The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Form 10-K.





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Certain statements in this Form 10-K constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plan," "potential," "project," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend," or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.





Overview

Leader Capital Holdings Corp. is an early stage technology company that conducts its operations through its wholly owned subsidiaries, Leader Financial Group Limited, a Seychelles corporation incorporated on March 6, 2017 ("LFGL"), and JFB Internet Service Limited, a Hong Kong corporation incorporated on July 6, 2017 ("JFB").

Through LFGL, we act as the service provider for a mobile application investment platform that is owned by JFB. The platform connects investors with financial service providers in an effort to sharpen operational efficiency and seeks to address customer demands for more innovative services. It is a ready-made application created to meet the needs of financial service providers, especially trust companies and insurance companies. The platform is customizable and each financial institution can adjust the platform to better suit their client's needs.

Use of the JFB platform is currently free; however, we have an agreement with a third party whereby we have authorized the third party to use our investment platform and related applications until December 31, 2020 for a fee. In the future, the Company intends to generate additional revenue by developing a new, more comprehensive mobile application, with similar functions as the JFB platform, to offer to our clients for a fee.

The Company is currently developing a new, more comprehensive FinMaster mobile application ("FinMaster App"), to offer to our clients for a fee. This FinMaster App intends to offer one-stop shopping for multi financial services. Key services include real-time Taiwan stock market quotes, financial industry information and news, social media activities, on-line live broadcast, A.I. stock selection and other features. On August 17, 2020, the Company, through its wholly-owned subsidiary JFB Internet Service Limited, a company incorporated and existing under the laws of Hong Kong (the "Buyer"), acquired all of the issued and outstanding capital stock (the "Acquisition") of Nice Products Inc., a company organized under the laws of the British Virgin Islands and the Company's software ODM developer of the FinMaster APP ("NPI"), pursuant to the terms and conditions of that certain Stock Purchase Agreement, dated as of August 17, 2020, among the Company, the Buyer, NPI, the selling shareholders of NPI identified therein (each a "Seller," and, collectively, the "Sellers") and the representative of the Sellers identified therein. The aggregate purchase price for the acquisition was $4,850,000, less certain discounts, expenses and reductions for outstanding NPI debt owed to the Company and/or its affiliates. The net purchase price for the acquisition was $3,506,042, payable in 8,415,111 shares of the Company's common stock to the Sellers in accordance with their respective pro rata percentage.

As a result of the acquisition, the Company now owns, indirectly through the Buyer, 100% of NPI. NPI, through its wholly-owned subsidiaries, LOC Weibo Co., Ltd. and Beijing DataComm Cloud Media Technology Co., Ltd., companies organized under the laws of the Republic of China and the laws of the People's Republic of China, respectively, engages primarily in the development of ecological-system applications, integration of big data and promotion of OTT applications. As a result of the acquisition, we believe the FinMaster App can be launched to the market in a timely and efficient manner and clients on this open platform could be served more effectively and satisfactorily.





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We have incurred significant operating losses. As of August 31, 2020 and 2019, our accumulated deficits were $11,307,575 and $1,464,746, respectively. We generated revenue of $6,667 and $18,111 for the fiscal years ended August 31, 2020 and 2019, respectively. Our net losses were principally attributed to general and administrative expenses.





Going concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

We have suffered recurring losses from operations, and recorded an accumulated deficit and a working capital deficit of $11,307,575 and $1,163,089, respectively as of August 31, 2020. These conditions raise substantial doubt about our ability to continue as a going concern. The ability to continue as a going concern is dependent upon our profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay our liabilities arising from normal business operations when they become due.

We expect to finance our operations primarily through cash flow from operations, loans from existing directors and shareholders and placements of capital stock for additional funding. In the event that we require additional funding to finance the growth of our current and expected future operations as well as to achieve our strategic objectives, a shareholder has indicated the intent and ability to provide additional financing. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, if needed, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity financing.

The COVID-19 pandemic has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for our business, and adversely impact our results of operations. We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.

These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as going concern.





Results of Operations

Comparison of years ended August 31, 2020 and 2019





                                                       Year ended August 31,
                                                        2020            2019

Revenue                                             $      6,667     $   18,111
General and administrative expenses                   (9,736,502 )     (955,569 )
Loss from operations                                  (9,729,835 )     (937,458 )
Interest expenses                                        (63,256 )       (2,795 )
Loss on change in fair value of convertible notes       (199,000 )            -
Other income                                             149,262         38,159
Loss before income tax                                (9,842,829 )     (902,094 )
Income tax expense                                             -              -

Net loss and comprehensive loss                     $ (9,842,829 )   $ (902,094 )




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Revenue

We signed an agreement with a third party whereby we authorized the third party to use our investment platform and related applications, for a period until December 31, 2020, for an upfront service fee. An additional fee is charged upon the third party's sale of products on our mobile application. Income recognized on this contract was $6,667 and $18,111 for the fiscal years ended August 31, 2020 and 2019, respectively.

General and Administrative Expenses

General and administrative expenses for the year ended August 31, 2020 amounted to $9,736,502 as compared to $955,569 for the year ended August 31, 2019, an increase of $8,780,933. Our general and administrative expenses consist primarily of software development costs, consultancy fees, payroll expenses, rental expenses, marketing fees and legal and professional fees. The increase in general and administrative expenses was mainly because we expensed $1,000,000 and $454,339 in development costs for our mobile application for the years ended August 31, 2020 and, 2019, respectively. The increase in general and administrative expenses in fiscal year 2020 was also contributed by an increase in share-based compensation from $nil in fiscal year 2019 to $8,062,500 in fiscal year 2020.

Loss on Change in Fair Value of Convertible Notes

Our loss on change in fair value of convertible notes increased from $nil in 2019 to $199,000 in 2020 due to fluctuation in the fair value of our convertible notes, which we issued in 2020.





Other Income

Other income for the year ended August 31, 2020 amounted to $149,262 as compared to $38,159 in the prior year, representing an increase of $111,103. The increase was due primarily to the increase in interest income of $127,849 primarily on notes receivable from $11,581 during the year ended August 31, 2019 to $139,430 during the year ended August 31, 2020; and partially offset by a drop of rental income of $25,561.





Net Loss

As a result of the foregoing, our net loss was $9,842,829 for the year ended August 31, 2020, as compared to $902,094 for the year ended August 31, 2019. The net loss was mainly derived from general and administrative expenses.

Liquidity and Capital Resources

We had $432,087 in cash and cash equivalents as of August 31, 2020.

Net cash used in operating activities for the year ended August 31, 2020 was $956,849, as compared to $427,580 for the year ended August 31, 2019. The net cash used in operating activities for the years ended August 31, 2020 and 2019 were mainly due to our net loss (excluding non-cash mobile application development costs, share-based compensation depreciation and amortization and loss on change in fair value of convertible notes) of $1,443,400 for the year ended August 31, 2020, as compared to $439,088 for the year ended August 31, 2019.

Net cash used in investing activities for the years ended August 31, 2020 and 2019 were $2,057,014 and $827,218, respectively. The net cash used in investing activities for the year ended August 31, 2020 were for the issuance of notes receivable of $2,291,760 and partially offset by the notes repayment of $50,000 and acquisition of NPI, net of cash on hand amounted to $185,117. The net cash used in investing activities for the year ended August 31, 2019 was mainly related to the issuance of notes receivable in the amount of $824,858 and the purchase of property, plant and equipment in the amount of $2,360.

Net cash provided by financing activities for the year ended August 31, 2020 was $2,998,388, as compared to $863,037 for the year ended August 31, 2019. The net cash provided by financing activities for the year ended August 31, 2020 was mainly attributed to the proceeds from the shares issued in private placement of $1,570,014, convertible notes issuance of $230,000 and advance from a director of $1,138,299. For the year ended August 31, 2019, net cash provided by financing activities was mainly from an advance from a director of $262,159 and proceeds from a bond issuance of $600,000.





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Critical Accounting Policies and Estimates

We regularly evaluate the accounting policies and estimates that we use to make budgetary and financial statement assumptions. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. The discussion of our critical accounting policies contained in Note 2 to our consolidated financial statements, "Summary of Significant Accounting Policies," is incorporated herein by reference.

Recent Accounting Pronouncements

For further information on recently issued accounting pronouncements, see Note 2-Summary of Significant Accounting Policies in the accompanying notes to consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

As of August 31, 2020, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.





Contractual Obligations

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.





Fiscal Year

Our fiscal year ends on August 31.

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