MICROALLIANCE GROUP INC. FORWARD-LOOKING STATEMENTS
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of the safe harbor provisions of the
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual future results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, inability to successfully conclude acquisitions of target companies or assets which are reasonably capable of generating positive cash flow in the near future, legal and regulatory changes in the jurisdictions in which we operate, volatility or decline in our stock price, potential fluctuation of our quarterly and annual financial and operational results, rapid adverse changes in markets, decline in demand for our goods and services, insufficient revenues to cover our operating costs and such other factors as discussed throughout this section.
Except as required by applicable law, including the securities laws of
You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with our consolidated financial
statements and the related notes included elsewhere in this report. Our
consolidated financial statements have been prepared in accordance with
Overview
The Company is a
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The following is the organization structure of the Company along with ownership detail of all companies:
WLJM Cayman was incorporated in the
The Company, through our subsidiaries, develops, produces, markets and sells coffee, tea, "coffee tea" and wine products. We sell our products wholesale to retail partners and corporate customers, and we also sell directly to consumers in the PRC via our e-commerce channels. We adopted the "online to offline", or O2O sales mode (i.e. selling products online and delivering products through offline channels), committing to building the first brand of "coffee tea" culture in the PRC. Beginning late 2020, we provide pre-opening assistance to retail partners to operate coffee stores.
Critical Accounting Policies and Use of Estimates
We prepare our financial statements in conformity with
We believe that of our significant accounting policies, which are described in Note 3 to our consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.
Revenue Recognition
We recognize revenue from the sale of coffee, tea, "coffee tea" and wine
products, net of value-added taxes, upon delivery at such time title passes to
the customer. Customers are required to pay in advance before making sales
orders and the advance is initially recorded as advance from customers. During
the three months ended
In addition, we provide pre-opening assistance to retail partners to operate
coffee stores, revenue is recognized upon the completion of services. During the
three months ended
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Our revenue recognition policy is compliant with ASU No. 2014-09, Revenue from Contracts with Customers that revenue is recognized when a customer obtains control of promised goods and is recognized in an amount that reflects the consideration that we expect to receive in exchange for those goods. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods. We apply the following five-step model in order to determine this amount:
(i) identification of the goods/services in the contract;
(ii) determination of whether the goods/services are performance obligations,
including whether they are distinct in the context of the contract;
(iii) measurement of the transaction price, including the constraint on variable
consideration;
(iv) allocation of the transaction price to the performance obligations; and
(v) recognition of revenue when (or as) the Company satisfies each performance
obligation.
We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct. We recognize as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, our performance obligations are transferred to customers at a point in time, typically upon delivery or service being rendered.
For all reporting periods, we have not disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
Concentrations of Credit Risk
Financial instruments that potentially expose us to significant concentration of
credit risk consist primarily of cash and cash equivalents and accounts
receivable. As of
Amount %
Customer A $ 723,412 21%
Customer B 365,189 10%
$ 1,088,601 31%
We did not have customers constituting 10% or more of the net revenues in the
three months ended
Amount %
Customer A $ 867,850 20%
Customer B 435,070 10%
$ 1,302,920 30%
Recently Issued and Adopted Accounting Pronouncements
In
We review new accounting standards as issued. We have not identified any other new standards that we believe will have a significant impact on our financial statements.
13 Results of Operations
The following discussion should be read in conjunction with the condensed
consolidated financial statements of
Revenue
We generated
Our business is gradually recovering from the COVID-19 pandemic which has been
less severe than in 2020. The measures taken by the Chinese government to
contain the virus is effective, business has returned to normal and the market
has regained confidence. This has positively affected our results. For example,
we earned a significant portion of revenue from our new wine products that was
launched in
Cost of Revenue
Cost of revenue was
Gross profit
Gross profit for the three months ended
Operating Expenses
By far the most significant component of our operating expenses for both the
three months ended
For the three months ended March 31,
2021 2020
Amount % of Amount % of
(US$) Total (US$) Total
General and administrative expense:
Consultancy fee $ 91,730 34.3 % $ 19,109 9.9 %
Salary and welfare 50,484 18.9 % 78,119 40.3 %
Rental expenses 78,596 29.3 % 62,121 32.0 %
Research and development costs 21,996 8.2 % 22,258 11.5 %
Office expenses 8,875 3.3 % 2,362 1.2 %
Travel and accommodations 5,218 1.9 % 1,365 0.7 %
Entertainment 4,585 1.7 % 1,920 1.0 %
Others 6,316 2.4 % 6,495 3.4 %
Total general and administrative expenses
Increase in general and administrative expenses by
14 Net Profit
We incurred a net profit of
Liquidity and Capital Resources
March 31, December 31,
Working capital: 2021 2020
Total current assets $ 3,927,546 $ 505,082
Total current liabilities (2,987,515 ) (1,947,717 )
Working capital surplus (deficiency)
As of
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