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 Method of Accounting The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in
the United States of Americaand have been consistently applied in the presentation of financial
statements. Basis of presentation
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles 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.
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
Interim unaudited 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 the
Securities and Exchange Commissionthat 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 ending December 31, 2021. The consolidated balance sheets and certain comparative information as of December 31, 2020are derived from the audited consolidated financial statements and related notes for the year ended December 31, 2020("2020 Annual Financial Statements"), included in the Company's 2020 Annual Report on Form 10-K. These unaudited interim condensed consolidated financial statements should be read in conjunction with the 2020 Annual Financial Statements. 2 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.
The contingencies of loss considered 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.
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.
Tangible fixed assets
Plant and equipment are carried at cost less accumulated depreciation. Depreciation is carried out over their estimated useful life, using the straight-line depreciation method with a residual value of 10%. The 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 impairment of long-lived assets
The long-lived assets held by the Company are reviewed in accordance with
Financial 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 three months ended March 31, 2021and 2020. 3 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 to
the United States, People's Republic of China(PRC), and Hong Kongtax 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 measures share awards using the market price on or around the date of the share award and includes the amount of compensation as a periodic compensation expense over the required service period.
For the three months ended
Foreign currency translation The accompanying financial statements are presented in
United Statesdollars (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 2021 2020 2020 Year-end/period-end RMB : US$ exchange rate 6.5713 7.0216 6.5249 Average annual/period RMB : US$ exchange rate 6.4844 6.9798 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 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. 4 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 the Company to disclose the estimated fair values ââof financial instruments. The book values ââentered in the balance sheet for current assets and liabilities classified as financial instruments constitute 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 data of the valuation methodology includes quoted prices for
similar assets and liabilities in active markets, and inputs
observable for the asset or liability, either directly or
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 both liability and equity characteristics under ASC 480, âDistinguing Liabilities from Equityâ and ASC 815.
The following tables present the Company’s financial assets and liabilities at fair value in accordance with ASC 820-10.
March 31, 2021: Quoted in Active Markets for Significant Significant Identical Other
Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total (Unaudited) (Unaudited) (Unaudited) (Unaudited) Financial assets: Cash
$ 3,003$ - $ - $ 3,003Total financial assets 3,003 $ - $ - $ 3,003As of December 31, 2020: Quoted in Active Markets for Significant Significant Identical Other Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total Financial assets: Cash $ 3 $ - $ - $ 3 Total financial assets 3 $ - $ - $ 3 Results of Operations
Fiscal quarters ended
There was no turnover for the three months ended
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 ended
March 31, 2021were $11,003as compared to $4,396for the comparable period ended March 31, 2020, which represented an increase of $6,607or approximately 150%. Such increase was primarily attributed to increase of professional fees.
Liquidity and capital resources
Our primary cash and capital requirements are to finance our operations, make capital expenditures and service our debt. We continue to depend on our ability to generate revenue, positive cash flow and additional funding.
Working Capital Summary As of As of March 31, December 31, 2021 2020 (Unaudited) (Audited) Current assets
$ 3,003$ 3 Current liabilities $ 85,847 $ 71,844Working capital $ (82,844 ) $ (71,841 )
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