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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-08 · 95 added, 109 removed, 46 unchanged (82% of the section changed)

1 unchanged sentence

of Financial Condition and Results of Operations

The following discussion and analysis of our financial

condition and results of operations are based upon our condensed consolidated financial statements and the notes thereto included elsewhere

in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United

The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets,

liabilities, revenues, and expenses.

On an ongoing basis, we evaluate these estimates, including those related to useful lives of real

estate assets, bad debts, impairment, contingencies and litigation.

We base our estimates on historical experience and on various other

assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about

the carrying values of assets and liabilities that are not readily apparent from other sources.

There can be no assurance that actual

results will not differ from those estimates.

The following discussion and analysis of our financial condition and

results of operations are based upon our condensed consolidated financial statements and the notes thereto included elsewhere in this

Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of such financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,

revenues, and expenses.

On an ongoing basis, we evaluate these estimates, including those related to useful lives of real estate assets,

bad debts, impairment, contingencies and litigation.

We base our estimates on historical experience and on various other assumptions that

are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values

of assets and liabilities that are not readily apparent from other sources.

There can be no assurance that actual results will not differ

from those estimates.

Application of Critical Accounting Policies

The discussion and analysis of the Company’s

financial condition and results of operations is based upon its condensed consolidated financial statements, which have been prepared

in accordance with United States generally accepted accounting principles.

The preparation of these financial statements requires us to

make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure

of contingent assets and liabilities.

These items are monitored and analyzed by management for changes in facts and circumstances, and

material changes in these estimates could occur in the future.

The discussion and analysis of the Company’s financial condition

and results of operations is based upon its condensed consolidated financial statements, which have been prepared in accordance with United

States generally accepted accounting principles.

The preparation of these financial statements requires us to make significant estimates

and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets

and liabilities.

These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in

these estimates could occur in the future.

Changes in estimates are recorded in the period in which they become known.

The Company bases its estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances.

Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

In connection with the preparation of our financial

statements for the six months ended March 31, 2024, there was no accounting estimate made which was (a) subject to a high degree of uncertainty

and (b) material to our results.

The Company bases

its estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances.

results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

In connection with the preparation of our financial statements for

the nine months ended June 30, 2024, there was no accounting estimate made which was (a) subject to a high degree of uncertainty and (b)

material to our results.

Results of Operations

The following table summarizes our operating results for three and

six months ended March 31, 2024.

nine months ended June 30, 2024.

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of revenue

Selling, general and administrative expenses

Loss from operations

Income from operations

Other income(expense)

Loss before provision for income taxes

Income before provision for income taxes

Provision for income taxes

Three Months Ended March 31, 2024

Tongzhilian’s revenue during the three months ended March 31,

2024 was attributable to one tour developed by Tongzhilian in concert with our supplier, Hebei Bailu, and sold directly by Tongzhilian

for $140,986.

We realized a gross profit of 39% on that tour.

Three Months Ended June 30, 2024

Tongzhilian’s revenue was $260,916 during the three months ended

June 30, 2024.

The revenue was attributable to four tours developed by Tongzhilian in concert with our suppliers.

We realized a gross

profit of 65%, primarily a result of a cultural feature tour.

Nevertheless, we will not have a predictable gross profit until we have

sold a significant number of tours.

Operating expenses for the three months ended March 31, 2024 consisted

Operating expenses for the three months ended June 30, 2024 consisted

primarily of salaries and benefits, office expenses, professional fees and rentals and leases.

1 unchanged sentence

this period were primarily attributable to:

in professional fees and related expenses incurred in preparing for registration as a reporting company in the United States.

$12,663 in professional fees and related expenses incurred in connection with the Company’s administrative operations in the United States.

$42,222 in salaries and benefits,

For the reasons described above, our net loss for the three months

ended March 31, 2024 was $24,908.

Six Months Ended March 31, 2024

Tongzhilian’s revenue during the six months ended March 31, 2024

was attributable to three tours developed by Tongzhilian in concert with our supplier, Hebei Bailu.

One of the tours was sold by our sales

agent, Beijing Jinguantong, for $41,651, and two were sold directly by Tongzhilian for $223,305.

For each tour we functioned as the principal,

paying Hebei Bailu a fixed percentage of the settlement price, determining the price to external parties, and carrying responsibility

for contract fulfillment.

In the case of the tour sold by our agent, we determined that Tongzhilian functioned as the principal in the

tour sale because Tongzhilian developed the tour, determined the market price for the tour and the parties agreed on the net settlement

price to be paid by Beijing Jiguantong.

Although Tongzhilian sold one tour directly and the others through

an agent, the gross profit on each sale was 39%.

This parity was attributable in part to the control that Tongzhilian exercises over the

sale price of tours it develops with Hebei Bailu.

But the unexpected parity also reflects the elasticity of the tour market.

have a predictable gross profit until we have sold a significant number of tours.

Operating expenses for the six months ended March 31, 2024 consisted

For the reasons described above, our net income for the three months

ended June 30, 2024 was $93,679.

Nine Months Ended June 30, 2024

Tongzhilian’s revenue was $525,872 during the nine months ended

June 30, 2024.

Revenue was attributable to seven tours developed by Tongzhilian in concert with our suppliers.

We realized a gross profit

of 52%, The significant gross profit margin is attributed to a cultural feature tour developed by Tongzhilian in concert with our supplier,

Hainan Jintongyuan.

Five suppliers provide services for our tours.

Tongzhilian sells tours both directly and through sales agents, with

54% of revenue being derived from two primary sales agents.

For each tour we functioned as the principal, paying our agents a fixed

percentage of the settlement price or a fixed quote, determining the price to external parties, and carrying responsibility for contract

Tongzhilian exercises control over the sale price of tours it develops with our suppliers.

Tongzhilian determines its varying

gross profit margins based on the content of the travel products.

For all these reasons, we record our revenue from the tours on a principal

Operating expenses for the nine months ended June 30, 2024 consisted

primarily of salaries and benefits, office expenses, professional fees and rentals and leases.

1 unchanged sentence

this period were primarily attributable to:

in professional fees and related expenses incurred in preparing for registration as a reporting company in the United States.

$79,589 in professional fees and related expenses incurred as a result of our status as a reporting company in the United States.

$113,996 in salaries and benefits,

$29,828 in office expenses.

For the reasons described above, our net loss for the six months ended

March 31, 2024 was $77,402.

Liquidity and Capital Resources

As of March 31, 2024, we have a working capital deficit of $84,930,

attributable primarily to the fact that the Company has operated at a loss since it was organized in September 2023.

70% of our liabilities

consist of payables to related parties who will not seek immediate repayment;

so our working capital deficit is not an immediate threat.

Nevertheless, until we achieve a sufficient level of operations to sustain profitability, it is likely that we will depend on loans from

Huang Fang, our CEO, and her affiliated companies to fund our ongoing operations.

$26,345 in rentals and leases.

For the reasons described above, our net income for the nine months

ended June 30, 2024 was $16,277.

The following unaudited table summarizes our cash

flows for the six months ended March 31, 2024.

Six Months Ended

flows for the nine months ended June 30, 2024.

Nine Months Ended

Net cash (used in) operating activities

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Cash and cash equivalents, end of period

During the six months ended March 31, 2024, our

operations used net cash of $127,584.

Our use of cash exceeded our net loss of $77,402 during the six months period primarily because

we increased Prepayments by $38,982.

During the six months ended March 31, 2024, our

investing activities used net cash of $3,729.

because we purchased fixed assets.

Our financing activities during the six months

ended March 31, 2024 generated $154,056, consisting of the $60,000 that Huang Fang contributed to fund our shareholders’ subscriptions

and $94,056 that we borrowed on an interest-free basis from Huang Fang and her affiliate entity.

During the nine months ended June 30, 2024, our operations used net

cash of $45,141.

Our use of cash exceeded our net income of $16,277 during the nine months period primarily because we increased Prepayments

During the nine months ended June 30, 2024, our investing activities

resulted in a net cash outflow of $3,719.

primarily due to the acquisition of fixed assets.

Our financing activities during the nine months ended June 30, 2024

generated $226,294, consisting of $60,000 contributed by Huang Fang to fund our shareholders’ subscriptions and $166,294 interest-free

loan from Huang Fang and her affiliate entity.

Trends, Events and Uncertainties

There is substantial doubt about our ability to

continue as a going concern as a result of our lack of significant revenues and recurring losses.

If we are unable to generate significant

revenue or secure additional financing, we may be required to cease or curtail our operations.

The Company is expanding its product offerings

to include more products.

In addition, our marketing personnel are developing new customers with the intention of building a stable base

of customers.

In this manner, the Company hopes to increase sales to support the future operations and development of the Company.

There is no guarantee that the Company’s new strategy will be successful.

As of March 31, 2024, a stable customer base has not been

established yet.

government, including the SEC, has made

statements and taken actions that have led to changes in relations between the U.S.

and China, and will impact companies with connections

to the United States or China.

The Company is expanding its product offerings to include more products.

In addition, our marketing personnel are developing new customers with the intention of building a stable base of customers.

manner, the Company hopes to increase sales to support the future operations and development of the Company.

There is no guarantee that

the Company’s new strategy will be successful.

As of June 30, 2024, a stable customer base has not been established yet.

government, including the SEC, has made statements and taken

actions that have led to changes in relations between the U.S.

and China, and will impact companies with connections to the United States

Those actions by the U.S.

government included imposing several rounds of tariffs affecting certain products

manufactured in China and imposing sanctions and restrictions in relation to China.

Actions by the SEC included issuing statements indicating

that it would make enhanced review of companies with significant China-based operations.

It is unknown whether and to what extent new

legislation, executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on U.S.-domiciled

companies with significant connections to China, our industry or on us.

Any unfavorable government policies on cross-border relations,

including increased scrutiny on companies with significant China-based operations, capital controls or tariffs, may affect our ability

to raise capital and the market price of our shares.

government included imposing several rounds of tariffs affecting certain products manufactured in

China and imposing sanctions and restrictions in relation to China.

Actions by the SEC included issuing statements indicating that it

would make enhanced review of companies with significant China-based operations.

It is unknown whether and to what extent new legislation,

executive orders, tariffs, laws or regulations will be adopted, or the effect that any such actions would have on U.S.-domiciled companies

with significant connections to China, our industry or on us.

Any unfavorable government policies on cross-border relations, including

increased scrutiny on companies with significant China-based operations, capital controls or tariffs, may affect our ability to raise

capital and the market price of our shares.

If any new legislation, executive orders, tariffs, laws and/or regulations are implemented,

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Recent Accounting Pronouncements

There were no recent accounting pronouncements

that we expect to have a material effect on the Company’s financial position or results of operations.

Please refer to Note 2 of

our condensed consolidated financial statements included in this quarterly report.

There were no recent accounting pronouncements that we expect to have

a material effect on the Company’s financial position or results of operations.

Please refer to Note 2 of our condensed consolidated

financial statements included in this quarterly report.

Quantitative and Qualitative Disclosures

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis