ITEM
2.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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We
have limited operations and are not currently generating any revenues from our business operations. Our independent registered
public accounting firm has issued a going concern opinion for the year ended December 31, 2015. This means that our auditors believe
there is substantial doubt that we can continue as an on-going business for the next 12 months. We do not anticipate generating
significant revenues until we acquire a business, are acquired by an existing business or develop a business organically. Accordingly,
we must raise additional cash from sources other than operations.
We
presently are exploring other such sources of funding, including raising funds through a public offering, a private placement
of securities, debt or a combination of the foregoing. If we are unable to raise additional capital, we will either have to suspend
operations until we do raise the cash or cease operations entirely.
The
following discussion should be read in conjunction with our Financial Statements and the notes thereto and the other information
included in this Annual Report as filed with the SEC on Form 10-K.
Overview
Our
original business plan was to become a commercial FM radio broadcaster. Subsequently, following a change in control, we changed
our business plan and intended to become a medical and spa company with a focus on Asia. However, after consultation with our
professional and business advisors in the United States and the People’s Republic of China, management decided during the
third quarter of 2014 that this would no longer be our plan of operations. Our plan of operations is to evaluate various industries,
and geographic and market opportunities. This may take the form of acquiring a business, being acquired by an existing business
or developing a business organically. Any such efforts may require significant capital, which we currently lack. There is no assurance
that any such opportunity will become available. There is also no assurance that, if any opportunity becomes available, we will
have the financial and other resources available to take advantage of such opportunity, since we have extremely limited liquidity.
Through March 31, 2016, we had no revenues or operations.
Results
of Operations
Three
Months Ended March 31, 2016 and 2015
Revenues
.
As of March 31, 2016, we had not generated any revenues.
Operating
Expenses
. For
the three months ended March 31, 2016, total operating expenses amounted
to $8,201 as compared to $22,557 for the three months ended March 31, 2015, a decrease of $14,356 or 63.6%. Since inception, our
operating expenses primarily consisted of fees and expenses related to complying with our ongoing SEC reporting requirements,
which have primarily consisted of legal fees, accounting fees, transfer agent fees, filing fees, and consulting fees
.
Other
expenses
.
During the three months ended March 31, 2016 and 2015, we recorded $3,035
and $1,569, respectively, in imputed interest expense related to advances outstanding to related parties. These imputed interests
were recorded in our financial statements under additional paid-in capital
.
Net
Loss
. Dur
ing the three months ended March 31, 2016 and 2015, we had a net loss of $11,236
and $24,126, res
pectively.
Liquidity
and Capital Resources
As
of March 31, 2016, we had cash of $108, had liabilities of $164,602, and had a working capital
deficit of $164,494. We expect to incur continued losses during the remainder of 2016, possibly even lon
ger until we commence
operations and those operations are profitable.
For
the three months ended March 31, 2016 and 2015, net cash used in operating activities amounted
to $5,037 and $16,178, respectively. We expect to require working capital of approximately $50,000 over the next 12 months to
meet our financial obligations
.
For
the three months ended March 31, 2016 and 2015
, net cash provided by financing activities
amounted to $3,350 and $17,146, respectively. For the three months ended March 31, 2016 and 2015, we received proceeds from loans
from officer of $3,350 and $17,146, respectively, for working capital purposes
.
We
have not generated any revenues from operations to date. It is not likely that we will generate
any revenue until at least a business combination has been consummated. Even following a business combination, there is no guarantee
that any revenues will be generated or that any revenues will be sufficient to meet our expenses. We may consider a business combination
with a target company which itself has recently commenced operations, is a developing company in need of additional funds for
expansion into new products or markets, is seeking to develop one or more new products or services, or is an established business
which may be experiencing financial or operating difficulties and is in need of additional capital.
Moreover,
any target business that is selected may be financially unstable or in the early stages of development or growth, including businesses
without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business
and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business
combination with a target company in an industry characterized by a high level of risk, and, although our management will endeavor
to evaluate the risks inherent in a particular target company, there can be no assurance that we will properly ascertain or assess
all significant risks.
The
foregoing considerations raise substantial doubt about our ability to continue as a going concern. We are currently planning
on devoting the vast majority of our efforts to identifying, investigating and conducting due diligence on target companies; and
negotiating, structuring, documenting and consummating a business combination. Our long-term ability to continue as a going concern
is dependent upon our ability to develop additional sources of capital, complete a business combination and, thereafter, achieve
profitable operations.
We
believe that we will be able to meet these costs through cash on hand and additional amounts, as may be necessary, to be loaned
by or invested in us by our stockholders, management and/or others. Currently, however, our ability to continue as a going concern
is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations
and repay our liabilities arising from normal business operations when they come due. Our ability to continue as a going
concern is also dependent on our ability to find a suitable target company and enter into a business combination. Management’s
plan includes obtaining additional funds through a combination of sales of our equity securities before, contemporaneously with,
or following, the consummation of a business combination; and borrowings, although we do not believe that we will be eligible
to borrow funds from a bank until at least a business combination is consummated. However, here is no assurance that any
additional funding will be available on terms that are favorable to us or at all.
We
currently rely on loans from our sole director and officer, Qiuping Lu, to meet our expenses. There is no guarantee that Ms. Lu
will continue to lend us funds to meet our expenses in the future. Currently, we do not have any other arrangements for financing.
We have no assurance that future financing will be available to us on acceptable terms, or at all. If financing is
not available to us on satisfactory terms or at all, we may be unable to develop operations or meet our expenses. Additionally,
any equity financing in which we might engage would result in dilution to our existing shareholders.
During
the three months ended March 31, 2016 and 2015, Ms. Lu, the sole director and officer of us, advanced an aggregate $3,350 and
$17,146, respectively, to us to pay some of our expenses and for working capital purposes. These advances in the aggregate amounts
of $137,098 and $133,748, respectively, at March 31, 2016 and December 31, 2015, are payable on demand and are reflected as related
parties loans on the accompanying balance sheets.
Imputed
interest of $3,035 and $1,569 was recorded for the three months ended March 31, 2016 and 2015, respectively, and the imputed interest
was recorded as interest expense and an increase in additional paid-in capital, respectively.
Going
Concern Consideration
Our
independent registered public accounting firm has issued a going concern opinion in their audit report dated March 30, 2016, which
can be found in our Annual Report on Form 10-K filed with the SEC on March 30, 2016. This means that our auditors believe there
is substantial doubt that we can continue as an on-going business for the next 12 months. Our financial statements found within
this Quarterly Report on Form 10-Q and the aforementioned Annual Report on Form 10-K contain additional note disclosures describing
the circumstances that lead to this disclosure by our independent auditors.
Contractual
Obligations
On
April 4, 2014, we entered into a memorandum of understanding (the “MOU”) with two business consultants. Under the
MOU, the consultants were to provide certain services to the Company and the Company was to have issued 10% of the issued and
outstanding shares of our common stock to each consultant upon the completion of a reverse merger with a previously identified
operating company, which reverse merger did not and will not take place. Pursuant to ASC 505-50, we did not recognize any expense
during the period since the issuance of these shares of common stock was contingent upon the completion of a specific merger.
Accordingly, no performance commitment has been reached nor has performance been completed.
As
of March 31, 2016, we had no contractual obligations.
Off
–Balance Sheet Operations
As
of March 31, 2016, we had no off-balance sheet activities or operations.
Critical
Accounting Policies
The
accompanying financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles
(US GAAP) for financial information and in accordance with the Securities and Exchange Commission’s (SEC) Regulation S-X.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation
of the unaudited financial statements.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the
reporting periods. Because of the use of estimates inherent in the financial reporting process, actual results may differ significantly
from those estimates.
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, we consider highly liquid financial instruments purchased with a maturity of three months
or less to be cash equivalents. As of March 31, 2016 and December 31, 2015, we had no cash equivalents.
Fair
Value of Financial Instruments
ASC
820, “Fair Value Measurements” and ASC 825, Financial Instruments, requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization
within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It
prioritizes the inputs into three levels that may be used to measure fair value:
Level
1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability
such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in
markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to
the measurement of the fair value of the assets or liabilities.
As
of March 31, 2016 and December 31, 2015, we believe that the recorded values of all of our financial instruments approximate their
current fair values because of their nature and respective maturity dates or durations.
Net
Loss per Share Calculation
Basic
net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted earnings per shares is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive. During the periods presented, we had no dilutive
financial instruments issued or outstanding.
Income
Taxes
We
account for income taxes pursuant to FASB ASC 740, “Income Taxes”. Under FASB ASC 740-10-25, deferred tax assets and
liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and
financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification
of the assets and liabilities generating the differences.
We
maintain a valuation allowance with respect to deferred tax assets. We establish a valuation allowance based upon the potential
likelihood of realizing the deferred tax asset and taking into consideration our financial position and results of operations
for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within
the carry-forward period under the Federal tax laws.
Changes
in circumstances, such as us generating taxable income, could cause a change in judgment about its ability to realize the related
deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.
Recently
Issued Accounting Pronouncement
Accounting
standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have
a material impact on the financial statements upon adoption. We do not discuss recent pronouncements that are not anticipated
to have an impact on or are unrelated to our financial condition, results of operations, cash flows or disclosures.