U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Mark One

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File No. 000-55260

MakingORG, Inc.

(Exact name of registrant as specified in its charter)

Nevada	6770	39-2079723
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Number)	(IRS Employer Identification Number)

618 Brea Canyon Rd. Ste A

Walnut, CA 91789

(213) 805-5799

(Address and telephone number of principal executive offices)

Indicate by checkmark whether the issuer: (1) has 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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
		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 checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ¨ No x

Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years. N/A

Indicate by checkmark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes ¨ No x

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	N/A

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

Class	Outstanding as of November 6, 2019
Common Stock: $0.001	35,540,000

PART 1	FINANCIAL INFORMATION
Item 1	Financial Statements (Unaudited)	3
	Balance Sheets	3
	Statements of Operations	4
	Statements of Stockholders’ Deficit	5
	Statements of Cash Flows	7
	Notes to the Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION
Item 1	Legal Proceedings	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3	Defaults Upon Senior Securities	23
Item 4	Mine safety disclosures	23
Item 5	Other Information	23
Item 6	Exhibits	24
	Signatures	25

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PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements.

MAKINGORG, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	September 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	121,272		$	57,372
Inventories (net of inventory reserve of $19,426 and $11,101)		19,023			22,201
Prepaid expenses and other current assets		136,668			4,500
Total Current Assets		276,963			84,073
Right-of-use assets - operating leases		7,597			-
Deposit		-			2,000
Total Assets	$	284,560		$	86,073
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Interest payable	$	74,000		$	56,000
Accrued liabilities		27,433			1,554
Lease liabilities - operating leases		7,941			-
Due to related party		279,869			230,903
Convertible note payable, net of discount $36,667 and $26,667		163,333			173,333
Total Current Liabilities		552,576			461,790
Long-Term Liabilities
Deferred rent		-			625
TOTAL LIABILITIES		552,576			462,415
Stockholders’ Deficit
Preferred stock, par value $0.001; 50,000,000 shares authorized, zero shares issued and outstanding		-			-
Common stock, par value $0.001; 150,000,000 shares authorized, 35,540,000 and 35,430,000 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		35,540			35,430
Additional paid-in capital		569,482			67,592
Accumulated other comprehensive income (loss)		(5,309	)		(713	)
Accumulated deficit		(867,729	)		(478,651	)
Total Stockholders’ Deficit		(268,016	)		(376,342	)
Total Liabilities and Stockholders’ Deficit	$	284,560		$	86,073
See accompanying notes to unaudited condensed consolidated financial statements.

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MAKINGORG, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
	For the three months ended September 30,						For the nine months ended September 30,
	2019			2018			2019			2018
Net Sales-Related Party	$	231,580		$	-		$	264,644		$	-
Cost of Sales		123,634			-			141,928			-
Gross Profit		107,946			-			122,716			-
OPERATING EXPENSES
Selling, general and administrative		12,791			8,365			32,377			22,913
Professional fees		137,021			21,486			418,017			68,056
TOTAL OPERATING EXPENSES		149,812			29,851			450,394			90,969
LOSS FROM OPERATIONS		(41,866	)		(29,851	)		(327,678	)		(90,969	)
OTHER INCOME (EXPENSE)
Interest income		31			29			59			58
Interest expense		(16,000	)		(9,239	)		(48,000	)		(30,953	)
Loss on inventory write-down		(2,776	)		-			(8,326	)		-
TOTAL OTHER INCOME (EXPENSE)		(18,745	)		(9,210	)		(56,267	)		(30,895	)
LOSS BEFORE INCOME TAX		(60,611	)		(39,061	)		(383,945	)		(121,864	)
Income tax		4,333			-			5,133			800
NET LOSS	$	(64,944	)	$	(39,061	)	$	(389,078	)	$	(122,664	)
OTHER COMPREHENSIVE ITEM:
Foreign currency translation income (loss)		(4,632	)		(1,116	)		(4,596	)		(1,576	)
TOTAL COMPREHENSIVE LOSS	$	(69,576	)	$	(40,177	)	$	(393,674	)	$	(124,240	)
NET LOSS PER COMMON SHARE: BASIC AND DILUTED	$	(0.002	)	$	(0.001	)	$	(0.011	)	$	(0.003	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED		35,540,000			35,430,000			35,540,000			35,430,000
See accompanying notes to unaudited condensed consolidated financial statements.

  

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MAKINGORG, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
	Three Months Ended September 30, 2019
							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficit			Deficit
Balance, June 30, 2019		35,540,000	$	35,540	$	529,482	$	(677	)	$	(802,785	)	$	(238,440	)
Foreign currency translation loss		-		-		-		(4,632	)		-			(4,632	)
Issuance of promissory note		-		-		40,000		-			-			40,000
Net loss		-		-		-		-			(64,944	)		(64,944	)
Balance, September 30, 2019		35,540,000	$	35,540	$	569,482	$	(5,309	)	$	(867,729	)	$	(268,016	)

	Three Months Ended September 30, 2018
							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficit			Deficit
Balance, June 30, 2018		35,430,000	$	35,430	$	27,592	$	467		$	(366,176	)	$	(302,687	)
Foreign currency translation loss		-		-		-		(1,116	)		-			(1,116	)
Net loss		-		-		-		-			(39,061	)		(39,061	)
Balance, September 30, 2018		35,430,000	$	35,430	$	27,592	$	(649	)	$	(405,237	)	$	(342,864	)

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	Nine Months Ended September 30, 2019
							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficit			Deficit
Balance, December 31, 2018		35,430,000	$	35,430	$	67,592	$	(713	)	$	(478,651	)	$	(376,342	)
Foreign currency translation loss		-		-		-		(4,596	)		-			(4,596	)
Common stock issued for service		110,000		110		461,890		-			-			462,000
Issuance of promissory note		-		-		40,000		-			-			40,000
Net loss		-		-		-		-			(389,078	)		(389,078	)
Balance, September 30, 2019		35,540,000	$	35,540	$	569,482	$	(5,309	)	$	(867,729	)	$	(268,016	)

	Nine Months Ended September 30, 2018
							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Capital		Income			Deficit			Deficit
Balance, December 31, 2017		35,430,000	$	35,430	$	27,592	$	927		$	(282,573	)	$	(218,624	)
Foreign currency translation loss		-		-		-		(1,576	)		-			(1,576	)
Net loss		-		-		-		-			(122,664	)		(122,664	)
Balance, September 30, 2018		35,430,000	$	35,430	$	27,592	$	(649	)	$	(405,237	)	$	(342,864	)

See accompanying notes to unaudited condensed consolidated financial statements.

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MAKINGORG, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the nine months ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(389,078	)	$	(122,664	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on inventories write-down		8,325			-
Shares issued for compensation		346,500			-
Amortization of debt discount		30,000			12,953
Amortization of Right-of-use assets		(281	)		-
Changes in assets and liabilities:
Accounts receivable		-			50,922
Inventories		(5,353	)		(10,578	)
Prepaid expenses and other current assets		(15,248	)		7,325
Deposit		-			(2,000	)
Accounts payable		-			(637	)
Interest payable		18,000			-
Accrued liabilities		26,457			12,161
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES		19,322			(52,518	)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan from related party		48,966			85,124
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		48,966			85,124
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(4,388	)		(1,721	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		63,900			30,885
Cash and cash equivalents, beginning of period		57,372			37,605
Cash and cash equivalents, end of period	$	121,272		$	68,490
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	800
NON-CASH TRANSACTION:
Deferred consulting fee paid in common stock	$	462,000		$	-
Beneficial conversion feature recognition	$	40,000		$	40,000
See accompanying notes to unaudited condensed consolidated financial statements.

    

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MakingORG, Inc. and Subsidiaries

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

MakingORG, Inc. (“MakingORG”) was incorporated under the laws of the State of Nevada on August 10, 2012. The trading symbol is “CQCQ” and the fiscal year end is December 31. On October 20, 2016, MakingORG filed documents registering its intention to transact interstate business in the state of California. On November 29, 2016, MakingORG incorporated HK Feng Wang Group Limited (“HKFW”) under the laws of Hong Kong. On August 22, 2017, HKFW incorporated Chongqing Beauty Kenner Biotechnology Co., Ltd (“CBKB”) under the laws of the People’s Republic of China (“PRC”).

MaingORG, Inc. and subsidiaries (“the Company”) purchase Acer truncatum bunge seed oil from China, outsource to third party to manufacture Acer truncatum bunge related health product, and sell to end user and distributor in the United States and PRC.

NOTE 2 – GOING CONCERN

Pursuant to ASU 2014-15, the Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these unaudited consolidated financial statements. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The accompanying unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. The Company currently suffered recurring loss, has an accumulated deficit and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time. These conditions raise substantial doubt as to its ability to continue as a going concern. These unaudited consolidated financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company may seek additional funding through additional issuance of common stock and/or borrowings from financial institutions or the majority shareholder to support its normal business operations. In light of management’s efforts, there is no assurance that the Company will be successful in this or any of its endeavors or become financially viable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

Principles of Consolidation

The Company’s unaudited consolidated financial statements include the accounts of MakingORG, and its wholly owned subsidiaries, HKFW and CBTB. All intercompany transactions and balances were eliminated in consolidation.

Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the Company’s unaudited consolidated financial statement date and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

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Cash and Cash Equivalents

The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are reported realizable value, net of allowance for contractual credits and doubtful accounts, which are recognized in the period the related revenue is recorded. Accounts receivable consists principally of receivables from distributor or end user, arising from the sale of the Company’s product. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Management evaluated that there was no allowance for doubtful accounts as of September 30, 2019 and December 31, 2018, respectively.

Inventories

Inventories consist of finished goods, which are stated at the lower of cost or net realizable value under the first-in-first-out method. The Company reviews its inventories periodically for possible excess and obsolescence to determine if any reserves are necessary.

Revenue Recognition

Effective January 1, 2018, the Company adopted Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method. The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the majority of its revenues continue to be recognized when the customer takes control of its product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption.

In general, the Company’s performance obligation is to transfer it products to its end user or distributor. Revenues from product sales are recognized when the customer obtains control of the Company’s finished goods product, which occurs at a point in time, typically upon delivery to the customer.

The Company’s revenue mainly generates from sale of acer truncatum bunge related health products, such as Nervonic Acid Oil, coffee and tea. The Company evaluated its product sales contracts and determined that those contracts are generally capable of being distinct and accounted for as separate performance obligations. Performance obligation is satisfied when the finished goods product delivered to the customer.

During the three and nine months ended September 30, 2019, the Company recognized revenue from sale of acer truncatum bunge related health products in an amount of $231,580 and $264,644, respectively. During the three and nine months ended September 30, 2018, the Company recognized revenue from sale of acer truncatum bunge related health products in an amount of $nil.

Advertising Expenses

Advertising costs are expensed as incurred. Advertising expenses incurred for the nine months ended September 30, 2019 and 2018 totaled $nil and $1,397, respectively.

Research and Development

Research and development costs are expensed as incurred and are included in general and administrative expenses in the accompanying consolidated statement of operations and totaled $nil for the nine months ended September 30, 2019 and 2018, respectively.

Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are using enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, if more likely than not that the company will not realize tax assets through future operation.

On December 22, 2017, the U.S. enacted the 2017 Tax Cuts and Jobs Act which contains several key tax provisions that affect the Company, including, but not limited to, a one-time mandatory transition tax on accumulated foreign earnings, changes in the sourcing and calculation of foreign income, and a reduction of the corporate income tax rate to 21% effective January 1, 2018. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring its U.S. deferred tax assets and liabilities as well as reassessing the net realizability of its deferred tax assets and liabilities.

9

Basic Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

Foreign Currency Transactions

The functional currency for the Company and HKFW is the US dollar. The functional currency for the China subsidiary (CBKB) is the Renminbi (RMB). Assets and liabilities of the China operation are translated from RMB into U.S. dollars at period-end rates, while statements of operations and cash flows are translated at the weighted-average exchange rates for the period. The related translation adjustments are reflected as a foreign currency translation adjustment in accumulated other comprehensive income/(loss) within shareholders’ deficit.

The Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into U.S. dollars are recorded in stockholders’ equity as part of accumulated other comprehensive income. The exchange rates used for financial statements are as follows:

	Average Rate for the Nine Months Ended September 30,
	2019		2018
China yuan (RMB)	RMB	6.861782	RMB	6.513683
United States dollar ($)	$	1.000000	$	1.000000

	Exchange Rate at
	September 30, 2019		December 31, 2018
China yuan (RMB)	RMB	7.135956	RMB	6.876443
United States dollar ($)	$	1.000000	$	1.000000

Related Parties

The Company follows Accounting Standards Codification (“ASC”) 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.

Lease

The Company determines if an arrangement is or contains a lease at inception. Operating leases with lease terms of more than 12 months are included in operating lease assets, accrued and other current liabilities, and long-term operating lease liabilities on its consolidated balance sheet. Operating lease assets represent its right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments over the lease term. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using its incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term.

Segment Reporting

The Company follows Financial Accounting Standards Board (“FASB”) ASC Topic 280, “Segment Reporting” for its segment reporting. The Company aggregates its operating segments into one reporting segment, as management believes that its operating segments have similar operating characteristics and similar long-term operating performance.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including the Company’s own credit risk.

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In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The carrying amounts of financial assets and liabilities in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accrued expenses and due to related party approximate their fair value due to the short-term duration of those instruments. Notes payable are recorded at agreed values.

Stock-Based Compensation

The Company accounts for share-based compensation awards to nonemployees in accordance with FASB ASC 718 and FASB ASC 505-50. Under FASB ASC 718 and FASB ASC 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.

Recent Adopted Accounting Pronouncements

In June 2018, the FASB issued ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“Topic 842”) (as subsequently amended by ASU 2018-01, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01) which requires a lessee to recognize assets and liabilities on the balance sheet for those leases classified as operating leases under previous guidance. Based on a preliminary assessment, the Company expect that its operating lease commitments will be subject to the new guidance and recognized as operating lease liabilities and right-of-use (“ROU”) assets upon adoption, resulting in a significant increase in the assets and liabilities on its consolidated balance sheets. There was no change in its leasing activities as a result of adoption. Upon adoption, as of January 1, 2019, the Company recognized operating lease liabilities of $14,079 based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases, as well as corresponding ROU assets of $13,454, the $625 difference attributable to the offset of the deferred rent existing as of January 1, 2019. See Note 8 for further details.

Recently Issued Accounting Pronouncement Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, (Topic 326), Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments which amends the current accounting guidance and requires the use of the new forward-looking “expected loss” model, rather than the “incurred loss” model, which requires all expected losses to be determined based on historical experience, current conditions and reasonable and supportable forecasts. This guidance amends the accounting for credit losses for most financial assets and certain other instruments including trade and other receivables, held-to-maturity debt securities, loans and other instruments. ASU 2016-13 is effective for public entities for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Company is evaluating the impact of the adoption of ASU 2016-13 on its financial position and results of operations.

NOTE 4 – INVENTORIES

The components of the Company’s inventories were packaging materials, raw materials and finished goods. Inventory consisted of the following as of September 30, 2019 and December 31, 2018:

	September 30, 2019			December 31, 2018
Finished goods	$	38,449		$	33,302
Inventory reserve		(19,426	)		(11,101	)
Total inventories	$	19,023		$	22,201

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NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets include primarily prepaid consulting fee, prepaid production processing fee, deposit for packaging materials and security deposit for rent. As of September 30, 2019, and December 31,2018 prepaid expenses and other current assets was $136,668 and $4,500, respectively.

NOTE 6 – RELATED PARTY TRANSACTIONS

Due to Related Party

During the nine months ended September 30, 2019 and 2018, the Company’s sole officer loaned the Company $48,966 and $85,124, respectively. As of September 30, 2019, and December 31, 2018, the Company was obligated to the officer, for an unsecured, non-interest bearing demand loan with a balance of $279,869 and $230,903, respectively.

Sales to Related Party

The Company sells its product to its related party, an entity in which CBKB’s supervisor is a shareholder. During three and nine months ended September 30, 2019, the Company consolidated net sales to related party was $231,580 and $264,644, respectively.

NOTE 7 – BUSINES CONCENTRATION AND RISKS

Concentration of Risk

The Company maintains cash with banks in the USA, People’s Republic of China (“PRC” or “China”), and Hong Kong. Should any bank holding cash become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash with that bank; however, the Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. In China, a depositor has up to RMB500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”). In Hong Kong, a depositor has up to HKD500,000 insured by Hong Kong Deposit Protection Board (“DPB”). In the United States, the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”).

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, and accounts receivable. As of September 30, 2019 and December 31, 2018, $93,692 and $57,372 of the Company’s cash and cash equivalents, was insured, and the remaining balance of approximately $27,580 and $0, was not insured. With respect to accounts receivable, the Company generally does not require collateral and does not have an allowance for doubtful accounts.

Major customer

The Company has one major customer that account for 0% and 0% of the accounts receivable as of September 30, 2019 and 2018, respectively, and one customer that account for 100% and 0% of total net sales for the quarter ended September 30, 2019 and 2018, respectively.

For the three months ended September 30, 2019 and 2018, the Company’s revenues from one major customer was: 

	Three Months Ended September 30,
	2019					2018
	Amount		% of Total Revenue			Amount		% of Total Revenue
Customer A	$	231,580		100	%	$	-		-	%

For the nine months ended September 30, 2019 and 2018, the Company’s revenues from one major customer was: 

	Nine Months Ended September 30,
	2019					2018
	Amount		% of Total Revenue			Amount		% of Total Revenue
Customer A	$	264,644		100	%	$	-		-	%

Major vendor

The Company has one major vendor that account for 0% and 0% of the accounts payable as of September 30, 2019 and 2018, respectively, and one vendor that account for 100% and 0% of purchases for the quarter ended September 30, 2019 and 2018, respectively.

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For the three months ended September 30, 2019 and 2018, the Company’s purchase from one major vendor was: 

	Three Months Ended September 30,
	2019					2018
	Amount		% of Total Revenue			Amount		% of Total Revenue
Vendor A	$	144,146		100	%	$	-		-	%

For the nine months ended September 30, 2019 and 2018, the Company’s purchase from one major vendor was: 

	Nine Months Ended September 30,
	2019					2018
	Amount		% of Total Revenue			Amount		% of Total Revenue
Vendor A	$	164,389		100	%	$	-		-	%

NOTE 8 – CONVERTIBLE NOTE PAYABLE

On September 1, 2016, the Company entered into a convertible note agreement in the principal amount of $200,000 with an unrelated party. The note bears interest at 12% per annum and the holder is able to convert all unpaid interest and principal into common shares at $3.50 per share. The note matures on September 1, 2018. The Company recognized a discount on the note of $38,857 at the agreement date. The interest expense was due every six months commencing on March 1, 2017 until the principal amount of this convertible note is paid in full.

On September 1, 2018, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2019 with no additional consideration. The Company recognized a discount on the note of $40,000 at the amended agreement date.

On September 1, 2019, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2020 with no additional consideration. The Company recognized a discount on the note of $40,000 at the amended agreement date.

The Company recognized interest expense related to the convertible note of $16,000 and $9,239, respectively, for the three months ended September 30, 2019 and 2018. The Company recognized interest expense related to the convertible note of $48,000 and $30,953, respectively, for the nine months ended September 30, 2019 and 2018. The unamortized debt discount at September 30, 2019 and December 31, 2018 was $36,667 and $26,667, respectively. As of September 30, 2019, and December 31, 2018, net balance of the convertible note amounted to $163,333 and $173,333, respectively.

NOTE 9 – LEASE

The Company has an operating lease for its office space from a third party. The Company determined if an arrangement is a lease inception of the contract and whether a contract is or contains a lease by determining whether it conveys the right to control the use of identified asset for a period of time. The contact provides the right to substantially all the economic benefits from the use of the identified asset and the right to direct use of the identified asset, we consider it to be, or contain, a lease.

Leases is classified as operating at inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Because the leases do not provide an explicit or implicit rate of return, the Company determines incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar term, which is 7.33%. Lease expense for the lease is recognized on a straight-line basis over the lease term.

The Company’s leases do not contain any residual value guarantees or material restrictive covenants. Leases with a lease term of 12 months or less are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term. The remaining term as of September 30, 2019 is 11 months. The Company currently has no finance leases.

During the nine months ended September 30, 2019, cash paid for amounts included in the measurement of lease liabilities- operating cash flows from operating lease was $6,469.

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The components of lease expense consist of the following:

	Classification	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost	S, G&A expense	$	2,156	$	6,469
Net lease cost		$	2,156	$	6,469

Balance sheet information related to leases consists of the following:

Assets	Classification	September 30, 2019
Operating lease ROU assets	Right-of-use assets	$	7,597
Total leased assets		$	7,597
Liabilities
Current portion
Operating lease liabilities	Current maturities of operating lease liabilities	$	7,941
Non-current portion
Operating lease liabilities	Long-term portion of operating lease liabilities		-
Total lease liabilities		$	7,941
Weighted average remaining lease term
Operating leases			0.92
Weighted average discount rate
Operating leases			7.33	%

Cash flow information related to leases consists of the following:

	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,094
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		5,813

As previously discussed, the Company adopted Topic 842 by applying the guidance at adoption date, January 1,2019. As required, the following disclosure is provided for periods prior to adoption, which continue to be presented in accordance with ASC 840. Future minimum lease payment under non-cancellable lease as of September 30, 2019 are as follows:

Ending December 31,	Operating Leases
2019	$	2,250
2020		6,000
Total lease payments		8,250
Less: Interest		(309	)
Present value of lease liabilities	$	7,941

NOTE 10 – STOCKHOLDERS’ DEFICIT

Common Stock

On January 4, 2019, the Company issued 110,000 shares of common stock with a fair value of $462,000 for consulting service. During the nine months ended, the Company incurred non-cash stock compensation expense for this consulting fee of $346,500.

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NOTE 11 – INCOME TAXES

The Company accounts for income taxes under ASC 740, “Income Taxes”. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company is subject to taxation in the United States and certain state jurisdictions. The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes. HKFW in Hong Kong are governed by the Inland Revenue Ordinance Tax Law of Hong Kong, and are generally subject to a profits tax at the rate of 16.5% on the estimated assessable profits. CBNB in the PRC is governed by the Income Tax Law of the PRC concerning the private enterprises, which are generally subject to tax at 25% on income reported in the statutory financial statements after appropriated adjustments.

The following table reconciles the Company’s statutory tax rates to effective tax rates for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,
	2019			2018
US statutory rate		21	%		21	%
Tax rate difference		7	%		1	%
PRC tax exempt		21	%		-	%
Loss not subject to income tax		(56	)%		(22	)%
Effective tax rate		(7	)%		-	%

	Nine Months Ended September 30,
	2019			2018
US statutory rate		21	%		21	%
Tax rate difference		(1	)%		-%
PRC tax exempt		5	%		-%
Loss not subject to income tax		(26	)%		(22	)%
Un-deductible and non-taxable items		-	%		-	%
Effective tax rate		(1	)%		(1	)%

The Company’s income tax expense is mainly contributed by its subsidiaries in PRC.

In addition, the 2017 Tax Act also creates a new requirement that certain income (i.e., Global Intangible Low-Taxed Income (“GILTI”)) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder income. GILTI is the excess of the shareholder’s net CFC tested income over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. For the three and nine months ended September 30, 2019 and 2018, no GILTI tax obligation existed and the GILTI tax expense was nil.

Provision (benefit) for income tax for the three months ended September 30, 2019 consisted of:

Three months ended September 30, 2019	Federal		State		Foreign		Total
Current	$	-	$	-	$	4,333	$	4,333
Deferred		-		-		-		-
Total	$	-	$	-	$	4,333	$	4,333

Provision (benefit) for income tax for the three months ended September 30, 2018 consisted of:

Three months ended September 30, 2018	Federal		State		Foreign		Total
Current	$	-	$	-	$	-	$	-
Deferred		-		-		-		-
Total	$	-	$	-	$	-	$	-

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Provision (benefit) for income tax for the nine months ended September 30, 2019 consisted of:

Nine months ended September 30, 2019	Federal		State		Foreign		Total
Current	$	-	$	800	$	4,333	$	5,133
Deferred		-		-		-		-
Total	$	-	$	800	$	4,333	$	5,133

Provision (benefit) for income tax for the nine months ended September 30, 2018 consisted of:

Nine months ended September 30, 2018	Federal		State		Foreign		Total
Current	$	-	$	800	$	-	$	800
Deferred		-		-		-		-
Total	$	-	$	800	$	-	$	800

Net deferred tax assets consist of the following components as of:

	September 30,
	2019			2018
Deferred tax asset:
Net operating loss carry forwards	$	112,419		$	86,290
Valuation allowance		(112,419	)		(86,290	)
Net deferred tax asset	$	-		$	-

Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately $381,000, which expires in 2032, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years. Tax filings for the Company for the years 2015 and 2016 are available for examination by stat tax jurisdictions and federal tax purposes.

NOTE 12– SUBSEQUENT EVENT

The Company has evaluated all subsequent events through the date the unaudited consolidated financial statements were issued and determine that there were no subsequent events or transactions that require recognition or disclosures in the unaudited consolidated financial statements.

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

As used in this Form 10-Q, references to “MakingORG”,” the “Company,” “we,” “our” or “us” refer to MakingORG, Inc. and subsidiaries unless the context otherwise indicates.

Forward-Looking Statements

The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.

Plan of Operation

Our sole officer and director intend to sell Acer truncatum bunge related health product in the United States and PRC, we might just identify and negotiate with another company for the business combination or merger of that entity with and into our company. We would seek, investigate and, if such investigation warrants, acquire an interest in one or more business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of a publicly held corporation. At this time, we have no plan, proposal, agreement, understanding or arrangement to acquire or merge with any specific business or company, and the Company has not identified any specific business or company for investigation and evaluation. No member of management or promoter of the Company has had any material discussions with any other company with respect to any acquisition of that company.

We will not restrict our search for another target company to any specific business, industry or geographical location, and the Company may participate in a business venture of virtually any kind or nature. The discussion of the proposed plan of operation under this caption and throughout this Annual Report is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities.

The following discussion should be read in conjunction with the unaudited interim financial statements contained in this Report and in conjunction with the Company’s Form 10-K filed on April 15, 2019. Results for interim periods may not be indicative of results for the full year.

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Critical Accounting Policies and Estimates

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new revenue recognition standard provides a five-step analysis of contracts to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue to depict 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. In August 2015, the FASB deferred the effective date of ASU No. 2014-09 for all entities by one year to annual reporting periods beginning after December 15, 2017. The FASB has issued several updates subsequently, including implementation guidance on principal versus agent considerations, on how an entity should account for licensing arrangements with customers, and to improve guidance on assessing collectability, presentation of sales taxes, noncash consideration, and contract modifications and completed contracts at transition. In general, the Company’s performance obligation is to transfer it products to its end user or distributor. Revenues from product sales are recognized when the customer obtains control of the Company’s finished goods product, which occurs at a point in time, typically upon delivery to the customer.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11, Targeted Improvements; and ASU 2019-01, Codification Improvements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of income.

The new standard was effective for the Company on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company adopted the new standard on January 1, 2019 and used the effective date as its date of initial application. Consequently, prior period financial information has not been recast and the disclosures required under the new standard have not been provided for dates and periods before January 1, 2019.

The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements, the latter not being applicable to the Company. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, it has not recognized ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for all of its leases.

The Company believe the most significant effects of the adoption of this standard relate to (1) the recognition of new ROU assets and lease liabilities on its condensed consolidated balance sheet for its office operating leases and (2) providing new disclosures about its leasing activities. There was no change in its leasing activities as a result of adoption.

Upon adoption, as of January 1, 2019, the Company recognized operating lease liabilities of $14,079 based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases, as well as corresponding ROU assets of $13,454, the $625 difference attributable to elimination of the accrued and prepaid rent existing as of January 1, 2019.

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The preparation of unaudited consolidated 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 reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the unaudited consolidated financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.

Results of Operations

For the three months ended September 30, 2019 and 2018

	Three Months Ended September 30,
	2019			2018			Change			Percent
Net Sales	$	231,580		$	-		$	231,580			-	%
Cost of Sales		123,634			-			123,634			-	%
Gross Profit		107,946			-			107,946			-	%
Operating expenses:
Selling, general and administrative		12,791			8,365			4,426			53	%
Professional fees		137,021			21,486			115,535			538	%
Total operating expenses		149,812			29,851			119,961			402	%
Loss from operations		(41,866	)		(29,851	)		(12,015	)		40	%
Other income (expenses):
Interest income		31			29			2			7	%
Interest expense		(16,000	)		(9,239	)		(6,761	)		73	%
Loss on inventory write-down		(2,776	)		-			(2,776	)		-	%
Total other income (expenses)		(18,745	)		(9,210	)		(9,535	)		104	%
Loss before income taxes		(60,611	)		(39,061	)		(21,550	)		55	%
Income tax expense		4,333			-			4,333			-	%
Net loss	$	(64,944	)	$	(39,061	)	$	(25,883	)		66	%

Net sales

The Company consolidated net sales for the three months ended September 30, 2019 and 2018 was $231,580 and $nil, respectively. The cost of sales for the three months ended September 30, 2019 and 2018 was $123,634 and $nil, respectively, resulting in a gross profit of $107,946 and $nil for the three months ended September 30, 2019 and 2018, respectively. Revenue increased due to the Company entered sales contract with one customer in 2019. The sales concentrate on one customer which consists of 100% of the revenue.

Total operating expenses

During the three months ended September 30, 2019, total operating expenses were $149,812, which mainly consisted of professional fees of $137,021, rent expenses of $2,156 and China expense of $8,899. During the three months ended September 30, 2018, total operating expenses were $29,851, which consisted of professional fees of $21,486, China salary and China office expense of $5,079 and rent expenses of $2,000. Total operating expenses increased $119,961, or 402%, primarily as a result of the increase in professional fees for the three months ended September 30, 2019 compared with the three months ended September 30, 2018.

Total other income (expenses)

During the three months ended September 30, 2019, the Company total other expenses were $18,745, which consisted of interest expense of $16,000, interest income of $31, and loss on inventory write-down of $2,776. During the three months ended September 30, 2018, the Company had total other expenses were $9,210, which consisted of interest expense of $9,239, and interest income of $29.

Net loss

During the three months ended September 30, 2019, the Company had a net loss of $64,944, as compared with a net loss of $39,061 for the three months ended September 30, 2018. The increase in net loss was predominantly due to the reasons stated above.

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For the nine months ended September 30, 2019 and 2018

	Nine Months Ended September 30,
	2019			2018			Change			Percent
Net Sales	$	264,644		$	-		$	264,644			-	%
Cost of Sales		141,928			-			141,928			-	%
Gross Profit		122,716			-			122,716			-	%
Operating expenses:
Selling, general and administrative		32,377			22,913			9,464			41	%
Professional fees		418,017			68,056			349,961			514	%
Total operating expenses		450,394			90,969			359,425			395	%
Loss from operations		(327,678	)		(90,969	)		(236,709	)		260	%
Other income (expenses):
Interest income		59			58			1			2	%
Interest expense		(48,000	)		(30,953	)		(17,047	)		55	%
Loss on inventory write-down		(8,326	)		-			(8,326	)		-	%
Total other income (expenses)		(56,267	)		(30,895	)		(25,372	)		82	%
Loss before income taxes		(383,945	)		(121,864	)		(262,081	)		215	%
Income tax expense		5,133			800			4,333			542	%
Net loss	$	(389,078	)	$	(122,664	)	$	(262,414	)		217	%

Net sales

The Company consolidated net sales for the nine months ended September 30, 2019 and 2018 was $264,644 and $nil, respectively. The cost of sales for the nine months ended September 30, 2019 and 2018 was $141,928 and $nil, respectively, resulting in a gross profit of $122,716 and $nil for the nine months ended September 30, 2019 and 2018, respectively. Revenue increased due to the Company entered sales contract with one customer in 2019. The sales concentrate on one customer which consists of 100% of the revenue.

Total operating expenses

During the nine months ended September 30, 2019, total operating expenses were $450,394, which mainly consisted of professional fees of $418,017, rent expenses of $6,469 and China expense of $23,294. During the nine months ended September 30, 2018, total operating expenses were $90,969, which consisted of professional fees of $68,056, China salary and China office expense of $11,359 and rent expenses of $8,000. Total operating expenses increased $359,425, or 395%, primarily as a result of the increase in professional fees for the nine months ended September 30, 2019 compared with the nine months ended September 30, 2018.

Total other income (expenses)

During the nine months ended September 30, 2019, the Company total other expenses were $56,267, which consisted of interest expense of $48,000, interest income of $59, and loss on inventory write-down of $8,326. During the nine months ended September 30, 2018, the Company total other expenses were $30,895, which consisted of interest expense of $30,953, and interest income of $58.

Net loss

During the nine months ended September 30, 2019, the Company had a net loss of $389,078, as compared with a net loss of $122,664 for the nine months ended September 30, 2018. The increase in net loss was predominantly due to the reasons stated above.

Liquidity and Capital Resources

As of September 30, 2019, the Company had cash and cash equivalents and total assets of $121,272 and $284,560, respectively. As of said date, the Company has total liabilities of $552,576, of which $163,333 is due to convertible note payable and $279,869 is due to our sole officer and director as an unsecured, non-interest bearing demand loan. As of September 30, 2019, and December 31, 2018, the Company had working capital amount of $(275,613) and $(377,717), respectively.

Other than an oral agreement with Ms. Cui to fund the expenses of the Company, we currently have no agreements, arrangements or understandings with financial institution or any person to obtain funds through bank loans, lines of credit or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.

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Cash Flows from Operating Activities

For the nine months ended September 30, 2019, net cash flows provided by operating activities was $19,322 resulting from a net loss of $389,078, an increase in inventories of $5,353, an increase in prepaid expenses and other current assets of $15,248, an increase in interest payable of $18,000, an increase in accrued liabilities of $26,457, loss on inventory write-down of $8,325, shares issued for compensation of $346,500, amortization of right-of use assets of $281 and amortization of debt discount of $30,000. For the nine months ended September 30, 2018, net cash flows used in operating activities was $52,518 resulting from a net loss of $122,664, a decrease in accounts receivable of $50,922, a decrease in prepaid expenses and other current assets of $7,325, an increase in inventory of $10,578, an increase in deposit of $2,000, a decrease in accounts payable of $637, an increase in accrued liabilities of $12,161, and amortization of debt discount of $12,953.

Cash Flows from Investing Activities

For the nine months ended September 30, 2019 and 2018, the Company did not have any cash flow from investing activities.

Cash Flows from Financing Activities

For the nine months ended September 30, 2019 and 2018, advances from the Company’s sole officer and director provided $48,966 and $85,124, respectively.

Going Concern Consideration

These consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to repay its debt obligations, to obtain necessary equity financing to continue operations, and the attainment of profitable operations. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company may seek additional funding through additional issuance of common stock and/or borrowings from financial institutions or the majority shareholder to support its normal business operations. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company had net loss of $389,078 for the nine months ended September 30, 2019 and a net loss of $122,664 for the nine months ended September 30, 2018. In addition, the Company had an accumulated deficit of $867,729 as of September 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital. The Company’s consolidated financial statements do not include any adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Convertible Note Payable

On September 1, 2016, the Company entered into a convertible note agreement in the principal amount of $200,000 with an unrelated party. The note bears interest at 12% per annum and the holder is able to convert all unpaid interest and principal into common shares at $3.50 per share. The note matures on September 1, 2018. The Company recognized a discount on the note of $38,857 at the agreement date. The interest expense was due every six months commencing on March 1, 2017 until the principal amount of this convertible note is paid in full.

On September 1, 2018, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2019 with no additional consideration. The Company recognized a discount on the note of $40,000 at the amended agreement date.

On September 1, 2019, the Company entered into an amended and restated 12% convertible promissory note. Pursuant to the amended convertible promissory note, both parties agreed to extend the convertible note agreement to September 1, 2020 with no additional consideration. The Company recognized a discount on the note of $40,000 at the amended agreement date.

The Company recognized interest expense related to the convertible note of $16,000 and $9,239, respectively, for the three months ended September 30, 2019 and 2018. The Company recognized interest expense related to the convertible note of $48,000 and $30,953, respectively, for the nine months ended September 30, 2019 and 2018. The unamortized debt discount at September 30, 2019 and December 31, 2018 was $36,667 and $26,667, respectively. As of September 30, 2019, and December 31, 2018, net balance of the convertible note amounted to $163,333 and $173,333, respectively.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

As a smaller reporting company, we are not required to provide the information required by this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Our management does not expect that our disclosure controls and procedures will prevent all error and all fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Based on that evaluation, as of September 30, 2019, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes that have affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the period covered by this report. 

 

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

Item 1A. Risk Factors.

As a smaller reporti0ng company, we are not required to provide the information required by this item.

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

Unregistered Sales of Equity Securities

None.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Use of Proceeds

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits

31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
10.1	Amended and Restated 12% Convertible Promissory Note, dated September 1, 2018, by and between the Company and Junhan Xie.
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

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SIGNATURES

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.

	MakingORG, Inc.
Dated: November 14, 2019	By:	/s/ Juanzi Cui
	Name:	Juanzi Cui
		President, Chief Executive Officer and Chief Financial Officer
		(principal executive officer and principal financial and accounting officer)

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