Quarterly Report for Quarter Ending June 30, 2024 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Effective January 1, 2023, the Company approved and completed the internal corporate restructuring actions to streamline, right-size and optimize specific organizational structure by disposing of several subsidiaries. As a result of the corporate exercise, the Advertising business met the criteria set forth in Accounting Standards Codification ("ASC") 205-20 to be presented as a discontinued operation and the related assets and liabilities have been presented as held for discontinued operations. The Advertising business' results of operations and the related cash flows are reflected in Income from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations and Comprehensive Loss and cash flows from discontinued operations in the Condensed Consolidated Statements of Cash Flows, respectively, for all periods presented.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements.

Currency Exchange Rates

Our functional currency is the U.S. dollar, and the functional currency of our operating subsidiaries is Hong Kong Dollar.

Our financial statements are expressed in U.S. dollars, which is the functional currency of our parent company. The functional currency of our operating subsidiaries and affiliates is the Hong Kong dollar. To the extent we hold assets denominated in U.S. dollars, any appreciation of the HKD against the U.S. dollar could result in a charge in our statement of operations and a reduction in the value of our U.S. dollar denominated assets. On the other hand, a decline in the value of HKD against the U.S. dollar could reduce the U.S. dollar equivalent amounts of our financial results.

Recent Accounting Pronouncements

In March 2023, the FASB issued ASU No. 2023-01, Leases (Topic 842): Common Control Arrangements ("ASU 2023-01") that is intended to improve the guidance for applying Topic 842 to arrangements between entities under common control. This ASU requires all entities (that is, including public companies) to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The standard will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company has adopted this pronouncement and had no material impact on its condensed and consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosures requirements included in ASU 2023-07 are required for all public entities, including those with a single reportable segment. ASU 2023-07 is effective for annual periods beginning after December 15, 2024, on a retrospective basis, and early adoption is permitted. The Company is currently evaluating the potential impact of ASU 2023-07 on its condensed and consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 720): Improvements to Income Tax Disclosures ("ASU 2023-09"), which prescribes standard categories for the components of the effective tax rate reconciliation and requires disclosure of additional information for reconciling items meeting certain quantitative thresholds, requires disclosure of disaggregated income taxes paid, and modifies certain other income tax-related disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective basis, with a retrospective option. The Company is currently evaluating the potential impact of the adoption of ASU 2023-09 on its condensed and consolidated financial statements.

In March 2024, the FASB issued ASU No. 2024-02, Codification Improvements-Amendments to Remove References to the Concepts Statements ("ASU 2024-02"). The amendments in this Update affect a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance. This update contains amendments to the Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior statements to provide guidance in certain topical areas. ASU 2024-02 is effective for public business entities for fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2025. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the potential impact of the adoption of ASU 2024-02 on its condensed and consolidated financial statements.

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

RESULTS OF OPERATIONS

Three months ended June 30, 2024 and 2023

The following table sets forth the results of our operations for the three months ended June 30, 2024 and 2023:

		Three Months ended June 30,
		2024				2023
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses			6,038				562,442
Loss from operations			(6,038	)			(562,442	)
Total other expenses, net			(6,145	)			(3,925	)
Loss from operations before provision for income taxes			(12,183	)			(566,367	)
Provision for income taxes			-				-
Net loss		$	(12,183	)		$	(566,367	)

Revenues.

No revenues were generated from our sharing economy business for the three months ended June 30, 2024 and 2023, respectively.

Cost of revenues.

No direct costs were incurred during the three months ended June 30, 2024 and 2023, respectively.

Gross profit and gross margin.

No gross profit and gross margin were resulted during the three months ended June 30, 2024 and 2023, as no income generated and direct costs incurred.

Operating expenses.

For the three months ended June 30, 2024, operating expenses were $6,038, as compared to $562,442 for the three months ended June 30, 2023, a decrease of $556,404 or 98.93%, due to decrease in selling, general and administrative expense.

Loss from operations.

As a result of the factors described above, for the three months ended June 30, 2024, loss from operations was $6,038 as compared to $562,442 for the three months ended June 30, 2023.

Total other expenses, net.

Total other expenses, net include interest income, interest expense, foreign currency transaction gain (loss) and gain on disposal of subsidiaries. For the three months ended June 30, 2024, total other expenses, net, was $6,145 as compared to $3,925 for the three months ended June 30, 2023, an increase of $2,220, was primarily increase in foreign exchange loss during the three months ended June 30, 2024.

Income tax provision.

No income tax expense was recorded for the three months ended June 30, 2024 and 2023, respectively.

Loss before provision for income taxes.

As a result of the foregoing, our loss from operations was $12,183, or $(0.00) per share (basic and diluted), for the three months March 31, 2024, as compared with loss from continuing operations of $566,367, or $(0.00) per share (basic and diluted), for the three months ended March 31, 2023, a change of $554,184 or 97.85%.

Net loss.

As a result of the foregoing, our net loss was $12,183 or $(0.00) per share (basic and diluted), for the three months ended June 30, 2024 as compared with net loss of $566,367, or $(0.01) in the three months ended June 30, 2023.

Six months ended June 30, 2024 and 2023

The following table sets forth the results of our operations for the six months ended June 30, 2024 and 2023:

		Six Months ended June 30,
		2024				2023
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses			54,109				598,207
Loss from operations			(54,109	)			(598,207	)
Total other (expenses) incomes, net			(158	)			26,237,616
(Loss) income from operations before provision for income taxes			(54,267	)			25,639,409
Provision for income taxes			-				-
Net (loss) income		$	(54,267	)		$	25,639,409

Revenues.

No revenues were generated from our sharing economy business for the six months ended June 30, 2024 and 2023.

Cost of revenues.

No direct costs were incurred during the six months ended June 30, 2024 and 2023.

Gross profit and gross margin.

No gross profit and gross margin were resulted during the six months ended June 30, 2024 and 2023, as no income generated and direct costs incurred.

Operating expenses.

For the six months ended June 30, 2024, operating expenses were $54,109, as compared to $598,207 for the six months ended June 30, 2023, a decrease of $544,098, or 90.95%, due to the decrease in selling, general and administrative expenses.

Loss from operations.

As a result of the factors described above, for the six months ended June 30, 2024, loss from operations was $54,109 as compared to $598,207 for the six months ended June 30, 2023.

Total other incomes (expenses), net.

Total other incomes (expenses), net include interest income, interest expense, foreign exchange gain (loss) and gain on disposal of subsidiaries. For the six months ended June 30, 2024, total other expenses, net, were $158 as compared to total other incomes, net, of $26,237,616 for the six months ended June 30, 2023, a decrease of $26,237,774. The decrease in total other income, net, was primarily related to the one-off event in gain on disposal of subsidiaries in the six months ended June 30, 2023.

Income tax provision.

No income tax expense was recorded for the six months ended June 30, 2024 and 2023, respectively.

Net (loss) income.

As a result of the foregoing, our net loss was $54,267, or $(0.00) per share (basic and diluted), for the six months ended June 30, 2024 as compared with net income $25,639,409, or $0.04 per share (basic and diluted) for the six months ended June 30, 2023.

Liquidity and Capital Resources

Liquidity is the ability of the Company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $1,671 and $1,557, respectively.

The following table sets forth a summary of changes in our working capital from December 31, 2023 to June 30, 2024:

		June 30, 2024				December 31, 2023				Change in Working Capital				Percentage Change
Working capital:
Total current assets		$	18,050,068			$	18,080,853			$	(30,785	)			(0.17	)%
Total current liabilities			3,956,512				3,933,360				23,152				0.59	%
Working capital		$	14,093,556			$	14,147,493			$	(53,937	)			(0.38	)%

During June 30, 2024, our working capital has no significant changes, as compared to December 31, 2023.

Cash Flows

The following table sets forth a summary of our cash flows for the periods as indicated:

		For the Six Months ended
		June 30,
		2024				2023
Net cash used in operating activities		$	(54,267	)		$	(43,632	)
Net cash provided by investing activities		$	-			$	-
Net cash provided by (used in) financing activities		$	44,852			$	(178,655	)
Effect of exchange rate changes on cash and cash equivalents		$	9,529			$	191,338
Net increase (decrease) in cash and cash equivalents		$	114			$	(30,949	)
Cash and cash equivalents at beginning of period		$	1,557			$	32,772
Cash and cash equivalents from operations at end of period		$	1,671			$	1,823

Cash Flow in Operating Activities

Net cash flow used in operating activities was $54,267 for the six months ended June 30, 2024, which consisted of net loss of $54,267.

Net cash flow used in operating activities was $43,632 for the six months ended June 30, 2023, and consisted primarily of a net income of $25,676,159, adjusted for gain on disposal of subsidiaries of $26,259,305, stock-based consultancy fees of $180,000, stock-based director's remuneration of $44,514 and stock-based staff salaries of $315,000.

Cash Flow in Investing Activities

There were no investing activities for the six months ended June 30, 2024 and 2023.

Cash Flow in Financing Activities

Net cash flow provided by financing activities was $44,852 for the six months ended June 30, 2024, which consisted of $44,852 fund advances from related party.

Net cash flow used in financing activities was $178,655 for the six months ended June 30, 2023, which consisted of $125,124 repayments to related party and repayments of $53,531 bank overdrafts.

We have historically funded our capital expenditures through cash flow provided by operations and bank loans. We intend to fund the cost by obtaining financing mainly from local banking institutions with which we have done business in the past. We believe that the relationships with local banks are in good standing and we have not encountered difficulties in obtaining needed borrowings from local banks.

Off-balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder's equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Inflation

The effect of inflation on our revenue and operating results was not significant.