liability claims may arise if any of our healthcare products have a harmful effect on a consumer, who may make a claim for damages or compensation as an injured party. The General Principles of the Civil Law of the PRC, which became effective in January 1987, state that manufacturers and sellers of defective products causing property damage or injury shall incur civil liabilities for such damage or injuries.

The Product Quality Law of the PRC was enacted in 1993 and amended in 2000 to strengthen the quality control of products and protect consumers’ rights and interests. Under this law, manufacturers and distributors who produce or sell defective products may be subject to confiscation of earnings from such sales, revocation of business licenses and imposition of fines, and in severe circumstances, may be subject to criminal liability.

The Law of the PRC on the Protection of the Rights and Interests of Consumers was promulgated on October 31, 1993 and became effective on January 1, 1994 to protect consumers when they purchase or use goods or services. All business operators must comply with this law when they manufacture or sell goods and/or provide services to customers. In extreme situations, product manufacturers and distributors may be subject to criminal liability if their goods or services lead to the death or injuries of customers or other third parties.

Critical Accounting Policies, Judgments and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires our management to make assumptions, estimates and assumptionsjudgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following accounting policies are critical in the unaudited Financial Statements and accompanying notes.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.  The Company believes there have been no significant changes during the three month periods ended December 31, 2017, to the items disclosed as significant accounting policies since the Company’s last auditedpreparation of our financial statements for the year ended September 30, 2017.statements.


The Company’s accounting policies are more fully described in Note 1 and 2 of the financial statements. As discussed in Note 1 and 2, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the future events that affect the amounts reported in the financial statements and the accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual differences could differ from these estimates under different assumptions or conditions. The Company believes that the following addresses the Company’s most critical accounting policies.




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Revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.  We recognize revenue as services are provided.


Deferred 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 that it is more likely than not that the asset will be realized. A valuation allowance has currently been recorded to reduce our deferred tax asset to $0.


Business of the Company


The Company was incorporated under the laws of the state of Utah on October 25, 1972, under the name of Electronic Agricultural Machinery Development Corporation.  In 1974, the Company changed its name to Zenith Development Corporation.  In 1980, the Company changed its name to Alternative Energy Resources, Inc.  In 2004, the Company changed its name to Trafalgar Resources, Inc.


Initially, the Company sought to develop and market inventions, including an asparagus harvester, a hot water saving device and a gas alert signal.  Ultimately, none of the inventions were successful and they were abandoned. The Company ceased to conduct any business and has not conducted any business during the last three years.


Currently, the Company is in the process of investigating potential business ventures which, in the opinion of management, will provide a source of eventual profit to the Company.  Such involvement may take many forms, including the acquisition of an existing business or the acquisition of assets to establish subsidiary businesses.  All risks inherent in new and inexperienced enterprises are inherent in the Company’s business.


The selection of a business opportunity in which to participate is complex and risky. Additionally, as the Company has only limited resources, it may be difficult to find good opportunities.  There can be no assurance that the Company will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its shareholders. The Company will select any potential business opportunity based on management's business judgment.


The activities of the Company are subject to several significant risks which arise primarily as a result of the fact that the Company has no specific business and may acquire or participate in a business opportunity based on the decision of management which potentially could act without the consent, vote, or approval of the Company’s shareholders.  The risks faced by the Company are further increased as a result of its lack of resources and its inability to provide a prospective business opportunity with significant capital.


Discussion and Analysis of Financial Condition and Results of Operations


The CompanyRESULTS OF OPERATIONS

We have been significantly impacted by COVID-19 global pandemic. In addition to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions and volatility in the processglobal financial markets. China and many other countries have issued policies intended to stop or slow the further spread of looking for potential business ventures.  As the Company possesses limited funds,COVID-19 virus.

19

COVID-19 and China’s response to the Company will be extremely limited in its attemptspandemic are significantly affecting the economy. There are no comparable events that provide guidance as to locate potential business situations for investigation.  The Company intends to commence, on a limited basis, the process of investigating possible mergereffect the COVID-19 pandemic may have, and, acquisition candidates, and believes that the Company’s status as a publicly-held corporation will enhance its abilityresult, the ultimate effect of the pandemic is highly uncertain and subject to locate such potentialchange. We do not yet know the full extent of the effects on the economy, the markets we serve, our business ventures.  No assurance can be given as to when the Company may locate suitable business opportunities and such opportunities may be difficult to locate; however, the Company intends to actively search for potential business venturesor our operations.

The following table sets forth certain operational data for the foreseeable future.three months and nine months ended September 30, 2021 and 2020:

  Three Months Ended  Three Months Ended 
  September 30, 2021  September 30, 2020 
Revenue, net $69,726  $299,426 
Cost of revenue  10,462   (285,746)
Gross profit  80,188   13,680 
Total operating expenses  (162,225)  (165,515)
Total other income  247   4,054 
Loss before income tax  (81,790)  (147,781)
Income tax expenses  -   - 
Net loss  (81,790)  (147,781)

  Nine Months Ended  Nine Months Ended 
  September 30, 2021  September 30, 2020 
Revenue, net $504,295  $435,682 
Cost of revenue  (202,506)  (354,705)
Gross profit  301,789   80,977 
Total operating expenses  (561,413)  (438,856)
Total other income  7,437   7,088 
Loss before income tax  (252,187)  (350,791)
Income tax expenses  -   - 
Net loss  (252,187)  (350,791)

Revenue. For the three and nine months ended September 30, 2021, we generated revenues of $69,726 and $504,295, respectively. For the comparative three and nine months ended September 30, 2020, we derived income $299,426 and $435,682, respectively. All the major customers are located in the HK and PRC. The Company’s management does not expect to remain involved as management of any acquired business.  


Management anticipates thatincrease in the revenue due to its lack of funds, anda revenue generated in the limited amount of its resources,Hong Kong, we expected the Company mayrevenue would be restricted to participation in only one potential business venture.  This lack of diversification should be considered a substantial risk because it will not permit the Company to offset potential losses from one venture against gains from another.


Business opportunities, if any arise, are expected to become available to the Company principally from the personal



11




contacts of its officers and directors.  While it is not expected that the Company will engage professional firms specializing in business acquisitions or reorganizations, such firms may be retained if funds become availableincreased in the future once an efficacious COVID-19 vaccine emerges.

Cost of Revenue. For the three and if deemed advisable.  Opportunities may thus become available from professional advisors, securities broker-dealers, venture capitalists, membersnine months ended September 30, 2021, the cost of revenue was ($10,462) and $202,506, respectively, and as a percentage of net revenue, approximately -15% and 40%, respectively. Cost of revenue for the financial community,three and nine months ended September 30, 2020, was $285,746 and $354,705, respectively, and as a percentage of net revenue, approximately 95% and 81%, respectively. The percentage of gross profit increased due to an increase in the revenue generated in Hong Kong.

Net Loss. For the three and nine months ended September 30, 2021, we incurred a net loss of $81,790 and a net loss of $252,187, respectively, compared for the three and nine months ended September 30, 2020, we incurred a net loss of $147,781 and $350,791, respectively. The decrease in net loss due to more revenue generated in the Hong Kong and decrease in the cost of revenue in the Mainland.

Liquidity and Capital Resources

As of September 30, 2021, we had cash and cash equivalents of $656,671, trade receivables of $167,183, inventories of $199,237, right of use assets of $375,567 and prepayments and other receivables of $130,193.

As of December 31, 2020, we had cash and cash equivalents of $1,006,394, inventories of $206,272, and prepayments and other receivables of $121,501.

20

We believe that our current cash and other sources of unsolicited proposals. In certain circumstances,liquidity discussed below are adequate to support general operations for at least the Company may agree to pay a finder’s fee ornext 12 months.

  Nine Months Ended September 30, 
  2021  2020 
Net cash (used in) provided by operating activities $(377,470) $355,588 
Net cash used in investing activities  (27,358)  (62,865)
Net cash provided by financing activities  43,672   3,115 
         

Net Cash (Used In) Provided By Operating Activities.

For the nine months ended September 30, 2021, net cash used in operating activities was $377,470, which consisted primarily of the increase in accounts receivables of $167,183, increase in prepayment and other formreceivables of compensation, including perhaps one-time$8,692, decrease in inventories of $7,035, increase in accrued liabilities and other payables of $48,205, decrease in accounts payable of $7,827, decrease in income tax payable of 5,058, decrease in customers deposit of $134,334, and increase in lease liabilities of $63,522.

For the nine months ended September 30, 2020, net cash payments, payments based upon a percentage of revenues or sales volume, and/or payments involving the issuance of securities, for services provided by persons who submitoperating activities was $358,588, which consisted primarily of a business opportunitydecrease in which the Company shall decide to participate, although no contracts or arrangementsaccounts receivables of this nature presently exist.  The Company is unable to predict at this time the cost of locating$530,196, a suitable business opportunity.


The analysis of business opportunities will be undertaken by or under the supervision of the Company’s management, none of whom is a professional analyst and none of whom have significant general business experience.  Among the factors which management will considerdecrease in analyzing potential business opportunities are the available technical, financial and managerial resources; working capital and financial requirements; the history of operation, if any; future prospects; the nature of present and anticipated competition; potential for further research, developments or exploration; growth and expansion potential; the perceived public recognition or acceptance of products or services; name identification,prepayment and other relevant factors.  


It is not possible at present to predict the exact mannerreceivables of $213,152, an increase in which the Company may participateinventories of $171,500, an increase in a business opportunity.  Specific business opportunities will be reviewed and, based upon such review, the appropriate legal structure or methodcustomer deposits of participation will be decided upon by management.  Such structures and methods may include, without limitation, leases, purchase and sale agreements, licenses, joint ventures; and may involve merger, consolidation or reorganization.  The Company may act directly or indirectly through84,097, an interestincrease in a partnership, corporation or reorganization.  However, it is most likely that any acquisition of a business venture the Company would make would be by conducting a reorganization involving the issuance of the Company’s restricted securities. Such a reorganization may involve a merger (or combination pursuant to state corporate statutes, where one of the entities dissolves or is absorbed by the other), or it may occur as a consolidation, where a new entity is formed and the Company and such other entity combine assets in the new entity.  A reorganization may also occur, directly or indirectly, through subsidiaries, and there is no assurance that the Company would be the surviving entity.  Any such reorganization could result in loss of control of a majority of the shares.  The Company’s present directors may be required to resign in connection with a reorganization.  


The Company may choose to enter into a venture involving the acquisition of or merger with a company which does not need substantial additional capital but desires to establish a public trading market of its securities.  Such a company may desire to consolidate its operations with the Company through a merger, reorganization, asset acquisition, or other combination, in order to avoid possible adverse consequences of undertaking its own public offering. Such consequences might include expense, time delays or loss of voting control.  In the event of such a merger, the Company may be required to issue significant additional shares, and it may be anticipated that control over the Company’s affairs may be transferred to others.


As part of their investigation of acquisition possibilities, the Company’s management may meet with executive officers of the business and its personnel; inspect its facilities; obtain independent analysis or verification of the information provided, and conduct other reasonable measures, to the extent permitted by the Company’s limited resources and management’s limited expertise.  Generally, the Company intends to analyze and make a determination based upon all available information without reliance upon any single factor as controlling.  


In all likelihood, the Company’s management will be inexperienced in the areas in which potential businesses will be investigated and in which the Company may make an acquisition or investment.  Thus, it may become necessary for the Company to retain consultants or outside professional firms to assist management in evaluating potential investments.  The Company can give no assurance that it will be able to find suitable consultants or managers.  The Company has no policy regarding the use of consultants, however, if management, in its discretion, determines that it is in the best interests of the Company, management may seek consultants to review potential merger or acquisition candidates.  




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It may be anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documentsaccrued liabilities and other instruments will require substantial management timepayables of $42,247 and attention, and substantial costs for accountants, attorneys and others.  Should a decision thereafter be made notdecrease in lease liabilities of $59,445.

We expect to participate in a specific business opportunity, it is likely that costs already expended would not be recoverable.  It is likely, in the event a transaction should eventually fail to be consummated, for any reason, that the costs incurred by the Company would not be recoverable.  The Company’s officers and directors are entitled to reimbursement for all expenses incurred in their investigation of possible business ventures on behalf of the Company, and no assurance can be given that if the Company has available funds they will not be depleted in such expenses.  


Based on current economic and regulatory conditions, management believes that it is possible, if not probable, for a company like the Company, without many assets or many liabilities, to negotiate a merger or acquisition with a viable private company.  The opportunity arises principally because of the high legal and accounting fees and the length of time associated with the registration process of “going public.”  However, should any of these conditions change, it is very possible that there would be little or no economic value for anyone taking over control of the Company.


LIQUIDITY AND CAPITAL RESOURCES


As of December 31, 2017, the Company had $12,472 in current assets and $330,971 in current liabilities resulting in a negative working capital as of December 31, 2017 of $318,499.  The Company has only incidental ongoing expenses primarily associated with maintaining its corporate status and maintaining the Company’s reporting obligations to the Securities and Exchange Commission.  Current management has indicated a willingness to help support the Company’s ongoing expenses through the purchase of securities of the Company or loans to the Company.  Existing liabilities are related to loans by management to help fund ongoing expenses.


For the three months ended December 31, 2017, the Company had $6,001 in general and administrative expense related to maintaining its corporate status, and paying accounting and legal fees.  Additionally, the Company had related party interest expense of $6,650 for the three months ended December 31, 2017.  Management anticipates only nominal continuing expenses related to investigating business opportunities and legal and accounting costs. For the three months ended December 31, 2017, the Company had a net loss of $12,651, compared to a loss of $16,616 for the three months ended December 31, 2016.  


Since inception, the Company has not generated significant revenue, and it is unlikely that any revenue will be generated until the Company locates a business opportunity with which to acquire or merge.  Management of the Company will be investigating various business opportunities.  These efforts may cost the Company not only out of pocket expenses for its management but also expenses associated with legal and accounting costs.  There can be no guarantee that the Company will receive any benefits from the efforts of management to locate business opportunities.


Management does not anticipate employing any employees in the future until a merger or acquisition can be accomplished.  Management will continue to rely on outside consultantscash generated through financing from our existing shareholders and private placements of our securities, however, to assist in its corporate filing requirements.  finance our operations and future acquisitions.


RESULTS OF OPERATIONSNet Cash Used In Investing Activities.


The Company has not had any significant revenues.  The Company continues to suffer a loss related to maintaining its corporate status and reporting obligations.  For the threenine months ended December 31, 2017,September 30, 2021, net cash used in investing activities was $27,358, consisted primarily of addition of leasehold improvement.

For the Company hadnine months ended September 30, 2020, net cash used in investing activities was $62,865, consisted primarily of purchase of motor vehicle of $70,063 and cash from acquisition of legal acquirer of $7,198.

Net Cash Provided By Financing Activities.

For the nine months ended September 30, 2021 net cash provided by financing activities was $43,672, which consisted primarily of advance from a director of $112,153 and repayment of lease liabilities of $68,481

For the nine months ended September 30, 2020, net losscash provided by financing activities was $3,114, consisting of $12,651.   The Company doesadvance from a director of $6,153 and repayment to a related company of $3,038.

Off Balance Sheet Arrangements

We have not anticipate any revenue until it locates a new business opportunity.


Off-balance sheet arrangements


The Company does not haveentered into any off-balance sheet arrangements and it is not anticipated that the Company will enter into any off-balance sheet arrangements.




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Forward-looking Statements


The Private Securities Litigation Reform Act of 1995 (the “Act”) provides a safe harbor for forward-looking statements made by or on behalf of our Company. Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect forward-looking statements include a wide range of factors that could materially affect future developments and performance, including the following:


Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions; changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally; legal and regulatory developments, such as regulatory actions affecting environmental activities; the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes; and labor disputes, which may lead to increased costs or disruption of operations.


This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.


Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk.Risk


NA-Smaller Reporting CompanyNot required for smaller reporting companies.


Item 4. Controls and Procedures.Procedures


Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for the Company.

(a) Evaluation of Disclosure Controls and Procedures


Our management evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our President and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected but we believe the controls and procedures do provide a reasonable assurance.

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(b) Changes in internal control over financial reportingthe Company’s Internal Controls Over Financial Reporting


There have been no changes in internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.




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PARTPart II - OTHER INFORMATIONOther Information


ITEMItem 1. Legal Proceedings


NoneThere are no legal proceedings, which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.


ITEMItem 1A. Risk Factors

Not applicable to smaller reporting companies.

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


Recent Sales of Unregistered Securities


We have not sold any restricted securities during the three and nine months ended December 31, 2017.September 30, 2021.


Use of Proceeds of Registered Securities


None; not applicable.


Purchases of Equity Securities by Us and Affiliated Purchasers


During the three and nine months ended December 31, 2017,September 30, 2021, we have not purchased any equity securities nor have any officers or directors of the Company.


ITEMItem 3. Defaults Upon Senior Securities


We are not aware of any defaults upon senior securities. Management has indicated they do not, at this time, intend to pursue the defaults.


ITEMItem 4. Mine Safety Disclosures


The Company isNone; not involved in the mining business and has no safety disclosure issues.applicable.


ITEMItem 5. Other Information.Information


The Company has relied on loans from its president.  As of December 31, 2017, the Company was in default on such loans.None; not applicable.


22

ITEMItem 6. Exhibits


(a)     Exhibits.


Item 4

Exhibit No.

Instruments Defining the Rights of Security Holders

Location


31.01

31

CEO certification Pursuant

to 18 USC Section 1350, as

adopted pursuant to Section 302

of Sarbanes-Oxley Act of 2002    

This Filing


31.02

31

CFO certification Pursuant

to 18 USC Section 1350, as

adopted pursuant to Section 302

of Sarbanes-Oxley Act of 2002   

This Filing


32.01

32

CEO Certification pursuant to

 

Exhibits No.
31.1Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document

                section 906           

This Filing


32.02

32

CFO Certification pursuant to



15




                        Section 906      

             This Filing


101.INS

 XBRL Instance*


101.XSD 

XBRL Schema*


101.CAL

 XBRL Calculation*


101.DEF

 XBRL Definition*


101.LAB

XBRL Label*


101.PRE

XBRL Presentation*


*These interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.


*These interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 




23

SIGNATURES


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


China Foods Holdings Ltd.
Dated: November 16, 2021
By:/s/ Kong Xiao Jun
Kong Xiao Jun
Chief Executive Officer & Chief Financial Officer

Trafalgar Resources, Inc.

24

[Registrant]



Dated: February 13, 2018

By: /s/ Anthony Brandon Escobar

Anthony Brandon Escobar, President

(Principal Executive Officer)



    February 13, 2018

By: /s/ Anthony Coletti

Anthony Coletti, Principal Accounting

Officer





17