|
Item 1.
|
Financial Statements
|
Xiamen Lutong International Travel Agency Co. Ltd.
Condensed Balance Sheets
|
|
|
March 31,
|
|
June 30,
|
|
|
|
2021
(Unaudited)
|
|
2020
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total Current Assets
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
157,173
|
|
|
$
|
147,077
|
|
|
Note payable to related party
|
|
|
256,132
|
|
|
|
256,132
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
413,305
|
|
|
|
403,209
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares outstanding and outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.001 par value; 150,000,000 shares authorized; 58,167,600 and 58,167,600 shares issued and outstanding
|
|
|
58,168
|
|
|
|
58,168
|
|
|
Additional paid-in capital
|
|
|
8,781,592
|
|
|
|
8,749,016
|
|
|
Accumulated deficit
|
|
|
(9,253,065
|
)
|
|
|
(9,210,393
|
)
|
|
Total Stockholders’ Deficit
|
|
|
(413,305
|
)
|
|
|
(403,209
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
—
|
|
|
$
|
—
|
|
The accompanying notes are an integral part of
these condensed financial statements.
Xiamen Lutong International Travel Agency Co. Ltd.
Condensed Statement of Operations
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General & administrative expenses
|
|
|
7,588
|
|
|
|
6,500
|
|
|
|
23,463
|
|
|
|
23,948
|
|
|
Total operating expenses
|
|
|
7,588
|
|
|
|
6,500
|
|
|
|
23,463
|
|
|
|
23,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(7,588
|
)
|
|
|
(6,500
|
)
|
|
|
(23,463
|
)
|
|
|
(23,948
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(6,403
|
)
|
|
|
(6,403
|
)
|
|
|
(19,209
|
)
|
|
|
(19,209
|
)
|
|
Total other expense
|
|
|
(6,403
|
)
|
|
|
(6,403
|
)
|
|
|
(19,209
|
)
|
|
|
(19,209
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(13,991
|
)
|
|
|
(12,903
|
)
|
|
|
(42,672
|
)
|
|
|
(43,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(13,991
|
)
|
|
$
|
(12,903
|
)
|
|
|
(42,672
|
)
|
|
|
(43,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic & diluted net loss per share
|
|
$
|
*
|
|
|
$
|
*
|
|
|
|
*
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares-basic and diluted
|
|
|
58,167,600
|
|
|
|
58,167,600
|
|
|
|
58,167,600
|
|
|
|
58,167,600
|
|
* Less than $0.01
The accompanying notes are an integral part of these
condensed financial statements
Xiamen Lutong International Travel Agency Co. Ltd.
Condensed Statements of Cash Flows
|
|
|
For
The Nine Months Ended
|
|
|
|
March
31,
|
|
|
|
2021
(Unaudited)
|
|
2020
(Unaudited)
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(42,672
|
)
|
|
$
|
(43,157
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
|
10,096
|
|
|
|
12,677
|
|
|
Net
cash used in operating activities
|
|
|
(32,576
|
)
|
|
|
(30,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Capital
contributions from stockholder
|
|
|
32,576
|
|
|
|
30,480
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
32,576
|
|
|
|
30,480
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
decrease in cash
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest expense
|
|
|
—
|
|
|
|
—
|
|
|
Cash
paid for income tax
|
|
|
—
|
|
|
|
—
|
|
The accompanying notes are an integral part of these
condensed financial statements
Xiamen Lutong International Travel Agency Co. Ltd.
Condensed Statements of Changes in Stockholders’
Deficit
(US$, except share data and per share data, or otherwise
noted)
For the Nine Months ended March 31, 2021
|
|
|
Shares
|
|
Shares
amount
|
|
Additional
paid-in capital
|
|
Accumulated
Deficit
|
|
Total
equity
|
|
Balance as of July 1, 2020
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,749,016
|
|
|
|
(9,210,393
|
)
|
|
|
(403,209
|
)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(42,672
|
)
|
|
|
(42,672
|
)
|
|
Contributions from stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
32,576
|
|
|
|
—
|
|
|
|
32,576
|
|
|
Balance as of March 31, 2021 (unaudited)
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,781,592
|
|
|
|
(9,253,065
|
)
|
|
|
(413,305
|
)
|
For the Three Months ended March 31, 2021
|
|
|
Shares
|
|
Shares
amount
|
|
Additional
paid-in capital
|
|
Accumulated
Deficit
|
|
Total
equity
|
|
Balance as of January 1, 2021 (unaudited)
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,773,816
|
|
|
|
(9,239,074
|
)
|
|
|
(407,090
|
)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,991
|
)
|
|
|
(13,991
|
)
|
|
Contributions from stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
7,776
|
|
|
|
—
|
|
|
|
7,776
|
|
|
Balance as of March 31, 2021 (unaudited)
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,781,592
|
|
|
|
(9,253,065
|
)
|
|
|
(413,305
|
)
|
For the Nine Months ended March 31, 2020
|
|
|
Shares
|
|
Shares
amount
|
|
Additional
paid-in capital
|
|
Accumulated
Deficit
|
|
Total
equity
|
|
Balance as of July 1, 2019
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,706,438
|
|
|
|
(9,144,181
|
)
|
|
|
(379,575
|
)
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(43,157
|
)
|
|
|
(43,157
|
)
|
|
Contributions from stockholders
|
|
|
—
|
|
|
|
—
|
|
|
|
30,480
|
|
|
|
—
|
|
|
|
30,480
|
|
|
Balance as of March 31, 2020 (unaudited)
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,736,918
|
|
|
|
(9,187,338
|
)
|
|
|
(392,252
|
)
|
For the Three Months ended March 31, 2020
|
|
|
Shares
|
|
|
Shares
amount
|
|
|
Additional
paid-in capital
|
|
|
Accumulated
Deficit
|
|
|
Total
equity
|
|
|
Balance
as of January 1, 2020 (unaudited)
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,729,418
|
|
|
|
(9,174,435
|
)
|
|
|
(386,849
|
)
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,903
|
)
|
|
|
(12,903
|
)
|
|
Contributions
from stockholders
|
|
|
-
|
|
|
|
-
|
|
|
|
7,500
|
|
|
|
-
|
|
|
|
7,500
|
|
|
Balance
as of March 31, 2020 (unaudited)
|
|
|
58,167,600
|
|
|
|
58,168
|
|
|
|
8,736,918
|
|
|
|
(9,187,338
|
)
|
|
|
(392,252
|
)
|
Xiamen Lutong International Travel Agency Co. Ltd.
Notes to the Condensed Financial Statements
March 31, 2021
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Xiamen Lutong International Travel Agency Co., Ltd.
(formerly Highlight Networks, Inc., the “Company”) was formed on June 21, 2007 as a Nevada corporation. The Company has a
June 30 year-end. The Company has been a shell company since June 18, 2015 as disclosed on its Form 8-K filed on January 27, 2017. The
Company currently does not have operations, revenue or any assets. For the period from June 18, 2015 to the date of this filing, the Company
did not have any operating activities.
On January 29, 2018, pursuant to a Stock
Purchase Agreement (the “SPA”), the Company’s then majority stockholder, Jose R. Mayorquin sold 57,000,000 shares
of common stock of the Company to a Chinese company, Xiamen Lutong International Travel Agency Co., Ltd. (“China Xiamen
Lutong”). China Xiamen Lutong subsequently transferred the 98% ownership of the Company to Longhai Yougoubao Network
Technology Co. Ltd., a Chinese company (“Longhai”). China Xiamen Lutong and Longhai are companies commonly controlled by
the Company’s current sole director, Qiyi Zheng. After the transaction, Longhai held 98% of the voting interest of the
Company, based on 58,167,600 shares outstanding as of the date hereof. The transaction has resulted in a change in control of the
Company and Longhai became the majority stockholder and related party of the Company.
On March 8, 2018, the Company incorporated a wholly-owned
subsidiary, Xiamen Lutong International Travel Agency Co., Ltd., in the State of Nevada (“Nevada Xiamen Lutong Sub”) for the
sole purpose of changing the Company’s name to Xiamen Lutong International Travel Agency Co., Ltd. Pursuant to an agreement and
plan of merger, dated March 29, 2018, between the Company and the Nevada Xiamen Lutiong Sub (“Plan of Merger”), the Nevada
Xiamen Lutong Sub was merged with and into the Company and the Company’s name was changed to “Xiamen Lutong International
Travel Agency Co., Ltd.” On April 12, 2018, the Company filed the Articles of Merger with the Secretary of State of Nevada. The
market effective date for such name change was May 14, 2018.
The Company plans to offer packaged tours and other
travel-related services in the People’s Republic of China, initially in Fujian province, with a focus on developing, promoting and
executing organized tours through its travel service stores. The packaged tours offer the benefits of pre-arranged itineraries, transportations,
accommodations, entertainments, meals and tour guide services and cover domestic as well as international destinations.
The Company plans to offer its travel products and
services through its travel service stores as well as its website. The Company also plans to offer other travel-related services comprised
mainly of sales of tourist attraction tickets, visa application services, financial services, hotel booking services, air ticketing services,
train ticketing services, bus ticketing services, car rental services and insurance services. The Company will earn a commission or service
fee on these services.
The Company has been evaluating the optimal approaches
to implement these plans, including through mergers and acquisitions of other travel agencies in China. The Company was assessing a number
of potential merger targets in China during late 2019 and early 2020. This work has been suspended due to the COVID-19 pandemic outbreak
as travel agencies throughout the world have been significantly impacted by this pandemic. The extent of the impact of COVID-19 pandemic
on the Company’s ability to execute on its business plans and initiatives will depend upon the developments of the pandemic, including
the duration and spread of COVID-19 and lockdown restrictions imposed by the respective global governments and oversight bodies, and tourists’
confidence over local and oversea travels after the pandemic. All of these are factors are uncertain and cannot be easily estimated given
the novelty of COVID-19 and the rapidly evolving nature of the pandemic. Given the dynamic nature of pandemic, the Company cannot reasonably
estimate the impact of COVID-19 on the Company’s timeline to implement its business plan. Until the Company is able to implement
its business plan, the Company will remain a shell company.
The Company’s principal executive offices are located at 20F, Longhai
Fortune Center, 42 Ziwei Road, Shima Town, Zhangzhou City, Fujian Province, China.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s unaudited condensed financial
statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.
GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items,
which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not
necessarily indicative of the results to be expected for the full year ending June 30, 2021. These unaudited condensed financial statements
should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K
for the year ended June 30, 2020.
Use of Estimates and Assumptions
Preparation of the financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates. The Company has adopted the provisions of Accounting Standards Codification (“ASC”)
260. The Company currently does not have significant estimates and assumptions.
Stock-Based Compensation
The Company will follow ASC 718-10, Stock Compensation,
which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary
focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 requires measurement
of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award
(with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be
recognized. The Company has not adopted a stock option plan and has not granted any stock options.
Loss per Share
Net loss per common share is computed pursuant to
ASC 260-10-45. Basic and diluted net income per common share has been calculated by dividing the net income for the period by the basic
and diluted weighted average number of common shares outstanding. There were no dilutive shares outstanding as of March 31, 2021 and 2020.
Taxation
Current income taxes are provided on the basis of
net profit for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax
purposes, in accordance with the regulations of the relevant tax jurisdictions.
Deferred income taxes are recognized for temporary
differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements, net operating
loss carry forwards and credits. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided in accordance
with the laws of the relevant taxing authorities. Deferred tax assets and liabilities are measured using enacted rates expected to apply
to taxable income in which temporary differences are expected to be reversed or settled. The effect on deferred tax assets and liabilities
of changes in tax rates is recognized in the statement of comprehensive income in the period of the enactment of the change.
The Company considers positive and negative
evidence when determining whether a portion or all of its deferred tax assets will more likely than not be realized. This assessment
considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future
profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused, and its tax
planning strategies. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient future
taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary
differences become deductible. When assessing the realization of deferred tax assets, the Company has considered possible sources of
taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income
exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax
planning strategies, and (iv) specific known trend of profits expected to be reflected within the industry.
The Company recognizes a tax benefit associated with an uncertain tax position
when, in its judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax
position that meets the more-likely-than-not recognition threshold, the Company initially and subsequently measures the tax benefit as
the largest amount that the Company judges to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing
authority. The Company’s liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances,
such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in
the period in which they are identified. The Company’s effective tax rate includes the net impact of changes in the liability for
unrecognized tax benefits and subsequent adjustments as considered appropriate by management. The Company classifies interest and penalties
recognized on the liability for unrecognized tax benefits as income tax expense.
There were no current and future income tax provision
recorded for the three and nine months ended March 31, 2020 and 2019 since the Company is a shell company and did not generate any revenues
in these two fiscal periods.
Subsequent Events
The Company follows the guidance in ASC 855-10-50
for the disclosure of subsequent events. The Company evaluates subsequent events from the date of the balance sheet through the date when
the financial statements are issued. Pursuant to Accounting Standards Update (“ASU”) 2010-09 of the Financial Accounting Standards
Board (“FASB”) ASC, the Company as an SEC filer considers its financial statements issued when they are widely distributed
to users, such as through filing them with the SEC on the EDGAR system.
Recent Accounting Pronouncements
The Company has reviewed the following recent accounting
pronouncements and concluded that they were either not applicable or had no impact to the Company’s financial statements:
In November 2016, the FASB issued ASU 2016-18, Statement
of Cash Flows (Topic 230) (“ASU 2016-18”). This ASU affects all entities that have restricted cash or restricted cash equivalents
and are required to present a statement of cash flows under Topic 230. ASU 2016-18 requires that a statement of cash flows explain the
change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash
equivalents. This update became effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years
beginning after December 15, 2019, and early adoption is permitted in any interim or annual period. The Company adopted the guidance
for its fiscal year beginning July 1, 2020 and the adoption does not have impact to the Company’s statement of cash flows as the
Company does not have restricted cash or restricted cash equivalents.
In February 2016, FASB issued ASU No. 2016–02,
“Leases (Topic 842)”, ASC 842, and subsequently amended the guidance relating largely to transition considerations under the
standard in July 2018. The new guidance, which creates new accounting and reporting guidelines for leasing arrangements, requires organizations
that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases,
regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement,
and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating
lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty
of cash flows arising from leases. The new standard is effective for public business entities for annual reporting periods beginning after
December 15, 2018, including interim periods within that reporting period, with early application permitted. In March 2019, the FASB issued ASU
2019-01, Leases (Topic 842) Codification Improvements, which further clarifies the determination of fair value of the underlying
asset by lessors that are not manufacturers or dealers and modifies transition disclosure requirements for changes in accounting principles
and other technical updates. The amendments in ASU 2019-01 amend Topic 842 and the effective date of those amendments is for fiscal
years beginning December 15, 2019, and interim periods within those fiscal years for public business entities. For all other entities,
ASC 842 is effective for annual periods beginning after December 15, 2020. The adoption of the standard does not have an impact on the
Company’s financial statements.
NOTE 3 - RELATED PARTY TRANSACTIONS AND NOTES PAYABLE
As of March 31, 2021 and June 30, 2020, the Company
had a total outstanding principal and accrued interest of $256,132 and $149,168, and $256,132 and $129,958, respectively, due to Longhai.
The unsecured promissory note bears an interest of 10% per annum and is payable on demand. The accrued interests as of March 31, 2021
and June 30, 2020 were recorded and included in “Accounts Payable and Accrued Expenses” on the balance sheets.
During the year, the Company also received total capital
contributions in the amount of $32,576 from its principal stockholder, Longhai, for working capital uses.
NOTE 4 - GOING CONCERN
The accompanying financial statements have been prepared
on the basis of accounting principles applicable to a “going concern,” which assumes that the Company will continue in operation
for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.
Several conditions and events raise substantial doubt
as to the Company’s ability to continue as a “going concern.” As of March 31, 2021, the Company had an accumulated deficit
of $9,253,065 and a working capital deficit and did not have revenues. The Company requires additional financing in order to finance its
business activities on an ongoing basis. The Company’s future capital requirements will depend on numerous factors including, but
not limited to, continued progress in the pursuit of business opportunities. The Company is depending on financing from its principal
stockholder to meet its minimal operating expenses. As the Company is a shell company, its operating expenses are limited. Management
believes that the financing from its principal stockholder and its continued efforts in pursing business combination will provide them
with the opportunity to continue as a “going concern.”
These financial statements do not reflect adjustments
that would be necessary if the Company were unable to continue as a “going concern.” While management believes that the actions
already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the “going concern”
assumption used in preparing these financial statements, there can be no assurance that these actions will be successful. If the Company
were unable to continue as a “going concern,” then substantial adjustments would be necessary to the reported amounts of its
liabilities, the reported expenses and the balance sheet classifications used.
NOTE 5 – SHARE CAPITAL
There were no transactions of common stock, warrants
and stock options during the three and nine months ended March 31, 2021 and 2020, respectively.
NOTE 6 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant
to the requirements of ASC Topic 855, from the balance sheet date through the date when the financial statements were issued, and determined
that no subsequent events occurred that would require adjustment to or disclosure in the financial statements.
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ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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The following discussion and analysis of our results
of operations and financial condition should be read together with our unaudited condensed financial statements and the notes thereto,
which are included elsewhere in this report and our Annual Report on Form 10-K for the year ended June 30, 2020 (the “Annual Report”)
filed with SEC. Our financial statements have been prepared in accordance with U.S. GAAP. In addition, our financial statements and the
financial information included in this report reflect our organizational transactions and have been prepared as if our current corporate
structure had been in place throughout the relevant periods.
Overview
We were incorporated under the name “Highlight
Networks, Inc.” in the state of Nevada on June 21, 2007. Our original business plan was to engage in the business of planning, development
and operation of both private and public access wireless broadband networks using WiFi (IEEE 802.11) and WiMAX (IEEE 802.16) wireless
technologies. In 2013, we commenced a new business venture in recycling, refining, metals trading and assisting in metal recovery, with
a focus on precious metals refining from electronic waste.
On June 5, 2015, we experienced a change of control
as a result of the purchase of 98% of our issued and outstanding capital stock from Infanto Holding Corp. by Legacy International Holdings
Group, LLC and Allied Crown Enterprises Limited. Our then operating subsidiary, EZ Recycling, Inc., was spun off and as a result we reverted
to the shell company status.
On January 29, 2018, pursuant to a stock purchase
agreement dated January 26, 2018, Xiamen Lutong International Travel Agency Co., Ltd. purchased 57,000,000 shares of our common stock
from our then majority stockholder, Jose R. Mayorquin, representing 98% of the voting securities of our company. Following this change
of control, we changed our name to Xiamen Lutong International Travel Agency Co., Ltd. and changed our business plan to engage in travel
businesses in the People’s Republic of China (the “PRC”).
From June 2015 to date, we had no business operations,
revenues or assets and have been a shell company as defined by Rule 405 of the Securities Act.
We plan to offer packaged tours and other travel-related
services in the PRC, initially in Fujian province, with a focus on developing, promoting and executing organized tours through our travel
service stores. The packaged tours offer the benefits of pre-arranged itineraries, transportations, accommodations, entertainments, meals
and tour guide services and cover domestic as well as international destinations.
We plan to offer our travel products and services
through our travel service stores as well as our website.
We also plan to offer other travel-related services
comprised mainly of sales of tourist attraction tickets, visa application services, financial services, hotel booking services, air ticketing
services, train ticketing services, bus ticketing services, car rental services and insurance services. We will earn a commission or service
fee on these services.
We are presently evaluating the optimal corporate
and legal structures in China necessary to establish our business there and as a U.S. publicly listed and reporting company. We are also
assessing the impact of the COVID-19 epidemic in China and globally on our business plans. We may establish our business in whole or in
part by acquiring existing businesses or assets owned by our majority stockholder or his affiliates. We do not have an established timetable
to implement these plans, and until we do, we will remain a shell company.
Results of Operations for the Three and Nine Months
Ended March 31, 2021 and 2020
Revenues
There was no revenue for the three and nine months
ended March 31, 2021 and 2020.
General and Administrative Expense
During the three months ended March 31, 2021 and 2020,
we incurred $7,588 and $6,500 of general and administrative expenses, respectively. During the nine months ended March 31, 2021 and 2020,
we incurred $23,463 and $23,948 of general and administrative expenses, respectively. Our general and administrative expenses primarily
consisted of auditor fees, accounting fees and legal fees, which are routine costs associated with a public company for financial reporting
requirements.
Other Expense
During the three months ended March 31, 2021 and 2020,
we incurred $6,403 and $6,403 of interest expenses, respectively. During the nine months ended March 31, 2021 and 2020, we incurred $19,209
and $19,209 of interest expenses, respectively. The interest expenses were solely related to the note payable due to a related party.
Net Loss
For the three months ended March 31, 2021 and 2020,
we had a net loss of $13,991 and $12,903, respectively. For the nine months ended March 31, 2021 and 2020, we had a net loss of $42,672
and $43,157, respectively.
Liquidity and Capital Resources
Cash Flows from Operating Activities
Net cash used in operating activities was $32,576
for the nine months ended March 31, 2021, compared to net cash used in operating activities of $30,480 for the same period ended March
31, 2020. Since we are a shell company, cash used in operating activities were fully funded by our principal stockholder as is reflected
in the accompanying condensed statements of cash flows.
Cash Flows from Financing Activities
Net cash provided by financing activities for the
nine months ended March 31, 2021 and 2020 was $32,576 and $30,480, respectively, which represented the amounts contributed by our principal
stockholder to support our operations.
As of March 31, 2021, we had a total outstanding principal
and accrued interest of $256,132 and $149,168, respectively, due to Longhai. The unsecured promissory note bears an interest of 10% per
annum and is payable on demand.
Our future capital requirements will depend on numerous
factors, including, but not limited to, the establishment and development of our travel services in China. We have relied on financing
from our principal stockholder and expect to continue to depend on financing from our principal stockholder to meet our current minimal
operating expenses. As we are a start-up company, our operating expenses are limited and discretional based on the availability of its
funds. Management believes that the financing from our principal stockholder will continue to support our planned operations over the
next 12 months.
In connection with our business plan, management
anticipates operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business
and (ii) marketing expenses will be funded primarily by debt or equity financings from our principal stockholder. However, there is
no assurance that such funds will be available or available on acceptable terms. If adequate funds are not available or are not
available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which
could significantly and materially restrict our business operations.
Commitments and Capital Expenditures
We presently have no material commitments for capital
expenditures.
Critical Accounting Policies Involving Management
Estimates and Assumptions
Our discussion and analysis of our financial condition
and results of operations is based on our financial statements. In preparing our financial statements in conformity with U.S. GAAP, we
must make a variety of estimates that affect the reported amounts and related disclosures.
Deferred Tax Valuation Allowance
Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount more likely than not to be realized. Income tax expense is the total of tax
payable for the period and the change during the period in deferred tax assets and liabilities.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would
have been established for the purpose of facilitating off-balance sheet financial arrangements.