The following discussion of our financial condition and results of operations
should be read in conjunction with the unaudited financial statements and the
notes to those statements included elsewhere in this Form 10-Q and with the
audited financial statements and the notes thereto included in our Annual Report
on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K"). This
discussion contains forward-looking statements that involve risks and
uncertainties. You should specifically consider the various risk factors
identified in our 2021 Form 10-K, that could cause actual results to differ
materially from those anticipated in these forward-looking statements.



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. The
pharmacies will be used to supplement our efforts to distribute our nutritional
products.



In July 2021, 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..



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 in China, 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 from
time to time in various localities due to the decrease in the prevalence of
Covid-19. However, beginning in the second half of 2021 and continuing to date,
the number of COVID-19 cases has fluctuated and increased again in many cities
of China, including Sichuan Province, where we are located. As a result, the
authorities in Chengdu have reinstituted short-term lockdowns and restrictions
on travel and the number of people that could gather at any location. During the
three months ended Mach 31, 2022, all of our operations were materially
adversely impacted by the measures and restrictions taken to limit the spread of
the disease in China and Sichuan Province. 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, Mr. Lin transferred to our Company 35,049,685
shares of our common stock for cancellation.



26







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:



                                                         Three Months Ended March 31,
                                                    2022                               2021
                                       $                % of Revenue       $              % of Revenue
Revenue                                $   418,678                100 %    $  698,158               100 %
Operating costs and expenses             1,190,832                284 %       475,988                68 %
Income (loss) from operations             (772,154 )             (184 )%      222,170                32 %
Non-operating income (expenses), net        20,565                  4 %          (468 )               - %
Income (loss) before income tax           (751,589 )             (180 )%   

  221,702                32 %
Income tax expense                             492                  - %             -                 - %
Net income (loss)                      $  (752,081 )             (180 )%   $  221,702                32 %

The following table shows our operations by business segment for the three Months ended March 31, 2022 and 2021.





                                        For the Three Months Ended March 31,
                                             2022                     2021
Net revenue
Advertising and products             $             16,098       $        698,158
Pharmacies                                        158,894                      -
Hotel                                             243,686                      -
Total revenues, net                  $            418,678       $        698,158

Operating costs and expenses
Advertising and products
Cost of goods sold                   $              4,683       $        135,659
Operating expenses                                298,042                340,329
Pharmacies
Cost of goods sold                                119,841                      -
Operating expenses                                169,309                      -
Hotel
Hotel operating costs                             511,619                      -
Operating expenses                                 87,338                      -
Total operating costs and expenses   $          1,190,832       $        475,988

Income (loss) from operations
Advertising and products             $           (286,627 )     $        222,170
Pharmacies                                       (130,256 )                    -
Hotel                                            (355,271 )                    -
Income (loss) from operations        $           (772,154 )     $        222,170




Revenue




Revenue was $418,678 in the three months ending March 31, 2022, compared to
$698,158 in the same period of 2021, a decrease of $279,480 or 40%. The decrease
in revenue was mainly due to decreases in direct sales of our nutritional
products and advertising revenues as we were not able to host the types of
events at which we market nutritional products, which were partly offset by
revenues from our hotel and pharmacies which we did not own in the first quarter
of 2021. For three months ended of March 31, 2022, we had $0 advertising revenue
and $174,992 product revenues (of which $16,098 were from direct sales and
$158,894 represented sales at our pharmacies), and hotel revenue of $243,686.
For three months ended March 31, 2021, we had $494,864 of advertising revenue
and $203,294 of product revenue from our direct sales activities and no revenues
from the hotel and pharmacies as the acquisitions were not completed until

the
third quarter of 2021.



27

Operation Costs and Expenses





Cost of Goods Sold




Cost of goods sold was $124,524 for the three months ended March 31, 2022,
compared to $135,659 for the three months ended March 31, 2021, a decrease of
$11,135 or 8%. The decrease in our cost of goods sold is attributable to the
decrease in direct product sales not made through our pharmacies. The cost of
goods sold for our direct product sales as a percentage of sales was 29% in
2022, compared to 19% for 2021. The cost of goods sold for products sold through
our pharmacies as a percentage of pharmacy product sales was 75% in 2022, and no
comparable costs were incurred in the three months ended March 31, 2021 as the
acquisition was completed in the third quarter of 2021.



Hotel Operating Costs

Hotel operating costs were $511,619 for the three months ended March 31, 2022. There were no comparable costs in three months ended March 31, 2021 as the acquisition was completed in the third quarter of 2021.





Operating Expenses




Operating costs and expenses were $554,689 for the three months ended March 31,
2022, compared to $340,329 for the same period of 2021, an increase of $214,360
or 63%. The increase in operating expenses was mainly due to the inclusion of
the operating expenses of the hotel and pharmacies.

Income (loss) from Operations

Loss from operations was $772,154 in the three months ended March 31, 2022, compared to income of $222,170 in the same period of 2021, a decrease of $994,324 or 448%. The decrease in our income from operations for 2022 was due to the loss incurred from our direct sales activities and the inclusion of the losses incurred by our pharmacies and hotel. All of our operations were materially adversely impacted by travel and work restrictions imposed on a temporary basis in China and Chengdu to limit the spread of COVID-19.

Non-operating Income (Expense)


Non-operating income was $20,565 for the three months ended March 31, 2022,
compared to non-operating expense of $468 for the three months ended March 31,
2021. For the three months ended March 31, 2022, we had interest income of
$1,328 and other income of $19,434, partly offset with other expenses of $197.
For the three months ended March 31, 2021, we had interest income of $1,218 and
other income $160, partly offset with other expense $1,846.



28







Income tax expense



Income tax expense was $492 and $0 for the three months ended March 31, 2022 and
2021, respectively, an increase of $492 or 100% for the three months ended March
31, 2022 compared with the same period of 2021.



Net Income (Loss)



Our net loss for the three months ended March 31, 2022 was $752,081, compared to
net income of $221,702 in the same period of 2021, a decrease of $973,783 or
439%. The decrease in the three months ended March 31, 2022 was mainly due to
the decreased sales and increased operating costs and expense as explained
above.

Liquidity and Capital Resources

During the three months ended of March 31, 2022, we used $503,520 in operations. As of March 31, 2022, cash and cash equivalents were $8,589,685 (excluding $58,650 of restricted cash), compared to $8,556,642 (excluding $44,211 of restricted cash) as of December 31, 2021. At March 31, 2022, we had working capital of $4,206,827 compared to $4,753,390 at December 31, 2021.

The following is a summary of cash provided by or used in each of the indicated types of activities during the three Months ended March 31, 2022 and 2021, respectively.





                                                       March 31, 2022       March 31, 2021
Net cash (used in) provided by operating activities   $       (503,520 )   $        141,844
Net cash (used in) provided by investing activities   $              -     $              -

Net cash (used in) provided by financing activities $ 504,629 $ (148,771 )

Net cash provided by (used in) operating activities





For the three months ended March 31, 2022, net cash used in operating activities
was $503,520. This reflects our net loss of $752,081, adjusted by non-cash
related expenses including depreciation and amortization expense of $29,639,
change in deferred tax of $492, bad debt expense of $27,422, operating lease
expense of $229,242 and stock-based compensation of $92,885, and then decreased
by changes in working capital of $131,119. The cash outflow from changes in
working capital mainly resulted from an increase in accounts receivable of
$52,174, payments of lease liabilities of $203,673, partly offset by cash inflow
from accrued liability and other payables of $124,901.



For the quarter ended March 31, 2021, net cash provided by operating activities
was $141,844. This was primarily due to our net income of $221,702, adjusted by
non-cash related expenses including depreciation of $7,225, operating lease
expense of $41,300, and stock-based compensation of $92,885, and then decreased
by unfavorable changes in working capital of $221,268. The unfavorable changes
in working capital mainly resulted from an increase in inventory of $102,826 and
a decrease in taxes payable of $73,290 and payment for lease liabilities of
$41,300.



29

Net cash provided by (used in) investing activities

For the three months ended March 31, 2022 and 2021, net cash used in investing activities was $0.

Net cash provided by (used in) financing activities

For the quarter ended March 31, 2022, net cash provided by financing activities were increased advances from related parties of $504,629.

For the quarter ended March 31, 2021, net cash used in financing activities were net repayments to advances from related parties of $148,771.





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, we are not party to long term contracts and 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.



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.





30







Basis of Presentation




The accompanying financial statements are prepared in conformity with U.S.
Generally Accepted Accounting Principles ("US GAAP"). The functional currency of
AiXinZhonghong, Aixin Shangyan Hotel and Aixintang Pharmacies 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.



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 March 31, 2022 and December 31, 2021, the bad
debt allowance was $242,390 and $213,787, 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.



31








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 $0 and $494,864 for the three
months ended March 31, 2022 and 2021, 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 $0 for the three months ended March 31, 2022 and
2021, 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.





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.



32







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 the
three months ended March 31, 2022 and 2021 consisted of net loss and foreign
currency translation adjustments.

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