Quarterly Report for Quarter Ending September 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 condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed 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 condensed 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 is 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 September 30, 2024 and 2023

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

		Three Months ended September 30,
		2024				2023
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses			5,501				13,805
Loss from operations			(5,501	)			(13,805	)
Total other expenses, net			(12,472	)			(2,041	)
Loss before provision for income taxes			(17,973	)			(15,846	)
Provision for income taxes			-				-
Net loss		$	(17,973	)		$	(15,846	)

Revenues.

During the three months ended September 30, 2024, we recognized no revenues from our sharing economy business.

Cost of revenues.

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

Gross profit and gross margin.

No gross profit and gross margin were resulted for the three months ended September 30, 2024 and 2023, respectively.

Operating expenses.

For the three months ended September 30, 2024, operating expenses were $5,501, as compared to $13,805 for the three months ended September 30, 2023, a decrease of $8,304 or 60.15%, 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 September 30, 2024, loss from operations was $5,501 as compared to $13,805 for the three months ended September 30, 2023.

Total other expenses, net.

For the three months ended September 30, 2024, total other expenses, net, were $12,472 as compared to other expense, net, of $2,041 for the three months ended September 30, 2023, an increase of $10,431. The increase in other income, net, was primarily increase in foreign exchange loss in the three months ended September 30, 2024.

Income tax provision.

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

Net loss.

As a result of the foregoing, our net loss was $17,973, or $(0.00) per share (basic and diluted), for the three months ended September 30, 2024, as compared with net loss of $15,846, or $(0.00) in the three months ended September 30, 2023.

Nine months ended September 30, 2024 and 2023

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

		Nine Months ended September 30,
		2024				2023
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses			59,610				612,012
Loss from operations			(59,610	)			(612,012	)
Total other (expenses) incomes, net			(12,630	)			26,235,575
(Loss) income before provision for income taxes			(72,240	)			25,623,563
Provision for income taxes			-				-
Net (loss) income		$	(72,240	)		$	25,623,563

Revenues.

During the nine months ended September 30, 2024 and 2023, we recognized no revenues from our sharing economy business.

Cost of revenues.

No direct costs were incurred during the nine months ended September 30, 2024 and 2023.

Gross profit and gross margin.

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

Operating expenses.

For the nine months ended September 30, 2024, operating expenses were $59,610, as compared to $612,012 for the nine months ended September 30, 2023, a decrease of $552,402 or 90.26%, due to a decrease in selling, general and administrative expense.

Loss from operations.

As a result of the factors described above, for the nine months ended September 30, 2024, loss from operations was $59,610 as compared to $612,012 for the nine months ended September 30, 2023.

Total other (expenses) incomes, net.

Other incomes (expenses) includes interest income, interest expense, foreign exchange gain (loss), gain on disposal of subsidiaries, and other income. For the nine months ended September 30, 2024, total other expenses, net, were $12,630 as compared to other income, net, of $26,235,575 for the nine months ended September 30, 2023, a decrease of $26,222,945. The decrease in other expenses, net, was primarily related to the one-off event in gain on disposal of subsidiaries for the nine months ended September 30, 2023.

Income tax provision.

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

Net (loss) income.

As a result of the foregoing, our net loss was $72,240, or $(0.00) per share (basic and diluted), for the nine months ended September 30, 2024, as compared with net income of $25,623,563, or $0.03 per share (basic and diluted) for the nine months ended September 30, 2023.

Liquidity and Capital Resources

As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $4,087 and $1,557, respectively.

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

		September 30, 2024				December 31, 2023				Change in Working Capital				Percentage Change
Working capital:
Total current assets		$	18,064,205			$	18,080,853			$	(16,648	)			(0.09	)%
Total current liabilities			3,969,028				3,933,360				35,668				0.91	%
Working capital		$	14,095,177			$	14,147,493			$	(52,316	)			(0.37	)%

Working Capital. Total working capital as of September 30, 2024 was approximately $14.1 million, as compared to approximately $14.1 million as of December 31, 2023. The working capital remained stable.

Cash Flows

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

		For the Nine Months ended
		September 30,
		2024				2023
Net cash used in operating activities		$	(72,240	)		$	(59,478	)
Net cash provided by investing activities		$	-			$	-
Net cash provided by (used in) financing activities		$	41,028			$	(170,981	)
Effect of exchange rate changes on cash and cash equivalents		$	33,742			$	199,353
Net increase (decrease) in cash and cash equivalents		$	2,530			$	(31,106	)
Cash and cash equivalents at beginning of period		$	1,557			$	32,772
Cash and cash equivalents at end of period		$	4,087			$	1,666

Cash Flow in Operating Activities

Net cash used in operating activities was $72,240 for the nine months ended September 30, 2024, and primarily consisted of a net loss of $72,240.

Net cash used in operating activities was $59,478 for the nine months ended September 30, 2023, and consisted primarily of a net income of $25,623,563, gain on disposal of subsidiaries of $26,222,555, 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 cash flows from investing activities for the nine months ended September 30, 2024 and 2023.

Cash Flow in Financing Activities

Net cash flow provided by financing activities was $41,028 for the nine months ended September 30, 2024, which consisted of $41,028 received fund advances from related party.

Net cash flow used in financing activities was $170,981 for the nine months ended September 30, 2023, which consisted of $117,450 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.