When used in this Quarterly Report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. Persons reviewing this Quarterly Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed further below under "Trends and Uncertainties," and include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations.

Overview of Current and Planned Business Operations

Through Sanyi Group, we are engaged in providing wellness services that include acupressure/reflexology, massage therapy and cupping. We offer various types of massage therapy, such as Swedish, deep tissue and hot stone oil, among others, all as discussed in Item 1. Business, of our Annual Report that is available by Hyperlink in Part II, Item 6 hereof. We primarily rely on our promotional activities and our shopping centre location in attracting new customers and maintaining our current customers.

We have identified future partners from strategic cities in China to help us exploit and expand to the China market for our wellness services in certain major cities of China, including Guangzhou, Shenzhen, Fujian, Sichuan, Beijing, Shanghai for fiscal 2023, though these plans are subject to the uncertainties related to the coronavirus pandemic and are currently on hold.

On March 11, 2020, the World Health Organisation declared the coronavirus outbreak as a pandemic owing to its rapid spread across the globe. A series of precautionary and control measures have been and continue to be implemented across the world by reason of this declaration and the recent furtherance of the pandemic attributable to variants of the coronavirus outbreak ("Covid-19).

The Australian Government imposed a Movement Control Order ("MCO") through its Australian Health Protection Principal Committee ("AHPPC") on February 27, 2020. Following that MCO, it implemented various MCO's to include travel restrictions and lockdowns to curb the spread of the Covid-19 outbreak in Australia. Consequently, the MCO's have resulted material adverse effects on Australia's economy for 2020 and beyond, with variants that continue to pose increased public exposure around the world. On July 6, 2022, border restrictions for people travelling to and from Australia were lifted.

We have accounted for the impact of the pandemic and its consequential effects on our results of operations in our financial statements for the financial fiscal years ended December 31, 2022, and 2021. The Company has slowly recovered from the Covid-19 pandemic, and that has resulted in a positive impact on our performance for the quarter ended December 31, 2022. Our revenue and the profit for the quarter ended December 31, 2022, has increased significantly as compared to the quarter ended December 31, 2021.





Results of Operations

Comparison of the quarter ended December 31, 2022, to the quarter ended December 31, 2021





Revenue

For the three months ended December 31, 2022, we had revenue of US$167,657, compared to the six months ended December 31, 2021, of US$100,840, or an increase of US$66,817. The increased revenue resulted from the Australian Government Authority starting to allow occasional people movement and the removal of Covid-19 lockdowns, allowing our wellness centre to be open for business. The opening of our centre and the cessation of the lockdown supported a higher revenue.

Payroll and employee related expense

For the three months ended December 31, 2022, our payroll and employee related expense was US$45,934, compared to the six months ended December 31, 2021, of US$36,157, or an increase of US$9,777. The payroll and employee related expense including superannuation contribution, employee membership fees, labour hiring costs and staff amenities, which were also greater.







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Amortization Right-of-Use Assets

For the three months ended December 31, 2022, the amortization right-of-use assets decreased by US$2,752 to US$29,958, compared to the six months ended September 31, 2021, of US$32,710. This decrease was due to foreign exchange translation.

General and Administrative Expenses

For the six months ended December 31, 2022, general and administrative expense increased by US$20,413 to US$30,438, compared to the six months ended December 31, 2021, of US$10,025. The lower expense for December 31, 2021, resulted from the wellness centre being closed for a much longer period during the Covid-19 pandemic as Australian Government Authority imposed longer and frequent shutdown periods and restricted people movement. However, the of business activity in the latter part of fiscal year 2022 had incurred cost associated with its usual operations, based upon being open for customary hours and periods.





Operating Expenses

For the six months ended December 31, 2022, our operating expenses were US$106,330, compared to the three months ended December 31, 2021, of US$78,892. Operating expenses consisted of payroll and employee related expenses, depreciation on right-of-use assets, and general and administrative expenses. The increase was primarily a result of the relaxation of the lockdown and other restrictions of the MCO, which allowed our wellness centre operations to be fully operational during the three months ended December 31, 2022.





Net Income

For the three months ended December 31, 2022, we had a net income after income tax of US$64,589, compared to the six months ended December 31, 2021, of US$44,150. The increase in revenue was directly related to our additional operating hours during the six months ended December 31, 2022.

Liquidity and Capital Resources

As of December 31, 2022, we had US$146,363 in cash and cash equivalents on hand.

Summary of Significant Accounting Policies

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in U.S. dollars. The Company's fiscal year end is June 30.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Foreign Currency Translation

The functional currency of our foreign subsidiary is its local currency. Assets and liabilities of the foreign subsidiary are translated into U.S. dollars at period-end exchange rates, stockholders' equity is translated at the historical rates and the consolidated statement of operations and cash flows are translated at average exchange rates during the reporting periods. Resulting translation adjustments are recorded in accumulated other comprehensive income, a separate component of stockholders' equity. A component of accumulated other comprehensive income will be released into income when the Company executes a partial or complete sale of an investment in a foreign subsidiary or a group of assets of a foreign subsidiary considered a business and/or when the Company no longer holds a controlling financial interest in a foreign subsidiary or group of assets of a foreign subsidiary considered a business.

Transactions denominated in currencies other than the local currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in foreign currency transaction gains and losses that are reflected in results of operations as unrealized (based on period end translation) and realized (upon settlement of the transactions) and reported under other general expenses in the consolidated statement of operations.







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Fair Value of Financial Instrument

The Company's financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are held in several Australian bank accounts and time deposit accounts. We regularly assesses the level of credit risk we are exposed to and whether there are better ways of managing credit risk. We invests our cash and cash equivalents with reputable financial institutions. The Company has not incurred any losses related to these deposits.





Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740-10-50 "Accounting for Income Taxes" as of its inception. Pursuant to the standard, the Company is required to compute tax asset benefits for initial years of operating losses carried forward.

Recent accounting Pronouncements

ASU 2016-02, Leases (Topic 842). ASC 842 requires companies to generally recognize operating and financing lease liabilities and corresponding ROU assets on their balance sheet. Leases will be classified as finance or operating leases, with classification affecting the pattern and classification of expense recognition in the consolidated statements of operation. Effective in year 2020, the Company adopted this new standard prospectively using a modified retrospective transition approach. The Company elected the package of practical expedients permitted under the transition guidance of the new standard, which allowed the Company to carry forward its historical assessment on whether a contract is or contains a lease, lease classification, and initial direct costs. Upon adoption in year 2020, the Company recognized ROU assets and lease liability of $437.2 thousand. The adoption of ASC 842 did not have a material impact to Company's consolidated statements of operations and cash flows from operations.

ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This standard update, along with subsequent ASUs, replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The Company adopted the standard in year 2020 on a modified retrospective basis. The adoption of the new standard did not have a material impact on the Company's consolidated financial statements.

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09") or ("ASC Topic 606"), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The new guidance provides a five-step process for recognizing revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also requires expanded qualitative and quantitative disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for public companies with annual reporting periods beginning after December 31, 2017, and is to be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial adoption. Early adoption is permitted for all entities but not before the original effective date for public entities. The Company adopted ASC Topic 606 in year 2019.

The FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), which is intended to simplify various aspects related to accounting for income taxes. The new standard is effective for the Company in year 2021. The Company is currently evaluating the impact of the new standard on its consolidated financial statements and related disclosures but does not expect it to have a material impact.

Off-Balance Sheet Arrangements

We had no Off-Balance Sheet arrangements during the six-month period ended December 31, 2022.





Critical Accounting Policies



Concentrations of Credit Risk

The Group's financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are held in several Australian bank accounts and time deposit accounts. The Group regularly assesses the level of credit risk we are exposed to and whether there are better ways of managing credit risk. The Group invests its cash and cash equivalents with reputable financial institutions. The Group has not incurred any losses related to these deposits.





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Concentration of Major Customer

Our concentration of revenue from customers in our facility that is located in a shopping centre in Victoria, Australia, makes it reasonably possible that we are vulnerable to the risk of a long-term adverse impact, especially with the current rise in variants of this coronavirus that have recently increased public exposure and the number of reported cases of this virus. As a result, governments and other authorities around the world continue to implement significant measures as deemed necessary to control the spread of the virus. While many of these restrictions have been lifted as the rates of Covid-19 infections have decreased or stabilized and as various vaccines have become more widely available, a resurgence of Covid-19 and the impact of variants of the virus that causes Covid-19 may result in the reinstatement of social distancing measures; business closures; lockdowns; restrictions on operations; quarantines and travel bans, among other restrictive measures. In addition, any government mandates that require Covid-19 vaccination or other employee behaviors may result in employee attrition at the Company or its suppliers or customers and may create difficulties in satisfying future employment and supply requirements.

Effect of Recent Accounting Pronouncements

The Company has evaluated all recent accounting pronouncements and believes that none will have a significant effect on the Company's financial statements.

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