The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report. Our audited financial statements are stated inUnited States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
11 Overview We were incorporated in theState of Nevada onMay 19, 2016 . We commenced operations in tourism. We were a travel agency that organized individual and group tours inKyrgyzstan , such as cultural, recreational, sport, business, ecotours and other travel tours. Services and products provided by our company included custom packages according to the client's specifications. We developed and offered our own tours inKyrgyzstan as well as third-party suppliers. OnJuly 15, 2019 , the Company's principal office relocated toRoom 1204 -06, 12/F,69 Jervois Street ,Sheung Wan ,Hong Kong . OnJanuary 15, 2020 , our principal office relocated to Suite 1802-03, 18/F, Strand 50, 50 Bonham Strand,Sheung Wan ,Hong Kong . Our management is planning to restructure our business from a travel agency to aFintech Company with major business focusing on financials services and using the internet, mobile devices, software technology or cloud services to perform or connect with financial services.
Reverse Acquisition of JTI
On
Under the terms and conditions of the Agreement (and supplemented by the Amendment, the Second Amendment and the Third Amendment), the Company offered, sold and will issue 4,118,182 shares of common stock in consideration for all the issued and outstanding shares in JTI. The effect of the issuance is that the Vendor now hold approximately 61.54% of the issued and outstanding shares of common stock of the Company. Mr.Roy Chan , the founder of JTI, and Chairman of the board of directors is the holder of 629,350 shares of common stock of the Company prior to the Transaction. The Company's officers and directors, Mr.Roy Chan , Mr.Mark Yip and Mr.Brian Wong therefore, control an aggregate of 4,993,412 or 74.62% of the outstanding common stock of the Company, on a fully diluted basis, after the Transaction.
As a result of the agreement, JTI is now a wholly-owned subsidiary of the Company.
The transaction with JTI was treated as a reverse acquisition, with JTI as the acquirer and the Company as the acquired party. As a result of the controlling financial interest of the former stockholders of JTI, for financial statement reporting purposes, the merger between the Company and JTI was treated as a reverse acquisition, with JTI deemed the accounting acquirer and the Company deemed the accounting acquiree under the acquisition method of accounting in accordance with the Section 805-10-55 of the FASB Accounting Standards Codification. The reverse acquisition is deemed a capital transaction in substance whereas the assets and liabilities of JTI. (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the combination and the equity structure (the number and type of equity interests issued) of JTI is being retroactively restated using the exchange ratio established in the Share Purchase Agreement to reflect the number of shares of the Company issued to effect the acquisition. The number of common shares issued and outstanding and the amount recognized as issued equity interests in the consolidated financial statements is determined by adding the number of common shares deemed issued and the issued equity interests of JTI immediately prior to the business combination to the unredeemed shares and the fair value of the Company determined in accordance with the guidance in ASC Section 805-40-55 applicable to business combinations, i.e. the equity structure (the number and type of equity interests issued) in the consolidated financial statements immediately post combination reflects the equity structure of the Company, including the equity interests the legal acquirer issued to effect the combination. JTI has four wholly owned operating subsidiaries, namely,JTI Finance Limited ,Concept We Mortgage Broker Limited ,JTI Property Agency Limited andJTI Asset Management Limited . The principal activities of JTI are provision of diversified financial services through its wholly owned subsidiaries incorporated inHong Kong .
JF is a licensed money lender inHong Kong , holding a money lender license no. 0991/2019 granted by the licensing court ofHong Kong . JF offers various types of loans including but not limited to personal loan, business loan, credit card consolidation loan and equity pledge loan to its customers inHong Kong . CW is one of the active mortgage brokers inHong Kong . Its revenue is mainly derived from the referral fee from the banks and financial institutions for
the mortgage referral. JP is a licensed property agent inHong Kong , holding an estate agent's license granted byEstate Agents Authority of Hong Kong . Its revenue is mainly derived from the commission provided by the landlord for facilitating the sales or
lease of commercial properties.
JA is a consultancy services company. After the completion of the Agreement, JA
is planning to apply for fund management licenses in
Impact of COVID-19
The spread of the coronavirus ("COVID-19") around the world has caused significant business disruption in year 2020. InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread around the world. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on theHong Kong's and global economy. While it is difficult to estimate the financial impact of COVID-19 on the Company's operations, management believes that COVID-19 could have a material impact on its financial results in year 2021. 12 Results of operations
The following table sets forth key components of our results of operations for
the years ended
Year ended August 31, August 31, 2020 2019 REVENUE$ 26,631 $ 44,392 Cost of revenue (2,371 ) (15,966 ) GROSS PROFIT 24,260 28,426
General and administrative expenses (299,474 ) (193,981 )
LOSS FROM OPERATIONS (275,214 ) (165,555 ) Other Income 9,487 29,127 Loss before income tax (265,727 ) (136,428 ) Income tax credit (expense) 634 (643 ) NET LOSS (265,093 ) (137,071 )
As of
Year ended
Revenue and cost of revenue During the year endedAugust 31, 2020 , the Company generated revenue of$26,631 compared to$44,392 for the year endedAugust 31, 2019 . Cost of revenue was$2,371 for the year endedAugust 31, 2020 compared to$15,966 for the year endedAugust 31, 2019 . Our agency revenues were$1,218 the year endedAugust 31, 2020 while such revenue was$33,097 in 2019. On the other hand, mortgage referral fee income was$25,413 in the year endedAugust 31, 2020 . We earned$10,993 mortgage referral fee in last year. Included in cost of revenue were referral fees of nil and$15,966 incurred in relation to our property agency business in 2020 and 2019, respectively.
General and administrative expenses
During the year endedAugust 31, 2020 , we incurred$299,474 general and administrative expenses compared to$193,981 for the year endedAugust 31, 2019 . General and administrative expenses incurred generally related to corporate overhead, director fee, financial and administrative contracted services, such as legal and accounting and developmental costs. Net loss As a result of the cumulative effect of the factors described above, our net loss for the year endedAugust 31, 2020 was$265,093 compared to net loss of$137,071 for the year endedAugust 31, 2019 . Going concern
Our consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As ofAugust 31, 2020 , we have suffered recurring losses from operations, and record an accumulated deficit and a working capital deficit of$695,468 and$244,186 , respectively. These conditions raise substantial doubt about our ability to continue as a going concern. The continuation of our company as a going concern is dependent upon improving our profitability and the continuing financial support from our shareholders or other debt or capital sources. Management believes the existing shareholders or external financing will provide the additional cash to meet our obligations as they become due. The continuation of our company as a going concern is dependent upon improving its profitability and the continuing financial support from our shareholders or other debt or capital sources. Management believes the existing shareholders or external financing will provide the additional cash to meet our obligations as they become due. 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 our operations, in the case of debt financing, or cause substantial dilution for our stock holders, in the case
of equity financing. 13 InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread around the world. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on theHong Kong's and global economy. While it is difficult to estimate the financial impact of COVID-19 on our operations, management believes that COVID-19 could have a material impact on our financial results at this time. Our consolidated 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 our company not being able to continue as a going concern. Segment Information
The following table set forth our results of operations by segments:
Property Mortgage agency referral Corporate
For the year ended August 31, 2020 Money lending services
services unallocated Consolidated Revenue $ -$ 1,218 $ 25,413 $ -$ 26,631 Cost of revenue - - (2,371 ) - (2,371 ) Gross profit - 1,218 23,042 - 24,260
General and administrative expenses (133,368 ) (283 )
(4,230 ) (161,593 ) (299,474 ) Profit (loss) from operations
(133,368 ) 935 18,812 (161,593 ) (275,214 ) Other income 1,282 - - 8,205 9,487 Profit (loss) before income tax (132,086 ) 935
18,812 (153,388 ) (265,727 ) Income tax - 634 - - 634 Net profit (loss) (132,086 ) 1,569 18,812 (153,388 ) (265,093 ) Property Mortgage agency
referral Corporate
For the year ended
Revenue $ 302$ 33,097 $ 10,993 $ -$ 44,392 Cost of revenue - (15,966 ) - - (15,966 ) Gross profit 302 17,131 10,993 - 28,426
General and administrative expenses (130,431 ) (1,531 )
(5,702 ) (56,317 ) (193,981 ) Profit (loss) from operations
(130,129 ) 15,600 5,291 (56,317 ) (165,555 ) Other income 4,512 - - 24,615 29,127 Profit (loss) before income tax (125,617 ) 15,600 5,291 (31,702 ) (136,428 ) Income tax - (643 ) - - (643 ) Net profit (loss) (125,617 ) 14,957
5,291 (31,702 ) (137,071 ) We do not allocate our assets located and expenses incurred outsideHong Kong to our reportable segments because these assets and activities are managed at
a corporate level.
We primarily operate in
Liquidity and capital resources
Working Capital August 31, 2020 2019 Cash and cash equivalents$ 2,580 $ 10,252 Total current assets 2,882 85,612 Total assets 2,882 85,804 Total liabilities 247,068 64,897 Accumulated deficit 695,468 430,375 Total equity (deficit) (244,186 ) 20,907 14
The following table provides detailed information about our net cash flow for all financial statement periods presented in this report:
Year ended August 31, August 31, 2020 2019 Net cash used in operating activities$ (234,137 ) $ (141,221 ) Net cash from investing activities -
-
Net cash provided by financing activities 226,465
149,928
Net increase (decrease) in cash and cash equivalents (7,672 )
8,707
Cash and cash equivalents, beginning of year 10,252
1,545
CASH AND CASH EQUIVALENTS, END OF YEAR$ 2,580 $
10,252
Cash Flows from Operating Activities
For the year endedAugust 31, 2020 , net cash flows used in operating activities was$234 ,137consisting primarily of net loss of$265,093 offset by the decrease of accounts receivable of$3,298 , decrease of prepaid expenses, deposits and other current assets of$16,410 and increase of accrued liabilities of$9,008 . For the year endedAugust 31, 2019 , net cash flows used inoperating activities was$141,221 , consisting primarily of net loss of$137,071 and an increase of prepaid expenses, deposits and other current assets of$16,410 .
Cash Flows from Investing Activities
Cash flows used in investing activities was nil during years ended
Cash Flows from Financing Activities
Cash flows provided by financing activities during the year endedAugust 31, 2020 were$226,465 , consisting of$661,643 advances from a shareholder and offset by$435,178 repayment to a shareholder. Cash flows provided by financing activities during the year endedAugust 31, 2019 were$149,928 , consisting of$185,269 advances from a shareholder and$35,341 repayment to a shareholder.
Contractual Obligations and Commercial Commitments
We had the following contractual obligations and commercial commitments as ofAugust 31, 2020 : . Payment Due by Period Less than More than Total 1 Year 1-3 Years 3-5 Years 5 Years Amount due to a shareholder$ 173,796 $ 173,796 $ - $ - $ -
Amount due to a related company 56,317 56,317 -
- - Total$ 230,113 $ 230,113 $ - $ - $ - We believe that our current cash and financing from our existing stockholders are adequate to support operations for at least the next 12 months. We may, however, in the future, require additional cash resources due to changed business conditions, implementation of our strategy to expand our business or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects. Capital Expenditures
We did not incur any capital expenditures in the periods presented.
Inflation Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in our industry and continually maintain effective cost control in operations. 15
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities. Seasonality
Our operating results and operating cash flows historically have not been subject to significant seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introductions.
Critical Accounting Policies and Estimates
We regularly evaluate the accounting policies and estimates that we use to make budgetary and financial statement assumptions. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. The discussion of our critical accounting policies contained in Note 2 to our consolidated financial statements, "Summary of Significant Accounting Policies," is incorporated herein by reference.
Recent Accounting Pronouncements
For further information on recently issued accounting pronouncements, see Note 2-Summary of Significant Accounting Policies in the accompanying notes to consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
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