Results of Operations
For the year ended December 31, 2019 compared to the year ended December 31,
2018
Revenue
For the year ended December 31, 2018, the Company generated $0 in revenues. For
the year ended December 31, 2019, the Company generated $0 in revenues.
Expenses
For the year ended December 31, 2018, we incurred operating expenses in the
amount of $43,292. For the year ended December 31, 2019, we incurred operating
expenses of $70,236. The increase is mainly due to increased bad debt expense of
$39,602 from Custodian Ventures, LLC for the 2019 Q2 reporting period and
increased audit and accounting fees in an amount of $2,200, combined with
decreases in legal fees and Registration fees in an amount of $8,975 and $7,506,
respectively, in associated with the preparation and filing of the Company's
periodic reports with the Securities and Exchange Commission.
Net Loss
We had net loss of $42,276 for the year ended December 31, 2018. For the year
ended December 31, 2019 we incurred a net loss of $68,562. The increase in net
loss is due mainly to an increase in bad debt expense of $39,602, increased
audit and accounting fees in an amount of $2,200, combined with decreases in
legal fees and Registration fees in an amount of $8,975 and $7,506 respectively.
Liquidity
As of December 31, 2019, the Company has no business operations and no cash
resources other than that provided by Management. We are dependent upon interim
funding provided by Management or an affiliated party to pay professional fees
and expenses. Our Management and an affiliated party have agreed to provide
funding as may be required to pay for accounting fees and other administrative
expenses of the Company until the Company enters into a business combination.
The Company would be unable to continue as a going concern without interim
financing provided by Management. As of December 31, 2019, we had $0 in cash. As
of December 31, 2018, we had $0 in cash.
If we require additional financing, we cannot predict whether equity or debt
financing will become available at terms acceptable to us, if at all. The
Company depends upon services provided by Management and an affiliated party to
fulfill its filing obligations under the Exchange Act. At present, the Company
has no financial resources to pay for such services.
The Company does not currently engage in any business activities that provide
cash flow. The costs of investigating and analyzing business combinations,
maintaining the filing of Exchange Act reports, the investigation, analyzing,
and consummation of an acquisition for an unlimited period of time will be paid
from additional money contributed by Zhichen Rao, our director, or an affiliated
party.
During the next 12 months we anticipate incurring costs related to:
? filing of Exchange Act reports.
? franchise fees, registered agent fees, legal fees and accounting fees, and
? investigating, analyzing and consummating an acquisition or business combination.
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We estimate that these costs will be in the range of five to six thousand
dollars per year, and that we will be able to meet these costs as necessary, to
be advanced/loaned to us by Management and/or an affiliated party.
On December 31, 2019 and December 31, 2018, we have had $6,000 in current assets
and $69,321 in current assets, respectively. As of December 31, 2019, we had
$38,838 in liabilities, consisting of Related party notes payable and Accounts
payable and accrued expenses. As of December 31, 2018, we had $33,597 in
liabilities.
We had $11,750 cash used in operations during the year ended December 31, 2019.
We had a positive cash used in operations of $36,912 during the year ended
December 31, 2018, mainly due to issuance of common stock to related party. We
financed our operations during the year ended December 31, 2018 through advances
made by our former CEO David Lazar.
The Company currently plans to satisfy its cash requirements for the next 12
months through borrowings from its director Mr. Zhicheng Rao or companies
affiliated with its directors and believes it can satisfy its cash requirements
so long as it is able to obtain financing from these affiliated parties. The
Company expects that money borrowed will be used during the next 12 months to
satisfy the Company's operating costs, professional fees and for general
corporate purposes. There is no written funding agreement between the Company
and Mr. Zhicheng Rao, our director.
The Company has only limited capital. Additional financing is necessary for the
Company to continue as a going concern. Our independent auditors have
unqualified audit opinion for the years ended December 31, 2019 and 2018 with an
explanatory paragraph on going concern.
Off-Balance Sheet Arrangements
As of December 31, 2019 and 2018, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated
under the Securities Act of 1934.
Contractual Obligations and Commitments
As of December 31, 2019 and 2018, we did not have any contractual obligations.
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial
statements for the year ended December 31, 2019 and 2018, and are included
elsewhere in this registration statement.
Going Concern
The financial statements accompanying this report have been prepared on a going
concern basis, which implies that our company will continue to realize its
assets and discharge its liabilities and commitments in the normal course of
business. Our company has not generated revenues since inception and has never
paid any dividends and is unlikely to pay dividends or generate earnings in the
immediate or foreseeable future. The continuation of our company as a going
concern is dependent upon the continued financial support from our shareholders,
the ability of our company to obtain necessary equity financing to achieve our
operating objectives, and the attainment of profitable operations. As at
December 31, 2019, our company has an accumulated deficit of $1,969,301. We do
not have sufficient working capital to enable us to carry out our plan of
operation for the next twelve months.
Due to the uncertainty of our ability to meet our current operating expenses and
the capital expenses noted above in their report on the financial statements for
the year ended December 31, 2018, our independent auditors included an
explanatory paragraph regarding concerns about our ability to continue as a
going concern. Our financial statements contain additional note disclosures
describing the circumstances that lead to this disclosure by our independent
auditors.
The continuation of our business is dependent upon us raising additional
financial support. The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
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Critical Accounting Policies
The financial statements and the related notes of our company are prepared in
accordance with generally accepted accounting principles in the United States
and are expressed in US dollars.
Use of Estimates
The preparation of financial statements in conformity with United States
generally accepted accounting principles 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. The Company regularly evaluates estimates and assumptions
related to deferred income tax asset valuation allowances. The Company bases its
estimates and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not
readily apparent from other sources. The actual results experienced by the
Company may differ materially and adversely from the Company's estimates. To the
extent there are material differences between the estimates and the actual
results, future results of operations will be affected.
Recent Accounting Pronouncements
In February 2016, the FASB issued an accounting standards update for leases. The
ASU introduces a lessee model that brings most leases on the balance sheet. The
new standard also aligns many of the underlying principles of the new lessor
model with those in the current accounting guidance as well as the FASB's new
revenue recognition standard. However, the ASU eliminates the use of bright-line
tests in determining lease classification as required in the current guidance.
The ASU also requires additional qualitative disclosures along with specific
quantitative disclosures to better enable users of financial statements to
assess the amount, timing, and uncertainty of cash flows arising from leases.
The pronouncement is effective for annual reporting periods beginning after
December 15, 2019, and interim periods within fiscal years beginning after
December 15, 2020, for nonpublic entities using a modified retrospective
approach. Early adoption is permitted. The Company is still evaluating the
impact that the new accounting guidance will have on its consolidated financial
statements and related disclosures and has not yet determined the method by
which it will adopt the standard.
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