Forward-Looking Statements

You should read this discussion together with the Financial Statements, related Notes and other financial information included elsewhere in this Form 10-Q. The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements. All references to "we," "us," "our" and the "Company" refer to Shengda Network Technology Inc., a Nevada corporation, and its consolidated subsidiaries unless the context requires otherwise.

Overview

Shengda Network Technology, Inc., formerly known as Soltrest, Inc., was incorporated on March 14, 2018 under the laws of the State of Nevada. On March 30, 2020, the Company filed an amendment to its Articles of Incorporation changing its name to Shengda Network Technology, Inc. (the "Company").

On April 20, 2020, we purchased 100% of the shares of Peaker International Trade Group Limited, ("Peaker"), located in Hong Kong, for a total purchase price of US$1,330. Thereafter, on May 15, 2020, Peaker incorporated its wholly-owned subsidiary, Zhejiang Jingmai Electronic Commerce Ltd., ("Jingmai Electronic") located in Zhejiang province, China, which serves as the operating company for our activities in China.

Description of Our Business

The Company's principal business, through Jingmai Electronic, is providing an e-commerce portal (similar to Amazon or Wish) for the sale of products. We purchase goods according to market demand, directly from manufacturers that we have standing relationships with. The goods we source include, but are not limited to, electronic products, daily consumer goods such as shampoo and toothpaste, and various other items.

We then sell the goods we purchase, as well as products from other reliable merchants, to our various customers. Our Company is similar to a wholesaler in that our customers purchase goods from us bulk. We aim to effectively organize suppliers, manufacturers and distributors in order to minimize the costs of the whole supply chain system and offer competitive prices. Our Company does not warehouse or store any of the good we purchase. If the manufacturer we purchase from is not able to ship the goods directly to our customers, then our Company manages the logistics and arranges for a third-party shipping company.

Our Company actively cooperates with other listed or state-owned enterprises. We currently have a commodity purchase contract with Kunming Pharmaceutical Group. We also engage with companies whose products we feel are of good quality and that also need new channels, specifically social e-commerce. We cooperate with these companies so that they can expand their sales and supplies by offering our products and services on their sites

Target Market and Clients/Potential Clients

Our current target market is China, where we engage in e-commerce services. In recent years, with the rapid rise of social e-commerce, the Company began to diversify. Our sales channels have gradually changed from offline to online and from a single product sales business into a more comprehensive business of supply chain management.

Other Events

In April 2022, Jingmai Electronic incorporated three (3) wholly owned subsidiaries. Jingmai Electronic has begun to supply goods to various social e-commerce platforms and merchants. Social e-commerce refers to the process of engaging customers at every point of their buying journey.



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Jingmai Electronic is designed to provide high-quality supply chain resources and is quicky moving into live broadcast management services in order to provide sustainable development for the Company. Jingmai Electronic, and its subsidiaries, also intend to provide comprehensive services, such as supply chain management and live broadcasting resources to TikTok and other social e-commerce platforms.

Covid-19 Pandemic

On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic. The Company is currently monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread.

While the Company's operations are principally located outside the United States, we utilize various consultants located in the United States, we participate in a global supply chain, and the existence of a worldwide pandemic, the fear associated with COVID-19, or any, pandemic, and the reactions of governments around the world in response to COVID-19, or any, pandemic, to regulate the flow of labor and products and impede the travel of personnel, may impact our ability to conduct normal business operations, which could adversely affect our results of operations and liquidity. Disruptions to our supply chain and business operations, or to our suppliers' or customers' supply chains and business operations, could include disruptions from the closure of supplier and manufacturer facilities, interruptions in the supply of raw materials and components, personnel absences, or restrictions on the shipment of our or our suppliers' or customers' products, any of which could have adverse ripple effects on our manufacturing output and delivery schedule. Any of these uncertainties could have a material adverse effect on our business, financial condition or results of operations.

Results of Operations

Three months ended March 31, 2022 compared to the three months ended March 31, 2021

Revenue and Cost of Sales

Total revenues for the three months ended March 31, 2022 were $1,412,849 compared to $765,616 during the three months ended March 31, 2021. This increase was mainly due to some relief of the COVID-19 pandemic in China during the first quarter of 2022.

Operating expenses

Operating expenses were $1,078,606 for the three months ended March 31, 2022, compared to $53,669 during the three months ended March 31, 2021. This increase was due to the Company's increased products supply to clients who are in the online live broadcasting business and the corresponding increased personnel.

Net Income

As a result of the forgoing, the net income for the three months ended March 31, 2021 was $2,771,749 as compared to net income of $45,207 for same period ended March 31, 2021. This increase was due to interest income.

Comparison of Results of Operations for the nine months ended March 31, 2022 and 2021

Revenue

Total revenues for the nine months ended March 31, 2021 were $2,759,820 compared to $8,499,788 during the nine months ended March 31, 2021. This decrease was due to the impact of the pandemic and the transition of the Company supplying products to clients in the internet live broadcasting business and e-commerce platforms, which caused reduced offline sales.



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Operating expenses

Operating expenses were $1,210,298 for the nine months ended March 31, 2022, compared to $148,509 during the nine months ended March 31, 2021. This increase was due to increased labor costs and expenditures required for revenue channel expansion.

Net Income

As a result of the forgoing, the net income for the period ended March 31, 2022 was $2,754,473 compared to net income of $1,025,050 for same period ended March 31, 2021. This decrease was due to the Company's shift from offline sales to online sales.

Liquidity and Capital Resources

As of March 31, 2022, we had $43,636 in cash and cash equivalents.

As of March 31, 2022, we had total assets of $11,805,580, working capital of $5,195,811 and an accumulated stockholders' equity of $11,515,861. As of June 30, 2021, we had total assets of $9,234,996, working capital of $8,482,903 and an accumulated stockholders' equity of $8,554,224

We believe that our Company's cash on hand will be sufficient to fund all Company obligations and commitments for the next twelve months.

Off-Balance Sheet Arrangements.

None.

Critical Accounting Policies

The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" suggesting that companies provide additional disclosure and commentary on their most critical accounting policies. In Financial Reporting Release No. 60, the Securities and Exchange Commission has defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. The nature of our business generally does not call for the preparation or use of estimates. Due to the fact that the Company does not have any operating business, we do not believe that we do not have any such critical accounting policies.

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