PORTER HOLDING INTERNATIONAL, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS. (Form 10-Q)

Investors are cautioned that you are not buying shares of a China-based
operating company but instead are buying shares of a shell company issuer that
maintains contractual arrangements with the associated operating company. Our
PRC subsidiary has nominal operations or assets. We conduct our business in
China through our consolidated VIE and its subsidiaries.



The following management's discussion and analysis should be read in conjunction
with our financial statements and the notes thereto and the other financial
information appearing elsewhere in this report. Our financial statements are
prepared in U.S. dollars and in accordance with U.S. GAAP.



Special note regarding forward-looking statements



In addition to historical information, this report contains forward-looking
statements. We use words such as "believe," "expect," "anticipate," "project,"
"target," "plan," "optimistic," "intend," "aim," "will" or similar expressions
which are intended to identify forward-looking statements. Such statements
include, among others, those concerning market and industry segment growth; any
projections of earnings, revenue, margins or other financial items; any
statements of the plans, strategies and objectives of management for future
operations; any statements regarding future economic conditions or performance;
as well as all assumptions, expectations, predictions, intentions or beliefs
about future events. You are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
including those identified in our Annual Report on Form 10-K filed on April 13,
2022, as well as assumptions, which, if they were to ever materialize or prove
incorrect, could cause our results to differ materially from those expressed or
implied by such forward-looking statements.



Readers are urged to carefully review and consider the various disclosures made
by us in this report and our other filings with the SEC. These reports attempt
to advise interested parties of the risks and factors that may affect our
business, financial condition and results of operations and prospects. The
forward-looking statements made in this report speak only as of the date hereof
and we disclaim any obligation, except as required by law, to provide updates,
revisions or amendments to any forward-looking statements to reflect changes in
our expectations or future events.



Use of Terms


Unless the context otherwise indicates and for the purposes of this report only, references in this report to:

? “Company”, “we”, “us” and “our” means the combined business of Doorman holding

International, Inc.a Nevada company and its consolidated subsidiaries

    and variable interest entities;



? “PGL” are at Porter Group Limiteda Republic of Seychelles company and our

    wholly-owned subsidiary;



? “PPBGL” must Porter Perspective Business Group Limiteda hong kong the society

    and wholly-owned subsidiary of PGL;



? “Qianhai Porter” are at Shenzhen Qianhai Porter Industrial Co.Ltd.a PRC

    company and wholly-owned subsidiary of PPBGL;



? “Portercity” are at Shenzhen Porter Enterprise Management Services Co.Ltd.a

    PRC company;



? “Porter E-Commerce” must Shenzhen Porter Warehouse E-Commerce Co. Ltd.a

    PRC company and wholly-owned subsidiary of Portercity;



? “Doorman advice” are at Shenzhen Porter Shops Lot Technology Co., Ltd.a

    PRC company and 85% owned subsidiary of Portercity;



? “Porter Commercial” are at Shenzhen Porter Commercial Perspective Network Co.,

    Ltd., a PRC company and wholly-owned subsidiary of Portercity;



? “Weifang Portercity” are at Weifang Porter City Commercial Management Company

Limited, a PRC company and a 60% subsidiary of Portercity. Weifang

    Portercity was dissolved on April 22, 2021.



? “Xinsanmao Wine” are at Shenzhen Xinsanmao Wine Co.,Ltda PRC company and a

    51% owned subsidiary of Porter E-Commerce.




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? “Guizhou Yueqian” are at Guizhou Yueqian Smart Zone Management Co., Ltda PRC

    company and a 52% owned subsidiary of Porter Consulting.




  ? "VIEs" means our consolidated variable interest entities, including

Portercity and its subsidiaries (i.e. Porter E-Commerce, Doorman advice,

Porter Commercial, Xinsanmao Wine and Guizhou Yueqian), unless the context

    otherwise indicates;



? “Hong Kong” refers to the Hong Kong Special Administrative Region of

    People's Republic of China;




  ? "China" and "PRC" refer to the People's Republic of China;




  ? "Renminbi" and "RMB" refer to the legal currency of China;



? “WE dollars”, “dollars” and “$” refer to legal currency of the United States

    States;




  ? "SEC" are to the U.S. Securities and Exchange Commission;



? “Exchange Act” means the Securities Exchange Act of 1934, as amended; and



  ? "Securities Act" are to the Securities Act of 1933, as amended.




Overview



Porter Holding International, Inc. is a holding company incorporated in Nevada,
the United States. As a holding company with no material operations of its own,
Porter Holding International, Inc. conducts its business through the VIEs in
China. The VIEs contributed 100% of our consolidated results of operations and
cash flows for the three months ended March 31, 2022 and 2021, respectively. As
of March 31, 2022 and December 31, 2021, the VIEs accounted for 100% of our
consolidated total assets and total liabilities.



Since 2016, through our VIE entity, Porter Consulting, we have partnered with
China Payment Technology Co., Ltd., a third-party online payment service
provider ("China Payment") to promote China Payment's online payment platform to
companies and businesses in Shenzhen and in return share a portion of the
processing fees earned by China Payment as commission. Porter Consulting also
partners with Shenzhen Xinghua Tongfu Technology Co., Ltd., a third-party online
payment service provider ("Shenzhen Tongfu"), whereby Porter Consulting agreed
to promote Shenzhen Tongfu's online payment platform, including the Point of
Sale (POS) system, to companies and businesses in China and in return obtain a
certain amount of commission based on the volume of trading through such online
payment platform.



As a company with limited operation history, we are at the early stage of
developing our O2O business and our goal is to become a leading innovative O2O
business platform operator providing both online E-commerce and offline physical
business facilities to our merchant customers, where they can conduct business,
interact with their existing and potential end-consumers face to face. Different
from most other O2O companies, which often lack of integrated platforms, our
goal is to provide one-stop services for our customers through our integrated
online and offline platforms. As described fully below, we are developing and
intend to offer products and services including both (i) hosting our online
marketplaces, www.pt37.com and www.17yugo.com for our merchant clients to post
and sell their products and services online and (ii) managing and operating
physical business facilities that our online merchant clients can utilize to
conduct their businesses offline. We are currently developing merchant clients
who are engaged in businesses including manufacturing, real estate, trade and
financing. In the future, we intend to expand our merchant client base to
industries of big data, new materials, new energy, green food and environment
protection. In addition, we are planning to collaborate with key opinion leaders
("KOLs") to promote the merchandises on our e-commerce platform.



According to the development demand and future goals of our customers, in 2018
we started to offer a series of services such as business planning, financial
guidance, business matching and guidance for listing primarily in the United
States. At present, in our customer pool, many small and medium-sized
enterprises have increased their public awareness. They are seeking the
potential advantages of being a listed company and striving for obtaining the
recognition of international capital to accelerate their corporate expansion.
However, many enterprises themselves may not be familiar with the listing
requirements, laws and regulations of different capital markets, and the process
of obtaining financing from overseas markets.



In order to help our customers who intend to access overseas capital markets, we
have a team of experienced professionals who have professional knowledge of the
listing rules and regulations of various capital markets. We will make full use
of our expertise and resources in the capital markets to assist these customers
to achieve their goals.



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Update on COVID-19



The ongoing coronavirus pandemic has had a material adverse effect on our
industry and the markets in which we operate. Most of our revenues and our
workforce are concentrated in China. The pandemic also impeded our ability to
recruit new clients and made us postpone providing services to existing clients.
Travel restrictions from time to time also limited clients' ability to visit and
meet us in person, which made it harder to build trust and engage clients.
Updates of products information on our e-commerce platform and the delivery of
goods were also delayed due to interruptions to operations of manufacturers
caused by local lockdowns. The imported goods on our platform face more
challenges as the pandemic continues outside China, and our distribution channel
has been disrupted as the operations of our distributors are interrupted by the
outbreak. The foregoing adverse impacts might be mitigated as the Chinese
government has rolled out an array of favorable fiscal measures.



However, as the coronavirus outbreak continues globally, the extent to which the
coronavirus impacts our operations and results in the long-term will depend on
future developments, including, among others, actions of the Chinese government
to contain imported infections, which are highly uncertain and cannot be
reasonably predicted. The outbreak has resurged locally from time to time. At
present, management is actively looking for a business breakthrough to increase
revenue in 2022. We will continue to monitor and mitigate developments affecting
our workforce, our customers, and the public at large to the extent we are able
to do so.



Results of Operations


Comparison of the three months ended March 31, 2022 and 2021

The following table shows the key elements of our operating results during the three months ended March 31, 2022 and 2021.


                                                        Three Months Ended March 31,
                                              2022           2021              Fluctuation
                                             Amount         Amount         Amount           %
Revenue                                    $   25,670     $   14,487         11,183         77.19 %
Cost of revenue                                (3,730 )       (6,844 )        3,114        (45.50 )%
Gross profit                                   21,940          7,643         14,297        187.06 %
Operating expenses
General and administrative expenses          (202,568 )     (301,637 )       99,069        (32.84 )%
Loss from operations                         (180,628 )     (293,994 )      113,366        (38.56 )%
Other income                                      399        536,416       (536,017 )      (99.93 %
(Loss) income before income taxes            (180,229 )      242,422       (422,651 )     (174.35 )%
Income tax expense                                  -              -              -             -
Net (loss) income                            (180,229 )      242,422       (422,651 )     (174.35 )%
Less: Net loss attributable to
non-controlling interests                     (14,951 )       (3,404 )      (11,547 )      339.22 %
Net (loss) income attributable to Porter
Holding International Inc. common
stockholders                               $ (165,278 )   $  245,826       (411,104 )     (167.23 )%




Revenue. Our revenue was $25,670 for the three months ended March 31, 2022,
compared to $14,487 for the same period last year. One of our revenue sources is
to provide various consulting services to our customers, especially those who
have the intention to be publicly listed, primarily on the stock exchanges in
the United States. Service income from the provision of these consulting
services totaled $nil and $nil for the three months ended March 31, 2022 and
2021, respectively. This was mainly attributable to the impacts of COVID-19 and
depressed market demand. Starting from 2019, the Company provides various
training services to its clients, primarily related to e-commerce platform
operation, expansion of channels, promotion strategy and capital market
operation, via live and online sessions. The service income from providing
training services totaled $19,692 and $1,947 for the three months ended March
31, 2022 and 2021. Through Porter Consulting, we also promote the payment
service of third-party payment service providers to merchants in Shenzhen and in
return share a portion of the processing fees earned by the third-party payment
service providers in the form of commission. Our commission totaled $4,001 and
$8,609 for the three months ended March 31, 2022 and 2021, respectively. The
approximately 53.53% decline in commission for the first quarter of 2022 was
also the result of the COVID-19 pandemic. Revenues of $646 and $3,236 were
generated from trading business for the three months ended March 31, 2022 and
2021, respectively. The Company started the wine sales business in late 2021 and
revenue of wine sales was $1,331 and $nil for the three months ended March 31,
2022 and 2021, respectively. Revenue of others were $nil and $695 for the three
months ended March 31, 2022 and 2021, respectively.



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Revenue cost. Our revenue cost was $3,730 for the three months ended March 31, 2022compared to $6,844 for the same period last year. The cost of revenue is mainly made up of the cost incurred as part of the third-party payment service. The decrease in the cost of sales is due to the decrease in the third-party payment service.



Gross profit and gross margin. Our gross profit was $21,940 for the three months
ended March 31, 2022, compared to $7,643 for the same period last year. Gross
profit as a percentage of revenue (gross margin) was 85.47% for the three months
ended March 31, 2022, compared to 52.76% for the same quarter last year. The
increase in gross profit was in line with an increase in revenue and mainly due
to the increase of revenue from providing training services which has a higher
profit margin.



General and administrative expenses. As shown below, our general and
administrative expenses consist primarily of bad debt provision, compensation
and benefits to our general management, finance and administrative staff,
professional fees and other expenses incurred in connection with general
operations. Our general and administrative expenses decreased by $99,069 to
$202,568 for the three months ended March 31, 2022, compared to $301,637 for the
same period of 2021. Decrease was mainly due to a decrease in salary and staff
benefit, legal and professional fees and other expenses by $26,950, $40,214 and
$29,739, respectively, compared to corresponding period in prior year. The
decrease was mostly due to the depressed market demand and the cost reduction
strategy of the Company as a result of the impact of COVID-19.



                                                           Three months ended March 31,
                                            2022                       2021                   Fluctuation
                                    Amount          %          Amount          %          Amount          %
Salary and staff benefit           $  67,109        33.13     $  94,059        31.18     $ (26,950 )     (28.65 )
Lease and management fee              70,762        34.93        72,068        23.89        (1,306 )      (1.81 )
Legal and professional fee            56,358        27.82        96,572        32.02       (40,214 )     (41.64 )
Depreciation and amortization          2,117         1.05         2,977         0.99          (860 )     (28.89 )
Others                                 6,222         3.07        35,961        11.92       (29,739 )     (82.70 )
Total                              $ 202,568       100.00     $ 301,637       100.00     $ (99,069 )     (32.84 )




Other income. Our other income was $399 and $536,416 for the three months ended
March 31, 2022 and 2021. The other income for the three months ended March 31,
2021 was primarily comprise of the compensation received with the termination of
the Weifang project in 2021. In January 2021, Weifang Portercity agreed with the
local government to terminate the project, which was signed on August 25, 2018
for Weifang Portercity to facilitate investment and promote business
opportunities for the Weifang region. As the local government changed its
development strategy, it determined to terminate the Weifang project.
Consequently, Weifang Portercity received a non-recurring compensation of
RMB3,474,828 (approximately $536,101) from the local government to compensate
its upfront establishment expenses including expenditure relating to office
renovation, office equipment and supplies in the first quarter of 2021.



income tax expense. Our income tax expense was nil and nil for the three months ended March 31, 2022 and 2021.

Net loss. Due to the cumulative effect of the factors described above, there was a net loss of $180,229 and a net income of $242,422 for the three months ended March 31, 2022 and 2021, respectively.

Cash and capital resources


Working Capital



                              March 31, 2022       December 31, 2021
Current Assets               $        520,606     $           438,456
Current Liabilities                 4,031,477               3,763,925
Working Capital Deficiency   $     (3,510,871 )   $        (3,325,469 )



From March 31, 2022we had money $108,892. To date, we have funded our operations primarily through borrowings from our shareholders and related parties.



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Going Concern Uncertainties


The accompanying unaudited condensed consolidated financial statements have been prepared on the assumption that we will continue as a going concern.



We have considered whether there is substantial doubt about our ability to
continue as a going concern given (1) our loss from operations approximately
$180,628 for the three months ended March 31, 2022, (2) our accumulated deficit
of approximately $4,663,876 as of March 31, 2022 and (3) the fact that we had
negative operating cash flows of approximately $5,654 for the three months ended
March 31, 2022.



As of March 31, 2022, our cash balance was $108,892 and our current liabilities
exceed current assets by $3,510,871. Our cash balance as of March 31, 2022 is
not sufficient to support our operations for the next 12 months after the date
that the financial statements were issued. The negative operating results of
cash flow and working capital deficiency for the quarter ended March 31, 2022
raise substantial doubt about our ability to continue as a going concern. Our
continued operations are highly dependent upon our ability to increase revenues
and if needed, to complete equity and/or debt financing.



In evaluating if there is substantial doubt about our ability to continue as a
going concern, we are trying to alleviate the going concern risk through (1)
increasing cash generated from operations by controlling operating expenses and
increasing more live steaming e-commerce events to bring up e-commerce revenue,
(2) financing from domestic banks and other financial institutions, and (3)
equity or debt financing. We have certain plans to mitigate these adverse
conditions and to increase the liquidity of the Company.



However, if we are unable to obtain the necessary additional capital on a timely
basis and on acceptable terms, we will be unable to implement our current plans
for expansion, repay debt obligations or respond to competitive market
pressures, which will have negative impacts upon our business, prospects,
financial condition and results of operations. On an on-going basis, the Company
also received and will continue to receive financial support commitments from
the Company's related parties.



                                                Three Months Ended March 31,
                                                 2022                 2021

Net cash used in operating activities ($5,654) ($162,925)
Net cash from investing activities

                -                  

Net cash provided by financing activities           80,124               

810 639

Effect of exchange rate changes on cash              3,227               (10,629 )
Net increase (decrease) in cash                     77,696               

637,085

Cash at the beginning of period                     31,196                24,912
Cash at the end of period                   $      108,892       $       661,997




Operating Activities



Net cash used in operating activities was $5,654 for the three months ended
March 31, 2022, as compared to $162,925 net cash used in operating activities
for the three months ended March 31, 2021. The net cash used in operating
activities for the three months ended March 31, 2022 was mainly due to our net
loss of $180,229 and a decrease in operating lease liabilities of $73,804,
partially offset by the increase in amortization of operating lease right-of-use
assets of $64,105, an increase in deferred revenue of $109,219 and an increase
in accruals and other payables of $77,484. The net cash used in operating
activities for the three months ended March 31, 2021 was mainly due to our net
income of $242,422, partially offset by the decrease in accruals and other
payables of $379,121 and deferred revenue of $64,461.



Investing Activities



Net cash provided by investing activities was $nil for the three months ended
March 31, 2022, as compared to $nil net cash provided by investing activities
for the three months ended March 31, 2021.



Financing Activities



Net cash provided by financing for the three months ended March 31, 2022 was
$80,124, as compared to $810,639 for the three months ended March 31, 2021. For
the three months ended March 31, 2022, we obtained advances of $97,846 from
shareholders and repaid $17,723 to shareholders. For the three months ended
March 31, 2021, we obtained advances of $1,530,917 from shareholders and repaid
$720,278 to shareholders.



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Significant Accounting Policies and Estimates



Our unaudited condensed consolidated financial information has been prepared in
accordance with U.S. GAAP, which requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues, costs and
expenses, and related disclosures. On an on-going basis, we evaluate our
estimates based 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. Actual results may
differ from these estimates under different assumptions or conditions. Since the
use of estimates is an integral component of the financial reporting process,
our actual results could differ from those estimates. Some of our accounting
policies require a higher degree of judgment than others in their application.
There were no other material changes to the critical accounting policies
previously disclosed in our audited consolidated financial statements for the
year ended December 31, 2021 included in the Annual Report on Form 10-K filed on
April 13, 2022.


Recent accounting pronouncements

Please refer to “Note 2. Basis of presentation and summary of significant accounting policies – Recent accounting pronouncements” to our condensed consolidated financial statements for a discussion of the relevant pronouncements.






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