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
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
Company Overview
During the quarterly ended
Results of Operation
For the three months ended
Revenue
For three months ended
Costs and Expenses
Cost of revenues is comprised of short video produce costs, bus rental fee and related costs, salaries and related costs.
? Short video produce costs of$5,652 and$161,806 for three months endedMarch 31, 2022 and 2021, respectively, which are outsourcing to the related party. ? Bus rental fee and related costs of$1,320 and$16,082 for three months endedMarch 31, 2022 and 2021 respectively, which for surcharges expenses. ? Salaries and related costs of$60,765 and$1,455 for three months endedMarch 31, 2022 and 2021 respectively, which are the compensation expenses for technical employees responsible for R&D and depreciation of computer related to our existing Xindian platform.
Operating Expenses
Operating expenses are generally included during our normal course of business, which we categorize as either sales and marketing expenses and general & administrative expenses.
? The main components of our sales and marketing expenses of$45,382 and$34,594 for three months endedMarch 31, 2022 and 2021 respectively, are: a. Compensation expenses for employees engaged in sales and marketing, sales support, and certain customer service functions; b. Spending related to our advertising and promotional activities in support of our services and Xindian platform. ? The main components of our general and administrative expenses of$317,212 and$164,107 for three months endedMarch 31, 2022 and 2021 respectively, are: a. Compensation expenses for employees in financial, human resources, and other administrative support functions; b. Professional services fees, including audit, consulting. c. Office expenses, including rent and rate, insurance.
Net (Loss) Income
The net loss was
2
Liquidity and Capital Resources
As of
Cash Flow from Operating Activities
For three months ended
Cash Flow from Investing Activities
For three months ended
Cash Flow from Financing Activities
For three months ended
Credit Facilities
We do not have any credit facilities or other access to bank credit.
Contractual Obligations, Commitments and Contingencies
We currently have three lease agreement in place with respect to office premises
in
Off-balance Sheet Arrangements
As of
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,
1. exercise effective control over BEZL whereby having the power to direct BEZL's
activities that most significantly drive the economic results of BEZL
2. receive substantially all of the economic benefits and residual returns, and
absorb substantially all the risks and expected losses from BEZL as if it was
their sole shareholder; and
3. have an exclusive option to purchase all of the equity interests in BEZL.
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, BEZL and shareholders of BEZL allow us to:
1. exercise effective control over BEZL whereby having the power to direct BEZL's
activities that most significantly drive the economic results of BEZL;
2. receive substantially all of the economic benefits and residual returns, and
absorb substantially all the risks and expected losses from BEZL as if it was
their sole shareholder;
3. and have an exclusive option to purchase all of the equity interests in BEZL.
We believe that the contractual arrangements among CETL, BEZL and the shareholders of BEZL 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
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