Loop Media, Inc. - Quarter Report: 2016 December (Form 10-Q)

PART I - FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, contained in INTERLINK PLUS, INC.’s Form 10-K dated June 30, 2016 and filed on October 14, 2016 as well as the Form 10-Q dated September 30, 2016 filed on November 9, 2016.

Our financial statements included in this Form 10-Q quarterly report are as follows:

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INTERLINK PLUS, INC.

BALANCE SHEETS

(UNAUDITED)

See accompanying notes to financial statements.

F-1

INTERLINK PLUS, INC.

STATEMENT OF OPERATIONS

(UNAUDITED)

See accompanying notes to financial statements.

F-2

INTERLINK PLUS, INC.

STATEMENT OF CASH FLOWS

(UNAUDITED)

See accompanying notes to financial statements.

F-3

INTERLINK PLUS, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended June 30, 2016 and notes thereto included in the Company’s annual report. The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim period are not indicative of annual results.

Organization

The Company was incorporated on May 11, 2015 (Date of Inception) under the laws of the State of Nevada, as Interlink Plus, Inc.

Nature of operations

The Company will provide services for oversea travel agents on hotel price quotation and negotiation, contract reviewing, detailed guests’ arrangements, hotel check-in assistance, as well as tradeshow services to domestic and international businesses.  Additionally, the Company is offering marketing materials and other products for the tradeshows.

Year end

The Company’s year-end is June 30.

Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Website

The Company capitalizes the costs associated with the development of the Company’s website pursuant to ASC Topic 350.  Other costs related to the maintenance of the website are expensed as incurred.  Amortization is provided over the estimated useful lives of 3 years using the straight-line method for financial statement purposes.   The Company plans to commence amortization upon completion and release of the Company’s fully operational website.    

Revenue recognition

We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.

The Company will record revenue when it is realizable and earned and the services are completed as part of the service contract.

F-4

INTERLINK PLUS, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising costs

Advertising costs are anticipated to be expensed as incurred; however there were no advertising costs included in general and administrative expenses for the six months ended December 31, 2016.

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market.  Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.  This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

F-5

INTERLINK PLUS, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings per share

The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Recent pronouncements

The Company has evaluated the recent accounting pronouncements through January 2017 and believes that none of them will have a material effect on the company’s financial statements.

NOTE 2 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company had a retained deficit as of December 31, 2016 of ($133,582). In addition, the Company’s activities since inception have been financially sustained through debt and equity financing.

The ability of the Company to continue as a going concern is dependent upon its 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.

NOTE 3 - PREPAID EXPENSES

As of December 31, 2016, the Company had prepaid transfer agent expenses totaling $750.  The prepaid professional fees will be expensed on a straight line basis over the remaining life of the service period.  During the six months ended December 31, 2016 the Company incurred an additional $750 of prepaid transfer agent fees and amortized transfer agent expenses of $375.

NOTE 4 - WEBSITE

The following is a summary of website costs:

Amortization expense for the six months ended December 31, 2016 was $250.

F-6

INTERLINK PLUS, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 5 - NOTES PAYABLE AND CONVERTIBLE DEBT - RELATED PARTY

Short term

On May 13, 2015, the Company executed a promissory note with a related party for $500.  The unsecured note bears interest at 10% per annum and is due upon demand.

On December 23, 2015, the Company executed a promissory note with a related party for $5,000.  The unsecured note bears interest at 10% per annum and is due upon demand.  

On February 26, 2016, the Company executed a promissory note with a related party for $1,000.  The unsecured note bears interest at 10% per annum and is due upon demand.  

Convertible debt long term

On May 22, 2015, the Company executed a convertible promissory note with a related party for $4,000.  The unsecured note bears interest at 10% per annum and is due on May 22, 2017.  This note is convertible at $0.005 per share and can be converted on or before the maturity date of May 22, 2017.  During the year ended June 30, 2016, this this promissory note was reclassified to current portion of long term debt - related party.

As of December 31, 2016, the balance of accrued interest was $1,341.  The interest expense for the six months ended December 31, 2016 was $535.

NOTE 6 - CONVERTIBLE DEBT

Convertible debt short term

On March 8, 2016, the Company executed a convertible promissory note with an entity for $6,000.  The unsecured note bears interest at 10% per annum and is due on March 7, 2017.  This note is convertible at $0.005 per share and can be converted on or before the maturity date of March 7, 2017.  On September 9, 2016, the Company received a notice of conversion for a lender to convert principal of $6,000 and accrued interest of $309 at a rate of $0.005 per share.  The Company issued 1,261,808 shares of common stock to satisfy the debt in full.

On July 15, 2016, the Company executed a convertible promissory note with an entity for $5,000.  The unsecured note bears interest at 10% per annum and is due on July 15, 2017.  This note is convertible at $0.005 per share and can be converted on or before the maturity date of July 15, 2017.

On August 18, 2016, the Company executed a convertible promissory note with an entity for $5,000.  The unsecured note bears interest at 10% per annum and is due on August 18, 2017.  This note is convertible at $0.005 per share and can be converted on or before the maturity date of August 18, 2017.

As of December 31, 2016, the balance of accrued interest was $769.  The interest expense for the six months ended December 31, 2016 was $11,569 including amortization of debt discount of $10,774.

F-7

INTERLINK PLUS, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 7 - STOCKHOLDERS’ EQUITY (DEFICIT)

The Company is authorized to issue 475,000,000 shares of its $0.0001 par value common stock and 25,000,000 shares of its $0.0001 par value preferred stock.  The Series A convertible preferred stock have a liquidation preference of $0.10 per share, have super voting rights of 100 votes per share, and each share of Series A may be converted into 100 shares of common stock.

Preferred stock

During the six months ended December 31, 2016, there have been no other issuances of preferred stock.

During November 2016, the Company issued 10,000,000 shares of common stock as part of a conversion of 100,000 shares of preferred stock.

Common stock

On September 9, 2016, the Company issued 1,261,808 shares of common stock for the conversion of debt totaling $6,309.  Of the total, $6,000 was the principal and $309 was the accrued interest payable.

During November 2016, the Company issued 10,000,000 shares of common stock as part of a conversion of 100,000 shares of preferred stock.

NOTE 8 - WARRANTS AND OPTIONS

As of December 31, 2016, there were no warrants or options outstanding to acquire any additional shares of common stock.

NOTE 9 - RELATED PARTY TRANSACTIONS

On July 11, 2015, the Company executed a consulting agreement for a period of three years with a former officer and director and current shareholder at a rate of $3,000 per month.  During the six months ended December 31, 2016, the Company had professional fees - related party totaling $18,000.  As of December 31, 2016, the accounts payable - related party balance was $45,000.

F-8

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

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 effect 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.

Company Overview

Our business is divided into two major segments: travel agency assistance services and convention services.

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.

As of June 30, 2016, we have a written agreement with two overseas travel agents. These overseas travel agencies work with exhibition service agents in their home country to coordinate the travel plans of tour groups that plan on attending exhibitions in the U.S.  Depending on the exhibition, these tour groups can range from 30 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.

We also have engaged with a travel agency to assist us with hotel booking and customer service assistance. It will act as a hotel booking service for groups of our clients that have sign up on their website. They will field customer service in the service of our clients at the hotels.

In November 2016, we became a certified travel agency.  Additionally, we became an affiliate partner with booking.com.  We hope these recent events will help us increase revenue in the future.

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Convention Services

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 intend to assist these clients on exhibits display design, 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 also offer trade show marketing services, such as event website landing pages, convention specific Google AdWords campaigns, email marketing services before, during and after the event, as well as media distribution and posting to convention attendees.

We plan to provide clients with an event website that contains the information about the trade show. We work with our clients to ensure that all the data included in the website is accurate. Visitors who want to receive more information about the trade show are required to submit their email addresses. The event website will also include a file download section. There the organizers are able to share press kits, brochures about the trade show, and other features. The trade show website will include an e-commerce feature for product sales.

In order to increase awareness about the trade show, we are able to set up AdWords campaigns for clients. We make sure that we pick the right keywords for the event to maximize the reach of the campaign. Through the Google AdWords campaign, we will build leads and even set appointments even before the official start of the convention.

We plan to put the emails clients have collected from their websites into good use by starting an email marketing campaign. This is done before, during, and after the trade show. Through email marketing, clients are able to reach existing customers, acquire new ones, and make them part of the mailing list.

We also provide the distribution of flyers and other media during the day of the event. We make sure that all attendees get a flyer of our client’s brand message. Our team will be position at the entrance and exit points to ensure everyone receives a copy of this media.

In addition to flyers, we also provide billboard advertising. We utilize both digital and static billboards that are strategically positioned along major roads going to and from the convention center. We also plan to use mobile static and digital billboards that are 10 feet in size. The mobile billboards will go up and down the Las Vegas strip. This is one way to put client brand in front of people throughout the day. We make sure that your brand is in front of the target market as soon as they land in Las Vegas. This is achieved by airport advertising cab ad advertising.

We are 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 do not yet have any 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.

We are a start-up company that was formed on May 11, 2015. To the present, we have engaged in formation activities, raising capital, and commencing operations. We have signed services contract with two 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. We have a per room fee that we charge for our services. Through September 30, 2016, we have generated nominal revenue from our agreement with our clients. We earned $13,549 in revenues from inception to the end of the 1^st quarter, September 30, 2016. We are also hopeful that we will engage in other contracts for the services we have outlined above.

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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. 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 client’s 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 client’s specific business purpose.

Our Estimated Expenses for the Next Twelve Months

Management, Employees and Consulting

We currently do not compensate our officer and director, Duan Fu. We plan to compensate him when we have enough money to do so. His main function is to oversee the entire plan of the company and engage in the day to day operations. His expertise is in design and business management. We expect that he will be instrumental in our marketing and advertising efforts. He will purchase keywords on Google AdWords to drive traffic to our website, and also purchase email lists and send bulk email to small and medium sized businesses to generate interest. We do not anticipate that we will enter into an employment agreement with Mr. Duan or compensate him with significant cash in the twelve months. We plan to provide him around $2,000 in cash monthly if and when it is available. As of December 31, 2016, we have not compensated Mr. Fu, since we want to utilize our capital on business operations and growth.

We have a consulting agreement with Zixiao Chen. Ms. Chen was a prior officer and director. She assisted with our formation activities and resigned shortly after our incorporation, opting for a consultant capacity with our company. In her agreement, dated July 11, 2015, we initially compensated her monthly with 60,000 shares of our common stock or $3,000. Her main function is to oversee the business accounts, dealing with clients and expanding the company’s sales efforts. She will assist with creating timelines, data entry, plans and budgets for our clients. She will also establish the training program to train new employees on delivering the services, oversee and respond to concerns with our outsourced personnel. Her agreement provides her compensation in the form of shares of our common stock or cash, if available, as determined by our board of directors, on a monthly basis. If we are able to raise the money, we plan to compensate Ms. Chen $3,000 monthly. For the six months ended December 31, 2016, Ms. Chen has accrued the $18,000 due to her under her agreement with the Company.  This amount has been expensed on the statement of operations as a professional fee to a related party, and is currently shown on the balance sheet as a liability.

We plan to hire a sales manager when funds are available, hopefully within the next three months. The sales manager will hire sales people for each geographical region. Sales staff will call leads generated from our marketing efforts, including mailing lists, and will engage in other sales techniques, like attending trade shows and networking. This sales manager will review and sign our service contracts with new customers. If we are able to raise the money, we plan to compensate our sales manager around $3,000 per month, plus commissions when available from sales. We anticipate hiring three members to our sales team when funds are available, hopefully within the next three months. Each sales staff member will make approximately $1,000 per month, plus commissions when available from sales.

We will also need to hire client account and customer service personnel. Ms. Chen will head the efforts of these personnel. They will assist her with working the accounts and service needs of our clients. We anticipate hiring one or two members to our accounts/service team when funds are available, hopefully within the next three months. Each member will make approximately $1,500-$2,000 per month.

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Marketing and Sales

We expect that most of our clients will be reached via email and phone calls from our sales personnel. As explained above, as business grows and we raise enough funds, we plan to hire employees. We also plan to rent a physical office. We plan to spend approximately $5,000 per month on Google Adwords, Paper-per-click (PPC), search engine marketing (SEM), search engine optimization (SEO) and other forms of online marketing. We will spend approximately $3,000 per month on purchasing email lists and engaging in print advertising with trade magazines and journals. These will be the main focus objectives with our marketing and sales budget for the next twelve months.

Website Development

We plan to develop our website where we provide detailed information regarding our client services and the ability for clients to provide feedback on the types of services they needs from us. It cost $1,500 to build our website. Our website is currently up and running, but not yet completed.  We will continue to refine the site, as funds are available, to provide more features and tools as our business operations dictate.  

Equipment and Software

In order to provide computers and software for our employees, we expect to spend around $50,000 in the next twelve months.

Legal and Accounting

Our primary priority will be to retain our reporting status with the SEC, which means that we will first ensure that we have sufficient capital to cover our legal and accounting expenses. We estimate that these expenses will be $25,000 in the next twelve months.

Offices

Currently, we have a mailbox address, but no office space. Our officer and consultants operate virtually. If the business grows and we successfully raise money, we plan to secure office space to conduct our operations. We estimate that we will need approximately 800 square feet of space and we estimate that it will cost us $1,000 - $1,500 per month in rent.

We will also have general and administrative expenses, including phone, utilities, insurance, business licenses and incidental expenses. These are estimated at approximately $32,000 for the next twelve months.

Our continuation in business after the expiration of one year and the employment of significant additional staff, will be dependent upon our achievement of profits from operations and/or obtaining capital from third party investors. Eventually, assuming our initial success in generating operating profits and raising capital from third party investors, management plans to expand the scope of our services and to begin to utilize foreign workers to fulfill our customer’s service needs.

Competition

Competition in all aspects of the outsourced services and business services industry is intense. We will compete against established outsourced business services companies with name familiarity and greater financial resources. We intend to use our relatively small size to our advantage by focusing on customer service and by deploying unique marketing strategies. A large part of our effort to compete against the other companies in our field will be directed to being recognized in this market of large players and, as a small company, to gain the trust of purchasing decision makers at our potential customers. In an effort to effectively compete, we will focus heavily on providing excellent service to our customers. We also intend to compete by running cutting edge marketing campaigns that use the internet and other technologies to educate the market about our services. Competitors may seek to duplicate the benefits of our services in ways that do not infringe on any benefits that our services offer. As a result we could find that our entire marketing plan and business model is undercut or made irrelevant by actions of other companies under which we have no control. We cannot promise that we can accomplish our marketing goals and as a result may experience negative impact upon our operating results.

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Regulation

Federal, state and international laws and regulations impose a number of requirements and restrictions on our business. There are state and federal consumer protection laws that apply to our customer management services business, such as laws limiting telephonic sales or mandating special disclosures, and laws that apply to information that may be captured, used, shared and/or retained when sales are made and/or collections are attempted. State and federal laws also impose limits on credit account interest rates and fees, and their disclosure, as well as the time frame in which judicial actions may be initiated to enforce the collection of consumer accounts. There are numerous other federal, state, local and even international laws and regulations related to, among other things, privacy, identity theft, telephonic and electronic communications, sharing and use of consumer information that apply to our business and to our employees’ interactions and communications with others. For example, the Federal Trade Commission's Telemarketing Sales Rule applies a number of limitations and restrictions on our ability to make outbound calls on behalf of our clients and our ability to encourage customers to purchase higher value products and services on inbound calls. Similarly, the Telephone Consumer Protection Act of 1991, which among other things governs the use of certain automated calling technologies, applies to calls to customers. Many states also have telemarketing laws that may apply to our business, even if the call originates from outside the state. Additionally, some of the laws directed toward credit originators, such as the Truth in Lending Act and the Fair Credit Billing Act, can affect our operations because our receivables were originated through credit transactions. These laws, among others, may give consumers a legal cause of action against us or may limit our ability to recover amounts owed with respect to the receivables.

Federal and state regulators are empowered to examine and take enforcement actions for violations of these laws and regulations or for practices, policies or procedures they deem non-compliant, unfair, unsafe or unsound. Moreover, lawsuits may be brought by appropriate regulatory agencies, attorneys general and private parties for non-compliance with these laws and regulations. Accordingly, a failure to comply with the laws and regulations applicable to our business could have a material adverse effect on us.

New consumer protection and privacy protection laws or regulations are likely to impose additional requirements on the enforcement of and recovery on consumer credit card or installment accounts, telephonic sales, Internet communications and other portions of our business. We cannot ensure that some of the receivables were not established as a result of identity theft or unauthorized use of credit and, accordingly, we will not be able to recover the amount of these and other defaulted consumer receivables. As a purchaser of defaulted consumer receivables, we may acquire receivables subject to legitimate defenses on the part of the consumer. In general, our account purchase contracts allow us to return to the debt seller certain defaulted consumer receivables that may not be collectible, due to these and other circumstances. Upon return, the debt sellers are required to replace the receivables with similar receivables or repurchase the receivables. These provisions limit, to some extent, our potential losses on such accounts.

Employees

We currently have no employees other than our sole officer and director, Mr. Fu. Our officer serves us on a part time basis and is not compensated at this time. We also hired Ms. Zixiao Chen and Desert Skyline as our business consultant. Ms. Chen’s services are described above. And Desert Skyline provided consulting services in the areas of business strategy, business connections related to trade shows and marketing, assembling and coordinating with the company’s vendors, and those types of services. The consulting agreement with Desert Skyline was fulfilled and ended on May 21, 2016 and was not renewed.

Results of operations for the six months ended December 31, 2016

We have earned revenues of $9,537 for the six months ended December 31, 2016, as compared to revenues of $4,532 for the six months ended December 31, 2015. We have earned revenues of $3,998 for the three months ended December 31, 2016 as compared to revenues of $1,848 for the three months ended December 31, 2015.

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 three Chinese travel agents 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, but no agreements have been reached at this time.

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Operating expenses were $33,606 for the six months ended December 31, 2016 as compared to operating expenses of $54,694 for the six months ended December 31, 2015. Our operating expenses for this period consisted of cost of goods sold, professional fees, amortization, and general and administrative expenses.

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 a related party interest expense of $535 in connection with promissory notes for the six months ended December 31, 2016. We also incurred $11,569 in interest expenses for such same said period.

Even though we experienced a more than 100% increase in revenue for the six months ended December 31, 2016 as compared to the same period the previous fiscal year (and a large decrease in total operating expenses for such same period), we recorded a net loss of $36,173 for the six months ended December 31, 2016 as compared to a net loss of $50,404 for December 31, 2015. This performance is in line with our projected continuing increase in revenues on a quarterly basis moving forward as well as a focus on lowering our total operating expenses.

Liquidity and Capital Resources

As of December 31, 2016, we had current assets of $15,754. Our total current liabilities as of December 31, 2016 were $80,196. As a result, we had working capital deficit of $64,442 as of December 31, 2016 as compared to a working capital deficit of $44,828 as of June 30, 2016.

Operating activities added $1,162 in cash for the six months ended December 31, 2016 up from a negative $31,973 in net cash used for the same period ended December 31, 2015. Our increase in operating cash flow was mainly the result of an increase in amortization of a debt discount of $10,774, an increase in accounts payable - related party of $18,000, and an increase in customer deposits of $8,757.

Financing activities provided $10,000 in cash for the six months ended December 31, 2016. Our positive financing cash flow was a result of proceeds from the convertible notes payable from a related party.

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, 2016, there were no off balance sheet arrangements.

Going Concern

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, 2016 of ($133,582). In addition, our development activities since inception have been financially sustained through debt and equity financing.

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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.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) as of December 31, 2016. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2016, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as the six months ended December 31, 2016, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting

Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2017 or the initial two quarters of the fiscal year ended June 30, 2018: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

We had originally planned to have this remediation of our controls described above completed by fiscal year ending June 30, 2016.  However, we have had to extend such remediation plans to the following fiscal year end June 30, 2017 or later as stated above.  This delay is solely the result of not having adequate capital at the present time to hire additional employees to assist in the remediation of our controls related to the inadequate segregation of duties and ineffective risk management.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the six months ended December 31, 2016 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

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Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

SEC Filings

On October 20, 2016, we filed a Form 8-K Current Report with the United States Securities and Exchange Commission related to an Item 401 disclosure related to a change in our certifying accountant.

On November 9, 2016, we filed a Form 8-K Current Report with the United States Securities and Exchange Commission related to an Item 801 disclosure related to conversion of Series “A” convertible preferred stock into common stock.

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PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

ITEM 1A: RISK FACTORS

Not applicable.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On September 9, 2016, the Company received a notice of conversion for a lender to convert principal of $6,000 and accrued interest of $309 at a rate of $0.005 per share.  The Company issued 1,261,808 shares of common stock to satisfy the debt in full.

On November 8, 2016, the Company received a request from an officer and director to convert 100,000 shares of Series “A” convertible preferred stock into 10,000,000 shares of common stock.  The Company issued the 10,000,000 shares of common stock pursuant to this request for conversion.

The shares were sold pursuant to an exemption from registration under Section 4(2) promulgated under the Securities Act of 1933, as amended.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

ITEM 5: OTHER INFORMATION.

None

ITEM 6: EXHIBITS

* Provided Herewith

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SIGNATURE

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.

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