WAVE SYNC CORP. The following discussion and analysis of our results of operations and financial condition since the Company's inception should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report. All statements, other than statements of historical facts, included in this report are forward-looking statements. When used in this report, the words "may," "will," "should," "would," "anticipate," "estimate," "possible," "expect," "plan," "project," "continuing," "ongoing," "could," "believe," "predict," "potential," "intend," and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, availability of additional equity or debt financing, changes in sales or industry trends, competition, retention of senior management and other key personnel, availability of materials or components, ability to make continued product innovations, casualty or work stoppages at our facilities, adverse results of lawsuits against us and currency exchange rates. Forward-looking statements are based on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Readers of this report are cautioned not to place undue reliance on these forward-looking statements, as there can be no assurance that these forward-looking statements will prove to be accurate and speak only as of the date hereof. Management undertakes no obligation to publicly release any revisions to these forward-looking statements that may reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. This cautionary statement is applicable to all forward-looking statements contained in this report. In this report, "we," "us," "our," the "Company" and "Wave." refer toWave Sync Corp. 6 Overview
OnDecember 6, 2010 , the Company entered into an Amendment (the "Amendment") to a certain share exchange agreement datedNovember 12, 2010 withDing Neng Holdings , aBritish Virgin Islands company ("Ding Neng Holdings "). This share exchange agreement and the Amendment provided for an acquisition transaction in which the Company, through the issuance of shares of its common stock, representing 90% of the issued and outstanding common stock immediately following the closing of this acquisition, acquired 100% ofDing Neng Holdings . The closing of this acquisition took place onFebruary 10, 2011 , on which date, pursuant to the terms of the share exchange agreement as amended, the Company acquired all of the outstanding equity securities ofDing Neng Holdings from the shareholders ofDing Neng Holdings . Accordingly, on the closing of the acquisition, the Company, viaDing Neng Holdings , held 100% ofDing Neng Bio-technology Co., Limited , aHong Kong Company , which held 100% ofZhangzhou Fuhua Biomass Energy Technology Co., Ltd. , a wholly-foreign owned enterprise inChina ("Fuhua Biomass"), which, via a series of variable interest entity (or VIE) arrangements, controlled the operating companyFujian Zhangzhou Ding Neng Bio-technology Co., Ltd. ("Ding Neng Bio-tech"). In connection of this share exchange, the Company changed its fiscal year end fromJune 30 to December 31 . The Company and the previous management believed that from late 2011 to 2014, due to change in law, unfavorable market conditions, and lack of effective management, the business of Ding Neng Bio-tech deteriorated significantly and eventually the Company defaulted on various loan obligations. Eventually, Ding Neng Bio-tech completely ceased its operations. OnJune 4, 2015 , Fuhua Biomass filed a civil action inHaicang District People's Court ofXiamen ,Fujian , PRC against Ding Neng Bio-tech, alleging that the purposes of those certain Consulting Service Agreement, Operating Agreement, Pledge and Security Agreement, Option Agreement, and Voting Rights Proxy Agreement (the "VIE Agreements") entered into by Fuhua Biomass and Ding Neng Bio-tech onOctober 28, 2010 had been frustrated, and that these VIE Agreements should be terminated. OnJuly 14, 2015 , this case was settled via in-court mediation directed by the Court. As a result, Fuhua Biomass and Ding Neng Bio-tech entered into binding settlement to, among other things, terminate
the VIE Agreements. Given that the Company was unable to exercise effective control over Ding Neng Bio-tech or gain access to Ding Neng Bio-tech's financial information since 2011, and that the VIE Agreements were terminated, the Company deconsolidated Ding Neng Bio-tech's financial results. The Company has written off all investments made inDing Neng Holdings as loss on investment in subsidiary. EffectiveNovember 1, 2021 , the Company completed a 1 for 5 reverse split of our common stock by filing an amended and restated Certificate of Incorporation with theState of Delaware , reducing the issued and outstanding shares of common stock from 59,327,713 to 11,865,542 (the "Reverse Stock Split"). The number of shares of common stock authorized for issuance remained as previously established at 100,000,000 shares. OnFebruary 1, 2022 , the Company filed a certificate of amendment to the Company's Amended and Restated Certificate of Incorporation (the "Certificate of Amendment") to change its corporate name from "Wave Sync Corp. " to "New York Holding Corp ," and the corporate action of such name change is pending with theFinancial Industry Regulatory Authority . Critical Accounting Policies Basis of presentation
The consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in
Principles of Consolidation
The consolidated financial statements include the financial statements of all
the subsidiaries and VIEs of the Company. All transactions and balances between
the Company and its subsidiaries and VIEs have been eliminated upon
consolidation
7
The consolidated financial statements include the accounts of the Company, its subsidiaries for which the Company is the primary beneficiary. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries. As ofDecember 31, 2021 , the detailed identities of the consolidating subsidiaries are as follows: Place of Attributable Registered Name of Company incorporation equity interest % capital
New York Link Capital ("NY Link") New York 100 % $ 100
New York Tech Capital ("NY Tech") New York 100 % 100
Center Florence, Inc. Delaware 100 % 1
Center St. Louis LLC ("St. Louis") Delaware 100 % 1,000
Royal Park, LLC ("Royal Park") South Carolina 100 % 1,000
Florence Development, LLC. ("Florence") Delaware
100 % 1,000
As of December 31, 2020 , the detailed identities of the consolidating
subsidiaries are as follows:
Place of Attributable Registered
Name of Company incorporation equity interest % capital
EGOOS Mobile Technology Company Limited ("EGOOS
BVI") BVI 100 % $ 1
EGOOS Mobile Technology Company Limited ("EGOOS
HK") Hong Kong
100 % 1,290
Move the
P.R.C 100 % -
Guangzhou Yuzhi Information Technology Co., Ltd.
("GZYZ") P.R.C 100 % 150,527
Shenzhen Qianhai Exce-card Technology Co., Ltd.
("SQEC") P.R.C 100 % 150,527
Guangzhou Rongsheng Information Technology Co. ,
Ltd. ("GZRS") P.R.C 100 % 1,505,267
Use of estimates
The preparation of the financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Estimates are used for, but not limited to, the accounting
for certain items such as allowance for doubtful accounts, depreciation and
amortization, impairment, inventory allowance, taxes and contingencies.
Contingencies
Certain conditions may exist as of the date the financial statements are issued,
which may result in a loss to the Company but which will only be resolved when
one or more future events occur or fail to occur. The Company's management
assesses such contingent liabilities, and such assessment inherently involves an
exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or un-asserted claims that may
result in such proceedings, the Company's management evaluates the perceived
merits of any legal proceedings or un-asserted claims as well as the perceived
merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's financial statements.
If the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material would be disclosed.
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
8
Cash and cash equivalents
The Company classifies the following instruments as cash and cash equivalents: cash on hand, unrestricted bank deposits, and all highly liquid investments purchased with original maturities of three months or less.
Accounts receivable
Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Other receivables
Other receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.
Property, plant and equipment
Lands are carried at cost and no depreciation is provided.
Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method with a salvage value from 0% - 10%. Estimated useful lives of the plant and equipment are as follows:
Building and improvement 15-40 years
Furniture and equipment 5-28 years
Digital mining machine 5 years
Office equipment 3 years
Office furniture 5 years
Motor vehicle 5 years
The cost and related accumulated depreciation of assets sold or otherwise
retired are eliminated from the accounts and any gain or loss is included in the
statement of income. The cost of maintenance and repairs is charged to income as
incurred, whereas significant renewals and betterments are capitalized.
Intangible Assets
Intangible assets, comprising digital assets, accounting software and big data
platform, which are separable from the property and equipment, are stated at
cost less accumulated amortization. Amortization is computed using the
straight-line method over the estimated useful lives of the assets.
9
Digital assets
Digital assets (including Bitcoin) are included in current assets in the
accompanying consolidated balance sheets. Digital assets purchased are recorded
at cost and digital assets awarded to the Company through its mining activities
are accounted for in connection with the Company's revenue recognition policy
disclosed below.
Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
For the year ended
Purchases of digital assets by the Company, if any, will be included within investing activities in the accompanying consolidated statements of cash flows, while digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of digital assets are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in "realized gain (loss) on exchange of digital assets" in the consolidated statements of operations and comprehensive income (loss). The Company accounts for its gains or losses in accordance with the first-in first-out method of accounting.
Separable Intangible Assest - Customer-related intangible assets
Customer-related intangible assets arising from the acquistion of subsidiary which has been separated from goodwill by complying with ASC 805-20-55 which meets the contactual-legal criterion for recognition separately from goodwill even though the Company cannot sell or otherwise transfe these lease contracts.
Customer-related intangible assets are accounted for as intangible assets with useful lives of five years. It would be amortized for the useful lives on monthly basis.
The Company tests intangible assets for impairment at the reporting unit level on an annual basis and between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired. The Company first has the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company decides, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is mandatory. Otherwise, no further testing is required. Business combinations Business combinations are recorded using the acquisition method of accounting. The assets acquired, the liabilities assumed and any non-controlling interests of the acquiree at the acquisition date, if any, are measured at their fair values as of the acquisition date.Goodwill is recognized and measured as the excess of the total consideration transferred plus the fair value of any non-controlling interests of the acquiree and fair value of previously held equity interest in the acquiree, if any, at the acquisition date over the fair values of the identifiable net assets acquired. Common forms of the consideration made in acquisitions include cash and common equity instruments. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition.Goodwill
10
The Company tests goodwill for impairment at the reporting unit level on an annual basis and between annual tests when an event occurs or circumstances change that could indicate that the asset might be impaired. The Company first has the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the company decides, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is mandatory. Otherwise, no further testing is required.
Impairment of Long-lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. For the years endedDecember 31, 2021 and 2020, the Company did not recognize any impairment loss of its long-lived assets. Long term investment
The Company's long-term investments include equity securities without readily determinable fair values and available-for-sale investments.
Equity securities without readily determinable fair values
As of
Equity securities not accounted for using the equity method are carried at fair value with unrealized gains and losses recorded in the consolidated income statements, according to ASC 321, Investments -Equity Securities . The Company elected to record the equity investments in privately held companies using the measurement alternative at cost, less impairment, with subsequent adjustments for observable price changes resulting from orderly transactions for identical or similar investments of the same issuer. Equity investments in privately held companies accounted for using the measurement alternative are subject to periodic impairment reviews. The Company's impairment analysis considers both qualitative and quantitative factors that may have a significant effect on the fair value of these equity securities, including consideration of the impact of the COVID-19 pandemic. In computing realized gains and losses on equity securities, the Company determines cost based on amounts paid using the average cost method. Dividend income is recognized when the right to receive the payment is established.
Available-for-sale investments
For investments in investees' shares which are determined to be debt securities, the Group accounts for them as available-for-sale investments when they are not classified as either trading or held-to-maturity investments. Available-for-sale investments are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income as a component of shareholders' equity. Declines in the fair value of individual available-for-sale investments below their amortized cost due to credit-related factors are recognized as an allowance for credit losses, whereas if declines in the fair value is not due to credit-related factors, the loss is recorded in other comprehensive income / (loss).
Accounting for the Impairment of Long-lived assets
The long-lived assets held by the Company are reviewed in accordance withFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 360-10-35, "Accounting for the Impairment or Disposal of Long-Lived Assets," for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Impairment is present if carrying amount of an asset is less than its undiscounted cash flows to be generated. If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company believes no impairment has occurred to its
assets during 2021 and 2020.
11
Income taxes
The Company uses the accrual method of accounting to determine income taxes for the year. The Company has implemented FASB ASC 740 Accounting for Income Taxes. Income tax liabilities computed according tothe United States ,People's Republic of China (PRC), andHong Kong tax laws provide for the tax effects of transactions reported in the financial statements and consists of taxes currently due, plus deferred taxes, related primarily to differences arising from the recognition of expenses related to the depreciation of plant and equipment, amortization of intangible assets, and provisions for doubtful accounts between financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is recognized for deferred tax assets if it is more likely than not, that the deferred tax assets will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.
Stock-based compensation
The Company has elected to use the Black-Scholes-Merton ("BSM") pricing model to
determine the fair value of stock options on the dates of grant. Also, the
Company recognizes stock-based compensation using the straight-line method over
the requisite service period.
The Company values stock awards using the market price on or around the date the shares were awarded and includes the amount of compensation as a period compensation expense over the requisite service period.
For the years ended
Foreign currency translation The accompanying financial statements are presented inUnited States dollars (USD). The functional currency of the Company is the USD and Renminbi (RMB). The financial statements are translated into USD from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. December 31, December 31, Exchange rates 2021 2020
Year-end/period-end RMB : US$ exchange rate 6.4515
6.5249
Average annual/period RMB : US$ exchange rate 6.3757
6.9010
The RMB is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US
Dollar at the rates used in translation.
Revenue recognition
The Company recognizes services revenue when the following criteria have been
met: 1.) it has agreed and entered into a contract for service with it customers
which the Company identifies the contract and determines the transactions price
with customers, 2.) the contract has set forth a fixed fee for the services to
be rendered which the Company has determined the transactions price and the
allocation of such price to performance obligations with the customers, 3.) the
Company has fully rendered service to its customers, and there are no additional
obligations that exist that under the terms of the contract that the Company has
not fulfilled that the Company recognizes revenue when the performance
obligation is satisfied, and 4.) the Company has either received payment, or
reasonably expects payment from the customer in accordance to the payment terms
set forth in the contract.
12
Cryptocurrency
When the cryptocurrency is sold in the exchange, which time revenue is recognized. There is no significant financing component in these transactions.
Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt.
There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company's consolidated financial position and results from operations. Rental income
Rental income from letting the Company's of investment properties is recognized on a straight-line basis over the lease term.
Clubhouse services
Clubhouse income is recognized when services are rendered.
Cost of revenue Cryptocurrency
The cost of revenue of cryptocurrency is the corresponding amount of intangible assets.
Clubhouse services
The cost of revenue of clubhouse services is mainly the labor costs and cost of food and beverage.
Earnings per share Basic earnings per share is computed on the basis of the weighted average number of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of common stock and common stock equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted earnings per share are excluded from the calculation. Dilution is computed by applying the treasury stock method for options and warrants. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Comprehensive loss Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company presents components of comprehensive income with equal prominence to other financial statements. The Company's current component of other comprehensive income is the foreign currency translation adjustment. Subsequent events The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose
subsequent to that date.
13
Fair Value of Financial Instruments
ASC 825, Financial Instruments, requires that the Company discloses estimated fair values of financial instruments. The carrying amounts reported in the balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.
The Company applies the provisions of ASC 820-10, Fair Value Measurements and Disclosures. ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. For certain financial instruments, including cash and cash equivalents, loan receivables and short-term bank loans, the carrying amounts approximate fair value due to their relatively short maturities. The three levels of valuation hierarchy are defined as follows:
? Level 1 inputs to the valuation methodology are quoted prices for identical
assets or liabilities in active markets.
? Level 2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for
the asset or liability, either directly or indirectly, for substantially the
full term of the financial instrument.
? Level 3 inputs to the valuation methodology are unobservable and significant
to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, "Distinguishing Liabilities from Equity," and ASC 815.
The following tables present the Company's financial assets and liabilities at fair value in accordance to ASC 820-10
Significant
Quoted in Active Other Significant
Markets for Observable Unobservable
Identical Assets Inputs Inputs
(Level 1) (Level 3) (Level 3) Total
2021 2020 2021 2020 2021 2020 2021 2020
Financial assets:
Cash $ 2,877,456 $ 3 $ - $ - $ - $ - $ 2,877,456 $ 3
Total financial assets $ 2,877,456 $ 3 $ - $
- $ - $ - $ 2,877,456 $ 3
14
Results of Operations
Overview of the years ended
The following table shows the results of operations for the years endedDecember 31, 2021 and 2020: Years Ended December 31, 2021 2020 Change Percent Revenue$ 162,853 $ -$ 162,853 100.0 % Cost of revenue 19,512 -$ 19,512 100.0 % Gross profit 143,341 -$ 143,341 100.0 % Operating expenses:
General and administrative expenses$ 1,793,636 39,438$ 1,754,197 4448.0 % Impairment loss on intangible assets$ 13,589 - $
13,589 100.0
Financial expenses $ 11,671 13 $ 11,658 89673.2 %
Total operating expenses $ 1,818,896 39,451 $ 1,779,444 4510.5 %
Income (loss) from operations$ (1,675,555 ) (39,451 ) $
(1,636,104 ) 97.6 % Other income (expenses): Interest income$ 772 -$ 772 100.0 %
Gain on disposal of fixed assets$ 208,012 -$ 208,012 100.0 % Other expenses$ (144 ) -$ (144 ) (100 )% Loss on disposal of subsidiary $ (2 ) - $ (2 ) (100 )% Total other income (expense), net$ 208,638 -$ 208,638 100.0 % Income before income tax Income tax expense $ - - $ - - % Net income (loss)$ (1,466,917 ) $ (39,451 ) $ (1,427,466 ) 97.3 % Revenue Year Ended Year Ended December 31, December 31, 2021 2020 Revenue$ 162,853 $ - Cost of revenue 19,512 - Gross profit$ 143,341 $ -
There was no revenue for the years ended
For the year endedDecember 31, 2021 , our revenues were$162,853 , representing revenue after the completion of acquisition of Center Florence atDecember 1, 2021 , reflecting a stable revenue from rental of recreational facilities and industrial properties.
For the year ended
Cost of revenue
For the years ended
Operating Expenses
The following table sets forth the breakdown of our operating expenses for the
years ended
For the Year Ended December 31, Variance
2021 % 2020 % Amount %
General and
administrative
expenses $ 1,793,636 98.7 % $ 39,438 99.9 % $ 1,754,197 4448.0 %
Impairment loss on
intangible assets 13,589 0.7 % - - % 13,589 100.0 %
Financial expenses 11,671 0.6 % 13 0.1 % 11,658 89673.2 %
Total Amount $ 1,818,896 100.0 % $ 39,451 100 % $ 1,779,444 4510.5 %
15
General and administrative and financial expenses were related to corporate overhead, financial and administrative contracted services, such as legal and accounting. General and administrative expenses and financial expenses for the year endedDecember 31, 2021 were$1,793,636 as compared to$39,451 for the comparable period endedDecember 31, 2020 , which represented an increase of$1,754,197 or approximately 44 times. Such increase was primarily attributed to increase of consulting fee, audit fee, legal and professional fees. Impairment loss on intangible assets were impairment loss on digital assets, which was Bitcoin, generated from digital mining operation for the year endedDecember 31, 2021 . Financial expenses for the year endedDecember 31, 2021 were related to interests on related party loans and a convertible note from the related parties. The increase of interests is contributed by draw down of an unsecured convertible note of$2,000,000 , at an annual interest rate of 10%, onDecember 12, 2021 .
(Loss) Income from Operations and Operating Margin
Loss from operations in the year ended
Operating margin, or income from operations as a percentage of total revenue was negative 10 times as for the year endedDecember 31, 2021 , compared with no revenue for the year endedDecember 31, 2020 , due to the previously discussed changes. Other income (expenses)
The following table sets forth the breakdown of our other income for the year
ended
For the Year Ended December 31, Variance
2021 % 2020 % Amount %
Interest income $ 772 0.4 % $ - - % $ 772 100.0 %
Gain on disposal of
fixed assets 208,012 99.7 % - - % 208,012 100.0 %
Other expenses (144 ) (0.1 )% - - % (144 ) (100 )%
Loss on disposal of
subsidiary (2 ) 0.0 % - - % (2 ) (100 )%
Total Amount $ 208,638 100.0 % $ - - % $ 208,638 100.0 %
Interest income was $772 and $0 for the years ended December 31, 2021 and 2020,
respectively, showing an increase of 100.0%. This increase is mainly contributed
to interest expenses on convertible note acquired on November 16, 2021 .
16
Gain on disposal of fixed assets for the year ended
Other expenses was
Loss on disposal of subsidiary for the year endedDecember 31, 2021 represented the disposal of a former subsidiary to a third party atDecember 30, 2021 for$1 and incurred loss on disposal of$2 and the operation in PRC has completely terminated.
Income tax (benefit) expense
Income tax expense was
Foreign Currency Translation Gain (Loss)
Foreign currency translation gain was
Net (Loss) Income Net loss for the year endedDecember 31, 2021 was$1,466,917 , as compared to net loss of$39,451 for the year endedDecember 31, 2020 . The net loss is mainly due to increase of general and administrative expenses.
Liquidity and Capital Resources
Our primary liquidity and capital resource needs are to finance the costs of our operations, to make capital expenditures and to service our debt. We continue to be dependent on our ability to generate revenues, positive cash flows and additional financing. Working Capital Summary
The following table represents a comparison of our working capital for the years
ended
As of As of
December 31, December 31,
2021 2020
Current assets $ 3,049,477 $ 3
Current liabilities $ 2,672,979 $ 71,844
Working capital $ 376,498 $ (71,841 )
Cash Flows
The following table represents a comparison of our cash flows for the years
ended
Years ended
December 31,
2021 2020
Cash flows used in operating activities
17
Cash flows used in operating activities
Since the change of management inFebruary 25, 2021 , the Company has resumed its operation and incurred cash flows used in operating activities. The Company incurred cash flows used in operating activities in the amounts of$1,565,278 and$13 for the years endedDecember 31, 2021 and 2020, respectively.
Cash flows from investing activities
For the year endedDecember 31, 2021 , the Company has some investing activities, including acquisition of motor vehicles of$100,000 and mining equipment of$1,300,000 , investment of equity of$750,000 and convertible loan note of$106,289 , and investment on intangible assets, which is digital mining costs, of$17,081 .
Cash flows from financing activities
For the years endedDecember 31, 2021 and 2020, the Company's cash flows from financing activities were$6,313,228 and$0 , respectively. The Company's cash flows from financing activities during the year of 2021 included$4,380,561 from certain private offerings of four investors, an advance from related party of$36,916 and issuance of convertible note to a related party of$2,000,000 . The Company has also repaid the bank loan of$104,249 .
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