This report contains certain forward-looking statements that involve risks and
uncertainties. We use words such as "anticipate," "believe," "expect,"
"future," "intend," "plan," and similar expressions to identify forward-looking
statements. These statements are only predictions. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this report. Our actual results
could differ materially from those anticipated in these forward-looking
statements.
Overview
The Company conducts business primarily through its wholly owned subsidiary
Sinoforte Ltd., a Hong Kong corporation.
Prior to August 2011, the Company operated primarily as a merchant, buying and
selling various type and grades of graphite, such as medium- and high-carbon
graphite, high-purity graphite, micro-powder graphite and expandable graphite.
As a merchant, the Company acted as a reseller. It purchased graphite products
in bulk, primarily from graphite producers, and resold them, either in bulk or
in smaller quantities (in either case, without further processing), to various
small and mid-sized customers.
In August 2011, the Company started to engage in a business of e-commerce
platform. Currently the Company is in the process of developing a website,
"Makeliving.com" ("Makeliving"), which provides an e-commerce platform, where
registered members can exchange goods and services.
Makeliving will act both as a platform and as a conduit between those
(individuals or companies) who desire to acquire goods and services and those
(individuals or companies) who desire to offer goods and services. Makeliving
plans to charge a certain percentage fee for the transactions. However, no
revenues have been generated. The website is now temporarily under maintenance.
At the same time, the Company is considering new business models.
On January 23, 2018, the Company entered into an agreement with Cityhill
Limited, a wholly owned subsidiary of South Sea Petroleum Holdings Limited, a
Hong Kong listed public company, pursuant to which parties agreed to establish a
joint venture (the "Joint Venture"). Each party owns 50% equity interest in the
Joint Venture respectively.
The Joint Venture, with the support of blockchain technology, is to provide
global trading service of physical gold for global customers. The parties
contribute their respective experiences in blockchain technology and marketing.
The Company will assist the Joint Venture in exploring the North America and
Europe markets, while Cityhill will focus on the Asian markets.
In September 2021, the Company completed the acquisition of 98.75% shares of
Macao E-Media Development Company Limited ("MED"). As consideration for the MED
shares, the Company agreed to issue the sellers, or its assigns, in a total of
131,337,500 shares of the Company's restricted common stock, par value $0.01 per
share, at a consideration of $0.50 per share, in the aggregate consideration of
$65,668,750. As a result of this acquisition, MED becomes a 98.75% owned
subsidiary of the Company. MED was founded at Macau in 2011. Its main area of
business includes food and grocery order-pickup-delivery services from local
restaurants, supermarkets and hotels. For the year ended December 31, 2021, MED
generated approximately $10 million of revenue.
MED has four subsidiaries, each of which is in charge of respective area such as
Development & Maintenance, Marketing & Operation, Logistics & Delivery, Payment
& Clearance, Emerging Market Business Development.
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Results of Operations
For the Three Months Ended March 31, 2022 Compared to the Three Months Ended
March 31, 2021
Sales
For the three months ended March 31, 2022, the Company generated sales of
$10,130,661 compared to $Nil for the same period of 2021. The new generated
sales were entirely from the newly acquired 98.75% owned subsidiary, MED.
Costs of Goods Sold
For the three months ended March 31, 2022, the Company generated cost of good
sold for $7,358,415 compared to $Nil for the same period of 2021. Currently the
Company is attributable to delivery rider costs and purchase of inventory.
Operating expenses
For the three months ended March 31, 2022 and 2021, the Company's selling,
general and administrative expenses were $3,794,019 compared to $35,375 for the
same period of the previous year. The increase is primarily the result of new
operation generated from Macao's and Zhuhai's subsidiaries.
Other Income (Expense)
For the three months ended March 31, 2022, the Company had $9,346 of interest
expense relating to bank loan interest payable, as compared to $2,924 of
interest expense for the same period last year.
Net Loss
For the three months ended March 31, 2022, the Company had a net loss of
$1,018,322, or $(0.004) per share, as compared to a net loss of $38,299, or
$(0.000) per share, for the same period of 2021.
Liquidity and Capital Resources
As of March 31, 2022, the Company had cash and cash equivalents of $4,666,521
and a working capital deficit of $3,896,526. For the three months ended March
31, 2022, the Company provided by net cash of $223,203 from its operating
activities primarily from our net loss of $1,031,119, adjusted net with
depreciation and amortization of $66,959, a loss of disposal of equipment of $6,
a decrease in account receivables of $89,843, an increase in inventories of
$113,250, a increase in prepaid expenses of $104,008, a decrease in deposits of
$4,154, a decrease in other receivables of $13,031, an increase in accrued
expense of $606,967, an increase in deposit received of $320,966, a decrease in
other payables of $201,099, a increase in account payable of $124,347. By
comparison, net cash used in operating activities was $39,566 for the same
period of 2021.
During the three months ended March 31, 2022, the Company provided net cash of
$6,281 from its investing activities which comprised with purchase of equipment
of $26,293, purchase of intangible assets of $79,242, a decrease in amount due
from related company of $159,408, an increase in amount due from shareholder of
$47,530 and a decrease in amount due to related company of $62. By comparison,
net cash provided by investing activities was $1 for the same period of 2021.
During the three months ended March 31, 2022, the Company's financing activities
used net cash of $47,897, which was comprised of repayment of bank loans of
$47,897. By comparison, net cash provided by financing activities was $45,641
for the same period of 2021.
Until we are able to generate sufficient liquidity from operations, we intend to
continue to fund operations from cash on-hand, and through private debt or
equity placements of our securities. Our continued operations will depend on
whether we are able to generate sufficient liquidity from operations and/or
raise additional capital through such sources as equity and debt financings,
collaborative and licensing agreements and strategic alliances. There can be no
assurance that additional capital will become available or, if it does, that it
will become available on acceptable terms, or that any additional capital we may
obtain will be sufficient to meet our long-term needs. We currently have no
commitments for any additional capital, both internally and externally.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
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Contractual Obligations
We lease our office space, approximately 250 square feet, in Jersey City, New
Jersey, on a month-by-month basis. For the six-month ended June 30, 2020, the
rent was $650 per month. We also have an office in Hong Kong, which is leased
on a term of two years ending in January 2022. The space is approximately 770
square feet, and the rent is approximately $4,393 per month. With the
acquisition with MED, the Company has the office in Macao and Zhuhai, which are
leased on terms of two to three years from 2020 to 2024. The rent is
approximately $44,724 per month.
Critical Accounting Policies
In preparing the consolidated financial statements, we follow accounting
principles generally accepted in the United States ("GAAP"). GAAP requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, sales and expenses, and related disclosure of contingent assets and
liabilities. We re-evaluate our estimates on an on-going basis. Our estimates
are based on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions and conditions.
We believe our use of estimates and underlying accounting assumptions adhere to
GAAP and are consistently applied. Our significant accounting policies are
summarized in Note 1 to our consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
A smaller reporting company is not required to provide the information in this
Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the Company's
management including its principal executive officer and principal financial
officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e)
under the Securities Exchange Act of 1934 (the "Exchange Act")). Based on this
evaluation, the principal executive officer and principal financial officer
concluded that, as of March 31, 2022, the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed by
us in the reports that the Company files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in applicable rules and forms and that such information is accumulated and
communicated to the Company's management, including its principal executive
officer and principal financial officer, in a manner that allows timely
decisions regarding required disclosure.
Changes in Internal Controls over Financial Reporting
There was no change in the Company's internal control over financial reporting
(as defined in Rule 13a-15(f) under the Exchange Act) during the Company's most
recently completed fiscal quarter that has materially affected, or is reasonably
likely to materially affect, its internal control over financial reporting.
PART II - OTHER INFORMATION© Edgar Online, source Glimpses
SCIENTIFIC ENERGY, INC. 
