Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 08, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Merion, Inc | |
Entity Central Index Key | 0001517498 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 61,519,905 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 333-173681 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 45-2898504 | |
Entity Address Address Line 1 | 100 N. Barranca | |
Entity Address Address Line 2 | St. #1000 | |
Entity Address City Or Town | West Covina | |
Entity Address State Or Province | CA | |
Entity Address Postal Zip Code | 91791 | |
City Area Code | 626 | |
Local Phone Number | 331-7570 | |
Entity Interactive Data Current | Yes |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash | $ 1,180 | $ 9,506 |
Accounts receivable, net | 8,232 | 75,258 |
Inventories | 67,333 | 80,730 |
Prepaid expenses | 39,103 | 190,059 |
TOTAL CURRENT ASSETS | 115,848 | 355,553 |
PROPERTY AND EQUIPMENT, net | 91,206 | 400,694 |
OPERATING RIGHT-OF-USE ASSETS | 452,687 | 612,118 |
DEPOSITS | 15,410 | 15,410 |
TOTAL ASSETS | 675,151 | 1,383,775 |
CURRENT LIABILITIES: | ||
Loan payable - Paycheck Protection Program | 137,792 | 0 |
Loan payable - Economic Injury Disaster Loans | 2,193 | 2,344 |
Accounts payable and accrued expenses | 79,949 | 113,125 |
Deferred revenue | 714,301 | 503,448 |
Operating lease liabilities - current | 241,107 | 221,819 |
Long term debt - current | 17,199 | 15,208 |
Due to shareholder, non-interest bearing | 48,886 | 55,607 |
TOTAL CURRENT LIABILITIES | 1,241,427 | 911,551 |
NON-CURRENT LIABILITIES: | ||
Operating lease liabilities - non-current | 241,646 | 411,584 |
Long term debt | 65,021 | 79,407 |
Loan payable - Economic Injury Disaster Loan | 154,370 | 150,000 |
TOTAL NON-CURRENT LIABILITIES | 461,037 | 640,991 |
TOTAL LIABILITIES | 1,702,464 | 1,552,542 |
SHAREHOLDERS' DEFICIT: | ||
Common stock, $0.001 par value, 333,333,333 shares authorized, 61,519,905 shares issued and outstanding, as of September 30, 2021 and December 31, 2020* | 61,520 | 61,520 |
Additional paid-in capital | 26,439,608 | 26,439,608 |
Deferred stock compensation | 0 | (179,992) |
Deficit | (25,792,746) | (24,754,208) |
Stock subscription receivable | (1,735,695) | (1,735,695) |
TOTAL SHAREHOLDERS' DEFICIT | (1,027,313) | (168,767) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $ 675,151 | $ 1,383,775 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
SHAREHOLDERS' DEFICIT | ||
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 333,333,333 | 333,333,333 |
Common stock, shares issued | 61,519,905 | 61,519,905 |
Common stock, shares outstanding | 61,519,905 | 61,519,682 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
SALES | ||||
Direct Sales | $ 542 | $ 8,870 | $ 17,923 | $ 38,624 |
OEM and Packaging | 169,280 | 32,827 | 1,348,368 | 98,185 |
TOTAL SALES | 169,822 | 41,697 | 1,366,291 | 136,809 |
COST OF SALES | ||||
Direct Sales | 155 | 8,126 | 13,455 | 23,177 |
OEM and Packagings | 61,045 | 28,047 | 903,730 | 57,224 |
Inventory write-down | 0 | 0 | 4,075 | 0 |
Idle Capacity | 0 | 20,483 | 9,298 | 96,924 |
TOTAL COST OF SALES | 61,200 | 56,656 | 930,558 | 177,325 |
GROSS PROFIT (LOSS) | 108,622 | (14,959) | 435,733 | (40,516) |
OPERATING EXPENSES | ||||
Selling expenses | 14,565 | 10,456 | 80,762 | 41,629 |
General and administrative expenses | 302,455 | 300,470 | 970,395 | 993,266 |
Stock compensation expense | 11,191 | 83,002 | 179,992 | 335,302 |
Loss (gain) on disposal of equipment | 0 | 0 | 268,800 | (16,000) |
Total operating expenses | 328,211 | 393,928 | 1,499,949 | 1,354,197 |
LOSS FROM OPERATIONS | (219,589) | (408,887) | (1,064,216) | (1,394,713) |
OTHER INCOME (EXPENSE), net | ||||
Other income | 1,500 | 8,171 | 35,120 | 19,988 |
Finance expenses | (2,373) | (41,905) | (9,442) | (126,785) |
Total other income (expense), net | (873) | (33,734) | 25,678 | (106,797) |
LOSS BEFORE INCOME TAXES | (220,462) | (442,621) | (1,038,538) | (1,501,510) |
PROVISION FOR INCOME TAXES | 0 | 0 | ||
NET LOSS | $ (220,462) | $ (442,621) | $ (1,038,538) | $ (1,501,510) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||
Basic and diluted* | 61,519,905 | 59,286,144 | 61,519,905 | 59,218,176 |
LOSS PER SHARE | ||||
Basic and diluteds* | $ 0 | $ (0.01) | $ (0.02) | $ (0.03) |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT (UNAUDITED) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Deferred Stock Compensation | Deficit | Stock Subscription Receivable |
Balance, shares at Dec. 31, 2019 | 59,136,129 | |||||
Balance, amount at Dec. 31, 2019 | $ (5,315,859) | $ 59,136 | $ 19,302,663 | $ (601,093) | $ (22,935,870) | $ (1,140,695) |
Net loss | (592,770) | 0 | 0 | 0 | (592,770) | 0 |
Amortization of deferred stock compensation | 188,650 | $ 0 | 0 | 188,650 | 0 | 0 |
Issuance of common stock, shares | 50,000 | |||||
Issuance of common stock, amount | 130,000 | $ 50 | 149,950 | 0 | 0 | (20,000) |
Issuance of common stock for financing related services, shares | 4,000 | |||||
Issuance of common stock for financing related services, amount | 0 | $ 4 | (4) | 0 | 0 | 0 |
Collection of stock subscription | 50,000 | $ 0 | 0 | 0 | 0 | 50,000 |
Balance, shares at Mar. 31, 2020 | 59,190,129 | |||||
Balance, amount at Mar. 31, 2020 | (5,539,979) | $ 59,190 | 19,452,609 | (412,443) | (23,528,640) | (1,110,695) |
Balance, shares at Dec. 31, 2019 | 59,136,129 | |||||
Balance, amount at Dec. 31, 2019 | (5,315,859) | $ 59,136 | 19,302,663 | (601,093) | (22,935,870) | (1,140,695) |
Net loss | (1,501,510) | |||||
Amortization of deferred stock compensation | 335,302 | |||||
Balance, shares at Sep. 30, 2020 | 59,606,796 | |||||
Balance, amount at Sep. 30, 2020 | (5,677,067) | $ 59,607 | 20,702,192 | (265,791) | (24,437,380) | (1,735,695) |
Balance, shares at Mar. 31, 2020 | 59,190,129 | |||||
Balance, amount at Mar. 31, 2020 | (5,539,979) | $ 59,190 | 19,452,609 | (412,443) | (23,528,640) | (1,110,695) |
Net loss | (466,119) | 0 | 0 | 0 | (466,119) | 0 |
Amortization of deferred stock compensation | 63,650 | $ 0 | 0 | 63,650 | 0 | 0 |
Balance, shares at Jun. 30, 2020 | 59,190,129 | |||||
Balance, amount at Jun. 30, 2020 | (5,942,448) | $ 59,190 | 19,452,609 | (348,793) | (23,994,759) | (1,110,695) |
Net loss | (442,621) | 0 | 0 | 0 | (442,621) | 0 |
Amortization of deferred stock compensation | 83,002 | $ 0 | 0 | 83,002 | 0 | 0 |
Issuance of common stock, shares | 416,667 | |||||
Issuance of common stock, amount | 625,000 | $ 417 | 1,249,583 | 0 | 0 | (625,000) |
Balance, shares at Sep. 30, 2020 | 59,606,796 | |||||
Balance, amount at Sep. 30, 2020 | (5,677,067) | $ 59,607 | 20,702,192 | (265,791) | (24,437,380) | (1,735,695) |
Balance, shares at Dec. 31, 2020 | 61,519,905 | |||||
Balance, amount at Dec. 31, 2020 | (168,767) | $ 61,520 | 26,439,608 | (179,992) | (24,754,208) | (1,735,695) |
Net loss | (297,640) | 0 | 0 | 0 | (297,640) | 0 |
Amortization of deferred stock compensation | 83,934 | $ 0 | 0 | 83,934 | 0 | 0 |
Balance, shares at Mar. 31, 2021 | 61,519,905 | |||||
Balance, amount at Mar. 31, 2021 | (382,473) | $ 61,520 | 26,439,608 | (96,058) | (25,051,848) | (1,735,695) |
Balance, shares at Dec. 31, 2020 | 61,519,905 | |||||
Balance, amount at Dec. 31, 2020 | (168,767) | $ 61,520 | 26,439,608 | (179,992) | (24,754,208) | (1,735,695) |
Net loss | (1,038,538) | |||||
Amortization of deferred stock compensation | 179,992 | |||||
Balance, shares at Sep. 30, 2021 | 61,519,905 | |||||
Balance, amount at Sep. 30, 2021 | (1,027,313) | $ 61,520 | 26,439,608 | 0 | (25,792,746) | (1,735,695) |
Balance, shares at Mar. 31, 2021 | 61,519,905 | |||||
Balance, amount at Mar. 31, 2021 | (382,473) | $ 61,520 | 26,439,608 | (96,058) | (25,051,848) | (1,735,695) |
Net loss | (520,436) | 0 | 0 | 0 | (520,436) | 0 |
Amortization of deferred stock compensation | 84,867 | $ 0 | 0 | 84,867 | 0 | 0 |
Balance, shares at Jun. 30, 2021 | 61,519,905 | |||||
Balance, amount at Jun. 30, 2021 | (818,042) | $ 61,520 | 26,439,608 | (11,191) | (25,572,284) | (1,735,695) |
Net loss | (220,462) | 0 | 0 | 0 | (220,462) | 0 |
Amortization of deferred stock compensation | 11,191 | $ 0 | 0 | 11,191 | 0 | 0 |
Balance, shares at Sep. 30, 2021 | 61,519,905 | |||||
Balance, amount at Sep. 30, 2021 | $ (1,027,313) | $ 61,520 | $ 26,439,608 | $ 0 | $ (25,792,746) | $ (1,735,695) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (1,038,538) | $ (1,501,510) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 32,987 | 43,546 |
Loss (gain) on disposal of equipment | 268,800 | (16,000) |
Stock compensation expense | 179,992 | 335,302 |
Amortization of operating right-of-use assets | 159,431 | 137,750 |
Bad debt expense | 0 | 29,579 |
Inventory write-down | 4,075 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable | 67,026 | (4,641) |
Inventories | 9,322 | 22,779 |
Prepaid expenses | 150,956 | (192,834) |
Accounts payable and accrued expenses | (28,955) | (25,573) |
Deferred revenue | 210,853 | 497,036 |
Operating lease liabilities | (150,650) | (125,942) |
Net Cash Used in Operating Activities | (134,701) | (800,508) |
Cash Flows from Investing Activities: | ||
Proceeds from disposal of equipment | 7,700 | 0 |
Net Cash Provided by Investing Activities | 7,700 | |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of common stock and stock subscription | 0 | 805,000 |
Advances from shareholder | 16,409 | 22,726 |
Repayment of shareholder loan | (23,130) | (239,116) |
Advances from third parties, non-interest bearing | 0 | 10,000 |
Repayment of advances from third parties, non-interest bearing | (10,000) | |
Proceeds from loan payable | 137,792 | 281,100 |
Principal payments of long-term debt | (12,396) | (9,248) |
Net Cash Provided by Financing Activities | 118,675 | 860,462 |
Net Change in Cash | (8,326) | 59,954 |
Cash, beginning of period | 9,506 | 9,237 |
Cash, end of period | 1,180 | 69,191 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 2,075 | 2,759 |
Cash paid for income tax | 0 | 0 |
Non-cash Transactions of Investing and Financing Activities: | ||
Initial recognition of operating right-of-use assets and lease liabilities | 0 | 278,883 |
Nonmonetary exchange of equipment and issuance of debt for equipment | $ 0 | $ 123,902 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2021 | |
Organization | |
Note 1 - Organization | Note 1 – Organization Merion, Inc. (the “Company”), a Nevada corporation, was formed on February 4, 2011. Its predecessor, E-World USA Holding, Inc., was a California company incorporated in 2007 (“E-World CA”). In April 2011, E-World CA entered into a merger agreement with its wholly-owned subsidiary, E-World USA Holding, Inc., a Nevada corporation (“E-World NV”) that was the survivor of the merger and became the Company. Under the Merger Agreement, the Company issued 30,000,000 shares of its common stock on a one for one basis for each share of E-World CA’s common stock issued and outstanding at the date of the merger. In addition, the Company issued Type A Warrants and Type B Warrants in exchange for comparable warrants issued and outstanding of E-World CA at the date of the merger. On June 27, 2017, the Company filed an amendment to its Articles of Incorporation with the Secretary of State for the State of Nevada to change its name from E-World NV to Merion, Inc. The Company is a provider of health and nutritional supplements and personal care products currently sold on the internet through our website, at www.merionus.com, and to wholesale distributors. The Company also provides Original Equipment Manufacturer (“OEM”) and packaging services of hard capsules, tablets, solid beverage (sachet packaging), teabags, powder, granules, dietary supplements for export, softgel capsules and health food. In May 2021, the Company determined that it is more beneficial to outsource to third-party manufacturers the production of its branded and OEM products than manufacturing through its Nevada factory. As a result, the Company disposed of its machinery and terminated its Nevada factory lease in May 2021. As the Company has significant continuing involvement in the sale of its branded and OEM products through its third-party manufacturers, this restructuring did not constitute a strategic shift that will have a major effect on the Company’s operations and financial results. Therefore, the results of operations for its Nevada factory were not reported as discontinued operations under the guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 205. |
Going Concern
Going Concern | 9 Months Ended |
Sep. 30, 2021 | |
Going Concern | |
Note 2 - Going Concern | Note 2 – Going Concern Management has determined there is substantial doubt about our ability to continue as a going concern as a result of our lack of significant revenues, significant recurring losses, and negative working capital. If we are unable to generate significant revenue or secure additional financing, we may be required to cease or curtail our operations. Our financial statements do not include adjustments that might result from the outcome of this uncertainty. Management is trying to alleviate the going concern risk by: engaging external sales representatives to sell the Company’s products, investigating and securing various financing resources, including but not limited to borrowing from the Company’s major shareholder, private placements, and the possibility of raising funds through a future public offering. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies | |
Note 3 - Summary of Significant Accounting Policies | Note 3 – Summary of Significant Accounting Policies Basis of Presentation These unaudited condensed financial statements have been presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for a fair presentation of the financial statements, have been included. Interim results are not necessarily indicative of results to be expected for the full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s annual report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 30, 2021. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s unaudited condensed financial statements include the useful lives of property and equipment, the collectability of receivables and impairment of long-lived assets. The inputs into the Company’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from those estimates. Cash and cash equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are comprised primarily of money market accounts and foreign and domestic bank accounts. To reduce its credit risk, the Company monitors the credit standing of the financial institutions that hold the Company’s cash and cash equivalents. Accounts Receivable Trade accounts receivable are periodically evaluated for collectability based on credit history with customers and their current financial condition. Bad debt expense or write-offs of receivables are determined on the basis of loss experience, known and inherent risks in the receivable portfolio, and current economic conditions. The accounts receivable balance and allowance for doubtful accounts are as follows: September 30, 2021 December 31, 2020 (Unaudited) Accounts receivable $ 8,232 $ 75,258 Allowance for doubtful accounts - - Accounts receivable, net $ 8,232 $ 75,258 Movement of the allowance for doubtful accounts is as follows: Nine Months Ended September 30 , 2021 Year Ended December 31, 2020 (Unaudited) Beginning balance $ - $ 41,011 Provision for doubtful accounts - 28,723 Less: write-offs - (69,734 ) Ending balance $ - $ - Inventories Inventories are valued at the lower of cost (determined on a first-in, first-out basis) or net realizable value. Inventory consists of nutritional products, beauty products, and raw materials to be used by the Company’s third party manufacturers. Management reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected net realizable value. The inventories’ shelf lives are approximately 3 years. For the three months ended September 30, 2021 and 2020, the Company did not recognize any inventory obsolescence reserves or write-downs. For the nine months ended September 30, 2021 and 2020, the Company recognized $4,075 and $0, respectively, of inventory obsolescence reserves or write-downs. Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation. Upon disposition, the cost and related accumulated depreciation and amortization is removed from the books, and any resulting gain or loss is included in operations. The Company provides depreciation and amortization using the straight-line method over the estimated useful lives of various classes as follows: Machinery 10 years Computer and software 3 to 5 years Furniture and fixtures 5 to 10 years Vehicles 5 to 7 years Leasehold improvements over the lesser of the remaining lease term or the expected life of the improvement Repairs and maintenance are charged to operations when incurred while betterments and renewals are capitalized. Right-of-use Asset and Lease Liabilities In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02 “Leases (Topic 842).” The new standard requires lessees to recognize lease assets (“right of use”) and related lease obligations (“lease liabilities”) for leases previously classified as operating leases under generally accepted accounting principles on the balance sheet for leases with terms in excess of 12 months. The Company adopted this standard as of January 1, 2019 utilizing the practical expedients approach. Long-Lived Assets Long-lived assets, including property, equipment, and right-of-use-assets with finite lives, are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When the Company identifies an impairment, the Company reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. Management reviewed the impact of COVID-19 and the related disruptions on the Company’s operating results, and based upon potential orders, it believes that currently there was no impairment during the three and nine months ended September 30, 2021 and 2020. Deferred Revenue Deferred revenue represents payments advanced by customers on specified product orders or on future orders that have not been shipped as of the balance sheet date. Deferred revenue also represents shipping fee deposits advanced by customers in relation to the unshipped product orders. Deferred revenue is reduced when the related sale is recognized in accordance with the Company’s revenue recognition policy. Fair Value of Financial Instruments The FASB accounting standards codification (“ASC”), FASB ASC 825 Financial Instruments As defined in ASC 820 Fair Value Measurement The three levels of the fair value hierarchy are as follows: Level 1 – Quoted prices that are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Pricing inputs, other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reporting date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Revenue Recognition The Company’s revenue is recognized based on the amount of consideration the Company expects to receive in exchange for satisfying the performance obligations in accordance with ASC 606 Revenue from Contracts with Customers The core principle underlying the revenue recognition is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streams are recognized at a point in time, based on when control of goods and services transfers to a customer and there are no remaining performance obligations under the contract. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies each performance obligation. The Company accounts for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. The Company derives its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via sales contracts and invoices; and the sales price to the customer is fixed upon acceptance of the sales contract. Sales rebates or discounts are recognized as a reduction of revenue when the sale is made. The Company recognizes revenue when control of the goods is transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured. These revenues are recognized at a point in time after all performance obligations are satisfied. The Company also recognizes revenue on shipping and handling fees charged to the Company’s customers. Shipping and handling fee revenue is recognized when products have been delivered at a point in time. Shipping and handling fee revenues totaled $74 and $518 for the three months ended September 30, 2021 and 2020, respectively, and totaled $10,380 and $1,415 for the nine months ended September 30, 2021 and 2020, respectively. Product returns are allowed for unopened products purchased under regular sales terms within 60 days. Allowances for product returns are provided at the time the sale is recorded using historic return rates for each country and the relevant return pattern. Historically the Company has a return rate of nearly zero. Accordingly, the allowance as of September 30, 2021 and December 31, 2020 is estimated at $0. In addition to the Company’s 60-day return policy, the Company, at its discretion, may accept a customer’s application for a buy-back of products previously sold within one year at 90% of the original product’s cost less commissions and shipping costs. To date, the Company has not received any buy-back applications. As a result, no allowance for buy-backs had been recorded as of September 30, 2021 and December 31, 2020. The majority of the Company’s product sales are generated from China and all of the Company’s OEM and packaging sales are generated from the United States. Shipping and Handling Expenses Shipping and handling costs incurred by the Company are included in selling expenses and totaled $3,358 and $1,886 for the three months ended September 30, 2021 and 2020, respectively, and totaled $26,728 and $8,043 for the nine months ended September 30, 2021 and 2020, respectively. Income Taxes The Company utilizes ASC 740 Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred taxes are also recognized for net operating losses that can be carried forward. A valuation allowance is established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. Reverse Stock Split On June 11, 2021, the Company’s Board of Directors approved a 1-for-3 reverse stock split of the Company’s common stock and filed on July 27, 2021, a Certificate of Change with the State of Nevada effective upon filing (see Note 11). All share and per share amounts used herein and in the accompanying unaudited condensed financial statements have been retroactively restated to reflect this reverse stock split. Basic and Diluted Earnings (Loss) Per Share Generally accepted accounting principles regarding earnings per share (“EPS”) require presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average of common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. These common stock equivalents are not included when the Company has a loss because they would be anti-dilutive. 766,668 shares and 460,000 shares of vested but unissued common stock to three employees which all have a vesting period of three years are excluded in the diluted EPS calculation for the three and nine months ended September 30, 2021 and 2020, respectively, due to its anti-dilutive nature. There were no other potential dilutive securities outstanding for the three and nine months ended September 30, 2021 and 2020. Financial instruments Financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable arising from its normal business activities. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation (FDIC) insured limits for the banks located in the United States. The Company had no uninsured balances as of September 30, 2021. Major Customers and Suppliers For the three months ended September 30, 2021, two customers accounted for approximately 95% (75% and 20%) of the Company’s sales and for the three months ended September 30, 2020, three customers accounted for approximately 69% (32%, 21% and 16%) of the Company’s sales. For the nine months ended September 30, 2021, one customer accounted for approximately 91% of the Company’s sales and for the nine months ended September 30, 2020, two customers accounted for approximately 36% (24% and 12%) of the Company’s sales. As of September 30, 2021 and December 31, 2020, one customer accounted for approximately 100% and 82% of the Company’s accounts receivable, respectively. For the three months ended September 30, 2021, three suppliers accounted for 87% (42%, 22%and 23%) of the Company’s product purchases and for the three months ended September 30, 2020, three suppliers accounted for 95% (46%, 28% and 21%) of the Company’s product purchases. For the nine months ended September 30, 2021, two suppliers accounted for 66% (39% and 27%) of the Company’s product purchases and for the nine months ended September 30, 2020, three suppliers accounted for 62% (31%, 19% and 12%) of the Company’s product purchases. Related Parties A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. New Accounting Pronouncements In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying this standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has not early adopted this update and it will become effective on January 1, 2023 assuming the Company will remain eligible to be a smaller reporting company. The Company is currently evaluating the impact of this new standard on the Company’s unaudited condensed financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 was effective for the Company for annual and interim reporting periods beginning January 1, 2021. The adoption of this ASU on January 1, 2021 did not have any significant impact on Company’s unaudited condensed financial statements and related disclosures. The Company does not believe other recently issued but not yet effective accounting standards and updates, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2021 | |
Inventories | |
Note 4 -Inventories | Note 4 – Inventories Inventories consist of raw materials for production and finished goods available for resale, and can be categorized as: September 30, 2021 December 31, 2020 (Unaudited) Raw materials $ 31,963 $ 51,078 Work-in-progress 13,674 8,925 Finished goods 21,696 20,727 Inventories $ 67,333 $ 80,730 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2021 | |
Property and Equipment | |
Note 5 - Property and Equipment | Note 5 – Property and Equipment Property and equipment consist of the following: September 30, 2021 December 31, 2020 (Unaudited) Computer equipment and software $ 114,953 $ 114,953 Furniture and fixtures 26,686 26,686 Automobiles 123,902 123,902 Leasehold improvements 40,053 40,053 Machinery - 420,000 Total 305,594 725,594 Less: accumulated depreciation and amortization (214,388 ) (324,900 ) Property and equipment, net $ 91,206 $ 400,694 Depreciation expense totaled $5,162 and $15,663 for the three months ended September 30, 2021 and 2020, respectively. Depreciation expense totaled $32,987 and $43,546 for the nine months ended September 30, 2021 and 2020, respectively. In May 2021, the Company determined that it would be more beneficial to outsource to the third-party manufacturers the production of its branded and OEM products rather than manufacturing through its Nevada factory. As a result, the Company disposed of its machinery for $7,700 which resulted in $0 and $268,800 of loss on disposal of equipment for the three and nine months ended September 30, 2021, respectively. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt | |
Note 6 - Debt | Note 6 – Debt Loan payable - Paycheck Protection Program (“PPP”) On April 17, 2020, the Company received loan proceeds in the amount of approximately $131,100 under the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualified business. The loans and accrued interest are forgivable after eight weeks (or an extended 24-week covered period) as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The loan forgiveness amount will be reduced for the Economic Injury Disaster Loan (“EIDL”) advance of $10,000 that the Company received on April 28, 2020. The amount of loan forgiveness will be further reduced if the borrower terminates employees or reduces salaries during the eight-week period by more than 25%. The Company believes that its use of the loan proceeds of $121,100, net of EIDL advances, complied with the conditions for forgiveness of the loan and interest. The Company filed for loan forgiveness and the application was approved on January 8, 2021. The PPP loan was accounted for as a government grant and the forgiveness of the loan was recorded in other income during the year ended December 31, 2020. On February 2, 2021, the Company received loan proceeds of $137,792 under the U.S. Small Business Administration (“SBA”) second round of Paycheck Protection Program (“PPP”). The Company currently believes that its use of the loan proceeds of $137,792 will meet the conditions for forgiveness of the loan and is in the process of filing for loan forgiveness. There can be no assurance that the full amount of the loan will be forgiven. Loan payable – Economic Injury Disaster Loan (“EIDL”) On July 17, 2020, the Company received a loan in the amount of $150,000 from the Small Business Administration (“SBA”) EIDL program administered by the SBA pursuant to the CARES Act. In accordance with the requirements of the CARES Act, the Company will use proceeds from the SBA loan primarily for working capital to alleviate economic injury caused by the COVID Pandemic occurring in the month of January 2020 and continuing thereafter. The SBA loan is scheduled to mature on July 17, 2050 with a 3.75% interest rate and is subject to the terms and conditions applicable to loans administered by the SBA under the CARES Act. The monthly payable, including principal and interest of $731, commences on July 17, 2022 payable over 30 years from July 17, 2020. The obligation is payable as follows: Twelve months ended September 30, Amount (Unaudited) 2022 $ 2,193 2023 8,772 2024 8,772 2025 8,772 2026 8,772 Thereafter 231,656 Total SBA loan payment 268,937 Less: interest (112,374 ) Present value of SBA loan 156,563 Less; current portion of SBA loan (2,193 ) Non-current portion of SBA loan $ 154,370 Interest expense for the three months ended September 30, 2021 amounted to $1,407. Interest expense for the nine months ended September 30, 2021 amounted to $4,219. Due to third parties, interest bearing The Company borrowed money from third parties to fund operations. These third parties consisted friends of Mr. Dinghua Wang, the Chairman, Chief Executive and Financial Officer of the Company, and the spouse of a former board member of the Company. These advances had a weighted average annual interest rate of 10%. and were unsecured. The full balance of the loans of $1,500,000 was transferred to DW California Food Distribution LLC (the “DW Food”), a California limited liability company that is owned by Mr. Dinghua Wang, through a debt sale agreement in December 2020. This balance due to DW Food was subsequently paid with shares of the Company’s common stock in December 2020 (See Note 7 – Related Party Transactions). Interest expense for the three months ended September 30, 2021 and 2020 for the above loans amounted to $0 and $37,606, respectively. Interest expense for the nine months ended September 30, 2021 and 2020 for the above loans amounted to $0 and $112,002, respectively. Long term debt In March 2020, the Company purchased and financed a vehicle with a six year loan for a total of approximately $124,000. The Company traded in a fully depreciated vehicle and received a credit of $16,000. The monthly payments are $1,715 from March 2020 to February 2026, with interest at 4.56% per annum. The obligation is payable as follows: Twelve months ended September 30, Amount (Unaudited) 2022 $ 17,199 2023 17,998 2024 18,834 2025 19,709 2026 8,480 Total long-term debt payment 82,220 Current portion of long-term debt (17,199 ) Long term debt $ 65,021 Interest expense for the three months ended September 30, 2021 and 2020 for the above loan amounted to $967 and $1,153, respectively. Interest expense for the nine months ended September 30, 2021 and 2020 for the above loan amounted to $3,042 and $2,759, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions | |
Note 7 - Related Party Transactions | Note 7 – Related Party Transactions Due to shareholder, non-interest bearing From time to time, Mr. Dinghua Wang advances monies to the Company and the Company repays such advances. Such business transactions are recorded as due to or from Mr. Dinghua Wang at the time of the transaction. During the nine months ended September 30, 2021 and 2020, advances totaled $16,409 and $22,726, respectively, and repayments totaled $23,130 and $239,116, respectively. As of September 30, 2021 and December 31, 2020, the balance due to Mr. Dinghua Wang, non-interest bearing, amounted to $48,886 and $55,607, respectively. This balance is unsecured. Advance from related party, interest bearing The Company borrowed $30,000 from a related party to fund operations in July 2016. This related party is the son of Mr. Dinghua Wang. The advance had an annual interest rate of 10%, was unsecured and was due on March 20, 2024. The advance of $30,000 was transferred to DW Food, a related party, through a debt sale agreement in December 2020. This balance due to DW Food was subsequently paid with shares of the Company’s common stock in December 2020. Interest expense for the three months ended September 30, 2021 and 2020 for the above loans amounted to $0 and $756, respectively. Interest expense for the nine months ended September 30, 2021 and 2020 for the above loans amounted to $0 and $2,252, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Taxes | |
Note 8 - Income Taxes | Note 8 – Income Taxes The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Nine Month Ended September 30, 2021 Nine Months Ended September 30, 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Federal statutory rate 21.0 % 21.0 % 21.0 % 21.0 % State statutory rate 7.0 % 7.0 % 7.0 % 7.0 % Valuation allowance (26.4 )% (21.9 )% (27.1 )% (21.2 )% Permanent difference * (1.6 )% (6.1 )% (0.9 )% (6.8 )% Effective tax rate 0.0 % 0.0 % 0.0 % 0.0 % _____________ *Represents 50% of meal and entertainment expenses and stock compensation expenses that are not deductible. The Company uses the asset and liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. Deferred taxes are also recognized for net operating loss carry forwards which can be utilized to offset taxable income in the future. Net operating losses for the years from 2017 through September 30, 2021 of approximately $5.7 million will not expire but are limited to 80% of income until utilized. Net operating losses for the year ended 2016 and prior years of approximately $5.5 million will expire in the years from 2031 to 2036. As deferred tax assets may not be fully realizable due to potential recurring losses, management has provided a 100% valuation allowance for the deferred tax assets. The components of the deferred tax assets are as follows: September 30, 2021 December 31, 2020 (Unaudited) Amortization of intangible assets $ - $ 181,333 Net operating losses 3,056,261 2,593,424 Deferred tax assets 3,056,261 2,774,757 Valuation allowance (3,056,261 ) (2,774,757 ) Deferred tax assets, net $ - $ - Changes in the valuation allowance for deferred tax assets increased by $281,504 and $317,521 for the nine months ended September 30, 2021 and 2020, respectively. During the nine months ended September 30, 2021, the Company did not utilize any deferred tax assets from prior periods. As of September 30, 2021, federal tax returns filed for 2018, 2019 and 2020 remain subject to examination by the taxing authorities. As of September 30, 2021, California tax returns filed for 2017, 2018, 2019 and 2020 remain subject to examination by the taxing authorities |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
Note 9 - Leases | Note 9 – Leases Operating leases Effective January 1, 2019, the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that do not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. The Company adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. There was no impact from the adoption of ASC 842 as of January 1, 2019, as the Company did not have any existing leases with a lease term in excess of twelve months on January 1, 2019. In January 2019, the Company entered an office lease agreement with a 5-year lease term starting in March 2019 and ending in February 2024. The Company recognized lease liabilities of approximately $618,000 with a corresponding right-of-use (“ROU”) asset in the same amount based on the present value of the future minimum rental payments of the lease, using an effective interest rate of 4.78%, which was determined using the Company’s estimated incremental borrowing rate. As of September 30, 2021, the remaining term of the lease is 2.42 years. In March 2020, the Company entered another office lease agreement with a 3-year lease term starting in March 2020 and ending in February 2023. The Company recognized lease liabilities of approximately $279,000, with a corresponding right-of-use (“ROU”) asset in the same amount based on the present value of the future minimum rental payments of the new lease, using an effective interest rate of 4.78%, which was determined using the Company’s incremental borrowing rate. As of September 30, 2021, the remaining term of the lease is 1.42 years. The Company leased factory space on a month-to-month basis, which it classified as an operating lease. This lease was terminated in May 2021. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. For the three months ended September 30, 2021 and 2020, lease expenses amounted to $59,786 and $70,287, respectively, of which, $0 and $10,500 are short-term lease expenses, respectively. For the nine months ended September 30, 2021 and 2020, lease expenses amounted to $193,359 and $194,193, respectively, of which, $14,000 and $31,500 are short-term lease expenses, respectively. The maturity of the Company’s lease obligations is presented below: Twelve months ended September 30, Amount (Unaudited) 2022 $ 258,555 2023 187,808 2024 61,640 Total lease payments 508,003 Less: interest (25,250 ) Present value of lease liabilities 482,753 Less: current portion of lease liabilities (241,107 ) Non-current portion of lease liabilities $ 241,646 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Note 10 - Commitments and Contingencies | Note 10 – Commitments and Contingencies Contingencies Coronavirus (COVID-19) At the end of 2019, there was an outbreak of a novel strain of coronavirus (COVID-19) which has spread rapidly to many parts of China and other parts of the world, including the United States. The epidemic has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities in China, United States, and elsewhere around the world. Substantially all of the Company’s revenues are concentrated in China and the United States. Consequently, the COVID-19 outbreak has and may continue to materially adversely affect the Company’s business operations, financial condition and operating results for 2021, including but not limited to the material negative impact to the Company’s suppliers and delivery of products, total revenues, slower collection of accounts receivable and additional allowances for doubtful accounts. The situation remains highly uncertain for any further outbreak or resurgence of COVID-19 and its new variants. It is therefore difficult for the Company to estimate the impact on our business or operating results that might be adversely affected by any further outbreak or resurgence of COVID-19 and its new variants. In addition, due to the COVID-19 going around the world and some of the raw materials to produce our products are sourced from outside of the United States, the suppliers have been and might continue to be negatively impacted due to supply chain disruption, increases of shipping costs and shortages of raw materials around the world. Consequently, COVID-19 has and may continue to materially adversely affect the Company’s business operations, financial condition and operating results for 2021, including but not limited to the raw material shortage, delay of shipment, and increased price for the Company’s products manufactured by our suppliers. Because of the uncertainty surrounding COVID-19, the financial impact for the remainder of 2021 cannot be reasonably estimated at this time. The Company’s operations started to recover as total revenues for the three and nine months ended September 30, 2021 were higher as compared to the same period of 2020. There can be no assurance that we will be able to maintain or increase our revenues for the remainder of 2021. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2021 | |
Equity | |
Note 11 - Equity | Note 11 – Equity Reverse stock split On June 11, 2021, the Company’s Board of Directors approved a 1-for-3 reverse stock split of the Company’s common stock. On July 27, 2021, the Company filed a Certificate of Change with the State of Nevada (the “Certificate”) to effect a 1-for-3 reverse stock split of the Company’s authorized shares of common stock, par value $0.001 (the “Common Stock”), accompanied by a corresponding decrease in the Company’s issued and outstanding shares of Common Stock (the “Reverse Stock Split”), effective upon filing. Following the Reverse Stock Split, the number of authorized shares of Common Stock was reduced from 1,000,000,000 to 333,333,333. Private placements During the nine months ended September 30, 2020, the Company entered into a series of Securities Purchase Agreements with various unrelated third party purchasers, pursuant to which the Company sold to these purchasers in private placements an aggregate of 466,667 shares of the Company’s common stock, at a purchase price of $3.00 per share for an aggregate offering price of $1,400,000. In connection with the private placements, the Company issued an aggregate of 4,000 shares of Common Stock to various unrelated third-party individuals located outside the United States as compensation for introducing private placement investors outside of the U.S. to the Company. These shares were valued at $12,000, which was determined by using the associated average private placement purchase price of $3.00per share. The value of the shares was accounted for as a reduction of additional paid-in capital because the issuances were made as compensation for financing-related services in connection with the Company’s private placement. As of September 30, 2021 and December 31, 2020, $1,735,695 were unpaid and recognized as stock subscription receivables in the accompanying statements of changes in shareholders’ deficit. During the nine months ended September 30, 2021 and 2020, the Company received $0 and $50,000 of the stock subscription receivables, respectively. Common stock issued for consulting services On March 13, 2019, the Company entered into a consulting agreement with Global Merchants Union (“GMU”), pursuant to which GMU was to provide business and financial operation and planning consultation services to the Company for consideration of $7,500 per month and a one-time stock payment of 333,334 shares of common stock of the Company (the “Share Payment”). The cash payments required of $7,500 per month in the agreement were cancelled in May 2019. However, GMU was required to provide services in respect to the stock compensation for the remaining term of the agreement until March 12, 2020. For the three months ended September 30, 2021 and 2020, amortization of deferred compensation of these shares amounted to $0. For the nine months ended September 30, 2021 and 2020, amortization of deferred compensation of these shares amounted to $0 and $125,000, respectively. Issuance of restricted common stock On July 13, 2018, the Board of Directors of the Company approved the grant of 766,668 restricted stock units (the “RSUs”) to three employees of the Company, pursuant to the Merion, Inc. 2018 Omnibus Equity Plan. The RSUs vested 30% each on July 13, 2019 and 2020 and the remaining 40% of the RSUs vested on July 13, 2021, in each case provided that the employee remains employed, in good standing, by the Company. These shares were valued at $851,000, determined using the closing price of the Company’s common stock on July 13, 2018 of $1.11 per share, and are being amortized ratably over the term of the vesting period of three years on a straight line basis. The Company accounts for the restricted common stock as equity-settled awards in accordance with ASC 718. For the three months ended September 30, 2021 and 2020, amortization of deferred stock compensation of these shares amounted to $11,191 and $83,002, respectively. For the nine months ended September 30, 2021 and 2020, amortization of deferred stock compensation of these shares amounted to $179,992 and $210,302, respectively. Deferred stock compensation of $0 has been recognized as a reduction of shareholders’ deficit as the services have been performed as of September 30, 2021. Deferred stock compensation of $179,992 has been recognized as a reduction of shareholders’ deficit as the services have not been performed as of December 31, 2020. The following table summarizes unvested restricted common stock activity for the nine months ended September 30, 2021 and for the year ended December 31, 2020: Number of shares Weighted average grant-date fair value per share Outstanding as of December 31, 2019 536,668 $ 1.11 Granted - - Vested 230,000 - Forfeited - - Outstanding as of December 31, 2020 306,668 1.11 Granted - - Vested 306,668 - Forfeited - - Outstanding as of September 30, 2021 - $ - |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events | |
Note 12 - Subsequent Events | Note 12 – Subsequent Events The Company evaluated all events and transactions that occurred after September 30, 2021 up through the date the Company issued these unaudited condensed financial statements on November 12, 2021. Based on the review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | These unaudited condensed financial statements have been presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for a fair presentation of the financial statements, have been included. Interim results are not necessarily indicative of results to be expected for the full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s annual report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 30, 2021. |
Concentration of Credit Risk | Financial instruments Financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable arising from its normal business activities. The Company maintains balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation (FDIC) insured limits for the banks located in the United States. The Company had no uninsured balances as of September 30, 2021. Major Customers and Suppliers For the three months ended September 30, 2021, two customers accounted for approximately 95% (75% and 20%) of the Company’s sales and for the three months ended September 30, 2020, three customers accounted for approximately 69% (32%, 21% and 16%) of the Company’s sales. For the nine months ended September 30, 2021, one customer accounted for approximately 91% of the Company’s sales and for the nine months ended September 30, 2020, two customers accounted for approximately 36% (24% and 12%) of the Company’s sales. As of September 30, 2021 and December 31, 2020, one customer accounted for approximately 100% and 82% of the Company’s accounts receivable, respectively. For the three months ended September 30, 2021, three suppliers accounted for 87% (42%, 22%and 23%) of the Company’s product purchases and for the three months ended September 30, 2020, three suppliers accounted for 95% (46%, 28% and 21%) of the Company’s product purchases. For the nine months ended September 30, 2021, two suppliers accounted for 66% (39% and 27%) of the Company’s product purchases and for the nine months ended September 30, 2020, three suppliers accounted for 62% (31%, 19% and 12%) of the Company’s product purchases. |
Use of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s unaudited condensed financial statements include the useful lives of property and equipment, the collectability of receivables and impairment of long-lived assets. The inputs into the Company’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Actual results could differ from those estimates. |
Cash and cash equivalents | The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are comprised primarily of money market accounts and foreign and domestic bank accounts. To reduce its credit risk, the Company monitors the credit standing of the financial institutions that hold the Company’s cash and cash equivalents. |
Accounts Receivable | Trade accounts receivable are periodically evaluated for collectability based on credit history with customers and their current financial condition. Bad debt expense or write-offs of receivables are determined on the basis of loss experience, known and inherent risks in the receivable portfolio, and current economic conditions. The accounts receivable balance and allowance for doubtful accounts are as follows: September 30, 2021 December 31, 2020 (Unaudited) Accounts receivable $ 8,232 $ 75,258 Allowance for doubtful accounts - - Accounts receivable, net $ 8,232 $ 75,258 Movement of the allowance for doubtful accounts is as follows: Nine Months Ended September 30 , 2021 Year Ended December 31, 2020 (Unaudited) Beginning balance $ - $ 41,011 Provision for doubtful accounts - 28,723 Less: write-offs - (69,734 ) Ending balance $ - $ - |
Inventories | Inventories are valued at the lower of cost (determined on a first-in, first-out basis) or net realizable value. Inventory consists of nutritional products, beauty products, and raw materials to be used by the Company’s third party manufacturers. Management reviews inventory on hand for estimated obsolescence or unmarketable items, as compared to future demand requirements and the shelf life of the various products. Based on the review, the Company records inventory write-downs, when necessary, when costs exceed expected net realizable value. The inventories’ shelf lives are approximately 3 years. For the three months ended September 30, 2021 and 2020, the Company did not recognize any inventory obsolescence reserves or write-downs. For the nine months ended September 30, 2021 and 2020, the Company recognized $4,075 and $0, respectively, of inventory obsolescence reserves or write-downs. |
Property and Equipment, net | Property and equipment are stated at cost, net of accumulated depreciation. Upon disposition, the cost and related accumulated depreciation and amortization is removed from the books, and any resulting gain or loss is included in operations. The Company provides depreciation and amortization using the straight-line method over the estimated useful lives of various classes as follows: Machinery 10 years Computer and software 3 to 5 years Furniture and fixtures 5 to 10 years Vehicles 5 to 7 years Leasehold improvements over the lesser of the remaining lease term or the expected life of the improvement Repairs and maintenance are charged to operations when incurred while betterments and renewals are capitalized. |
Right-of-use Asset and Lease Liabilities | In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02 “Leases (Topic 842).” The new standard requires lessees to recognize lease assets (“right of use”) and related lease obligations (“lease liabilities”) for leases previously classified as operating leases under generally accepted accounting principles on the balance sheet for leases with terms in excess of 12 months. The Company adopted this standard as of January 1, 2019 utilizing the practical expedients approach. |
Long-Lived Assets | Long-lived assets, including property, equipment, and right-of-use-assets with finite lives, are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When the Company identifies an impairment, the Company reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. Management reviewed the impact of COVID-19 and the related disruptions on the Company’s operating results, and based upon potential orders, it believes that currently there was no impairment during the three and nine months ended September 30, 2021 and 2020. |
Deferred Revenue | Deferred revenue represents payments advanced by customers on specified product orders or on future orders that have not been shipped as of the balance sheet date. Deferred revenue also represents shipping fee deposits advanced by customers in relation to the unshipped product orders. Deferred revenue is reduced when the related sale is recognized in accordance with the Company’s revenue recognition policy. |
Fair Value of Financial Instruments | The FASB accounting standards codification (“ASC”), FASB ASC 825 Financial Instruments As defined in ASC 820 Fair Value Measurement The three levels of the fair value hierarchy are as follows: Level 1 – Quoted prices that are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Pricing inputs, other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reporting date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
Revenue Recognition | The Company’s revenue is recognized based on the amount of consideration the Company expects to receive in exchange for satisfying the performance obligations in accordance with ASC 606 Revenue from Contracts with Customers The core principle underlying the revenue recognition is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company’s revenue streams are recognized at a point in time, based on when control of goods and services transfers to a customer and there are no remaining performance obligations under the contract. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies each performance obligation. The Company accounts for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. The Company derives its revenues from sales contracts with its customers with revenues being recognized upon delivery of products. Persuasive evidence of an arrangement is demonstrated via sales contracts and invoices; and the sales price to the customer is fixed upon acceptance of the sales contract. Sales rebates or discounts are recognized as a reduction of revenue when the sale is made. The Company recognizes revenue when control of the goods is transferred upon shipment to the customer by the Company and collectability of payment is reasonably assured. These revenues are recognized at a point in time after all performance obligations are satisfied. The Company also recognizes revenue on shipping and handling fees charged to the Company’s customers. Shipping and handling fee revenue is recognized when products have been delivered at a point in time. Shipping and handling fee revenues totaled $74 and $518 for the three months ended September 30, 2021 and 2020, respectively, and totaled $10,380 and $1,415 for the nine months ended September 30, 2021 and 2020, respectively. Product returns are allowed for unopened products purchased under regular sales terms within 60 days. Allowances for product returns are provided at the time the sale is recorded using historic return rates for each country and the relevant return pattern. Historically the Company has a return rate of nearly zero. Accordingly, the allowance as of September 30, 2021 and December 31, 2020 is estimated at $0. In addition to the Company’s 60-day return policy, the Company, at its discretion, may accept a customer’s application for a buy-back of products previously sold within one year at 90% of the original product’s cost less commissions and shipping costs. To date, the Company has not received any buy-back applications. As a result, no allowance for buy-backs had been recorded as of September 30, 2021 and December 31, 2020. The majority of the Company’s product sales are generated from China and all of the Company’s OEM and packaging sales are generated from the United States. |
Shipping and Handling Expenses | Shipping and handling costs incurred by the Company are included in selling expenses and totaled $3,358 and $1,886 for the three months ended September 30, 2021 and 2020, respectively, and totaled $26,728 and $8,043 for the nine months ended September 30, 2021 and 2020, respectively. |
Income Taxes | The Company utilizes ASC 740 Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred taxes are also recognized for net operating losses that can be carried forward. A valuation allowance is established, when necessary, to reduce net deferred tax assets to the amount expected to be realized. |
Reverse Stock Split | On June 11, 2021, the Company’s Board of Directors approved a 1-for-3 reverse stock split of the Company’s common stock and filed on July 27, 2021, a Certificate of Change with the State of Nevada effective upon filing (see Note 11). All share and per share amounts used herein and in the accompanying unaudited condensed financial statements have been retroactively restated to reflect this reverse stock split. |
Basic and Diluted Earnings (Loss) Per Share | Generally accepted accounting principles regarding earnings per share (“EPS”) require presentation of basic and diluted earnings (loss) per share in conjunction with the disclosure of the methodology used in computing such earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average of common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. These common stock equivalents are not included when the Company has a loss because they would be anti-dilutive. 766,668 shares and 460,000 shares of vested but unissued common stock to three employees which all have a vesting period of three years are excluded in the diluted EPS calculation for the three and nine months ended September 30, 2021 and 2020, respectively, due to its anti-dilutive nature. There were no other potential dilutive securities outstanding for the three and nine months ended September 30, 2021 and 2020. |
Related Parties | A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. |
New Accounting Pronouncements | In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying this standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has not early adopted this update and it will become effective on January 1, 2023 assuming the Company will remain eligible to be a smaller reporting company. The Company is currently evaluating the impact of this new standard on the Company’s unaudited condensed financial statements and related disclosures. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 was effective for the Company for annual and interim reporting periods beginning January 1, 2021. The adoption of this ASU on January 1, 2021 did not have any significant impact on Company’s unaudited condensed financial statements and related disclosures. The Company does not believe other recently issued but not yet effective accounting standards and updates, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements. |
Organization (Details Narrative
Organization (Details Narrative) - Merger agreement [Member] - E-World USA Holdings, Inc. [Member] | 1 Months Ended |
Apr. 30, 2011shares | |
Common stock issued at merger agreement | 30,000,000 |
Common stock issued at merger agreement, description | In April 2011, E-World CA entered into a merger agreement with its wholly-owned subsidiary, E-World USA Holding, Inc., |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Summary of Significant Accounting Policies | ||
Accounts receivable | $ 8,232 | $ 75,258 |
Allowance for doubtful accounts | 0 | 0 |
Accounts receivable, net | $ 8,232 | $ 75,258 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | ||
Beginning balance | $ 0 | $ 41,011 |
Provision for doubtful accounts | 0 | 28,723 |
Less: write-offs | 0 | (69,734) |
Ending balance | $ 0 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 2) | 9 Months Ended |
Sep. 30, 2021 | |
Estimated useful lives | 3 years |
Machinery [Member] | |
Estimated useful lives | 10 years |
Computer and software [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Computer and software [Member] | Maximum [Member] | |
Estimated useful lives | 5 years |
Furniture and fixtures [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Furniture and fixtures [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Vehicles [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Vehicles [Member] | Maximum [Member] | |
Estimated useful lives | 7 years |
Leasehold improvement [Member] | |
Estimated useful lives for leasehold improvement | over the lesser of the remaining lease term or the expected life of the improvement |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Shipping and handling fee revenues | $ 74 | $ 518 | $ 10,380 | $ 1,415 | |
Shipping and handling costs | 3,358 | 1,886 | 26,728 | 8,043 | |
Product return allowance | 0 | 0 | $ 0 | 0 | |
Product warranty description | the Company’s 60-day return policy, the Company, at its discretion, may accept a customer’s application for a buy-back of products previously sold within one year at 90% of the original product’s cost less commissions and shipping costs. | the Company’s 60-day return policy, the Company, at its discretion, may accept a customer’s application for a buy-back of products previously sold within one year at 90% of the original product’s cost less commissions and shipping costs | |||
Inventory write-down | $ 0 | $ 0 | $ 4,075 | $ 0 | |
Product sales | 91.00% | 69.00% | 95.00% | 36.00% | |
Product purchases | 87.00% | 95.00% | 66.00% | 62.00% | |
Inventories shelf lives | 3 years | ||||
Restricted Common Stock [Member] | |||||
Unvested restricted common stock, outstanding | 766,668 | 460,000 | |||
One Customer [Member] | |||||
Product sales | 32.00% | 75.00% | 24.00% | ||
Product purchases | 42.00% | 46.00% | 39.00% | 31.00% | |
Accounts receivable | 100.00% | 82.00% | 82.00% | ||
Two Customer [Member] | |||||
Product sales | 21.00% | 20.00% | 12.00% | ||
Product purchases | 22.00% | 28.00% | 27.00% | 19.00% | |
Three Customer [Member] | |||||
Product sales | 16.00% | ||||
Product purchases | 23.00% | 21.00% | 12.00% | ||
Accounts receivable | 68.00% |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Inventories | ||
Raw materials | $ 31,963 | $ 51,078 |
Work-in-progress | 13,674 | 8,925 |
Finished goods | 21,696 | 20,727 |
Total Inventories | $ 67,333 | $ 80,730 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Property and equipment, gross | $ 305,594 | $ 725,594 |
Less: accumulated depreciation and amortization | (214,388) | (324,900) |
Property and equipment, net | 91,206 | 400,694 |
Machinery [Member] | ||
Property and equipment, gross | 0 | 420,000 |
Leasehold improvement [Member] | ||
Property and equipment, gross | 40,053 | 40,053 |
Computer equipment and software [Member] | ||
Property and equipment, gross | 114,953 | 114,953 |
Furniture and fixtures [Member] | ||
Property and equipment, gross | 26,686 | 26,686 |
Automobile [Member] | ||
Property and equipment, gross | $ 123,902 | $ 123,902 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Property and Equipment | ||||
Depreciation expense | $ 5,162 | $ 15,663 | $ 32,987 | $ 43,546 |
Loss on disposal of equipment | $ 0 | 268,800 | ||
Disposed machinery | $ 7,700 |
Debt (Details)
Debt (Details) | Sep. 30, 2021USD ($) |
Debt | |
2022 | $ 2,193 |
2023 | 8,772 |
2024 | 8,772 |
2025 | 8,772 |
2026 | 8,772 |
Thereafter | 231,656 |
Total SBA loan payment | 268,937 |
Less: interest | (112,374) |
Present value of SBA loan | 156,563 |
Current portion of SBA loan | (2,193) |
Non-current portion of SBA loan | $ 154,370 |
Debt (Details 1)
Debt (Details 1) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Debt | ||
2022 | $ 17,199 | |
2023 | 17,998 | |
2024 | 18,834 | |
2025 | 19,709 | |
2026 | 8,480 | |
Total long-term debt payment | 82,220 | |
Current portion of long-term debt | (17,199) | $ (15,208) |
Long term debt | $ 65,021 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Feb. 02, 2021 | Jul. 17, 2020 | Apr. 17, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Apr. 28, 2020 |
Proceeds from loan payable - paycheck protection program | $ 137,792 | $ 281,100 | |||||||
Paycheck Protection Program ("PPP") [Member] | |||||||||
Proceeds from loan | $ 131,100 | ||||||||
Advance received | $ 10,000 | ||||||||
Description of loan forgiveness | The amount of loan forgiveness will be further reduced if the borrower terminates employees or reduces salaries during the eight-week period by more than 25% | ||||||||
Loan forgiveness, amount | $ 121,100 | ||||||||
Vehicles [Member] | |||||||||
Interest expense | $ 967 | $ 1,153 | 3,042 | 2,759 | |||||
Long term loan | $ 124,000 | $ 124,000 | |||||||
Loan term | 6 years | ||||||||
Periodic payment, monthly | $ 1,715 | ||||||||
Interest rate | 4.56% | 4.56% | |||||||
Periodic payment term | from March 2020 to February 2026 | ||||||||
Proceeds from sale of assets | $ 16,000 | ||||||||
Third party borrowing One [Member] | |||||||||
Due to third parties, interest bearing | 1,500,000 | 1,500,000 | |||||||
Interest expense | 0 | $ 37,606 | $ 0 | $ 112,002 | |||||
Description of due to third party, interest bearing | The full balance of the loans of $1,500,000 was transferred to DW California Food Distribution LLC (the “DW Food”), a California limited liability company that is owned by Mr. Dinghua Wang, through a debt sale agreement in December 2020 | ||||||||
SBA [Member] | |||||||||
Proceeds from loan payable - paycheck protection program | $ 137,792 | ||||||||
Interest expense | $ 1,407 | $ 4,219 | |||||||
Maturity date description | July 17, 2050 | ||||||||
Interest rate | 3.75% | ||||||||
Loans payable included principle and interest | $ 731 | ||||||||
Loan payable | $ 150,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2016 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Proceeds from related party debt | $ 16,409 | $ 22,726 | ||||
Due to shareholder, non-interest bearing | $ 48,886 | 48,886 | $ 55,607 | |||
Interest rate | 4.78% | 4.78% | ||||
Chief Executive Officers [Member] | ||||||
Proceeds from related party debt | $ 30,000 | |||||
Interest expense | 0 | $ 756 | 0 | $ 2,252 | ||
Interest rate | 10.00% | |||||
Maturity date | Mar. 20, 2024 | |||||
Due to shareholder, interest bearing | 30,000 | 30,000 | ||||
Mr. Dinghua Wang [Member] | Unsecured loan [Member] | ||||||
Due to shareholder, non-interest bearing | $ 41,029 | $ 55,607 | 41,029 | 55,607 | ||
Repayment of shareholder loan, non-interest bearing | $ 23,130 | $ 239,116 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Taxes | ||||
Federal statutory rate | 21.00% | 21.00% | 21.00% | 21.00% |
State statutory rate | 7.00% | 7.00% | 7.00% | 7.00% |
Valuation allowance | (26.40%) | (21.90%) | (27.10%) | (21.20%) |
Permanent difference | (1.60%) | (6.10%) | (0.90%) | (6.80%) |
Effective tax rate | 0.00% | 0.00% | 0.00% | 0.00% |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Income Taxes | ||
Amortization of intangible assets | $ 0 | $ 181,333 |
Net operating losses | 3,056,261 | 2,593,424 |
Deferred tax assets | 3,056,261 | 2,774,757 |
Valuation allowance | (3,056,261) | (2,774,757) |
Deferred tax assets, net | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2016 | |
Income Taxes | |||
Operating loss carry-forward expiry description | Net operating losses for the year ended 2016 and prior years of approximately $5.5 million will expire in the years from 2031 to 2036. | ||
Deferred tax assets, valuation allowance percentage | 100.00% | ||
Net operating loss | $ 5,700,000 | $ 5,500,000 | |
Changes in the valuation allowance | $ 281,504 | $ 317,521 |
Lease (Details)
Lease (Details) | Sep. 30, 2021USD ($) |
Twelve months ended June 30, | |
2022 | $ 258,555 |
2023 | 187,808 |
2024 | 61,640 |
Total lease payments | 508,003 |
Less: interest | (25,250) |
Present value of lease liabilities | 482,753 |
Less: current portion of lease liabilities | (241,107) |
Non-current portion of lease liabilities | $ 241,646 |
Lease (Details Narrative)
Lease (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2020 | Jan. 31, 2019 | Sep. 30, 2021 | Jun. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Operating lease labilities | $ 618,000 | $ 279,000 | ||||
Effective interest rate | 4.78% | |||||
Lease expenses | $ 59,786 | $ 70,287 | $ 193,359 | $ 194,193 | ||
Short-term lease expenses | $ 0 | $ 10,500 | $ 14,000 | $ 31,500 | ||
Operating lease, lease term | 3 | |||||
Operating lease, remaining term | 1.42 | |||||
Lease Agreements [Member] | ||||||
Operating lease, lease term | 5 | |||||
Operating lease, remaining term | 2.42 |
Equity (Details)
Equity (Details) - Restricted Common Stock [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Number of shares, outstanding, beginning | 306,668 | 536,668 |
Number of shares, Vested | 230,000 | |
Number of shares, outstanding, ending | 306,668 | 306,668 |
Weighted average grant date fair value per share, beginning | $ 1.11 | $ 1.11 |
Weighted average grant date fair value per share, Granted | 0 | 0 |
Weighted average grant date fair value per share, Vested | 0 | 0 |
Weighted average grant date fair value per share, Forfeited | 0 | 0 |
Weighted average grant date fair value per share, ending | $ 1.11 | $ 1.11 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Jun. 11, 2021 | Mar. 13, 2019 | Jul. 13, 2018 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Stock Subscription Receivable | $ (1,735,695) | $ (1,735,695) | $ (1,735,695) | |||||
Stock subscription received | $ 0 | $ 50,000 | ||||||
Common stock, authorized shares | 333,333,333 | 333,333,333 | 333,333,333 | |||||
Common stock, shares issued | 61,519,905 | 61,519,905 | 61,519,905 | |||||
Reverse stock split [Member] | ||||||||
Common stock, authorized shares | 333,333,333 | |||||||
Description of reverse stock split | 1-for-3 reverse stock split | |||||||
Securities Purchase Agreement [Member] | Private Placement [Member] | ||||||||
Purchase price per share | $ 3 | $ 3 | ||||||
Common stock, shares issued during the period, amount | $ 1,400,000 | |||||||
Common stock, shares issued during the period, shares | 466,667 | |||||||
Securities Purchase Agreement [Member] | Private Placement [Member] | Third Party Individuals [Member] | ||||||||
Purchase price per share | $ 3 | $ 3 | ||||||
Common stock, shares issued during the period, amount | $ 12,000 | |||||||
Common stock, shares issued during the period, shares | 4,000 | |||||||
Consulting Agreement [Member] | Global Merchants Union [Member] | ||||||||
Common stock, shares issued | 333,334 | |||||||
Amortization of deferred stock compensation | $ 0 | $ 0 | $ 0 | $ 125,000 | ||||
Monthly consulting fee | $ 7,500 | |||||||
Cancelation of monthly consulting fee | $ 7,500 | |||||||
Omnibus Equity Plan [Member] | Restricted Stocks [Member] | ||||||||
Common stock, shares issued | 766,668 | |||||||
Purchase price per share | $ 1.11 | |||||||
Amortization of deferred stock compensation | $ 11,191 | $ 83,002 | 179,992 | $ 210,302 | ||||
Vested description | The RSUs vested 30% each on July 13, 2019 and 2020 and the remaining 40% of the RSUs vested on July 13, 2021 | |||||||
Reduction of shareholders deficit | $ 0 | $ 179,992 | ||||||
Common stock, shares sold, value | 851,000 |