Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations Forward-Looking
Statements
Certain statements, other than purely historical
information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results,
and the assumptions upon which those statements are based, are "forward-looking statements." These forward-looking statements
generally are identified by the words "believes," "project," "expects," "anticipates,"
"estimates," "intends," "strategy," "plan," "may," "will," "would,"
"will be," "will continue," "will likely result," and similar expressions. Forward-looking statements
are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies
is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated
basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital,
interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered
in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Company Overview and Plan of Operation
We were incorporated as Alpine Auto Brokers,
Inc. on May 12, 2011, in the State of Nevada for the purpose of locating and purchasing used vehicles at auctions, from private
individuals, from other dealers and selling these vehicles specifically to consumers in Salt Lake City, Utah. On January 1, 2014
we acquired 100 percent of the membership interests of Alpine Auto Brokers, LLC, a Utah Limited Liability Company formed on December
10, 2010. Alpine Auto Brokers, LLC commenced operations of selling vehicles in approximately March 2011. We then operate through
a wholly-owned subsidiary, Alpine Auto Brokers, LLC. Our dealership and executive offices were located at 749 South State Street,
Salt Lake City, Utah 84111. Our offices are now located at 11/F Johnson Industrial Mansion, 340 Kwun Tong Road, Kowloon, Hong Kong.
On June 6, 2016, as a result of a private transaction, the control block of voting stock of this company, represented by 3,000,000
shares of common stock (the “Shares”), were transferred from Jason Wilkinson to Tsz Ting Ip, and a change of control
of Alpine Auto Brokers, Inc. (the “Company”) occurred. Upon the change of control of the Company, the then existing
director and officer resigned immediately. Accordingly, Jason Wilkinson, serving as the sole director and as the only officer,
ceased to be the Company’s President and Principal Accounting Officer. At the effective date of the transfer, Tsz Ting Ip
assumed the role of director and President, Chief Financial Officer, Secretary, and Treasurer of the Company.
We were focused on selling older model
vehicles with a price range of $3,000 to $50,000. Most of the vehicles we sell are priced under $25,000. The majority of our prior
customers had good credit and get their financing from local banks and credit unions. On June 1, 2016, the Company discontinued
these operations. The Company is currently negotiating with Matthew Pau, a minority shareholder and non-affiliate of the Company,
to purchase all of the issued and outstanding equity of BKG International Limited (Formerly known as Getabed Company Limited) ("BKGI").
BKGI was incorporated in Hong Kong on May
16, 2013, by Matthew Pau and four business partners, for the development of a new hostel business in Hong Kong. However, as it
failed to obtain a valid hostel license, it ceased business in January 2015. The company had been dormant for about a year. The
company changed its name to BKG International Limited on February 29, 2016 and Matthew Pau became the sole owner on July 28, 2016.
Through its Hong Kong incorporated wholly
owned subsidiary, Max Treasure Holdings Limited, BKGI is setting up a retail shop selling skincare and cosmetic products in Hong
Kong with the intention of building it up to be chain of shops targeted at the local consumers, as well as visitors from Mainland
China. The shop is positioned in the middle to upper end of the market with products sourced from uprising brands in Korea, Japan
and Switzerland.
BKGI is in the process of setting up a wholly foreign owned
enterprise in China for the development of an online business selling imported consumer goods, including milk powder, organic honey
and meat, to satisfy the fast growing demands for safe and healthy food. Sales channels will include the company’s own website
as well as its own shop on WeChat. Promotion and marketing will be primarily through social media. Currently, it has engaged a
sales agent to sell and promote its products through her account on WeChat.
Market Analysis and Distribution
BKGI is setting up a retail shop selling
skincare and cosmetic products in Hong Kong with the intention of building it up to be chain of shops targeted at the local consumers,
as well as visitors from Mainland China. The shop is positioned in the middle to upper end of the market with products sourced
from uprising brands in Korea, Japan and Switzerland.
Competition
The beauty industry is highly competitive
and at times changes rapidly due to consumer preferences and industry trends. Our retail shop will face, competition for consumer
recognition and from popular chain stores that have achieved significant brand name recognition and consumer loyalty. They include
Mannings, Watsons, Joyce Beauty, and the online shops such as HKTVMALL.COM and hereweseoul.com, each of which have launched and
are promoting a variety of skincare and makeup brands. These companies have significantly greater resources than we have and enjoy
a longer history in Hong Kong. These competitors typically devote substantial resources to promoting their brands through traditional
forms of advertising, such as print media and television commercials. Because of such mass marketing methods, these competitors’
products may achieve higher visibility and recognition than our products.
In order to succeed, we must continue to
take market share from our competitors across our retail channels. We compete with chain stores primarily in retail channel in
locating our shop in prime commercial area. We will launch mainly Swiss and Korean natural skin care products with high popularity
with the young target customer. Owing to the highly competitive market in skin care products in Hong Kong, competitive and discount
pricing will be offered to attract customers and boost sales volume in our initiate stage of operation. We will keep signing up
more supplier agreement with distributors in order to introduce more brands and products into our shop in order to increase variety
of products which will be expected to attract re-visited customers.
E-commerce is an extremely competitive
industry in China. Our competitors, including JD.COM, TMALL.COM, AMAZON.COM, VIP.COM and many other corporate and individual operators
from small to medium scale, provide a large variety of products online both imported and locally made. Among all these competitors,
there is a lack of professional skincare products platform. As the demand for professional skincare products in China is very high,
we think that our online shop with a focus on professional skincare products will attract a lot of attention of the customers and
will then share a prominent portion of such market. In order to compete, our online shop will be operating on zero inventory base
strategy which eliminates carrying costs and obsolete inventory costs. Owing to the thin profit margin, we maintain a very slim
operating team in order to reduce fixed operating costs. We make use of external logistic service provider for delivery of goods
which results in less fixed costs as well. After all, we are trying to build up high sales volume with thin profit margin, to increase
the number of online visitors and try to keep a very low fixed costs in order to facilitate a flexible operation under such fierce
competition.
We are also trying to compete with a more
personal approach of advertising and promotion strategy via the social circle function in the most popular social networking cell
phone application in China, Wechat. Products and discounts will be given to the registered users to our online shop who have referred
certain number of new registered users and accumulated certain amount of purchases in our shop. Where these strategies are not
widely used by other competitors.
Sales, Marketing and Distribution Strategy
Our main marketing channels for skincare
products in Hong Kong will be through advertising in social media, such as Facebook, Instagram, Wechat and Weibo, and launching
promotional activities by making interviews with celebrities and beauty products models. The sale of skincare products through
our physical store in prime shopping area.
As the sales of our products will be made
via our eshop via cell phone or PC, the marketing channel of our e-commerce business will be mainly through social networking events
in China. Wechat, the most widely used social networking application in China, will be used to promote our e-shop with its associated
functionalities, such as the “social circle” to different users in China. Discount pricing, gifts and many other interactive
activities will be used to attract attention and browsing on our e-shop. Direct shipment will be made from our supplier to our
customer for any products they purchase in our e-shop via local logistic companies.
Being a new entrant to this e-commerce
industry, we are expected to put large amount of resources in advertising and promotion in order to get customers’ attention
and build up online users baseby making use of discount and aggressive pricing. Accordingly, we will expect a low margin and profitability
in the development stage.
Products
And the products of online shop mainly
include face, eye, body, hair care products, baby care products, health and beauty food, and baby milk powder from Switzerland,
Australia, New Zealand, France and Korea.
The Company’s skincare and cosmetic
products are products sourced from uprising brands in Koreaand Switzerland. The Company’s retail shops will sell skincare
and cosmetic products in Hong Kong with the intention of building it up to be chain of shops targeted at the local as well as Mainland
Chinese consumers.
The Company’s online shop will import
consumer goods, including milk powder, organic honey,health and beauty food, hair care products and baby care products to satisfy
the fast growing demands for safe and healthy food of Chinese consumers which will be undertaken by the company’s own website
as well as its own shop on WeChat.
Products
BKGI’s cosmetics include lipstick,
mascara, eyeshadow, foundation, rouge, skin cleansers and skin lotions, shampoo, and hairstyling products.
Production and Delivery
The Company’s skincare and cosmetics
products are products sourced from uprising brands in Korea, Japan and Switzerland. The Company’s retail shops will sell
skincare and cosmetic products in Hong Kong with the intention of building it up to be chain of shops targeted at the local as
well as Mainland Chinese consumers.
The Company’s distribution of imported
consumer goods, including milk powder, organic honey and meat, to satisfy the fast growing demands for safe and healthy food will
be undertaken the company’s own website as well as its own shop on WeChat. Promotion and marketing will be primarily through
social media.
We compete primarily on the basis of quality,
and price. We believe that BKGI’s success will depend upon its ability to remain competitive in our product areas. The failure
to compete successfully in the future could result in a material deterioration of customer loyalty and our image and could have
a material adverse effect on our business.
Employees
We currently have two employees, Tsz Ting, Ip and Chung Lai
Lok.
Initial Public Offering
Our Form S-1 Registration Statement went effective on September
21, 2015. It was an "all or nothing" offering for 350,000 pre-split shares of our common stock at $0.10 per pre-split
share with a September 21, 2016 deadline to completely sell our offering. We sold our complete offering as of January 29, 2016.
Forward Stock-Split
Effective January 29, 2016 we forward split our issued and outstanding
shares of common stock on a 3 for 1 basis. This increased the number of shares of our common stock issued and outstanding from
1,350,000 pre-split shares to 4,050,000 post-split shares.
Results of Operations for the six
months ended June 30, 2016 and 2015
During the six months ended June 30,
2016, we generated gross revenues of $73,875. Total cost of sales was $74,114, resulting in a gross loss of $239, Total
operating expenses during the period were $80,972, and consisted of general and administrative expenses of $4,621, and unpaid
compensation expense of $6,500 and a loss on disposal of subsidiary of $69,851. Our net loss from discontinued operations for
the six months ended June 30, 2016 was therefore $81,211.
By comparison, during the six months ended
June 30, 2015, we generated gross revenues of $112,477. Total cost of sales was $114,275, resulting in gross profit of $(1,798).
Total operating expenses were $23,201, and consisted of compensation expenses of $13,000, and general and administrative expenses
of $10,201. Our net loss from discontinued operations for the six months ended June 30, 2015 was therefore $24,999.
The decrease in revenues and cost of sales
was due to the winding down of business in anticipation of the change of control transaction. The decrease in operating expenses
in the second quarter of 2016 was mainly due to the winding down of business in anticipation of the change of control transaction.
Liquidity and Capital Resources
As of June 30, 2016, we had current assets
in the amount of $0, consisting of cash in the amount of $0, and inventory in the amount of $0. As of June 30, 2016, we had current
liabilities in the amount of $0. This was due to the change of control event and the shift in operations currently being undertaken.
Off Balance Sheet Arrangements
As of June 30, 2016, there were no off
balance sheet arrangements.
Going Concern
We have experienced recurring losses from
operations and we had an accumulated deficit of $196,156 as of June 30, 2016. To date, we have not been able to produce sufficient
sales to become cash flow positive and be profitable on a consistent basis. The success of our business plan during the next 12
months and beyond will be contingent upon generating sufficient revenue to cover our costs of operations and/or upon obtaining
additional financing. For these reasons, our auditor has raised substantial doubt about our ability to continue as a going concern.
Critical Accounting Policies
In December 2001, the SEC requested that
all registrants list their most "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated
that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition
and results, and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain. We do not believe that any accounting policies currently fit this definition.
Recently Issued Accounting Pronouncements
Our management has considered all recent
accounting pronouncements issued since the last audit of our financial statements. Our management believes that these recent pronouncements
will not have a material effect on our financial statements.