Annual Report for Fiscal Year Ending 12-31, 2023 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See "Note Regarding Forward-Looking Statements." Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed in "Risk Factors" and elsewhere in this report.

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Overview

Since January 30, 2017, following a change of control, our business has been the business of developing and marketing nutritional products that promote wellness and a healthy lifestyle. Our business has involved the purchase of products from three suppliers in Taiwan and the sale of these products to four unrelated customers, two of which accounted for all of our sales in the year ended December 31, 2022 and 91.7% of sales in the year ended December 31, 2021. We did not have any sales in the second and third quarters of 2022 or subsequent to December 31, 2022 through the date of this annual report and as of the date of this report we do not have any orders for products or purchase orders from suppliers.

All of our sales to date have been sales of cordyceps related products except that, in the quarter ended June 30, 2018, we sold metallothionein MT-3 elizer, a product that we do not currently sell. Cordyceps is a fungus that is used in traditional Chinese medicine. Cordyceps sinensis has been described as a medicine in old Chinese medical books and Tibetan medicine. It is a rare combination of a caterpillar and a fungus and found at altitudes above 4500m in Sikkim. We may also seek to market other products which we see as complimentary to our present products; however, we have not entered into negotiations with respect to the distribution of other products, and we cannot assure you that we will be able to market any other products.

We believe that, since a major market for cordyceps products is China, our customers have significant customers in China and our business was impacted by COVID-19 and steps taken by the government of China, particularly its Zero COVID policy, which was relaxed in December 2022. Further, we also cannot assure you the political instability in Hong Kong will not affect our sales, since our customers in 2017 and 2018 were Hong Kong based customers who sold their products in the PRC and none of these customers has made purchases from us since the quarter ended December 31, 2018. We cannot assure you that these factors will not affect our ability to generate revenue in the future and, to the extent that any of these factors affect our ability to generate revenue, we may not be able to continue in business.

At present, we have no full-time employees. Our only employee is our chief executive officer who works for us on a part-time basis and does not receive compensation. We face significant risks in developing our business, including, but not limited to, our ability to raise the necessary financing either through the sale of debt or equity securities or through a loan facility, our ability to increase our customer base and supply chain, our ability to increase our gross margins, our ability to hire and retain qualified research and development, marketing and administrative personnel, our ability to develop products and to market in the United States and other western markets any products we may develop, our ability to comply with any government regulations relating to the manufacture, distribution and marketing any products we develop. We cannot assure you that we can or will develop any products or generate revenue or profits in the future.

In May and August 2021, we entered into two-year service agreements with consultants who performed research and development services as well as selling general and administrative services all in connection with a proposed product - a cordyceps-infused chicken feed. These research and development activities did not generate a marketable product, and we cannot assure you that we will seek to continue the development of this product or any other product. The agreements with the consultant expired in May and August 2023. We do not have the funds or the revenue stream for us to hire any consultants or employees. Our statement of operations reflects the amortization of common stock issued to consultants for research and development relating to our proposed chicken feed product. We issued a total of 12,282,000 shares of common stock to consultants as stock grants pursuant to agreements with the consultants in May and August 2021. The agreements provide for the consultants to perform the services described in the contracts for the two-year period commencing the date of the agreements. The shares were valued at $31,424,800, based on the market price of the common stock on the respective dates of the agreements, and were amortized over the two-year period of the agreement terms using the straight-line method. During the years ended December 31, 2023 and 2022, we recorded stock-based compensation of $8,060,983 and $15,712,400. At December 31, 2023, the deferred stock compensation was fully amortized. We did not develop any product as a result of the services from the consultants. Our selling, general and administrative expenses do not include any compensation for our chief executive officer, who serves without compensation and is responsible for our purchases, sales and directing our research and development program. As a result, the results of our operations do not reflect costs that would normally be associated with a chief executive officer who performs such functions.

We require funds for our operations. At December 31, 2023, we had $376 in cash, and no accounts receivable. Of the accounts receivable at December 31, 2022 of $638,500, we collected $158,500 and we determined that $480,000 was not collectible and we recognized a provision for doubtful account for that amount in 2023. We also recognized a provision for an inventory deposit write-off of $12,000. Although we may seek to raise funds in the equity market, we have no agreements or understandings with respect to any funding and we can give no assurance as to the availability or terms of any such financing. Because of our financial condition, the lack of sales in the second and third quarters of 2022 and in 2023 and the absence of any sales subsequent to December 31, 2023 through the date of this annual report, along with the absence of an active market for our stock and our stock being traded on the OTC Market Group's Expert Market, which means that our common stock is not eligible for proprietary broker-deal quotes, with the result that there are no published quotes for our common stock, together with risk related to political and legal situation in Hong Kong, it may be difficult for us to raise funds in the equity market, and, if we are able to raise funds our stockholders may suffer significant dilution.

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To the extent that we implement our business plan, we anticipate that we will incur marketing and other expenses without any assurance that such expenses will generate any significant revenue, cash flow from operations or net income. Because of our cash position, we may use equity-based compensation for our employees and independent contractors. Because of our low cash position, we may rely on loans from stockholders or related parties, although we do not have any agreements or understandings at this time, and we may issue equity to attract employees and consultants to help us develop our business plan. Because our common stock is on the OTC Market Group's Expert Market, potential employees or consultants may be reluctant to accept common stock as compensation. Accordingly, we cannot assure you that we will be able to develop or market products, in which case we may continue to be unable to generate revenue. Quotes in the Expert Market are only for unsolicited orders. This means broker-dealers may not use the Expert Market to publish unsolicited quotes, and there are no market makers in our common stock. Quotations in Expert Market securities are restricted from public viewing. Only broker-dealers and professional or sophisticated investors are permitted to view quotations in Expert Market securities.

Inflation, Supply Chain Disruption and Effects of COVID-19 Restrictions

After years of relatively low inflation, in recent years, countries throughout the world, including Asia, have been subject to inflation at a rate significantly higher than in prior periods. We expect that both the inflationary pressures and supply chain disruption that affect other industries will affect us. These factors may result in delays in receipt of products we order, and increased costs which we may not be able to pass on to consumers. Both our cost of inventory and the prices we can charge for products increased as a result of inflation. We cannot assure you that our business will not be materially impaired by inflationary and supply chain disruption as well as be increased tariffs, in the event that we seek to sell products into the United States, although historically we have not sold products into the United States market. Since we did not make any sales or purchase any inventory during the year ended December 31, 2023 or for any periods subsequent to December 31, 2023, we cannot evaluate the effects of inflation or supply chain issues on the price at which we sell products or the cost of our inventory.

We cannot assure you that we will be able to develop a marketable product or that we will be able to generate significant, if any, revenue.

Our recent inability to generate sales partially resulted from the aftereffects of the COVID-19 restrictions of the Chinese government. Our customers suffered tremendous financial losses due to COVID-19 restrictions, including the Chinese government's Zero COVID policy. Our customers sold their products into China and the Chinese economy was having difficulty in bouncing back. We believe these factors also affected the ability of our customer to pay for the products purchased from us which resulted in the bad debt provision of accounts receivable of $480,000.

Results of Operations

Years Ended December 31, 2023 and 2022

For the year ended December 31, 2023, we had no revenues or cost of revenue, and we incurred operating expenses of $8,804,367, of which $4,794,825 represented research and development expenses related primarily to the cordyceps-infused chicken feed development project, $3,517,542 represented selling, general and administrative expenses, of which $3,266,158 related to services provided by our consultants and the balance primarily to expenses and professional fees relating to our status as a public company, bad debt provision of accounts receivable of $480,000 and provision for an inventory deposit of write-off of $12,000. The compensation to our consultants for research and development services and selling, general and administrative services totaling $8,060,983 represented the amortization of deferred stock compensation issued to the consultants in 2021. We also incurred interest expense to a minority stockholder of $3,206. As a result, we had a net loss of $8,807,573, or $(0.15) per share (basic and diluted).

For the year ended December 31, 2022, we had revenue of $658,500, representing sales to two customers. Our gross profit was $140,500, and our gross margin was 21.3%. We had operating expenses of $16,010,237, representing research and development expenses of $10,080,000 and selling, general and administrative expenses of $5,930,237, which included stock-based compensation of $15,712,400 paid to consultants working on research and development and marketing and related expense relating to our proposed chicken feed product. As a result of the foregoing, we had a net loss of $15,871,443, or $(0.26) per share (basic and diluted).

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Liquidity and Capital Resources

The following table summarizes our changes in working capital from December 31, 2022 to December 31, 2023:

		December 31 2023				December 31, 2022				Change				% Change
Current assets		$	1,626			$	657,537			$	(655,911	)			(99.8	)%
Current liabilities		$	288,575			$	201,116			$	87,459				43.5	%
Working capital (deficiency)		$	(286,949	)		$	456,421			$	(743,370	)

The following table summarizes our cash flows for the years ended December 31, 2023 and 2022:

		Year Ended December 31,
		2023				2022
Cash (used in) operating activities		$	(15,446	)		$	(147,481	)
Cash provided by financing activities		$	9,970			$	58,085
Cash at end of period		$	376			$	5,852

Cash used in operating activities of $15,446 for the year ended December 31, 2023 reflected primarily our net loss of $8,807,573, increased primarily by stock-based compensation representing the amortization of deferred stock compensation of $8,060,983, and a bad debt provision of accounts receivable of $480,000, a reduction of accounts receivable of $158,500, and an increase in accounts payable and accrued expenses of $77,873.

Cash used in operating activities of $147,481 for the year ended December 31, 2022 reflected the net loss of $15,871,443, decreased primarily by stock-based compensation of $15,712,400.

Cash provided by financing activities of $9,970 for the year ended December 31, 2023 and $58,085 for the year ended December 31, 2022 reflected advances from a minority stockholder.

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Going Concern

The accompanying financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company had minimal cash as of December 31, 2023, had no revenue for the year ended December 31, 2023, and incurred a loss from operations for the years ended December 31, 2023 and 2022 as well as prior years, and losses and the absence of revenue have continued, had negative cash flow from operations for the years ended December 31, 2023 and 2022, has not actively engaged in its business subsequent to September 30, 2023, and did not generate any products from its research and development activities. Further, our common stock is presently on the OTC Market Group's Expert Market, which means that our common stock is not eligible for proprietary broker-deal quotes, with the result that there are no published quotes for our common stock. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Although we propose to fund operations through sales of our products and equity financing arrangements, we do not presently have any orders for products, we incurred a bad debt provision of accounts receivable of $480,000, our common stock is reported on the Expert Market as a result of which there are no market makers in the common stock and we are delinquent in our filings with the Securities and Exchange Commission, as a result of which we may not be able to raise funds for capital expenditures, working capital and other cash requirements and will have to rely on advances from a minority stockholder and an officer. If we cannot generate revenue from our products, we may not be able to continue in business.

Critical Accounting Policy and Estimates

Our critical accounting policies and estimates are disclosed in Note 2 of Notes to Financial Statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.