WAVE SYNC CORP. The following discussion and analysis of our results of operations and financial condition 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, and retention of senior management and other key personnel. 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. Critical Accounting Policies Basis of presentation
The consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in
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C. 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 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, 2020 and 2019, the detailed identities of the consolidating subsidiaries are as follows: Place of Attributable Registered Name of Company incorporation equity interest % capitalEGOOS Mobile Technology Company Limited ("EGOOS BVI") BVI 100% $ 1EGOOS Mobile Technology Company Limited ("EGOOS HK") Hong Kong 100% 1,290 Move the Purchase Consulting Management (Shenzhen ) Co., Ltd. ("WOFE") P.R.C 100% -Guangzhou Yuzhi Information Technology Co., Ltd. ("GZYZ") P.R.C 100% 150,527Shenzhen Qianhai Exce-card Technology Co., Ltd. ("SQEC") P.R.C 100% 150,527Guangzhou Rongsheng Information Technology Co. , Ltd. ("GZRS") P.R.C 100% 1,505,267 Use of estimates The preparation of the financial statements in conformity withU.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.
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.
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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
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 of 10%. Estimated useful lives of the plant and equipment are as follows:
Computer 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.
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 2020 and 2019. 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.
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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 2020 2019
Year-end/period-end RMB : US$ exchange rate 6.5249
6.9762
Average annual/period RMB : US$ exchange rate 6.9010
6.8944
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 its
customers pursuant to which the Company identifies the contract and determines
the transactions price with its customers, 2.) the contract has set forth a
fixed fee for the services to be rendered under which the Company has determined
the transaction's 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 under the
terms of the contract that the Company has not fulfilled such 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.
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.
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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.
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
As ofDecember 31, 2020 : Quoted in Active Significant Significant Markets for Other Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Financial assets: Cash $ 3 $ - $ - $ 3 Total financial assets 3 $ - $ - $ 3 As ofDecember 31, 2019 : Quoted in Active Significant Significant Markets for Other Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Financial assets: Cash $ 16 $ - $ -$ 16 Total financial assets 16 $ - $ -$ 16 7 Results of Operations
Year Ended
For the year ended
Revenue
There was no revenue for the years ended
Expenses
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, 2020 were$39,451 as compared to$33,276 for the comparable period endedDecember 31, 2019 , which represented an increase of$6,175 or approximately 19%. Such increase was primarily attributed to increase of professional fees.
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
As of As of
December 31, December 31,
2020 2019
Current assets $ 3 $ 16
Current liabilities $ 71,844 $ 32,406
Working capital $ (71,841 ) $ (32,390 )
Cash Flows
Years ended
December 31,
2020 2019
Cash flows used in operating activities
Results of Operations
Fiscal Quarters Ended
Revenue
There was no revenue for the three months ended
Expenses
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 three months endedMarch 31, 2021 were$11,003 as compared to$4,396 for the comparable period endedMarch 31, 2020 , which represented an increase of$6,607 or approximately 150%. Such increase was primarily attributed to increase of professional fees. 8
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
As of As of
March 31, December 31,
2021 2020
(Unaudited) (Audited)
Current assets $ 3,003 $ 3
Current liabilities $ 85,847 $ 71,844
Working capital $ (82,844 ) $ (71,841 )
Cash Flows
Three months ended
March 31,
2021 2020
(Unaudited) (Audited)
Cash flows used in operating activities
Results of Operations
Three Months Ended
Revenue
There was no revenue for the three months ended
Expenses
General and administrative were related to corporate overhead, professional fees and administrative contracted services, such as legal and accounting. General and administrative expenses for the three months endedJune 30, 2021 were$31,090 as compared to$4,014 for the comparable period endedMarch 31, 2020 , which represented an increase of$27,076 or approximately 675%. Such increase was primarily attributed to increase of professional fees.
Financial expenses were related to bank charges, and interest expenses.
Financial expenses for the three months ended
Six Months Ended
Revenue
There was no revenue for the six months ended
Expenses General and administrative expenses were related to corporate overhead, professional fees and administrative contracted services, such as legal and accounting. General and administrative expenses for the six months endedJune 30, 2021 were$41,814 as compared to$8,410 for the comparable period endedMarch 31, 2020 , which represented an increase of$33,404 or approximately 397%. Such increase was primarily attributed to increase of professional fees. 9
Financial expenses were related to bank charges, and interest expenses.
Financial expenses for the six months ended
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
As of As of
June 30, December 31,
2021 2020
(Unaudited) (Audited)
Current assets $ 129,628 $ 3
Current liabilities $ 78,963 $ 71,844
Working capital $ 50,665 $ (71,841 )
Cash Flows
Six months ended
June 30,
2021 2020
(Unaudited) (Audited)
Cash flows used in operating activities
Cash flows from operating activities
Since the change of management in
Cash flows from investing activities
During the period ended
Long term investment OnJune 4, 2021 , the Company (the "Buyer") andHudson Capital USA Inc. (the "Seller") entered into a share transfer agreement (the "Archax SPA"), pursuant to which the Company agreed to buy from the Seller$500,000 worth of shares (1.74% of ownership) ofArchax Holdings Ltd. ("Archax"), a company organized under the laws ofEngland ,UK . Archax is a global digital asset trading platform and ecosystem. In addition, onJune 4, 2021 , the Company and the Seller entered into another share transfer agreement (the "Montis SPA"), pursuant to which the Company agreed to buy from the Seller$250,000 worth of shares of (2.63% of ownership)Montis Digital Limited ("Montis"), a company organized under the laws ofGibraltar . Montis primarily provides marketing and consulting services for digital assets and related entities in the digital asset ecosystems. Each of the Archax SPA and Montis SPA contained customary representations and warranties for transactions of this nature and scale. The Company and Seller are related parties because the majority of the board of directors of the Company are the board members of the Seller, constituting the majority of the board of directors of the Seller and Hon Man Yun serves as the Chief Financial Officer of both the Company and Seller. Property, plant and equipment
On
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The Company and Seller are related parties because the majority of the board of
directors of the Company are the board members of the Seller, constituting the
majority of the board of directors of the Seller and Hon Man Yun serves as the
Chief Financial Officer of both the Company and Seller.
Cash flows from financing activities
OnApril 23, 2021 , the Company entered into subscription agreements with five accredited investors for the sale and issuance of ten million and five hundred thousand shares (10,500,000) of the Company's common stock at a per-share price of$0.10 for aggregate gross proceeds of$1,050,000 . As of the date of this filing, the Company has received gross proceeds of$1,050,000 from this private placement.
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, capital expenditures or capital resources that is material to investors.
Recent Accounting Pronouncements
InJune 2016 , the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments", which will be effective for fiscal years beginning afterDecember 15, 2019 , including interim periods within those fiscal years. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The standard did not have a material impact on our consolidated financial statements. InJanuary 2017 , the FASB issued ASU 2017-04, "Intangibles -Goodwill and Other (Topic 350): simplifying the test for goodwill impairment", the guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation.Goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not the difference between the fair value and carrying amount of goodwill which was the step 2 test before. The ASU should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning afterDecember 15, 2019 . Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates afterJanuary 1, 2017 . The standard did not have a material impact on our consolidated financial statements. InAugust 2018 , the FASB issued ASU 2018-13, "Changes to the Disclosure Requirements for Fair Value Measurement." This standard eliminates the current requirement to disclose the amount or reason for transfers between level 1 and level 2 of the fair value hierarchy and the requirement to disclose the valuation methodology for level 3 fair value measurements. The standard includes additional disclosure requirements for level 3 fair value measurements, including the requirement to disclose the changes in unrealized gains and losses in other comprehensive income during the period and permits the disclosure of other relevant quantitative information for certain unobservable inputs. The new guidance is effective for interim and annual periods beginning afterDecember 15, 2019 . The standard did not have a material impact on our consolidated financial statements. InAugust 2018 , the FASB issued ASU 2018-15, "Internal-Use Software - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement." This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement service contract with the guidance to capitalize implementation costs of internal use software. The ASU also requires that the costs for implementation activities during the application development phase be capitalized in a hosting arrangement service contract, and costs during the preliminary and post implementation phase are expensed. The new guidance is effective for interim and annual periods beginning afterDecember 15, 2019 . The standard did not have a material impact on our consolidated financial statements. InOctober 2018 , the FASB issued ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, ("ASU 2018-17"). ASU 2018-17 requires reporting entities to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety for determining whether a decision-making fee is a variable interest. The standard is effective for all entities for financial statements issued for fiscal years beginning afterDecember 15, 2019 , and interim periods within those fiscal years. Early adoption is permitted. Entities are required to apply the amendments in ASU 2018-17 retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The standard did not have a material impact on our consolidated financial statements 11 InApril 2019 , the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, ("ASU 2019-04"). ASU 2019-04 clarifies and improves areas of guidance related to the recently issued standards on credit losses (ASU 2016-13), hedging (ASU 2017-12), and recognition and measurement of financial instruments (ASU 2016-01). The amendments generally have the same effective dates as their related standards. If already adopted, the amendments of ASU 2016-01 and ASU 2016-13 are effective for fiscal years beginning afterDecember 15, 2019 and the amendments of ASU 2017-12 are effective as of the beginning of the Company's next annual reporting period; early adoption is permitted. The standard did not have a material impact on our consolidated financial statements. InDecember 2019 , the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning afterDecember 15, 2020 . ASU 2019-12 will be effective for the Company in the first quarter of 2021. The Company does not expect the adoption of the new accounting rules to have a material impact on the Company's financial condition, results of operations, cash flows or disclosures. InMarch 2020 , the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, ("ASU 2020-03"). ASU 2020-03 improves various financial instruments topics, including the CECL Standard. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments related to Issue 1, Issue 2, Issue 4 and Issue 5 were effective upon issuance of ASU 2020-03. The amendments related to Issue 3, Issue 6 and Issue 7 were effective for the Company beginning onJanuary 1, 2020 . The Company does not anticipate that the adoption of the new standard will have a material effect on its consolidated financial statements. InMarch 2020 , the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this standard can be applied anytime between the first quarter of 2020 and the fourth quarter of 2022. The Company is currently in the process of evaluating the impact of adoption of the new rules on the Company's financial condition, results of operations, cash flows and disclosures.
Other than the above, management does not believe that any of the recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company's consolidated financial statements.
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