SHENGDA NETWORK TECHNOLOGY: MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Form 10-Q)

FORWARD-LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use of terms such as "may," "will," "expect," "believe," "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such forward-looking statements be subject to the safe harbors for such
statements. We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what may
occur in the future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond our control that could cause actual
results and events to differ materially from historical results of operations
and events and those presently anticipated or projected. We disclaim any
obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.



Overview of the Business


The Company was incorporated on March 14, 2018 under the laws of State of nevada. The main activity of the Company is the development of Internet security software products for personal computers. The Company is active in electronic commerce.




Results of Operations



Three months ended March 31, 2021 Compared to the three months ended March 31, 2020

The following table summarizes the results of our operations for the three months ended. March 31, 2021 and 2020, respectively, and provides information regarding the dollar and the percentage increase or (decrease) from the current three-month period to the previous three-month period:



                                                                                           Percentage
                                   Three months      Three months        Increase           Increase
           Line Item               ended 3/31/21     ended 3/31/20     

(Decrease) (Decrease)

Revenues                           $     765,616     $           -     $     765,616                 n/a
Operating expenses                        53,669            28,303            25,366               89.62 %
Net income (loss)                         45,207           (28,303 )          73,510              259.72 %
Income (Loss) per share of
common stock                                0.00             (0.00 )               -                 n/a



We recorded net income of $45,207 for the three months ended March 31, 2021 as
compared with a net loss of $28,303 for the three months ended March 31, 2020
primarily due to the ramp-up of the Company's business operations in the
relevant periods.



Nine months ended March 31, 2021 Compared to the nine months ended March 31, 2020




The following table summarizes the results of our operations for the nine months
ended March 31, 2021 and 2020, respectively, and provides information regarding
the dollar and percentage increase or (decrease) from the current nine-month
period to the prior nine-month period:



                                                                                       Percentage
                                    Nine months       Nine months       Increase        Increase
           Line Item               ended 3/31/21     ended 3/31/20     (Decrease)      (Decrease)

Revenues                           $   8,499,788     $           -     $ 8,499,788             n/a
Operating expenses                       148,509            45,692         102,817          225.02 %
Net income (loss)                      1,025,050           (45,692 )     1,070,742        2,343.39 %
Income (Loss) per share of
common stock                                0.09             (0.01 )          0.10        1,546.58 %




We recorded net income of $1,025,050 for the nine months ended March 31, 2021 as
compared with a net loss of $45,692 for the nine months ended March 31, 2020
primarily due to the ramp-up of the Company's business operations in the
relevant periods.



Liquidity and capital resources




As of March 31, 2021, we had total assets of $12,806,768, working capital of
$12,140,670 and an accumulated stockholders' equity of $12,215,605. We recorded
$8,499,788 in revenues for the nine months ended March 31, 2021, while we had no
revenues in the nine months ended March 31, 2020.



Operating Activities



Net cash used in operating activities for the nine months ended March 31, 2021
was $2,578,186 primarily as a result of net income of $1,025,050, depreciation
and amortization expense of $8,215 and due to net increase in operating assets
of $3,611,451 due to increase in accounts receivable of $3,470,436, increase in
advance to suppliers of $622,291, increase in accounts payable of $122,015,
increase in accrued expenses and other payables of $58,442, increase in tax
payable of $268,581 and increase in advances and deposits of $29,945, offset by
decrease in prepaid expenses of $3,623 and decrease in other payable to related
party of $1,330. Cash used in operating activities for the nine months ended
March 31, 2020 was $21,084 primarily due to the net loss of $45,692, and due to
net increase in operating liabilities of $24,608 as a result of increase in
prepaid expenses of $918, increase in accounts payable of $16,059 and increase
in accrued expenses and other payable of $9,467.



3







Investing Activities



Net cash used in investing activities for the nine months ended March 31, 2021
was $8,162,519 primarily due to loan of $8,085,285  advanced to the customer,
and cash paid for the acquisition of property and equipment of $77,234. Net cash
used in investing activities for the nine months ended March 31, 2020 was $0.



Financing Activities



Net cash provided by financing activities for the nine months ended March 31,
2021 was $6,232,225 primarily due to cash proceeds from sale of common stock of
$6,230,225 to third party investors, and cash proceeds from sale of stock of
$2,000 received from related party. Net cash provided by financing activities
for the nine months ended March 31, 2020 was $5,000 as a result of loan received
by the Company from a related party.



We recorded a gain of $ 554,246 for the nine months ended March 31, 2021 due to the effect of fluctuating foreign exchange rates on cash and cash equivalents.




As a result of the above explanations, we recorded a net decrease in cash of
$3,954,235 for the nine months ended March 31, 2021 as compared to a decrease in
cash of $16,084 for the same comparable period in 2020.



Future Capital Requirements



Our capital requirements for the fiscal year ending June 30, 2021 will depend on
numerous factors, including management's evaluation of the timing of projects to
pursue. Subject to our ability to generate revenues and cash flow from
operations and our ability to raise additional capital (including through
possible joint ventures and/or partnerships), we expect to incur substantial
expenditures to carry out our business plan, as well as costs associated with
our capital raising efforts, and being a public company.



Our plans to finance our operations include seeking equity and debt financing,
alliances or other partnership agreements, or other business transactions, that
would generate sufficient resources to ensure continuation of our operations.
Management believes that the Company's cash on hand will be sufficient to fund
all Company obligations and commitments for the next twelve months.
Historically, we have depended on loans from our principal shareholders and
their affiliated companies to augment our working capital as required



The sale of additional equity or debt securities may result in additional
dilution to our shareholders. If we raise additional funds through the issuance
of debt securities or preferred stock, these securities could have rights senior
to those of our common stock and could contain covenants that would restrict our
operations. Any such required additional capital may not be available on
reasonable terms, if at all. If we were unable to obtain additional financing,
we may be required to reduce the scope of, delay or eliminate some or all of our
planned activities and limit our operations which could have a material adverse
effect on our business, financial condition and results of operations.



Going Concern



The Company demonstrates adverse conditions that raise substantial doubt about
the Company's ability to continue as a going concern. The continuation of the
Company as a going concern is dependent upon the continued financial support
from its shareholders, the ability of the Company to sell its stock to the
investing community and obtain necessary financing to continue operations, and
the attainment of profitable operations. Although the Company recorded a net
income of $1,025,050 for the nine months ended March 31, 2021, it has used net
cash flows in operating activities of $2,578,186, and has a net decrease in cash
of $3,954,236 for the nine months ended March 31, 2021. These factors, among
others, raise a substantial doubt regarding the Company's ability to continue as
a going concern. If the Company is unable to obtain adequate capital, it could
be forced to cease operations. The interim condensed consolidated financial
statements do not include any adjustments to reflect 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.



4







Inflation



The amounts presented in our financial statements do not provide for the effect
of inflation on our operations or financial position. The net operating losses
shown would be greater than reported if the effects of inflation were reflected
either by charging operations with amounts that represent replacement costs or
by using other inflation adjustments.



Off-balance sheet provisions




We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity or
capital expenditures or capital resources that is material to an investor in our
securities.



Seasonality


Our operating results are not affected by seasonality.

Critical accounting policies




The Securities and Exchange Commission issued Financial Reporting Release No.
60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies"
suggesting that companies provide additional disclosure and commentary on their
most critical accounting policies. In Financial Reporting Release No. 60, the
Securities and Exchange Commission has defined the most critical accounting
policies as the ones that are most important to the portrayal of a company's
financial condition and operating results and require management to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. The nature of our business
generally does not call for the preparation or use of estimates. Due to the fact
that the Company does not have any operating business, we do not believe that we
do not have any such critical accounting policies.

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