The following information should be read in conjunction with (i) the financial statements of Fovea Jewelry Holdings, Ltd., a Nevada corporation (the "Company"), and the notes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information and the December 31, 2019 audited financial statements and related notes included in the Company's Amendment No. 2 to Registration Statement on Form 10 (File No. 000-56156; the "Form 10"), as filed with the Securities and Exchange Commission on May 1, 2020. Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute "forward-looking" statements.





OVERVIEW

The Company is incorporated in the State of Wyoming as a result of a domestication from the State of Nevada on March 4, 2019, and has a fiscal year end of December 31.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP"). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the policies below as critical to our business operations and to the understanding of our financial results:





Derivative Instruments

The derivative instruments are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and is then re-valued at each reporting date, with changes in fair value recognized in operations for each reporting period. The Company uses the Binomial option pricing model to value the derivative instruments.





Stock Based Compensation

Stock based compensation costs are measured at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The Company determines the fair value of awards using the Black - Scholes valuation model.





New Accounting Pronouncements

In February 2016, Financial Accounting Standard Board ("FASB") issued ASC 842 that requires lessees to recognize lease assets and corresponding lease liabilities on the balance sheet for all leases with terms of more than 12 months. The update, which supersedes existing lease guidance, will continue to classify leases as either finance or operating, with the classification determining the pattern of expense recognition in the income statement.

The ASU has become effective for annual and interim periods beginning January 1, 2019, with early adoption permitted, and is applicable on a modified retrospective basis with various optional practical expedients. The Company has assessed the impact of this standard and the impact was immaterial to the financial statements.






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The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to September 30, 2020 through the date these financial statements were issued.





Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606 - Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 - Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred, or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for sales returns, bad debts, and other allowances based on its historical experience.

Pursuant to ASC 605: revenues were recognized when the four basic criteria for recognition were met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) consideration is fixed or determinable; and (4) collectability is reasonably assured.





Use of Estimates

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

Fair Value of Financial Instruments

The fair value of financial instruments, which include cash, accounts payable and accrued expenses and advances from related parties were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from financial instruments.

Fair value is defined as the price which would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy which prioritizes the inputs used in the valuation methodologies, as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity's own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.






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At September 30, 2020, the carrying amounts of the Company's financial instruments, including cash, accounts payable and accrued expenses, approximate their respective fair value due to the short-term nature of these instruments.

At September 30, 2020, the Company does not have any assets or liabilities required to be measured at fair value in accordance with FASB ASC Topic 820, Fair Value Measurement.





PLAN OF OPERATION

Our plan of operations over the next 12 month period is to continue developing our website to have a fully functioning online store and sell our diamond products.

Comparison of the three months ended September 30, 2020 and September 30, 2019

The following table sets forth certain operational data for the three months ended September 30, 2020, compared to the three months ended September 30, 2019:





                            Three months ended September 30,
                               2020                   2019

Revenue                  $         542,900       $        25,919
Cost of revenue                   (271,443 )             (10,209 )
Gross profit                       271,457                15,710
Operating Expenses                  (8,630 )              (5,989 )
Income from operations             262,827                 9,721
Income tax expense                 (22,312 )              (6,204 )
NET INCOME               $         240,515       $         3,517

Revenue. We generated revenues of $542,900 and $25,919 for the three months ended September 30, 2020 and 2019, respectively. The increase in revenue is attributable to the development of new business line in healthcare supplement products to meet with the pandemic demand.

Cost of Revenue. Cost of revenue for the three months ended September 30, 2020, was $271,443 as compared to cost of revenue of $10,209 for the same period ended September 30, 2019. Cost of revenue increased primarily as a result of the increase in our business volume.

Gross Profit. We achieved a gross profit of $271,457 and $15,710 for the three months ended September 30, 2020, and 2019, respectively. The increase in gross profit is primarily attributable to the increasing market demand.

Operating Expenses. We incurred G&A expenses of $8,630 and $5,989 for the three months ended September 30, 2020, and 2019, respectively. The increase in G&A is primarily attributable to increase professional, administrative and other fees.

Income Tax Expense. Our income tax expenses for the three months ended September 30, 2020 and 2019 was $22,312 and $6,204, respectively.

Net Income. During the three months ended September 30, 2020, we incurred a net income of $240,515, as compared to net income of $3,517 for the same period ended September 30, 2019.






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Comparison of the nine months ended September 30, 2020 and September 30, 2019

The following table sets forth certain operational data for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019:





                            Nine months ended September 30,
                              2020                   2019

Revenue                 $         942,965       $       109,208
Cost of revenue                  (604,566 )             (54,912 )
Gross profit                      338,399                54,296
Operating expenses                (32,220 )              (8,667 )
Income from operation             306,179                45,629
Income tax expense                (21,674 )              (6,204 )
NET LOSS                $         284,505       $        39,425

Revenue. We generated revenues of $942,965 and $109,208 for the nine months ended September 30, 2020 and 2019, respectively. The increase in revenue is attributable to the development of new business line in healthcare supplement products to meet with the pandemic demand.

Cost of Revenue. Cost of revenue for the nine months ended September 30, 2020, was $604,566. Cost of revenue for the nine months ended September 30, 2019, was $54,912. The increase in our cost of revenue for the nine months ended September 30, 2020, is primarily attributable to increase in our business volume.

Gross Profit. We achieved a gross profit of $338,399 and $54,296 for the nine months ended September 30, 2020, and 2019, respectively. The increase in gross profit is primarily attributable to increase in our business volume.

Operating Expenses. We incurred operating expenses of $32,220 and $8,667 for the nine months ended September 30, 2020, and 2019, respectively. The increase in G&A is primarily attributable to increase professional, administrative and other fees.

Operating expenses as a percentage of net revenue was approximately 3.4% and 7.9% for the nine months ended September 30, 2020 and 2019, respectively. The increase in G&A is primarily attributable to increase professional, administrative and other fees.

Income Tax Expense. Our income tax expenses for the nine months ended September 30, 2020 and 2019 was $21,674 and $6,204, respectively.

Net Income. During the nine months ended September 30, 2020, we realized a net income of $284,505, as compared to net income of $39,425 for the same period ended September 30, 2019.

Liquidity and Capital Resources

As of September 30, 2020, we had cash and cash equivalents of $46,755 and accounts receivable of $543,639. As of December 31, 2019, we had cash and cash equivalents of $31,380 and accounts receivable of $0.





                                               Nine Months Ended September 30,
                                                 2020                  2019

Net cash provided by operating activities $ 29,501 $ 46,266 Net cash used in investing activities $

            -       $        (38,220 )
Net cash provided by financing activities   $        2,062       $              -





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Net Cash Provided By Operating Activities.

For the nine months ended September 30, 2020, net cash provided by operating activities was $29,501 which consisted primarily of a net income of $284,505, an increase in accounts payables of $271,812, a decrease in accrued liabilities and other payables of $10,708, an increase in tax payable of $25,164 and depreciation of property, plant and equipment of $5,798 offset by an increase in accounts receivables of $543,639 and a decrease in deferred tax liabilities of $3,431.

For the nine months ended September 30, 2019, net cash provided by operating activities was $46,266, which consisted primarily of a net income of $39,425, an increase in deferred tax liabilities of $6,204, and depreciation of property, plant and equipment of $637.

Net Cash Used In Investing Activities.

For the nine months ended September 30, 2020, net cash used in investing activities was $0.

For the nine months ended September 30, 2019, net cash used in investing activities was $38,220, consisting of property, plant and equipment purchases relating to discontinued operations.

Net Cash Provided By Financing Activities.

For the nine months ended September 30, 2020, net cash provided by financing activities was $2,062 consisting primarily of advances from our former Chief Executive Officer.

For the nine months ended September 30, 2019, net cash provided by financing activities was $0.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders





Subsequent Events

None through the date of this filing.

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