Kun Peng International Ltd 10-Q for FY2020 Q2
Kun Peng International Ltd. (KPEA)
About this 10-Q
Kun Peng International Ltd filed this 10-Q on June 24, 2020, covering the quarter ended March 31, 2020 (FY2020 Q2).
Headline figures
Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $26
- down 99.8% from $15.19K a year earlier
- Net loss
- $33.27K
- compared with a net loss of $12.27K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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: 333-169805
| CX Network Group, Inc. |
| (Exact name of registrant as specified in its charter) |
| Nevada | 32-0538640 | |
| (State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Room 1801, Vanke building Northwest Hong 7 Road Hongtupian District, Nancheng Residential District Dongguan, Guangdong Province, China |
523000 | |
| (Address of Principal Executive Offices) | (ZIP Code) |
(011) (86) 755-26412816
(Registrant’s Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None |
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 ☒ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ 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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒
As of June 24, 2020, we have 21,376,918 shares of common stock, par value $0.0001 per share issued and outstanding.
TABLE OF CONTENTS
i
RELIANCE ON SEC ORDER
CX Network Group, Inc., or the Company, is filing its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020, or the Quarterly Report, pursuant to the Securities and Exchange Commission’s, or SEC’s, Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465).
As set forth in the Company’s Form 8-K furnished to the SEC on May 12, 2020, the Company was unable to file the Quarterly Report on a timely basis due to travel restriction, quarantines and staffing issues as a result of COVID-19. The Company is filing this Quarterly Report within the time period as permitted with the additional 45 days granted by the SEC.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our annual report on Form 10-K, quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
ii
CONSOLIDATED BALANCE SHEETS
| March 31, | September 30, | |||||||
| 2020 | 2019 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 3,346 | $ | 5,858 | ||||
| Accounts receivable | 250 | 453 | ||||||
| Prepaid expenses | 364 | 1,051 | ||||||
| Security deposit | - | 4,204 | ||||||
| Other receivables | 3,628 | 2,490 | ||||||
| Total Current Assets | 7,588 | 14,056 | ||||||
| Property and equipment, net | 8,736 | 14,380 | ||||||
| Total Non-current Assets | 8,736 | 14,380 | ||||||
| Total Assets | $ | 16,324 | $ | 28,436 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Due to related parties | $ | 548,360 | $ | 460,899 | ||||
| Accrued liabilities and other payables | 104,063 | 91,528 | ||||||
| Short-term loans | 57,497 | 57,497 | ||||||
| Total Current Liabilities | 709,920 | 609,924 | ||||||
| Total Liabilities | 709,920 | 609,924 | ||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
| Common stock, $.0001 par value, 40,000,000 shares authorized; 21,376,918 shares issued and outstanding at March 31, 2020 and September 30, 2019 | 2,138 | 2,138 | ||||||
| Additional paid-in capital | 1,743,629 | 1,743,629 | ||||||
| Accumulated deficit | (2,413,078 | ) | (2,301,435 | ) | ||||
| Accumulated other comprehensive loss | (26,285 | ) | (25,820 | ) | ||||
| Total Stockholders’ Deficit | (693,596 | ) | (581,488 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | 16,324 | $ | 28,436 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| For
the Six Months Ended March 31, |
For
the Three Months Ended March 31, |
|||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| REVENUES | $ | 4,172 | $ | 48,646 | $ | 26 | $ | 15,186 | ||||||||
| COST OF REVENUES | 605 | 11,522 | 88 | 3,837 | ||||||||||||
| GROSS PROFIT (LOSS) | 3,567 | 37,124 | (62 | ) | 11,349 | |||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| General and administrative expenses | 107,735 | 200,567 | 33,559 | 54,986 | ||||||||||||
| Research and development expenses | 5,835 | 500 | 713 | 6 | ||||||||||||
| Total Operating Expenses | 113,570 | 201,067 | 34,272 | 54,992 | ||||||||||||
| LOSS FROM OPERATIONS | (110,003 | ) | (163,943 | ) | (34,334 | ) | (43,643 | ) | ||||||||
| OTHER INCOME (EXPENSES) | (1,640 | ) | 45,175 | 1,069 | 31,369 | |||||||||||
| LOSS BEFORE INCOME TAXES | (111,643 | ) | (118,768 | ) | (33,265 | ) | (12,274 | ) | ||||||||
| INCOME TAXES | - | - | - | - | ||||||||||||
| NET LOSS | $ | (111,643 | ) | $ | (118,768 | ) | $ | (33,265 | ) | $ | (12,274 | ) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||
| Foreign currency translation adjustment | (465 | ) | (2,697 | ) | 2,442 | (2,930 | ) | |||||||||
| COMPREHENSIVE LOSS | $ | (112,108 | ) | $ | (121,465 | ) | $ | (30,823 | ) | $ | (15,204 | ) | ||||
| NET LOSS PER COMMON SHARE: | ||||||||||||||||
| Basic & Diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic & Diluted | 21,376,918 | 21,343,951 | 21,376,918 | 21,376,918 | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
2
CX NETWORK GROUP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
For the Six Months Ended March 31, 2020
(UNAUDITED)
| Additional | Accumulated Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||||||||
| Balance, September 30, 2019 | 21,376,918 | $ | 2,138 | $ | 1,743,629 | $ | (2,301,435 | ) | $ | (25,820 | ) | $ | (581,488 | ) | ||||||||||
| Net loss | - | - | - | (78,378 | ) | - | (78,378 | ) | ||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (2,907 | ) | (2,907 | ) | ||||||||||||||||
| Balance, December 31, 2019 | 21,376,918 | 2,138 | 1,743,629 | (2,379,813 | ) | (28,727 | ) | (662,773 | ) | |||||||||||||||
| Net loss | - | - | - | (33,265 | ) | - | (33,265 | ) | ||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | 2,442 | 2,442 | ||||||||||||||||||
| Balance, March 31, 2020 | 21,376,918 | $ | 2,138 | $ | 1,743,629 | $ | (2,413,078 | ) | $ | (26,285 | ) | $ | (693,596 | ) | ||||||||||
3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
For the Six Months Ended March 31, 2019
(UNAUDITED)
| Additional | Accumulated Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Deficit | |||||||||||||||||||
| Balance, September 30, 2018 | 21,216,918 | $ | 2,122 | $ | 1,695,645 | $ | (2,094,690 | ) | $ | (30,179 | ) | $ | (427,102 | ) | ||||||||||
| Common stock issued for cash | 160,000 | 16 | 47,984 | - | - | 48,000 | ||||||||||||||||||
| Net loss | - | - | - | (106,494 | ) | - | (106,494 | ) | ||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | 233 | 233 | ||||||||||||||||||
| Balance, December 31, 2018 | 21,376,918 | 2,138 | 1,743,629 | (2,201,184 | ) | (29,946 | ) | (485,363 | ) | |||||||||||||||
| Net loss | - | - | - | (12,274 | ) | - | (12,274 | ) | ||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (2,930 | ) | (2,930 | ) | ||||||||||||||||
| Balance, March 31, 2019 | 21,376,918 | $ | 2,138 | $ | 1,743,629 | $ | (2,213,458 | ) | $ | (32,876 | ) | $ | (500,567 | ) | ||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (111,643 | ) | $ | (118,768 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | 5,805 | 11,407 | ||||||
| Operating lease expense | 4,879 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 209 | 1,627 | ||||||
| Prepaid expenses | 80 | (4,975 | ) | |||||
| Other receivables | (1,135 | ) | (451 | ) | ||||
| Security deposit | 2,139 | - | ||||||
| Operating lease liability | (2,130 | ) | - | |||||
| Accrued liabilities and other payables | 15,526 | (6,746 | ) | |||||
| NET CASH FLOWS USED IN OPERATING ACTIVITIES | (86,270 | ) | (117,906 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayments to related party | (2,995 | ) | (21,454 | ) | ||||
| Proceeds from related parties | 86,716 | 106,284 | ||||||
| Proceeds from stock issuance | - | 48,000 | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 83,721 | 132,830 | ||||||
| EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 37 | 601 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (2,512 | ) | 15,525 | |||||
| CASH AND CASH EQUIVALENTS - beginning of period | 5,858 | 21,941 | ||||||
| CASH AND CASH EQUIVALENTS - end of period | $ | 3,346 | $ | 37,466 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | - | $ | - | ||||
| Income taxes | $ | - | $ | - | ||||
| Non-cash financing and investing activities: | ||||||||
| Expenses paid by related party on behalf of the Company | $ | 3,065 | $ | 4,058 | ||||
| Derecognition of operating lease right-of-use asset and liability | $ | 10,566 | $ | - | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 – ORGANIZATION AND GOING CONCERN
ORGANIZATION
The Company was incorporated in the State of Florida on September 3, 2010 under the name of “mLight Tech, Inc.” (“MLGT”). On July 11, 2017, MLGT merged with and into CX Network Group, Inc. (“CXKJ”), a Nevada corporation, with CXKJ as the surviving corporation that operates under the name “CX Network Group, Inc.” (the “Name Change”), pursuant to an agreement and plan of merger (the “Merger Agreement”) dated July 3, 2017.
Pursuant to the Merger Agreement, immediately after the effective time of the Merger, the Company’s corporate existence is governed by the laws of the State of Nevada and the Articles of Incorporation and bylaws of CXKJ (the “Domicile Change”), and each outstanding share of MLGT’s common stock, par value $0.0001 per share was converted into 0.0667 outstanding share of common stock of CXKJ, par value $0.0001 per share at a one-for-fifteen reverse split ratio (the “Reverse Stock Split”) which resulted in reclassification of capital from par value to capital in excess of par value. Immediately prior to the effectiveness of the reverse stock split, we had 217,300,000 shares of common stock of MLGT issued and outstanding. Immediately upon the effectiveness of the reverse stock split, we had 14,486,670 shares of common stock of CXKJ issued and outstanding.
The Name Change, Domicile Change, and Reverse Stock Split went effective on June 12, 2017. Subsequently, the Company’s trading symbol for its common stock was changed to “CXKJ”.
On March 20, 2018, CXKJ entered into a share exchange agreement (the “Share Exchange”) with Chuangxiang Holdings Inc. (“CX Cayman”). Under the Share Exchange, CX Network Group, Inc. issued an aggregate of 5,350,000 shares of common stock, par value $0.0001 per share to the shareholders of CX Cayman in exchange for 100% of the issued and outstanding equity securities of CX Cayman. The Share Exchange was closed on March 20, 2018. As a result of the Share Exchange, CX Cayman became the Company’s wholly-owned subsidiary.
CX Cayman was incorporated on February 4, 2016 under the laws of Cayman Islands.
Chuangxiang (Hong Kong) Holdings Limited (“CX HK”) was incorporated on February 23, 2016 and became CX Cayman’s wholly owned subsidiary on December 1, 2016. CX HK operates through its subsidiary, Shenzhen Chuangxiang Network Technology (Shenzhen) Limited (“CX Network”). CX Network was incorporated by CX HK on April 12, 2016 under the laws of People’s Republic of China (“PRC”) as a wholly foreign owned enterprise.
Shenzhen Chuangxiang Network Technology Limited (“Shenzhen CX”) is a limited liability company formed under the laws of PRC on August 14, 2015. Shenzhen CX became a variable interest entity (“VIE”) of CX Network through a series of contractual arrangements entered into on April 20, 2017. CX Network controls Shenzhen CX through agreements and arrangements that absorbs operating risk, as if Shenzhen CX is a wholly owned subsidiary of CX Network. Shenzhen CX is engaged in the business of developing and operating membership-based social network, dating and mobile gaming, and interactive live broadcast platforms.
The transaction has been treated as a recapitalization of CX Cayman and its subsidiaries, with CXKJ (the legal acquirer of CX Cayman and its subsidiaries) considered the accounting acquiree, and CX Cayman (the legal acquiree) considered the accounting acquirer. Accordingly, CX Cayman’s assets, liabilities and results of operations will become the historical financial statements of the registrant, and CXKJ’s assets, liabilities and results of operations will be consolidated with CX Cayman effective as of the date of the closing of the Share Exchange (March 20, 2018). The Company did not recognize goodwill or any intangible assets in connection with the transaction. All costs related to the transaction are being charged to operations as incurred. CX Cayman received cash of $145 and assumed $249,966 liabilities upon execution of the Share Exchange. The 5,350,000 shares of common stock issued in conjunction with the Share Exchange have been presented as outstanding for all periods.
6
As used in this report, unless otherwise indicated, the terms “we” and “us” refer to CX Network Group, Inc., a Nevada corporation (previously known as “mLight Tech, Inc.”, a Florida corporation,), its owned subsidiaries CX Cayman, CX HK, CX Network and Shenzhen CX, which is controlled by us via various contracts.
The accompanying unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of CXKJ, its wholly owned subsidiaries, CX Cayman, CX HK, CX Network, and its VIE, Shenzhen CX. All intercompany transactions and balances have been eliminated in the consolidation. Certain information and footnote disclosures normally included in financial statements prepared in conjunction with U.S. GAAP have been condensed or omitted as permitted by the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. Interim operating results for the six months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2020, or for any subsequent period. These interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended September 30, 2019 included in the Form 10-K filed with the SEC on December 30, 2019.
Going Concern
In assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of March 31, 2020, the Company’s current liabilities exceeded the current assets, its accumulated deficit was approximately $2,413,000 and the Company has incurred losses since inception. None of the Company’s stockholders, officers or directors, or third parties, are under any obligation to advance us funds, or to invest in the Company. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, the Company may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. Currently, the Company plans to develop E-commerce business in the app of Little Love to increase revenues to meet its future cash flow requirements. However, the Company cannot provide any assurance on the successful development of the Company’s contemplated plan of operations or the financing that will be available to us on commercially acceptable terms, if at all.
In addition, starting in January 2020, the COVID-19 pandemic surfaced in China has significantly affected the Company’s operation. The Company suspended its operation in early February 2020 due to government mandates, and resumed to work by the end of February. However, the operation and business were still adversely impacted by the COVID-19 pandemic as of the filing date.
These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The extent to which the COVID-19 pandemic may directly or indirectly impact our business, financial condition, and results of operations is highly uncertain and subject to change. Actual results could differ from those estimates.
7
Recently adopted accounting pronouncements
On October 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (as amended by ASU 2017-13, 2018-01, 2018-10 & 11, 2018-20, and 2019-01, collectively ASC Topic 842), using the modified retrospective method. The Company elected the transition method which allows entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As a result of electing this transition method, previously reported financial information has not been restated to reflect the application of the new standard to the comparative periods presented. The Company elected the package of practical expedients permitted under the transition guidance within ASC 842, which among other things, allows the Company to carry forward certain historical conclusions reached under ASC Topic 840 regarding lease identification, classification, and the accounting treatment of initial direct costs. The Company elected not to record assets and liabilities on its consolidated balance sheet for new or existing lease arrangements with terms of 12 months or less. The Company recognizes lease expenses for such lease on a straight-line basis over the lease term.
The primary impact of applying ASC Topic 842 is the initial recognition of approximately $15,000 of lease liability and right-of-use asset on the Company’s consolidated balance sheet as of October 1, 2019, for lease classified as operating lease under ASC Topic 840, as well as enhanced disclosure of the Company’s leasing arrangement. There is no cumulative effect to accumulated deficit or other components of equity recognized as of October 1, 2019 and the adoption of this standard did not impact the consolidated statement of operations and comprehensive loss. The Company does not have finance lease arrangements as of March 31, 2020. See Note 8 for further discussion.
NOTE 3 – ACCOUNTS RECEIVABLE
At March 31, 2020 and September 30, 2019, accounts receivable consisted of the following:
| March 31, 2020 | September 30, 2019 | |||||||
| Accounts receivable | $ | 250 | $ | 453 | ||||
| Allowance for doubtful accounts | - | - | ||||||
| $ | 250 | $ | 453 | |||||
NOTE 4 – PROPERTY AND EQUIPMENT, NET
At March 31, 2020 and September 30, 2019, property and equipment consisted of the following:
| March 31, 2020 | September 30, 2019 | |||||||
| Office equipment | $ | 29,827 | $ | 29,625 | ||||
| Furniture and fixtures | 17,617 | 17,497 | ||||||
| Sub-total | 47,444 | 47,122 | ||||||
| Less: accumulated depreciation | (38,708 | ) | (32,742 | ) | ||||
| Property and equipment, net | $ | 8,736 | $ | 14,380 | ||||
For the six months ended March 31, 2020 and 2019, depreciation expense amounted to $5,805 and $11,407, respectively, which is included in general and administrative expenses, research and development expenses and cost of revenues.
NOTE 5 – SHORT-TERM LOANS
As of March 31, 2020 and September 30, 2019, the balance of the short-term loans was $57,497. The amount represents loans borrowed from an individual and a company that are unsecured, no interest bearing and due on demand.
8
NOTE 6 – INCOME TAXES
The Company accounts for income taxes pursuant to the accounting standards that requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. Additionally, the accounting standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The Company and its subsidiaries file separate income tax returns.
United States
CXKJ is incorporated in the State of Nevada and is subject to the United States federal income tax. No provision for income taxes in the U.S. has been made as the Company has no U.S. taxable income for the six months ended March 31, 2020 and 2019.
Cayman Islands
CX Cayman is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, CX Cayman is not subject to tax on income or capital gains. In addition, upon payments of dividends by CX Cayman, no Cayman Islands withholding tax is imposed.
Hong Kong
CX HK is incorporated in Hong Kong and Hong Kong’s profits tax rate is 8.25% for the first $0.26 million (HK$2 million), the excess part will be taxed at 16.5%. CX HK did not earn any income that was derived in Hong Kong for the six months ended March 31, 2020 and 2019 and therefore, CX HK was not subject to Hong Kong profits tax for the periods reported.
PRC
The PRC’s statutory income tax rate is 25%. The Company’s subsidiary and VIE registered in PRC are subject to income tax rate of 25%, unless otherwise specified.
CX Network did not generate taxable income in the PRC for the six months ended March 31, 2020 and 2019. Management estimated that CX Network will not generate any taxable income in the future.
Shenzhen CX was incorporated in the PRC. For the six months ended March 31, 2020 and 2019, Shenzhen CX incurred net operating losses and no provision for income taxes has been recorded. In addition, a full valuation allowance has been provided against Shenzhen CX’s deferred income tax assets due to the uncertainty of the realization of any tax assets.
NOTE 7 – RELATED PARTY TRANSACTIONS
The related parties consist of the following:
| Name of Related Party | Nature of Relationship | |
| Jiyin Li | Chairman | |
| Huibin Su | Chief Executive Officer and Chief Financial Officer | |
| Chaoran Zhang | Significant Shareholder of Shenzhen CX | |
| Zizhong Huang | Chief Operating Officer |
9
Due to related parties
Due to related parties consist of the following:
| March 31, 2020 | September 30, 2019 | |||||||
| Jiyin Li | $ | 1,279 | $ | 1,279 | ||||
| Huibin Su | 532,972 | 445,607 | ||||||
| Chaoran Zhang | 14,109 | 14,013 | ||||||
| Total | $ | 548,360 | $ | 460,899 | ||||
The balance of due to related parties represents expense paid by related parties on behalf of the Company and the loans the Company obtained from related parties for working capital purpose. The loans owed to the related parties are interest free, unsecured and repayable on demand.
During the six months ended March 31, 2020 and 2019, the Company obtained loans from the above related parties in the amount of $86,716 and $106,284, respectively, and made repayments to them in the amount of $2,995 and $21,454, respectively.
During the six months ended March 31, 2020 and 2019, Huibin Su paid expenses on behalf of the Company in the amount of $3,065 and $4,058, respectively.
In addition, during the six months ended March 31, 2020 and 2019, Dongguan FirstWisdom Listing Services Co., Ltd, a company controlled by Chaoran Zhang and Huibin Su, was allowed to share the office space leased by Shenzhen CX at no cost. During the six months ended March 31, 2020 and 2019, friends of Huibin Su provided office spaces to CX HK and Shenzhen CX free of charge. Yi Zhang, a friend of Huibin Su, also provided non-compensated accounting services to the Company during the six months ended March 31, 2020 and 2019.
NOTE 8 – OPERATING LEASE
On May 10, 2018, the Company entered into a lease agreement for its office with a monthly rent of RMB15,000 (approximately $2,130) and a term of two years. Effective October 1, 2019, the Company initially recognized operating lease liability of $14,714 and corresponding right-of-use asset of $15,332 based on the present value of the remaining minimum rental payments under current lease standards for existing operating lease. The discount rate utilized in such present value calculation was 4.80% based on an estimate of the Company’s incremental borrowing rate. In December 2019, the Company has terminated the lease.
During the six months ended March 31, 2020, the Company had operating lease expense of $4,879, and cash paid for amounts included in the measurement of operating lease liability is $2,130. Operating lease right-of-use asset and operating lease liability in the amount of $10,566 has been extinguished due to the lease termination in December 2019. The loss related to termination was $2,130 which is included in other income (expenses). As of March 31, 2020, there is no operating lease right-of-use asset and operating lease liability in the consolidated balance sheet.
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used herein and except as otherwise noted, the term “Company”, “it(s)”, “our”, “us”, “we”, “CX” and “CXKJ” shall mean CX Network Group, Inc., a Nevada corporation (previously known as “mLight Tech Inc.” or “MLGT”, a Florida corporation), its owned subsidiaries Chuangxiang Holdings Inc.(“CX Cayman”), Chuangxiang (Hong Kong) Holdings Limited (“CX HK”), Chuangxiang Network Technology (Shenzhen) Limited (“CX Network”) and Shenzhen Chuangxiang Network Technology Limited (“Shenzhen CX”), which is controlled by us via various contracts.
This Form 10-Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited financial statements and accompanying notes and the other financial information appearing in the 2019 Annual Report filed with the Securities and Exchange Commission on December 30, 2019 and elsewhere in this quarterly report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.
Overview of the Business
Our business focuses on development and operation of online dating and mobile gaming products either developed and operated by us, or developed by us but co-operated by third parties; or developed by third parties but co-operated by us.
Our self-developed and self-operated online dating product Little Love (“小恋爱”) and Hotchat (“热聊”) are mobile applications geared towards Chinese singles designed to increase a user’s likelihood of finding a romantic connection. Our mission is to help individuals forge life-long relationships with others that share their interests and values. Through these mobile applications, our users can search for and communicate with other like-minded individuals. Our product creates a virtual community where users can meet, chat and message. We operate location-based social networks for meeting new people on mobile platforms, including on iPhone, Android, iPad and other tablets that facilitate interactions among users and encourage users to connect and chat with each other.
Our online dating mobile platforms monetize through advertising, in-app purchases, and paid subscriptions. The Company offers online marketing capabilities, which enable marketers to display their advertisements in different formats and in different locations. In the near future, we plan to offer sophisticated data science for highly effective hyper-targeting. The Company is actively seeking the opportunities to work with its advertisers to maximize the effectiveness of their campaigns by optimizing advertisement formats and placements. We temporarily suspended our operation of Hotchat at the end of year 2019 due to the revenue from in-app purchase was insufficient to support the cost of the operation. We temporarily suspended our paid advertisements for Little Love to adjust our marketing strategy of Little Love from April 2018. Little Love is currently under development and upgrade and the Company is working internally to develop E-commerce business in Little Love in order to provide better service to the users of Little Love and generate more income to the company at the same time. The company currently has no plan to resume the advertisement of Little Love until the E-commerce business in Little Love is launched.
Our self-developed mobile gaming application is Eternal Tribe (“永恒部落”) which was launched by us in January 2018. For Eternal Tribe, our users can deposit fund on as needed basis for the in-app purchases. Eternal Tribe is Android-based mobile games developed solely by us to diversify our product portfolio. We updated Eternal Tribe based on the collected user experiences and market feedbacks and launched an upgraded version of Eternal Tribe in July 2018 and engaged third party to co-market and co-operate Eternal Tribe on different platforms and channels. However, based on the market responses, we suspended Eternal Tribe in November 2018 and dismissed the development team for Eternal Tribe.
As of March 31, 2020, we had approximately 3,569,051 registered members for Little Love, 146,543 registered members for Hotchat.
Coronavirus (“COVID-19”) Updates
The COVID-19 pandemic has caused disruptions to our operations starting in January 2020. Our operations were closed in early February due to China’s government mandates. In late February 2020, substantially all of our employees were back to work in our offices. The ongoing COVID-19 pandemic not only adversely impacted our operations but the business of our customers. We experienced and are continually experiencing delayed customer payments and rescheduled customer orders, which adversely impacted the Company’s results of operations, cash flows and financial position.
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The extent of the impact on our fiscal 2020 results will be dependent on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. The Company continues taking actions to help mitigate, as best we can, the impact of the COVID-19 pandemic on the health and well-being of our employees, the communities in which we operate and our partners, as well as the impact on our operations and business as a whole.
Foreign Operations
Substantially all of our business operations are conducted in Mainland China. Accordingly, our results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in the PRC. We also have operations in Hong Kong. Operating in foreign countries involves substantial risk. For example, our business activities subject us to a number of Chinese laws and regulations, such as anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy and security requirements, labor laws, intellectual property laws, privacy laws, and anti-competition regulations, which have uncertainties. Any failure to comply with the PRC laws and regulations could subject us to fines and penalties, make it more difficult or impossible to do business in China and harm our reputation.
Operating in foreign countries also subjects us to risk from currency fluctuations. Our primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses. The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of our foreign currency-denominated sales and earnings. This could either reduce the U.S. dollar value of our prices or, if we raise prices in the local currency, it could reduce the overall demand for our offerings. Either could adversely affect our revenue. Conversely, a rise in the price of local currencies relative to the U.S. dollar could adversely impact our profitability because it would increase our costs denominated in those currencies, thus adversely affecting gross margins.
Financial Operations Overview
Results of Operations for the three months ended March 31, 2020 and 2019
Revenues
For the three months ended March 31, 2020, we had total revenues of $26 as compared to $15,186 for the three months ended March 31, 2019. The revenues during the three months ended March 31, 2020 were mainly generated through in-app purchase of Little Love. The decrease of $15,160 or 100% during the three months ended March 31, 2020 was primarily due to the COVID-19 pandemic surfaced in China has significantly affected the Company’s operation. The Company has suspended its operation from February 2020 and has not resumed to its full operation as of the filing date.
Cost of Revenues
For the three months ended March 31, 2020 and 2019, cost of revenues amounted to $88 and $3,837, respectively. The decrease of cost of revenues during the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was primarily attributable to the COVID-19 pandemic which has significantly affected the Company’s operation.
Gross Profit (Loss)
For the three months ended March 31, 2020 and 2019, gross profit (loss) amounted to $(62) and $11,349, respectively. The decrease of gross profit during the three months ended March 31, 2020 compared to the comparative period in 2019 was primarily attributable to the reason above.
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General and Administrative Expenses
For the three months ended March 31, 2020 and 2019, general and administrative expenses amounted to $33,559 and $54,986, respectively. The decrease of general and administrative expenses in the amount of $21,427 or 39% was primarily attributable to the COVID-19 pandemic which has significantly affected the Company’s operation. The Company has suspended its operation from February 2020.
Research and Development Expenses
For the three months ended March 31, 2020 and 2019, research and development expenses amounted to $713 and $6, respectively.
Other Income
For the three months ended March 31, 2020, total other income was $1,069 as compared to $31,369 for the three months ended March 31, 2019. The decrease in other income is primarily attributable to $1,069 insurance compensation received during the three months ended March 31, 2020 as compared to $31,369 government subsidy received by the Company during the three months ended March 31, 2019.
Net loss
For the three months ended March 31, 2020 and 2019, net loss amounted to $33,265 and $12,274, respectively. The increase of net loss in the amounts of $20,991 or 171% for the three months ended March 31, 2020 was a result of the factors described above.
Foreign Currency Translation Adjustment
The reporting currency of the Company is the U.S. Dollar. The functional currency of Shenzhen CX and CX Network operating in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements of entities in PRC are translated to U.S. dollars using period end rates of exchange for assets and liabilities, historical rates of exchange for equity, and average rates of exchange during the period for results of operations. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations and comprehensive loss.
As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $2,442 for the three months ended March 31, 2020 as compared to a foreign currency translation loss of $2,930 for the three months ended March 31, 2019. This non-cash gain or loss had an effect of decreasing or increasing our reported comprehensive loss.
Comprehensive Loss
For the three months ended March 31, 2020, comprehensive loss of $30,823 is derived from our net loss of $33,265. For the three months ended March 31, 2019, comprehensive loss of $15,204 is derived from our net loss of $12,274.
Results of Operations for the Six Months ended March 31, 2020 and 2019
Revenues
For the six months ended March 31, 2020, we had total revenues of $4,172, as compared to $48,646 for six months ended March 31, 2019. The revenues were mainly generated through the in-app purchase of Little Love. The decrease of $44,474, or 91%, during the six months ended March 31, 2019 was primarily attributable to that the Company temporarily suspended the advertisement, the number of active users of Hotchat and Little Love decreased. The influence of COVID-19 pandemic has also resulted in a significant drop in revenue.
Cost of Revenues
For the six months ended March 31, 2020 and 2019, cost of revenues amounted to $605 and $11,522, respectively. The decrease of cost of revenues in 2019 was primarily attributable to decrease of labor cost associated with maintenance of mobile platform and the influence of the COVID-19 pandemic.
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Gross Profit
For the six months ended March 31, 2020 and 2019, gross profit amounted to $3,567 and $37,124, respectively. The decrease of gross profit for the six months ended at March 31, 2020 was primarily attributable to the reason above.
General and Administrative Expenses
For the six months ended March 31, 2020 and 2019, general and administrative expenses amounted to $107,735 and $200,567, respectively. The decrease of general and administrative expenses of $92,832 or 46% during the six months ended March 31, 2020 was primarily attributable to the decrease of salary expense, professional fees, and lease expense and the influence of the COVID-19 pandemic.
Research and Development Expenses
For the six months ended March 31, 2020 and 2019, research and development expenses amounted to $5,835 and $500, respectively. The increase of research and development expenses in the amount of $5,335 or 1,067% was primarily attributable to the fact that the Company adjusted the strategy to develop E-commerce business in the app of Little Love in the six months ended March 31, 2020.
Other Income (Expenses)
For the six months ended March 31, 2020, total other expenses was $(1,640) as compared to total other income of $45,175 for the six months March 31, 2019. The decrease in other income is primarily attributable to the security deposit for the Company’s office forfeited during the six months ended March 31, 2020, and government subsidy received by the Company during the six months ended March 31, 2019.
Net loss
For the six months ended March 31, 2020 and 2019, net loss amounted to $111,643 and $118,768, respectively. The decrease of net loss in the amounts of $7,125 was a result of the factors described above.
Foreign Currency Translation Adjustment
The functional currency of our VIE entity operating in the PRC is the Chinese Yuan or RMB. The financial statements of our VIE are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations.
As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation loss of $465 for the six months ended March 31, 2020 as compared to a foreign currency translation loss $2,697 for the six months ended March 31, 2019. This non-cash loss had the effect of increasing our reported comprehensive loss.
Comprehensive Loss
For the six months ended March 31, 2020, comprehensive loss of $112,108 is derived from the sum of our net loss of $111,643 and foreign currency translation loss of $465. For the six months ended March 31, 2019, comprehensive loss of $121,465 is derived from the sum of our net loss of $118,768 and foreign currency translation loss of $2,697.
Liquidity and Capital Resources
In assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of March 31, 2020, the Company’s working capital deficit was approximately $702,000 as compared to working capital deficit of approximately $596,000 as of September 30, 2019. As of March 31, 2020 and September 30, 2019, the Company’s accumulated deficit was approximately $2,413,000 and $2,301,000, respectively, and the Company has incurred losses since inception. None of the Company’s stockholders, officers or directors, or third parties, are under any obligation to advance the Company funds, or to invest in it. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, the Company may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.
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Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.
The following summarizes the key components of the Company’s cash flows for the six months ended March 31, 2020 and 2019:
| Six Months Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| Net cash used in operating activities | $ | (86,270 | ) | $ | (117,906 | ) | ||
| Cash flows used in investing activities | $ | - | $ | - | ||||
| Cash flows provided by financing activities | $ | 83,721 | $ | 132,830 | ||||
| Effect of exchange rate on cash and cash equivalent | $ | 37 | $ | 601 | ||||
| Net increase (decrease) in cash and cash equivalents | $ | (2,512 | ) | $ | 15,525 | |||
Operating Activities.
Net cash used in operating activities totaled $86,270 for the six months ended March 31, 2020, which was attributable to the net loss of approximately $112,000, partially offset by the depreciation expense of around $6,000, the operating lease expense of around $5,000 and the increase of accrued liability and other payable around $16,000, as compared to net cash used in operating activities of $117,906 for the six months ended March 31, 2019.
Financing Activities.
Net cash provided by financing activities for the six months ended March 31, 2020 was $83,721 as compared to $132,830 for the six months ended March 31, 2019. The decrease in cash provided by financing activities for the six months ended March 31, 2020 was mainly due to the decrease of proceeds from stock issuance around $48,000.
Going Concern
In assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of March 31, 2020, the Company’s current liabilities exceeded the current assets, its accumulated deficit was approximately $2,413,000 and the Company has incurred losses since inception. None of the Company’s stockholders, officers or directors, or third parties, are under any obligation to advance us funds, or to invest in us. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. In the coming years, the Company plans to develop business in oversea markets to increase its revenues to meet its future cash flow requirements. However, the Company cannot provide any assurance on the successful development of the Company’s contemplated plan of operations or the financing that will be available to us on commercially acceptable terms, if at all.
These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
Off-Balance Sheet Arrangements
As of March 31, 2020 and September 30, 2019, there are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our investors.
Recent Accounting Pronouncements
See Note 2 of our Financial Statements included in this quarterly report for discussion of recent accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to a smaller reporting company.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on his evaluation as of the end of the six months ended March 31, 2020, our chief executive officer, who served as both our chief financial officer and principal accounting manager, concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer, to allow timely decisions regarding required disclosure as a result of the material weaknesses in our internal control over financial reporting due to the existence of the following material weaknesses:
| ● | A lack of sufficient and adequately trained internal accounting and finance personnel with appropriated understanding of U.S. GAAP and SEC reporting requirement; | |
| ● | A lack of segregation of duties within significant accounts; and | |
| ● | A lack of a functioning audit committee and a majority of outside directors on the Company’s board of director. |
Changes in Internal Controls over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the second fiscal quarter covered by this quarterly report that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting other than the facts disclosed above.
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None.
As of the date of this quarterly report, there have been no material changes to the risk factors disclosed in our annual report on Form 10-K for the fiscal year ended September 30, 2019 filed with the SEC on December 30, 2019.
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.
| 3.1 | Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on July 6, 2017). | |
| 3.2 | Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed on July 6, 2017). | |
| 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 financial and accounting officer | |
| 32.1* | Section 1350 Certification of principal executive officer | |
| 32.2* | Section 1350 Certification of principal financial and accounting officer | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* filed herewith
17
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.
| CX NETWORK GROUP, INC. | ||
| Date: June 24, 2020 | By: | /s/ Huibin Su |
| Huibin Su | ||
Chief Executive Officer, Chief Financial Officer, Principal Accounting Manager and Director | ||
18
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13A-14(A),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Huibin Su, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2020 of CX Network Group, Inc.; |
| 2 | Based on my knowledge, this 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 over financial reporting 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 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: |
| 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: June 24, 2020 | By: | /s/ Huibin Su |
|
Huibin Su Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13A-14(A),
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Huibin Su, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2020 of CX Network Group, Inc.; |
| 2 | Based on my knowledge, this 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 over financial reporting 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 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: |
| 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: June 24, 2020 | By: | /s/ Huibin Su |
|
Huibin Su Chief Financial Officer (Principal Financial and Accounting 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
I, Huibin Su, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
| 1. | The Quarterly Report on Form 10-Q of CX Network Group, Inc. (the “Company”) for the period ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: June 24, 2020 | By: | /s/ Huibin Su |
| Huibin Su | ||
|
Chief Executive Officer (Principal Executive Officer) |
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.
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
I, Huibin Su, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
| 1. | The Quarterly Report on Form 10-Q of CX Network Group, Inc. (the “Company”) for the period ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: June 24, 2020 | By: | /s/ Huibin Su |
| Huibin Su | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.