Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions; changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company's access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally; legal and regulatory developments, such as regulatory actions affecting environmental activities; the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes; and labor disputes, which may lead to increased costs or disruption of operations.

This list of factors that may affect future performance and the accuracy of forward-looking statements are illustrative, but by no means exhaustive.

Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

Business Overview

We are a health and wellness company that develops, markets, promotes and distributes a variety of customized health and wellness care products and services, including supplements, healthy snacks, meal replacements, skincare products, and nutritional consultation services to consumers in China and Hong Kong. We work with certain licensed healthcare food factories to develop and manufacture products and services that are distributed conventionally through sales agents and also through a network of e-commerce and social media platforms.

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

While recent trade tensions and high tariffs pose potential risks to our supply chain and pricing, we are actively monitoring the situation and implementing strategies such as supplier diversification, local sourcing, and logistics optimization to mitigate these impacts. Committed to innovation and customer well-being, we strive to provide holistic, accessible, and customized wellness solutions that empower our customers to lead healthier lives despite the evolving global trade environment.

We conduct our business through our wholly owned subsidiary Guangzhou Xiao Xiang Health Industry Company Limited, a limited liability company organized under the laws of China on March 8, 2017, and Alpha Wellness (HK) Limited, a limited liability company organized under the laws of Hong Kong on April 24, 2019. Elite Creation Group, a limited liability company formed under the laws of the British Virgin Islands formed on September 5, 2018, is holding companies without operations.

RESULTS OF OPERATIONS

The following table sets forth certain operational data for the three and nine months ended September 30, 2025, and 2024:

		Three Months Ended				Three Months Ended
		September 30, 2025				September 30, 2024
Revenue, net		$	96,828			$	22,403
Cost of revenue			(87,958	)			(21,088	)
Gross profit			8,870				1,315
Total operating expenses			(88,126	)			(111,984	)
Total other income			10				39
Loss before income tax			(79,246	)			(110,630	)
Income tax expense			-				(16,543	)
Net loss			(79,246	)			(127,173	)

		Nine Months Ended				Nine Months Ended
		September 30, 2025				September 30, 2024
Revenue, net		$	239,083			$	50,020
Cost of revenue			(214,628	)			(28,529	)
Gross profit			24,455				21,491
Total operating expenses			(304,807	)			(318,454	)
Total other income			199				666
Loss before income tax			(280,153	)			(296,297	)
Income tax expense			-				(835	)
Net loss			(280,153	)			(297,132	)

Revenue. For the three and nine months ended September 30, 2025, the Company generated revenues of $96,828 and $239,083, respectively. For the comparative three and nine months ended September 30, 2024, the Company generated revenues of $22,403 and $50,020, respectively. The increase in revenue was primarily driven by rising demand in the Chinese healthcare market and the Company's expanded distribution network, which enabled higher sales volumes.

Cost of Revenue. For the three and nine months ended September 30, 2025, the cost of revenue was $87,958 and $214,628, respectively, and as a percentage of net revenue, approximately 91% and 90%. Cost of revenue for the three and nine months ended September 30, 2024 was $21,088 and $28,529, respectively, and as a percentage of net revenue, approximately 94% and 57%, respectively. The cost of revenue also rose substantially for the three and nine months of 2025, largely due to sourcing products from vendors with higher costs. This increase in procurement costs has impacted the overall cost structure, raising the cost of revenue as a percentage of net revenue.

Gross Profit. For the three months ended September 30, 2025, and 2024, the gross profit was $8,870 and $1,315, respectively, the gross profit margin was 9% and 6%, respectively. For the nine months ended September 30, 2025, and 2024, the gross profit was $24,455 and $21,491, respectively, the gross profit margin was 10% and 43%, respectively. The decrease in gross profit margin for the periods ended September 30, 2025, compared to the same periods in 2024, is primarily due to increased cost of revenue from sourcing products at higher costs, which offset the revenue growth driven by rising demand in the Chinese healthcare market.

Operating Expenses. For the three and nine months ended September 30, 2025, the operating cost was $88,126 and $304,807, respectively, and while for the three and nine months ended September 30, 2024 was $111,984 and $318,454, respectively, the operating expenses decreased due to a decrease in administrative expenses.

Other Income. For the three and nine months ended September 30, 2025, the total other income was $10 and $199, respectively and for the three and nine months ended September 30, 2024 was $39 and $666, respectively, the other income decreased due to a decrease in receipt of bank interest income.

Income Tax Expense: For the three and nine months ended September 30, 2025, no income tax expenses were recorded, whereas income tax expenses for the same periods in 2024 were $16,543 and $835, respectively. The decrease in income tax expense is primarily due to the Company recording a net loss during the period.

Net Loss. For the three and nine months ended September 30, 2025, the Company incurred a net loss of $79,246 and $280,153, respectively and for the three and nine months ended September 30, 2024, the Company incurred a net loss of $127,173 and $297,132, respectively. The decrease in net loss for the three and nine months ended September 30, 2025, was primarily attributed to the decrease in operating costs.

Liquidity and Capital Resources

As of September 30, 2025, we had cash and cash equivalents of $76,861.

As of December 31, 2024, we had cash and cash equivalents of $39,192.

We believe that our current cash and other sources of liquidity discussed below are adequate to support general operations for at least the next 12 months.

		Nine Months Ended September 30,
		2025				2024
Net cash used in operating activities		$	(255,911	)		$	(201,678	)
Net cash used in investing activities			-				(4,169	)
Net cash provided by financing activities			311,714				104,147

Operating Activities.

For the nine months ended September 30, 2025, net cash used in operating activities was $255,911, which primarily consisted of a net loss of $280,153, decrease in customer deposits of $125,583, decrease in income tax payable of $4,269 and decrease in accrued liabilities and other payables of $43,602. The amounts are partially offset by non-cash adjustments of depreciation of plant and equipment of $5,234, amortization of intangible asset of $350, decrease in deposits and other receivables of $180,770, decrease in inventories of $9,309 and increase in accounts payable of $2,033.

For the nine months ended September 30, 2024, net cash used in operating activities was $201,678, which primarily consisted of a net loss of $297,132, increase in inventories of $22,248, decrease in lease liabilities of $38,858 and decrease in income tax payable of $21,244. The amounts are partially offset by non-cash adjustments of depreciation of plant and equipment of $194, amortization of intangible asset of $233, non-cash lease expense of $38,963, decrease in accounts receivable of $38,831, decrease in in deposits and other receivables of $10,530, increase in accrued liabilities and other payables of $3,532 and increase in customer deposits of $72,305.

We expect to continue to rely on cash generated through financing from our existing stockholders and private placements of our securities, however, to finance our operations and future acquisitions.

Investing Activities.

For the nine months ended September 30, 2025, net cash used in investing activities was $0 (2024: $4,169, which primarily consisted of purchase of plant and equipment).

Financing Activities.

For the nine months ended September 30, 2025, and 2024, net cash provided by financing activities was $311,714 and $104,147, which primarily consisted of advances from directors, a related company and related parties.

Off Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements, and it is not anticipated that the Company will enter into any off-balance sheet arrangements.

Critical Accounting Policies, Judgments and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management's subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following accounting policies are critical in the preparation of our financial statements.

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

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

Forward-looking Statements

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

Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions; changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company's access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally; legal and regulatory developments, such as regulatory actions affecting environmental activities; the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes; and labor disputes, which may lead to increased costs or disruption of operations.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive.

Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.