ITEM 2 - MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Quarterly Report contains forward-looking statements
within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies
for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
"will," "we believe," "management believes" and similar language. The forward-looking statements are based
on the current expectations of the Company and are subject to certain risks, uncertainties and assumptions, including those set forth
in the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report.
Actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements
on information currently available to us, and we assume no obligation to update them.
Investors are also advised to refer to the information
in our previous filings with the Securities and Exchange Commission (SEC), especially on Forms 10-K, 10-Q and 8-K, in which we discuss
in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible
to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement
of all risks and uncertainties or potentially inaccurate assumptions.
Overview
From November 2009 until October, 2013, through our
China subsidiary, we were engaged in design, marketing and distributing of alcohol base clean fuel which are designed to use less fossil
fuel and have less pollution than traditional fuel.
From October 2013 until September, 2017, through our
Taiwan subsidiary, we were engaged in design, marketing and distributing of hardware and software technologies, including new cell phone
apps, as well as solutions and technology in fleet management, the driving record management system (DMS) that provide total solution
and management mechanism for vehicles and driver behavior control and analysis, which increase driving safety and efficiency.
On September 30, 2017, pursuant to agreements
with one of the Company's directors, Li-An Chu, the Company transferred the 100% ownership in its wholly owned Taiwan Subsidiary, Jinchih
International Limited ("Jinchih"), to Li-An Chu in exchange for cancellation of debt $379,254, and cancellation of total 25,503,333
shares of the Company's common stock owned by a group of stockholders, including Li-An Chu. As a result of these transactions, Jinchih
is no longer a wholly owned subsidiary of the Company as of September 30, 2017.
On August 1, 2020, the Company signed
a Loan Agreement with Sinoway International Corporation, granting the latter a credit line in the aggregate amount of US$1 million. On
August 25, 2020, the Company granted the first loan of USD25,000 to Sinoway International Corp. with a Promissory Note. This note can
be converted to 25,000,000 shares of common stock of Sinoway International Corp. This is in connection with the new business venture
between our two companies relating to international third party mobile payments apps developed and provided by Sinoway International
Corp.
On December 22, 2020, the Company signed
an Investment Commitment Agreement with iDrink Technology Co. Ltd. (“iDrink”) stating that the Company commits to invest
in iDrink Technology Co. Ltd. for a total amount equivalent to the value of five percent of outstanding common stock of iDrink. iDrink
designs the iDrink Smart Vending Machine, utilizing cloud platform services that consolidate consumption data from beverage manufacturers
and consumers alike, and uploads the data to its blockchain-enabled iDrink Smart Vending Machine. It also adopts AI and Big Data technology
to facilitate gold trading hedge strategies.
The
Company will continue to strengthen our competencies in other high technology and blockchain related businesses, such as the revolutionary
sound wave technology with industrial applications, blockchain technology, fintech services, professional consultancy for ICO’s, AI
and other high potential critical blockchain projects.
The Company is working new businesses in various fields
through careful review and critical selection of new growth businesses. The Company is working to strengthen our core competencies in
high technology and blockchain related businesses, such as blockchain apps technology, fintech services, professional consultancy for
ICO's, and other high potential critical blockchain projects.
Results of Operations
Three and Six Months ended June 30, 2021 and 2020.
Revenue
The Company recognized $65,000 and $20,999 of revenue
during the three months ended June 30, 2021 and 2020, and $98,000 and $45,000 of revenue during six months ended June 30, 2021 and 2020
respectively. Our revenues were generated from the I.T. management consulting services.
General and Administrative Expenses:
General and administrative expenses were $57,413 and
$30,122 for the three months ended June 30, 2021 and 2020, and $73,633 and $57,312 for the six months ended June 30, 2021 and 2020, respectively.
The increase was primarily due to professional fees paid.
Interest expense
During the three months ended June 30, 2021 and 2020,
the Company had interest expense of $4,475 and $4,250 and during the six months ended June 30, 2021 and 2020, the company had interest
expenses of $9,000 and $8,498, from convertible promissory note respectively.
Net income
As a result of the foregoing, the Company generated
net income (loss) of $3,424 and ($4,373) for the three months ended June 30, 2021 and 2020, and $17,486 and ($16,427) for the six months
ended June 30, 2021 and 2020, respectively.
Liquidity and Capital Resources
We have funded our operations to date primarily through
operations, and non-related party loans and capital contributions. Due to our net loss and negative cash flow from operating activities,
there is substantial doubt about the Company's ability to continue as a going concern. The Company's management recognizes
that the Company must generate sales and obtain additional financial resources to continue to develop its operations
As of June 30, 2021, we had a working capital deficit
of $50,705. Our current assets on June 30, 2021 were $237,218 primarily consisting of cash of $69,193, accounts receivable of $138,025
and Short Term Investment- Held-for-Trading in iDrink Technology Co. Ltd. $30,000. Other assets include loans receivable of $50,000 and
other receivables $58,099 and accounts receivables-income from HFT $9,000. Our current liabilities were primarily composed of credit card
payable of $6,013, convertible promissory notes of $287,000, accrued expenses and accrued expenses and other liabilities of $102,980 and
short term debt $10,000.
Cash Flow from Operating Activities
Net cash provided
used in operating activities was ($33,935) during the six months ended June 30, 2021 which consisted of our net income of ($17,486), offset
by the changes in accounts receivable $11,975, other receivables ($8,966), a change of accrued expenses of $7,402 and a change of credit
card payable of $6,013.
Net cash provided used in operating activities was
$7,161 during the six months ended June 30, 2020 which consisted of our net income of ($16,427), offset by the changes in other receivable
$17,134, accounts receivable $10,000, increase of other payable of $26,500, a change of accrued expenses of $7,313 and a change of credit
card payable of $2,564.
Cash Flow from Investing
Activities
Net cash used in investing activities totaled $0 for the six
months ended June 30, 2021
Net cash used in investing activities totaled $30,300 for the
six months ended June 30, 2020
Cash Flow from Financing
Activities
Net cash provided by financing activities totaled $10,000 of
proceeds from non-related party for the six months ended June 30, 2021.
Net cash provided by financing activities totaled $47,000 of
proceeds from non-related party for the six months ended June 30, 2020.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, expenses,
results of operations, liquidity, capital expenditures or capital resources.
Inflation
We do not believe our business and operations
have been materially affected by inflation.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition
and results of operations are based on our financial statements that have been prepared under accounting principle generally accepted
in the United States of America. The preparation of 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
and the disclosure of contingent 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.
A summary of significant accounting policies is included
in Note 3 to the consolidated financial statements included in this Annual Report. Of these policies, we believe that the following items
are the most critical in preparing our financial statements.
Accounts Receivable and Allowance for Doubtful
Accounts
Accounts receivable are recorded at the invoiced amount,
net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of the FASB Accounting Standards Codification to
estimate the allowance for doubtful accounts. The Company performs on-going credit evaluations of its customers and adjusts credit limits
based upon payment history and the customer's current credit worthiness, as determined by the review of their current credit information;
and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.
Outstanding account balances are reviewed individually
for collectability. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in
the Company's existing accounts receivable. Bad debt expense is included in general and administrative expenses, if any. Pursuant
to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against the allowance after all
means of collection have been exhausted and the potential for recovery is considered remote. The Company has adopted paragraph 310-10-50-6
of the FASB Accounting Standards Codification and determine when receivables are past due or delinquent based on how recently payments
have been received.
Inventories
Inventories consists of products purchased and are
valued at the lower of cost or net realizable value. Cost is determined on the weighted average cost method. The Company reduces inventories
for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference
between the cost of the inventory and its estimated net realizable value. Factors utilized in the determination of estimated net realizable
value include (i) current sales data and historical return rates, (ii) estimates of future demand, (iii) competitive pricing pressures,
(iv) new product introductions, (v) product expiration dates, and (vi) component and packaging obsolescence.
The Company evaluates its current level of inventories
considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the income statement as
a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification to adjust inventories
to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions,
customer demand or competition differ from expectations.
Revenue Recognition
The Company's revenue recognition policies are
in compliance with ASC 605 (Originally issued as Staff Accounting Bulletin (SAB) 104). Revenue is recognized at the date of shipment to
customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations
of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition
are satisfied are recorded as unearned revenue. Discounts provided to customers by the Company at the time of sale are
recognized as a reduction in sales as the products are sold. Sales taxes are not recorded as a component of sales.
The Company derives its revenues from sales contracts
with customers with revenues being generated upon the shipment of merchandise. Persuasive evidence of an arrangement is demonstrated via
sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as a signed acknowledgement of receipt from
the customers or a signed bill of lading from the third party trucking company and title transfers upon shipment, based on free on board
("FOB") warehouse terms; the sales price to the customer is fixed upon acceptance of the signed purchase order or contract
and there is no separate sales rebate, discount, or volume incentive. When the Company recognizes revenue, no provisions are made for
returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues.
Net sales of products represent the invoiced value
of goods, net of value added taxes ("VAT"). The Company is subject to VAT which is levied on all of the Company's products
at the rate of 5% on the invoiced value of sales. Sales or Output VAT is borne by customers in addition to the invoiced value of sales
and Purchase or Input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export
sales.
Foreign Currency Translation
The Company follows Section 830-10-45 of the FASB
Accounting Standards Codification ("Section 830-10-45") for foreign currency translation to translate the financial statements
of the foreign subsidiary from the functional currency, generally the local currency, into U.S. Dollars. Section 830-10-45 sets out the
guidance relating to how a reporting entity determines the functional currency of a foreign entity (including of a foreign entity in a
highly inflationary economy), re-measures the books of record (if necessary), and characterizes transaction gains and losses. the assets,
liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity. An entity's functional
currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment,
or local currency, in which an entity primarily generates and expends cash.
The functional currency of each foreign subsidiary
is determined based on management's judgment and involves consideration of all relevant economic facts and circumstances affecting
the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing,
payroll and other expenditures, would be considered the functional currency, but any dependency upon the parent and the nature of the
subsidiary's operations must also be considered. If a subsidiary's functional currency is deemed to be the local currency,
then any gain or loss associated with the translation of that subsidiary's financial statements is included in accumulated other
comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar, then any gain or loss associated with the re-measurement
of these financial statements from the local currency to the functional currency would be included in the consolidated statements of comprehensive
income (loss). If the Company disposes of foreign subsidiaries, then any cumulative translation gains or losses would be recorded into
the consolidated statements of comprehensive income (loss). If the Company determines that there has been a change in the functional currency
of a subsidiary to the U.S. Dollar, any translation gains or losses arising after the date of change would be included within the statement
of comprehensive income (loss). Based on an assessment of the factors discussed above, the management of the Company determined the relevant
subsidiaries' local currencies to be their respective functional currencies.
