UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2021March 31, 2022
| ☐ | 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: 000-55053
BLOW & DRIVE INTERLOCK CORPORATIONLEET TECHNOLOGY INC.
(Exact name of registrant as specified in its charter)
| Delaware | 46-3590850 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
805,, 8th Floor, Menara Mutiara Majestic,
Jalan Othman,, Petaling Jaya 46000, Selangor, Malaysia
(Address of principal executive offices) (zip code)
+603 7783 1636
(Registrant’s (Registrant’s telephone number, including area code)
1427 S. Robertson Blvd.
Los Angeles, CA 90035
(Former name or former address, 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 | None | None |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock Par value, $0.0001
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 every Interactive Data File required to be submitted 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 such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated | 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 ☒.
Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes☒ ☒ No ☐
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of August 2, 2021,May 17, 2022, there were shares of common stock, $0.0001 par value, issued and outstanding, and issues of preferred stock issued and outstanding, par value $0.001.
filed for xbrl
EXPLANATORY PARAGRAPH
This Amendment No. 1 to the Quarterly Report on Form 10-Q is being filed solely to furnish the Interactive Data files as Exhibit 104, in accordance with Rule 405 of Regulation S-T. No other changes have been made to the Form 10-Q, as originally filed on August 16, 2021.
$0.0001.
CAUTIONARY STATEMENTLEET TECHNOLOGY INC.
All statements included or incorporated by reference in this Quarterly Report on Form 10-Q (this “Form 10-Q”), other than statements or characterizations of historical fact, are “forward-looking statements” within the meaning of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). Examples of forward-looking statements include, but are not limited to, statements concerning projected sales, costs, expenses and gross margins; our accounting estimates, assumptions and judgments; the prospective demand for our products; the projected growth in our industry; the competitive nature of and anticipated growth in our industry; and our prospective needs for, and the availability of, additional capital. These forward-looking statements are based on our current expectations, estimates, approximations and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by such words as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors, some of which are set forth in the “Risk Factors” section of our Report on Form 10-K for the year ended December 31, 2019, filed on March 30, 2020, and this Report, which could cause our financial results, including our net income or loss or growth in net income or loss to differ materially from prior results, which in turn could, among other things, cause the price of our common stock to fluctuate substantially. These forward-looking statements speak only as of the date of this report. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.
BLOW & DRIVE INTERLOCK CORPORATION
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
ITEM 1 Financial Statements
BLOW & DRIVE INTERLOCK CORPORATIONLEET TECHNOLOGY INC.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Unaudited)
BLOW & DRIVE INTERLOCK CORPORATIONLEET TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2021 AND DECEMBER 31, 2020(Unaudited)
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| June 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current asset: | ||||||||
| Cash and cash equivalents | $ | 20,619 | $ | 38,985 | ||||
| Accounts receivable | 114,967 | 20,630 | ||||||
| Deposit and other receivables | 9,062 | 2,897 | ||||||
| Right of use assets | 418 | 0 | ||||||
| Total current assets | 145,066 | 62,512 | ||||||
| Non-current asset: | ||||||||
| Plant and equipment, net | 152,020 | 8,034 | ||||||
| Intangible assets | 449,380 | 540,126 | ||||||
| Right of use assets | 0 | 3,018 | ||||||
| TOTAL ASSETS | $ | 746,466 | $ | 613,690 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 539,374 | $ | 540,126 | ||||
| Accrued liabilities and other payables | 388,607 | 366,331 | ||||||
| Amounts due to related parties | 2,922,265 | 2,234,433 | ||||||
| Operating lease liabilities | 426 | 3,075 | ||||||
| TOTAL LIABILITIES | 3,850,672 | 3,143,965 | ||||||
| Commitments and contingencies | – | – | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, Series A, $ par value, shares authorized, issued and outstanding as of June 30, 2021 and December 31, 2020 | 1,000 | 1,000 | ||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding as of June 30, 2021 and December 31, 2020 | 14,040 | 14,040 | ||||||
| Additional paid-in capital | 9,000 | 9,000 | ||||||
| Accumulated other comprehensive loss | (45,872 | ) | (76,196 | ) | ||||
| Accumulated deficit | (3,082,374 | ) | (2,478,119 | ) | ||||
| Total stockholders’ deficit | (3,104,206 | ) | (2,530,275 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 746,466 | $ | 613,690 | ||||
| March 31, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current asset: | ||||||||
| Cash | $ | 14,966 | $ | 23,192 | ||||
| Accounts receivable | 33,040 | 19,833 | ||||||
| Deposit and other receivables | 28,366 | 25,367 | ||||||
| Total current assets | 76,372 | 68,392 | ||||||
| Non-current asset: | ||||||||
| Plant and equipment, net | 149,351 | 153,191 | ||||||
| Capitalized development costs | 66,481 | 0 | ||||||
| Right of use assets | 6,726 | 8,052 | ||||||
| TOTAL ASSETS | $ | 298,930 | $ | 229,635 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 538,653 | $ | 537,034 | ||||
| Accrued liabilities and other payables | 86,767 | 51,618 | ||||||
| Accrued compensation payable to officers and directors | 390,748 | 366,558 | ||||||
| Contract liability | 261 | 0 | ||||||
| Amounts due to related parties | 4,670,154 | 4,035,596 | ||||||
| Operating lease liabilities | 3,767 | 5,042 | ||||||
| Total current liabilities | 5,690,350 | 4,995,848 | ||||||
| Non-current liabilities | ||||||||
| Operating lease liabilities | 2,930 | 2,971 | ||||||
| TOTAL LIABILITIES | 5,693,280 | 4,998,819 | ||||||
| Commitments and contingencies | – | – | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, shares authorized, $ par value: | ||||||||
| Series A authorized, issued and outstanding | 100 | 100 | ||||||
| Series B, shares authorized, issued and outstanding | 0 | 0 | ||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 15,290 | 15,290 | ||||||
| Additional paid-in capital | 3,062,662 | 3,062,662 | ||||||
| Accumulated other comprehensive income (loss) | 20,719 | (12,530 | ) | |||||
| Accumulated deficit | (8,493,121 | ) | (7,834,706 | ) | ||||
| Total stockholders’ deficit | (5,394,350 | ) | (4,769,184 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 298,930 | $ | 229,635 | ||||
See accompanying notes to these unaudited condensed consolidated financial statements.
BLOW & DRIVE INTERLOCK CORPORATIONLEET TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020(Unaudited)
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue, net | $ | 114,986 | $ | 22,406 | $ | 128,488 | $ | 47,077 | ||||||||
| Operating expenses: | ||||||||||||||||
| IT operating expenses | (115,196 | ) | (35,109 | ) | (204,550 | ) | (76,251 | ) | ||||||||
| Research and development | (9,085 | ) | 0 | (18,132 | ) | 0 | ||||||||||
| General and administrative expenses | (289,400 | ) | (98,085 | ) | (510,593 | ) | (196,099 | ) | ||||||||
| Total operating expenses | (413,681 | ) | (133,194 | ) | (733,275 | ) | (272,350 | ) | ||||||||
| Loss from operations | (298,695 | ) | (110,788 | ) | (604,787 | ) | (225,273 | ) | ||||||||
| Other income: | ||||||||||||||||
| Sundry income | 442 | 10,039 | 532 | 10,046 | ||||||||||||
| LOSS BEFORE INCOME TAXES | (298,253 | ) | (100,749 | ) | (604,255 | ) | (215,227 | ) | ||||||||
| Income tax expense | 0 | 0 | 0 | 0 | ||||||||||||
| NET LOSS | (298,253 | ) | (100,749 | ) | (604,255 | ) | (215,227 | ) | ||||||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency translation (loss) income | (4,726 | ) | 13,797 | 30,324 | 13,797 | |||||||||||
| COMPREHENSIVE LOSS | $ | (302,979 | ) | $ | (86,952 | ) | $ | (573,931 | ) | $ | (201,430 | ) | ||||
| Loss per share | ||||||||||||||||
| - Basic and diluted | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.02 | ) | ||||
| Weighted average common shares outstanding | ||||||||||||||||
| - Basic | 140,397,289 | 10,000,000 | 140,397,289 | 10,000,000 | ||||||||||||
| - Diluted | 141,397,289 | 10,000,000 | 141,397,289 | 10,000,000 | ||||||||||||
| Three Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | 22,309 | $ | 13,502 | ||||
| Cost of revenue (includes related party expenses, $151,850 and $72,700 for the 3 months ended March 31, 2022 and 2021, respectively) | (154,196 | ) | (89,354 | ) | ||||
| Gross loss | (131,887 | ) | (75,852 | ) | ||||
| Operating expenses: | ||||||||
| Research and development (includes related party expenses, $8,997 and $9,027 for the 3 months ended March 31, 2022 and 2021, respectively) | (8,997 | ) | (9,047 | ) | ||||
| General and administrative expenses (includes related party expenses, $41,745 and $0 for the 3 months ended March 31, 2022 and 2021, respectively) | (517,608 | ) | (221,193 | ) | ||||
| Total operating expenses | (526,605 | ) | (230,240 | ) | ||||
| Loss from operations | (658,492 | ) | (306,092 | ) | ||||
| Other income: | ||||||||
| Interest income | 77 | 77 | ||||||
| Other income | 0 | 13 | ||||||
| Total other income | 77 | 90 | ||||||
| LOSS BEFORE INCOME TAXES | (658,415 | ) | (306,002 | ) | ||||
| Income tax expense | 0 | 0 | ||||||
| NET LOSS | (658,415 | ) | (306,002 | ) | ||||
| Other comprehensive income: | ||||||||
| Foreign currency translation income | 33,249 | 35,050 | ||||||
| COMPREHENSIVE LOSS | $ | (625,166 | ) | $ | (270,952 | ) | ||
| Loss per common share, basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 152,899,640 | 140,397,289 | ||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
| 5 |
LEET TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
| Preferred Series A stock | Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total stockholders’ | |||||||||||||||||||||||||||
| No. of shares | Amount | No. of shares | Amount | capital | (loss) income | losses | deficit | |||||||||||||||||||||||||
| Balance as of January 1, 2021 | 1,000,000 | $ | 100 | 140,397,289 | $ | 14,040 | $ | 9,900 | $ | (76,195 | ) | $ | (2,478,119 | ) | $ | (2,530,274 | ) | |||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | 35,050 | – | 35,050 | ||||||||||||||||||||||||
| Net loss for the period | – | – | – | – | – | – | (306,002 | ) | (306,002 | ) | ||||||||||||||||||||||
| Balance as of March 31, 2021 | 1,000,000 | $ | 100 | 140,397,289 | $ | 14,040 | $ | 9,900 | $ | (41,145 | ) | $ | (2,784,121 | ) | $ | (2,801,226 | ) | |||||||||||||||
| Balance as of January 1, 2022 | 1,000,000 | $ | 100 | 152,899,640 | $ | 15,290 | $ | 3,062,662 | $ | (12,530 | ) | $ | (7,834,706 | ) | $ | (4,769,184 | ) | |||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | 33,249 | – | 33,249 | ||||||||||||||||||||||||
| Net loss for the period | – | – | – | – | – | – | (658,415 | ) | (658,415 | ) | ||||||||||||||||||||||
| Balance as of March 31, 2022 | 1,000,000 | $ | 100 | 152,899,640 | $ | 15,290 | $ | 3,062,662 | $ | 20,719 | $ | (8,493,121 | ) | $ | (5,394,350 | ) | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 6 |
LEET TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (658,415 | ) | $ | (306,002 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation on plant and equipment | 8,680 | 1,244 | ||||||
| Amortization on intangible assets | 0 | 44,984 | ||||||
| Right of use amortization | 1,265 | 1,282 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | (13,406 | ) | 6,232 | |||||
| Deposit and other receivables | (3,209 | ) | (5,130 | ) | ||||
| Accounts payable | 3,907 | 0 | ||||||
| Accrued liabilities and other payables | 35,493 | 62,084 | ||||||
| Accrued compensation payable to officers and directors | 27,209 | 21,413 | ||||||
| Contract liability | 262 | 0 | ||||||
| Operating lease liabilities | (1,254 | ) | (1,306 | ) | ||||
| Net cash used in operating activities | (599,468 | ) | (175,199 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of plant and equipment | (5,572 | ) | (1,575 | ) | ||||
| Capitalization of development costs | (66,679 | ) | 0 | |||||
| Net cash used in investing activities | (72,251 | ) | (1,575 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Advances from related parties | 655,105 | 198,474 | ||||||
| Net cash provided by financing activities | 655,105 | 198,474 | ||||||
| Effect on exchange rate change on cash | 8,388 | 12,367 | ||||||
| Net (decrease) increase in cash | (8,226 | ) | 34,067 | |||||
| CASH, BEGINNING OF PERIOD | 23,192 | 38,985 | ||||||
| CASH, END OF PERIOD | $ | 14,966 | $ | 73,052 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for tax | $ | 0 | $ | 0 | ||||
| Cash paid for interest | $ | 0 | $ | 0 | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
| 7 |
BLOW & DRIVE INTERLOCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
| Six months ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (604,255 | ) | $ | (215,227 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | 95,009 | 0 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | (94,840 | ) | (80,627 | ) | ||||
| Deposit and other receivables | (6,326 | ) | 308 | |||||
| Accounts payable | 118 | 0 | ||||||
| Accrued liabilities and other payables | 32,235 | 649,450 | ||||||
| Operating lease liabilities | (48 | ) | (21 | ) | ||||
| Net cash (used in) generated from operating activities | (578,107 | ) | 353,883 | |||||
| Cash flow from investing activities: | ||||||||
| Purchase of plant and equipment | (149,395 | ) | 0 | |||||
| Net cash used in investing activities | (149,395 | ) | 0 | |||||
| Cash flow from financing activities: | ||||||||
| Advance from (repayment to) related parties | 699,587 | (300,612 | ) | |||||
| Net cash generated from (used in) financing activities | 699,587 | (300,612 | ) | |||||
| Effect on exchange rate change on cash and cash equivalents | 9,549 | (91,913 | ) | |||||
| Net change in cash and cash equivalents | (18,366 | ) | (38,642 | ) | ||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 38,985 | 42,526 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 20,619 | $ | 3,884 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for tax | $ | 0 | $ | 0 | ||||
| Cash paid for interest | $ | 0 | $ | 0 | ||||
See accompanying notes to condensed consolidated financial statements.
BLOW & DRIVE INTERLOCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Preferred stock |
Common stock | Additional | Accumulated other |
| Total | |||||||||||||||||||||||||||
| No. of shares | Amount | No. of shares | Amount | paid-in capital | comprehensive loss | Accumulated losses | stockholders’ deficit | |||||||||||||||||||||||||
| Balance as of January 1, 2020 | – | $ | – | 10,000,000 | $ | 1,000 | $ | – | $ | (21,113 | ) | $ | (1,618,839 | ) | $ | (1,638,952 | ) | |||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||
| Net loss for the period | – | – | – | – | – | – | (114,478 | ) | (114,478 | ) | ||||||||||||||||||||||
| Balance as of March 31, 2020 | – | $ | – | 10,000,000 | $ | 1,000 | $ | – | $ | (21,113 | ) | $ | (1,733,317 | ) | $ | (1,753,430 | ) | |||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | 13,797 | – | 13,797 | ||||||||||||||||||||||||
| Net loss for the period | – | – | – | – | – | – | (100,749 | ) | (100,749 | ) | ||||||||||||||||||||||
| Balance as of June 30, 2020 | – | $ | – | 10,00,000 | $ | 1,000 | $ | – | $ | (7,316 | ) | $ | (1,834,066 | ) | $ | (1,840,382 | ) | |||||||||||||||
| Balance as of January 1, 2021 | 1,000,000 | $ | 1,000 | 140,397,289 | $ | 14,040 | $ | 9,000 | $ | (76,196 | ) | $ | (2,478,119 | ) | $ | (2,530,275 | ) | |||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | 35,050 | – | 35,050 | ||||||||||||||||||||||||
| Net loss for the period | – | – | – | – | – | – | (306,002 | ) | (306,002 | ) | ||||||||||||||||||||||
| Balance as of March 31, 2021 | 1,000,000 | $ | 1,000 | 140,397,289 | $ | 14,040 | $ | 9,000 | $ | (41,146 | ) | $ | (2,784,121 | ) | $ | (2,801,227 | ) | |||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | – | (4,726 | ) | – | (4,726 | ) | ||||||||||||||||||||||
| Net loss for the period | – | – | – | – | – | – | (298,253 | ) | (298,253 | ) | ||||||||||||||||||||||
| Balance as of June 30, 2021 | 1,000,000 | $ | 1,000 | 140,397,289 | $ | 14,040 | $ | 9,000 | $ | (45,872 | ) | $ | (3,082,374 | ) | $ | (3,104,206 | ) | |||||||||||||||
See accompanying notes to condensed consolidated financial statements.
BLOW & DRIVE INTERLOCK CORPORATIONLEET TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
| 1. | DESCRIPTION OF BUSINESS AND ORGANIZATION |
Blow & Drive Interlock CorporationLeet Technology Inc. (“the Company” or “BDIC”“LTES”) was incorporated on July 2, 2013 under the laws of the State of Delaware. The Company currently operates an eSports platform in Malaysia.
On August 23, 2021, the Company was approved to change its current name to Leet Technology Inc. and the trading symbol of LTES.
Description of subsidiaries
| Schedule of description of subsidiaries | ||||||||
| Name | Place of incorporation and kind of legal entity | Principal activities | Particulars of registered/ paid up share capital | Effective interest held | ||||
| Leet Technology Limited | Labuan, Malaysia | Investment holding | 100% | |||||
| Leet Entertainment Group Limited | Hong Kong | Provision of information technology and mobile application development and digital content publishing service | 100% | |||||
| Leet Entertainment Sdn. Bhd. | Malaysia | Provision of information technology and mobile application development and digital content publishing service | 100% |
| 8 |
The Company and its subsidiaries are hereinafter referred to as (the “Company”).
2. GOING CONCERN UNCERTAINTIESOn February 15, 2022, Leet Entertainment Group Limited transferred all 1,000 ordinary shares of Leet Entertainment Sdn. Bhd to the Company at part of the Company’s plans to restructure and simplify the corporate structure (see Note 13).
| 2. | LIQUIDITY GOING CONCERN UNCERTAINTIES |
The accompanying unaudited condensed consolidated 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.
The Company has suffereddetermined that certain factors raise substantial doubt about its ability to continue as a going concern for a least one year from athe date of issuance of these unaudited condensed consolidated financial statements.
As of March 31, 2022, the Company had $14,966 in cash, working capital deficit of $5,613,978 and accumulated deficit of $3,705,6068,493,121 and $3,082,374 at June 30, 2021, respectively.. The Company incurred a continuous net loss of $604,255658,415 during the 6 month periodthree months ended June 30, 2021.March 31, 2022. The Company believes that its current level of cash are not sufficient to fund its operations and obligations without additional financing. In addition, with respect to the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2020, the outbreak has caused substantial disruption in international economies and global trades and if repercussions of the outbreak are prolonged, could have a significant adverse impact on the Company’s business.
The continuation of the Company as a going concern through the next twelve months is dependent upon the continued financial support from its stockholders.stockholders and related parties. The Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.operations for one year from the date of the filing of the unaudited condensed consolidated financial statements.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
3. 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 unaudited condensed consolidated financial statements and notes.
| Basis of presentation |
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) for interim financial reporting, and in accordance with instructions for Form 10-Q and Article 108 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The comparative figures in theyear-end balance sheet data was derived from audited financial statements but does not include all disclosures required by US GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. These unaudited condensed consolidated financial statements, footnote disclosures and other information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.2021.
These accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
| 9 |
| Use of estimates and assumptions |
In preparing these unaudited condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities inand disclosure of contingent assets and liabilities at the balance sheet and revenues and expensesdate of the financial statements during the yearsperiod reported. Actual results may differ from these estimates.
| Basis of consolidation |
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
| Cash |
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Accounts receivable |
Accounts receivable are recorded in accordance with Accounting Standards Codification (“ASC”) 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthinesscreditworthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility.collectability. At the end of fiscal year,each quarter, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, there were 0 allowance for doubtful accounts.
| Plant and equipment |
Plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any.depreciation. Leasehold improvements are amortized over the lessor of the based term of the lease or 5 years of the leasehold improvement. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Schedule of useful lives of plant and equipment | |||
| Expected useful lives | |||
| Computer equipment | 5 years | ||
| Furniture and fixtures | 5 years | ||
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
In accordance with the relevant FASB accounting guidance regarding the development of software to be sold, leased, or marketed, the Company expenses such costs as they are incurred until technological feasibility has been established, at and after which time these costs are capitalized until the product is available for general release to customers. Once the technological feasibility is established per ASC 985-20, the Company capitalizes costs associated with the acquisition or development of major software for internal and external use in the balance sheet. Costs incurred to enhance the Company’s software products, after general market release of the services using the products, is expensed in the period they are incurred. The Company only capitalizes subsequent additions, modifications or upgrades to internally developed software to the extent that such changes allow the software to perform a task it previously did not perform. The Company also expenses website costs as incurred.
Research and development expenditures in the development of its own software are charged to operations as incurred. Based on the software development process, technological feasibility is established upon completion of a working model, which also requires certification and extensive testing. Costs incurred by the Company between completion of the working model and the point at which the product is ready for general release are immaterial.
| Capitalized development costs |
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”In accordance with ASC 340-40, Other Assets and Deferred Costs (ASC 340-40”), exceptthe Company capitalizes certain development costs required to fulfill its obligations under contracts for numberits customers. These direct costs are typically incurred at a contract’s inception which enables the Company to satisfy its future performance obligations for its customers. These costs primarily consist of shares)direct labor for coding, programing, and additional customizations specific to the customers licensed platform offering. These costs are expected to be recovered through the life of the contract.
(Unaudited)
The capitalized development costs are amortized on a customer specific contract basis using the straight-line method over the estimated economic life of the application, typically two years, beginning when those development effort were placed into service.
| Research and development costs |
Research and development costs are expensed as incurred and consist of development work associated with our existing technology, customer solutions and processes. Our research and development expenses relate primarily to payroll costs for personnel, costs associated with various projects, including testing, development and other related expenses.
| Impairment of long-lived assets |
In accordance with the provisions of ASC Topic 360, “Impairment“Impairment or Disposal of Long-Lived Assets”Assets”, all long-lived assets such as plant and equipment, intangible assets, and intangibleright of use (“ROU”) assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has beenwas 0 impairment charge for the years presented.three months ended March 31, 2022 and 2021.
Contract liability
Billing practices for the Company’s contracts are governed by the contract terms of each project. Billings do not necessarily correlate with revenues recognized. The Company records contract liabilities to account for these differences in timing.
The contract liability, represents the Company’s obligation to transfer goods or services to a customer for which the Company has been paid by the customer or for which the Company is obligated to perform under the contract. Revenue for future services reflected in this account are recognized, and the liability is reduced, as the Company subsequently satisfies the performance obligation under the contract.
| Revenue recognition |
The revenue of the Company adoptedis currently generated from the provision of white label solutions and esports event management and team services. The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”ASC”) Topic 606 – Revenue from Contracts with Customers” (“ASC 606”). when control of a product or service is transferred to a customer.
| 11 |
Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied, and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
| · | identify the contract with a customer; | |
| · | identify the performance obligations in the contract; | |
| · | determine the transaction price; | |
| · | allocate the transaction price to performance obligations in the contract; and | |
| · | recognize revenue as the performance obligation is satisfied. |
White Label Solutions Revenue
The Company derives revenue from the provision of white label solutions. The Company offers white label, contracted licensed, solutions primarily to their information & communications technology (“ICT”) partners. The Company engages its ICT partners to utilize its Matchroom.net Platform. For customers who have their own platforms and apps being used, the Company will customize the design of Matchroom.net to meet the customer’s need and integrate, a customized solution into the customer’s system. The Matchroom.net platform and software solution is customizable to the specific needs of each customer and can be integrated across multiple platforms. On average it will take the Company three months to complete the customization of the platform for a customers use.
The Company’s typical arrangement involves customizing the Matchroom.net platform solution, which requires technical programming support to build out the platform to its customers specifications. As a result, in analyzing the performance obligations being provided to the customer the Company considers the software license and customization services as a single performance obligation as required by ASC 606. In carrying out the services under these arrangements, the Company is derived fromoften provided with upfront payment which is deferred and recognized into revenue over the organizationduration of competitions using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game competitions. Revenues are recognized when the competition is completed, and prize money is awarded. Revenues are earned through sponsorship fees on a per tournament basis.contract.
Esports Tournament Management and Team Services Revenue
The Company derives revenue from esports tournament management and team services. The Company offers tournament management services to their customers, whereby they are engaged to provide the service of managing and hosting a tournament of the customer’s choice. The Company provides the required manpower and skills to host and manage an esports tournament on their own Matchroom.net platform or on the platform of the customer. The hosting and management of these tournaments on behalf of the customer is deemed to be one performance obligation and is met over the period of performance (couple of days) in which the tournament is held.
The amount to be recognized as revenue equals the predetermined event management fee as per the agreement in place between the Company and the customer. The Company fulfils its performance obligation through the execution and completion of hosting the tournament, over the period of performance that being the multi-day tournament. The amount per the contract is based on the needs of the customer and the required level of manpower or skills needed for the relevant tournament.
Apart from hosting the tournaments of other customers, the Company also hosts and managed their own internally held tournaments. The Company will obtain sponsorship agreements with other third-party entities whereby the Company commits to deliver certain sponsor and promotional services in exchange for consideration. Upon completion of the tournament a work completion report will be generated and communicated to the customer. Revenue will be recording pro rata during the duration of the tournament. The Company invoices its promotional partners based on the contracted services within the agreement.
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for numberDisaggregation of shares)Revenue
(Unaudited)
The Company adoptedhas disaggregated its revenue from contracts with customers into categories based on the nature of the revenue. The following table presents the revenue streams by segments, with the presentation revenue categories presented on the statements of operation for the periods indicated:
| Schedule of foreign currencies translation | ||||||||
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| White label solutions | $ | 17,373 | $ | 5,168 | ||||
| Esport tournament management and team services | 3,314 | 1,503 | ||||||
| Matchroom Mini-app solutions | 1,622 | 6,831 | ||||||
| $ | 22,309 | $ | 13,502 | |||||
Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 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 years 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 740 Incomeprescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed positions taken or expected to be claimedtaken on a tax return shouldreturn. Under ASC 740, tax positions must initially be recordedrecognized in the condensed consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only ifstatements when it is more likely than not that the tax position will be sustained onupon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position shouldauthorities. Such tax positions must initially and subsequently be measured based onas the largest amount of tax benefit that has a greater than fifty percent (50%)50% likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification,settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the three months ended March 31, 2022 and 2021, the Company did 0t have any interest and penalties on income taxes, accounting in interim periodsassociated with tax positions. As of March 31, 2022 and requires increased disclosures. TheDecember 31, 2021, the Company had no material adjustments to its liabilities fordid not have any significant unrecognized incomeuncertain tax benefits according to the provisions of paragraph 740-10-25-13.positions.
The estimated futureCompany is subject to tax effectsin local and foreign jurisdiction. As a result of temporary differences betweenits business activities, the Company files tax basis of assets and liabilitiesreturns that are reported insubject to examination by the accompanying balance sheets, as well asrelevant tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.authorities.
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 condensed consolidated statement of operations.
The reporting currency of the Company is United States Dollar ("US$") and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In addition,The functional currencies of the Company’s operating subsidiaries are operating in Hong Kong and Malaysia and maintain their books and record in their local currencies Hong(Hong Kong Dollars (“HKD”) and Malaysian Ringgit (“MYR”), which are their functional currencies, being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes,). HKD-denominated assets and liabilities of the subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”,the United States Dollar using the exchange rate onat the balance sheet date. Revenuesdate (0.12771 and expenses0.12866, at March 31, 2022 and December 31, 2021, respectively), and revenue and expense accounts are translated atusing the weighted average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of changesexchange rate in stockholder’s equity.
Translation of amounts from HKD into US$ and MYR into US$ have been made at the following exchange rateseffect for the period (0.12813 and 0.12892 for the three months ended June 30,March 31, 2022 and 2021, respectively). MYR-denominated assets and 2020:
| Schedule of foreign currencies translation | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Period-end HKD:US$ exchange rate | 0.12878 | 0.12903 | ||||||
| Period average HKD:US$ exchange rate | 0.12885 | 0.12885 | ||||||
| Period-end MYR:US$ exchange rate | 0.24098 | 0.23359 | ||||||
| Period average MYR:US$ exchange rate | 0.24423 | 0.23540 | ||||||
liabilities are translated into the United States Dollar using the exchange rate at the balance sheet date (0.23797 and 0.24145, at March 31, 2022 and December 31, 2021, respectively), and revenue and expense accounts are translated using the weighted average exchange rate in effect for the period (0.23868 and 0.24613 for the three months ended March 31, 2022 and 2021, respectively).
BLOW & DRIVE INTERLOCK CORPORATIONComprehensive income
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
ASC Topic 220, “Comprehensive Income”“Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying unaudited condensed consolidated statements of changes in stockholders’ equity,deficit, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
Retirement plan costs
Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying unaudited condensed consolidated statements of operation as the related employee service is provided.
Leases
The Company adoptedaccounts for leases in accordance with Topic 842, Leases“Leases” (“ASC 842”) and determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)ROU assets, other current liabilities, and operating lease liabilities in our unaudited condensed consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our unaudited condensed consolidated balance sheets.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company generally use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.
Net loss per share
The Company calculates net income or loss per share in accordance with ASC Topic 260, “Earnings“Earnings per Share.” Basic income or loss per share is computed by dividing the net income or loss by the weighted-average number of common shares outstanding during the year.period. Diluted incomenet loss per share is computed similar tothe same as basic incomenet loss per share except that the denominator is increased to include the number of additional common shares thatwhen their inclusion would have been outstanding ifan anti-dilutive effect due to the potential common stock equivalents had been issuedcontinuing net losses. The following anti-dilutive equity and ifdebt securities were excluded from the additional common shares were dilutive.computation of net loss per share.
| Schedule of anti-dilutive equity and debt securities | ||||||||
| As of | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| (Shares) | (Shares) | |||||||
| Warrants | 629,410 | 4,060,160 | ||||||
BLOW & DRIVE INTERLOCK CORPORATIONContingencies
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
The Company follows the ASC 450-20Commitments to report accounting for contingencies. Certain conditions may exist as of the date the unaudited financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s unaudited condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that theseany matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
Fair value of financial instruments
The Carrying amounts for cash, accounts receivable, deposits receivable, accounts payable, accrued liabilities, and other payables approximate their fair value because of their short-term maturity. The Company determined that the carrying amount of accrued compensation payable to officers and directors and amounts due to related parties approximates fair value as these amounts are indicative of the amounts the company would expect to settle in current market exchange.
Stock based compensation
The Company accounts for non-employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to non-employees to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital.
Reclassifications
Certain prior period income statement and cash flow items have been reclassified to conform to the 2022 period end presentation. These reclassifications had no impact on reported operating loss and net loss. For income statement items, IT operating expenses have been reclassified to cost of revenue. For cash flow items, certain accrued liabilities and other payables have been reclassified to accrued compensation payable to officer and directors. The cash flow reclassification also included the reclassification of advances from related parties from operating to financing.
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally acceptedRecent accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy givesAccounting Standards Issued, Adopted
In March 2020, the highest priorityFASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848), which provides temporary optional expedients and exceptions to quoted prices (unadjusted) in active markets for identical assets or liabilitiesthe GAAP guidance on contract modifications and the lowest priorityhedge accounting to unobservable inputs. If the inputs used to measureease the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurementreporting burdens of the instrument.
The carrying amountsexpected market transition from LIBOR and other interbank offered rates to alternative reference rates such as the Secured Overnight Financing Rate (SOFR). This guidance is effective upon issuance and generally can be applied through the end of calendar year 2022. Adoption of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, deposits, and other receivables, payables and accrued liabilities and amounts duestandard requires certain changes to related parties, approximate their fair values because ofbe made prospectively. Adopting the short maturity of these instruments.
From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective willdid not have a material impact on itsthe unaudited condensed consolidated financial position or results of operations upon adoption.statements.
Accounting Standards Issued, Not Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning January 1, 2023. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Adopting the standard is not expected to have a material impact on the condensed consolidated financial statements.
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
In December 2020, the FASB issued ASU No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (“ASU 2020-12”), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. Adopting the standard is not expected to have a material impact on the condensed consolidated financial statements.
Accounting Standards Issued, Not Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848), which provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates such as the Secured Overnight Financing Rate (SOFR). This guidance is effective upon issuance and generally can be applied through the end of calendar year 2022. The Company is currently evaluating the impact and applicability of this new standard.
4. PLANT AND EQUIPMENTFrom time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
| 4. | PLANT AND EQUIPMENT |
Plant and equipment consisted of the following:
| Schedule of plant and equipment | ||||||||||||||||
| As of | ||||||||||||||||
| June 30, 2021 | December 31, 2020 | As of | ||||||||||||||
| (Audited) | March 31, 2022 | December 31, 2021 | ||||||||||||||
| Computer equipment | $ | 160,531 | $ | 11,136 | $ | 170,056 | $ | 170,056 | ||||||||
| Furniture and fixtures | 992 | 992 | 6,355 | 5,607 | ||||||||||||
| Leasehold improvements | 12,618 | 12,618 | 22,833 | 18,009 | ||||||||||||
| Foreign translation difference | (500 | ) | 364 | |||||||||||||
| Foreign currency translation difference | (2,038 | ) | (1,026 | ) | ||||||||||||
| 173,641 | 25,110 | 197,206 | 192,646 | |||||||||||||
| Less: accumulated depreciation | (21,804 | ) | (16,716 | ) | ||||||||||||
| Less: foreign translation difference | 183 | (360 | ) | |||||||||||||
| Less: accumulated depreciation and amortization | (48,436 | ) | (39,756 | ) | ||||||||||||
| Less: foreign currency translation difference | 581 | 301 | ||||||||||||||
| $ | 152,020 | $ | 8,034 | $ | 149,351 | $ | 153,191 | |||||||||
Depreciation and amortization expense for the three months ended June 30,March 31, 2022 and 2021 and 2020 were $3,8438,680 and $01,244, respectively.
Depreciation expense forDuring the sixthree months ended June 30,March 31, 2021 and 2020 wereyear ended December 31, 2021 the Company purchased computers and equipment of approximately $5,0870 and $145,883, respectively from a related party, Bru Haas Consultants.
| 5. | CAPITALIZED DEVELOPMENT COSTS |
During the three months ended March 31, 2022 and 2021, the Company capitalized development costs of $66,481 and $0, respectively.respectively for the customization and enhancements of the gaming platform provided to customers under contract. The estimated useful life specific to each contracts total capitalized cost is based on the original length of the customer contract.
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
5. INTANGIBLE ASSETS
Intangible assets consisted of the following:
| Schedule of intangible assets | ||||||||||
| As of | ||||||||||
| Useful life | June 30, 2021 | December 31, 2020 | ||||||||
| (Audited) | ||||||||||
| At cost: | ||||||||||
| Software platform | 3 years | $ | 539,899 | $ | 539,899 | |||||
| Foreign translation difference | (643 | ) | 227 | |||||||
| 539,256 | 540,126 | |||||||||
| Less: accumulated amortization | (89,922 | ) | 0 | |||||||
| Less: foreign translation difference | 46 | 0 | ||||||||
| $ | 449,380 | $ | 540,126 | |||||||
Amortization of intangible assets attributable to the future periods is as follows:
| Schedule of amortization of intangible assets | ||||
| Year ending June 30: | ||||
| 2022 | $ | 179,845 | ||
| 2023 | 179,845 | |||
| 2024 | 89,690 | |||
| Total | $ | 449,380 | ||
Amortization for the three months ended June 30, 2021 and 2020 were $44,937 and $0, respectively.
Amortization for the six months ended June 30, 2021 and 2020 were $89,922 and $0, respectively.
| LEASE LIABILITY |
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
6. LEASE LIABILITY
The Company entersentered into an operating leases primarilylease for office premises. Lease terms are generallyThe lease term is fixed for 42 years. The Company adopted ASC 842, using the modified-retrospective approach as discussed in Note 3, and as a result, recognized a right-of-use asset and a lease liability. The Company uses a1.75% rate to determine the present value of the lease payments.
The Company excludes short-term leases (those with lease terms of less than one year at inception) from the measurement of lease liabilities or right-of-use assets.
AsThe consolidated balance sheet allocation of June 30, 2021assets and December 31, 2020, right-of-use assets were $418 and $3,018 andliabilities related to operating lease liabilities were $426 and $3,075, respectively. For the three months ended June 30, 2021, the Company did not enter into any new lease arrangements, and did not have any arrangements that had not yet commenced.is as follows:
| Schedule of allocation of assets and liabilities | ||||||||||
| Consolidated Balance | As of | |||||||||
| Sheets Caption | March 31, 2022 | December 31, 2021 | ||||||||
| Assets | Operating lease right-of-use assets | $ | 6,726 | $ | 8,052 | |||||
| Liabilities: | ||||||||||
| Current | Operating lease liability – current | $ | 3,767 | $ | 5,042 | |||||
| Non-current | Operating lease liability – non-current | 2,930 | 2,971 | |||||||
| Total lease liabilities | $ | 6,697 | $ | 8,013 | ||||||
For the three months ended June 30,March 31, 2022 and 2021, and 2020, the Company charged itsrecorded lease expenses of $1,3091,289 and $1,249 respectively.
For the six months ended June 30, 2021 and 2020, the Company charged its lease expenses of $2,638 and $2,5421,329 respectively.
The maturityfuture minimum operating lease commitments for operating leases having initial or non-cancelable terms in excess of the Company’s lease obligations is presented below:one year are as follows:
| Schedule of lease obligations | ||||
| Period ended June 30, | Operating lease amount | |||
| 2021 | $ | 434 | ||
| Total lease | 434 | |||
| Less: interest | (8 | ) | ||
| Present value of lease liabilities | $ | 426 | ||
7. AMOUNTS DUE TO RELATED PARTIES
As of June 30, 2021 and December 31, 2020, the Company’s director and major shareholder, Mr. Song Dai and the related companies under his control, made temporary advances to the Company for its working capital, which is unsecured, interest-free and has no fixed terms of repayment.
| Schedule of lease obligations | ||||
| Year Ended March 31, | ||||
| 2023 | $ | 5,140 | ||
| 2024 | 1,713 | |||
| 2025 | – | |||
| 2026 | – | |||
| 2027 | – | |||
| Total minimum lease payments | 6,853 | |||
| Less: interest | (156 | ) | ||
| Total present value of lease liabilities | $ | 6,697 | ||
| 7. | STOCKHOLDERS’ DEFICIT |
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
8. STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company’s articles of incorporation authorize the Company to issue up to preferred shares of $ par value.
| 17 |
Series A Preferred Stock
The Company has been authorized to issue shares of Series A Preferred Stock. The Series A shares have the following preferences: no dividend rights; no liquidation preference over the Company’s common stock; no conversion rights; no redemption rights; no call rights by the Company; each share of Series A Preferred stock will have one hundred (100) votes on all matters validly brought to the Company’s common stockholders.
Series B Convertible Preferred Stock
The Company has authorized shares of Series B Convertible Preferred Stock. The Series B shares have the following preferences: (i) dividend rights in pari passu with the Company’s common stock on an as converted basis, (ii) liquidation preference over the Company’s common stock, (iii) conversion rights of 10 shares of common stock for each share of Series B Convertible Preferred Stock converted, (iv) no redemption rights, (v) no call rights, (vi) each share of Series B Convertible Preferred Stock will have 1,000 votes on all matters validly brought to the Company’s common stock holders.
As of June 30,March 31, 2022 and December 31, 2021, the total number of Series A preferred shares issued or issuableand outstanding was shares.
As of March 31, 2022 and December 31, 2021, there was Series B preferred shares issued or outstanding.
Common Stock
The Company has authorized shares of $ par value. Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company’s ability to pay dividends on its common stock, subject to the requirements of the Delaware Revised Statutes. The Company has not declared any dividends since incorporation.
On August 23, 2021, the Company issued shares of restricted common stock to an independent advisory company for advisory service rendered at the current market value of $0.28.
On October 6, 2021, the Company issued shares of restricted common stock to Lincoln Park Capital Fund, LLC as commitment fee pursuant to the Purchase Agreement dated on the same date.
As of June 30,March 31, 2022 and December 31, 2021, the Company had a total of shares of its common stock issued and outstanding, respectively.outstanding.
9. WARRANTS
| 8. | WARRANTS |
The Company issued common stock warrants in individual sales and in connection with common stock purchase agreements. The warrants have expiration dates ranging from three 3 to four 4 years from the date of grant and exercise prices ranging from $0.10 to $1.00.
A summary of warrant activity for the periods presented is as follows:follow:
| Schedule of warrant activity | ||||||||||||||||||||||||||||
| Weighted average | ||||||||||||||||||||||||||||
| Warrants for common shares | Exercise price | Remaining contractual life (in years) | Aggregate intrinsic value | Weighted average | ||||||||||||||||||||||||
| Warrants for common shares | Exercise price | Remaining contractual life (in years) | ||||||||||||||||||||||||||
| Outstanding as of December 31, 2020 | 4,130,160 | $ | 0.60 | $ | 621,497 | 4,080,160 | $ | 0.71 | 0.79 | |||||||||||||||||||
| Forfeited, cancelled, expired | (136,668 | ) | – | (0.30 | ) | – | (3,169,750 | ) | 0.08 | (0.46 | ) | |||||||||||||||||
| Outstanding as of June 30, 2021 | 3,993,492 | 0.60 | 621,497 | |||||||||||||||||||||||||
| Outstanding as of December 31, 2021 | 910,410 | 0.79 | ||||||||||||||||||||||||||
| Forfeited, cancelled, expired | (281,000 | ) | (0.03 | ) | (0.18 | ) | ||||||||||||||||||||||
| Outstanding as of March 31, 2022 | 629,410 | $ | 0.76 | |||||||||||||||||||||||||
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30,There were warrants exercisable at March 31, 2022 with a weighted average exercise price of $0.76. The intrinsic value of the warrants exercisable during the three months ended March 31, 2022 and 2021
(Currency expressed in United States Dollars (“US$”) was $ and $, except for number of shares)
(Unaudited)respectively.
10. INCOME TAX
| 9. | INCOME TAX |
The Company is subjectrecorded $0 tax provision for the three months ending March 31, 2022 and 2021, due in large part to taxes inits expected tax losses for the governing jurisdictions in which its subsidiaries operate. The effective tax rate in the period presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate, as follows:
United States
The Company is registered in the State of Delawareyear and is subject to the tax laws of United States.
As of June 30, 2021, the operation in the United States incurred $276,140 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2041, if unutilized. The Company has provided formaintaining a full valuation allowance against theits net deferred tax assets in every jurisdiction that it is operating in.
At December 31, 2021, the Company has U.S. federal operating loss carryforwards of $57,9897,247,356 on, and state of California operating loss carryforwards of $6,542,099. Due to U.S. enacted Public Law 115-97, known as the expected future tax benefits from theTax Cuts and Jobs Act (the "TCJA") in 2017, U.S. federal net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.amount of $4,601,190, generated after 2017 have an indefinite carryforward period. U.S. net operating loss carryforwards, in the amount of $2,646,166, generated prior to 2018 will expire, if unused, beginning in 2034. State net operating loss carryforwards will begin to expire, if unused, in 2034.
Labuan
UnderAt December 31, 2021, the current laws of the Labuan, LTL is governed under the Labuan Business Activity Act, 1990 (“LBATA”) and being an investment company is not subject to tax if the Labuan Substance Requirement Rules are met, failing which, it will be taxed at 24% of the audited net profit under the LBATA with no carry forward of losses to offset any future income.
Hong Kong
The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable profits arising in Hong Kong during the current year, after deducting a tax concession for the tax year. NaN provision for income tax for six months ended June 30, 2021 and 2020.
As of June 30, 2021, the operation in Hong Kong incurred $471,603 of cumulativehas net operating lossesloss carryforwards of $698,685 which do not expire and therefore can be carried forward to offset future taxable income. The net operating loss carryforwards has no expiration. The Company has provided for a full valuation allowance against the deferred tax assets of $77,814 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.indefinitely.
TheAt December 31, 2021, the Company’s subsidiary operating in Malaysia is subjecthas net operating loss of $2,525,831. Net operating loss carryforwards will begin to expire, if unused, in 2025.
The Company follows the Malaysia Corporate Tax Laws atprovision of ASC 740 which prescribes a progressivecomprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. The Company did 0t have any unrecognized tax positions or benefits as of March 31, 2022 and December 31, 2021. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax rateexpense. We do not expect any material changes in our unrecognized tax benefits over the next 12 months.
The Company’s ability to utilize U.S. net operating loss carryforwards to offset future taxable income may be deferred or limited significantly if the Company were to experience an “ownership change” as defined in section 382 of 17% (for Company with paid up capitalthe Internal Revenue Code of 1986, as amended, and corresponding provisions of state law. In general, an ownership change occurs when the ownership of the Company’s stock by 5 percent or more shareholders “5-percent shareholders” exceeds 50 percentage points within a three-year period. We have not more than MYR2.5 millionconducted a Section 382 study to determine whether the use of our U.S. net operating losses is limited. We may have experienced ownership changes in the past, and onwe may experience ownership changes in the first MYR 600,000 (2020 : MYR 500,000) assessablefuture, some of which are outside our control. This could limit the amount of net operating losses that we can utilize annually to offset future taxable income and 24% onor tax liabilities.
| 10. | RELATED PARTY TRANSACTIONS |
Related party balances consisted of the remaining assessable income for its tax year.following:
| Schedule of Related party balances consisted | ||||||||
| As of | ||||||||
| March 31, 2022 | December 31, 2021 | |||||||
| Due to Porta Capital Limited (“Porta Capital”) | $ | 2,091,145 | $ | 2,063,876 | ||||
| Due to Bru Haas (B) Sdn Bhd (“Bru Haas (B)”) | 2,222,988 | 1,675,573 | ||||||
| Due to Bru Haas Sdn Bhd (“Bru Haas”) | 187,756 | 168,649 | ||||||
| Due to Clicque Technology Snd Bhd (“Clicque”) | 131,170 | 90,272 | ||||||
| Due to Tila Network Limited (“Tila Network”) | 19,396 | 19,478 | ||||||
| Due to Porta Network Inc. (“Porta Network”) | 5,694 | 5,734 | ||||||
| Due to Mr. Song Dai (“Mr. Song”) | 12,005 | 12,014 | ||||||
| $ | 4,670,154 | $ | 4,035,596 | |||||
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The reconciliation of income tax rate toMr. Song is the effective income tax rate for the six months ended June 30, 2021director and 2020 is as follows:
| Schedule of effective income tax rate reconciliation | ||||||||
| Six months ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Loss before income taxes | $ | (369,483 | ) | $ | (152,900 | ) | ||
| Statutory income tax rate | 17% | 17% | ||||||
| Income tax expense at statutory rate | (62,812 | ) | (25,993 | ) | ||||
| Tax effect of non-taxable items | 0 | 0 | ||||||
| Tax effect of non-deductible items | 185 | 41 | ||||||
| Net operating loss | 62,627 | 25,952 | ||||||
| Income tax expense | $ | 0 | $ | 0 | ||||
As of June 30, 2021, the operation in Malaysia incurred $1,942,708 of cumulative net operating losses which can be carried forward to offset future taxable income. Effective from the year of assessment 2019, unutilized tax losses shall only be allowed to be carried forward for a maximum period of seven consecutive years commencing from the year of assessment 2019 and thereafter, from the year in which the unutilized tax losses arise. The expiry of the amounts are as follows:
| Schedule of tax credit carryforwards | ||||||||
| June 30, 2021 | December 21,2020 | |||||||
| Year ending December 31, | ||||||||
| 2025 | $ | 409,523 | $ | 426,182 | ||||
| 2026 | 508,822 | 526,244 | ||||||
| 2027 | 647,448 | 670,133 | ||||||
| 2028 | 376,915 | 0 | ||||||
| 1,942,708 | 1,622,559 | |||||||
The Company has provided for a full valuation allowance against the deferred tax assets of $330,260 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The following table sets forth the significant components of the deferred tax assets and liabilities of the Company as of June 30, 2021 and December 31, 2020:
| Schedule of Components of Deferred Tax Assets and Liabilities | ||||||||
| As of | ||||||||
| June 30, 2021 | December 31, 2020 | |||||||
| (Audited) | ||||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | ||||||||
| - United States | $ | 57,989 | $ | 39,462 | ||||
| - Hong Kong | 77,814 | 55,550 | ||||||
| - Malaysia | 330,260 | 275,835 | ||||||
| 466,063 | 370,847 | |||||||
| Less: valuation allowance | (466,063 | ) | (370,847 | ) | ||||
| Deferred tax assets, net | $ | 0 | $ | 0 | ||||
11. RELATED PARTY TRANSACTIONS
From time to time, the directormajor shareholder of the Company, and hishe is also the major shareholder of Porta Capital, Bru Haas (B), Bru Haas, Tila Network, and Porta Network. Amount due to these related companies under his control advanced funds toare those trade and nontrade payables arising from transactions between the Company for working capital purpose.and the related companies, such as advances made by the related companies on behalf of the Company, and advances made by the Company on behalf of the related companies. Those advances are unsecured, non-interest bearing and have no fixed terms of repayment.
ForThe advances from Mr. Song is mainly for working capital purpose. The advances are unsecured, non-interest bearing and have no fixed terms of repayment.
| Schedule of commercial terms among related parties | ||||||||
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Nature of transactions with related parties | ||||||||
| Online sales income from Bru Haas | $ | 0 | $ | 1,201 | ||||
| Research and development consulting fee to related parties: | ||||||||
| - Porta Capital | (a) | $ | 8,997 | $ | 9,027 | |||
| Consultancy fee to related parties | ||||||||
| - Clicque | (b) | $ | 41,745 | $ | 0 | |||
| Rent expense of Matchroom platform server to related parties: | ||||||||
| - Porta Capital | (c) | $ | 28,440 | $ | 31,045 | |||
| - Bru Haas (B) | (d) | 69,410 | 0 | |||||
| Total | $ | 97,850 | $ | 31,045 | ||||
| Network Bandwidth expense to Bru Haas (B) | (e) | $ | 54,000 | $ | 41,655 | |||
Both platform server rent expense and network bandwidth expense are recorded in the cost of revenue.
(a) The Company entered a consultancy service agreement with Porta Capital for a fixed period of 56 months commenced from May 1, 2017. The consultancy service fee is $3,000 per month and the agreement was renewed for another fixed period of 24 months on January 1, 2022.
(b) The Company entered two separate consultancy service agreements with Clicque for a fixed period of 36 months each commenced from June 1, 2021 and December 1, 2021. The consultancy service fees are RM 40,000 (equivalent to approximately $9,700) per month and RM 15,000 (equivalent to approximately $3,600) per month, respectively.
(c) The Company entered a platform server rental agreement with Porta Capital for a fixed period of 60 months commenced from March 1, 2021. The rent is $9,500 per month.
(d) The Company entered a platform server rental agreement with Bru Haas (B) for a fixed period of 60 months commenced from July 1, 2021. The rent is $20,000 per month. In additions, the Company entered a service agreement with Bru Haas (B) providing security operations center service for a fixed period of 12 months commenced from February 17, 2022. The service fee is $4,705 per month.
(e) The Company entered a network bandwidth rental agreement with Bru Haas (B) for a fixed period of 12 months commenced from January 1, 2022. The rent is $18,000 per month.
During the three months ended June 30,March 31, 2022 and 2021, and 2020, the Company paid $29,786 and $19,401 IT operating expense to Porta Capital Limited,utilized space on a companyrent-free basis in the office located at Unit 805, 8th Floor, Menara Mutiara Majestic, Jalan Othman, Petaling Jaya 46000, Selangor, Malaysia which is controlledowned by the directorMr. Song. The fair market value of the Company, respectively.
For the six months ended June 30, 2021 and 2020, the Company paid $69,858 and $39,477 IT operating expense to Porta Capital Limited, a company whichrent is controlled by the director of the Company, respectively.
For the three months ended June 30, 2021 and 2020, the Company paid $46,640 and $0 network bandwidth expense to Bru Haas (B) Sdn Bhd, a company which is controlled by the director of the Company, respectively.
For the six months ended June 30, 2021 and 2020, the Company paid $88,295 and $0 network bandwidth expense to Bru Haas (B) Sdn Bhd, a company which is controlled by the director of the Company, respectively.
For the six months ended June 30, 2021 and 2020, the Company sold $1,192 and $0 online game accessories to Bru Haas Sdn Bhd, a company which is controlled by the director of the Company, respectively. NaN such amounts were received for the three months ended June 30, 2021 and 2020.RM1,800 per month.
| 11. | CONCENTRATIONS OF RISK |
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
12. CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
| (a) | Major customers |
For the three months ended June 30, 2021, there was one single customer (Customer B) who accounted for 87% of the Company’s revenues and its outstanding receivable balances as at period-end date was $99,970.
For the six months ended June 30, 2021, there was one single customer (Customer B) who accounted for 78% of the Company’s revenues and its outstanding receivable balances as at period-end date was $99,970.
For the three months ended June 30, 2020,March 31, 2022, the individual customer who accounts for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates, are presented as follows:
| Schedule of concentrations of risk | |||||||||||
| Three months ended June 30, 2020 | June 30, 2020 | ||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | ||||||||
| Customer A | $ | 15,976 | 71% | $ | – | ||||||
| Customer C | 3,037 | 14% | 3,013 | ||||||||
| Customer D | 2,825 | 13% | – | ||||||||
| Total: | $ | 21,838 | 98% | Total: | $ | 3,013 | |||||
| 20 |
| Schedule of concentrations of risk | ||||||||||||
| Three months ended March 31, 2022 | March 31, 2022 | |||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | |||||||||
| Customer A | $ | 15,288 | 69% | $ | 15,369 | |||||||
| Customer B | 3,314 | 15% | 3,438 | |||||||||
| Total: | $ | 18,602 | 84% | Total: | $ | 18,807 | ||||||
For the sixthree months ended June 30, 2020,March 31, 2021, the individual customer who accounts for 10% or more of the Company’s revenues and its outstanding receivable balances as at period-end dates,December 31, 2021, are presented as follows:
| Six months ended June 30, 2020 | June 30, 2020 | ||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | ||||||||
| Customer A | $ | 30,557 | 65% | $ | – | ||||||
| Customer B | 9,986 | 21% | – | ||||||||
| Total: | $ | 40,543 | 86% | Total: | $ | – | |||||
BLOW & DRIVE INTERLOCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
| Three months ended March 31, 2021 | December 31, 2021 | |||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | |||||||||
| Customer C | $ | 5,168 | 38% | $ | 98 | |||||||
| Customer D | 1,503 | 11% | 19,735 | |||||||||
| Total: | $ | 6,671 | 49% | Total: | $ | 19,833 | ||||||
| (b) | Economic and political risk |
The Company’s major operations are conducted in Hong Kong and Malaysia. Accordingly, the political, economic, and legal environments in Hong Kong and Malaysia, as well as the general state of Hong Kong and Malaysia’s economy may influence the Company’s business, financial condition, and results of operations.
| (c) | Exchange rate risk |
The Company cannot guarantee that the current exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD and MYR converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
13. COMMITMENTS AND CONTINGENCIES
| (d) | Concentration of credit risk |
AsFinancial instruments that potentially subject the Company to concentrations of June 30,credit risk consist principally of cash. The Company maintains cash with various financial institutions in Hong Kong and Malaysia. Cash are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by management. The Hong Kong Deposit Protection Board and Perbadanan Insurans Deposit Malaysia (“PIDM”) pays compensation up to a limit of HK$500,000 and RM250,000 , respectively if the bank with which an individual/a company hold its eligible deposit fails. At March 31, 2022 and December 31, 2021, the Company has no material commitments or contingencies.
14. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting fordid not have deposit funds that exceeded the insured limits in Hong Kong and disclosure of events that occur after the balance sheet date but before condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2021, up through the date the Company issued the unaudited condensed consolidated financial statements. The Company determined that there are no further events to disclose.
Malaysia.
| 12. | COMMITMENTS AND CONTINGENCIES |
The Company from time to time may be involved in legal proceedings and disputes arising in the normal course of business. The Company believes that there are no material claims or actions pending or threatened against the Company.
On April 28, 2021, the Company entered into a financial advisory agreement, (“the agreement”) with Maxim Group, LLC (“Maxim”), a leading full-service investment banking, securities and wealth management firm, pursuant to which Maxim will provide certain advisory services including strategic corporate planning, capitalization, and marketing. Additionally, Maxim, will advise the Company with respect to its objective to list on a national securities exchange. As consideration for Maxim’s services pursuant to the agreement, the Company agreed to issue restricted shares of the Company’s common stock to Maxim equal to 2% of the outstanding shares of the Company’s Common Stock. As mentioned in Note 7, the Company issued restricted shares, 1% of the outstanding shares of the common stock, upon execution of the agreement. Under the terms of the agreement, the Company is committed to issue additional restricted shares of 1% of the outstanding shares of its common stock upon a successful listing of the Company’s common stock to a national exchange (NASDAQ or NYSE).
On October 6, 2021, the Company entered into an agreement, (“the Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”, “the Investor”), in which the Company has the right, but not the obligation, to direct Lincoln Park to purchase up to $15,000,000 of common stock, in increments of shares, subject to certain limitations and adjustments noted in the Purchase Agreement. As consideration for Lincoln Park’s irrevocable commitment to purchase shares of the Company’s Common Stock upon the terms of and subject to satisfaction of the conditions set forth in the Purchase Agreement, the Company agreed to issue shares of its Common Stock to Lincoln Park as commitment shares, and up to additional shares of Common Stock on a pro rata basis as Lincoln Park purchases up to its $15,000,000 total aggregate dollar amount purchase commitment under the Purchase Agreement. The right of the Company to commence sales under the purchase agreement is subject to the satisfaction of certain conditions including but not limited to a Registration Statement covering the resale of the shares being declared effective under the Securities Act by the SEC, and no stop order with respect to the Registration Statement shall be pending or threatened by the SEC. As mentioned in Note 7, on October 21, 2021, the Company issued the 1,003,378 initial commitment shares. As of the date of these financial statements, the Company has not filed the Registration Statement pursuant to this Purchase Agreement. The Purchase Agreement prohibits the Company from directing Lincoln Park to purchase any shares of the Company’s common stock if those shares, when aggregated with all other shares of common stock then beneficially owned by Lincoln Park (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder), would result in Lincoln Park beneficially owning more than 4.99% of the outstanding shares of the Company’s common stock.
The Company entered several commitment agreements with related parties, see Note 10.
| 13. | SUBSEQUENT EVENTS |
On April 4, 2022, the Company sold all its 10,000 shares in Leet Technology Limited, with its wholly owned subsidiary Leet Entertainment Group Limited, to Mr. Song for $10,000 at part of its plans to restructure and simplify the corporate structure. With the completion of this corporate restructure, the Company shall henceforth only have one wholly owned Malaysian subsidiary, Leet Entertainment Sdn Bhd. Prior to the corporate restructure, Leet Entertainment Group Limited, a wholly owned subsidiary of Leet Technology Limited, transferred all its assets, liabilities, and business operations to Leet Entertainment Sdn Bhd with the approval by the board of directors. This resulted the main business activities of the Company remain unchanged.
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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Disclaimer Regarding Forward Looking Statements
Our Management’s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Company Overview
The following discussion should be read in conjunction with the interim unaudited condensed consolidated financial statements and the notes thereto, which are set forth in Item 1 of this report.
The Company operates within the Esports industry and derives revenue from esports tournament management and team services. The Company offers tournament management services to their customers, whereby they are engaged to provide the service of managing and hosting a tournament of the customer’s choice. The Company provides the required manpower and skills to host and manage an esports tournament on their own Matchroom.net platform or on the platform of the customer. Apart from hosting the tournaments of other customers, the Company also hosts and managed their own internally held tournaments. The Company will obtain sponsorship agreements with other third-party entities whereby the Company commits to deliver certain sponsor and promotional services in exchange for consideration.
COVID-19
As discussed in more detail throughout this Quarterly Report on Form 10-Q for the sixthree months ended June 30, 2021March 31, 2022 (this “Quarterly Report”), we have experienced business disruptions resulting from efforts to contain the rapid spread of the novel coronavirus (“COVID-19”), including the vast mandated self-quarantines of customers and closures of non-essential business throughout the United States and internationally.
The COVID-19 pandemic has adversely impacted global commercial activity, disrupted supply chains and contributed to significant volatility in financial markets. From March 2020, the Malaysian Prime Minister has issued a number of Movement Control Orders (MCO), which reduced movement within Malaysia and cancelled to various extents all non-essential travel and limited travel from outsiders deemed as non-essential. The MCO remains in place to date.
In the secondfirst quarter of 2021,2022, the COVID-19 pandemic continues to adversely impact many different industries. The ongoing COVID-19 pandemic could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the extent and the duration of the impact of COVID-19. The COVID-19 pandemic therefore presents material uncertainty and risk with respect to us and our performance and could materially affect our financial results in an adverse way.
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We expect the evolving COVID-19 pandemic to continue to have an adverse impact on our business and results of operations, as the ongoing pandemic is likely to continue to depress economic activity and reduce the demand for our products and services, as well as disrupt supply chains. Although the duration and severity of the COVID-19 pandemic, and resulting economic impacts, remain uncertain, we expect that our business operations and results of operations, will be adversely impacted through 2021,2022, and possibly longer.
In these challenging and unprecedented times, management is taking all necessary and appropriate action to maximize liquidity as the Company navigates the current landscape. These actions include significantly reducing operating expenses and the elimination of all non-essential spending and capital expenditures.
Going concern
The accompanying unaudited condensed consolidated 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.
The Company has determined that certain factors raise substantial doubt about its ability to continue as a going concern for a least one year from the date of issuance of these unaudited condensed consolidated financial statements.
As of March 31, 2022, the Company had $14,966 in cash, working capital deficit of $5,613,978 and accumulated deficit of $8,493,121. The Company incurred a continuous loss of $658,415 during the three months ended March 31, 2022. The Company believes that its current level of cash are not sufficient to fund its operations and obligations without additional financing. In addition, with respect to the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2020, the outbreak has caused substantial disruption in international economies and global trades and if repercussions of the outbreak are prolonged, could have a significant adverse impact on the Company’s business.
The continuation of the Company as a going concern through the next twelve months is dependent upon the continued financial support from its stockholders and related parties. The Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations for one year from the date of the filing of the unaudited condensed consolidated financial statements.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
Overview and Outlook
The following comparative analysis on results of operations was based primarily on the comparative unaudited condensed consolidated financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report.
Three months ended June 30, 2021March 31, 2022, compared to the three months ended June 30, 2020March 31, 2021
During
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For the three months ended June 30,March 31, 2022 and 2021, and 2020, the following customers accounted for 10% or more of our total net revenues:revenues and its outstanding accounts receivable as of March 31, 2022 and December 31, 2021:
| Three months ended June 30, 2021 | June 30, 2021 | Three months ended March 31, 2022 | March 31, 2022 | |||||||||||||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | Revenues | Percentage of revenues | Accounts receivable | ||||||||||||||||||
| Smart Communications Inc. | $ | 100,022 | 87% | $ | 99,970 | |||||||||||||||||||
| Customer A | $ | 15,288 | 69% | $ | 15,369 | |||||||||||||||||||
| Customer B | 3,314 | 15% | 3,438 | |||||||||||||||||||||
| Total: | $ | 18,602 | 84% | Total: | $ | 18,807 | ||||||||||||||||||
| Three months ended June 30, 2020 | June 30, 2020 | ||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | ||||||||
| Gogopass Asia Sdn Bhd | $ | 15,976 | 71% | $ | – | ||||||
| PayTM First Games Private Limited | 3,037 | 14% | 3,013 | ||||||||
| Pattern Pink (M) Sdn Bhd | 2,825 | 13% | – | ||||||||
| Total: | $ | 21,838 | 98% | Total: | $ | 3,013 | |||||
| Three months ended March 31, 2021 | December 31, 2021 | |||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | |||||||||
| Customer C | $ | 5,168 | 38% | $ | 98 | |||||||
| Customer D | 1,503 | 11% | 19,735 | |||||||||
| Total: | $ | 6,671 | 49% | Total: | $ | 19,833 | ||||||
All of our major customers are located in Malaysia, India and Philippines
Revenue increased by 413.2%65.2% to $114,986$22,309 for the three months ended June 30, 2021,March 31, 2022, from $22,406$13,502 for the three months ended June 30, 2020.March 31, 2021. The increase in revenue is mainly due toattributed by our new white label project entered with Smart Communications, Inc., a new whitelable project which commencedlarge telecommunication provider in June 2021.the Philippines.
IT operating expensesCost of revenue increased by 228.1%72.6% to $115,196$154,196 for the three months ended June 30, 2021,March 31, 2022, from $35,109$89,354 for the three months ended June 30, 2020.March 31, 2021. The increase in IT operating expensescost of revenue is due to the increase in the rental of platform server cost, network bandwidth expenses,cost, and direct labor costs to whitelabel project, and Matchroom online event costs in tournament streaming as there are more subscribersincurred during the three months ended June 30, 2021.
Research and development expense increased to $9,085 for the three months ended June 30, 2021, from $0 for the three months ended June 30, 2020. The increase in research and development expense is due to the increase in IT system advisory services.period.
General and administrative expenses increased by 195.0%134.0% to $289,400$517,608 for the three months ended June 30, 2021,March 31, 2022, from $98,085$221,193 for the three months ended June 30, 2020.March 31, 2021. The increase in general and administrative expenses is mainly attributable from the increase in anticipationexhibition expenses, salaries and wages, and travelling expense for the expansion of revenue growth in second half of 2021 where staff strength has been increased.business.
Net loss increased 196.0%115.2% to $298,253$658,415 for the three months ended June 30, 2021,March 31, 2022, from net loss of $100,749$306,002 for the three months ended June 30, 2020.March 31, 2021. The increase in net loss is mainly attributed from the increase in general and administrative expenses.
Six months ended June 30, 2021 compared to the Six months ended June 30, 2020
During the six months ended June 30, 2021 and 2020, the following customers accounted for 10% or more of our total net revenues:
| Six months ended June 30, 2021 | June 30, 2021 | |||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | |||||||||
| Smart Communications Inc. | $ | 100,022 | 78% | $ | 99,970 | |||||||
| Six months ended June 30, 2020 | June 30, 2020 | ||||||||||
Customers | Revenues | Percentage of revenues | Accounts receivable | ||||||||
| Gogopass Asia Sdn Bhd | $ | 30,557 | 65% | $ | – | ||||||
| Smart Communications Inc. | 9,986 | 21% | – | ||||||||
| Total: | $ | 21,838 | 86% | Total: | $ | – | |||||
All of our major customers are located in Malaysia and Philippines.
Revenue increased by 172.9% to $128,488 for the six months ended June 30, 2021, from $47,077 for the six months ended June 30, 2020. The increase in revenue is mainly due to revenue from new whitelable projects and sale of merchandise in the newly established Maroo mall.
IT operating expenses increased by 168.2% to $204,550 for the six months ended June 30, 2021, from $76,251 for the six months ended June 30, 2020. The increase in IT operating expenses is due to the increase in network bandwidth expenses, direct labor costs to whitelabel project, and Matchroom online event costs in tournament streaming as there are more subscribers during the six months ended June 30, 2021.
Research and development expense increased to $18,132 for the six months ended June 30, 2021, from $0 for the six months ended June 30, 2020. The increase in research and development expense is due to the increase in IT system advisory services.
General and administrative expenses increased by 160.4% to $510,593 for the six months ended June 30, 2021, from $196,099 for the six months ended June 30, 2020. The increase in general and administrative expenses is in anticipation of revenue growth in second half of 2021 where staff strength has been increased and the amortization of platform development cost from January 2021.
Net loss increased 180.8% to $604,255 for the six months ended June 30, 2021, from net loss of $215,227 for the six months ended June 30, 2020.
Liquidity and Capital Resources
As of June 30, 2021,March 31, 2022, we had cash and cash equivalents of $20,619,$14,966, accounts receivable of $115,564,$33,040, deposit and other receivables of $9,062.$28,366. Such cash amount and other sources of liquidity are not sufficient to support our operation in the next twelve months. The Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations. In the absence of such financing, our business will likely fail.
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Net cash (used in) generated from operating activities | $ | (578,107 | ) | $ | 353,883 | |||
| Net cash used in investing activities | (149,395 | ) | – | |||||
| Net cash generated from (used in) financing activities | 699,587 | (300,612 | ) | |||||
| Three Months Ended March 31 | ||||||||
| 2022 | 2021 | |||||||
| Net cash used in operating activities | $ | (599,468 | ) | $ | (175,199 | ) | ||
| Net cash used in investing activities | (72,251 | ) | (1,575 | ) | ||||
| Net cash provided by financing activities | 655,105 | 198,474 | ||||||
Net Cash (Used In) Generated FromUsed In Operating Activities.Activities
For the sixthree months ended June 30, 2021,March 31, 2022, net cash used in operating activities was $578,107,$599,468, which consisted primarily of a net loss of $604,255,$658,415, an increase in accounts receivable of $94,840,$13,406, an increase in deposit and other receivables of $6,326,$3,209, a decrease in operating lease liabilities of $48,$1,254, and offset by depreciation on plant and equipment of $8,680, right of use amortization of $95,009,$1,265, an increase in accrued liabilities and other payables of $32,235,$35,493, an increase in accrued compensation payable to officers and directors of $27,209, and an increase in accounts payabledeferred revenue of $118.$262.
For the sixthree months ended June 30, 2020,March 31, 2021, net cash generated fromused in operating activities was $353,883,$175,199, which consisted primarily of a net loss of $215,227,$306,002, an increase in accountdeposits and receivables of $80,627,$5,130, a decrease in operating lease liabilities of $21,$1,306 and offset by depreciation on plant and equipment of $1,244, amortization on intangible assets of $44,984, right of use amortization of $1,282, a decrease in deposit and otheraccount receivables of $308, and$6,232, an increase in accrued liabilities and other payables of $649,450.$62,084, and an increase in accrued compensation payable to officers and directors of $21,413.
We expect to continue to rely on cash generated through financing from our existing shareholders and private placements of our securities, however, to finance our operations and future acquisitions.
Net Cash Used In Investing Activities.
For the sixthree months ended June 30,March 31, 2022 and 2021, net cash used in investing activities was $149,395,$72,251 and $1,575, respectively which consisted primarily of capitalization of software platform costs and purchase of plant and equipment.
For the six months ended June 30, 2020, net cash used in investing activities was $0.
Net Cash Generated From (Used In)Provided by Financing Activities.
For the sixthree months ended June 30,March 31, 2022 and 2021, net cash generated fromprovided by financing activities was $699,587 consisting$655,105 and $198,474, respectively which consisted primarily of advanceadvances from related parties.
For the six months ended June 30, 2020, net cash used in financing activities was $300,612, consisting primarily of repayment to related parties.
Off-Balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity, or market risk support to such entity. Moreover, we do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management's subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following accounting policies are critical in the preparation of our financial statements.
Basis of presentation
These accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Use of estimates and assumptions
In preparing these consolidated financial statements,requires management makesto make estimates and assumptions that affectimpact amounts reported therein. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported.circumstances. Actual results may differ from these estimates.
Revenue recognition
The Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
Revenue of the Company is derived from the organization of competitions using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game competitions. Revenues are recognized when the competition is completed, and prize money is awarded. Revenues are earned through sponsorship fees on a per tournament basis.
Related parties
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b)For a description of the transactions, including transactionsaccounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see the notes to which no amounts or nominal amounts were ascribed, for each of the periods for which incomeconsolidated financial statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any changeincluded in the method of establishingForm 10-K for the terms from that used inyear ended December 31, 2021, as well as Note 3 to our unaudited condensed consolidated financial statements for the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.three months ended March 31, 2022.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 ofDuring the FASB Accounting Standards Codification for disclosures about fair value of its financial instrumentsthree months ended March 31, 2022, there were no significant changes in our accounting policies and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”)estimates to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, deposits, prepayment and other receivables, amount due from a director and operating lease right-of-use assets, approximate their fair values because of the short maturity of these instruments.
Recent accounting pronouncement
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning January 1, 2023. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Adopting the standard is not expected to have a material impact on theour unaudited condensed consolidated financial statements.
In December 2020, the FASB issued ASU No. 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes (“ASU 2020-12”), which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively. Adopting the standard is not expected to have a material impact on the condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848), which provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates such as the Secured Overnight Financing Rate (SOFR). This guidance is effective upon issuance and generally can be applied through the end of calendar year 2022. The Company is currently evaluating the impact and applicability of this new standard.
Corporate History
Prior to the acquisition of our wholly-owned subsidiary as described below, our main business consisted of the manufacture and sale of a Breath Alcohol Ignition Interlock Device (BAIID) we developed known as the BDI-747 Ignition Interlock Device (the “BDI-747/1”), which is a mechanism that is installed on the steering column of an automobile and into which a driver exhales prior to starting their vehicle.
Current Business
Shortly after changing our business focus towards the eSports industry, which we regard as a potentially high growth and profitable industry, we identified certain opportunities to engage in the business related to e-sports in South East Asia, which has seen high growth over the last 3 years, and determined that we should pursue that business opportunity. We entered into negotiations with LTL, and have closed that acquisition as of November 18, 2020.
Currently, the Company is a holding company and has no principal business other than LTL’s business. As a result of the closing of the SEA, LTL is a wholly-owned subsidiary of the Company which operates an eSports platform in Malaysia. All references to Company herein include its operating subsidiary LTL unless otherwise noted.
Esports Industry and Segment
Definition of eSports:
“Esports (also known as electronic sports, e-sports, or eSports) is a form of sport competition using video games. Esports often takes the form of organized, multiplayer video game competitions, particularly between professional players, individually or as teams. Although organized competitions have long been a part of video game culture, these were largely between amateurs until the late 2000s, when participation by professional gamers and spectatorship in these events through live streaming saw a large surge in popularity. By the 2010s, esports was a significant factor in the video game industry, with many game developers actively designing and providing funding for tournaments and other events.” (Source: Wikipedia)
Growth of eSports
In 2020, the global eSports market was valued at just over US$950 million. According to the source's estimates, global eSports market revenue will reach almost US$1.6 billion in 2023. The eSports industry is expected to grow rapidly in the coming years. The majority of these revenues come from sponsorships and advertising, and the rest from media rights, publisher fees, merchandise and tickets, digital and streaming. In terms of revenues, Asia and North America represent the two largest eSports markets, with China alone accounting for almost one fifth of the market. (Source: Statistica)
In 2016, ASEAN decided to enter the market by hosting its very own eSports tournament. Malaysia, in collaboration with eSports Malaysia hosted the first ever ASEAN Games for eSports (AGES) with a prize pool of around US$256,000.
Most recently, the 2018 Asian Games, held in Jakarta and Palembang simultaneously, had – for the first time – six demonstration games as part of its eSports event. The games were Arena of Valor, Hearthstone, Pro Evolution Soccer, League of Legends, Clash Royale and StarCraft 2. (Source: Newzoo)
Other reasons why the eSports market is increasing in the region are due to growing regional incomes. According to a Newzoo report from 2015, the “Big Six” countries in Southeast Asia for eSports are Vietnam, Thailand, Philippines, Indonesia, Malaysia and Singapore. The report stated that these countries account for 99 percent of the region’s eSports revenue. The “Big Six” countries mentioned in the report have flourishing economies and a growing middle-class population. As populations grow, more disposable income is spent on hobbies and leisure activities which includes video games.
Our Product Portfolio
Our current product is an e-sports platform which is www.Matchroom.net. Matchroom features an integrated e-sports tournament site that allows tournament organizers, brands, players and game developers to organize e-sports tournaments on our platform utilizing our platform tools. Matchroom tools includes user registrations, payments, communications, livestream link ups, wallet system and many other community features.
Market, Customer and Distribution Methods
Our focus in regards of target markets encompasses the emerging markets (South East Asia, Middle East, and South Asia) in terms of geography, and users between the ages of 17 – 35. As most of these markets are mobile centric, our focus is mainly towards mobile e-sport tournaments. As such, we also focus on working with mobile network operators in our target markets, as they have direct access to their mobile subscribers, which are our target audience as well.
Sales and Marketing
Our sales strategy is geared towards a subscription model, at which users subscribe to a tournament pass that allows them to participate in a series of tournaments which has prize pools and benefits. Our partnerships with mobile network operators extend our payment reach through direct carrier billings with the mobile network operators in the respective countries in which we work.
By building up the community of e-sports players, brands can sponsor some of these prize pools by offering product ad placements, sampling and giveaways. This will be further amplified by offerings of ecommerce opportunities for brands to sell their product on our platform.
Our marketing strategy revolves around digital marketing through social media, brand marketing, influencer marketing and working with mobile carriers to co-promote our tournaments.
Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies in any jurisdiction in which we conduct our current business. As of now, there are no additional required government approvals which we must obtain.
Competition
There has been increased competition on eSports providers in this region over the last 2 years. E-sports platforms such as ESPL, Mogul.gg, Yamisok, ESL, and several others are constantly expanding their reach across the South East Asian and South Asian markets.
Our key competitors include some of the following:-
ESPL (E-Sport Player League) – A new esports platform that has recently emerged out of Malaysia and has been aggressively focused on professional esports management and platform. It has expanded its reach towards India as well as in South East Asia.
Mogul.gg – An Australian-based esports platform, and has seen its expansion in Australia and Philippines. It focuses on community esports as opposed to Professional Esports
Yamisok – An Indonesian-based esports platform that also focuses on community esports and works with brands and mobile carriers, primarily in Indonesia to carry out community tournaments in Indonesia.
ESL (Electronic Sports League) – A German-based esports company that has operated many international tournaments with major partnership with Valve. ESL also has an esports platform but mainly focuses on Europe and US markets.
Business Plan
The year 2020 saw most countries and economies deal with the Covid-19 pandemic, as it was still spreading across continents. While responding to the pandemic has led to many innovations and digitization in many sectors, eSports has also been affected. Esports has traditionally been offline-based, due to its competitive factor and focus on fair play. With on-ground events largely restricted, there has been a growth in online tournaments. More gamers are getting online to compete with others, as well as the growth of online viewers watching livestreams. This has also led to higher data consumption usage of the internet, mainly mobile data consumption.
2021 will see the Company focusing on working with mobile network operators within South East Asia to extend our platform’s (Matchroom) product offerings via a subscription model, at which mobile subscribers will subscribe to a data package that offers a tournament pass, at which users are able to compete in a series of tournaments that is offered.
Matchroom will focus on delivering eSports content to the market through the following:
1) White label solutions with mobile network operators to cater to their users
2) Launch of Matchroom’s Regional Tournaments and working with mobile network operators in each country to promote and provide a direct carrier billing subscription method for their users to subscribe.
3) Brand partnerships to carry out online eSports tournaments and livestream content for brand exposure and engagement.
Based on our current roadmap, we intend to cover South East Asia, namely Malaysia, Philippines, Indonesia, Thailand, Singapore and Cambodia within the next 18 months. The following 18 months in 2022-2023 will see us incorporating Vietnam, South Asia, Middle East and African markets into our platform.
To cater to our expansion, our platform roadmap also focuses on several priorities:-
1) Enhancement of our current platform to enable deep-linking with mobile carriers
2) Launch of a redemption and ecommerce platform
3) Enhancements of our current esports tools and services
4) Gamifications and User Experience enhancements
5) Multi language and geographical-led content management.
6) Software development kits (SDK) for better onboarding of game developers and tournament operators.
7) Customer Engagement and Community management tools for better customer experience.
We will also need to recruit computer gaming employees and consultants, and executives that will lead localized teams across the region, especially in Philippines, Indonesia and Thailand where there is a distinct local culture that calls for localization of content in that particular country. We also expect to expand our development and operations team to cater to more tournaments including automations, data mining, customer retentions & userbase including monetization strategies.
We expect our revenues to continue growing in 2021 onwards, especially through our mobile carrier partnerships, as well as our subscription model, which is expected to in line with our user growth and platform deliverables.
Employees
As of June 30, 2021, we have approximately 21 full time employees based in Malaysia, 3 full time employees based in the Philippines, 1 full time employee based in Vietnam, and 2 full time employees based in Indonesia. We have never experienced a work stoppage.
Description of Properties
Our principal executive offices are located at 805, 8th Floor, Menara Mutiara Majestic, Jalan Othman, Petaling Jaya 46000, Selangor, Malaysia. Our telephone number is 603 7783 1636. We have no present intention of acquiring other facilities during our development stage.
We do not currently have any investment or interests in any real estate, nor do we have investments or an interest in any real estate mortgages or securities of persons engaged in real estate activities.
We were incorporated under the name Jam Run Acquisition Corporation on July 2, 2013, in the State of Delaware. From inception through early February 2014, we were a blank check company and qualified as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act which became law in April 2012, with a business plan of entering into a transaction with a foreign or domestic private company for that company to become a reporting company as part of the process toward the public trading of its stock. We ceased being a shell company upon the filing of our Form 8-K on November 18, 2020.
Available Information
We are a fully reporting issuer, subject to the Securities Exchange Act of 1934. Our Quarterly Reports, Annual Reports, and other filings can be obtained from the SEC’s Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may also obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at http://www.sec.gov.
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 4 Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2021.procedures. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.effective as of March 31, 2022 and there have been no changes for the three months ended March 31, 2022.
Remediation Plan
Management has implemented remediation steps to improve our internal control over financial reporting. Specifically, we are expanding and remediating our review process for revenue related transactions and contracts with our customers and ASC 606. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
Changes in Internal Controls over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, and therefore has no significant impact on the company’s financial report nor internal control. Under the new ownership and management, accounting officer will provide monthly, quarterly, semi-annually, annually financial statements to our shareholders, CPA, and corporate management to ensure accurate financial activities recorded.
PART II – OTHER INFORMATION
ITEM 1 Legal Proceedings
InAs of the ordinary coursedate of business,this quarterly report on Form 10-Q, we are from time to timenot involved in variousany pending or threatened legal actions. The litigation process is inherently uncertain, and it is possibleproceedings that the resolution of such matters might have a material adverse effect upon our financial condition and/we believe we would likely, individually or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expectedaggregate, to have a material adverse effect on our financial positioncondition or results of operations.
ITEM 1A Risk Factors
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds
During the sixthree months ended June 30, 2021,March 31, 2022, we did not issue any unregistered securities:
ITEM 3 Defaults Upon Senior Securities
There have been no events which are required to be reported under this Item.
ITEM 4 Mine Safety Disclosures
There have been no events which are required to be reported under this Item.
ITEM 5 Other Information
N/AThere is no other information for this period.
ITEM 6 Exhibits
| 31.1* | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. | ||
| 31.2* | Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer. | ||
| 32.1* | Section 1350 Certification of Chief Executive Officer. | ||
| 32.2* | Section 1350 Certification of Chief Accounting Officer. | ||
| 101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | ||
| Inline XBRL Taxonomy Extension Schema Document | |||
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||
| Inline XBRL Taxonomy Extension Definition Linkbase Document | |||
| Inline XBRL Taxonomy Extension Label Linkbase Document | |||
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||
| Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
*filed herewith
SIGNATURES
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.
| Dated: | /s/ Ding Jung LONG | ||
| Chief Executive Officer | |||
| Dated: | /s/ Kamal Hamidon | ||
| Chief Financial Officer and Principal Accounting Officer | |||