ITEM 7.-MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Quarterly Report contains forward-looking statements
within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies
for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
"will," "we believe," "management believes" and similar language. The forward-looking statements are based
on the current expectations of the Company and are subject to certain risks, uncertainties and assumptions, including those set forth
in the discussion under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report.
Actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements
on information currently available to us, and we assume no obligation to update them.
Investors are also advised to refer to the information
in our previous filings with the Securities and Exchange Commission (SEC), especially on Forms 10-K, 10-Q and 8-K, in which we discuss
in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible
to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement
of all risks and uncertainties or potentially inaccurate assumptions.
Overview
From November 2009 until October, 2013, through our
China subsidiary, we were engaged in design, marketing and distributing of alcohol base clean fuel which are designed to use less fossil
fuel and have less pollution than traditional fuel.
From October 2013 until September, 2017, through
our Taiwan subsidiary, we were engaged in design, marketing and distributing of hardware and software technologies, including new cell
phone apps, as well as solutions and technology in fleet management, the driving record management system (DMS) that provide total solution
and management mechanism for vehicles and driver behavior control and analysis, which increase driving safety and efficiency.
On September 30, 2017, pursuant to
agreements with one of the Company’s directors, Li-An Chu, the Company transferred the 100% ownership in its wholly owned Taiwan
Subsidiary, Jinchih International Limited (“Jinchih”), to Li-An Chu in exchange for cancellation of debt $379,254, and cancellation
of total 25,503,333 shares of the Company’s common stock owned by a group of stockholders, including Li-An Chu. As a result of
these transactions, Jinchih is no longer a wholly owned subsidiary of the Company as of September 30, 2017.
On January 29, 2020, the Company signed
the Investment Commitment Agreement with iDrink Technology Co. Ltd. (“iDrink”) stating that the Company commits to invest
in iDrink Technology Co. Ltd. for total thirty percent common stock of iDrink. iDrink Technology Co. Ltd., Taiwan designs the iDrink
Smart Vending Machine, utilizing cloud platform services that consolidate consumption data from beverage manufacturers and consumers
alike, and uploading the data to its blockchain-enabled iDrink Smart Vending Machine. iDrink Smart Vending Machine is a beverage vending
machine and a cryptocurrency mining machine, as well as a O2O digital currency ATM terminal. iDrink Smart Vending Machine manages real-time
inventory information, track fleet of beverage suppliers, offer myriad of data about its consumers’ habits and spending through
a seamless cryptocurrency payment system, using business intelligence and analytics solutions with Internet of Things (IoT), Bluetooth
and RFID tags.
The Company is working new businesses in various
fields through careful review and critical selection of new growth businesses. The Company is working to strengthen our core competencies
in high technology and blockchain related businesses, such as blockchain apps technology, fintech services, professional consultancy
for ICO’s, and other high potential critical blockchain projects.
Results of Operations
Three and Three Months ended March 31, 2021 and
2020.
Revenue
The Company recognized $33,000 and $19,385 of revenue
during the three months ended March 31, 2021 and 2020 respectively. Our revenues were generated from the I.T. management consulting services.
General and Administrative Expenses:
General and administrative expenses were $20,695
and $27,878 for the three months ended March 31, 2021 and 2020, respectively. The increase was primarily due to professional expenses.
Interest expense
During the three months ended March 31, 2021 and
2020, the Company had 1interest expense of $4,525 and $3,561 from convertible promissory note respectively.
Net income
As a result of the foregoing, the Company generated
net income (loss) of $9,587 and ($12,054) and for the three months ended March 31, 2021 and 2020, respectively.
Liquidity and Capital Resources
We have funded our operations to date primarily through
operations, and non-related party loans and capital contributions. Due to our net loss and negative cash flow from operating activities,
there is substantial doubt about the Company’s ability to continue as a going concern. The Company’s management recognizes
that the Company must generate sales and obtain additional financial resources to continue to develop its operations.
As of March 31, 2021, we had a working capital deficit
of $58,604. Our current assets on March 31, 2021 were $223,303 primarily consisting of cash of $20,303, loans receivable of $50,000,
accounts receivable of $173,000 and Short Term Investment - Held-For-Trading $30,000. Our current liabilities were primarily composed
of convertible promissory notes of $287,000, accrued expenses and other current liabilities of 98,505, and short term debt of $10,000.
As of March 31, 2020, we had a working capital deficit
of $96,618. Our current assets on March 31, 2020 were $195,858 primarily consisting of cash of $16,874, loans receivable of $50,000,
accounts receivable of $85,000 and equity investments in iDrink Technology Co. Ltd. $43,683. Our current liabilities were primarily composed
of credit card payable of $10,256, convertible promissory notes of $225,000 and accrued expenses and other current liabilities of $57,220.
Cash Flow from Operating Activities
Net cash provided (used) in operating activities
was ($14,955) during the three months ended March 31, 2021 which consisted of our net earnings of $9,587 with an increase of accounts
receivable of $23,000, increase in other receivables $4,173, increase in interest receivables of $308, and a change in accrued expenses
of $2,927.
Net cash provided (used) in operating activities
was $12,422 during the three months ended March 31, 2020 which consisted of our net loss of ($12,054), offset by a decrease of accounts
receivable of $20,000, a change of accrued expenses of $3,573 and a change of credit card payable of $903.
Cash Flow from Investing
Activities
Net cash used in investing activities totaled $0 for the three months ended March 31, 2021.
Net cash used in investing activities
totaled $43,983 for the three months ended March 31, 2020, which consisted of investment in iDrink Technology Co. Ltd., Taiwan $43,683
and purchase of new office computer laptop $300.
Cash Flow from Financing
Activities
Net cash provided by financing activities
totaled $10,000 of proceeds from non-related party loans for the three months ended March 31, 2021.
Net cash provided by financing activities
totaled $35,000 of proceeds from non-related party for the three months ended March 31, 2020.
Off-Balance Sheet Arrangements
There are no 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,
expenses, results of operations, liquidity, capital expenditures or capital resources.
Inflation
We do not believe our business and
operations have been materially affected by inflation
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition
and results of operations are based on our financial statements that have been prepared under accounting principle generally accepted
in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the 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.
A summary of significant accounting policies is included
in Note 3 to the consolidated financial statements included in this Annual Report. Of these policies, we believe that the following items
are the most critical in preparing our financial statements.
Accounts Receivable and Allowance for Doubtful
Accounts
Accounts receivable are recorded at the invoiced
amount, net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of the FASB Accounting Standards Codification
to estimate the allowance for doubtful accounts. The Company performs on-going credit evaluations of its customers and adjusts credit
limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit
information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and
economic conditions.
Outstanding account balances are reviewed individually
for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses
in the Company’s existing accounts receivable. Bad debt expense is included in general and administrative expenses, if any. Pursuant
to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against the allowance after all
means of collection have been exhausted and the potential for recovery is considered remote. The Company has adopted paragraph 310-10-50-6
of the FASB Accounting Standards Codification and determine when receivables are past due or delinquent based on how recently payments
have been received.
Inventories
Inventories consists of products purchased and are
valued at the lower of cost or net realizable value. Cost is determined on the weighted average cost method. The Company reduces inventories
for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference
between the cost of the inventory and its estimated net realizable value. Factors utilized in the determination of estimated net realizable
value include (i) current sales data and historical return rates, (ii) estimates of future demand, (iii) competitive pricing pressures,
(iv) new product introductions, (v) product expiration dates, and (vi) component and packaging obsolescence.
The Company evaluates its current level of inventories
considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the income statement as
a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification to adjust inventories
to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions,
customer demand or competition differ from expectations.
Revenue Recognition
The Company’s revenue recognition policies
are in compliance with ASC 605 (Originally issued as Staff Accounting Bulletin (SAB) 104). Revenue is recognized at the date of shipment
to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations
of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition
are satisfied are recorded as unearned revenue. Discounts provided to customers by the Company at the time of sale are
recognized as a reduction in sales as the products are sold. Sales taxes are not recorded as a component of sales.
The Company derives its revenues from sales contracts
with customers with revenues being generated upon the shipment of merchandise. Persuasive evidence of an arrangement is demonstrated
via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as a signed acknowledgement of receipt
from the customers or a signed bill of lading from the third party trucking company and title transfers upon shipment, based on free
on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon acceptance of the signed purchase order or
contract and there is no separate sales rebate, discount, or volume incentive. When the Company recognizes revenue, no provisions are
made for returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection
of revenues.
Net sales of products represent the invoiced value
of goods, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on all of the Company’s products
at the rate of 5% on the invoiced value of sales. Sales or Output VAT is borne by customers in addition to the invoiced value of sales
and Purchase or Input VAT is borne by the Company in addition to the invoiced value of purchases to the extent not refunded for export
sales.
Foreign Currency Translation
The Company follows Section 830-10-45 of the FASB
Accounting Standards Codification (“Section 830-10-45”) for foreign currency translation to translate the financial statements
of the foreign subsidiary from the functional currency, generally the local currency, into U.S. Dollars. Section 830-10-45 sets out the
guidance relating to how a reporting entity determines the functional currency of a foreign entity (including of a foreign entity in
a highly inflationary economy), re-measures the books of record (if necessary), and characterizes transaction gains and losses. the assets,
liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity. An entity’s functional
currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment,
or local currency, in which an entity primarily generates and expends cash.
The functional currency of each foreign subsidiary
is determined based on management’s judgment and involves consideration of all relevant economic facts and circumstances affecting
the subsidiary. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing,
payroll and other expenditures, would be considered the functional currency, but any dependency upon the parent and the nature of the
subsidiary’s operations must also be considered. If a subsidiary’s functional currency is deemed to be the local currency,
then any gain or loss associated with the translation of that subsidiary’s financial statements is included in accumulated other
comprehensive income. However, if the functional currency is deemed to be the U.S. Dollar, then any gain or loss associated with the
re-measurement of these financial statements from the local currency to the functional currency would be included in the consolidated
statements of comprehensive income (loss). If the Company disposes of foreign subsidiaries, then any cumulative translation gains or
losses would be recorded into the consolidated statements of comprehensive income (loss). If the Company determines that there has been
a change in the functional currency of a subsidiary to the U.S. Dollar, any translation gains or losses arising after the date of change
would be included within the statement of comprehensive income (loss). Based on an assessment of the factors discussed above, the management
of the Company determined the relevant subsidiaries’ local currencies to be their respective functional currencies.