ZZLL INFORMATION TECHNOLOGY, INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

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The discussion and analysis which follows in this Annual Report may contain
trend analysis and other forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 which reflect our current
views with respect to future events and financial results. These include
statements regarding our future financial results, projected growth and
forecasts, and similar matters which are not historical facts. We remind
stockholders that forward-looking statements are merely predictions and
therefore are inherently subject to uncertainties and other factors which could
cause the actual future events or results to differ materially from those
described in the forward-looking statements. These uncertainties and other
factors include, among other things, the impact of the spread of the COVID-19
pandemic, business conditions affecting our business and general economic
conditions; our ability to generate sufficient revenues to reach profitable
operations; and our need to obtain additional financing. The forward-looking
statements contained in this Annual Report and made elsewhere by or on our
behalf should be considered in light of these factors.



We currently operate our business through our subsidiaries, HSAL, SAL and
Ezekiel.



                                      -10-





HSAL's e-Commerce business



HSAL is an e-Commerce company operating through its self-developed online
application "Bibishengjia". Bibishengjia is a shopping search engine that
concurrently searches many shopping sites, preliminarily based in China,
including major shopping sites such as Taobao.com, Tmall.com, JD.com and
Pinduoduo.com, and helps customers meet their one-stop online shopping needs.
Bibishengjia also runs its own online shopping platforms - Bibi Mall and
Lianlian Nongyuan Agricultural Products Store. Bibishengjia was launched on
August 18, 2019 and is currently available for download at the Apple APP Store
and other major mobile download stores.



In addition to our own marketing and promotional efforts and Pretech's sales
support, in the third quarter of 2020, we started to promote the Bibishengjia
APP through "Momo" by using live streaming. We believe the mobile streaming
media will accelerate our growth in the future.



Ezekiel Petroleum Products Distribution Company



In October 2020, Ezekiel entered into the business of distribution of petroleum
based products, such as asphalt, heat conduction oil and machine (lubricating)
oil. Ezekiel's suppliers include large Chinese state-owned enterprises as well
as reputable private Chinese companies. Ezekiel doesn't take possession of the
petroleum based products which are stored in the supplier's designated warehouse
and is not responsible for delivery to the customers.



Ezekiel’s Multi-Function Lottery Ticket Machine Company

In late 2020, Ezekiel started a new business where it purchases custom-made
multi-function lottery ticket machines and re-sells them to third parties. The
machines are designed and manufactured by third parties with third party
technologies. Ezekiel doesn't own any intellectual property rights relating to
the machines. Besides dispensing lottery tickets for which the machine owner
retains 7-8% of the ticket sales price, the machines also function as a
cellphone charging station for about $0.45 per hour and a disinfectant wipes
dispenser at cost. No sales were recorded in 2021.



Critical accounting policies



Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
policies discussed below are considered by management to be critical to an
understanding of our financial statements because their application places the
most significant demands on management's judgment, with financial reporting
results relying on estimation about the effect of matters that are inherently
uncertain. Specific risks for these critical accounting policies are described
in the following paragraphs. For all of these policies, management cautions that
future events rarely develop exactly as forecast, and the best estimates
routinely require adjustment.



                                      -11-





Revenue Recognition.



We adopted Accounting Standard Codification ("ASC") Topic 606, Revenues from
Contract with Customers ("ASC 606") for all periods presented. Under ASC 606,
revenue is recognized when control of the promised goods and services is
transferred to the Company's customers, in an amount that reflects the
consideration that we expect to be entitled to in exchange for those goods and
services, net of value-added tax. We determine revenue recognition through
the
following steps:


? Identify the contract with a customer;

? Identify performance obligations in the contract;

? Determine the price of the transaction;

? Attribute the transaction price to the performance obligations of the contract;

   and



? Recognize revenue when (or as) the entity satisfies a performance obligation.




The transaction price is allocated to each performance obligation on a relative
standalone selling price basis. The transaction price allocated to each
performance obligation is recognized when that performance obligation is
satisfied by the control of the promised goods and services is transferred to
the customers, which at a point in time or over time as appropriate.



Our revenues are net of value added tax ("VAT") collected on behalf of PRC tax
authorities in respect to the sales of merchandise. VAT collected from
customers, net of VAT paid for purchases, is recorded as a liability in the
accompanying consolidated balance sheets until it is paid to the relevant PRC
tax authorities



Ezekiel's petroleum-based product distribution business generates revenue from
its sales. Ezekiel's multi-function lottery ticket machine business generates
revenue from the sale of machines to third parties and from its retention of a
percentage of all lottery ticket sales made by the machines.



Cost of sales. Cost of sales includes the cost of direct labour, goods and materials.

Selling fees. Selling expenses include advertising, depreciation and certain expenses associated with the operation of the Company’s head office.



General and administrative expenses. General and administrative expenses include
rent, salaries, business registration fees, telephone and utilities costs, and
office miscellaneous expenses.



Accounts Receivable. We don't have any accounts receivable in this period. For
our e-commence segment, our customers are required to pay while placing their
orders per our policy, and therefore we don't record any accounts receivable.
The payment under the Pretech Agreement was paid in full upon signing. Lump sum
payments are required to be made for our petroleum based products and our
multi-function lottery machines per our sales policy, and therefore we don't
incur any material accounts receivable.



Plant and equipment. Plant and equipment are stated at cost less accumulated
depreciation. Cost represents the purchase price of the asset and other costs
incurred to bring the asset into its existing use. Maintenance, repairs and
betterments, including replacement of minor items, are charged to expense; major
additions to physical properties are capitalized. Depreciation of plant and
equipment is provided using the straight-line method over their estimated useful
lives at the following annual rates.



                                      -12-




Income Taxes. Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.



Recent accounting statements



Our company considers the applicability and impact of all Accounting Standard
Updates ("ASUs"). ASUs not discussed below were assessed and determined to be
either not applicable or are expected to have minimal impact on our balance
sheets or statements of operations.



In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses
(Topic 326) Measurement of Credit Losses on Financial Instruments.  The
amendments in this Update require a new topic to be added (Topic 326) to the
Accounting Standards Codification ("ASC") and removes the thresholds that
entities apply to measure credit losses on financial instruments measured at
amortized cost, such as loans, trade receivables, reinsurance recoverables and
off-balance-sheet credit exposures, and held-to-maturity securities.  Under
current U.S. GAAP, entities generally recognize credit losses when it is
probable that the loss has been incurred.  The guidance under ASU 2016-13 will
remove all current recognition thresholds and will require entities under the
new current expected credit loss ("CECL") model to recognize an allowance for
credit losses for the difference between the amortized cost basis of a financial
instrument and the amount of amortized cost that an entity expects to collect
over the instrument's contractual life.  The new CECL model is based upon
expected losses rather than incurred losses. The ASU is effective for fiscal
years beginning after December 15, 2022, including interim periods within those
fiscal years.  We are currently evaluating the effect that this new guidance
will have on our financial statements and related disclosures.



Recent Developments



The COVID-19 outbreak has resulted in travel restrictions, closed international
borders, enhanced health screenings at ports of entry and elsewhere, disruption
of and delays in healthcare service preparation and delivery, prolonged
quarantines, cancellations, supply chain disruptions, and lower consumer demand,
layoffs, defaults and other significant economic impacts, as well as general
concern and uncertainty. The current severity of the pandemic and the
uncertainty regarding the length of its effects could have negative consequences
for our company.


Most of our administrative functions are being performed remotely. A small crew
maintains each of our three offices for those functions that cannot be handled
remotely. Our ability to collect money, pay bills, handle customer and consumer
communications, schedule production, and order ingredients necessary for our
production has not been impacted.



To date, the pandemic has had minimal impact on our sales. The majority of our
sales are made online. We experienced a slight decline in sales at the beginning
of the imposition of restrictions to mitigate the spread of COVID-19. To date we
have not experienced a significant change in the timeliness of payments of our
invoices and our cash position, remains stable with approximately $1,932,693 of
cash and cash equivalents as of December 31, 2021.



Segment Reporting



In 2021 and 2020, we were engaged in two business segments, (i) the e-commerce
business, consisting of HSAL and SAL's e-commerce operations and (ii) Ezekiel's
sales of petroleum based products and multi-function lottery machines.



                          Gross
                         Revenue         Percentage
E-commerce segment   $    915,550.00             1.2 %
Sales segment        $ 77,569,749.00            98.8 %

Consolidated total   $ 78,485,299.00             100 %




                                      -13-





Result of Operations


Year ended December 31, 2021 Compared to the year ended December 31, 2020

The following table presents a summary of our consolidated statements of earnings for the periods indicated.


                                                   Full year Ended                      Variance
                                           December 31,      December 31,
                                               2021              2020             Amount             %

Net sales                                  $  78,485,299     $   4,508,703        73,976,596         1,641 %

Cost of revenues                             (76,906,929 )      (4,266,850 )     (72,640,079 )       1,702 %

Gross profit                                   1,578,370           241,853         1,336,517           553 %
General and administrative and other
operating expenses                            (1,407,566 )        (676,983

) (730,583 ) 108%

Income (loss) from operations                    170,804          (435,130

) 605,934 -139%

Other non-operating income                         9,262           228,251 
        (218,989 )         -96 %

Other expenses                                    (7,752 )        (156,575 )         148,824           -95 %

Interest income                                        2                 5                (3 )         -60 %

Interest expenses                               (156,350 )         (23,378 )        (132,972 )         569 %
Income (loss) before income taxes                 15,967          (386,827
)         402,794          -104 %

Income taxes                                           -                 -                 -             -

Net income (loss)                                 15,967          (386,827 )         402,794          -104 %




Net revenue for the year ended December 31, 2021 was $78,485,299, an increase of
$73,976,596, or 1,641%, from net revenue of $4,508,703 for the year ended
December 31, 2020. The increase is primarily attributable to an increase in
revenues from the operations of Ezekiel that entered the business of selling
petroleum-based products and the sales of multi-function lottery ticket machines
in 2021. In 2021, Ezekiel recorded net revenues of $ $77,5697,49 from the sale
of petroleum-based products and revenues of $ 0 from the sale of multi-function
lottery tickets machines compared to revenue of $3,929,716 from petroleum-based
product, $44,416 from lottery ticket machines and design. E-commerce generated
revenues of $915,550 in the year ended December 31, 2021 compared to revenues of
$277,099 in the year ended December 31, 2020.



Our cost of revenues increased to $76,906,929 for the year ended December 31,
2021, an increase of $72,640,079, or 1,702%, from $4,266,850 for the year ended
December 31, 2020. The increased costs are primarily attributable to Ezekiel's
sales of petroleum based products. In 2021, Ezekiel had cost of revenues of
$76,782,221 and the e-Commerce segment's cost of revenues were $124,709.



Our gross profit increased by $1,336,517, or 553%, to $1,578,370 in the year
ended December 31, 2021 from $241,853 in the year ended December 31, 2020. Our
gross profit percentage was 2.01% in the year ended December 31, 2021 compared
to 5.36% in the year ended December 31, 2020. In 2020, we started the business
of selling petroleum-based products and the lottery machines. which have high
costs of goods . Ezekiel's gross profit was $787,528 in 2021 compared to
$197,289 in the year ended December 31, 2020 and the e-Commerce segment's gross
profit was $790,841 in 2021 compared to $44,564 in the year ended December
31,
2020.



                                      -14-





Selling, general and administrative expenses increased by $730,593, or 108%, to
$1,407,566 in the year ended December 31, 2021, from $676,983 in the year ended
December 31, 2020. The increase is mainly attributable to increased rent
expenses and increased employee salaries.



We had income from operations of $170,804 for the year ended December 31, 2021
compared to a loss from operations of $435,130 for the year ended December
31,
2020.


We had a non-operating income of $9,262 in the year ended December 31, 2021
compared to the non-operating result of $228,251 in the year ended December 31, 2020. In 2020, we recognized revenue from the expiration of warrants issued in 2018.

We have not paid any taxes in the past two years December 31, 2021.

As a result of the above, we had a net profit of $15,967 in the year ended
December 31, 2021 compared to a net loss of $386,827 for the year ended December 31, 2020.

Cash and capital resources

As of December 31, 2021, we had $1,932,693 in cash and cash equivalents and a
working capital deficit of $982,679 compared with $932,102 in cash and cash
equivalents and a working capital deficit of $595,800 at December 31, 2020. Our
accumulated deficit at December 31, 2021 was $2,790,808.



To date the Company has funded its operations by advances from related parties
which are interest free, unsecured, and have no fixed repayment terms and in
2021 from cash provided from operations including the prepayment made under the
Pretech Agreement. As of December 31, 2021 and December 31, 2020, the Company
had received net advances of $1,348,102 and $1,157,601 from shareholders and
related parties for operating expenses. These advances bear no interest, no
collateral and have no repayment term.



On December 31, 2021, Ezekiel entered into a loan agreement with Mr. Jianjun Du,
a Chinese resident, whereby Ezekiel borrowed RMB 10 million from Mr. Du for
operating purposes.  The initial term of the loan is from December 14, 2021 to
May 13, 2022 during which time there is no interest.  The term of the loan may
be extended upon the parties' mutual agreement. After the initial term, the loan
will bear an annual interest of 10%.



Management has continued to support the Company's operations and the Company has
relied on its officers and directors to perform essential functions with minimal
compensation. If the Company is unable to raise the funds it requires from third
parties it will have to find alternative sources, such as loans from our
officers and directors.



As of December 31, 2021 and December 31, 2020, the Company reported related
party receivables in the aggregate amount of $414,395 and $779,768,
respectively, due from Hunan Zhong Zong Hong Fu Culture Industry Company Limited
("Hong Fu") and Hunan Zhong Zong Lianlian Information Technology Limited Company
("Lianlian"), respectively. 100% of equity interests of Hong Fu and Lianlian are
owned by Wei Liang and Wei Zhu, the two majority shareholders of the Company.
The amount due from Hong Fu, which is a loan in the principal amount of RMB
600,000 (approximately $88,203) for a two-year term beginning on July 1, 2019
and free of interest. The amount due from Lianlian in 2021, which is a loan with
the principal amount of RMB 4,500,000 (approximately $ 689,675) for a two-year
term beginning on January 1, 2020 and free of interest. The $13,018 due from
Lianlian, is free of interests and due on demand. All of these loans were made
in the ordinary course of business.



Management has actively taken steps to monitor its operational and financial needs and believes that its current and available capital resources will enable the Company to continue its operations throughout this fiscal year.


                                      -15-




The following table summarizes our cash flows for the periods presented:


                                                                 Full year         Full year
                                                                   Ended             Ended
                                                               December 31,       December 31,
                                                                   2021               2020
Net cash provided by (used for) operating activities           $  (1,129,288 )   $      243,113
Net cash used for investing activities                               (28,323 )         (152,724 )
Net cash provided by (used for) financing activities               2,128,505            (44,306 )
Net increase (decrease) in cash and cash equivalents           $     970,894     $       46,083




Net cash used for operating activities during the year ended December 31, 2021
was $1,129,288, primarily attributable to our increase level of activity in 2021
and net income of $408,409, compared to net cash provided by operating
activities of $243,113 in 2020, attributable to Pretech contract asset.



Net cash used for investing activities during the year ended December 31, 2021,
was $28,323 compared to net cash used by investing activities of $152,724 in
2020. The cash used for investing activities relate to the purchase of fixed
assets, consisting of furniture and lottery machines in 2021.



Net cash provided by financing activities was $2,128,505 for the year ended
December 31, 2021 compared to net cash used by financing activities of $44,306
in 2020. This change was primarily due to proceeds of $1,572,631 from short term
loan and advances of $412,568 from related parties and repayment of loans from
related parties.



We believe our existing cash and cash equivalents on hand at December 31, 2021
and the cash flows expected from operations, will be sufficient to support our
operating and capital requirements during the next twelve months.



Inflation and Seasonality


We do not believe that our operating results have been materially affected by
inflation during the preceding two years. There can be no assurance, however,
that our operating results will not be affected by inflation in the future. Our
business is subject to minimal seasonal variations.



Off-balance sheet arrangements

The Company had no off-balance sheet arrangements at December 31, 2021
and 2020.

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