CFOO 10-K & 10-Q changes, risk factors and insider trading

This Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include bybut are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

In addition to products, we are committed to providing customized science basedscience-based wellness consultation and service programs to customers. Our diverse products and services target health conscioushealth-conscious customers and differentiate based upon age and gender and seek to manage different conditions. We reach out to customers fitting certain health and lifestyle profiles through our offline and online consultation services, and track eating habits and health indicators to provide customized products such as supplements. We believe this will facilitate the ability of customers to monitor, understand and adjust their health practices and lifestyle anytime and anywhere for increased customer engagement and retention.

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

WeTo intenddrive tosales developvolume and revenue growth, we are strategically expanding both our online and offline distribution channelsnetworks. toIn increasebuilding our salesdigital volumefootprint, we anticipate collaborating with established e-commerce platforms and revenue. We expect to partner with third party e-commerce platforms,key social media andchannels, We-mediaincluding such as Wechat, TikTokWeChat, TikTok, and XiaohongshuXiaohongshu. toNot buildonly ourwill these online presence.avenues We believe that online channels will allow us to providefacilitate real-time nutrition and healthcare consultationconsultations, servicesbut asthey wellwill also asbe increaseinstrumental in driving customer engagement and long-term retention. StartingIndeed, fromhaving thelaunched secondour halfdedicated ofnutrition consulting service via a prominent social media platform in late 2020, we haveare launchednow able to seamlessly offer pre-purchase advice and comprehensive after-sales support, making it accessible to our “nutritionclients consulting”wherever supportthey servicesmay using a major social media software to allow customer groups to receive pre-purchase consultation and after-sales service for products anytime and anywhere.be.

Product Liability and ConsumersConsumer Protection

Revenue. We generated revenues of $233,339$327,871 and $158,475$233,339 for the fiscal years ended December 31, 20242025 and 2023.2024. All of our major customers are located in the PRC and Hong Kong. Our revenue increased by 47%,40.5%, due to the upturn in market conditions and high demand infor wine products and the healthcare market.

Cost of Revenue. Cost of revenue as a percentage of net revenue was approximately 90.86% for the fiscal year ended December 31, 2025. Cost of revenue as a percentage of net revenue was approximately 76.91% for the fiscal year ended December 31, 2024. Cost of revenue as a percentage of net revenue was approximately 59.52% for the fiscal year ended December 31, 2023. The increase in cost of revenue as a percentage of net revenue is attributable to an increase in salescost of healthcare products. During the years ended December 31, 20242025 and 2023,2024, the following vendors accounted for 10% or more of our purchases:

Gross Profit. We achieved a gross profit of $53,873$29,962 and $64,144$53,873 for the fiscal years ended December 31, 2024,2025, and 2023,2024, respectively. The decrease in gross profit is primarily attributable to the decrease in gross profitsales of bothwine healthcare products and wine products.

General and Administrative Expenses (“G&A”). We incurred G&A expenses of $502,654$423,644 and $465,234$502,654 for the fiscal years ended December 31, 2024,2025, and 2023, 2024, respectively. The increasedecrease was primarily due to highera motorreduction vehiclein rental expenses andthat travellingis mainly attributable to the relocation expensesof Hong Kong office during the year.

Net Loss. During the year ended December 31, 2024,2025, we incurred a net loss of $455,571,$398,672 as compared to a net loss of $403,700$455,571 for the year ended December 31, 2023.2024. The increasedecrease in net loss is mainly due to the increasedecrease in gross profit in wine segment and the decrease in total operating expenses with primarily attributable to the reduction in rental expenses.

For the year ended December 31, 2025, net cash used in investing activities was $Nil. For the year ended December 31, 2024, net cash used in investing activities was $23,454 which solely consisted primarily of purchase of plant and equipment.

We have not achieved profitability since our inceptioninception, and we expect to continue to incur net losses for the foreseeable future. We expect net cash expended in 20252026 to be higher than 2024.2025. As of December 31, 2024,2025, we had an accumulated deficit of $2,131,544.$2,530,216. Our material cash requirements are highly dependent upon the additional financial support from our major shareholders in the next 12 - 18 months.

As of December 31, 2024,2025, the Company does not have any off-balance sheet arrangementsarrangements, and it is not anticipated that the Company will enter into any off-balance sheet arrangements.

The sale and distribution of the healthcare products, such as (i) Nutrition Catering (ii) Special Health Food (iii) Health Supplement and and (iv) Skincare, is the only performance obligation under the fixed-fee arrangements. Revenue is recognized fromwhen the salecontrol of theirthe healthcare healthcare products upon deliverytransfers to the customers,customer, whereastypically upon delivery, if that is the titlepoint andat risk of loss are fully transferred towhich the customers.performance obligation is satisfied. The Company records its revenues, net of value added taxes (“VAT”) on the majority of the products at the rate of 17%13% on the invoiced value of sales. The cost, such as shipping cost and material cost, is recognized when the product is delivered to the customers. The Company records its cost including taxes.

Wine Business mainly provides the wine products to the customers. Revenue is recognized from the sale of wine products upon delivery to the customers, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value value added taxes (“VAT”) on the majority of the products at the rate of 17%13% on the invoiced value of sales. The cost, such as shipping cost and material cost, is recognized when the product is delivered to the customers. The Company records its cost including taxes.

The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the CompanyCompany, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-assertedunasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-assertedunasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

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

We conduct our business through our wholly owned subsidiary Guangzhou Xiao Xiang Health Industry Company Limited, a limited liability company organized under the laws of China on March 8, 20172017, and Alpha Wellness (HK) Limited, a limited liability company organized under the laws laws of Hong Kong on April 24, 2019. Elite Creation Group, a limited liability company formed under the laws of the British Virgin Islands formed on September 5, 2018, is a holding companycompanies without operations.

The following table sets forth certain operational data for the three and six months ended MarchJune 31,30, 20262026, and 2025:

Revenue. For the three and six months ended MarchJune 31,30, 2026, we generated revenues of $253.$2 and $255, respectively. For the comparative three and six months ended MarchJune 31,30, 2025, we generated revenues of $41.$142,214 and $142,255, respectively. There was ana increasesignificant decrease in revenue because of thea increasereducing demand in sales of winehealthcare products during the quarter.period.

Cost of Revenue. For the three and six months ended MarchJune 31,30, 2026, the cost of revenue was $0 and $24, respectively, and as a percentage of net revenue, approximately 0% and 9%, Cost of revenue for the three and six months ended June 30, 2025, was $126,654 and $126,670, respectively, and as a percentage of net revenue, approximately 9%, the89% and 89%, respectively. The decrease in cost of revenue forwas in line with the threedrop monthsin ended March 31, 2025 was $16, and as a percentage of net revenue, approximately 39%. The cost of revenue increased due toduring the increase in sales of wine products in China mentioned above.period.

Operating Expenses. For the three and six months ended MarchJune 31,30, 2026 and 2025,2026, the operating cost was $61,827$63,754 and $103,766,$125,581, respectively, and while for the three and six months ended June 30, 2025, was $112,915 and $216,681, respectively. The decrease in operating expenses was primarilydecreased due to effectivea decrease costin selling expenses and better control byin management.administrative expenses.

Other Income. For the three and six months ended MarchJune 31,30, 2026 and 2025,2026, the total other income was $1$2 and $186,$3, respectively and for the three and six months ended June 30, 2025 was $3 and $189, respectively. TheOther total other income decreased due to lessa decrease in receipt of bank interest income during the period ended March 31, 2026 compared to the period ended March 31, 2025.income.

Net Loss. For the three and six months ended MarchJune 31,30, 20262026, we incurred a net loss of $63,750 and $125,347, respectively and for the three and six months ended June 30, 2025, we incurred a net loss of $61,597$97,352 and $103,555,$200,907, respectively. The decrease in net loss was primarily attributable to the significant decrease in general and administrative expenses.

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $9,806.$15,923.

NetOperating Cash Used In Operating Activities.

For the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was $55,933,$149,705 which primarily consisted of a net loss of $61,597, $125,347, non-cash adjustments of depreciation of plant and equipment of $1,752,$3,504, non-cash adjustments of depreciation of right of use assets of $2,719,$5,513, amortization of intangible asset of $122, $245, non-cash lease expense of $235,$441, increase in deposits and other receivables of $716,$3,840, increase in inventories of $482,$1,152, increasedecrease in accrued liabilities and other payables of $3,382,$28,169, increase in customer deposits of $1,985,$5,463, deceasedecrease in lease liabilities of 2,954$5,954 and increase in income tax refundable of $379.$409.

For the threesix months ended MarchJune 31,30, 2025, net cash used in operating activities was $100,870,$186,613 which primarily consisted of a net loss of $200,907, $103,555, non-cash adjustments of depreciation of plant and equipment of $1,747,$3,489, amortization of intangible asset of $116,$232, increasedecrease in deposits deposits and other receivables of $14,729,$157,061, increase in inventories of $23,559,$43,295, increase in accrued liabilities and other payables of $1,500, $1,656, increasedecrease in customer deposits of $43,362$96,118 and increase in income tax refundable of $5,908.$8,575.

NetInvesting Cash provided by Financing Activities.

For the threesix months ended MarchJune 31,30, 2026, and 2025, net cash provided by financing activities was $36,452$167,550 advanceand $216,549, which primarily consisted of advances from a director, related parties, $20,405 advanced from directorsparties and $67 advanced from a related company.

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

Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. A valuation allowance has currently been recorded to reduce our deferred tax assetassets to $0.

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