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

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The discussion and analysis which follows in this 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
Report and made elsewhere by or on our behalf should be considered in light
of
these factors.


We are a holding company incorporated in Nevada with no material operations of
our own. As a holding company, we conduct operations our business through our
PRC operating subsidiaries, Hunan Syndicore Asia Limited ("HSAL") and Shenzhen
Ezekiel Technology Co. Limited ("Ezekiel"). Our corporate structure may involve
unique risks for investors and could be disallowed by Chinese regulatory
authorities, which would likely result in a material change in our operations
and/or a material change in the value of our Common Stock, including the
possibility that our shares could significantly decline in value or become
worthless. Therefore, investments in our Common Stock involve a high degree
of
risk.



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.



On September 26, 2019, we, through SAL, entered into an agreement (the "Pretech
Agreement") with Pretech International Co., Limited ("Pretech"), a company
incorporated under the laws of Hong Kong ("HK"). Pretech is a software, hardware
and digital company that also specializes in the development and manufacture of
consumer electronics. Under the terms of the Pretech Agreement, Pretech agreed
to act as SAL's sales agent to promote and bring more customers to Bibishengjia
and also make sales of its own products through the use of Bibishengjia. Pretech
paid $1 million for the use of Bibishengjia, and the Company agreed to pay
Pretech 5% of all sales made in the PRC and HK through Bibishengjia. The initial
term of the Pretech Agreement was for 24 months from the date the Pretech
Agreement was entered into and was extendable for another 24 months. On October
26, 2020, the Pretech Agreement was amended and restated whereby Pretech was
given the right to use Bibishengjia for 7 years. Pretech's use of Bibishengjia
is accomplished by a section on the Bibishengjia APP created specifically for
Pretech. When users browse the Bibishengjia APP, they are able to click on the
Pretech hyperlink and be directed to Pretech's own site where they can make
purchases of Pretech's products. Additional features and functions may be added
to the APP according to the Pretech's needs, markets conditions and additional
requirements upon separate agreement between the parties, either in conjunction
with the needs of SAL and HSAL or specifically for Pretech. Under the Pretech
Agreement, the Bibishengjia APP, its contents and all related intellectual
property rights including rights related to the Pretech hyperlink, are the sole
property of SAL, including any additional developments or modifications made in
the APP, in perpetuity.



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



                                       16




Ezekiel’s Petroleum Products Distribution Business



Ezekiel sells petroleum-based products, such as asphalt, heat conduction oil and
machine (lubricating) oil, which are purchased directly from its suppliers and
sold to end customers. All shipping instructions, product return, and customer
services are handled by Ezekiel. Ezekiel also owns the legal title of the
products before and during the transit and bears the risk of loss in transit.



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 cell
phone charging station for about $0.45 per hour and a disinfectant wipes
dispenser at cost. The machine has a LED screen which allows a customer to
browse the Bibishengjia APP and make purchases there. Ezekiel has obtained
licenses from several second and third-tier cities in the PRC where competition
for lottery tickets sales and lottery tickets machines is manageable. The
licenses allow its machines to dispense lottery tickets in these cities, besides
selling the machines to third parties. Due to the global pandemic, local
lockdown and other restrictive policies, Ezekiel was unable able to sell any
machines since 2021.



Going Concern Uncertainties



The unaudited condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the discharge of liabilities in the normal course
of business for the foreseeable future.



The Company, which had an accumulated deficit of $3,220,043 and a working
capital deficit of $1,474,995 as of June 30, 2022, has incurred operating losses
in most periods since inception. The recoverability of a major portion of the
recorded asset amounts and realization of the portion of current liabilities
into revenue shown in the accompanying balance sheets are dependent upon
continued operations of the Company, which in turn are dependent upon the
Company's ability to raise additional financing and to succeed in its future
operations. The Company will need additional cash resources to operate during
the upcoming 12 months, and the continuation of the Company will be dependent
upon the continuing financial support of investors, directors and/or
shareholders of the Company. However, there is no assurance that efforts to
raise equity or debt will be successful in raising sufficient funds to assure
the eventual profitability of the Company. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. These
accompanying financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.



Management plans to support the Company in operation and to maintain its
business strategy to raise funds through public and private offerings and to
rely on officers and directors to perform essential functions with minimal
compensation. If we do not raise all of the money we need from such offerings,
we will have to find alternative sources including, loans from our officers,
directors or others. Management has actively taken steps to revise its operating
and financial requirements, which they believe will allow the Company to
continue its operations for the next 12 months.



Critical accounting estimates



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.



                                       17





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 the performance obligations in the contract;




  ? Determine the transaction price;



    ?   Allocate the transaction price to the performance obligations in
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, when made. No petroleum- based products were sold in the first half
year of 2022 due to the increased frequency of city shutdowns in China as one of
China's COVID-19 control measures. Ezekiel's multi-function lottery ticket
machine business generates revenue from the sale of machines when made to third
parties and from its retention of a percentage of all lottery ticket sales made
by such machines. No revenues were generated from the sale of multi-function
lottery ticket machines in the six month periods ended June 30, 2022 and 2021
due to the increased frequency of COVID-19 lockdowns across Chinese cities.



Accounts Receivable. - The receivables of $827,296 and $848,181 reported as of
June 30, 2022 and December 31, 2021 relate to the sale of petroleum-based
products. For our e-commence segment, our customers are required to pay when
placing their orders per our policy, and therefore we don't record any accounts
receivable. Purchasers of our multi-function lottery machines are required paid
in full per our sales policy and we don't record account receivable for this
business.


Equipment. Equipment is 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 ranged from 3
to 5 years.


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.



                                       18




Recent accounting pronouncements



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 recoverable, 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.



Ezekiel did not make any sales of multi-function lottery machines in the six
months ended June 30, 2022 because of COVID-19 lockdowns across Chinese cities
and travel restrictions across communities.



Ezekiel does not have any long-term customers or supply agreements with its
customers at petroleum based product sales. In the first half year of 2022,
there were no sales of petroleum based products because of Chinese COVID-19
control measures, which include city lockdowns and travel restrictions among
communities. City lockdowns and travel restrictions in various Chinese cities
impacted our sales team's ability to visit potential customers and also caused
our customers to be conservative n their business operations and developments
which temporarily or permanently ceased their purchase plans of our petroleum
based products.



Segment Reporting



Since the fourth quarter of 2020 we have been engaged in two business segments,
the E-commerce business, consisting of HSAL and SAL's E-commerce operation, and
trading business covering Ezekiel's sales of petroleum-based products and
multi-function lottery machines.



                                       19





Result of Operations


Three months completed June 30, 2022 Compared to the three months ended June 30, 2021

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


                                                For the Three Months
                                                   Ended June 30,                      Variance
                                               2022            2021             Amount             %
Revenue                                    $  253,361     $  19,739,374       (19,486,013 )         (99 )%
Cost of revenue                              (227,199 )     (19,490,994 )     (19,263,795 )         (99 )%

Gross profit                                   26,162           248,380          (222,218 )         (89 )%
General and administrative and other
operating expenses                            224,278           206,248            18,030             9 %
Income (loss) from operations                (198,116 )          42,132    

(240,248) (570)%

Interest income (expense), net                174,438            (3,124 )  
      177,562         (5684 )%
Other income                                   14,579             3,241            11,338           350 %
Other expenses                                 (7,411 )             (27 )          (7,384 )       28404 %
Income (loss) before income taxes             (16,510 )          42,222    
      (58,732 )        (139 )%

Income taxes                                    1,063                -              1,063           n/a

Net income (loss)                          $  (17,573 )   $      42,222     $     (59,795 )        (142 )%




Revenue for the three months ended June 30, 2022 was $253,361, a decrease of
$19,486,013, or 99%, from revenue of $19,739,374 for the three months ended June
30, 2021. HSAL's E-commerce business, Bibiishengjia's platform, generated
revenues of $253,361 in the three months ended June 30, 2022 compared to
revenues of $37,027 in the three months ended June 30, 2021. Our online sale
platform benefited from the health concerns related to COVID-19 as more
customers took advantage of the online platform and door to door delivery
services for their daily grocery shopping and meals. However, the same concerns
brought in opposite effects at Ezekiel's industry product wholesale business.
There were no sales of petroleum-based products in the second quarter of 2022
due to unexpected quarantine requirements to control COVID-19 spray in China.
During the second quarter of 2022, we faced strict disease control
implementations from Chinese government which include shutdown of all business
activities and public contact. Due to unpredictable government actions or
enforcements, most of Ezekiel's customers stopped or slowed down their purchase
plans until the economic trend is clearer. In addition, we did not make any
sales of multi-function lottery machines in the second quarter of 2022 because
of the same health concerns of COVID-19.



Our cost of revenue decreased to $227,199 for the three months ended June 30,
2022, a decrease of $19,263,795, or 99%, from $19,490,994 for the three months
ended June 30, 2021. Such decrease was mainly attributable to the lack of sales
by Ezekiel.



Our gross profit decreased by $222,218 or 89%, to $26,162 in the quarter ended
June 30, 2022 from $248,380 in the same quarter in 2021. The decrease was mainly
due to health concerns relating to physical contact which caused a significant
decline in demand for industrial products, including petroleum-based products.
Although our online sale platform benefited from these health concerns, this
trend also attracts more competitors joining the market which further reduced
our margin from our E-commerce business. With more lockdowns among Chinese
cities, many traditional companies began to develop their online operations
because physical stores could not be opened. We believe that this will result in
more companies developing shopping platforms. Accordingly, the Company may need
to offer more cash bonuses or discounts to customers to compete with such
platforms.



During the second quarter of 2022, our operating expenses increased by $18,030,
or 9%, to $224,278, compared to the same quarter in 2021. The increase was due
to our efforts to enhance the functions and service models of our
Bibiishengjia's platform which may not bring in immediate profit but we expect
will lead to improved operating result in the long-term.



Our operating loss was $198,116 for the quarter ended June 30, 2022
compared to the operating result of $42,132 for the quarter ended June 30, 2021. This reduction is mainly due to the aforementioned closures related to COVID-19 in China.

For the three months ended June 30, 2022, our net loss was $17,573 compared to
net income of $42,223 for the three months ended June 30, 2021. This was mainly
due to decrease in our petroleum product sales, which was partially offset by an
increase in our interest income from an early collection of a long-term other
receivable.



                                       20




Semester completed June 30, 2022 Compared to the half-year ended June 30, 2021

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


                                                For the Six Months
                                                  Ended June 30,                      Variance
                                               2022            2021            Amount             %
Revenue                                    $  658,944     $ 20,119,750       (19,460,806 )         (97 )%
Cost of revenue                               326,728       19,500,237       (19,173,509 )         (98 )%

Gross profit                                  332,216          619,513          (287,297 )         (46 )%
General and administrative and other
operating expenses                            918,386          451,684           466,702           103 %
Income (loss) from operations                (586,170 )        167,829     

(753,999) (449)%

Interest income (expense), net                150,062           (6,296 )   
    (156,350 )       (2483 )%
Other income                                   15,347            3,566            11,781           330 %
Other expenses                                 (7,411 )         (7,740 )             329            (4 )%
Income (loss) before income taxes            (428,172 )        157,358     
    (585,530 )        (372 )%

Income taxes                                    1,063               -              1,063           n/a

Net income (loss)                          $ (429,235 )   $    157,358     $    (586,593 )        (373 )%




Revenue. For the six months ended June 30, 2022, revenue was $658,944 compared
to $20,119,750 for the six months ended June 30, 2021, a decrease of $19,460,806
or 97%. The reduction was mainly caused by the decline in activity in our
trading business segment. Our trading business segment was engaged in wholesale
sales of industrial products to our customers through the traditional method,
such as site visits of our sales team and face to face negotiation and
discussions with our customers to understand their demand and needs. However,
starting in 2022, certain Chinese cities started to execute immediate quarantine
actions which increased the uncertainty of future business development among our
customers. Therefore, we made no sales during the first half year of 2022.



Cost of revenue. For the six months ended June 30, 2022, cost of goods sold was
$326,728 compared to $19,500,237 for the six months ended June 30, 2021, a
decrease of $19,173,509, or 98%. This decrease was mainly due to the decrease in
sales in our trading business segment.



Gross profit. Our gross profit decreased by $287,297 or 46% to $332,216 for the
six months ended June 30, 2022, compared to $619,513 for the six months ended
June 30, 2021. This decrease was due to the decrease in trading sales. Our gross
margin increased from 3% for the six months ended June 30, 2021 to 50% for the
six months ended June 30, 2022. This increase was mainly due to the increase in
gross margin in our e-commence business segment. Although our e-commence
business segment contributes a higher margin rate, the segment faces strong
competition and lower customer loyalty. Therefore, to reach higher market share
we will need to improve our operations and build up customer awareness and
loyalty.



Operating expenses. Our total operating expenses consist of sales and marketing
expenses and general and administrative expenses. Our total operating expenses
increased by $466,702, or 103%, from $451,684 for the six months ended June 30,
2021 to $918,386 for the six months ended June 30, 2022. This increase was
mainly due to the increased development expenses and maintenance spending for
our online platform program. We expect that these expenditures will enhance and
complete the functions of our platform and improve the shopping experience
of
our customers.



                                       21




Operating income (loss). As a result of the above, our operating loss was $586,170 for the six months ended June 30, 2022compared to the operating result of $167,829 for the six months ended June 30, 2021.

Income taxes. Our income taxes were $1,063 for the six months ended June 30, 2022compared to no income tax for the six months ended June 30, 2021.

Net loss. Our net loss was $429,235 for the six months ended June 30, 2022,
compared to net income of $157,358 for the six months ended June 30, 2021. Our
net loss was mainly due to the decrease in revenues from our trading business
segment, which was partially offset by an increase in our interest income from
an early collection of a long-term other receivable.



Cash and capital resources

As of June 30, 2022, we had $230,885 in cash and a working capital deficit of
$1,474,995 compared with $1,932,693 in cash and a working capital deficit of
$982,679 at December 31, 2021. Our accumulated deficit at June 30, 2022 was
$3,220,043.



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
2020 from cash provided from operations including the prepayment made under
the
Pretech Agreement.



Management has continued to support the Company's operations and has actively
taken steps to monitor its operating and financial requirements. 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.



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


                                                         Six Months Ended June 30,
                                                           2022             2021
Net cash used in operating activities                 $   (890,855 )   $ (1,212,481 )
Net cash provided by (used in) investing activities       (247,506 )       

68,656

Net cash provided by (used in) financing activities (515,433 ) 274,350 Net decrease in cash

                                  $ (1,653,794 )   $   (869,475 )



Net cash used in operating activities

Net cash used for operating activities during the six months ended June 30,
2022, was $890,855 compared to net cash used in operating activities of
$1,264,066 in the same period of 2022. For the six months ended June 30, 2022,
cash was mainly used to cover our loss of $429,235, which was primarily offset
by an add-back of $131,088 of depreciation and amortization and $125,411 of
impairment of other assets for non-cash expenses, partially offset by our rental
payments of $114,092 and an increase in other payables of $514,416.



Net cash provided by (used in) investing activities

Net cash used in investing activities was $247,506 for the six months ended June
30, 2022, compared to net cash provided by investing activities of $68,656 for
the six months ended June 30, 2021. For the six months ended June 30, 2022, the
cash expenditure of $247,506 was used for the purchase of a vehicle for business
purposes.



                                       22




Net cash provided by (used in) financing activities



For the six months ended June 30, 2022, $515,433 of cash was used in financing
activities, compared to $274,350 of cash provided by financing activities for
the six months ended June 30, 2021. The cash was used to repay a loan of
$617,231. Net cash provided by financing activities was $274,350 for six months
ended June 30, 2021. This change was primarily due to advances of $418,202
from
related parties.


We estimate that our existing cash at June 30, 2022 and expected cash flow from operations will be sufficient to meet our operating and capital needs over the next twelve months.


Inflation and Seasonality


We do not believe that our operating results have been significantly affected by inflation over the past two years.

Off-balance sheet arrangements



Under SEC regulations, we are required to disclose off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, such as changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors. An off-balance sheet
arrangement means a transaction, agreement or contractual arrangement to which
any entity that is not consolidated with us is a party, under which we have:



? any obligation under certain warranty contracts,

? any retained or contingent interests in assets transferred to an unconsolidated company

entity or similar arrangement serving as credit, liquidity or market risk

support to this entity for these assets,

? any obligation under a contract that would be accounted for as a derivative

instrument, except that it is both indexed to our stock and classified in

equity in our statement of financial position, and

? any obligation arising from a material variable interest that we hold in any

unconsolidated entity that provides funding, liquidity, market risk or credit

risk to us, or engages in rental, hedging, or research and development

   services with us.




We do not have any off-balance sheet arrangements that we are required to
disclose pursuant to these regulations. In the ordinary course of business, we
enter into operating lease commitments, purchase commitments and other
contractual obligations. These transactions are recognized in our financial
statements in accordance with generally accepted accounting principles in the
United States.

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