The following discussion and analysis of our financial condition and results of
operations should be read together with our unaudited financial statements and
related notes appearing elsewhere in this Form 10-Q and our audited financial
statements and related notes for the year ended
most recent annual report on Form 10-K/A. In addition to historical information,
this discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of
certain factors.
Company Overview
its operations through its wholly owned subsidiaries,
Limited
2017
Through LFGL, we act as the service provider for a mobile application investment
platform that is owned by JFB. The platform connects investors with financial
service providers in an effort to sharpen operational efficiency and seeks to
address customer demands for more innovative services. It is a ready-made
application created to meet the needs of financial service providers, especially
trust companies and insurance companies. The platform is customizable and each
financial institution can adjust the platform to better suit their client’s
needs.
Use of the JFB platform is currently free; however, we have an agreement with a
third party whereby we have authorized the third party to use our investment
platform and related applications until
future, the Company intends to generate additional revenue by developing a new,
more comprehensive mobile application, with similar functions as the JFB
platform, to offer to our clients for a fee.
The Company has been developing a new, more comprehensive FinMaster mobile
application (“FinMaster App”), to offer to our clients for a fee, which has been
made available for download as of
one-stop shopping for multi financial services. Key services include real-time
media activities, on-line live broadcast, A.I. stock selection and other
features. On
JFB, acquired all of the issued and outstanding capital stock (the
“Acquisition”) of
APP (“NPI”), pursuant to the terms and conditions of that certain Stock Purchase
Agreement, dated as of
shareholders of NPI identified therein (each a “Seller,” and, collectively, the
“Sellers”) and the representative of the Sellers identified therein. The
aggregate purchase price for the acquisition was
discounts, expenses and reductions for outstanding NPI debt owed to the Company
and/or its affiliates. The net purchase price for the acquisition was
Sellers in accordance with their respective pro rata percentage.
As a result of the acquisition, the Company now owns, indirectly through JFB,
100% of NPI. NPI, through its wholly-owned subsidiaries,
laws of the
respectively, engages primarily in the development of ecological-system
applications, integration of big data and promotion of OTT applications.
32
We have incurred significant operating losses. As of
2020
We generated revenue of
2021
three months ended
principally attributed to general and administrative expenses.
Going Concern
The accompanying unaudited condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
business.
As of
recorded an accumulated deficit and a working capital deficit of
ability to continue as a going concern. The ability to continue as a going
concern is dependent upon our profit generating operations in the future and/or
obtaining the necessary financing to meet our obligations and repay our
liabilities arising from normal business operations when they become due.
We expect to finance our operations primarily through cash flows from
operations, loans from existing directors and shareholders and placements of
capital stock for additional funding. In the event that we require additional
funding to finance the growth of our current and expected future operations as
well as to achieve our strategic objectives, a shareholder has indicated the
intent and ability to provide additional financing. No assurance can be given
that any future financing, if needed, will be available or, if available, that
it will be on terms that are satisfactory to us. Even if we are able to obtain
additional financing, if needed, it may contain undue restrictions on its
operations, in the case of debt financing, or cause substantial dilution for its
stock holders, in the case of equity financing.
Any outbreak of contagious diseases, including but not limited to COVID-19, Zika
virus, Ebola virus, avian or swine influenza or severe acute respiratory
syndrome, may disrupt our ability to adequately staff our business and may
generally disrupt our operations. The recent outbreak of COVID-19 epidemic in
conditions in
economic growth in
customers operate, which will negatively impact the global supply chain, market
and economies. We have significant operations in
Pacific
and marketing channels. If the pandemic continues, we may experience a decline
of sales activities and customer orders; reduction of operation and workforce at
our fabs; difficulties in international travels and communications; regulatory
restrictions; reduction of research and development activities; and other risks
resulting from the outbreak. Any of these factors may adversely affect our
business, financial conditions and results of operations. In addition, as a
result of the COVID-19 pandemic and ensuing government regulations implementing
stay-at-home orders and restrictions on travel and other activities, we have
experienced an increase in demand for manufacturing capacity in the
semiconductor industry in respond to increased demand for consumer electronic
products, which had a positive impact on our financial performance. However, we
cannot predict the impact of COVID-19 pandemic on the semiconductor industry in
the future, and any increase in such demand may not be sustainable and we may
experience a decline in our sales activities and customer orders.
In addition, if any of our employees is suspected of having contracted COVID-19
or any contagious disease, we may under certain circumstances be required to
quarantine such employees and the affected areas of our premises. Therefore, we
may have to temporarily suspend part of or all of our operations. Furthermore,
government actions to contain the outbreak may restrict the level of economic
activities in affected regions, including
ability of our employees and customers to travel, which may also adversely
affect our business and prospects. As a result, we cannot assure you that any
future outbreak of contagious diseases would not have a material adverse effect
on our financial condition and results of operations.
The COVID-19 pandemic has created and may continue to create significant
uncertainty in macroeconomic conditions, which may cause further business
slowdowns or shutdowns, depress demand for our business, and adversely impact
our results of operations. We expect uncertainties around our key accounting
estimates to continue to evolve depending on the duration and degree of impact
associated with the COVID-19 pandemic. Our estimates may change as new events
occur and additional information emerges, and such changes are recognized or
disclosed in its consolidated financial statements.
These unaudited condensed consolidated financial statements do not include any
adjustments to the recoverability and classification of recorded asset amounts
and classification of liabilities that might be necessary should we be unable to
continue as going concern.
Liquidity and Capital Resources
The following table sets forth a summary of our cash flows for the periods
indicated:
For the nine months ended
May 31, 2021 May 31, 2020
Net cash used in operating activities $ (2,873,554 ) $ (513,865 )
Net cash used in investing activities (63,081 ) (1,338,408 )
Net cash provided by financing activities 4,272,333 1,568,269
Cash and cash equivalents and restricted cash,
beginning of period 432,087 447,562
Effects of exchange rate changes on cash and
cash equivalents and restricted cash (218,623 ) -
Cash and cash equivalents and restricted cash,
end of period $ 1,549,162 $ 163,558
33
Cash Used in Operating Activities
Net cash used in operating activities for the nine months ended
2020 was
activities was mainly for payment of general and administrative expenses.
Cash Used in Investing Activities
Net cash used in investing activities for the nine months ended
2020 was
activities for the nine months ended
of plant and equipment and intangible assets. The net cash used in investing
activities for the nine months ended
and repayment of notes receivable.
Cash Provided by Financing Activities
Net cash provided by financing activities for the nine months ended
and 2020 was
financing activities were related to the issuance of shares and convertible
notes, and advances from (to) shareholders and from a director.
Results of Operations
Comparison for the nine months ended
For the nine months ended
May 31, 2021 May 31, 2020
Revenue $ 78,696 $ 5,000
Research and development expenses (456,428 ) -
Sales and marketing expenses (186,068 ) -
General and administrative expenses (7,779,743 ) (3,700,182 )
Loss from operations (8,343,543 ) (3,695,182 )
Interest expenses (51,000 ) (47,303 )
Loss on change in fair value of convertible notes (129,288 ) -
Other income 3,813 89,591
Loss before income tax (8,520,018 ) (3,652,894 )
Income tax benefit (expense) 16,108 (30,250 )
Net loss $ (8,503,910 ) $ (3,683,144 )
Revenue
We signed an agreement with a third party whereby we authorized the third party
to use our investment platform and related applications, from
the third party’s sale of products on our mobile application. From
2020
application, which we refer to as the FinMaster mobile application (the
“FinMaster App” and together with the JFB platform, the “Apps”), with similar
functions as the JFB platform. We also provided software maintenance services.
We generated revenue of
2021
Research and Development Expenses
Research and development expenses for the nine months ended
amounted to
consulting work performed by third parties and salaries and benefits for those
employees engaged in research, design and development activities after our
acquisition of NPI in
nine months ended
34 Sales and Marketing Expenses
Sales and marketing expenses were
amounted to
our acquisition of NPI in
General and Administrative Expenses
General and administrative expenses were
months ended
compensation to directors, employees and consultants of
Besides, we incurred more payroll costs and other administrative expenses after
our acquisition of NPI in
Loss on change in fair value of convertible notes
We incurred a fair value loss of
notes for the nine months ended
to measure the convertible promissory notes in their entirety at fair value with
changes in fair value recognized as non-operating income or loss at each balance
sheet date.
Other Income
Other income for the nine months ended
compared to
Net Loss
Our net loss was
2021
and administrative expenses.
Comparison for the three months ended
For the three months ended
May 31, 2021 May 31, 2020
Revenue $ 23,444 $ 1,667
Research and development expenses (151,863 ) -
Sales and marketing expenses (15,338 ) -
General and administrative expenses (2,301,816 ) (1,215,184 )
Loss from operations (2,445,573 ) (1,213,517 )
Interest expenses (18,597 ) (17,196 )
Gain on change in fair value of convertible notes 201,000 -
Other (expense) income (19,212 ) 39,309
Loss before income tax (2,282,382 ) (1,191,404 )
Income tax benefit 5,879 -
Net loss $ (2,276,503 ) $ (1,191,404 )
Revenue
We signed an agreement with a third party whereby we authorized the third party
to use our investment platform and related applications, from
the third party’s sale of products on our mobile application. From
2020
application, which we refer to as the FinMaster mobile application (the
“FinMaster App” and together with the JFB platform, the “Apps”), with similar
functions as the JFB platform. We also provided software maintenance services.
We generated revenue of
2021
35
Research and Development Expenses
Research and development expenses for the three months ended
amounted to
consulting work performed by third parties and salaries and benefits for those
employees engaged in research, design and development activities after our
acquisition of NPI in
three months ended
Sales and Marketing Expenses
Sales and marketing expenses were
amounted to
our acquisition of NPI in
General and Administrative Expenses
General and administrative expenses were
months ended
compensation to directors, employees and consultants of
Besides, we incurred more payroll costs and other administrative expenses in
2020 after our acquisition of NPI in
Gain on change in fair value of convertible notes
We incurred a fair value gain of
notes for the three months ended
to measure the convertible promissory notes in their entirety at fair value with
changes in fair value recognized as non-operating income or loss at each balance
sheet date.
Other (Expense) Income
Other (expense) income for the three months ended
Net Loss
Our net loss was
2021
and administrative expenses.
Off-Balance Sheet Arrangements
As of
have or are reasonably likely to have a current or future effect on our
financial condition, changes in our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to our stockholders.
Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the
Company is not required to provide this information.
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