UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2020~~2021

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________ to _____________

Commission file number 333-173681

Merion, Inc.

(Name of small business issuer in its charter)

Nevada	5122	45-~~2898504~~289-8504
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

100 N. Barranca St. #1000

West Covina, CA 91791

(626) 331-7570

(Address and telephone number of principal executive offices and principal place of business)

None.

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

None

N/A

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~Securities~~The ~~registered~~number ~~pursuant~~of tooutstanding ~~Section 12(b)~~shares of ~~the~~Registrant’s ~~Act:~~Common Stock, $0.001 par value, was 184,555,937 shares as of May 11, 2021.

Title of each class Trading Symbol(s) Name of each exchange on which registered None N/A N/A

As of November 9, 2020, there were 179,116,608 issued and outstanding shares of the registrant’s common stock.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3	3
Item 2.	Management’s Discussion and Analysis or Plan of Operation	19	22
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	24	28
Item 4.	Controls and Procedures	24	28
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	26	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26	30
Item 6.	Exhibits	27	31

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

MERION, INC.
CONDENSED BALANCE SHEETS
	September 30			Decemeber 31
	March 31,			December 31,
	2020			2019
	2021			2020
	(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash	$	696,~~191~~034		$	9,~~237~~506
Accounts receivable, net		1475,~~843~~388			3975,~~781~~258
Inventories		~~142~~143,~~965~~271			~~165~~80,~~744~~730
Prepaid expenses		~~216~~37,~~184~~861			23190,~~350~~059
TOTAL CURRENT ASSETS		~~443~~262,~~183~~554			~~238~~355,~~112~~553
PROPERTY AND EQUIPMENT, net		~~416~~385,~~356~~031			~~336~~400,~~000~~694
OPERATING RIGHT-OF-USE ASSETS		~~664~~559,~~017~~606			~~522~~612,~~884~~118
DEPOSITS		15,410			15,410
TOTAL ASSETS	$	1,~~538~~222,~~966~~601		$	1,~~112~~383,~~406~~775
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	1,182,684		$	1,208,257
Loan payable - paycheck protection program	$	137,792		$	-
Deferred revenue		503,729			6,693
Loan payable - economic injury disaster loan		3,750			2,344
Operating lease liabilities - current		218,275			113,857
Accounts payable and accrued expenses		92,109			113,125
Loan payable		122,922			-
Deferred revenue		515,448			503,448
Long term debt - current		16,435			-
Operating lease liabilities - current		217,082			221,819
Due to shareholder, non-interest bearing		221,665			438,055
Long term debt - current		15,382			15,208
Due to third parties, interest bearing		1,480,000			1,480,000
Due to shareholder, non-interest bearing		42,286			55,607
Due to third parties, non-interest bearing		50,000			50,000
TOTAL CURRENT LIABILITIES		1,023,849			911,551
TOTAL CURRENT LIABILITIES		3,795,710			3,296,862
NON-CURRENT LIABILITIES:
Operating lease liabilities - non-current		~~466~~356,~~087~~077			~~417~~411,~~564~~584
Long term debt		8275,~~219~~148			-79,407
Loan payable		158,178			-
Loan payable - economic injury disaster loan		150,000			150,000
Due to shareholder, non-interest bearing		2,000,000			2,000,000
TOTAL NON-CURRENT LIABILITIES		581,225			640,991
Advances from related parties, interest bearing		30,000			30,000
TOTAL LIABILITIES		1,605,074			1,552,542
Advances from related parties, non-interest bearing		518,839			518,839
Due to employee		95,000			95,000
Due to third parties, interest bearing		20,000			20,000
Due to third parties, non-interest bearing		50,000			50,000
TOTAL NON-CURRENT LIABILITIES		3,420,323			3,131,403
TOTAL LIABILITIES		7,216,033			6,428,265
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Common stock, $0.001 par value, 200,000,000 shares authorized, 178,816,608 and 177,404,608 shares issued and outstanding, as of September 30, 2020 and December 31, 2019, respectively		178,816			177,404
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 184,555,937 shares issued and outstanding, as of March 31, 2021 and December 31, 2020		184,556			184,556
Stock subscription receivable		(1,735,695	)		(1,~~140~~735,695	)
Additional paid-in capital		2026,~~582~~316,~~983~~572			1926,~~184~~316,~~395~~572
Deferred stock compensation		(~~265~~96,~~791~~058	)		(~~601~~179,~~093~~992	)
Deficit		(2425,~~437~~051,~~380~~848	)		(2224,~~935~~754,~~870~~208	)
TOTAL SHAREHOLDERS' DEFICIT		(5382,~~677,067~~473	)		(5168,~~315,859~~767	)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	1,~~538~~222,~~966~~601		$	1,~~112~~383,~~406~~775

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

MERION, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(UNAUDITED)
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2020			2019			2020			2019
	2021			2020
SALES
Direct Sales	$	~~8,870~~961		$	2120,~~770~~977		$	~~38,624~~		$	~~1,494,117~~
OEM and Packaging		32434,~~827~~401			7645,~~041~~011			~~98,185~~			~~229,720~~
TOTAL SALES		41435,~~697~~362			9765,~~811~~988			~~136,809~~			~~1,723,837~~
COST OF SALES
Direct Sales		~~8,126~~89			86,~~309~~530			~~23,177~~			~~52,861~~
OEM and Packaging		28225,~~047~~346			369,~~289~~443			~~57,224~~			~~106,275~~
Idle Capacity		20,483			4,349			96,924			4,349
Inventory write-down		4,075			8,217
TOTAL COST OF SALES		56,656			48,947			177,325			163,485
Idle Capacity		8,014			23,499
GROSS (LOSS) PROFIT		(14,959	)		48,864			(40,516	)		1,560,352
TOTAL COST OF SALES		237,524			47,689
OPERATING EXPENSES
GROSS PROFIT		197,838			18,299
Selling expenses		10,456			18,531			41,629			58,001
OPERATING EXPENSES
General and administrative expenses		300,470			350,301			993,266			1,092,961
Selling expenses		46,103			13,431
Stock compensation expense		83,002			214,350			335,302			642,742
General and administrative expenses		366,606			383,608
Gain on disposal of equipment		-			-			(16,000	)		-
Stock compensation expense		83,934			188,650
Total operating expenses		393,928			583,182			1,354,197			1,793,704
Gain on disposal of equipment		-			(16,000	)
LOSS FROM OPERATIONS		(408,887	)		(534,318	)		(1,394,713	)		(233,352	)
Total operating expenses		496,643			569,689
OTHER INCOME (EXPENSE), net
LOSS FROM OPERATIONS		(298,805	)		(551,390	)
Other income		8,171			1,035			19,988			45,222
OTHER INCOME (EXPENSE), net
Finance expenses		(41,905	)		(22,791	)		(126,785	)		(54,239	)
Other income		5,020			207
Gain on debt settlement		-			-			-			241,426
Finance expenses		(3,855	)		(41,587	)
Total other income (expense), net		~~(33~~1,~~734~~165	)		(2141,~~756~~380	)		~~(106,797~~	)		~~232,409~~
LOSS BEFORE INCOME TAXES		(~~442~~297,~~621~~640	)		(~~556~~592,~~074~~770	)		~~(1,501,510~~	)		~~(943~~	)
PROVISION FOR INCOME TAXES		-			-			-			-
NET LOSS	$	(~~442~~297,~~621~~640	)	$	(~~556~~592,~~074~~770	)	$	~~(1,501,510~~	)	$	~~(943~~	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
Basic		177,854,651			177,264,208			177,650,750			176,531,447
Basic and diluted		184,555,937			177,528,749
Diluted		177,854,651			177,264,208			177,650,750			176,531,447
LOSS PER SHARE
INCOME (LOSS) PER SHARE
Basic and diluted	$	(0.00	)	$	(0.00	)
Basic	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

Table of Contents

MERION, INC.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
	For the Nine Months Ended September 30, 2019
	For the Three Months Ended March 31, 2020
	Common Stock				Stock			Additional			Deferred
					Stock			Additional			Deferred
					Subscription			Paid-in			Stock
	Common Stock				Subscription			Paid-in			Stock
	Shares		Amount		Receivable			Capital			Compensation			Deficit			Total
BALANCE, January 1, 2019		174,792,364	$	174,792	$	(1,200,000	)	$	17,573,900		$	(738,185	)	$	(22,213,466	)	$	(6,402,959	)
BALANCE, January 1, 2020		177,404,608	$	177,404	$	(1,140,695	)	$	19,184,395		$	(601,093	)	$	(22,935,870	)	$	(5,315,859	)
Net loss		-		-		-			-			-			(~~222~~592,~~124~~770	)		(~~222~~592,~~124~~770	)
Issuance of common stock for consulting services		1,150,000		1,150		-			1,078,850			(1,080,000	)		-			-
Amortization of deferred stock compensation		-		-		-			-			188,650			-			188,650
Amortization of deferred stock compensation		-		-		-			-			174,742			-			174,742
Issuance of common stock for cash and financing related services		162,000		162		(20,000	)		149,838			-			-			130,000
Issuance of common stock for debt settlement		1,271,844		1,272		-			761,835			-			-			763,107
Collection of stock subscription		-		-		50,000			-			-			-			50,000
Collection of stock subscription		-		-		62,500			-			-			-			62,500
BALANCE, March 31, 2020 (Unaudited)		177,566,608	$	177,566	$	(1,110,695	)	$	19,334,233		$	(412,443	)	$	(23,528,640	)	$	(5,539,979	)
BALANCE, March 31, 2019 (Unaudited)		177,214,208		177,214		(1,137,500	)		19,414,585			(1,643,443	)		(22,435,590	)		(5,624,734	)
	For the Three Months Ended March 31, 2021
Net income		-		-		-			-			-			777,255			777,255
					Stock			Additional			Deferred
Issuance of common stock for consulting services		50,000		50		-			(50	)		-			-			-
	Common Stock				Subscription			Paid-in			Stock
Cancellation of common stock for consulting services		-		-		-			(360,000	)		360,000			-			-
	Shares		Amount		Receivable			Capital			Compensation			Deficit			Total
Amortization of deferred stock compensation		-		-		-			-			253,650			-			253,650
BALANCE, January 1, 2021		184,555,937	$	184,556	$	(1,735,695	)	$	26,316,572		$	(179,992	)	$	(24,754,208	)	$	(168,767	)
Collection of stock subscription		-		-		26,805			-			-			-			26,805
Net loss		-		-		-			-			-			(297,640	)		(297,640	)
BALANCE, June 30, 2019 (Unaudited)		177,264,208		177,264		(1,110,695	)		19,054,535			(1,029,793	)		(21,658,335	)		(4,567,024	)
Amortization of deferred stock compensation		-		-		-			-			83,934			-			83,934
Net loss		-		-		-			-			-			(556,074	)		(556,074	)
BALANCE, March 31, 2021 (Unaudited)		184,555,937	$	184,556	$	(1,735,695	)	$	26,316,572		$	(96,058	)	$	(25,051,848	)	$	(382,473	)
Amortization of deferred stock compensation		-		-		-			-			214,350			-			214,350
BALANCE, September 30, 2019 (Unaudited)		177,264,208	$	177,264	$	(1,110,695	)	$	19,054,535		$	(815,443	)	$	(22,214,409	)	$	(4,908,748	)

	For the Nine Months Ended September 30, 2020
	Common Stock				Stock			Additional			Deferred
					Subscription			Paid-in			Stock
	Shares		Amount		Receivable			Capital			Compensation			Deficit			Total
BALANCE, January 1, 2020		177,404,608	$	177,404	$	(1,140,695	)	$	19,184,395		$	(601,093	)	$	(22,935,870	)	$	(5,315,859	)
Net loss		-		-		-			-			-			(592,770	)		(592,770	)
Amortization of deferred stock compensation		-		-		-			-			188,650			-			188,650
Issuance of common stock		150,000		150		(20,000	)		149,850			-			-			130,000
Issuance of common stock for financing related services		12,000		12		-			(12	)		-			-			-
Collection of stock subscription		-		-		50,000			-			-			-			50,000
BALANCE, March 31, 2020 (Unaudited)		177,566,608		177,566		(1,110,695	)		19,334,233			(412,443	)		(23,528,640	)		(5,539,979	)
Net loss		-		-		-			-			-			(466,119	)		(466,119	)
Amortization of deferred stock compensation		-		-		-			-			63,650			-			63,650
BALANCE, June 30, 2020 (Unaudited)		177,566,608		177,566		(1,110,695	)		19,334,233			(348,793	)		(23,994,759	)		(5,942,448	)
Net income		-		-		-			-			-			(442,621	)		(442,621	)
Amortization of deferred stock compensation		-		-		-			-			83,002			-			83,002
Issuance of common stock		1,250,000		1,250		(625,000	)		1,248,750			-			-			625,000
BALANCE, September 30, 2020 (Unaudited)		178,816,608	$	178,816	$	(1,735,695	)	$	20,582,983		$	(265,791	)	$	(24,437,380	)	$	(5,677,067	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

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MERION, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(UNAUDITED)
	For the Nine Months Ended September 30,
	For the Three Months Ended March 31,
	2020			2019
	2021			2020
Cash Flows from Operating Activities:
Net loss	$	(1297,~~501,510~~640	)	$	(~~943~~592,770	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		4315,~~546~~663			4412,~~124~~221
Gain on disposal of equipment		~~(16,000~~-	)		-(16,000	)
Stock compensation expense		~~335~~83,~~302~~934			~~642~~188,~~742~~650
Gain on debt settlement		-			(241,426	)
Amortization of operating right-of-use assets		52,512			35,760
Amortization of operating right-of-use assets		137,750			67,116
Bad debt expense		-			17,434
Bad debt expense		29,579			24,308
Inventory write-down		4,075			8,217
Changes in operating assets and liabilities
Accounts receivable		(~~4,641~~130	)		(6412,~~854~~322	)
Inventories		22(66,~~779~~616	)		(~~115~~12,~~897~~504	)
Prepaid expenses		~~(192~~152,~~834~~198	)		339,~~836~~263
Deposits		-			(15,410	)
Accounts payable and accrued expenses		(19,610	)		241,261
Accounts payable and accrued expenses		(25,573	)		55,548
Deferred revenue		12,000			(1,253	)
Deferred revenue		497,036			(1,418,307	)
Operating lease liabilities		(60,244	)		(64,550	)
Operating lease liabilities		(125,942	)		(71,460	)
Net Cash Used in Operating Activities		(123,858	)		(186,593	)
Net Cash Used in Operating Activities		(800,508	)		(1,060,623	)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock and stock subscription		~~805,000~~-			89180,~~305~~000
Advances from shareholder, non-interest bearing		22,726			193,272
Advances from shareholder		4,519			8,953
Repayment of shareholder loan, non-interest bearing		(239,116	)		(283,075	)
Repayment of shareholder loan		(17,840	)		(10,435	)
Advances from third parties, interest bearing		-			1,480,000
Advances from third parties		-			10,000
Advances from third parties, non-interest bearing		10,000			50,000
Proceeds from loan payable - paycheck protection program		137,792			-
Repayment of advances from third parties, non-interest bearing		(10,000	)		(19,666	)
Principal payments of long-term debt		(4,085	)		(1,306	)
Proceeds from loan payable		281,100			-
Net Cash Provided by Financing Activities		120,386			187,212
Principal payments of long-term debt		(9,248	)		-
Net Change in Cash		(3,472	)		619
Net Cash Provided by Financing Activities		860,462			1,509,836
Cash, beginning of period		9,506			9,237
Net Change in Cash		59,954			449,213
Cash, end of period	$	6,034		$	9,856
Cash, beginning of period		9,237			295,521
Cash, end of period	$	69,191		$	744,734
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	21,~~759~~061		$	-409
Cash paid for income tax	$	-		$	-
	.
Non-cash Transactions of Investing and Financing Activities:
Stock issued for debt settlement	$	-		$	763,107
Initial recognition of operating right-of-use assets and lease liabilities	$	-		$	278,883
Stock issued on deferred stock compensation	$	-		$	720,000
Nonmonetary exchange of equipment and issuance of debt for equipment	$	-		$	123,902
Initial recognition of operating right-of-use assets and lease liabilities	$	278,883		$	618,226
Nonmonetary exchange of equipment and issuance of debt for equipment	$	123,902		$	-

The accompanying notes are an integral part of these unaudited condensed financial statements.

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MERION, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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 90,000,000 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 manufacturer and provider of health and nutritional supplements and personal care products currently sold on the internet through our websites, www.dailynu.com and 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.

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.

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, ~~2019~~2020, filed with the Securities and Exchange Commission on ~~April~~March 830, ~~2020~~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 on 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.

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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, 2020			December 31, 2019
	March 31, 2021			December 31, 2020
	(Unaudited)
Accounts receivable	$	8575,~~433~~388		$	8075,~~792~~258
Allowance for doubtful accounts		~~(70,590~~-	)		~~(41,011~~-	)
Accounts receivable, net	$	1475,~~843~~388		$	3975,~~781~~258

Movement of the allowance for doubtful accounts is as follows:

	Nine Months Ended September 30, 2020		Year Ended December 31, 2019
	Three months ended March 31, 2021		Year Ended December 31, 2020
	(Unaudited)
Beginning balance	$	~~41,011~~-	$	-41,011
Provision for doubtful accounts		~~29,579~~-		4128,~~011~~723
Less: write-offs		-		-(69,734	)
Ending balance	$	~~70,590~~-	$	~~41,011~~-

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 in our manufacturing facility. 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. AsFor ofthe ~~September~~three 30months ended March 31, ~~2020~~2021 and ~~December 31~~2020, ~~2019~~the Company recognized $4,075 ~~there~~and ~~were~~$8,217, norespectively, 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.

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~~Operating~~ Right-of-use Asset and Lease Liabilities

In February 2016, the Financial Accounting ~~Standard~~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 ~~standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The~~ Company adopted this standard as of January 1, 2019 utilizing the practical expedients approach.

~~Impairment of~~ Long-Lived Assets

Long-lived assets, including property, equipment, and right-of-use-assets ~~and previously written off intangible 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 ~~nine~~three months ended ~~September~~March 3031, 2021 and 2020.

Deferred Revenue

Deferred revenue represents ~~product~~payments ~~deposits~~ 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, requires that the Company discloses estimated fair values of financial instruments.

As defined in ASC 820 Fair Value Measurement, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

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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.

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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 $~~518~~661 and $~~930~~699 for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019, respectively, and totaled $1,415 and $27,354 for the nine months ended September 30,~~ 2020 ~~and 2019~~, 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~~March 3031, ~~2020~~2021 and December 31, ~~2019~~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 March 31, 2021 and December 31, 2020.

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InThe ~~addition~~majority toof the Company’s ~~60-day~~product ~~return~~sales ~~policy,~~are ~~the~~generated ~~Company,~~from atChina ~~its~~and ~~discretion,~~all ~~may accept a customer’s application for a buy-back~~ of ~~products previously sold within one year at 90% of~~ the ~~original product~~Company’s ~~cost~~OEM ~~less commissions~~ and ~~shipping~~packaging ~~costs.~~sales Toare ~~date,~~generated from the ~~Company~~United ~~has not received any buy-back applications~~States. ~~As a result, no allowance for buy-backs had been recorded as of September 30, 2020 and December 31, 2019.~~

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. While all products are priced in U.S. currency, the Company accepts payments in both U.S. dollars and Hong Kong dollars.

Shipping and Handling Expenses

Shipping and handling costs incurred by the Company are included in selling expenses and totaled $115,~~886~~492 and $43,~~154~~466 for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019, respectively, and totaled $8,043 and $24,117 for the nine months ended September 30,~~ 2020 ~~and 2019~~, 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.

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.

2920,~~300,~~000 shares and 1,610,000 of unvested restricted common stock granted 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~~March 3031, 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~~March 3031, ~~2020~~2021 and ~~2019~~2020.

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~~, or may exceed Hong Kong Deposit Protection Board (HKDPB) insured limits for the banks located in Hong Kong~~. The Company had no uninsured balances as of ~~September~~March ~~30, 2020 and December~~ 31, ~~2019~~2021.

Major Customers and Suppliers

For the three months ended ~~September~~March 3031, ~~2020~~2021, ~~three~~one ~~customers~~customer accounted for approximately 6994% ~~(32%, 21% and 16%)~~ of the Company’s sales and for the three months ended ~~September~~March 3031, ~~2019~~2020, ~~one~~three ~~customer~~customers accounted for approximately 6468% (29%, 25% and 14%) of the Company’s sales.

As of March 31, 2021, one customer accounted for approximately 100% of the Company’s accounts receivable. As of December 31, 2020, one customer accounted for approximately 82% of the Company’s accounts receivable.

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For the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021, two ~~customers~~suppliers accounted for ~~approximately 36~~87% (2474% and 1213%) of the Company’s ~~sales~~product purchases and for the ~~nine~~three months ended ~~September~~March 3031, ~~2019~~2020, noone ~~customer~~supplier accounted for ~~more than 10~~100% of the Company’s ~~sales.~~product purchases.

As of September 30, 2020, one customer accounted for approximately 64% of the Company’s accounts receivable. As of December 31, 2019, three customers accounted for approximately 88% (67%, 11% and 10%) of the Company’s accounts receivable.

For the three months ended September 30, 2020, three suppliers accounted for 95% (46%, 28% and 21%) of the Company’s product purchases and for the three months ended September 30, 2019, three suppliers accounted for 100% (67%, 22% and 11%) of the Company’s product purchases.

For the nine months ended September 30, 2020, three suppliers accounted for 62% (31%, 19% and 12%) of the Company’s product purchases and for the nine months ended September 30, 2019, four suppliers accounted for approximately 70% (24%, 19%, 17% and 10%) of the Company’s product purchases.

Risk and Uncertainties

In March 2020, the World Health Organization declared the COVID-19 as a pandemic. Given the rapidly expanding nature of the COVID-19 pandemic, and because substantially all of the Company’s business operations and its major customers are concentrated in China and the United States, its business, results of operations, and financial condition could be materially adversely affected for the rest of fiscal year 2020 and beyond. The situation remains highly uncertain with respect to any further outbreak or resurgence of the COVID-19. 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. Our total revenues in October of 2020 were lower as compared to the same period of 2019. Although the Company expects to generate approximately $1,125,900 of revenues for the quarter ended December 31, 2020 for two OEM orders that are currently in process, there is no guarantee that our revenues will grow or remain at a similar level year over year for the remainder of 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 for credit losses 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, ~~Table~~“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 ~~Contents~~and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for the Company for annual and interim reporting periods beginning January 1, 2021. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. 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.

~~In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”.~~ The ~~amendments~~Company indoes ~~this~~not ~~Update~~believe ~~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~~recently ofissued ~~Topic~~but ~~740~~not byyet ~~clarifying and amending existing guidance. ASU 2019-12 is~~ effective ~~for~~accounting ~~the~~standards ~~Company for annual~~ and ~~interim reporting periods beginning January 1~~updates, ~~2021.~~if ~~Early~~currently ~~adoption of the amendments is permitted~~adopted, ~~including~~would ~~adoption in any interim period for public business entities for periods for which financial statements~~ have ~~not~~a ~~yet~~material ~~been~~effect ~~issued.~~on ~~An entity that elects to early adopt~~ the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company ~~is currently evaluating the impact of this new standard on Company~~’s unaudited condensed financial statements ~~and related disclosures~~.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.

Reclassifications

Certain prior ~~period~~year amounts have been reclassified to conform to the current ~~year~~period presentation for the three months ended March 31, 2021. These reclassifications have no effect on the ~~accompanying~~ statements of operations and cash flows.

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Note 4 – Inventories

Inventories consist of ~~the~~raw ~~following~~materials for production and finished goods available for resale, and can be categorized as:

	September 30, 2020		December 31, 2019
	March 31, 2021		December 31, 2020
	(Unaudited)
Raw materials	$	~~102~~113,~~836~~351	$	~~101~~51,~~102~~078
Work-in-progress		9,~~265~~282		68,~~776~~925
Finished goods		3020,~~864~~638		5720,~~866~~727
Total	$	142,965	$	165,744
Inventories	$	143,271	$	80,730

Note 5 – Property and Equipment

Property and equipment consist of the following:

	September 30, 2020			December 31, 2019
	March 31, 2021			December 31, 2020
	(Unaudited)
Computer equipment and software	$	114,953		$	114,953
Furniture and fixtures		26,686			26,686
Automobiles		123,902			~~179~~123,~~677~~902
Leasehold improvements		40,053			40,053
Machinery		420,000			420,000
Total		725,594			~~781~~725,~~369~~594
Less: accumulated depreciation and amortization		(~~309~~340,~~238~~563	)		(~~445~~324,~~369~~900	)
Property and equipment, net	$	~~416~~385,~~356~~031		$	~~336~~400,~~000~~694

Depreciation expense totaled $15,663 and $1012,~~763~~221 for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, respectively.

Depreciation expense totaled $43,546 and $44,124 for the nine months ended September 30, 2020 and 2019, respectively.

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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 ~~qualifying~~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 ~~has~~ filed for loan forgiveness and the application iswas ~~currently~~approved ~~under~~on ~~review~~January by8, ~~the lender~~2021. ~~There~~The ~~can~~PPP beloan nowas ~~assurance~~accounted ~~that~~for ~~the~~as ~~full~~a ~~amount~~government ofgrant and the ~~loan~~forgiveness ~~will~~of bethe ~~forgiven. The~~loan ~~estimated~~was ~~unforgiven~~recorded ~~amount~~in ofother ~~$10,000~~income isin ~~expected~~the toyear beended ~~due~~December ~~on April 16~~31, ~~2022~~2020.

~~Interest~~On ~~expense~~February ~~for~~2, 2021, the ~~three~~Company ~~and~~received ~~nine~~loan ~~months~~proceeds ~~ended~~of ~~September 30~~$137,792 ~~2020~~under ~~amounted~~the toU.S. Small Business Administration (“SBA”) second round of Paycheck Protection Program (“PPP”). The Company currently believes that its use of the loan proceeds of $25137,792 will meet the conditions for forgiveness of the loan and ~~$45~~intends ~~respectively~~to file for loan forgiveness during the twenty-four weeks covered period after receipt of loan proceeds. There can be no assurance that the full amount of the loan will be forgiven.

~~Small~~13 ~~Business~~Table ~~Administration~~of ~~Loans (“SBA”)~~Contents

OnLoan July 17, 2020, the Company received a loan in the amount of $150,000 from the 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~~Economic ~~and~~Injury ~~interest,~~Disaster ofLoan ~~$731 commences on July 17, 2021 payable over 30 years.~~ (“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, 2021 payable over 30 years.

The obligation is payable as follows:

Twelve months ended September 30,	Amount
Twelve months ended March 31,	Amount
	(Unaudited)
2021	$	1,822
2022	$	6,579
2022		8,745
2023		8,772
2023		8,745
2024		8,772
2024		8,745
2025		8,772
2025		8,745
2026		8,772
Thereafter		~~113~~212,~~198~~875
Total SBA loan payment		~~150~~254,~~000~~542
Current portion of SBA loan		(1,822	)
Interest		(100,792	)
SBA loan	$	148,178
Present value of SBA loan		153,750
Current portion of SBA loan		(3,750	)
Non-current portion of SBA loan	$	150,000

Interest expense for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 amounted to $1,~~156~~406.

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Due to third parties, interest bearing

The Company has borrowed money from third parties to fund operations. These third parties consist of the Chairman, Chief Executive and Financial Officer of the Company Mr. Dinghua Wang’s friends and the spouse of a former board member of the Company. These advances have a weighted average annual interest rates of 10% ~~and 6%~~ for ~~both~~ the three ~~and nine~~ months ended ~~September~~March 3031, 2020 ~~and 2019~~, ~~respectively,~~ are unsecured,. ~~and~~The ~~are~~full ~~due~~balance onof ~~demand~~the orloans ~~March~~of 30$1,500,000 ~~2024.~~was Astransferred ofto ~~September~~DW ~~30,~~California ~~2020~~Food ~~and~~Distribution ~~December~~LLC 31(“DW Food), ~~2019~~a California limited liability company that is owned by Mr. Dinghua Wang, the Company’s ~~owed~~Chairman $1and Chief Executive and Financial Officer,~~500,000~~ through a debt sale agreement in December 2020. This balance due to ~~these~~DW ~~third~~Food ~~parties,~~was subsequently paid with shares of ~~which~~the ~~$20,000~~Company’s iscommon ~~due~~stock on(See ~~March~~Note ~~20,~~7 ~~2024.~~– Related Party Transactions).

Interest expense for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020 for the above loans amounted to $~~37,606~~0 and $437,~~160~~198, respectively.

Interest expense for the nine months ended September 30, 2020 and 2019 for the above loans amounted to $112,002 and $4,755, respectively.

Due to third parties, non-interest bearing

The Company has borrowed money from third parties to fund operations. These third parties consist of the Chief Executive and Financial Officer’s friends and a former board member of the Company. These advances do not bear interest, are unsecured, and are due on demand or March 30, 2024. As of September 30, 2020 and December 31, 2019, the Company owed $100,000 to these third parties, of which $50,000 is due on March 20, 2024.

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. ~~As of September 30, 2020, $98,654 of loan payments remained outstanding, of which $16,435 is due within one year from September 30, 2020.~~

The obligation is payable as follows:

Twelve months ended September 30,	Amount
Twelve months ended March 31,	Amount
	(Unaudited)
2021	$	16,435
2022	$	16,813
2022		17,199
2023		17,594
2023		17,998
2024		18,411
2024		18,834
2025		19,266
2025		19,709
2026		18,446
Thereafter		8,479
Total long-term debt payment		90,530
Total long-term debt payment		98,654
Current portion of long-term debt		(15,382	)
Current portion of long-term debt		(16,435	)
Long term debt	$	75,148
Long term debt	$	82,219

Interest expense for the three months ended ~~September~~March 3031, 2021 and 2020 for the above loan amounted to $1,~~153~~061 and $409, respectively.

~~Interest~~14 ~~expense~~Table ~~for~~of ~~the nine months ended September 30, 2020 for the above loan amounted to $2,759.~~Contents

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Note 7 – Related Party Transactions

Due to shareholder, interest bearing

In January 2016, Mr. Dinghua Wang, a major shareholder, director, Chief Executive and Financial Officer of the Company, pledged certain of his personal assets and obtained a personal loan from which he provided funds for the operations of the Company. In consideration for the funds the Company received, the Company agreed to pay the interest on this loan on Mr. Wang’s behalf. The loan had interest of 9.99%. The loan was repaid in October 2019.

Interest expense for the three months ended September 30, 2020 and 2019 for the above loan amounted to $0 and $12,488.

Interest expense for the nine months ended September 30, 2020 and 2019 for the above loan amounted to $0 and $37,463.

Due to shareholder, non-interest bearing

From time to time, Mr. Dinghua Wang, ~~a major shareholder, director, Chief Executive and Financial Officer of the Company,~~ 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~~three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, advances totaled $224,~~726~~519 and $~~193~~8,~~272~~953, respectively, and repayments ~~to Mr. Wang~~ totaled $~~239~~17,~~116~~840 and $~~283~~10,~~075~~435, respectively. As of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, the balance due to Mr. Dinghua Wang, non-interest bearing, amounted to $242,~~221,665~~286 and $255,~~438~~607,~~055,~~ respectively~~, of which, $2,000,000 is due on March 20, 2024 with the remaining balance to be due on demand~~. This balance is unsecured.

Due to employee

The Company has borrowed money from Vickie Ho, Executive Vice President of the Company, to fund operations. These advances do not bear interest, are unsecured, and are due on March 20, 2024. As of September 30, 2020 and December 31, 2019, the Company owed $95,000 to such employee.

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 the Company’s Chief Executive and Financial Officer, Mr. Dinghua Wang. The advance ~~has~~had an annual interest rate of 10%, iswas unsecured and iswas due on March 20, 2024. AsThe full balance of ~~September~~the advances of $30,000 ~~2020~~was ~~and~~transferred ~~December~~to 31DW Food, ~~2019~~a related party, ~~the~~through ~~Company~~a ~~owed~~debt ~~$30,000~~sale agreement in December 2020. This balance due to ~~this~~DW ~~related~~Food ~~party~~was subsequently paid with shares of the Company’s common stock.

Interest expense for the three months ended ~~September~~March 3031, 2020 ~~and 2019~~ for the above ~~loans~~loan amounted to $~~756 and $756, respectively~~748.

Interest expense for the nine months ended September 30, 2020 and 2019 for the above loans amounted to $2,252 and $2,244, respectively.

Advances from related parties, non-interest bearing

The Company has borrowed money from certain related parties to fund operations. The related parties consist of the Chief Executive and Financial Officer’s immediate family members and relatives. These advances do not bear interest, are unsecured and are due on March 20, 2024. As of September 30, 2020 and December 31, 2019, the Company owed $518,839 to these related parties.

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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~~March 3031, ~~2020~~2021 and ~~2019~~2020:

	Three Months Ended September 30, 2020			Three Months Ended September 30, 2019			Nine Months Ended September 30, 2020			Nine Months Ended September 30, 2019
	Three months ended March 31, 2021			Three months ended March 31, 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		(2118.98	)%		(1618.54	)%		~~(21.2~~	)%		~~20,320.9~~	%
Permanent difference *		(69.12	)%		(119.56	)%		~~(6.8~~	)%		~~(20,348.9~~	)%
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. ~~The~~Net ~~cumulative net~~ operating loss ~~carryforwards that may be applied against future taxable income is approximately $8.7 million~~ for ~~federal~~the ~~and~~years ~~state~~ended ~~income~~2017 ~~taxes~~through as2020 of ~~September 30, 2020. The cumulative net operating loss carry forward that may be applied against future taxable income is~~ approximately $74.68 million ~~for federal and state as of December 31, 2019. Net operating loss for the years ended 2017 through 2019~~ will not expire but limited to 80% of income until utilized. Net operating loss for the years ended 2016 and prior of approximately $4.4 million will expire in the years 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.

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The components of the deferred tax assets are as follows:

	September 30, 2020			December 31, 2019
	March 31, 2021			December 31, 2020
	(Unaudited)
Allowance for doubtful accounts	$	19,754		$	11,476
Amortization of intangible assets	$	177,556		$	181,334
Amortization of intangible assets		185,112			196,445
Net operating losses		2,653,065			2,593,424
Net operating losses		2,445,678			2,125,102
Deferred tax assets		2,830,621			2,774,757
Total deferred tax assets		2,650,544			2,333,023
Valuation allowance		(2,830,621	)		(2,774,757	)
Valuation allowance		(2,650,544	)		(2,333,023	)
Deferred tax assets, net	$	-		$	-

Changes in the ~~value~~valuation allowance for deferred tax assets increased by $~~317~~55,~~521~~864 ~~from~~and $2109,~~333,023~~152 atfor ~~December~~the ~~31,~~three ~~2019~~months toended $2March 31,~~650,544~~ at2021 ~~September~~and 302020, ~~2020~~respectively. During the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021, the Company did not utilize any deferred tax assets from the prior period.

As of ~~September~~March 3031, ~~2020~~2021, federal tax returns filed for ~~2017~~2018, ~~2018~~2019 and ~~2019~~2020 remain subject to examination by the taxing authorities. As of ~~September~~March 3031, ~~2020~~2021, California tax returns filed for ~~2016,~~ 2017, 2018, 2019 and ~~2019~~2020 remain subject to examination by the taxing authorities

Note 9 – ~~Lease~~Leases

Operating ~~lease~~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 iswas 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. ~~The~~As of March 31, 2021, the remaining term of the lease is 32.4292 years.

17In ~~Table~~March 2020, the Company entered another new office lease agreement with a 3-year lease term starting in March 2020 and ending in February 2023. The Company recognized lease liabilities of ~~Contents~~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 March 31, 2021, the remaining term of the lease is 1.92 years

In March 2020, the Company entered another new office lease agreement with 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. The remaining term of the lease is 2.42 years

The Company also leases factory space on a month-to-month basis, which it classifies as an operating lease. 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~~March 3031, ~~2020~~2021 and ~~2019~~2020, lease expenses amounted to $70,~~287~~286 and $4553,~~286~~620, respectively, of which, $10,500 and $10,500 are short-term lease expenses, respectively.

~~For~~16 ~~the~~Table ~~nine months ended September 30, 2020 and 2019, lease expenses amounted to $194,193 and $112,668, respectively,~~ of ~~which, $31,500 and $21,000 are short-term lease expenses, respectively.~~ Contents

The four-year maturity of the Company’s lease obligations is presented below:

Twelve months ended September 30,	Operating lease amount
Twelve months ended March 31,	Amount
	(Unaudited)
2021	$	246,090
2022	$	239,800
2022		241,888
2023		235,654
2023		187,808
2024		135,608
2024		61,640
Total lease payments		611,062
Total lease payments		737,426
Less: interest		(37,903	)
Less: interest		(53,064	)
Present value of lease liabilities	$	573,159
Present value of lease liabilities	$	684,362

Note 10 – Commitments and Contingencies

Contingencies

Coronavirus (COVID-19)

InAt ~~January~~the ~~2020~~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 ~~2020~~2021, including but not limited to the material negative impact to the Company’s production and delivery, total revenues, slower collection of accounts ~~receivables~~receivable and additional ~~allowance~~allowances for doubtful accounts. The situation remains highly uncertain for any further outbreak or resurgence of ~~the~~ COVID-19. 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.

18In ~~Table~~addition, due to the COVID-19 going around the world and some of ~~Contents~~the Company’s raw materials are sourced from outside of the United States, the raw material supplies have been and might continue to be negatively impacted due to 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 shortage, delay of shipment, and increased price of raw materials for the Company’s products.

InBecause ~~addition,~~of ~~due to~~ the ofuncertainty surrounding COVID-19 ~~going around the world and some of the Company’s raw materials are sourced from outside of the United States~~, the ~~raw~~financial ~~material~~impact ~~supplies~~for ~~have~~2021 ~~been~~cannot ~~and might continue to~~ be ~~negatively~~reasonably ~~impacted~~estimated ~~due~~at tothis ~~increase of shipping costs and shortage of raw materials around the world~~time. ~~Consequently,~~ ~~COVID-19~~The ~~outbreak~~Company ~~has~~started ~~and may continue~~ to ~~materially~~recover ~~adversely~~its ~~affect~~operations ~~the~~as ~~Company’s~~total ~~business~~revenues ~~operations,~~for ~~financial~~the ~~condition~~three ~~and~~months ~~operating~~ended ~~results~~March ~~for 2020~~31, ~~including~~2021 ~~but~~were ~~not~~higher ~~limited~~as compared to the ~~shortage,~~same ~~delay~~period of ~~shipment, and increased price of raw materials for the Company’s productions~~2020.

Because of the uncertainty surrounding the COVID-19 outbreak, the financial impact cannot be reasonably estimated at this time. Our total revenues in October of 2020 were lower as compared to the same period of 2019. Although the Company expects to generate $1,125,900 of revenues for the quarter ended December 31, 2020 for two OEM orders that are currently in process, there is no guarantee that its total revenues will grow or remain at a similar level year over year for the remainder of 2020.

Note 11 – Equity

Private placements

During the ~~nine~~three months ended ~~September~~March 3031, 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 1162,~~400,~~000 shares of the Company’s common stock, ~~par value $0.001 per share,~~ at a purchase price of $1.00 per share for an aggregate offering price of $1162,~~400,~~000. The sales were completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended

InAs ~~connection~~of ~~with~~March ~~the private placements~~31, ~~the~~2021 ~~Company~~and ~~issued~~December an31, ~~aggregate~~2020, ~~of 12~~$1,~~000~~735,695 ~~shares~~were ofunpaid ~~Common~~and ~~Stock~~recognized toas ~~various~~stock ~~unrelated~~subscription ~~third-party~~receivables ~~individuals~~in ~~located outside~~ the ~~United~~accompanying ~~States~~statements asof ~~compensation~~changes ~~for~~in ~~introducing~~shareholders’ ~~private placement investors outside of the U~~deficit.S. toDuring the ~~Company.~~three ~~These~~months ~~shares~~ended ~~were~~March ~~valued at $12~~31,~~000,~~ ~~which~~2021 ~~was~~and ~~determined~~2020, ~~by using~~ the ~~associated~~Company ~~average~~received ~~private~~$0 ~~placement~~and ~~purchase price of~~ $~~1.00~~50,000 ~~per share. The value~~ of the ~~shares~~stock ~~was~~subscription ~~accounted~~receivables, ~~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~~respectively.

As17 ofTable ~~September 30, 2020 and December 31, 2019, $1,735,695 and $1,140,695, respectively, were unpaid and recognized as stock subscription receivables in the accompanying statements~~ of ~~changes in shareholders’ deficit. During the nine months ended September 30, 2020 and 2019, the Company received $50,000 and $89,305 of the stock subscription receivables, respectively.~~ Contents

Settlement of debt

On March 19, 2019, the Company entered into two Debt Repayment Agreements with two creditors of the Company (the “Creditors”), pursuant to which the Company agreed to repay $135,851 owed to the Creditors in the form of 295,480 shares of Company’s common stock at an average debt conversion rate of $0.46 per share (the “Debt Repayment”). The Debt Repayment was completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended. The closing price of the Company’s common stock on March 19, 2019 was $0.60 per share, which resulted in a loss on settlement of debt of $41,437.

On March 30, 2019, the Company entered into four Debt Repayment Agreements with four creditors of the Company (the “Creditors”), pursuant to which the Company agreed to repay $868,682 owed to the Creditors in the form of 976,364 shares of Company’s common stock at an average debt conversion rate of $0.89 per share (the “Debt Repayment”). The Debt Repayment was completed pursuant to the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended. The closing price of the Company’s common stock on March 30, 2019 was $0.60 per share, which resulted in a gain on settlement of debt of $282,863.

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Common stock issued for consulting services

On ~~August~~March 3013, ~~2018~~2019, the Company entered into ~~two~~a ~~advisory~~consulting ~~agreements~~agreement with ~~two~~Global ~~advisors~~Merchants ~~(the~~Union (“~~Financial Advisors~~GMU”), pursuant to which ~~the~~GMU ~~Company~~was ~~engaged the Financial Advisors~~ to provide ~~certain~~business and financial ~~advisory~~operation ~~services~~and ~~for~~planning aconsultation ~~service~~services ~~period~~to ofthe ~~six~~Company ~~months. As compensation~~ for ~~the~~consideration ~~services~~of $7,500 ~~the~~per ~~Company~~month ~~agreed~~and toa ~~issue~~one-time ~~the~~stock ~~Financial~~payment ~~Advisors an aggregate~~ of 671,~~916~~000,000 shares of ~~its~~ common stock, ~~par~~of ~~value~~the $0Company (the “Share Payment”).~~001.~~ ~~These~~The ~~shares~~cash ~~were~~payments ~~valued~~required atof $207,~~375,~~500 ~~determined~~per ~~using~~month ~~the~~in ~~closing price of~~ the ~~Company’s~~agreement ~~common~~were ~~stock~~cancelled onin ~~August~~May ~~30, 2018 of $0~~2019.30 ~~per~~However, ~~share.~~GMU ~~For~~was ~~the~~required ~~three~~to ~~months~~provide ~~ended~~services ~~September~~in ~~30,~~respect ~~2020~~to ~~and~~the ~~2019,~~stock ~~amortization~~compensation offor ~~deferred~~the ~~stock~~remaining ~~compensation~~term of ~~these~~the ~~shares~~agreement ~~amounted~~until toMarch $012, 2020. For the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, amortization of deferred ~~stock~~ compensation of these shares amounted to $0 and $6125,~~792~~000, respectively.

On January 23, 2019, the Company entered into a consulting agreement with Redfield Management Service Limited for business, finance and investor relations services. The consultant is due a monthly consulting fee of $7,000 and 50,000 shares, to be paid every three months. The term of the agreement was for one year. The service agreement was terminated at the end of April 2019 and the Company issued a total of 200,000 shares of its common stock. For the three months ended September 30, 2020 and 2019, amortization of deferred stock compensation of these shares amounted to $0. For the nine months ended September 30, 2020 and 2019, amortization of deferred stock compensation of these shares amounted to $0 and $120,000, respectively.

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 1,000,000 shares of common stock of the Company (the “Share Payment”). The term of the agreement was for one year but the cash consideration and payment obligation by the Company under this agreement was terminated in May 2019. For the three months ended September 30, 2020 and 2019, amortization of deferred compensation of these shares amounted to $0 and $150,000, respectively. For the nine months ended September 30, 2020 and 2019, amortization of deferred compensation of these shares amounted to $125,000 and $325,000, respectively.

Issuance of restricted common stock

On July 13, 2018, the Board of Directors of the Company approved the grant of 2,300,000 restricted stock units (the “RSUs”) to three employees of the Company, pursuant to the Merion, Inc. 2018 Omnibus Equity Plan. ~~Thirty~~The ~~percent of the~~ RSUs vested 30% on both July 13, 2019, ~~thirty~~and ~~percent of the RSUs vested on July 13,~~ 2020, and the remaining ~~forty~~40% ~~percent~~ of the RSUs will vest 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 $0.37 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~~March 3031, ~~2020~~2021 and ~~2019~~2020, amortization of deferred stock compensation of these shares amounted to $83,~~002~~934 and $6463,~~349~~650, respectively. ~~For the nine months ended September 30, 2020 and 2019, amortization of deferred stock compensation of these shares amounted to $210,302 and $190,950, respectively.~~ Deferred stock compensation of $~~265~~96,~~791~~058 and $~~476~~179,~~093~~992 has been recognized as a reduction of shareholders’ deficit as the services have not been performed as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively.

20The ~~Table~~following oftable ~~Contents~~summarizes unvested restricted common stock activity for the three months ended March 31, 2021 and for the year ended December 31, 2020:

The following table summarizes unvested restricted common stock activity for the nine months ended September 30, 2020 and for the year ended December 31, 2019:

	Number of shares		Weighted average grant-date fair value per share
Outstanding as of December 31, 2019		1,610,000	$	0.37
Granted		-		-
Vested		690,000		-
Forfeited		-		-
Outstanding as of December 31, 2020		920,000	$	0.37
Granted		-		-
Vested		-		-
Forfeited		-		-
Outstanding as of March 31, 2021		920,000	$	0.37

	Number of shares		Weighted average grant-date fair value per share
Outstanding as of December 31, 2018		2,300,000	$	0.37
Granted		-		-
Vested		690,000		-
Forfeited		-		-
Outstanding as of December 31, 2019		1,610,000	$	0.37
Granted		-		-
Vested		690,000		-
Forfeited		-		-
Outstanding as of September 30, 2020		920,000	$	0.37

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Note 12 – Subsequent Events

The Company evaluated all events and transactions that occurred after September 30, 2020 up through the date the Company issued these unaudited condensed financial statements on November 13, 2020.

On October 12, 2020, the board of directors of the Company approved an amendment (the “Amendment”) to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock of the Company from 200,000,000 to 1,000,000,000. Also, on October 12, 2020, the stockholder holding a majority of the Company’s outstanding shares of common stock approved the Amendment. The Amendment was filed with the Secretary of State for the State of Nevada on October 13, 2020, and has become effective on October 13, 2020.

On October 19, 2020, the Company entered into a Securities Purchase Agreement with Vickie Hienthuc Duong, a California resident (the “Purchaser”), pursuant to which the Company agreed to sell to the Purchaser in a private placement 300,000 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $1.00 per share for an aggregate offering price of $300,000. The sale was completed pursuant to the exemption from registration provided by Regulation D promulgated under the Securities Act of 1933, as amended. On October 19, 2020, the Company received gross proceeds of $150,000.

21 Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-Q and our financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 (the “~~2019~~2020 Form 10-K”).

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rates; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission. For more information, see our discussion of risk factors located at Part I, Item 1A of our ~~2019~~2020 Form 10-K.

Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

Our Company is a manufacturer and provider of health and nutritional supplements and personal care products. Currently, we are mainly selling our products over the ~~Internet~~internet directly to end-user customers through our websites, www.dailynu.com and www.merionus.com, and to wholesale distributors through phone and electronic communication. Our major customers of our nutritional and beauty products are located in the Asian market, predominantly in the People’s Republic of China. Our major customers of our OEM and packaging products are located in the United States.

Since June 2014, we have sold our products primarily over the ~~Internet~~internet directly to end-user customers and by phone/email orders directly to our wholesale distributors. Certain miscellaneous sales are made directly to customers who walk into the Company offices and customers who call the Company directly for products. We are now focusing on selling health and nutritional supplements and personal care products directly on the internet through our websites, www.dailynu.com and www.merionus.com. As of the date of filing of this report, we market ~~thirteen~~ten individual nutritional supplement products, three and five of which were introduced in 2018 and 2019 respectively, and one beauty product, which was also introduced in 2018, on our websites. We are no longer selling similar products of third parties on our websites.

In January 2018, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with SUSS Technology Corporation, a Nevada corporation (the “Seller”), pursuant to which the Seller agreed to sell to the Company substantially all of the assets associated with the Seller’s manufacture of dietary supplements (the “Asset Sale”) for an aggregate purchase price (the “Purchase Price”) of $1,000,000 and 1,000,000 shares of the Company’s common stock (the “Purchase Shares”) valued at $320,000. The Seller was one of our major suppliers during the year ended December 31, 2017. Upon purchasing these assets from the Seller, we started to manufacture some of the nutritional supplements that we sell. These assets meet all industry nutritional and dietary supplement manufacturing standards, including U.S. Food and Drug Administration and Good Manufacturing Practice compliance and Current Good Manufacturing Practice regulations. In addition to manufacturing the nutritional supplements that we sell, we produce hard capsules, tablets, solid beverages (sachet packaging), teabags, powder, granules, dietary supplements, softgel capsules and health foods from these assets for any potential new customers who need such products. These are the products that were added to our existing products, as a part of our OEM and packaging businesses.

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In January 2018, we introduced a new beauty product, Noir Naturel, a gentle formula for grey coverage from the first application into hair care.

In September 2018, we introduced three different types of natural aphrodisiac supplements, Viwooba (1-3) for men that may support kidney health, improve immunity, enhance physical fitness, eliminate fatigue, improve sexual desire and enhance body energy, strength and sexual ability.

In March 2019, we introduced 1) Lady-S, a female dietary supplement that may assist with weight loss, 2) Gold King, a nutritional supplement that may provide antioxidant support and liver health, 3) New Power, a nutritional supplement that may support heart health, and 4) Taibao, a nutritional supplement that may enhance physical performance and energy metabolism.

In December 2019, we introduced ReMage Power, a nutritional supplement that may provide anti-aging Nicotinamide adenine dinucleotide (NAD)+ support and promote energy & cell metabolism.

Principal Factors Affecting Our Financial Performance

We believe consumers have become more confident in ordering products like ours over the internet. However, the nutritional supplement and skin care products e-commerce markets have been, and continue to be, increasingly competitive and are rapidly evolving due to the reasons discussed below.

Barriers to entry are minimal in the nutritional supplement and skin care businesses, and current and new competitors can launch new websites at a relatively low cost. Many competitors in this area have greater financial, technical and marketing resources than we do. Continued advancement in technology, and increased access to that technology, is paving the way for growth in direct marketing. We also face competition for consumers from retailers, duty-free retailers, specialty stores, department stores and specialty and general merchandise catalogs, many of which have greater financial and marketing resources than we have. Notwithstanding the foregoing, we believe that we are well-positioned within the Asian consumer market with our current plan of supplying American merchandise to consumers in Asia. There can be no assurance that we will maintain or increase our competitive position or that we will continue to provide only American-made merchandise.

~~Our~~As ~~products~~COVID-19 ~~are~~has ~~sensitive~~limited tothe ~~business~~global travels and ~~personal~~import ~~discretionary spending levels~~goods, ~~and~~we ~~demand~~moved ~~tends~~our tofocus ~~decline~~on orlocal ~~grow~~OEM ~~more~~and ~~slowly~~packaging ~~during~~business ~~economic~~and ~~downturns,~~it ~~including~~became ~~downturns in any of~~ our major ~~markets.~~revenue ~~The~~source ~~global~~in ~~economy~~fiscal isyear ~~currently~~2021. ~~undergoing~~The aloss ~~period~~ of ~~downturn~~one ~~now~~or ~~due~~more toof ~~COVID-19,~~our ~~and the future economic environment continues to remain uncertain~~U.S. ~~This~~OEM ~~has~~and ~~led,~~packaging ~~and~~customers could ~~further~~result ~~lead,~~in toa ~~reduced~~potential ~~consumer~~loss ~~spending, which may include spending on nutritional and beauty products and other discretionary items. The increase~~ of ~~trade~~sales ~~tensions between US~~ and ~~China and the spread of COVID-19~~ have ~~and~~a ~~might continue to have~~ negative ~~impacts~~effect on our ~~business.~~operations ~~The~~if ~~reduced~~we ~~consumer~~cannot ~~spending~~find ~~may~~one ~~force~~or usmore ~~and our competitors to lower prices~~substitutes. ~~These conditions may adversely affect our revenues and results of operations.~~

Our products are sensitive to business and personal discretionary spending levels, and demand tends to decline or grow more slowly during economic downturns, including downturns in any of our major markets. The global economy is currently undergoing a period of downturn due to COVID-19, and the future economic environment continues to remain uncertain. This has led, and could further lead, to reduced consumer spending, which may include spending on nutritional and beauty products and other discretionary items. The increase of trade tensions between US and China and the spread of COVID-19 have and might continue to have negative impacts on our business. The reduced consumer spending may force us and our competitors to lower prices. These conditions may adversely affect our revenues and results of operations.

Coronavirus (COVID-19)

InAt ~~January~~the ~~2020~~end of 2019, there was an outbreak of a novel strain of coronavirus (COVID-19) in China, which has spread rapidly to many parts of the world, including the U.S. In March 2020, the World Health Organization declared COVID-19 a pandemic. The pandemic has resulted in quarantines, travel restrictions, and the temporary closure of office buildings and facilities in China and in the U.S. The ~~President of the United States declared the COVID-19 pandemic a national emergency, invoking powers under the Stafford Act, the legislation that directs federal emergency disaster response. The~~ economic impact of the coronavirus or COVID-19 in both China and the U.S have significantly impacted our business and resulting in lesser demand from our customers.

2320 Table of Contents

Our headquarters are located in California and were closed from March 19, 2020 to June 9, 2020. Due to the ~~recent~~ surge of ~~new~~ Covid-19 cases in California, our offices were closed again from July 16, 2020 to September 16, 2020 and our employees worked remotely from home during these periods. Our offices ~~are~~have ~~reopen~~been reopened since September 16, 2020. Our manufacturing facility is located in Nevada and partially suspended its operations from March 23, 2020 to April 1, 2020 due to lack of raw materials and it has been operating normally since April 1, 2020. Substantially all of our product sales revenues are generated in China and all of our OEM and packaging revenues are generated in the U.S. Consequently, our results of operations have been and will continue be materially adversely affected, to the extent that COVID-19 harms the Chinese and U.S. economy. Any potential impact to our results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of COVID-19, efficacy and distribution of COVID-19 vaccines and the actions taken by government authorities and other entities in China and U.S. to contain COVID-19 or treat its impact, almost all of which are beyond our control.

Although we expect that our health supplement products and our OEM/packaging services will still be in demand due to awareness of the importance of health growing along with the realities of COVID-19, the global economy has been and may continue to be negatively affected by COVID-19 and there is continued uncertainty about the duration and intensity of the impact of COVID-19. Many of our customers are individuals and small and medium-sized enterprises (SMEs), which may not have strong cash flows or be well capitalized, and may be vulnerable to a pandemic outbreak and slowing macroeconomic conditions. If the SMEs cannot weather ~~the~~ COVID-19 pandemic and the resulting economic impact, or cannot resume business as usual after a prolonged outbreak, our revenues and business operations may be materially and adversely impacted.

While the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing the Company’s ability to access capital, which could negatively affect the Company’s liquidity.

Substantially all of our revenues are concentrated in China and the United States. Consequently, the COVID-19 outbreak has and may continue to materially adversely affect our business operations, financial condition and operating results ~~for the remainder of 2020~~, including but not limited to the material negative impact to our production and delivery of our products, revenues and collection of accounts receivable and the additional allowance for doubtful accounts. The situation remains highly uncertain for any further outbreak or resurgence of the COVID-19 and the efficacy and distribution of COVID-19 vaccines. 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 for the ~~remainder~~remaining year of ~~2020 and beyond~~2021.

In addition, due to the of COVID-19 going around the world and some of the Company’s raw materials sourced from outside of the United States, the raw material supplies have been and might continue to be negatively impacted ~~and~~ due to ~~increase~~increased of shipping costs and shortage of raw materials around the world. Consequently, the COVID-19 outbreak has and may continue to materially adversely affect the Company’s business operations, financial condition and operating results for ~~2020~~2021, including but not limited to the shortage of raw materials, delay of shipment, and increased price of raw materials for the Company’s ~~productions~~products.

Because of the uncertainty surrounding ~~the~~ COVID-19 ~~outbreak~~, the ~~overall~~ financial impact for ~~2020~~2021 cannot be reasonably estimated at this time. ~~Our~~The ~~total~~Company ~~revenues~~started into ~~October~~recover ~~of 2020 were lower~~ as ~~compared~~total ~~to the same period of 2019. Although we expect to generate $1,125,900 of~~ revenues for the ~~quarter~~three months ended ~~December~~March 31, ~~2020~~2021 ~~for~~were ~~two~~higher ~~OEM~~as ~~orders~~compared ~~that~~to ~~are currently in process, there is no guarantee that our total revenues will grow or remain at a similar level year over year for~~ the ~~remainder~~same period of 2020.

Looking ahead, we understand that these unprecedented times will ~~bring~~have a financial impact to some of our customers, and might potentially cause loss of certain existing customers. Our plan has been to promote the awareness of the importance of health and our health supplement products, which in ~~term~~turn might build sales with new customers to offset the loss of any of our existing customers.

24As ~~Table~~COVID-19 continues to impact global business, the U.S. government established relief programs for small business such as the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan program (“EIDL”). We received a PPP loan of ~~Contents~~$131,100 and EIDL loan of $150,000 to help fund our operation in 2020. The PPP loan was fully forgiven by the SBA administration in January 2021.

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”) to help fund our operations in 2021.

Table of Contents

Results of Operations

Comparison of the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020

	For the three months ended September 30,
	For the three months ended March 31,
										Percentage
	2020			2019			Change			Change
	2021			2020			Change			Change
Total sales	$	41435,~~697~~362		$	9765,~~811~~988		$	~~(56~~369,~~114~~374	)		~~(57~~559.48	)%
Total cost of sales		56237,~~656~~524			4847,~~947~~689			7189,~~709~~835			15398.71	%
Gross profit		~~(14~~197,~~959~~838	)		4818,~~864~~299			~~(63~~179,~~823~~539	)		~~(130~~981.61	)%
Operating expenses
Selling		1046,~~456~~103			1813,~~531~~431			(832,~~075~~672	)		~~(43~~243.63	)%
General and administrative		~~300~~366,~~470~~606			~~350~~383,~~301~~608			(4917,~~831~~002	)		(144.24	)%
Stock compensation expense		83,~~002~~934			~~214~~188,~~350~~650			(~~131~~104,~~348~~716	)		(6155.35	)%
Total operating expenses		393,928			583,182			(189,254	)		(32.5	)%
Gain on disposal of equipment		-			(16,000	)		16,000			(100.0	)%
Loss from operations		(408,887	)		(534,318	)		(125,431	)		(23.5	)%
Total operating expenses		496,643			569,689			(73,046	)		(12.8	)%
Other expense, net		(33,734	)		(21,756	)		11,978			55.1	%
Loss from operations		(298,805	)		(551,390	)		252,585			(45.8	)%
Net loss	$	(442,621	)	$	(556,074	)	$	(113,453	)		(20.4	)%
Other income (expense), net		1,165			(41,380	)		42,545			(102.8	)%
Provision for income taxes		-			-			-			-
Net (loss)	$	(297,640	)	$	(592,770	)	$	295,130			(49.8	)%

Total sales ~~decreased~~increased by approximately $56369,000, or 57559.48%, from approximately $9866,000 in the three months ended ~~September~~March 3031, ~~2019~~2020 to approximately $42435,000 in the three months ended ~~September~~March 3031, ~~2020~~2021. The ~~decrease~~increase of sales was mainly due to ~~lesser demand from our customers resulting from~~ the ~~negative~~OEM ~~economic~~contracts ~~impact~~that of the ~~coronavirus or COVID-19 in both China and the U.S. In May 2020, the~~ Company ~~entered~~signed ~~into an OEM order and originally expected to recognize $920,000 of revenue~~ in ~~August~~ 2020. ~~The order was delayed due to product labeling issues~~ and iswe ~~expected~~began to befulfill ~~completed~~some ~~in December 2020. The Company expects to generate a total~~ of ~~$1,125,900~~those oforders ~~revenues~~during ~~for~~ the first quarter ~~ended~~of ~~December 31, 2020 for two OEM orders that are currently in process~~2021.

The cost of sales increased by approximately $8190,000, or 15398.71%, from approximately $4948,000 in the three months ended ~~September~~March 3031, ~~2019~~2020 to approximately $57238,000 in the three months ended ~~September~~March 3031, ~~2020~~2021. The ~~major reason for the~~ increase of cost of sales was ~~due~~in toline ~~the increase of idle capacity costs~~ with ~~less~~our ~~productions~~revenue as we ~~were~~fulfilled ~~operating~~two ~~under~~large ~~capability~~OEM orders during the ~~three~~first ~~months~~quarter ~~ended September 30, 2020, due to the outbreak and economic impact~~ of ~~COVID-19 pandemic~~2021. During the three months September 30, 2019, we have more productions on our self-manufactured products which were remained unsold and capitalized into our inventories as of September 30, 2019 and resulted in lesser cost of sales.

Our overall gross margin ~~(loss)~~ percentage ~~decreased~~increased from approximately 5027.07% in the three months ended ~~September~~March 3031, ~~2019~~2020 to approximately ~~a negative (35~~45.9)4% in the three months ended ~~September~~March 3031, ~~2020~~2021, mainly due to the ~~decrease~~increase of sales in the three months ended ~~September~~March 3031, ~~2020~~2021 as compared to the same period in ~~2019~~2020. ~~while~~We wehad ~~were~~more ~~still~~sales ~~incurring~~to ~~significant~~absorb ~~overhead~~our ~~cost~~fixed inproduction costs during the first quarter of 2021 as our ~~factory~~products ~~which~~normally ~~were~~have ~~underutilized~~high ~~creating~~gross margins. On the other hand, we had more idle capacity. cost during the same period in 2020 which had driven down our gross margin.

Our product sales decreased by $20,016, or 95.4% from $20,977 for the three months ended March 31, 2020 to $961 for the same period in 2021. The gross margin percentage ~~decreased~~increased from approximately 6168.89% in the three months ended ~~September~~March 3031, ~~2019~~2020 to approximately 890.47% in the three months ended ~~September~~March 3031, ~~2020~~2021. The ~~main~~ reason for the ~~decrease~~increase of product sales gross margin percentage was due to the ~~combination~~sale of ~~reduced~~products ~~sales~~at ~~and~~retail ~~our~~price ~~periodic~~without ~~inventory~~any ~~count~~wholesale todiscounts ~~account~~in ~~for~~the ~~inventory~~three ~~loss~~months onended March 31, 2021 while we offered some wholesales and bundle discounts to our ~~raw~~customers ~~materials~~ during the ~~three~~same ~~months~~period ~~ended~~in ~~September 30,~~ 2020.

Our OEM and packaging sales increased by $389,390, or 865.1% from $45,011 for the three months ended March 31, 2020 to $434,401 for the same period in 2021. The gross margin percentage decreased from approximately 5279.30% in the three months ended ~~September~~March 3031, ~~2019~~2020 to approximately 1448.61% in the three months ended ~~September~~March 3031, ~~2020~~2021. For the three months ended ~~September~~March 3031, ~~2020~~2021, we had incurred more manufacturing overhead costs for our OEM and packaging sales with additional labor hours being allocated to such production due to ~~more~~increased production procedures ~~for~~as ~~certain~~compared ~~products~~to the same period in 2020. In addition, the cost of raw materials of the two large OEM orders required higher material usage in the first quarter of 2021 as compared to the OEM and packaging products sold in the same period in ~~2019~~2020. As a result, our OEM and packaging sales gross margin percentage decreased by 3730.79% during the three months ended ~~September~~March 3031, ~~2020~~2021 as compared to the same period in ~~2019~~2020.

~~Selling~~22 ~~expenses~~Table ~~decreased from approximately $19,000 in the three months ended September 30, 2019 to approximately $10,000 in the three months ended September 30, 2020. The decrease~~ of ~~approximately $8,000, or 43.6%, was mainly due to the decrease of approximately $6,000 of marketing, advertising and promotion expenses and the decrease of approximately $2,000 of shipping expenses.~~ Contents

~~General~~Selling ~~and administrative (“G&A”)~~ expenses ~~decreased~~increased ~~by approximately $50,000~~ from approximately $~~350~~13,000 in the three months ended ~~September~~March 3031, ~~2019~~2020 to approximately $~~300~~46,000 in the three months ended ~~September~~March 3031, ~~2020~~2021. The ~~decrease~~increase of approximately $33,000, or 243.3%, was mainly ~~attributable~~due to the ~~decrease~~increase of approximately $5930,000 of ~~payroll~~packing ~~and benefit~~ expenses, and the ~~decrease~~increase of approximately $1012,000 of ~~automobile~~shipping expenses ~~and~~as ~~the~~we ~~decrease~~have ofmore ~~approximately~~OEM ~~$6,000~~orders ofthat ~~other~~requires ~~miscellaneous~~packing ~~G&A~~and ~~expenses~~shipping services, offset by the ~~increase~~decrease of approximately $259,000 of ~~rent~~advertising, ~~expense~~marketing and training expenses.

25General ~~Table~~and administrative (“G&A”) expenses decreased by approximately $17,000 from approximately $384,000 in the three months ended March 31, 2020 to approximately $367,000 in the three months ended March 31, 2021. The decrease was mainly attributable to the decrease of ~~Contents~~approximately $30,000 of payroll and benefit expenses as we did not replace our employees after their resignations and the decrease of approximately $17,000 of bad debt expenses, offset by the increase of approximately $17,000 of rent expense with our training center in New York, the increase of approximately $7,000 of professional fees and the increase of approximately $6,000 of other miscellaneous G&A expenses.

Stock compensation expenses decreased by approximately $~~131~~105,000 during the three months ended ~~September~~March 3031, ~~2020~~2021 compared to the same period in ~~2019~~2020. In March 2019, we issued 1,000,000 shares of our common stock to an advisor to provide certain business and financial operation and planning consultation services, and with amortization expenses of approximately $~~150~~125,000, and such services were completed in March 2020 and we no longer incurred such costs in the three months ended ~~September~~March 3031, ~~2020~~2021. Approximately $8384,000 and $64,000, ~~are~~ related to the amortization of the value of 2,300,000 shares of restricted common stock to three employees for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, respectively, which all have a vesting period of three years.

~~Other~~During ~~expense increased by approximately $12,000 from approximately $22,000 in~~ the three months ended ~~September~~March 3031, ~~2019 to approximately $34,000 in the three months ended September 30,~~ 2020, ~~mainly~~we ~~due~~traded toin ~~the~~one ~~increase~~ of ~~interest~~our ~~expenses~~vehicles ofwhich ~~approximately~~resulted ~~$19,000 incurred from the third party interest bearing loans that we obtained~~ in ~~August~~a ~~and~~gain ~~September~~ of ~~2019~~$16,000.

~~Net~~Other ~~loss~~income ~~decreased~~(expense) increased by approximately $~~113~~42,000 from an expense of approximately $~~556~~(41,000) in the three months ended ~~September~~March 3031, ~~2019~~2020 to income of approximately $~~443~~1,000 in the three months ended ~~September~~March 3031, ~~2020~~2021, mainly due to the ~~reasons~~decrease ~~discussed~~of ~~above~~interest expenses of approximately $38,000 incurred from the third and related parties interest bearing loans that were transferred to DW Food, a related party, through a debt sale agreement in December 2020 and subsequently paid with shares of the Company’s common stock in December 2020.

~~Comparison~~Net ofloss decreased by approximately $295,000 from approximately $593,000 in the ~~nine~~three months ended ~~September~~March 3031, 2020 ~~and~~to ~~2019~~approximately $298,000 in the three months ended March 31, 2021, mainly due to the reasons discussed above.

	For the nine months ended September 30,
										Percentage
	2020			2019			Change			Change
Total sales	$	136,809		$	1,723,837		$	(1,587,028	)		(92.1	)%
Total cost of sales		177,325			163,485			13,840			8.5	%
Gross profit		(40,516	)		1,560,352			(1,600,868	)		(102.6	)%
Operating expenses
Selling		41,629			58,001			(16,372	)		(28.2	)%
General and administrative		993,266			1,092,961			(99,695	)		(9.1	)%
Stock compensation expense		335,302			642,742			(307,440	)		(47.8	)%
Gain on disposal of equipment		(16,000	)		-			(16,000	)		(100.0	)%
Total operating expenses		1,354,197			1,793,704			(439,507	)		(24.5	)%
Loss from operations		(1,394,713	)		(233,352	)		1,161,361			497.7	%
Other (expense) income, net		(106,797	)		232,409			(339,206	)		(146.0	)%
Net loss	$	(1,501,510	)	$	(943	)	$	1,500,567			159,126.9	%

Total sales decreased by approximately $1,587,000, or 92.1%, from approximately $1,724,000 in the nine months ended September 30, 2019 to approximately $137,000 in the nine months ended September 30, 2020. The decrease of sales was mainly due to lesser demand from our customers resulting from the negative economic impact of the coronavirus or COVID-19 in both China and the U.S. In May 2020, the Company entered into an OEM order and originally expected to recognize $920,000 of revenue in August 2020. The order was delayed due to product labeling issues and is expected to be completed in December 2020. The Company expects to generate a total of $1,125,900 of revenues for the quarter ended December 31, 2020 for two OEM orders that are currently in process.

The cost of sales increased by approximately $14,000, or 8.5%, from approximately $163,000 in the nine months ended September 30, 2019 to approximately $177,000 in the nine months ended September 30, 2020. The main reason for the increase was due to the increase of idle capacity costs as we were operating under capability during the nine months ended September 30, 2020, due to the negative impact of COVID-19 pandemic.

Our overall gross margin (loss) percentage decreased from approximately 90.5% in the nine months ended September 30, 2019 to approximately (29.6)% in the nine months ended September 30, 2020, mainly due to the decrease of sales in the nine months ended September 30, 2020 as compared to the same period in 2019 while we were still incurring significant overhead cost in our factory which we operated under idle capacity. The decrease in overall gross margin percentage was also due to our periodic inventory count to account for inventory loss on our raw materials.

26 Table of Contents

Our product sales gross margin percentage decreased from approximately 96.5% in the nine months ended September 30, 2019 to approximately 40.0% in the nine months ended September 30, 2020. The main reason for the decrease of sales gross margin percentage was due to the increase of sales in our ReMage Power product that we introduced in December 2019 during the nine months ended September 30, 2020 as compared to the same period in 2019. The ingredients that we used to manufacture our ReMage Power product are more expensive which result in a higher manufacturing unit cost and less gross margin percentage as compared to other products, such as OPC, Cell Power, Viwooba (1-3), Lady-S, Gold King, New Power and Tabiao with an average of 96.5% of gross margin percentage, that we sold during the nine months ended September 30, 2019, which have a lower unit cost and higher gross margin percentage than ReMage Power. In addition, the decrease of sales gross margin percentage of product sales was also due to our periodic inventory count to account for inventory loss on our raw materials during the nine months ended September 30, 2020 as compared to the same period in 2019.

Our OEM and packaging sales gross margin percentage decreased from approximately 53.7% in the nine months ended September 30, 2019 to approximately 41.7% in the nine months ended September 30, 2020. For the nine months ended September 30, 2020, we had incurred more manufacturing overhead costs for our OEM and packaging sales with additional labor hours being allocated to such production due to more production procedures for certain products as compared to the same period in 2019. As a result, our OEM and packaging sales gross margin percentage decreased by 12.0% during the nine months ended September 30, 2020 as compared to the same period in 2019.

Selling expenses decreased from approximately $58,000 in the nine months ended September 30, 2019 to approximately $42,000 in the nine months ended September 30, 2020. The decrease of approximately $16,000, or 28.2%, was mainly due to the decrease of approximately $16,000 of shipping expenses.

General and administrative (“G&A”) expenses decreased by approximately $100,000 from approximately $1,093,000 in the nine months ended September 30, 2019 to approximately $993,000 in the nine months ended September 30, 2020. The decrease was mainly attributable to the decrease of approximately $42,000 of professional expenses, such as attorney fees, auditor fees and consulting fees, the decrease of approximately $95,000 of payroll and benefit expenses and the decrease of approximately $38,000 of other miscellaneous G&A expenses, offset by the increase of approximately $75,000 of rent expense.

Stock compensation expenses decreased by approximately $307,000 during the nine months ended September 30, 2020 compared to the same period in 2019. In March 2019, we issued 1,000,000 shares of our common stock to an advisor to provide certain business and financial operation and planning consultation services, and amortized such cost, which was $125,000 and $445,000 during the nine months ended September 30, 2020 and 2019, respectively. We also issued shares of our common stock to other financial advisors which resulted in $7,000 of stock compensation expense during the nine months ended September 30, 2019. Approximately $210,000 and $191,000, related to the amortization of the value of 2,300,000 shares of restricted common stock to three employees for the nine months ended September 30, 2020 and 2019, respectively, which all have a vesting period of three years.

During the nine months ended September 30, 2020, we traded in one of our vehicles which resulted in a gain of $16,000.

Other income decreased by approximately $339,000 from approximately $232,000 of other income in the nine months ended September 30, 2019 to approximately $107,000 of other expense in the nine months ended September 30, 2020, mainly due to the decrease of approximately $241,000 of gain on settlement of debt in which we issued stock with a fair value of approximately $763,000 in exchange for the settlement of debt of approximately $1.0 million during the nine months ended September 30, 2019. We did not enter into such transactions during the same period in 2020. The decrease of other income was also due to the increase of interest expenses of approximately $73,000 incurred from the third party interest bearing loans that we obtained in August and September of 2019.

Net loss increased by approximately $1.5 million from approximately $900 in the nine months ended September 30, 2019 to approximately $1.5 million in the nine months ended September 30, 2020, mainly due to the reasons discussed above.

27 Table of Contents

Liquidity and Capital Resources

As of ~~September~~March 3031, ~~2020~~2021, we had a cash balance of approximately $696,000, compared to a cash balance of approximately $910,000 at December 31, ~~2019~~2020.

In assessing our liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations. Other than operating expenses and current liabilities of approximately $31.80 million, the Company does not have significant cash commitments. Cash requirements include cash needed for purchase of inventory, payroll, payroll taxes, rent, and other operating expenses. However, in response to the liquidity factors described above, the Company has continued to find ways to reduce its operating expenses. In addition, should our Company need funds, our principal shareholder and Chief Executive and Financial Officer Mr. Dinghua Wang may lend additional money to the Company from time to time to the extent he is in a position and willing to do so. No assurance can be provided that he will continue to lend funds to the Company in the future.

Management has concluded under U.S. GAAP that there is substantial doubt about our ability to continue as a going concern as a result of our lack of significant revenue and ~~negative~~sufficient working capital. If we are unable to generate significant revenue or secure ~~additional~~ financing, we may be required to cease or limit our operations. Our financial statements do not include adjustments that might result from the outcome of this uncertainty.

For the nine months ended September 30, 2020, cash used in operating activities amounted to approximately $801,000 as compared to approximately $1,061,000 used in operating activities in the same period in 2019. Cash used in operating activities for the nine months ended September 30, 2020 was primarily the result of our $1.5 million net loss, non-cash transaction of approximately $16,000 from gain on disposal of equipment, the increase of prepaid expense of approximately $193,000, the decrease of accounts payable and accrued expenses of approximately $26,000 and the payment of lease liabilities of approximately $126,000 as we paid for our lease obligations when they become due. This amount was partially offset by the non-cash expense of approximately $335,000 in stock based compensation, approximately $44,000 of depreciation expense, approximately $138,000 in amortization of operating leases right-of-use assets, approximately $30,000 of bad debt expense, the decrease of inventories of approximately $23~~,000~~ ~~and~~Table ~~increase~~ of ~~deferred revenue of approximately $497,000.~~ Contents

For the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021, ~~financing~~cash used in operating activities ~~provided~~amounted to approximately $~~860~~124,000 as compared to approximately $1187,~~510,~~000 ~~during~~used ~~the~~in ~~nine~~operating ~~months~~activities ~~ended~~in ~~September~~the ~~30,~~same ~~2019.~~period ~~Net~~in ~~cash~~2020. ~~received~~Cash used in operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 ~~includes~~was primarily the result of our approximately $~~805~~298,000 ~~from~~net loss, the ~~issuance~~increase of ~~common~~inventories ~~stock~~of ~~and~~approximately ~~collection~~$67,000 ofto ~~our~~secure ~~stock~~inventories ~~subscriptions~~for ~~receivable,~~our ~~approximately~~OEM ~~$10~~orders,~~000~~ ~~from~~the adecrease ~~third~~of ~~party~~accounts ~~loan,~~payable and accrued expenses of approximately $~~281~~20,000 ~~from~~and ~~SBA~~the ~~loans~~payment ~~that~~of welease ~~are~~liabilities ~~expected to have a forgiveness~~ of approximately $~~121~~60,000. ~~These~~This ~~amounts~~amount ~~were~~was partially offset by ~~our~~the ~~net~~non-cash ~~repayments~~expense toof ~~our~~approximately ~~principal~~$84,000 ~~shareholder~~in ~~and~~stock ~~Chief~~based ~~Executive~~compensation, ~~and~~approximately ~~Financial~~$16,000 ~~Officer~~ of depreciation expenses and approximately $~~216~~53,000, ~~repayment~~in amortization of ~~third~~operating ~~party~~leases ~~loan~~right-of-use assets, the decrease of prepaid expenses approximately $10152,000 ~~and~~as ~~principal~~we ~~payments~~realized ofour prepaid inventory purchases to fulfill our ~~long-term~~OEM ~~debt~~orders and the increase of ~~approximately~~deferred revenue of $912,000.

For the three months ended March 31, 2021, financing activities provided approximately $120,000 as compared to approximately $187,000 during the three months ended March 31, 2020. Net cash received in the three months ended March 31, 2021 includes approximately $138,000 from the second round of the SBA PPP loan, and approximately $5,000 from a loan from our principal shareholder and Chief Executive and Financial Officer, Mr. Dinghua Wang. These amounts were partially offset by our repayment of approximately $18,000 to our principal shareholder and Chief Executive and Financial Officer, Mr. Dinghua Wang and approximately $4,000 of principal payments of long-term debt.

The material terms of the loans from our principal shareholder and Chief Executive and Financial Officer, Mr. Dinghua Wang, certain related parties and certain unaffiliated third parties are set forth in Note 6 and Note 7 of the accompanying 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 our stockholders.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company has established disclosure controls and procedures to ensure that information required to be disclosed in this quarterly report on Form 10-Q was properly recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. The Company’s controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers to allow timely decisions regarding required disclosure.

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We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at ~~September~~March 3031,~~2020~~ 2021 based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer/Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer/Chief Financial Officer concluded that, at ~~September~~March 3031, ~~2020~~2021, our disclosure controls and procedures are not effective due to the following material weakness that we have identified:

Lack of Accounting and Finance Expertise – Our current accounting staff is relatively small, and we do not have the required infrastructure of meeting the higher demands of being a U.S. public company. This material weakness also relates to a lack of personnel with expertise in preparing financial statements in accordance with U.S. GAAP.

We have taken certain actions to remediate the material weakness related to our lack of U.S. GAAP experience. We have engaged an outside CPA firm with U.S. GAAP knowledge and SEC reporting experience to supplement our current internal accounting personnel and assist us in the preparation of our financial statements to ensure that our financial statements are prepared in accordance with U.S. GAAP.

The Company’s operations are relatively small and uncomplicated, and as our operations grow and become more complex, we intend to hire additional personnel in financial reporting and other areas. However, there can be no assurance of when, if ever, we will be able to remediate the identified material weaknesses.

Changes in Internal Controls over Financial Reporting

Except as disclosed above, there have been no changes in the Company’s internal controls over financial reporting that occurred during the ~~Company’s~~period ~~last~~covered ~~fiscal~~by ~~quarter~~this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently a party to any material legal proceedings, and to our knowledge none is threatened. There can be no assurance that future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

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Item 6. Exhibits.

(a) Exhibits.

The following exhibits are filed herewith and this list is intended to constitute the exhibit index.

Exhibit No.		Document Description

31.1		CERTIFICATION of CEO/CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

32.1*		CERTIFICATION of CEO/CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 101		Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows, and (iv) the Notes to the Financial Statements.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

_______________

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

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SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Merion, Inc.

Title	Name	Date	Signature
President, CEO and CFO	Ding Hua Wang	November 12, 2020	/s/ Ding Hua Wang
Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer)	Ding Hua Wang	May 14, 2021	/s/ Ding Hua Wang

~~Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.~~28

SIGNATURE	NAME	TITLE	DATE
/s/ Ding Hua Wang	Ding Hua Wang	President, Chief Executive Officer,	November 12, 2020
		Principal Financial and
		Principal Accounting Officer, Director

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