Overview





We market and sell consumer products in China by offering premium-quality
nutritional products. We also provide advertising and marketing services to
clients which engage us to distribute their products. We offer our nutritional
products and those of our clients through our sales offices, exhibition events
we organize and sponsor, and person-to-person marketing. Our marketing business
mainly focuses on proactively approaching customers such as by hosting events
for clients, which we believe is ideally suited to marketing our products and
those of our clients for which we perform advertising services because sales of
nutritional products are strengthened by ongoing personal contact and support,
coaching and education among the Company and our clients towards how to achieve
a healthy and active lifestyle.



In September 2021, we completed the acquisition of nine pharmacies located in
Chengdu by acquiring the entities which owned the pharmacies for an aggregate
purchase price of RMB 34,635,845, or approximately US$5.31 million ("Transfer
Price"). The Transfer Price will be reduced by an amount equal to any amounts
paid or distributed by any of the entities to its shareholders after December
31, 2020 and increased by an amount contributed to any of the entities by its
shareholders after such date. The pharmacies will be used to supplement our
efforts to distribute our nutritional products.



In July we completed the acquisition of Aixin Shangyan Hotel. Shangyan Hotel
Company owns and operates a hotel located in the Jinniu District, Chengdu City.
The hotel covers more than 8,000 square meters and has a large restaurant that
can accommodate 600 people, 6 luxury dining rooms, a 200 square meter music tea
house, 13 private tea rooms, 108 guest rooms and other supporting facilities. We
acquired the hotel through an acquisition of the outstanding equity of Aixin
Shangyan Hotel for a purchase price of RMB 7,598,887, or approximately $1.16
million ("Transfer Price"). The Transfer Price will be reduced by an amount
equal to any amounts paid or distributed by the hotel to its shareholders after
December 31, 2020 and will be increased by an amount equal to any amounts
contributed to the hotel by its equity owners after December 31, 2020.



In March 2020, the World Health Organization announced that infections caused by
the coronavirus disease of 2019 ("COVID-19") had become pandemic and national,
provincial and local authorities, including those whose jurisdictions include
Chengdu, where our offices, hotel and pharmacies are located, adopted various
regulations and orders, including "shelter in place" rules, restrictions on
travel, mandates on the number of people that may gather in one location and
closing non-essential businesses. Many of these measures have been relaxed due
to the decrease in the prevalence of Covid-19 in China. However, since February
2022 to date, COVID-19 cases have increased again in many cities of China. There
has been only a slight increase in the number of cases in Sichuan Province, the
Province in which we are located, and we do not expect that the recent increase
will materially impact our operations. During the years ended December 31, 2021
and 2020, the ongoing operations of our advertising and marketing business were
not materially adversely impacted by the measures taken to limit the spread of
the disease in China. Our hotel and pharmacies, however, experienced adverse
impacts due to travel and work restrictions imposed on a temporary basis in
Chengdu to limit the spread of COVID-19. We implemented procedures to promote
employee and customer safety. These measures will not significantly increase our
operating costs. However, we cannot predict with certainty what measures may be
taken by our suppliers and customers and the impact these measures may have on
our financial results for 2022.



In addition to our ongoing operations, we seek to acquire interests in
additional businesses through opportunities found by our management or presented
by persons or firms which desire to take advantage of the perceived advantages
of an Exchange Act registered corporation. We do not restrict our search to any
specific business, industry, or geographical location and may participate in a
business venture of virtually any kind or nature.



It is the goal of our management, in particular, our Chairman, Quanzhong Lin to
grow our business and to modify its capital structure in order to qualify for a
listing on NASDAQ or the NYSE-American exchange. As part of this effort, we will
continue to seek to acquire more businesses and to modify our capital structure
as necessary to meet the requirements of the exchange to which we apply for a
listing. As part of this effort. on June 8, 2020, Mr. Lin transferred to our
Company35,049,685 shares of our common stock for cancellation.



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Results of Operations



The following table sets forth the results of our operations for the periods
indicated as a percentage of net revenue, certain columns may not add due to
rounding (In reviewing the tables below, please note that the operations of our
pharmacies and our hotel are reflected in our financial results from August
2022, the dates as of which the acquisitions were completed):



                                                           Years Ended December 31,
                                                   2021                               2020
                                       $               % of Revenue       $               % of Revenue
Revenue                                $ 3,066,233               100 %    $ 2,451,055               100 %
Operating costs and expenses             3,093,171               101 %      1,656,595                68 %
Income (Loss) from operations              (26,938 )              (1 )%       794,460                32 %

Non-operating income (expenses), net        34,023                 1 %     

  563,178                23 %
Income tax expense                         274,321                 9 %        340,127                14 %
Net income(loss)                       $  (267,236 )              (9 )%   $ 1,017,511                42 %

The following table shows our operations by business segment for the years ended December 31, 2021 and 2020.





                                        2021            2020
Net revenue
Advertising and products             $ 2,406,988     $ 2,451,055
Pharmacies                               280,447               -
Hotel                                    378,798               -
Total revenues, net                  $ 3,066,233     $ 2,451,055

Operating costs and expenses
Advertising and products
Cost of goods sold                   $   316,750     $   224,675
Operating expenses                     1,344,543       1,431,920
Pharmacies
Cost of goods sold                       218,735               -
Operating expenses                       252,513               -
Hotel
Hotel operating costs                    744,594               -
Operating expenses                       216,036               -

Total operating costs and expenses $ 3,093,171 $ 1,656,595



Income (loss) from operations
Advertising and products             $   745,695     $   794,460
Pharmacies                              (190,801 )             -
Hotel                                   (581,832 )             -

Income (loss) from operations $ (26,938 ) $ 794,460





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Revenue



Revenue was $3,066,233 in the year ending December 31, 2021, compared to
$2,451,055 in the same period of 2020, an increase of $615,178 or 25%. The
increase in revenue was mainly due to increased advertising revenue and the
inclusion of revenue from our hotel and pharmacies, partly offset by a decline
in product revenues of the Advertising and products segment. For 2021, we had
advertising and product revenues of $2,406,988, pharmacies revenue of $280,447,
and hotel revenue of $378,798. For 2020, we had $2,451,055 in advertising and
products revenue and no revenues from the hotel and pharmacies as the
acquisitions were not completed until 2021.



Operation Costs and Expenses



Cost of Goods Sold



Cost of goods sold was $535,485 in the year ended December 31, 2021, compared to
$224,675 for 2020, an increase of $310,810 or 138%. The increase in our cost of
goods sold is attributable to the increase in product sales due to the
acquisition of the pharmacies as well as an increase in cost of goods sold from
our traditional products. The cost of goods sold for our nutritional products as
a percentage of sales was 69% in 2021, compared to 39% for 2020. The cost of
goods sold as a percentage of nutritional product sales was higher in 2021 than
2020 due to increased sales volume of lower profit margin products in 2021.
Hotel Operating Costs

Hotel Operating costs were $744,594 for the year ended December 31, 2021. There were no comparable costs in 2020 as the acquisition was completed in 2021.





Operating Expenses




Operating costs and expenses were $2,557,688 for the year ended December 31
2021, compared to $1,431,920 for 2020, an increase of $1,125,766. The increase
in operating expenses was mainly due to the inclusion of the operating expenses
of the hotel and pharmacies since their respective dates of acquisitions.



Income (loss) from Operations



Loss from operations was $(26,938) in the year ended December 31 2021, compared
to income of $794,460 in 2020, a decrease of $821,398 or 103%. The decrease in
our income from operations for 2021 was mainly due to the inclusion of the
losses occurred by our pharmacies and hotel, along with a slight decrease in our
income from advertising services and product sales.



Non-operating Income



Non-operating income was $34,023 for the year ended December 31, 2021, compared
to $563,178 for 2020. For 2021, we had interest income of $4,113 and other
income of $63,064 and other expenses of $33,154. For 2020, we had interest
income of $537,580 and other income $28,924 and other expense $3,326. The
interest income in 2020 was primarily due to the interest income from a loan to
third party in 2020, which was repaid in full during the year ended December 31,
2020.



Income tax expense

Income tax expense was $274,321 and $340,127 for the years ended December 31, 2021 and 2020, a decrease of $65,806 or 19% for 2021 compared with 2020.





Net Income (Loss)




Our net income (loss) for the years ended December 31, 2021 and 2020 was a loss
of $(267,236) and income of $1,017,511, respectively, a decrease in net income
of $1,284,747 or 126% for 2021 compared with 2020. The decrease in net income in
2021 was mainly due to a decrease in interest income and operating losses
incurred by our hotel and pharmacies.



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Liquidity and Capital Resources


During the year ended of December 31, 2021, we used $57,804 in operations. As of
December 31, 2021, cash and cash equivalents were $8,556,642 (excluding $44,211
of restricted cash), compared to $7,676,689 as of December 31, 2020. At December
31, 2021, we had working capital of $4,753,390 compared to $6,753,486 at
December 31, 2020.

The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2021 and 2020, respectively.





                                                December 31, 2021       December 31, 2020
Net cash (used in) provided by operating
activities                                     $           (57,804 )   $

1,613,207


Net cash (used in) provided by investing
activities                                     $        (4,431,513 )   $

4,085,236


Net cash (used in) provided by financing
activities                                     $         5,221,864     $         1,546,854

Net cash provided by operating activities


For the year ended December 31, 2021, net cash used in operating activities was
$57,804. This reflects our net loss of $267,236, adjusted by non-cash related
expenses including depreciation and amortization expense of $96,106, change in
deferred tax of $18,570, operating lease expense of $411,607 and stock-based
compensation of $371,540, and then decreased by changes in working capital of
$651,251. The cash outflow from changes in working capital mainly resulted from
unearned revenue of $122,897, payments of taxes payable of $57,467, payments of
lease liabilities of $473,508 and payments of accrued liabilities of $142,027,
partly offset by cash inflow from other receivables and prepaid expenses $94,992
and inventory of $69,738.



For the year ended December 31, 2020, net cash provided by operating activities
was $1,613,207. This was primarily due to our net income of $1,017,511, adjusted
by non-cash related expenses including depreciation of $43,462, provision for
bad debt of $13,624, and stock-based compensation of $371,540, and then
increased by favorable changes in working capital of $15,340. The favorable
changes in working capital mainly resulted from a decrease in advance to
suppliers of $136,479, a decrease in other receivables and prepaid expenses of
$20,003, a decrease in inventory of $6,866, and an increase in taxes payable of
$169,734, offset by a decrease in accrued liabilities and other payables of
$166,012.

Net cash (used in) provided by investing activities

For the year ended December 31, 2021, net cash used in investing activities was $4,431,513, mainly for the acquisition of a hotel and pharmacies.





For the year ended December 31, 2020, net cash provided by investing activities
was $4,085,236, which was mainly due to the return of prepayments for
acquisitions of $4,087,409, partly offset by purchases of property and equipment
of $2,173.

Net cash (used in) provided by financing activities





For the year ended December 31, 2021, net cash provided by financing activities
reflected a capital contribution of $4,386,070 and the proceeds from advances
from related parties of $1,204,442, partially offset by the repayment of loans
from third parties of $368,648.

For the year ended in December 31, 2020, net cash provided by financing activities were advances from related parties of $1,546,854.





Impact of Inflation

Our results of operations may be affected by inflation, particularly rising prices for products and other operating costs if we cannot pass such increases along to our customers in the form of higher prices for our products and services. Generally, our inventory turns multiple times per year and we anticipate that we will be able to increase prices on products to reflect increases in the cost of inventory.





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Contractual Obligations

We have no long-term fixed contractual obligations or commitments.





Contingencies



Our operations are conducted in the PRC and are subject to specific
considerations and significant risks not typically associated with companies in
North America and Western Europe. These include risks associated with, among
others, the political, economic and legal environments in China and foreign
currency exchange rates. Our results may be adversely affected by changes in PRC
government policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad and rates and methods of
taxation, among other things.



Our sales, purchases and expense transactions in China are denominated in RMB
and all of our assets and liabilities in China are also denominated in RMB. The
RMB is not freely convertible into foreign currencies under the current PRC law.
In China, foreign exchange transactions are required by law to be transacted
only by authorized financial institutions. Remittances in currencies other than
RMB may require certain supporting documentation in order to affect the
remittance.

Significant Accounting Policies





Our management's discussion and analysis of our financial condition and results
of operations are based on our consolidated financial statements, which were
prepared in accordance with accounting principles generally accepted in the
United States of America ("US GAAP"). The preparation of these financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements as well as the
reported net sales and expenses during the reporting periods. On an ongoing
basis, we evaluate our estimates and assumptions. We base our estimates on
historical experience and various other factors that we believe are reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe the following accounting policies are the most critical to assist you in fully understanding and evaluating this management discussion and analysis.





Basis of Presentation




The accompanying financial statements are prepared in conformity with U.S.
Generally Accepted Accounting Principles ("US GAAP"). The functional currency of
Aixin is Chinese Renminbi (''RMB''). The accompanying financial statements are
translated from RMB and presented in U.S. dollars ("USD").



Use of Estimates



In preparing financial statements in conformity with US GAAP, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the dates of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period.



Significant estimates, required by management, include the recoverability of
long-lived assets, allowance for doubtful accounts, and the reserve for obsolete
and slow-moving inventories. Actual results could differ from those estimates.



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Accounts Receivable



We maintain an allowance for potential credit losses on accounts receivable.
Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness,
current economic trends and changes in customer payment patterns to evaluate the
adequacy of these reserves. As of December 31, 2021 and 2020, the bad debt
allowance was $213,787 and $148,520, respectively.



Revenue Recognition



ASU No. 2014-09, Revenue from Contracts with Customers ("Topic 606"), became
effective for us on January 1, 2018. Our revenue recognition disclosure reflects
updated accounting policies that are affected by this new standard. We applied
the "modified retrospective" transition method for open contracts for the
implementation of Topic 606. As revenues are and have been primarily from the
delivery of products and the performance of services, and we have no significant
post-delivery obligations, this did not result in a material recognition of
revenue on the accompanying consolidated financial statements for the cumulative
impact of applying this new standard. We made no adjustments to
previously-reported total revenues, as those periods continue to be presented in
accordance with our historical accounting practices under Topic 605, Revenue
Recognition.

Revenue from sale of goods under Topic 606 is recognized in a manner that reasonably reflects the delivery of our products and services to customers in return for expected consideration and includes the following elements:

? executed contract(s) with customers that we believe are legally enforceable;

? identification of performance obligation in the respective contract;

? determination of the transaction price for each performance obligation in the


    respective contract;

  ? allocation of the transaction price to each performance obligation; and

? recognition of revenue only when we satisfy each performance obligation.


Our revenue recognition policies for our operating segments are as follows:




Advertising and Products



Advertising Revenue



Commencing in the third quarter of 2019 we began to provide advertising services
to our clients. Advertising contracts are signed to establish the price and
advertising services to be provided. Pursuant to the advertising contracts, we
provided advertising and marketing services to clients through exhibition
events, conferences, and person-to-person marketing. We perform a credit
assessment of each customer to assess the collectability of the contract price
prior to entering into contracts.



Most of the advertisement contracts designated that we perform advertising
services for the client through exhibition events, conferences, and
person-to-person marketing during the contracted period, regardless of the
number of such events. As such, we determined that the performance obligation is
satisfied over time during the contracted period and revenue is recognized
accordingly. Such advertising revenue amounted to $1,944,811 and $1,863,785 for
the years ended December 31, 2021 and 2020, respectively.



A smaller proportion of our advertising revenue is generated from services to
clients through exhibition events, conferences, and person-to-person marketing,
and our compensation is based on the number of products sold. Such advertising
revenue amounted to $0 and $6,558 for the years ended December 31, 2021 and
2020, respectively.

All of the advertising revenue is subject to the PRC VAT of 6%. This VAT may be offset by VAT paid by us for raw materials and other materials purchased in China.





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Products Revenue



Our revenue from sales of products is recognized when goods are delivered to the
customer and no other obligation exists. We do not provide unconditional return
or other concessions to customers. Our sales policy allows for the return of
unopened products for cash after deducting certain service and transaction fees.
As an alternative to returning a product, customers may request an exchange for
products with the same value.



Product sales revenue represents the invoiced value of goods, net of value-added
taxes ("VAT"). All of our products sold in China are subject to the PRC VAT of
17% of the gross sales price prior to May 1, 2018, 16% since May 1, 2018 and 13%
since April 1, 2019. This VAT may be offset by VAT paid by for raw materials and
other materials purchased in China. We record VAT payables and VAT receivables
net of payments in the financial statements. The VAT tax return is filed
offsetting the payables against the receivables. Sales and purchases are
recorded net of VAT collected and paid as we act as an agent for the government.



Hotel



Hotel revenues are primarily derived from the rental of rooms, food and beverage
sales and other ancillary goods and services, including but not limited to
souvenir, parking and conference reservations. Each of these products and
services represents a distinct performance obligation and, in exchange for these
services, we receive fixed amounts based on published rates or negotiated
contracts. Payment is due in full at the time when the services are rendered or
the goods are provided. Room rental revenue is recognized on a daily basis when
rooms are occupied. Food and beverage revenue and other goods and services
revenue are recognized when they have been delivered or rendered to the guests
as the respective performance obligations are satisfied. All of the hotel's
goods sold in China are subject to the PRC VAT of 6%. This VAT may be offset by
VAT paid by on raw materials and other materials purchased in China.



Pharmacies



Our retail drugstores recognize revenue at the time the customer takes
possession of the merchandise. For pharmacy sales, each prescription claim is
its own arrangement with the customer and is a performance obligation. We
generally receive payment from pharmacy customers we satisfy our performance
obligations. We record a receivable when we have an unconditional right to
receive payment and only the passage of time is required before payment is due.
Sales revenue represents the invoiced value of goods, net of VAT. All of the
products sold in our pharmacies are exempt from VAT as the pharmacies qualify
for a small business exemption.

Foreign Currency Translation and Comprehensive Income (Loss)





The functional currency of our business operations is RMB. For financial
reporting purposes, RMB is translated into USD as the reporting currency. Assets
and liabilities are translated at the exchange rate in effect at the balance
sheet dates. Revenues and expenses are translated at the average rate of
exchange prevailing during the reporting period.



Translation adjustments arising from the use of different exchange rates from
period to period are included as a component of stockholders' equity as
"Accumulated other comprehensive income". Gains and losses resulting from
foreign currency transactions are included in income. There was no significant
fluctuation in the exchange rate for the conversion of RMB to USD after the
balance sheet date.



We use FASB ASC Topic 220, "Comprehensive Income". Comprehensive income (loss)
is comprised of net income (loss) and all changes to the statements of
stockholders' equity, except those due to investments by stockholders, changes
in paid-in capital and distributions to stockholders. Comprehensive loss for
years ended December 31, 2021 and 2020 consisted of net loss and foreign
currency translation adjustments.

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