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 endedAugust 31, 2020 included in our most recent annual report on Form 10-K. 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 OverviewLeader Capital Holdings Corp. is an early stage technology company that conducts its operations through its wholly owned subsidiaries,Leader Financial Group Limited , aSeychelles corporation incorporated onMarch 6, 2017 ("LFGL"), andJFB Internet Service Limited , aHong Kong corporation incorporated on July
6, 2017 ("JFB"). 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 untilDecember 31, 2020 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 ofDecember 2020 . This FinMaster App offers one-stop shopping for multi financial services. Key services include real-timeTaiwan stock market quotes, financial industry information and news, social media activities, on-line live broadcast, A.I. stock selection and other features. OnAugust 17, 2020 , the Company, through its wholly-owned subsidiaryJFB Internet Service Limited , a company incorporated and existing under the laws ofHong Kong (the "Buyer"), acquired all of the issued and outstanding capital stock (the "Acquisition") ofNice Products Inc. , a company organized under the laws of theBritish Virgin Islands and the Company's software ODM developer of the FinMaster APP ("NPI"), pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as ofAugust 17, 2020 , among the Company, the Buyer, NPI, the selling 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$4,850,000 , less certain discounts, expenses and reductions for outstanding NPI debt owed to the Company and/or its affiliates. The net purchase price for the acquisition was$3,506,042 , payable in 8,415,111 shares of the Company's common stock to the Sellers in accordance with their respective pro rata percentage. As a result of the Acquisition, the Company now owns, indirectly through the Buyer, 100% of NPI. NPI, through its wholly-owned subsidiaries,LOC Weibo Co., Ltd. andBeijing DataComm Cloud Media Technology Co., Ltd. , companies organized under the laws of theRepublic of China and the laws ofthe People's Republic of China , respectively, engages primarily in the development of ecological-system applications, integration of big data and promotion of OTT applications. Following the Acquisition, we were able to release the FinMaster App for download inDecember 2020 . We have incurred significant operating losses. As ofNovember 30, 2020 andAugust 31, 2020 , our accumulated deficits were$14,964,635 and$11,307,575 , respectively. We generated revenue of$22,863 and$1,667 for the three months endedNovember 30, 2020 and 2019, respectively. Our net losses were principally attributed to general and administrative expenses. Going Concern The accompanying 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. We have suffered recurring losses from operations, and recorded an accumulated deficit of$14,964,635 as ofNovember 30, 2020 . These conditions raise substantial doubt about our 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. 31 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. 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. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements. These 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 three months endedNovember 30, 2020 2019
Net cash used in operating activities $ (766,843 ) $ (154,234 ) Net cash used in investing activities (59,632 ) (401,285 ) Net cash provided by financing activities 932,561 175,502 Effect of exchange rate changes on cash and cash equivalents 12,332 - Net increase (decrease) in cash and cash equivalents 118,418 (380,017 ) Cash and cash equivalents, beginning of period 432,087 447,562 Cash and cash equivalents, end of period $ 550,505
$ 67,545
Cash Used in Operating Activities
Net cash used in operating activities for the three months ended
Cash Used in Investing Activities
Net cash used in investing activities for the three months endedNovember 30, 2020 and 2019 was$59,632 and$401,285 , respectively. The net cash used in investing activities for the three months endedNovember 30, 2020 was related to the acquisition of plant and equipment and intangible assets. The net cash used in investing activities for the three months endedNovember 30, 2019 was related to the issuance of notes receivable.
Cash Provided by Financing Activities
Net cash provided by financing activities for the three months endedNovember 30, 2020 and 2019 was$932,561 and$175,502 , respectively. The cash provided by financing activities were related to the issuance of shares and convertible notes, and advances from a shareholder and a director. 32 Results of Operations
Comparison for the three months ended
For the three months ended November 30, 2020 2019 Revenue $ 22,863 $ 1,667
Research and development expenses (146,971 ) - Sales and marketing expenses (109,702 ) - General and administrative expenses (2,953,167 )
(1,238,147 ) Loss from operations (3,186,977 ) (1,236,480 ) Interest expenses (15,446 ) (14,959 )
Loss on change in fair value of convertible notes (481,043 )
- Other income 21,292 21,809 Loss before income tax (3,662,174 ) (1,229,630 )
Income tax benefit (expense) 5,114
(20,000 ) Net loss $ (3,657,060 ) $ (1,249,630 ) Revenue We signed an agreement with a third party whereby we authorized the third party to use our investment platform and related applications, fromJanuary 1, 2018 toDecember 31, 2020 , for an upfront service fee. An additional fee is charged upon the third party's sale of products on our mobile application. FromSeptember 2020 , we generated additional revenue from a new, more comprehensive mobile 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
Research and Development Expenses
Research and development expenses for the three months endedNovember 30, 2020 amounted to$146,971 which primarily represented the charges for R&D and 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 inAugust 2020 . We did not incur any R&D expenses for the three months endedNovember 30, 2019 . Sales and Marketing Expenses Sales and marketing expenses were$109,702 and $nil for the three months endedNovember 30, 2020 and 2019, respectively. It consists of the advertising costs amounted to$97,361 and the redeemable point liability charges of$12,341 after our acquisition of NPI inAugust 2020 .
General and Administrative Expenses
General and administrative expenses were$2,953,167 and$1,238,147 for the three months endedNovember 30, 2020 and 2019, respectively. We recognized share-based compensation to directors, employees and consultants of$2,159,260 and$1,062,500 for the three months endedNovember 30, 2020 and 2019, respectively. Besides, we incurred more payroll costs and other administrative expenses in 2020 after our acquisition of NPI inAugust 2020 . Other Income
Other income for the three months ended
33 Net Loss
Our net loss was
Off-Balance Sheet Arrangements
As ofNovember 30, 2020 , we have no significant off-balance sheet arrangements that 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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