Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words believes, project, expects, anticipates, estimates, intends, strategy, plan, may, will, would, will be, will continue, will likely result, and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.
Our business is divided into two major segments: travel agency assistance services and convention services.
We have signed services contracts with multiple travel agents to assist with hotel room price quotation and negotiation and communicating with hotels to ensure that accurate reservations are made with Chinese clientele. Through December 31, 2018, we have generated some revenue from our agreement with our clients. We earned $30,106 and $34,718 in revenues for the three months ended December 31, 2018 and 2017, respectively. We are also hopeful that we will engage in other contracts for the services outlined below.
We require additional capital necessary for us to grow our business. Our initial plans include: hiring necessary personnel, marketing our business, completing our website, purchasing equipment and software and further developing the service offering. Our business plan calls for capital of approximately $250,000 in the next twelve months. There is no assurance that we will be successful in these endeavors or that if we accomplish all of these steps we will be able to operate profitably. We intend to fulfill the service needs of our potential customers by utilizing resources and employees in the United States, but, as we grow, we believe we can reduce costs and increase margins by utilizing personnel in foreign countries, such as China, to fulfill the services on behalf of our customers.
Through our services, we believe that clients will be able to gain the advantage of maintaining their growth goals without the need to sacrifice precious resources to address standard business bottlenecks. Our goal is to allow firms to retain their entrepreneurial speed and agility, advantages they would otherwise sacrifice in dealing with logistics rather than the specific focus of the clients business. We plan to allow clients to grow at a faster pace as they will be less constrained by large capital expenditures for people, training, equipment, or mistakes made from lack of experience in areas which are unrelated to the clients specific business purpose.
Since our inception, we have been attempting to raise money to implement our business plan, and we have raised some funds lately, mostly through the sale of convertible debt, but have not been able to secure the funds necessary to fully implement our business plan. The lack of funds have prevented us from growing the business as we had hoped.
As we have been unable to raise the capital necessary to develop and market our services, we have recently been engaged in a search for other business opportunities which may benefit our shareholders and allow us to raise capital and operate. Recent negotiations with what we believe is a more viable business opportunity leads us to believe that we will be revising our business plan and focus over the next quarter. If this opportunity does not develop, however, we will continue to both seek new opportunities and look for capital to further our existing business plan.
Travel Agency Assistance
We provide services for overseas travel agents on hotel price quotation and negotiation, contract reviewing, detailed guests arrangements, hotel check-in assistance and tradeshow assistance. Overseas travel agents often encounter language barriers and time differences on office hours when dealing with U.S. based hotels and U.S. based conventions. We believe that our bilingual language services, flexible office hours, and reasonable fee structure will help our clients to increase accuracy and efficiency levels, and reduce costs.
Currently, we service 8 overseas and domestic travel agencies. These travel agencies work with exhibition service agents or travel groups in China to coordinate the travel plans of tour groups that plan on attending exhibitions in the U.S. Depending on the event, these tour groups can range from 20 to over 700 people. It is vital for the travel agents and exhibition services agents to provide their clients - Chinese businesses who exhibit in the trade show, a seamless and worry-free trip.
Our role is to help the travel agencies communicate with hotels and convention staff timely and accurately, including finding and negotiating hotel rate, reviewing and updating contracts, submitting and revising guest lists, group check-in (pick up and sorting the room keys for different groups), communicating on bill differences, etc. We currently have bilinguals that are fluent in English and Chinese. We plan to expand our staff of bilinguals to cater to other languages and countries other than China. Our main focus at the present time is to establish a presence in China and we intend to branch out to other Asian countries from there as resources permit.
In November 2016, we became a certified travel agency. Additionally, we became an affiliate partner with booking.com and the Expedia TAAP program. We hope these recent events will help us increase revenue in the future.
Our second business segment is catering to the individual exhibitors at the exhibitions. Exhibitors/ attendees often have temporary assistance needs at conventions and trade shows. We assist these clients on booth set up, tradeshow promotion material preparing, entourage interpreter and/or exhibitor booth personnel arrangements, including bilingual spokespersons, sales associates, narrators and demonstrators, hostesses/hosts, promoters and models.
We are also able to provide custom and pre-made booths, booth graphic design, and exhibit booth setup services to our clients. For clients looking for complete tradeshow exhibit booths, we provide turnkey solutions for sale. We offer top of the range Tablets, TV screens with stands, tables, and chairs, storage bins among others, to ensure that your tradeshow booth is highly inviting. We are able to work with clients on their required specifications and our staff is capable of delivery and assembly of attractive booth designs.
We have limited clients in this business segment. We plan to utilize our travel agency and exhibition service agent contacts to reach out to these exhibitors and establish direct connections for our exhibition services. We may also work though these vital contacts as an extension of their services to these clientele. Furthermore, because we have a U.S. presence, we plan to reach out to the U.S. exhibitions to offer our services to these clientele.
Results of operations for the three and six months ended December 31, 2018 and 2017
We have earned revenues of $30,106 for the three months ended December 31, 2018, as compared with $34,718 for the same period ended 2017. We have earned revenues of $40,682 for the six months ended December 31, 2018, as compared with $51,812 for the same period ended 2017.
We expect to continue to achieve steadily increasing revenues within the coming months. However, as we are a start-up, we have limited operating history to rely upon and we cannot guarantee that our business plan will be successful. To date, we only have 8 travel agencies as our main clients that we contracted to assist with hotel room price quotation and negotiation and communicating with hotels to ensure that accurate reservations are made with Chinese clientele. Our management is actively working to secure additional contracts to grow the business. We are also looking at other business opportunities that would better serve our shareholders.
Operating expenses were $19,753 for the three months ended December 31, 2018, as compared with $41,506 for the same period ended 2017. Operating expenses were $49,444 for the six months ended December 31, 2018, as compared with $69,589 for the same period ended 2017. Our operating expenses for the three and six months ended December 31, 2018 and 2017 mainly consisted of professional fees and related party professional fees.
We expect our operating expenses to increase as a result of increased operating activity to implement our business plan and the added expenses associated with reporting with the Securities and Exchange Commission.
We incurred other expense of $4,306 for the three months ended December 31, 2018, compared with other expense of $4,627 for the same period ended December 31, 2017. We incurred other expense of $8,612 for the six months ended December 31, 2018, compared with other expense of $7,384 for the same period ended December 31, 2017.
Our other expenses for all periods consisted of interest expense and related party interest expense. We expect that our other expenses will increase in 2019 as a result of our outstanding debt, and any additional debt we take on in our financing efforts.
We recorded a net income of $6,047 for the three months ended December 31, 2018, as compared with a net loss of $11,415 for the same period ended 2017. We recorded a net loss of $17,374 for the six months ended December 31, 2018, as compared with a net loss of $25,161 for the same period ended 2017.
Liquidity and Capital Resources
As of December 31, 2018, we had current assets of $20,166. Our total current liabilities as of December 31, 2018 were $221,468. As a result, we had working capital deficit of $201,302 as of December 31, 2018.
Operating activities provided $4,055 in cash for the six months ended December 31, 2018, as compared with cash used of $774 for the same period ended 2017. Our positive operating cash flow for the six months ended December 31, 2018 was mainly the result if an increase in customer deposits and related party accounts payable, offset mainly by our net loss for the period, and an increase in prepaid expenses. Our negative operating cash flow in 2017 was mainly the result of an increase in prepaid expenses of $123,164 and our net loss of $25,161, offset by increase in customer deposits of $150,334.
Investing activities used $0 in cash for the six months ended December 31, 2018, as compared with $1,176 for the same period ended 2017. Our negative investing cash flow for the six months ended December 31, 2017 was a result of the purchase of fixed assets.
We have no cash used or provided in financing activities for the six months ended December 31, 2018, as compared with $15,367 provided in financing activities for the six months ended December 31, 2017.
We were incorporated on May 11, 2015. Our operations, to date, have been devoted primarily to startup, development activities and obtaining our first contract. Because of our limited operating history, it is difficult to predict our capital needs on a monthly, quarterly or annual basis. We will have no capital available to us if we are unable to raise money from this offering or find alternate forms of financing, which we do not have in place at this time.
There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
Our plan specifies a minimum amount of $250,000 in additional operating capital to operate for the next twelve months. If we are unable to raise $250,000 from this offering, our business will be in jeopardy and we could be formed to suspend our operations or go out of business. As such, there can be no assurance that this offering will be successful. You may lose your entire investment.
Off Balance Sheet Arrangements
As of December 31, 2018, there were no off balance sheet arrangements.
The accompanying financial statements have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, we are a start-up and, accordingly, have generated slight revenues from operations. Since our inception, we have been engaged substantially in financing activities and developing our business plan and incurring startup costs and expenses. As a result, we incurred accumulated net losses from Inception (May 11, 2015) through the period ended December 31, 2018 of ($277,101). In addition, our development activities since inception have been financially sustained through debt and equity financing.
Our ability to continue as a going concern is dependent upon our ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.