Quarterly Report for Quarter Ending June 30, 2023 (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 continually evaluate our estimates, including those related to income taxes and the valuation of equity transactions.

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.

Stock-based Compensation

FASB's ASC Topic 718, "Stock Compensation" ("ASC Topic 718"), prescribes accounting and reporting standards for all stock-based payment transactions in which employee and non-employee services are acquired. The Company measures the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

The Company estimates the fair value of each restricted stock award as of the date of grant using the closing price as reported by the OTC Markets Group Inc. on the date of grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. The Company accounts for forfeitures of restricted stock as they occur.

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 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, 2023 and 2022

The following table sets forth the results of our continuing operations for the three months ended June 30, 2023 and 2022:

		Three Months ended June 30,
		2023				2022
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses			562,442				1,239,652
Loss from operations			(562,442	)			(1,239,652	)
Total other expenses, net			(3,925	)			(3,496	)
Loss from continuing operations before provision for income taxes			(566,367	)			(1,243,148	)
Provision for income taxes			-				-
Loss from continuing operations			(566,367	)			(1,243,148	)
Loss from discontinued operations, net of income taxes			-				(255,495	)
Net loss		$	(566,367	)		$	(1,498,643	)

Revenues.

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

Cost of revenues.

No direct costs were incurred during the three months ended June 30, 2023 and 2022, respectively.

Gross profit and gross margin.

No gross profit and gross margin were resulted for the three months ended June 30, 2023 and 2022, as no income generated and direct costs incurred.

Operating expenses.

For the three months ended June 30, 2023, operating expenses were $562,442, as compared to $1,239,652 for the three months ended June 30, 2022, a decrease of $677,210 or 54.63%, 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, 2023, loss from operations was to $562,442 as compared to $1,239,652 for the three months ended June 30, 2022.

Total other expenses, net.

Total other expenses, net include interest income, interest expense, foreign currency transaction loss, net and gain on disposal of subsidiaries. For the three months ended June 30, 2023, total other expenses, net, were $3,925 as compared to $3,496 for the three months ended June 30, 2022, a increase of $429. The increase in total other expenses, net, was primarily increase in foreign currency transaction loss in the three months ended June 30, 2023.

Income tax provision.

No income tax expense was recorded for the three months ended June 30, 2023 and 2022.

Loss from continuing operations. As a result of the foregoing, our loss from continuing operations was $566,367, or $(0.01) per share (basic and diluted), for the three months June 30, 2023, as compared with loss from continuing operations of $1,243,148, or $(0.00) per share (basic and diluted), for the three months ended June 30, 2022, a change of $676,781 or -54.44%.

Loss from discontinued operations, net of income taxes. Our loss from discontinued operations was $0, or $(0.01) per share (basic and diluted), for the three months ended June 30, 2023, as compared with loss from discontinued operations of $255,495, or $(0.00) per share (basic and diluted), for the three months ended June 30, 2022, a change of $255,495 or -100%.

Net loss.

As a result of the foregoing, our net loss was $566,367, or $(0.00) per share (basic), for the three months ended June 30, 2023 as compared with net loss of $1,498,643, or $(0.00) in the three months ended June 30, 2022.

Six months ended June 30, 2023 and 2022

The following table sets forth the results of our operations for the six months ended June 30, 2023 and 2022:

		Six Months ended June 30,
		2023				2022
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses			598,207				1,398,313
Loss from operations			(598,207	)			(1,398,313	)
Total other incomes (expenses), net			26,237,616				(52,720	)
Income (Loss) from continuing operations before provision for income taxes			25,639,409				(1,451,033	)
Provision for income taxes			-				-
Income (loss) from continuing operations			25,639,409				(1,451,033	)
Loss from discontinued operations, net of income taxes			-				(831,613	)
Net income (loss)		$	25,639,409			$	(2,282,646	)

Revenues.

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

Cost of revenues.

No direct costs were incurred during the six months ended June 30, 2023 and 2022.

Gross profit and gross margin.

No gross profit and gross margin were resulted during the six months ended June 30, 2023 and 2022 as no income generated and direct costs incurred.

Operating expenses.

For the six months ended June 30, 2023, operating expenses were $598,207, as was compared to $1,398,313 for the six months ended June 30, 2022, a decrease of 800,106, or 57.22%, due to a 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, 2023, loss from operations was to $598,207 as compared to $1,398,313 for the six months ended June 30, 2022.

Total other incomes (expenses), net.

Total other incomes (expenses), net include interest income, interest expense, foreign currency transaction gain (loss) and gain on disposal of subsidiaries. For the six months ended June 30, 2023, total other incomes, net, amounted to $26,239,616 as compared to total other expenses, net, of $488,838 for the six months ended June 30, 2022. The increase in total other incomes, net, was primarily due to $26,222,555 in gain on disposal of subsidiaries during the six months ended June 30, 2023.

Income tax provision.

No income tax expense was recorded for the six months ended June 30, 2023 and 2022.

Net income (loss).

As a result of the foregoing, our net income was $25,639,409, or $0.04 per share (basic), for the six months ended June 30, 2023 as compared with net loss $2,282,646, or $(0.01) for the six months ended June 30, 2022.

Liquidity and Capital Resources

Liquidity is the ability of a 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, 2023 and December 31, 2022, we had cash balance of $1,823 and $4,275, respectively. These funds are located in financial institutions mainly located in Hong Kong.

The following table sets forth a summary of changes in our working capital from December 31, 2022 to June 30, 2023:

		June 30, 2023				December 31, 2022				Change in Working Capital				Percentage Change
Working capital:
Total current assets		$	17,990,176			$	2,707,371			$	15,282,805				564.6	%
Total current liabilities			3,820,049				12,372,740				(8,552,691	)			(69.1	)%
Working capital (deficit)		$	14,170,127			$	(9,665,369	)		$	23,835,496				246.6	%

Working Capital. Total working capital as of June 30, 2023 amounted to approximately 14.1 million, as compared to deficit approximately 9.7 million as of December 31, 2022. The increase in working capital was due to the disposal of the subsidiaries.

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,
		2023				2022
Net cash used in operating activities		$	(43,632	)		$	(775,250	)
Net cash provided by investing activities		$	-			$	240,524
Net cash (used in) provided by financing activities		$	(178,655	)		$	969,852
Effect of exchange rate changes on cash and cash equivalents		$	191,338			$	5,166
Net (decrease) increase in cash and cash equivalents		$	(30,949	)		$	440,292
Cash and cash equivalents at beginning of period		$	32,772			$	66,273
Cash and cash equivalents at end of period		$	1,823			$	506,565

Net cash 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.

No cash flows from investing activities for the six months ended June 30, 2023. Net cash flow provided investing activities for the six months ended June 30, 2022, consisted primarily of discontinued operations of $240,524.

Net cash flow used in financing activities was $178,655 for the six months ended June 30, 2023 as compared to provided by financing activities was $429,979 for the six months ended June 30, 2022. During the six months ended June 30, 2023, we repaid to related party of $125,124 and repaid bank overdraft balance of $51,531.

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.