EVER HARV This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company and its subsidiary for the fiscal years endedDecember 31, 2021 , and 2020. The discussion and analysis that follows should be read together with the section entitled "Cautionary Note Concerning Forward-Looking Statements" and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on Form 10-K. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by
us in this report.
Currency and exchange rate
Unless otherwise noted, all currency figures quoted as "U.S. dollars", "dollars" or "US$" refer to the legal currency ofthe United States . References to "Hong Kong Dollar" are to the Hong Kong Dollar, the legal currency of theHong Kong Special Administrative Region ofthe People's Republic of China . Throughout this report, assets and liabilities of the Company's subsidiaries are translated intoU.S. dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders' equity.
We are not required to obtain permission from the Chinese authorities to operate or to issue securities to foreign investors.
We, through our subsidiaries are currently engaged in the rendering of marketing and strategic advisory services and also offer financing and business development solutions as well as related professional services such as assisting clients in meeting regulatory and best practices requirements. With the recent boom of the Non-Fungible Tokens (NFTs) sector, we expect to assist technology companies in meeting regulatory and legal requirements while setting up and offering NFT and hybrid NFT products and services inHong Kong . We are at a development stage company and reported a net loss of$2,237,346 and$512 for the years endedDecember 31, 2021 and 2020, respectively. We had current assets of$7,504 and current liabilities of$81,473 as ofDecember 31, 2021 . As ofDecember 31, 2020 , our current assets and current liabilities were$123,060 and$22,797 , respectively. Our financial statements for the years endedDecember 31, 2021 and 2020 have been prepared assuming that we will continue as a going concern. Our continuation as a going concern is dependent upon improving our profitability and the continuing financial support from our stockholders. Our sources of capital in the past have included the sale of equity securities, which include common stock sold in private transactions and public offerings, capital leases and short-term and long-term debts. We believe that we will require approximately$1 million in the next twelve months to sustain our operations and an additional$2 million for the subsequent twelve month period to sustain our operations and implement our business plan. For the immediate future, we intend to finance our business expansion efforts through loans from existing shareholders or financial institutions and private placements of our securities. 16 Results of Operations.
Comparison of the year ended
The following table sets forth certain operational data for the year ended
Year ended December 31,
2021 2020
Revenue $ 488,663 $ 65,113
Cost of revenue (456,893 ) (64,011 )
Gross profit 31,770 1,102
General and administrative expenses (2,269,116 ) (5,173 )
Loss from operation (2,237,346 ) (4,071 )
Total other income - 3,559
Income tax expense - -
NET LOSS $ (2,237,346 ) $ (512 )
Revenue.
During the years ended
Year ended December 31, 2021 December 31, 2021
Percentage Accounts
Customer Revenues of revenues receivable
IOT Solution Limited (related party) $ 488,663 100% Total: $ -
Year ended December 31, 2020 December 31, 2020
Percentage
Customer Revenues of revenues Accounts receivable
IOT Solution Limited (related party)$ 65,113 100%
Total: $ 1,296
All customers are located in
Cost of Revenue.
Cost of Revenue for the years endedDecember 31, 2021 and 2020 was$456,893 and$64,011 , respectively. The increase in cost of revenue is primarily attributable to the increase in sales volume. 17
During the year ended
Year ended December 31, 2021 December 31, 2021
Percentage Accounts
Customer Cost of revenues of cost of revenues payable
AppClass (HK) Limited (related party) $ 256,238
56% Total: $ -
During the year ended
Gross Profit.
We achieved a gross profit of
General and Administrative Expenses ("G&A").
We incurred G&A expenses of$2,269,116 and$5,173 for the years endedDecember 31, 2021 and 2020, respectively. The increase in G&A is primarily attributable to the payroll expenses and consulting expenses. Other Income, net.
We have generated other income of
Income Tax Expense.
Our income tax expenses for the years ended
Liquidity and Capital Resources
We have never paid dividends on our Common Stock. Our present policy is to apply cash to investments in product development, acquisitions or expansion; consequently, we do not expect to pay dividends on Common Stock in the foreseeable future.
We expect to incur significantly greater expenses in the near future as we expand our business or enter into strategic partnerships. We also expect our general and administrative expenses to increase as we expand our finance and administrative staff, add infrastructure, and incur additional costs related to being reporting act company, including directors' and officers' insurance and increased professional fees.
We have never paid dividends on our Common Stock. Our present policy is to apply cash to investments in product development, acquisitions or expansion; consequently, we do not expect to pay dividends on Common Stock in the foreseeable future.
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Going Concern Uncertainties
Our continuation as a going concern is dependent upon improving our
profitability and the continuing financial support from our stockholders. Our
sources of capital may include the sale of equity securities, which include
common stock sold in private transactions, capital leases and short-term and
long-term debts. While we believe that we will obtain external financing and the
existing shareholders will continue to provide the additional cash to meet our
obligations as they become due, there can be no assurance that we will be able
to raise such additional capital resources on satisfactory terms. We believe
that our current cash and other sources of liquidity discussed below are
adequate to support operations for at least the next 12 months.
Years Ended
December 31,
2021 2020Net cash used operating activities$ (125,790 ) $ (167 ) Net cash provided by investing activities - -
Net cash provided by (used in) financing activities 134,647 (517 )
For the year ended
For the year endedDecember 31, 2020 , net cash used in operating activities was$167 , which consisted primarily of a net loss of$512 , an increase in accounts receivable of$1,296 and offset by an increase in accrued liabilities and other payables of$1,641 .
We expect to continue to rely on cash generated through financing from our existing shareholders and private placements of our securities, however, to finance our operations and future acquisitions.
Net Cash Provided By Investing Activities.
For the years ended
Net Cash Provided by (Used In) Financing Activities.
For the year endedDecember 31, 2021 , net cash provided by financing activities was$134,647 consisting of advances from a director of$133,351 and advance
from a related company of$1,296 .
For the year ended
Off-Balance Sheet Arrangements
We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
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Critical Accounting Policies and Estimates.
The preparation of financial statements in conformity with accounting principles generally accepted inthe United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management's subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following accounting policies are critical in the preparation of our financial statements. · Use of estimates and assumptions In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates. · Basis of consolidation
The consolidated financial statements include the accounts of TLGN and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
· Cash and cash equivalents Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments. · Impairment of long-lived assets
In accordance with the provisions of ASC Topic 360, "Impairment or Disposal of
Long-Lived Assets", all long-lived assets such as plant and equipment and
intangible assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is
evaluated by a comparison of the carrying amount of an asset to its estimated
future undiscounted cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amounts of the assets exceed the
fair value of the assets.
· Revenue recognition
The Company adopted Accounting Standards Update ("ASU") No. 2014-09, Revenue
from Contracts with Customers (Topic 606) ("ASU 2014-09") using the full
retrospective transition method. The Company's adoption of ASU 2014-09 did not
have a material impact on the amount and timing of revenue recognized in its
consolidated financial statements.
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Under ASU 2014-09, the Company recognizes revenue when control of the promised
goods or services is transferred to customers, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for those goods
or services.
The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
· identify the contract with a customer; · identify the performance obligations in the contract; · determine the transaction price; · allocate the transaction price to performance obligations in the contract; and · recognize revenue as the performance obligation is satisfied. Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. Most of the Company's contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore,
not distinct.
Revenue is earned from the rendering of IT programming services to the customers. The Company recognizes services revenue over the period in which such services are performed under fixed price contracts.
· Income taxes
The Company adopted the ASC 740 "Income tax" provisions of paragraph
740-10-25-13, which addresses the determination of whether tax benefits claimed
or expected to be claimed on a tax return should be recorded in the consolidated
financial statements. Under paragraph 740-10-25-13, the Company may recognize
the tax benefit from an uncertain tax position only if it is more likely than
not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits
recognized in the consolidated financial statements from such a position should
be measured based on the largest benefit that has a greater than fifty percent
(50%) likelihood of being realized upon ultimate settlement. Paragraph
740-10-25-13 also provides guidance on de-recognition, classification, interest
and penalties on income taxes, accounting in interim periods and requires
increased disclosures. The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis
of assets and liabilities are reported in the accompanying balance sheets, as
well as tax credit carry-backs and carry-forwards. The Company periodically
reviews the recoverability of deferred tax assets recorded on its balance sheets
and provides valuation allowances as management deems necessary.
· Foreign currencies translation
Transactions denominated in currencies other than the functional currency are
translated into the functional currency at the exchange rates prevailing at the
dates of the transaction. Monetary assets and liabilities denominated in
currencies other than the functional currency are translated into the functional
currency using the applicable exchange rates at the balance sheet dates. The
resulting exchange differences are recorded in the consolidated statement of
operations.
The reporting currency of the Company is United States Dollar ("US$") and the
accompanying consolidated financial statements have been expressed in US$. In
addition, the Company is operating in Hong Kong and maintains its books and
record in its local currency, Hong Kong Dollars ("HKD"), which is a functional
currency as being the primary currency of the economic environment in which the
operations are conducted. In general, for consolidation purposes, assets and
liabilities of its subsidiary whose functional currency is not US$ are
translated into US$, in accordance with ASC Topic 830-30, "Translation of
Financial Statement", using the exchange rate on the balance sheet date.
Revenues and expenses are translated at average rates prevailing during the
period. The gains and losses resulting from translation of financial statements
of foreign subsidiary are recorded as a separate component of accumulated other
comprehensive income within the statements of changes in stockholder's equity.
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· Comprehensive income
ASC Topic 220, "Comprehensive Income", establishes standards for reporting and
display of comprehensive income, its components and accumulated balances.
Comprehensive income as defined includes all changes in equity during a period
from non-owner sources. Accumulated other comprehensive income, as presented in
the accompanying consolidated statements of changes in stockholders' equity,
consists of changes in unrealized gains and losses on foreign currency
translation. This comprehensive income is not included in the computation of
income tax expense or benefit.
· Segment reporting
ASC Topic 280, "Segment Reporting" establishes standards for reporting
information about operating segments on a basis consistent with the Company's
internal organization structure as well as information about geographical areas,
business segments and major customers in the consolidated financial statements.
· Stock based compensation
Pursuant to ASU 2018-07, the Company follows ASC 718, Compensation-Stock
Compensation ("ASC 718"), which requires the measurement and recognition of
compensation expense for all share-based payment awards (employee or
non-employee), are measured at grant-date fair value of the equity instruments
that an entity is obligated to issue. Restricted stock units are valued using
the market price of the Company's common shares on the date of grant.
· Retirement plan costs
Contributions to retirement plans (which are defined contribution plans) are
charged to general and administrative expenses in the accompanying statements of
operation as the related employee service are provided.
· Related parties
The Company follows the ASC 850-10, "Related Party Disclosures" for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of theCompany; b ) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. 22 · Commitments and contingencies The Company follows the ASC 450-20, "Contingencies" to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company's financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company's business, financial position, and results of operations or cash flows. · Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification
("Paragraph 820-10-35-37") to measure the fair value of its financial
instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards
Codification establishes a framework for measuring fair value in generally
accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, paragraph 820-10-35-37 of the FASB
Accounting Standards Codification establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into
three (3) broad levels. The fair value hierarchy gives the highest priority to
quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs. The three (3) levels of fair
value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting
Standards Codification are described below:
Level 1 Quoted market prices available in active markets for identical assets or
liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly observable as of the
reporting date.
Level 3 Pricing inputs that are generally observable inputs and not corroborated
by market data.
Financial assets are considered Level 3 when their fair values are determined
using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company's financial assets and liabilities, such as cash and cash equivalents, approximate their fair values because of the short maturity of these instruments. 23
Recently Issued Accounting Pronouncements
InMay 2021 , the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40), ("ASU 2021-04"). This ASU reduces diversity in an issuer's accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning afterDecember 15, 2021 . An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The adoption of ASU 2021-04 onJanuary 1, 2022 did not have a material impact on the Company's financial statements or disclosures.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
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