The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed financial
statements and related notes included in this Quarterly Report on Form 10-Q and
the audited financial statements and notes thereto as of and for the year ended
December 31, 2021 and the related Management's Discussion and Analysis of
Financial Condition and Results of Operations, both of which are contained in
the Company's Annual Report on Form 10-K for the year ended June 30, 2021, filed
with the Securities and Exchange Commission (the "SEC") on September 28, 2021.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and
information within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the securities Exchange Act of 1934, as amended,
(the "Exchange Act"), which are subject to the "safe harbor" created by those
sections. The words "anticipated," "believes," "estimates," "expects,"
"intends," "may," "plans," "projects," "will," "should," "could," "predicts,"
potential," continue," "would," and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
these identifying words. We may not actually achieve the plans, intentions, or
expectations disclosed in our forward-looking statements that we make. The
forward-looking statements are applicable only as of the date on which they are
made, and we do not assume any obligation to update any forward-looking
statements. All forward-looking statements in this Form 10-Q are made based on
our current expectations, forecasts, estimates and assumptions, and involve
risks, uncertainties and other factors that could cause results or events to
differ materially from those expressed in the forward-looking statements. In
evaluating these statements, you should specifically consider various factors,
uncertainties and risks that could affect our future results or operations.
These factors, uncertainties and risks may cause our actual results to differ
materially from any forward-looking statement set forth in this quarterly report
on Form 10-Q. You should carefully consider these risks and uncertainties
described and other information contained in the reports we file with or furnish
to the SEC before making any investment decision with respect to our securities.
All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by this cautionary statement.
Overview
Corporate Background- Business Development
Ajia Innogroup Holdings, LTD. (the "Company") was incorporated in the State of
Nevada on March 19, 2014, and our fiscal year end is June 30. The Company's
administrative address is 187 E. Warm Springs Road, Suite B307, Las Vegas,
Nevada 89119. The telephone number is: (702) 360-0652.
The Company had intended to provide a website and mobile app to assist event
planners in locating performers, bands and speakers, booking locations and
planning events in areas around the United States and Canada. However, The
Company changed its business plan in 2017 and pursued the business of self-help
photo kiosks to be implemented at major convenient locations, such as shopping
mall, buildings near subway stations, etc. to attract customers to use the
service.
In September 2017, the Company began exploring a business plan for a sales
system for food and beverage products also sometimes referred to as a catering
integration system. The system consists of a website and app which offers menu
and ordering systems for end users, which predominantly consists of restaurants
and food vendors. We generate revenue from the licensing of our sales system and
we provide all necessary training to restaurant staff, system maintenance and
updates. In addition, the Company provides system development consulting and
training services.
On November 24, 2017, the Board of Directors (the "Board") accepted the
resignation of Ms. Yin Ling (Elaine) Wan as Chief Executive and Chief Financial
Officer of the Company. At the same time, the Board elected the following
individuals to the following positions: Mr. Zhi Qiang Liang was elected as
President, Chief Executive Officer and Director of the Company; Mr. Wai Hing
(Samuel) Lai was elected as Chief Financial Officer of the Company; Shun Ching
(Dickson) Wong was elected as a Director and a Member of the Audit Committee of
the Company; Ms. Sin Kei Stella Hui was elected as a Director and a Member of
the Audit Committee; Ms. Kiu Chung Jacqueline Tang was elected as Chief
Operating Officer of the Company; Mr. Jeffrey Firestone was elected as Director
and Vice President of Investor Relations of the Company; Dr. Kwai Lam (Terence)
Wong was elected as Vice President of Investor Relations and Yin Ling (Elaine)
Wan was elected as Director, Secretary and Treasurer.
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On December 1, 2017, the Company acquired a ten percent (10%) ownership interest
in a collection code project ("Project"), the purpose of which is to improve the
marketability and market penetration of Alipay Network Technology Co., Ltd.
("Alipay") collection code system. As a part of the agreement, the Company will
share 10% of expenses and profit on the Project.
Effective February 9, 2018, the Board accepted the resignation of Jeffrey S.
Firestone from his position as Vice President and director of the Company.
On April 25, 2018, the Company announced that its wholly owned subsidiary,
Guangzhou Shengjia Trading Co., Ltd. of Guangzhou, China ("Shengjia") has
entered into an agreement with Guangzhou Renhai Network Technology Co., Ltd.
("Renhai") in which Shengjia would replace its 10% interest in the Alipay
payment code business development project ("Alipay Project"), with a 30%
interest of Renhai's new China Mobile project. Renhai has recently reached an
agreement with China Mobile Communications Corporation ("China Mobile") whereby
Renhai and China Mobile are to sign an agreement appointing Renhai as one of
China Mobile's marketers in promoting China Mobile's business products for the
period from April 1, 2018 to September 30, 2018. Renhai's China Mobile agreement
will be extended once certain business targets are fulfilled.
Nevertheless, even with the above remedies, the returns from the projects are
still not satisfied by the Company's management and are far below the
estimations made from Renhai to the Company. In this regard, on December 28,
2018, both parties agreed that the agreements between Shengia and Renhai are
rescinded and voided. Renhai shall return the Company's 3,000,000 shares to the
Company for cancellation and the Company shall return all the incomes previously
received from Renhai. The Company cancelled these 3,000,000 shares of common
stock on December 28, 2018.
On July 28, 2018, the Company issued a convertible promissory note in the amount
of $300,000.00 to Full Yick International Ltd. Pursuant to the terms the
convertible promissory note was convertible into 93,750,000 common shares of the
Company at $0.0032 per share on July 31, 2019. On or about August 9, 2019, Full
Yick International Ltd. exercised their option to convert the $300,000.00 note
into 93,750,000 common shares of the Company, which constitutes approximately
92.8% of the issued and outstanding common shares of the Company, and instructed
the Company to issue the shares to approximately 84 shareholders. Of those
approximately 84 shareholders, the largest, Full Yick International, Ltd. holds
12,038,723 shares, or approximately 11.9% of the issued and outstanding shares
of the Company. There are no arrangements between the members of the former and
new control groups and their associates with respect to election of directors or
other matters.
On September 20, 2019, Mr. Kin Chung (Ken) Tam was appointed as members of the
Board of Directors (the "Board") of the Company's Executive directors. Mr. Hung
Hin Samuel Leung and Mr. Kwok Fai (Thomas) Yip were appointed as members of the
Board of the Company's Independent and Non-executive directors - Audit
committee. On September 20, 2019, Ms. Sin Kei Stella Hui and Mr. Shun Ching
(Dickson) Wong were resigned from the member of the Board of the Company.
On March 30, 2020, Splendor Radiant Limited, a wholly-owned subsidiary of the
Company entered into a Memorandum of Understanding ("MOU") with Allied Precision
Medicine Consultants Limited ("Allied"), a Hong Kong corporation, in which the
Parties have committed to jointly promote stem cell products and services in
Hong Kong and Macau. Ajia has initially issued 100,000 shares of its common
stock to Allied to acquire 50% sharing of the profits in this project. The Board
shall then appoint an independent third party to carry out due diligence and
valuation of the project and, based upon the recommendation of this valuation
report, the Board shall issue additional common shares of Ajia to Allied as fair
consideration and compensation to acquire 50% profit sharing interest in the
project. The project has not yet commenced.
On September 28, 2020, Mr. Kwok Fai YIP, Thomas (Mr. Yip) was resigned from a
member of our Board of Directors of the Company's Independent and Non-executive
directors - Audit committee. Concurrently, Mr. Yip was appointed as the
Company's Executive Director and Vice Chairman. Mr. Yip's position as the
Company's Independent and non-executive director was immediately replaced by Ms.
Kiu Chung Jacqueline Tang (Ms. Tang) who was formerly engaged as the Company's
Chief Operating Officer ("COO"). Ms. Tang resigned from the position of COO
concurrently with this appointment.
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On November 17, 2020, subsequent to our year end, Mr. Zhi Qiang Liang resigned
as Chief Executive Officer and Mr. Yip was appointed as Chief Executive Officer.
In October 16, 2020, Splendor Radiant Limited entered into a joint venture
agreement with its strategic partner, Mr. Tsz Man (Eric) Ngan. Both parties
agreed to establish a joint venture relationship in order to collaborate to form
a company, Ajia Corporate Systems Architecture Solution Limited ("ACSA") which
Splendor Radiant own 51% of the shares. ACSA has planned to acquire or become
business partner in insurance and finance industries, which includes licensed
insurance brokerage, trust servicing consulting team and licensed money lender
in Hong Kong. ACSA has owned 51% of Tangent Asia Pacific Finance Ltd ("TAPF"),
licensed money lender in Hong Kong and willing to develop money lending in Hong
Kong and global. TAPF is focusing on the money lending business on second
mortgage on property market and lending on crypto assets as collateral that
seeks for 8% to 10% return on principle per annum. The Company believes that the
finance business in Hong Kong is profitable and has great potential because of
the increasing demand for lending on second mortgages on property and
cryptocurrency assets.
In June 2021, ACSA purchased 51% shares of Jia Yu Insurance Finance limited
("JYIF"), which is a licensed Insurance brokerage firm in Hong Kong. JYIF's
primary role is to provide local lump sum universal life, annuity assurance and
offshore insurance products both life and non-life, which include compliant US
PPLI, UL, and IUL policies, to designated clients asset growth purposes with
complied tax solutions. There is a growing need and demand for Asian clients to
purchase compliant PPLI, UL, and IUL policies in order to receive tax benefits
and investment returns, and these products are becoming increasingly popular.
The Company utilizes Hong Kong as a hub to organize US PPLI, UL, and IUL
policies for high-net-worth clients from China, Japan, Taiwan, Korea, Thailand,
and Indonesia. PPLI, IUL, and UL policies are increasingly in demand, and the
Company has a professional technical team as well as US lawyers and tax advisors
on hand to service these clients as a one-stop shop for all their insurance
needs.
In 2021, Guangzhou Shengjia Trading Co., Ltd ("GST"), subsidiary of AJIA, aims
to provide back-end support on project called "Easy Picture Mobile Application"
("Easy Picture"). Easy Picture is an application for mobile photos software for
end customers who want to take qualified photos to apply for visas to China.
Easy Picture is an accessible cost saving application offering user-friendly
interface. GST has signed up agreement with a travel agency to use this Easy
Picture App, however, execution of the business has been delayed due to COVID-19
and resulting closure of travel.
The details of the Company's subsidiaries are described below:
Place of Principal Particulars of
incorporation activities issued/ Effective
and kind of and place of registered share interest
Name legal entity operation capital Held
British Virgin
Islands, a
limited
Splendor Radiant liability Investment 1 ordinary share
Limited company holding of US$1 each 100%
Provision of
food and
Hong Kong, a beverage sales
limited system setup and 100 ordinary
Ajia Creative liability maintenance shares for
Holdings Limited company service HK$100 100%
The PRC, a Provision of
Guangzhou limited mobile app
Shengjia Trading liability back-end support
Co., Ltd company service HK$1,000,000 100%
Provision of
money lending,
insurance
Ajia Corporate Hong Kong, a brokerage and
Systems limited business 10,000 ordinary
Architecture liability development shares for
Solution Limited company trustee service HK$10,000 51%
Hong Kong, a
Tangent Asia limited Provision of 10,000 ordinary
Pacific Finance liability money lending shares for
Limited company business HK$10,000 51%
Hong Kong, a
limited Provision of 2,500,000
JiaYu Insurance liability Insurance agency ordinary shares
Finance Limited company service for HK$2,500,000 51%
AJIA and its subsidiaries are hereinafter referred to as (the "Company").
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Business Plan
In September 2017, the Company began exploring a business plan for a sales
system for food and beverage products also sometimes referred to as a catering
integration system. The system consists of a website and app which offers menu
and ordering systems for end users, which predominantly consists of restaurants
and food vendors. Its catering integration system has a crossover sales
promotion program with our restaurants and food suppliers' members to set up an
incentive program for their seasonal and festival sales to meet with the HK
Government consumption vouchers scheme during the COVID-19. The Company
generates revenue from the licensing of its sales system and we provide all
necessary training to restaurant staff, system maintenance and updates.
On December 1, 2017, the Company acquired a ten percent (10%) ownership interest
in a collection code project ("Project"), the purpose of which is to improve the
marketability and market penetration of Alipay Network Technology Co., Ltd.
("Alipay") collection code system. The Company plans to acquire additional
interest in this project as the project develops.
On October 15, 2020, the Company ratified entry into a Memorandum of
Understanding with Union Patron Limited for the formation of holding joint
venture company, AJIA Corporate Systems Architecture Solution Ltd ("Ajia
Corporate"), which the Company shall own a 51% interest in. Ajia Corporate is a
company registered in Hong Kong and intends to enter a Memorandum of
Understanding ("MOU") to expand its business developments in area of data
enterprise solutions, cloud and digital trading solutions, combined enterprise
syndication planning and solutions, and E-compliance system and enterprise
solutions.
Jia Yu Insurance Finance limited
The Company's insurance brokerage firm, Jia Yu Insurance Finance limited
("Jiayu"), in which Ajia Corporate owns 51% interest, is a licensed brokerage
firm in Hong Kong. Jiayu's primary goal is to provide local lump sum large
premium universal life & annuity assurance policies, and offshore insurance
products (both life and n on-life), which include compliant US, Canada, UK and
Australia PPLI, UL, and IUL policies, to the designated high net worth clients
for asset growth purposes (as well as other commercial reasons and purposes).
Introduction
Jiayu Insurance Finance Limited was established in 2014 with the goal of
providing professional insurance services to target newly arrived immigrants.
Because of the rapid changes in the insurance brokerage market in recent years,
we have invited former eminent insurance industry experts to join, with the
direction of expanding the international market for life insurance from onshore
and offshore insurers, as well as professional general insurance.
Our Hong Kong license number is FB1699 which under register of Licensed
Insurance Intermediaries (Firm) by Insurance Authority in Hong Kong.
Products and Services
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Life Insurance
Jiayu offers full range of private placement life insurance (PPLI) products and
services. Advantage PPLI policies provide clients with bespoke solutions to
inter-generational wealth transfer, estate planning, business succession and
charitable giving needs.
General Insurance
Jiayu's Business Insurance group specializes in the creation of customized risk
finance, risk protection and risk transfer solutions for small and medium-sized
businesses using captive insurers and other alternative risk transfer methods.
Offshore Life Insurance
Jiayu offers full range of private placement life insurance (PPLI) products with
bespoke investment funds and services. Advantage PPLI policies provide clients
with bespoke solutions to inter-generational wealth transfer, estate planning,
business succession and charitable giving needs.
Results of Operations
Comparison for the Three Months Ended December 31, 2021 and 2020
During the three months ended December 31, 2021 and 2020, COVID-19 affected the
operational and financial performance of the Company: Hong Kong, PRC, and United
States national economic shutdown that was imposed to limit the spread of
COVID-19. Both global and local markets have suffered huge public and private
financial and economic losses. The closures resulting from COVID have required
management to focus on making rapid decisions to protect employees, address new
customers' concerns and needs and shareholder support. Management has had to
readjust and act-Resolve, Resilience, Return, Reimagination, and Reform- both in
order to address to immediate crisis and to prepare for the next normal after
the battle against coronavirus has been won.
As of December 31, 2021, we suffered from a working capital deficit of $407,882.
As a result, our continuation as a going concern is dependent upon improving our
profitability and the continuing financial support from our stockholders or
other capital sources. Management believes that the continuing financial support
from the existing shareholders and external financing will provide the
additional cash to meet our obligations as they become due. Our financial
statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets and liabilities that may
result in the Company not being able to continue as a going concern.
The following table sets forth certain operational data for the three months
ended December 31, 2021, compared to December 31, 2020:
Three months ended December 31,
2021 2020
Revenue $ 36,417 $ 18,185
Cost of revenue (10,025 ) -
Gross profit 26,392 18,185
General and administrative expenses (31,374 ) (26,000 )
Professional fees (17,468 ) (21,561 )
Loss from operation (22,450 ) (29,376 )
Total other income 10 8,977
Income tax expense - -
NET LOSS $ (22,440 ) $ (20,399 )
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Revenues
During the three months ended December 31, 2021, we have derived income of
$36,417 (2020: $18,185). This increase is primarily due to an overall increase
in monthly sales from the maintenance service from the catering system sales and
growth in insurance brokerage transactions. Management anticipates revenues to
continue to grow as the revenue trends are positive month over month.
General and administrative expenses
The Company's general and administrative expenses for the three months ended
December 31, 2021 is amounted to $31,374 and for the three months ended December
31, 2020 is amounted to $26,000. This increase is due to the increase in the
payroll headcount.
Professional fees
The Company's professional fees for the three months ended December 31, 2021 is
$17,468 and for the three months ended December 31, 2020 is $21,561.
Loss from operation
During the three months ended December 31, 2021 and 2020, the Company recorded
the loss from operation of $22,450 and $29,376, respectively.
Net Loss
During the three months ended December 31, 2021 and 2020, the Company recognized
net losses of $22,440 and $20,399, respectively.
Comparison for the Six Months Ended December 31, 2021 and 2020
Six months ended December 31,
2021 2020
Revenue $ 60,929 $ 36,222
Cost of revenue (13,109 ) -
Gross profit 47,820 36,222
General and administrative expenses (93,257 ) (63,066 )
Professional fees (50,355 ) (38,703 )
Loss from operation (95,792 ) (65,547 )
Total other income 10 9,052
Income tax expense - -
NET LOSS $ (95,782 ) $ (56,495 )
Revenues
During the six months ended December 31, 2021 we have derived income of $60,929
(2020: $36,222). This increase was primarily due to an overall increase in
monthly sales from the maintenance service from the catering system sales and
growth in insurance brokeage transactions. Management anticipates revenues to
continue to grow as the revenue trends are positive month over month
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General and administrative expenses
The Company's general and administrative expenses for the six months ended
December 31, 2021 is amounted to $93,257 and for the six months ended December
31, 2020 is amounted to $63,066. This increase is due to the increase in the
payroll headcount.
Professional fees
The Company's professional fees for the six months ended December 31, 2021 is
amounted to $50,355 and for the six months ended December 31, 2020 is amounted
to $38,703.
Net Loss
During the six months ended December 31, 2021 and 2020, the Company recognized
the net losses of $95,782 and $56,495, respectively.
Liquidity and Capital Resources
At December 31, 2021, we had total current assets of $157,520 which consist of
$23,946 in cash and cash equivalents, $1,264 in accounts receivables, $27,310 in
deposits and prepayment and $105,000 in earnest deposit. We had total current
liabilities of $565,402, which consist of $177,285 due to related party and
$388,117 in other payables and accrued liabilities.
At June 30, 2021, we had total current assets of $106,752 which consist of
$1,120 in cash and cash equivalents, $632 in prepayment and other receivables
and $105,000 in earnest deposit. We had total current liabilities of $335,747,
which consist of $215,075 due to related party and $120,672 in other payables
and accrued liabilities.
Six months ended December 31,
2021 2020
Net cash used in operating activities $ (86,213 ) $ (26,053 )
Net cash provided by investing activities
2,910 -
Net cash provided by financing activities 102,986 23,075
Net Cash Used In Operating Activities
For the six months ended December 31, 2021, net cash used in operating
activities was $86,213, which consisted primarily of a net loss of $95,782,
depreciation of plant and equipment of $119, an increase in other payables and
accrued liabilities of $35,649 offset by an increase in prepayments and other
receivables of $26,199.
For the six months ended December 31, 2020, net cash used in operating
activities was $26,053, which consisted primarily of a net loss of $56,495,
depreciation of plant and equipment of $114, a decrease in accounts receivable
of $3,871, an increase in other payables and accrued liabilities of $26,468,
offset by an increase in prepayments and other receivables of $11.
We expect to continue to rely on cash generated through financing from our
existing shareholders and private placements of our securities, however, to
finance our operations and future acquisitions.
Net Cash Provided By Investing Activities
For the six months ended December 31, 2021, net cash provided by investing
activities was $2,910, which consisted primarily of cash from acquisition of a
subsidiary of $3,064 and purchases of plant and equipment of $154.
For the six months ended December 31, 2020, there were no investing activities.
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Net Cash Provided By Financing Activities
For the six months ended December 31, 2021, net cash provided by financing
activities was $102,986, consisting primarily of advances from a director.
For the six months ended December 31, 2020, net cash provided by financing
activities was $23,075, consisting primarily of advances from a director.
In the early stage of development, we have limited business activity to generate
revenue from our operations. We will require additional funds to fully implement
our plans. These funds may be raised through equity financing, debt financing,
or other sources, which may result in the dilution in the equity ownership of
our shares. We currently do not have any arrangements for additional financing
and we may not be able to obtain financing when required. Our future is
dependent upon our ability to obtain financing, a successful marketing and
promotion program and, further in the future, achieving a profitable level of
operations. The issuance of additional equity securities by us could result in a
significant dilution in the equity interests of our current stockholders.
Obtaining commercial loans, assuming those loans would be available, will
increase our liabilities and future cash commitments. We will require additional
funds to maintain our reporting status with the SEC and remain in good standing
with the state of Nevada.
Going Concern
We have incurred net loss since our inception on March 19, 2014 through December
31, 2021 totaling $925,898 and have completed only the preliminary stages of our
business plan. We anticipate incurring additional losses before realizing any
revenues and will depend on additional financing in order to meet our continuing
obligations and ultimately, to attain profitability. Our ability to obtain
additional financing, whether through the issuance of additional equity or
through the assumption of debt, is uncertain. Accordingly, our independent
auditors' report on our financial statements for the year ended June 30, 2021
includes an explanatory paragraph regarding concerns about our ability to
continue as a going concern, including additional information contained in the
notes to our financial statements describing the circumstances leading to this
disclosure. The financial statements do not include any adjustments that might
result from the uncertainty about our ability to continue our business.
Recently Issued Accounting Pronouncements
See Note 4 to our unaudited condensed consolidated financial statements,
included in Part I, Item 1, Financial Information for this quarterly report on
Form 10-Q.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations
are based on our consolidated condensed financial statements, which have been
prepared in accordance with GAAP. The preparation of our consolidated condensed
financial statements requires us to make estimates and judgements that affect
the reported amounts of assets, liabilities, revenue, expenses and related
disclosure of contingent assets and liabilities. On an ongoing basis, we
evaluate our estimates, including those related to areas that require a
significant level of judgment or are otherwise subject to an inherent degree of
uncertainty. Significant accounting estimates in these financial statements
include but are not limited to accounting for depreciation and amortization,
current and deferred income taxes, deferred costs, accruals and contingencies,
carrying value of goodwill and intangible assets, collectability of notes
receivable, the fair value of common stock and the estimated fair value of stock
options and warrants. We base our estimates on historical experience, our
observance of trends in particular areas, and information or valuations and
various other assumptions that we believe to be reasonable under the
circumstances and which form the basis for making judgments about the carrying
value of assets and liabilities that may not be readily apparent from other
sources. Actual amounts could differ significantly from amounts previously
estimated. For a discussion of our critical accounting policies, refer to Part
I, item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our annual report on Form 10-K for the year ended June
30, 2021. Management believes that there have been no changes in our critical
accounting policies during the fiscal quarter ended December 31, 2021.
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Off-Balance Sheet Arrangements
We are not currently a party to, or otherwise involved with, any off-balance
sheet arrangements that have or are reasonably likely to have a current or
future material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.
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AJIA INNOGROUP HOLDINGS, LTD. 