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
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 of
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 Purchase Consulting Management (Shenzhen )
Co., Ltd. ("WOFE") 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
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Unaudited Interim Financial Information
These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of theSecurities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year endingDecember 31, 2019 . The consolidated balance sheets and certain comparative information as ofDecember 31, 2018 are derived from the audited consolidated financial statements and related notes for the year endedDecember 31, 2018 ("2018 Annual Financial Statements"), included in the Company's 2018 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2018 Annual Financial Statements. 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.
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.
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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 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 2019 and 2018. 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 three months endedMarch 31, 2019 and 2018,$0 and$466,886 stock-based compensation was recognized. 4 Foreign currency translation The accompanying financial statements are presented inUnited States dollars (USD). The functional currency of the Company is the USD and Renminbi (RMB). The financial statements are translated into USD from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. March 31, March 31, December 31, Exchange rates 2019 2018 2018
Year-end/period-end RMB : US$ exchange rate 7.0216 6.2802 6.8764 Average annual/period RMB : US$ exchange rate 6.9798
6.3566 6.6146 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 that 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. 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.
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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 areobservable 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 ofMarch 31, 2019 : Significant Quoted in Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) Financial assets: Cash $ 310 $ - $ - $ 310 Total financial assets $ 310 $ - $ - $ 310 As ofDecember 31, 2018 : Quoted in Active Significant Significant Markets for Other Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total (Audited) (Audited) (Audited) (Audited) Financial assets: Cash $ 504 $ - $ -$ 504 Total financial assets $ 504 $ - $ -$ 504 6 Results of Operations
Three Months Ended
For the three months ended
Revenue
There was no revenue for the three months ended
For the three months endedMarch 31, 2018 , we generated revenues from our audio banking card operations (including software and hardware). We earned revenues of$89,047 during this quarter endedMarch 31, 2018 . 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, 2019 were$2,051 as compared to$657,819 for the comparable period endedMarch 31, 2018 , which represented a decrease of$655,768 or approximately 99.7%. Such decrease was primarily attributed to the stock compensation in the amount of$0 and$466,886 incurred in the three months endedMarch 31, 2019 and 2018, respectively.
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,
2019 2018
Current assets $ 5,256 $ 7,203
Current liabilities $ 1,414,485 $ 1,414,965
Working capital $ (1,409,229 ) $ (1,407,762 ) © Edgar Online, source
