Ezagoo Ltd 10-Q for FY2020 Q3
Ezagoo Ltd (EZOO)
About this 10-Q
Ezagoo Ltd filed this 10-Q on November 16, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).
Headline figures
Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $64.48K
- up 1581.8% from $3834 a year earlier
- Net loss
- $187.98K
- compared with a net loss of $180.24K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2020
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number 333-228681
Ezagoo Limited
(Exact name of registrant issuer as specified in its charter)
| Nevada | 30-1077936 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
YIJIAREN BUSINESS HOTEL NO. 168, TONG ZI PO XI LU, YUELU DISTRICT CHANGSHA,
HUNAN 410205, CHINA
(Address of principal executive offices, including zip code)
Registrant’s phone number, including area code (+86) 139 751 09168
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock | EZAGOO | OTC Markets |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).
YES [X] NO [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” or an “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] Accelerated Filer [ ] Non-accelerated Filer [ ] Smaller reporting company [X]
Emerging Growth Company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of September 30, 2020.
| Class | Outstanding at September 30, 2020 | |
| Common Stock, $.0001 par value | 119,956,826 |
TABLE OF CONTENTS
| 1 |
PART I – FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of | ||||||||
| September 30, 2020 | December 31, 2019 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 666,846 | $ | 1,106,420 | ||||
| Account receivables, related parties | - | 63,444 | ||||||
| Deposits paid, prepayments and other receivables | 33,420 | 31,310 | ||||||
| Total current assets | 700,266 | 1,201,174 | ||||||
| NON-CURRENT ASSETS | ||||||||
| Plant and equipment, net | 24,141 | 31,818 | ||||||
| Operating lease right-of-use assets | 9,393 | 49,455 | ||||||
| TOTAL ASSETS | $ | 733,800 | $ | 1,282,447 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Account payables | $ | 41,141 | $ | 14,254 | ||||
| Accrued expenses, other payables and deposit received | 537,823 | 490,050 | ||||||
| Amount due to the related parties | 1,519,686 | 1,466,120 | ||||||
| Amount due to a director | 23,597 | 23,127 | ||||||
| Operating lease liabilities, current portion | 10,443 | 55,083 | ||||||
| Income tax payable | - | 5,650 | ||||||
| TOTAL LIABILITIES | $ | 2,132,690 | $ | 2,054,284 | ||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $0.0001 par value, 200,000,000 shares authorized, None issued and outstanding | - | - | ||||||
| Common stock, $0.0001 par value, 600,000,000 shares authorized, 119,956,826 shares issued and outstanding as of September 30, 2020 and December 31, 2019 respectively | 11,996 | 11,996 | ||||||
| Additional paid-in capital | 1,308,646 | 1,308,646 | ||||||
| Accumulated other comprehensive income | 26,013 | 56,500 | ||||||
| Accumulated deficit | (2,745,545 | ) | (2,148,979 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (1,398,890 | ) | (771,837 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 733,800 | $ | 1,282,447 | ||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-1 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS SEPTEMBER 30, 2020 AND 2019
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(unaudited)
| Three months Ended September 30 | Nine months Ended September 30 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| REVENUES | $ | 64,481 | $ | 3,834 | $ | 108,825 | $ | 33,251 | ||||||||
| COST OF REVENUES | (33,022 | ) | (31,906 | ) | (92,891 | ) | (121,591 | ) | ||||||||
| GROSS PROFIT | 31,459 | (28,072 | ) | 15,934 | (88,340 | ) | ||||||||||
| OPERATING EXPENSES | (205,067 | ) | (152,263 | ) | (566,435 | ) | (662,754 | ) | ||||||||
| LOSS FROM OPERATIONS | (173,608 | ) | (180,335 | ) | (550,501 | ) | (751,094 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 3,023 | 59 | 5,904 | 59 | ||||||||||||
| Interest expense | (17,396 | ) | 35 | (50,919 | ) | 769 | ||||||||||
| Total other income (expense) | (14,373 | ) | 94 | (45,015 | ) | 828 | ||||||||||
| Net loss from operations | (187,981 | ) | (180,241 | ) | (595,516 | ) | (750,266 | ) | ||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net loss | (187,981 | ) | (180,241 | ) | $ | (595,516 | ) | $ | (750,266 | ) | ||||||
| Other comprehensive income/(loss): | ||||||||||||||||
| - Foreign currency translation adjustment | (51,338 | ) | 8,733 | 24,963 | 18,493 | |||||||||||
| COMPREHENSIVE LOSS | (239,319 | ) | (171,508 | ) | $ | (570,553 | ) | $ | (731,773 | ) | ||||||
| Net loss per share- Basic and diluted | (0.00 | ) | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||||
| Weighted Average Number of shares outstanding | 119,956,826 | 107,158,454 | 119,956,826 | 107,158,454 | ||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-2 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(unaudited)
For the three months ended September 30, 2020
| COMMON STOCK | ACCUMULATED | |||||||||||||||||||||||
| Number of shares | Amount | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | OTHER COMPREHENSIVE LOSSES | TOTAL EQUITY | |||||||||||||||||||
| Balance as of July 1, 2020 (unaudited) | 119,956,826 | 11,996 | 1,308,646 | (2,559,037 | ) | 78,924 | (1,159,471 | ) | ||||||||||||||||
| Net loss | - | - | - | (187,981 | ) | - | (187,981 | ) | ||||||||||||||||
| Cumulative effect of adoption of new accounting principle | - | - | - | 1,473 | - | 1,473 | ||||||||||||||||||
| Other comprehensive loss | - | - | - | (52,811 | ) | (52,811 | ) | |||||||||||||||||
| Balance as of September 30, 2020 (unaudited) | 119,956,826 | 11,996 | 1,308,646 | (2,745,545 | ) | 26,013 | (1,398,890 | ) | ||||||||||||||||
For the nine months ended September 30, 2020
| COMMON STOCK | ACCUMULATED | |||||||||||||||||||||||
| Number
of shares | Amount | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | OTHER COMPREHENSIVE LOSSES | TOTAL EQUITY | |||||||||||||||||||
| Balance as of January 1, 2020 (audited) | 119,956,826 | 11,996 | 1,308,646 | (2,148,979 | ) | 56,500 | $ | (771,837 | ) | |||||||||||||||
| Net loss | - | - | - | (595,516 | ) | - | (595,516 | ) | ||||||||||||||||
| Cumulative effect of adoption of new accounting principle | - | - | - | (1,050 | ) | - | (1,050 | ) | ||||||||||||||||
| Other comprehensive loss | - | - | - | (30,487 | ) | (30,487 | ) | |||||||||||||||||
| Balance as of September 30, 2020 (unaudited) | 119,956,826 | 11,996 | 1,308,646 | (2,745,545 | ) | 26,013 | (1,398,890 | ) | ||||||||||||||||
For the three months ended September 30, 2019
| COMMON STOCK | ACCUMULATED | |||||||||||||||||||||||
| Number
of shares | Amount | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | OTHER COMPREHENSIVE LOSSES | TOTAL EQUITY | |||||||||||||||||||
| Balance as of July 1, 2019 (unaudited) | $ | 95,000,000 | 9,500 | 774,007 | (1,872,463 | ) | 66,310 | (1,022,646 | ) | |||||||||||||||
| Issuance of Common Stock | 24,956,826 | 2,496 | 496,641 | - | - | 499,137 | ||||||||||||||||||
| Net loss | - | - | - | (180,241 | ) | - | (180,241 | ) | ||||||||||||||||
| Cumulative effect of adoption of new accounting principle | - | - | - | 1,791 | - | 1,791 | ||||||||||||||||||
| Other comprehensive loss | - | - | - | - | 8,733 | 8,733 | ||||||||||||||||||
| Balance as of September 30, 2019 (unaudited) | 119,956,826 | 11,996 | 1,270,648 | (2,050,913 | ) | 75,043 | (693,226 | ) | ||||||||||||||||
For the nine months ended September 30, 2019
| COMMON STOCK | ACCUMULATED | |||||||||||||||||||||||
| Number
of shares | Amount | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | OTHER COMPREHENSIVE LOSSES | TOTAL EQUITY | |||||||||||||||||||
| Balance as of January 1, 2019 (audited) | $ | 95,000,000 | 9,500 | 774,007 | (1,293,655 | ) | 56,550 | (453,598 | ) | |||||||||||||||
| Issuance of Common Stock | 24,956,826 | 2,496 | 496,641 | - | - | 499,137 | ||||||||||||||||||
| Net loss | - | - | - | (750,266 | ) | - | (750,266 | ) | ||||||||||||||||
| Cumulative effect of adoption of new accounting principle | - | - | - | (6,992 | ) | - | (6,992 | ) | ||||||||||||||||
| Other comprehensive loss | - | - | - | - | 18,493 | 18,493 | ||||||||||||||||||
| Balance as of September 30, 2019 (unaudited) | 119,956,826 | 11,996 | 1,270,648 | (2,050,913 | ) | 75,043 | (693,226 | ) | ||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-3 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Nine
Months Ended September 30, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (595,516 | ) | $ | (750,266 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation | 7,677 | 4,022 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | - | 44,293 | ||||||
| Prepayments, deposits and other receivables | (2,110 | ) | 1,658 | |||||
| Receipts in advance | (39,184 | ) | 33,124 | |||||
| Operating lease expense | 40,062 | 61,262 | ||||||
| Operating lease liabilities | (44,640 | ) | (68,277 | ) | ||||
| Accounts payable | 26,887 | 6,302 | ||||||
| Other payables and accrued liabilities | 86,957 | (47,018 | ) | |||||
| Income tax payable | (5,646 | ) | (29 | ) | ||||
| Net cash used in operating activities | (525,513 | ) | (714,929 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property, plant and equipment | - | (36,913 | ) | |||||
| Net cash (used in) Investing activities | - | (36,913 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from share issuance | - | 499,138 | ||||||
| Advance from related parties | 117,011 | 105,770 | ||||||
| Advance from (Repayment to) a director | 470 | (82,986 | ) | |||||
| Net cash provided by financing activities | 117,481 | 521,921 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (31,542 | ) | (17,818 | ) | ||||
| Net change in cash and cash equivalents | (439,574 | ) | (247,739 | ) | ||||
| Cash and cash equivalents, beginning of period | 1,106,420 | 795,618 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 666,846 | $ | 547,879 | ||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest paid | $ | - | $ | - | ||||
See accompanying notes to the unaudited condensed consolidated financial statements.
| F-4 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 1 – BASIS OF PREPARATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the rules and regulations of the Securities 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, the consolidated balance sheet as of September 30, 2020 which has been derived from unaudited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2020 or for any future period.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
NOTE 2 - ORGANIZATION AND BUSINESS BACKGROUND
Ezagoo Limited, a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on May 9, 2018.
On May 9, 2018 Tan Xiaohao was appointed as President, Secretary, Treasurer, and Director of the Company.
On May 9, 2018, our President, Tan Xiaohao, purchased 90,050,500 shares of restricted common stock at a purchase price of $0.0001 (par value) per share. The proceeds from the sale, which were in the amount of $9,005 have gone directly to the Company for initial working capital.
On June 30, 2018 Zhang Qianwen and Greenpro Asia Strategic SPC- Greenpro Asia Strategic Fund SP purchased 3,591,000 and 1,358,500 shares of restricted common stock respectively at a purchase price of $0.0001 (par value) per share. The proceeds from the sale, which were in the amount of $495, have gone directly to the Company for initial working capital.
On June 6, 2018 Ezagoo Holding Limited, a Seychelles Company, acquired Ezagoo Limited, A Hong Kong Company, in consideration of $0.13.
Ezagoo Limited, a Nevada Company, acquired Ezagoo Holding Limited, a Seychelles Company, on June 25, 2018 in consideration of $1. Ezagoo Holding Limited is now a wholly owned subsidiary of the Company.
On July 20, 2018, Ezagoo Limited, a Hong Kong Company, incorporated a new subsidiary in Changsha, China, called Changsha Ezagoo Technology Limited, whereas it is owned entirely (100%) by Ezagoo Limited, the Hong Kong Company. There was no consideration exchanged per the transaction.
The three companies above are under common control Mr. Tan Xiaohao, the director of the Company, so they are related parties.
On July 20, 2018, Changsha Ezagoo Technology Limited, the Hong Kong Company, also referred to herein as “CETL”, entered into and consummated an agreement with Beijing Ezagoo Shopping Holding Limited, also referred to herein as “BESH”, and Ruiyin (Shenzhen) Financial Leasing Limited, also referred to herein as “RFLL”, whereas CETL has the option to purchase all of the equity interests of Hunan Ezagoo Zhicheng Internet Technology Limited, a Chinese, “PRC” Company, from RFLL and BESH. These equity interests would make up 100% of the equity interests of Hunan Ezagoo Zhicheng Internet Technology Limited. Hunan Ezagoo Zhicheng Internet Technology Limited is considered to be a variable interest entity, also referred to herein as a “VIE”, to Changsha Ezagoo Technology Limited, and therefore a VIE of the issuer, Ezagoo Limited, a Nevada Company. More information regarding this agreement can be found in exhibit 10.1, titled, “Call Option Agreement”.
On July 20, 2018, CETL entered into and consummated an agreement with BESH and RFLL whereas BESH and RFLL have given CETL the right to appoint management of CETL to act as proxy to existing shareholders of Hunan Ezagoo Zhicheng Internet Technology Limited. This gives management of CETL the ability to conduct and control company affairs of Hunan Ezagoo Zhicheng Internet Technology Limited. Actions which management of CETL may be able to carry out include, but are not limited to, exercising voting rights as proxy of the existing shareholder(s), appointing new directors, hiring new management, and carrying out corporate actions. More information regarding this agreement can be found in exhibit 10.2, titled, “Shareholder’ Voting Rights Proxy Agreement.”
On July 20, 2018 CETL entered into and consummated an agreement with BESH and RFLL whereas BESH and RFLL have engaged CETL to provide management, financial, and other business services to Hunan Ezagoo Zhicheng Internet Technology Limited. CETL is to be compensated with 100% of all profits generated by Hunan Ezagoo Zhicheng Internet Technology Limited. This Agreement is effective as of July 20, 2018 and will continue in effect for a period of ten (10) years (the “Initial Term”), and for succeeding periods of the same duration (each, “Subsequent Term”), until terminated by one of the following means either during the Initial Term or thereafter: Mutual Consent, Termination by CETL, Breach or Insolvency. Hunan Ezagoo Zhicheng Internet Technology Limited is considered to be a variable interest entity to Changsha Ezagoo Technology Limited, and therefore a VIE of the issuer, Ezagoo Limited, a Nevada Company. More information regarding this agreement can be found in exhibit 10.3, titled, “Management Services Agreement.”
On July 20, 2018, CETL entered into and consummated an agreement with BESH and RFLL whereas BESH and RFLL have pledged their equity interests in Hunan Ezagoo Zhicheng Internet Technology Limited, to CETL. More information regarding this agreement can be found in exhibit 10.4, titled, “Equity Pledge Agreement.”
| F-5 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
On July 20, 2018, CETL entered into a loan agreement with BESH and RFLL wherein CETL will loan the amount of approximately CNY$100,000 (Chinese Yuan) to BESH and RFLL, all of which shall be used for the benefit of Hunan Ezagoo Zhicheng Internet Technology Limited. The total amount of the loan is due on, or before, December 31, 2018. More information regarding this agreement can be found in exhibit 10.5, titled, “Loan Agreement.”
Hunan Ezagoo Zhicheng Internet Technology Limited is the company through which we operate, and which shares our business plan to provide video advertising on buses.
On July 31, 2018 Xin Yang was appointed Chief Financial Officer of the Company.
NOTE 3 - GOING CONCERN UNCERTAINTIES
The accompanying financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As of September 30, 2020, the Company suffered an accumulated deficit of $2,745,545 and continuously incurred a net operating loss of $595,516 for the nine months ended September 30, 2020. The continuation of the Company as a going concern through December 31, 2020 is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company expects to finance its operations primarily through cash flow from revenue and continuing financial support from a shareholder. In the event that we require additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, the shareholder has indicated the intent and ability to provide additional financing.
No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
| ● | Basis of presentation |
The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
| ● | Basis of consolidation |
The condensed consolidated financial statements include the accounts of Ezagoo Limited and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
| ● | Use of estimates |
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.
| ● | Cash and cash equivalents |
The company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
| ● | Plant and equipment |
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
| Categories | Estimated useful life | Residual value | ||
| Office equipment | 3 years | - |
Expenditures for maintenance and repairs are expensed as incurred.
| F-6 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| ● | Accounts receivable |
Accounts receivable are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
| ● | Revenue recognition |
Effective January 1, 2018, the Company adopted the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts. The implementation of ASC 606 did not have a material impact on the Company’s consolidated financial statements. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
The Company’s revenue mainly from providing advertising services (“service revenue”).
| ● | Cost of revenue |
Cost of revenue includes bus media terminal rental fees, bus monitors maintenance fees, bus screen installation fees and internet data fees.
| ● | Income taxes |
The provision of income taxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company did not have any unrecognized tax positions or benefits and there was no effect on the financial conditions or results of operations for the nine months ended September 30, 2020. The Company conducts major businesses in Hong Kong and is subject to tax in this jurisdiction. As a result of its business activities, the Company will file tax returns that are subject to examination by the foreign tax authority.
| ● | Imputed Interest |
The Company owned director and related parties some loans which are unsecured, interest-free with no fixed payment term, for working capital purpose. Imputed interest is considered insignificant.
| ● | Net loss per share |
The Company calculates net loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
| F-7 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| ● | Foreign currencies translation |
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations and comprehensive income.
The reporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company’s subsidiary in People’s Republic of China maintains its books and record in its local currency, Chinese Yuan (“CNY”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of stockholders’ equity.
Translation of amounts from CNY into US$1 has been made at the following exchange rates for the respective periods:
| As
of and for the nine months ended June 30, | ||||||||
| 2020 | 2019 | |||||||
| Period-end CNY: US$1 exchange rate | 6.79 | 7.14 | ||||||
| Period-average CNY: US$1 exchange rate | 6.82 | 7.11 | ||||||
| Period-end HK$: US$1 exchange rate | 7.75 | 7.84 | ||||||
| Period-average HK$: US$1 exchange rate | 7.75 | 7.84 | ||||||
| ● | Related parties |
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| ● | Fair value of financial instruments |
The carrying value of the Company’s financial instruments: cash and cash equivalents, accounts receivable, deposits and other receivables, accounts payable, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
The Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC Topic 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| Level 1 : Observable inputs such as quoted prices in active markets; | |
| Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and | |
| Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions |
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
| ● | Lease |
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was subsequently amended in 2018 by ASU 2018-10, ASU 2018-11 and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. Topic 842 allows for a cumulative-effect adjustment in the period the new lease standard is adopted and will not require restatement of prior periods.
| F-8 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease right-of-use assets of $91,694, lease liabilities for operating leases of $102,320, and $10,626 adjustment to accumulated deficit. After the adoption, $9,393 of operating lease right-of-use assets and $10,443 of lease liabilities for operating leases, and $1,050 of adjustment to accumulated deficit were reflected to September 30, 2020 financial statements. See Note 14 for further information regarding the impact of the adoption of ASC 842 on the Company’s financial statements.
| ● | Recent accounting pronouncements |
In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill impairment test. Step two of the goodwill impairment test measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with its carrying amount. The new guidance is effective prospectively for us for the year ending March 31, 2021 and interim reporting periods during the year ending March 31, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are evaluating the effects, if any, of the adoption of this guidance on our financial position, results of operations and cash flows.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. The new guidance modifies disclosure requirements related to fair value measurement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this ASU while delaying adoption of the additional disclosures until their effective date.
NOTE 5 - PROPERTY AND EQUIPMENT
| As of | ||||||||
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | (audited) | |||||||
| Office equipment | $ | 40,977 | $ | 40,977 | ||||
| Accumulated depreciation | (16,836 | ) | (9,159 | ) | ||||
| Property and equipment, net | $ | 24,141 | $ | 31,318 | ||||
Depreciation expense, classified as operating expenses, was $7,677 and $4,022 for the nine months ended September 30, 2020 and 2019, respectively.
Accumulated depreciation for the nine months ended September 30, 2020 and 2019 were $16,836 and $6,581, respectively.
NOTE 6 - ACCOUNT RECEIVABLES, RELATED PARTIES
As of September 30, 2020, and December 31,2019, our account receivables are $0 and $63,444, respectively.
NOTE 7 - PREPAID EXPENSES AND OTHER RECEIVABLES
Prepaid expenses and other receivables consisted of the following at September 30, 2020 and December 31, 2019:
| As of | ||||||||
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | (audited) | |||||||
| Prepaid expenses | $ | 33,420 | $ | 31,310 | ||||
| Total prepaid expenses and other receivables | $ | 33,420 | $ | 31,310 | ||||
As of September 30, 2020, the balance $33,420 represented an outstanding prepaid expenses and other receivables which included social security fee, bus monitors maintenance fee, management fee and employee receivables.
As of December 31, 2019, the balance $31,310 represented an outstanding prepaid expense and other receivables which included social security fee, bus monitors maintenance fee, management fee and employee receivables.
NOTE 8 - ACCOUNT PAYABLES
Accounts payable consists of the following:
| As of | ||||||||
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | (audited) | |||||||
| Account payables | $ | 41,141 | $ | 14,254 | ||||
| Total | $ | 41,141 | $ | 14,254 | ||||
The account payables balance of $41,141 includes $39,764 payables to a vendor for bus screen terminal platform fee. It was expected to be paid in the fourth quarter in 2020.
| F-9 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 9 – ACCRUED EXPENSES, OTHER PAYABLES AND DEPOSITS RECEIVED
Other payables consisted of the following:
| As of | ||||||||
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | (audited) | |||||||
| Other payables | $ | 100,096 | $ | 9,411 | ||||
| Accrued payroll and benefits | - | 3,728 | ||||||
| Deposits received from customers | 437,727 | 476,911 | ||||||
| Total | $ | 537,823 | $ | 490,050 | ||||
Other payables include accrued social security fee and housing fund, bus screen repair fee, accrued property management fee and employee payables.
Deposits received from customers are advertisement service fee paid by customers.
NOTE 10 - DUE TO RELATED PARTIES
| As of | ||||||||
| September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | (audited) | |||||||
| Amount due to related party B | $ | 219,282 | $ | 213,735 | ||||
| Amount due to related party C | 23,737 | 23,137 | ||||||
| Amount due to related party D | 16,199 | 15,789 | ||||||
| Amount due to related party E | 125,960 | 122,774 | ||||||
| Amount due to related party F | 588,906 | 716,113 | ||||||
| Amount due to related party G | 268,371 | 261,582 | ||||||
| Amount due to related party H | 7,616 | 33,692 | ||||||
| Amount due to related party I | 1,652 | 1,473 | ||||||
| Amount due to related party J | 213,532 | 21,531 | ||||||
| Amount due to related party K | 39,761 | 41,626 | ||||||
| Amount due to related party L | 14,668 | 14,668 | ||||||
| Total | $ | 1,519,686 | $ | 1,466,120 | ||||
Related party B is Hunan Ezagoo Shopping Co. Ltd., Mr. Xiaohao Tan owns 2.4% of this company, and is the Legal Company Representative of this company. For the nine months ended September 30, 2020 and the years ended December 31, 2019, related party B advanced $219,282 and $213,735 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party C is Ms. Weihong Wan, Assistant and Secretary of Mr. Xiaohao Tan. Ms. Weihong Wan is a shareholder and Legal Company Representative of Ruiyin (Shenzhen) Financial Leasing Limited, which is a shareholder of Hunan Ezagoo Zhicheng Internet Technology Limited. For the nine months ended September 30, 2020 and the years ended December 31, 2019, related party C advanced $23,737 and $23,137 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party D is Ms. Qianwen Zhang, spouse of Mr. Xiaohao Tan, a director of the Company. Ms. Qianwen Zhang is the Legal Company Representative of Hunan Ezagoo Internet Technology Limited. For the nine months ended September 30, 2020 and the years ended December 31, 2019, related party D advanced $16,199 and $15,789 to the company as working capital, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party E is Changsha Kexibeier E-commerce Limited, 98% of its equity is owned by Mr. Xiaohao Tan, a director of the Company. For the nine months ended September 30, 2020 and the years ended December 31, 2019, related party E advanced $125,960 and $122,774 to the company as working capital, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party F is Hunan Homestead Asset Management Co. Ltd., a shareholder of Beijing Ezagoo Shopping Holding Limited, which is a shareholder of Hunan Ezagoo Internet Technology Limited. For the nine months ended September 30, 2020 and the years ended December 31, 2019, related party F advanced $588,906 and $716,113 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party G is Kuaile Motors Camping Site Investment Development Limited. One of the shareholders of Hunan Ezagoo Zhicheng Internet Technology Limited, Beijing Ezagoo Shopping Holding Limited owns 92% of Hunan Kuaile Motors Camping Site Investment Development Limited. Ms. Qianwen Zhang, spouse of Mr. Xiaohao Tan owns 8% of Hunan Kuaile Motors Camping Site Investment Development Limited and is the Legal Company Representative of this company. For the nine months ended September 30,2020 and the years ended December 31, 2019, related party G advanced $213,532 and $261,582 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party H is Hunan Yijiaren Hotel Limited. One of the shareholders of Hunan Ezagoo Zhicheng Internet Technology Limited, Beijing Ezagoo Shopping Holding Limited owns 90% of Hunan Yijiaren Hotel Limited, and Ms. Qianwen Zhang, spouse of Mr. Xiaohao Tan owns 10% of this company. For the nine months ended September 30, 2020 and the years ended December 31, 2019, related party H advanced $7,616 and $33,692 to the company as working capital, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
| F-10 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Related party I is Hunan Bright Lionrock Mountain Resort Limited. Beijing Ezagoo Industrial Development Group Holding Limited, formerly named Beijing Ezagoo Shopping Holding Limited, which is a shareholder of Hunan Ezagoo Zhicheng Internet Technology Limited, owns 80% of Hunan Bright Lionrock Mountain Resort Limited. Mr. Xiao Hao Tan is the Legal Company Representative of this company. For the nine months ended September 30, 2020 and the years ended December 31, 2019 related party I advanced $1,652 and $1,473 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party J is Beijing Ezagoo Industrial Development Group Holding Limited, formerly named Beijing Ezagoo Shopping Holding Limited. It is a shareholder of Hunan Ezagoo Zhicheng Internet Technology Limited. For the nine months ended September 30,2020 and the years ended December 31, 2019 related party J advanced $213,532 and $21,531 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party K is Ruiyin (Shenzhen) Financial Leasing Limited, which is a shareholder of Hunan Ezagoo Zhicheng Internet Technology Limited. Weihong Wan, Assistant and Secretary of Xiaohao Tan, is a shareholder and Legal Company Representative of related party K. For the nine months ended September 30, 2020 and the years ended December 31, 2019 related party K advanced $39,761 and $41,626 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
Related party L is Ezagoo B&R (HongKong) Industry Development Group Limited, which is a shareholder of Hunan Ezagoo Zhicheng Internet Technology Limited, owns 100% of Ezagoo B&R(HongKong) Industry Development Group Limited. Mr. Xiao Hao Tan is the Legal Company Representative of this company. For the nine months ended September 30, 2020 and the years ended December 31, 2019 related party L advanced $14,668 and $14,668 to the company as working capital and to pay administrative expenses, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
During the period ended September 30, 2020, related parties imputed interest of $50,154.
NOTE 11 - DUE TO DIRECTOR
For the nine months ended September 30, 2020 and the years ended December 31, 2019, a director of the Company advanced $23,597 and $23,127 to the Company, which is unsecured, interest-free with no fixed payment term, for working capital purpose.
NOTE 12 - CONCENTRATIONS OF RISK
(a) Major customers
For the nine months ended September 30, 2020, there are the customers that is more than 10% showing below of the Company’s revenues and the accounts receivable balances at period-end are presented as follows:
| For
the nine months ended September 30, 2020 | As
of September 30, 2020 | |||||||||||
| Revenues | Percentage
of revenues | Accounts receivable | ||||||||||
| Customer E | $ | 14,469 | 13 | % | $ | - | ||||||
| Customer J | 31,304 | 29 | % | - | ||||||||
| Customer K | 25,329 | 23 | % | - | ||||||||
| Total: | $ | 71,102 | 65 | % | $ | - | ||||||
For the nine months ended September 30, 2019, the customers who accounted for more than 10% of the Company’s revenues and the accounts receivable balances at period-end are presented as follows:
| For
the nine months ended September 30, 2019 | As
of September 30, 2019 | |||||||||||
| Revenues | Percentage
of revenues | Accounts receivable | ||||||||||
| Customer A | $ | 22,347 | 68 | % | $ | - | ||||||
| Customer B | 4,968 | 15 | % | - | ||||||||
| Total: | $ | 27,315 | 83 | % | $ | - | ||||||
| F-11 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
(b) Major vendors
For the nine months ended September 30, 2020, the vendors who accounted for more than 10% of the Company’s cost of revenues and its accounts payable balance at period-end are presented as follows:
| For
the nine months ended September 30, 2020 | As
of September 30, 2020 | |||||||||||
| Purchases | Percentage
of Purchases | Accounts payable | ||||||||||
| Vendor B | $ | 9,671 | 11 | % | $ | 3,170 | ||||||
| Vendor C | 9,451 | 10 | % | 3,098 | ||||||||
| Vendor E | 51,240 | 56 | % | 39,761 | ||||||||
| Total: | $ | 69,362 | 77 | % | $ | 46,029 | ||||||
For the nine months ended September, 2019, the vendors who accounted for 10% or more of the Company’s cost of revenues and its accounts payable balance at period-end are presented as follows:
| For
the nine months ended September 30, 2019 | As
of September 30, 2019 | |||||||||||
| Purchases | Percentage
of Purchases | Accounts payable | ||||||||||
| Vendor A | $ | 30,510 | 24 | % | $ | - | ||||||
| Vendor B | 37,948 | 35 | % | 12,608 | ||||||||
| Vendor C | 14,942 | 13 | % | - | ||||||||
| Total: | $ | 83,400 | 74 | % | $ | 12,608 | ||||||
(c) Credit risk
Financial instruments that are potentially subject to credit risk consist principally of accounts receivable. The Company believes the concentration of credit risk in its accounts receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
NOTE - 13 OPERATING LEASE
The Company has an operating lease agreement for the office space with remaining lease terms of 0.2 years, the Company plans to do month by month rent after the lease ends. The Company does not have any other leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
This standard did not have a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans.
| F-12 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The components of lease expense and supplemental cash flow information related to leases for the period are as follows:
(a) Rent expenses
For nine months ended September 30, 2020, the Company has incurred rent expenses solely for the office premises on a monthly basis as follows:
| Nine
Months Ended September 30, 2020 | ||||
| Lease Cost | ||||
| Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations) | $ | 42,366 | ||
| Other Information | ||||
| Cash paid for amounts included in the measurement of lease liabilities for the third quarter 2020 | $ | 47,074 | ||
| Weighted average remaining lease term – operating leases (in years) | 0.25 | |||
| Average discount rate – operating leases | 4.35 | % | ||
| The supplemental balance sheet information related to leases for the period is as follows: | ||||
| Operating leases | ||||
| Right-of-use assets | $ | 9,393 | ||
| Total operating lease assets | $ | 9,393 | ||
| Short-term operating lease liabilities | $ | 10,443 | ||
| Long-term operating lease liabilities | $ | - | ||
| Total operating lease liabilities | $ | 10,443 | ||
Maturities of the Company’s lease liabilities are as follows:
| Period ending September 30, | Operating Lease | |||
| 2020 (remaining 2 months) | 10,500 | |||
| 2021 | - | |||
| Total lease payments | 10,500 | |||
| Less: Imputed interest/present value discount | (57 | ) | ||
| Present value of lease liabilities | 10,443 | |||
For nine months ended September, 2019, the Company has incurred rent expenses solely for the office premises on a monthly basis as follows:
| Nine
Months Ended September 30, 2019 | ||||
| Lease Cost | ||||
| Operating lease cost (included in general and administration in the Company’s unaudited condensed statement of operations) | $ | 40,586 | ||
| Other Information | ||||
| Cash paid for amounts included in the measurement of lease liabilities for the third quarter 2019 | $ | 44,947 | ||
| Weighted average remaining lease term – operating leases (in years) | 1.17 | |||
| Average discount rate – operating leases | 4.35 | % | ||
| The supplemental balance sheet information related to leases for the period is as follows: | ||||
| Operating leases | ||||
| Right-of-use assets | $ | 61,062 | ||
| Total operating lease assets | $ | 61,062 | ||
| Short-term operating lease liabilities | $ | 58,119 | ||
| Long-term operating lease liabilities | $ | 9,934 | ||
| Total operating lease liabilities | $ | 68,053 | ||
Maturities of the Company’s lease liabilities are as follows:
| Period ending September 30, | Operating Lease | |||
| 2019 (remaining 6 months) | 14,982 | |||
| 2020 | 54,936 | |||
| Total lease payments | 69,918 | |||
| Less: Imputed interest/present value discount | (1,865 | ) | ||
| Present value of lease liabilities | 68,053 | |||
Lease expenses were $42,366 and $40,586 during the nine months ended September 30, 2020 and 2019, respectively.
| F-13 |
EZAGOO LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 14 – ADDITIONAL PAID-IN CAPITAL – CAPITAL CONTRIBUTION
As of September 30, 2020, the Company has a total additional paid-in capital - capital contribution balance of $1,308,646. It includes $452,790 capital contribution from related party J, capital contribution is recorded for any payments received in 2019.
As of December 31, 2019, the Company has a total additional paid-in capital - capital contribution balance of $1,308,646. It includes $725,690 capital contribution from related party J.
Related party J is Beijing Ezagoo Industrial Development Group Holding Limited, formerly named Beijing Ezagoo Shopping Holding Limited. It is a shareholder of Hunan Ezagoo Zhicheng Internet Technology Limited.
NOTE 15 – SUBSEQUENT EVENTS
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of the COVID-19 outbreak and the risks to the international community as the virus spreads globally beyond its point of origin. From April 2020, the Company has implemented and launched its operation of the newly developed advertising social platform called “Xin Dian” application, and has entered into the testing phase. And it starts to its real time online operation in the third quarter of 2020.
The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for the period ended September 30, 2020.
| F-14 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended December 31, 2019 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form S-1 Amendment No.5, dated May 3, 2019 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.
Company Overview
Advertising Industry
At present, Ezagoo Limited aims to solely provide services to consumers in China, although the Company may evaluate this focus in the future and may consider expanding into other countries. Given the demand for our services will be limited to China, at least initially, we will focus primarily on the Digital Advertising Industry as it pertains to China.
Advertising Industry Worldwide and In China
Since 2011, the global advertising market has grown steadily, with the growth rate remaining between 4% and 5%. It is expected that the advertising market will maintain this growth rate until 2018. Spending on advertising worldwide has been increasing steadily and is expected to reach almost 557.99 billion U.S. dollars in 2018, up from 534.8 billion in 2017, which amounts to an annual growth rate of 4.3 percent. In terms of digital advertising, spending is expected to grow from 229.25 billion U.S. dollars in 2017 to around 335.5 billion by 2020.
In China, the advertising industry has experienced tremendous growth and profitability. Currently, China is the second largest advertising market in the world. In terms of e-commerce advertisement, China has ranked first in search advertising. In 2012, China’s digital advertising market was about 77.31 billion Chinese Yuan and by 2016 it had nearly quadrupled in size. From 2015 to 2021, the digital video adverting revenue in China is expected to grow from 3.37 billion to 11.03 billion U.S. dollars.
Results of Operation
For the Three and Nine Months Ended September 30, 2020 and September 30, 2019
For the three ended September 30, 2020, we realized revenue in amount of $64,481, while for the three months ended September 30, 2019, we realized revenues in the amount of $3,834. Our gross profit for the three months ended September 30, 2020 were $31,459, which is gross losses of $28,072 for the three months ended September 30, 2019. The increase in revenue & profit is the Company’s business development is on track, and the cost-effective services have price advantage in market that can attract more customers.
For the nine months ended September 30, 2020, we realized revenue in the amount of $108,825, while for the nine months ended September 30, 2019, we realized revenues in the amount of $33,251. Our gross profits for the nine months ended September 30, 2020 were $15,935, which is more than $104,274 for the nine months ended September 30, 2019. Since our cost of revenue mostly is fixed cost, in order to reduce gross loss, we must develop more long-term stable customer to lower our unit fixed cost and generate profit in long term.
Result of operation for the three months ended September 30, 2020, we realized cost of revenue in amount of $33,022, while for the three months ended September 30, 2019, we realized cost of revenues in the amount of $31,906.
Result of operation for the nine months ended September 30, 2020, we realized cost of revenue in amount of $92,891, while for the nine months ended September 30, 2019, we realized cost of revenues in the amount of $121,591. The decreased amount of $28,700 is because of the COVID-19, the bus media terminal rental vendor allow to give some discount and offer a rent-free period to the Company.
The overall gross profit (or loss) for the Company was $15,934 and negative $88,340 for the nine months ended September 30, 2020 and 2019, respectively. Gross profit (or loss) as a percentage of total revenues was 15% and negative 266% for the same period ended September 30, 2020 and 2019, respectively. During year 2020, the Company entered into several agreements with more customers than during year 2019.
Our net loss for the nine months ended September 30, 2020 were $595,516, while for the nine months ended September 30, 2019 were $750,266. We attribute this decrease due to high administrative expenses.
Liquidity and Capital Resources
As of September 30, 2020, we had cash and cash equivalents of $666,846. We have negative operating cash flows and our working capital has been and will continue to be significant. As a result, we depend substantially on our previous financing activities to provide us with the liquidity and capital resources we need to meet our working capital requirements and to make capital investments in connection with ongoing operations. The Company expects its current capital resources to meet our basic operating requirements for approximately twelve months.
| 2 |
Operating Activities
For the nine months ended September 30, 2020, net cash used in operating activities was $525,513, compared to net cash used in operating activities of $714,929 for the nine months ended September 30, 2019. The cash used in operating activities was mainly for cost of revenue, general and administrative expenses and increased receivables from a customer.
Investing Activities
For the nine months ended September 30, 2020, net cash used in investing activities was $0, compared to net cash used in investing activities of $36,913 for the nine months ended September 30, 2019.
Financing Activities
For the nine months periods ended September 30, 2020 net cash provided by financing activities was $117,481 resulted from advance from director and related parties. For the nine months periods ended September 30, 2019, net cash provided by finance activities was $521,921.
Capital Expenditures
Our capital expenditures primarily relate to the acquisition of property and equipment. Capital expenditures for the nine months periods ended September 30, 2020 is $0, and $36,913 for the nine months periods ended September 30, 2019.
Credit Facilities
We do not have any credit facilities or other access to bank credit.
Contractual Obligations, Commitments and Contingencies
We currently have a lease agreement in place with respect to office premises in Hunan Province in China to commence our business operations.
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of September 30, 2020.
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
Additional Information
VIE STRUCTURE AND ARRANGEMENTS
Foreign ownership in companies providing media advertising services is subject to certain restrictions under PRC laws and regulations. To comply with the PRC laws and regulations, we, through our wholly-owned subsidiary, Changsha Ezagoo Technology Limited (CETL), entered into a set of contractual arrangements with Hunan Ezagoo Zhicheng Internet Technology Limited (HEZL) and its shareholders. The contractual arrangements between CETL, HEZL and shareholders of HEZL allow us to:
| 1. | exercise effective control over HEZL whereby having the power to direct HEZL’s activities that most significantly drive the economic results of HEZL |
| 2. | receive substantially all of the economic benefits and residual returns, and absorb substantially all the risks and expected losses from HEZL as if it was their sole shareholder; and |
| 3. | have an exclusive option to purchase all of the equity interests in HEZL. |
Our consolidated financial statements include the financial statements of our company, our subsidiaries and our consolidated VIE for which we are the primary beneficiary. All transactions and balances among our company, our subsidiaries and our consolidated VIE have been eliminated upon consolidation.
A subsidiary is an entity in which we, directly or indirectly, control more than one half of the voting powers; or has the power to appoint or remove the majority of the members of the board of directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
A consolidated VIE is an entity in which we, or our subsidiaries, through contractual agreements, bears the risks of, and enjoys the rewards normally associated with ownership of the entity. In determining whether we or our subsidiaries are the primary beneficiary, we considered whether it has the power to direct activities that are significant to the consolidated VIE’s economic performance, and also our obligation to absorb losses of the consolidated VIE that could potentially be significant to the consolidated VIE or the right to receive benefits from the consolidated VIE that could potentially be significant to the consolidated VIE. We hold all the variable interests of the consolidated VIE and its subsidiaries, and has been determined to be the primary beneficiary of the consolidated VIE.
| 3 |
In accordance with the contractual agreements among between CETL, HEZL and shareholders of HEZL allow us to:
| 1. | exercise effective control over HEZL whereby having the power to direct HEZL’s activities that most significantly drive the economic results of HEZL; |
| 2. | receive substantially all of the economic benefits and residual returns, and absorb substantially all the risks and expected losses from HEZL as if it was their sole shareholder; |
| 3. | and have an exclusive option to purchase all of the equity interests in HEZL. |
We believe that the contractual arrangements among CETL, HEZL and the shareholders of HEZL are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements and if the shareholders of our consolidated VIE were to reduce their interest in us, their interests may diverge from ours and that may potentially increase the risk that they would seek to act contrary to the contractual terms.
Our ability to control the consolidated VIE also depends on the voting rights proxy agreement and our company, through CETL, has to vote on all matters requiring shareholder approval in the consolidated VIE. As noted above, we believe this voting rights proxy agreement is legally enforceable but may not be as effective as direct equity ownership.
On July 31, 2018 Xin Yang was appointed as Chief Financial Officer of the Company.
The Company’s mailing address is Yijiaren Business Hotel No. 168, Tong Zi Po Xi Lu, Yuelu District Changsha, Hunan 410205, China.
Item 3 Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4 Controls and Procedures.
Evaluation of Disclosure Controls and Procedures:
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2016. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2020, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of September 30, 2020, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ending September 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We know of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
None.
| 4 |
| Exhibit No. | Description | |
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer* | |
| 31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer* | |
| 32.1 | Section 1350 Certification of principal executive officer * | |
| 32.2 | Section 1350 Certification of principal executive officer * | |
| 101.INS | XBRL Instance Document* | |
| 101.SCH | XBRL Schema Document* | |
| 101.CAL | XBRL Calculation Linkbase Document* | |
| 101.DEF | XBRL Definition Linkbase Document* | |
| 101.LAB | XBRL Label Linkbase Document* | |
| 101.PRE | XBRL Presentation Linkbase Document* |
* Filed herewith.
| 5 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| EZAGOO LIMITED | ||
| (Name of Registrant) | ||
| Date: November 13, 2020 | ||
| By: | /s/ Tan Xiaohao | |
| Title: | President, Secretary, Treasurer, Director | |
| 6 |
EXHIBIT 31.1
CERTIFICATION
I, TAN XIAOHAO, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ezagoo Limited (the “Company”) for the quarter ended September 30, 2020;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 13, 2020 | ||
| By: | /s/ Tan Xiaohao | |
| Title: | President, Secretary, Treasurer, Director |
EXHIBIT 31.2
CERTIFICATION
I, YANG XIN, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Ezagoo Limited (the “Company”) for the quarter ended September 30, 2020;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 13, 2020 | ||
| By: | /s/ Yang Xin | |
| Title: | Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ezagoo Limited (the “Company”) on Form 10-Q for the period ending September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Date: November 13, 2020 | ||
| By: | /s/ Tan Xiaohao | |
| Title: | President, Secretary, Treasurer, Director |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ezagoo Limited (the “Company”) on Form 10-Q for the period ending September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Date: November 13, 2020 | ||
| By: | /s/ Yang Xin | |
| Title: | Chief Financial Officer |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.