The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes appearing elsewhere in this Form 10-Q and our audited financial statements and related notes for the year ended August 31, 2020 included in our most recent annual report on Form 10-K/A. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.





Company 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 has been developing a new, more comprehensive FinMaster mobile application ("FinMaster App"), to offer to our clients for a fee, which has been made available for download as of December 2020. This FinMaster App offers 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, 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, JFB, 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 JFB, 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.





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We have incurred significant operating losses. As of May 31, 2021 and August 31, 2020, our accumulated deficits were $19,811,485 and $11,307,575, respectively. We generated revenue of $78,696 and $5,000 for the nine months ended May 31, 2021 and 2020, respectively. We generated revenue of $23,444 and $1,667 for the three months ended May 31, 2021 and 2020, respectively. Our net losses were principally attributed to general and administrative expenses.





Going Concern


The accompanying unaudited condensed 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.

As of May 31, 2021, we have suffered recurring losses from operations, and recorded an accumulated deficit and a working capital deficit of $19,811,485 and $393,267, respectively. 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 our obligations and repay our liabilities arising from normal business operations when they become due.

We expect to finance our operations primarily through cash flows 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 its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.

Any outbreak of contagious diseases, including but not limited to COVID-19, Zika virus, Ebola virus, avian or swine influenza or severe acute respiratory syndrome, may disrupt our ability to adequately staff our business and may generally disrupt our operations. The recent outbreak of COVID-19 epidemic in China is spreading globally and expected to adversely affect the economic conditions in Asia and throughout the world. The outbreak has slowed the economic growth in China and other regions of the world where we and our customers operate, which will negatively impact the global supply chain, market and economies. We have significant operations in China, Taiwan and the Asia Pacific region, including supply chain and manufacturing facilities and sales and marketing channels. If the pandemic continues, we may experience a decline of sales activities and customer orders; reduction of operation and workforce at our fabs; difficulties in international travels and communications; regulatory restrictions; reduction of research and development activities; and other risks resulting from the outbreak. Any of these factors may adversely affect our business, financial conditions and results of operations. In addition, as a result of the COVID-19 pandemic and ensuing government regulations implementing stay-at-home orders and restrictions on travel and other activities, we have experienced an increase in demand for manufacturing capacity in the semiconductor industry in respond to increased demand for consumer electronic products, which had a positive impact on our financial performance. However, we cannot predict the impact of COVID-19 pandemic on the semiconductor industry in the future, and any increase in such demand may not be sustainable and we may experience a decline in our sales activities and customer orders.

In addition, if any of our employees is suspected of having contracted COVID-19 or any contagious disease, we may under certain circumstances be required to quarantine such employees and the affected areas of our premises. Therefore, we may have to temporarily suspend part of or all of our operations. Furthermore, government actions to contain the outbreak may restrict the level of economic activities in affected regions, including Taiwan, and affect the willingness and ability of our employees and customers to travel, which may also adversely affect our business and prospects. As a result, we cannot assure you that any future outbreak of contagious diseases would not have a material adverse effect on our financial condition and results of operations.

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. Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.

These unaudited condensed 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.

Liquidity and Capital Resources





The following table sets forth a summary of our cash flows for the periods
indicated:



                                                        For the nine months ended
                                                    May 31, 2021        May 31, 2020
Net cash used in operating activities              $    (2,873,554 )   $      (513,865 )
Net cash used in investing activities                      (63,081 )        (1,338,408 )
Net cash provided by financing activities                4,272,333           1,568,269
Cash and cash equivalents and restricted cash,
beginning of period                                        432,087             447,562
Effects of exchange rate changes on cash and
cash equivalents and restricted cash                      (218,623 )                 -
Cash and cash equivalents and restricted cash,
end of period                                      $     1,549,162     $       163,558




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Cash Used in Operating Activities

Net cash used in operating activities for the nine months ended May 31, 2021 and 2020 was $2,873,554 and $513,865, respectively. The cash used in operating activities was mainly for payment of general and administrative expenses.

Cash Used in Investing Activities

Net cash used in investing activities for the nine months ended May 31, 2021 and 2020 was $63,081 and $1,338,408, respectively. The net cash used in investing activities for the nine months ended May 31, 2021 was related to the acquisition of plant and equipment and intangible assets. The net cash used in investing activities for the nine months ended May 31, 2020 was related to the issuance and repayment of notes receivable.

Cash Provided by Financing Activities

Net cash provided by financing activities for the nine months ended May 31, 2021 and 2020 was $4,272,333 and $1,568,269, respectively. The cash provided by financing activities were related to the issuance of shares and convertible notes, and advances from (to) shareholders and from a director.





Results of Operations


Comparison for the nine months ended May 31, 2021 and 2020





                                                       For the nine months ended
                                                    May 31, 2021      May 31, 2020
Revenue                                             $      78,696     $       5,000
Research and development expenses                        (456,428 )               -
Sales and marketing expenses                             (186,068 )               -
General and administrative expenses                    (7,779,743 )      (3,700,182 )
Loss from operations                                   (8,343,543 )      (3,695,182 )
Interest expenses                                         (51,000 )         (47,303 )
Loss on change in fair value of convertible notes        (129,288 )               -
Other income                                                3,813            89,591
Loss before income tax                                 (8,520,018 )      (3,652,894 )
Income tax benefit (expense)                               16,108           (30,250 )

Net loss                                            $  (8,503,910 )   $  (3,683,144 )




Revenue


We signed an agreement with a third party whereby we authorized the third party to use our investment platform and related applications, from January 1, 2018 to 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. From September 2020, we generated additional revenue from a new, more comprehensive mobile application, which we refer to as the FinMaster mobile application (the "FinMaster App" and together with the JFB platform, the "Apps"), with similar functions as the JFB platform. We also provided software maintenance services.

We generated revenue of $78,696 and $5,000 for the nine months ended May 31, 2021 and 2020, respectively.

Research and Development Expenses

Research and development expenses for the nine months ended May 31, 2021 amounted to $456,428 which primarily represented the charges for R&D and consulting work performed by third parties and salaries and benefits for those employees engaged in research, design and development activities after our acquisition of NPI in August 2020. We did not incur any R&D expenses for the nine months ended May 31, 2020.





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Sales and Marketing Expenses


Sales and marketing expenses were $186,068 and $nil for the nine months ended May 31, 2021 and 2020, respectively. It consists of the advertising costs amounted to $155,618 and the redeemable point liability charges of $30,450 after our acquisition of NPI in August 2020.

General and Administrative Expenses

General and administrative expenses were $7,779,743 and $3,700,182 for the nine months ended May 31, 2021 and 2020, respectively. We recognized share-based compensation to directors, employees and consultants of $5,409,296 and $3,187,500 for the nine months ended May 31, 2021 and 2020, respectively. Besides, we incurred more payroll costs and other administrative expenses after our acquisition of NPI in August 2020.

Loss on change in fair value of convertible notes

We incurred a fair value loss of $129,288 and $nil on our convertible promissory notes for the nine months ended May 31, 2021 and 2020, respectively. We elected to measure the convertible promissory notes in their entirety at fair value with changes in fair value recognized as non-operating income or loss at each balance sheet date.





Other Income



Other income for the nine months ended May 31, 2021 amounted to $3,813 as compared to $89,591 in the same period of prior year.





Net Loss


Our net loss was $8,503,910 and $3,683,144 for the nine months ended May 31, 2021 and 2020, respectively. The net loss was mainly derived from our general and administrative expenses.

Comparison for the three months ended May 31, 2021 and 2020





                                                       For the three months ended
                                                     May 31, 2021      May 31, 2020
Revenue                                             $       23,444     $       1,667
Research and development expenses                         (151,863 )               -
Sales and marketing expenses                               (15,338 )               -
General and administrative expenses                     (2,301,816 )      (1,215,184 )
Loss from operations                                    (2,445,573 )      (1,213,517 )
Interest expenses                                          (18,597 )         (17,196 )
Gain on change in fair value of convertible notes          201,000                 -
Other (expense) income                                     (19,212 )          39,309
Loss before income tax                                  (2,282,382 )      (1,191,404 )
Income tax benefit                                           5,879                 -

Net loss                                            $   (2,276,503 )   $  (1,191,404 )




Revenue


We signed an agreement with a third party whereby we authorized the third party to use our investment platform and related applications, from January 1, 2018 to 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. From September 2020, we generated additional revenue from a new, more comprehensive mobile application, which we refer to as the FinMaster mobile application (the "FinMaster App" and together with the JFB platform, the "Apps"), with similar functions as the JFB platform. We also provided software maintenance services.

We generated revenue of $23,444 and $1,667 for the three months ended May 31, 2021 and 2020, respectively.





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Research and Development Expenses

Research and development expenses for the three months ended May 31, 2021 amounted to $151,863 which primarily represented the charges for R&D and consulting work performed by third parties and salaries and benefits for those employees engaged in research, design and development activities after our acquisition of NPI in August 2020. We did not incur any R&D expenses for the three months ended May 31, 2020





Sales and Marketing Expenses


Sales and marketing expenses were $15,338 and $nil for the three months ended May 31, 2021 and 2020, respectively. It consists of the advertising costs amounted to $11,790 and the redeemable point liability charges of $3,548 after our acquisition of NPI in August 2020.

General and Administrative Expenses

General and administrative expenses were $2,301,816 and $1,215,184 for the three months ended May 31, 2021 and 2020, respectively. We recognized share-based compensation to directors, employees and consultants of $1,574,704 and $1,062,500 for the three months ended May 31, 2021 and 2020, respectively. Besides, we incurred more payroll costs and other administrative expenses in 2020 after our acquisition of NPI in August 2020.

Gain on change in fair value of convertible notes

We incurred a fair value gain of $201,000 and $nil on our convertible promissory notes for the three months ended May 31, 2021 and 2020, respectively. We elected to measure the convertible promissory notes in their entirety at fair value with changes in fair value recognized as non-operating income or loss at each balance sheet date.





Other (Expense) Income



Other (expense) income for the three months ended May 31, 2021 amounted to $(19,212) as compared to $39,309 in the same quarter of prior year.





Net Loss


Our net loss was $2,276,503 and $1,191,404 for the three months ended May 31, 2021 and 2020, respectively. The net loss was mainly derived from our general and administrative expenses.

Off-Balance Sheet Arrangements

As of May 31, 2021, 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.

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