MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations for the fiscal year ended December 31, 2024 should be read in conjunction with our Financial Statements and corresponding notes to those financial statements that are included in this Annual Report on Form 10-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding Forward-Looking Statements in this report. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," "target", "forecast" and similar expressions to identify forward-looking statements.

Company Overview

Intelligent Hotel Group Ltd, formerly known as YCQH Agricultural Technology Co., Ltd, was incorporated under the laws of the State of Nevada on October 15, 2019. The Company operated in several business segments, including the wholesale and retail of BCBF, online sales of consumer goods, and trading of beauty products.

Its BCBF business was conducted through a wholly owned subsidiary, SCQC, and involved sourcing environmentally friendly fertilizer from third-party suppliers. The product was manufactured using thermal decomposition of straw in a low-oxygen environment and promoted for its ability to improve soil fertility, increase crop yield, and enhance water retention. The Company did not own or operate any production facilities or equipment related to BCBF. SCQC was disposed of in April 2025, and the Company no longer engaged in this line of business since then.

On July 25, 2022, the Company entered the online retail space by offering a range of consumer goods including healthcare, cosmetics, fashion, and household products on third-party e-commerce platforms in the PRC. During our operation of the online retail business in 2024, we purchased goods directly from suppliers and then sold them to the users of the online retail platform, with the Company bearing the inventory risk of the goods.

On April 19, 2023, the Company expanded into beauty product trading, focusing on retail sales to customers in the PRC with goods sourced directly from local manufacturers. On September 25, 2023, the Company, through its subsidiary YCWB disposed of XMYC Trading Co., Limited, which had been involved in the beauty trading business. Despite the disposal, the Company continued to operate the beauty product segment through YCWB for a period thereafter. As of the date of this report, the Company has ceased all activities in the online retail and beauty trading sectors.

Following its exit from these historical business lines, the Company is actively exploring new strategic directions and evaluating acquisition and investment opportunities across several industries. These efforts are intended to realign the Company's operations with long-term growth objectives.

Results of operations

Year ended December 31, 2024

For the years ended December 31, 2024 and 2023, the Company has generated a revenue of $246,466 and $510,235, respectively. Breakdown of revenue as following:

		Years ended December 31
		2024				2023
BCBF Business Sales Revenue		$	17			$	57,803
Percentage towards Total Revenue			0	%			11	%
Online Business Revenue without inventory risk		$	-			$	90,471
Online Business Revenue with inventory risk		$	246,449			$	293,763
Total Online Business Revenue		$	246,449			$	384,234
Percentage towards Total Revenue			100	%			75	%
Beauty Products Business Revenue			-			$	68,198
Percentage towards Total Revenue			-				14	%
Total Revenue		$	246,466			$	510,235
BCBF Business Cost of Sales		$	(6	)		$	(34,517	)
Online Business Cost of Sales - with inventory risk		$	(149,978	)		$	(29,966	)
Beauty Products Business Cost of Sales			-			$	(5,436	)
Total Cost of Sales		$	(149,984	)		$	(69,919	)
BCBF Business Gross Profit		$	11			$	23,286
Online Business Gross Profit - without inventory risk		$	-			$	90,471
Online Business Gross Profit - with inventory risk		$	96,471			$	263,797
Beauty Products Business Gross Profit		$	-			$	62,762
Total Gross Profit		$	96,482			$	440,316
Gross Profit Margin			39	%			86	%
BCBF Business Gross Profit Margin			65	%			40	%
Online Business Gross Profit Margin			39	%			92	%
Beauty Products Business Gross Profit Margin			-				92	%

For the year ended December 31, 2024, the BCBF trading business segment, the online retailing business segment and the beauty products trading business segment contributed 0%, 100% and 0% of the total revenue respectively.

Fiscal Years ended December 31, 2024 and 2023

The Company generated total revenue of $246,466 for the year ended December 31, 2024, a significant decrease of 52% compared to $510,235 for the year ended December 31, 2023 due to the Company's decision to shut down its online business since April 30, 2024. The total revenue cost of the Company increased from $69,919 in 2023 to $149,984 in 2024, reflecting the rising cost burden of the online retail business. The gross profit declined to $96,482 in 2024 from $440,316 in 2023, and overall gross margin decreased from 86% to 39%.

BCBF Trading Business

Revenue from the BCBF trading business decreased significantly from $57,803 in 2023 to $17 in 2024. The Company has continued to operate in this business segment, but has not actively expanded the market.

Online Retail Business

Revenue from the online retail business declined significantly to $246,449 in 2024 from $384,234 in 2023, representing a 36% year-over-year decrease. The cost of revenue increased from $29,966 in 2023 to $149,978 in 2024, Among them, in 2024, there were inventory scrapping, inventory loss, and provision for inventory impairment, which increased the cost by $82,923. Gross margin dropped from 92% in 2023 to 39% in 2024, reflecting reduced pricing power, increased platform fees, and supplier costs in a competitive e-commerce environment.

Beauty Products Trading Business

Revenue from the beauty products trading business declined to $0 in 2024 from $68,198 in 2023, the Company withdrew from this market segment in April, 2024.

General and Administrative Expenses

The general and administrative expenses for the year ended December 31, 2024 and 2023 were $141,111 and $348,051 respectively, primarily related to salary and social contribution, lease expenses, travelling expenses, advertising expenses, audit fees and consultancy fees. Due to the reduction in personnel and rent, there has been a decrease in general and administrative expenses.

Selling and Distribution Expenses

Selling and distribution expenses were $2,452 for the year ended December 31, 2024, compared to $85,418 for the prior year, reflecting a significant year-over-year decrease of approximately 97%. These expenses were primarily associated with third-party storage fees related to the Company's online and beauty product sales. The substantial reduction in 2024 was due to the sharp decline in sales activity and the discontinuation of inventory-handling operations as the Company moved away from its overall product distribution activities.

Operating Loss

As a result of the significant drop in revenue and gross profit, partially offset by reductions in general and administrative expenses, the Company recorded an operating loss of $47,081 for the year ended December 31, 2024. This compares to an operating income of $6,847 for the year ended December 31, 2023. The decline in operating performance primarily reflects the substantial contraction across all former business segments and the resulting decrease in revenue-generating activities.

Liquidity and Capital Resources

Years ended December 31, 2024 and 2023

Cash Used In Operating Activities

For the year ended December 31, 2024, the Company used $116,070 in operating activity, of which primarily consist of decrease in inventories, decrease in prepayment, deposits and other receivables, decrease in other payables and accrued liabilities.

For the year ended December 31, 2023, the Company used $318,155 in operating activity, of which primarily consist of increase in inventories, increase in prepayment, deposits and other receivables, decrease in other payables and accrued liabilities, decrease in deferred revenue and reduction in lease liability contra by net income, depreciation and amortization, increase in account payables and increase in receipt advance.

Cash Used In Investing Activities

For the year ended December 31, 2024, the Company did not have any investing activities affecting cash position.

For the year ended December 31, 2023, the Company did not have any investing activities affecting cash position.

Cash Provided by Financing Activities

For the year ended December 31, 2024, the Company realized cash provided by financing activity in the amount of $53,016, of which consist of advance from director.

For the year ended December 31, 2023, the Company realized cash provided by financing activity in the amount of $179,956, of which consist of advance from director.

Foreign Currency

Most of our revenues and operating expenses are denominated in Renminbi. The Renminbi is currently freely convertible under the "current account," which includes dividends, trade and service-related foreign exchange transactions, but not under the "capital account," which includes foreign direct investment and loans. Under our current corporate structure, our company in the United States may rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have.

Under existing PRC foreign exchange regulations, payments of current account items, including payment of dividends, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Our PRC subsidiaries may also retain foreign exchange in its current account, subject to a ceiling approved by SAFE, to satisfy foreign exchange liabilities or to pay dividends. However, we cannot assure you that the relevant PRC governmental authorities will not limit or eliminate our ability to purchase and retain foreign currencies in the future.

Since a significant amount of our future revenues will be denominated in Renminbi, the existing and any future restrictions on currency exchange may limit our ability to utilize revenues generated in Renminbi to fund our business activities outside China, if any, or expenditures denominated in foreign currencies.

Foreign exchange transactions under the capital account are subject to limitations and require registration with or approval by the relevant PRC governmental authorities. In particular, any transfer of funds from us to any of our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject to certain statutory limit requirements and registration or approval of the relevant PRC governmental authorities, including the relevant administration of foreign exchange and/or the relevant examining and approval authority. Our ability to use the U.S. dollar proceeds of the sale of our equity or debt to finance our business activities conducted through our PRC subsidiaries will depend on our ability to obtain these governmental registrations or approvals. In addition, because of the regulatory issues related to foreign currency loans to, and foreign investment in, domestic PRC enterprises, we may not be able to finance the operations of our PRC subsidiaries by loans or capital contributions. We cannot assure you that we can obtain these governmental registrations or approvals on a timely basis, if at all.

The amount of cash denominated in RMB is approximately CNY209,092 (Equivalent to USD29,087) as of December 31, 2024.

Off-balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of December 31, 2024.

Contractual Obligations

As a smaller reporting company, we are not required to provide the aforementioned information.

Critical Accounting Policies

Revenue Recognition

The Company generates two streams of revenue.

The first stream of revenue is generated through sale of goods, primarily BCBF and beauty products. Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods and services. The Company applies the following five-step model in order to determine this amount:

(i) identification of the promised goods and services in the contract;

(ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations; and

(v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Company records revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company records revenue from the sale of product upon shipment or delivery of the products to the customer.

While another revenue stream is our online retailing business. In online retailing business we have differentiate into two distinct revenue streams: sales revenue with inventory risk and sales revenue without inventory risk. Initially, the Company act as an agent in transactions, meaning we place orders with suppliers upon receiving orders from customers. The suppliers will then directly send the goods to the customer based on our order info. A reporting entity assumes the role of agent in a transaction and arranges for the other party to provide the specified goods or service. Consequently, product sales revenue is recorded net of cost of sales, as we act as an agent and do not bear inventory risk.

We purchased stock from several suppliers and outsourced inventory warehouse to a few suppliers. We bear the inventory risk, and therefore we are the primary responsible party in this regard. Similar to previous operations, contracts are formed when customers place orders in the app, and the performance obligation remains unchanged. Revenue recognition continues to be based on the point in time when customers assume control and legal ownership of the purchased products, without deducting any associated costs, as this reflects the normal transactional relationship between seller and buyer. We recognize revenue when customers take control and legal ownership of the purchased products.

From the quarter four of 2023 onwards, the company continue operate as sales income from BCBF and online retailing business with and without inventory risk. to fulfill such purposes. As such, revenue is being recognized on net basis, i.e. gross revenue received from customer deduct the cost of purchase to supplier.

Besides, after adopting ASC 606-10-55-42, we offer our customers an option, allowing them to receive a 54% cash back from the purchase of "Yao Cheng Duo" products in 2024, and a 44% cash back in 2023. Therefore, the 54% cash back in 2024 and the 44% cash back in 2023 are substantive rights, and we offset the cash back portion against the revenue instead of recognizing the entire purchase amount as revenue.

Going Concern Uncertainties

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company suffered a loss of $59,275 for the year ended December 31, 2024 resulting in accumulated deficit of $439,273 and a working capital deficit of $281,771.

The Company's cash position may not be significant enough to support the Company's daily operations. While the Company believes in the viability of its strategy and in its ability to raise additional funds, there can be no assurances to that effect. The Company's ability to continue as a going concern is dependent upon its ability to improve profitability and the ability to acquire funding through public offering. If funding from public offering is insufficient, then the Company shall rely on the financial support from its controlling shareholder.

These and other factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that financial statements are issued. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.

Recent accounting pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). ASU 2020-06 aims to simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. ASU 2020-06 also simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity and amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. Early adoption is permitted for fiscal years beginning after December 15, 2020. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods therein. The adoption of the new guidance, effective January 1, 2024, did not have an impact on the financial condition, results of operations, cash flows and disclosures of the Company.

The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company's consolidated financial statements.

Restatement of Interim Financial Statements

The Company restated its previously issued unaudited condensed consolidated financial statements for the first, second, and third quarters of fiscal year 2024, primarily to correct the timing of recognition of certain revenues, costs and expenses.

The Company reduced its operating profit before income tax by $48,619 for the three months ended March 31, 2024, and correspondingly increased it by $48,619 for the three months ended June 30, 2024. The restatements had no impact on the Company's consolidated full-year net income, financial position, or cash flows for the year ended December 31, 2024. Please refer to Note. 14.