SEATech Ventures Corp. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report. Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. Overview SEATech Ventures Corp. is a company that operates through its wholly owned subsidiary, SEATech Ventures Corp., a Company registered in Labuan, Malaysia,which in turn owns 100% of SEATech Ventures (HK) Limited, the operating Hong Kong Company which is described below. The purpose of SEATech Ventures Corp. Labuan, Malaysia is to act as a holding company. The purpose of SEATech Ventures (HK) Limited is to become the current regional hub for business activities and to engage in operational functions. SEATech Ventures (HK) Limited owns 60% of the newly incorporated SEATech Bigorange CVC Sdn Bhd , which is a company in Malaysia, as part of the business development initiative. At present, we have a physical office in in Bangsar South with address 11-05 & 11-06, Tower A, Ave 3 Vertical Business Suite, Jalan Kerinchi, Bangsar South, 59200 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia. SEATech Ventures Corp. group of companies business activities is that of providing business mentoring services, nurturing and incubation services relating to client businesses and corporate development advisory services to entrepreneurs in the broader technology industry, but with a specific focus on the information and communication technology industry. We will, focus our efforts on nurturing ICT entrepreneurs in Asia. Our advisory services will center on our “ICT Start-Up Mentorship Program”, which is designed to assist tech-based entrepreneurs in solving ICT industry pain points caused by technical insufficiencies, inappropriate financial modelling and weak strategic positioning Our advisory services aim to improve the technical exposure of our clients and to improve their sustainability in the ICT industry community through a combination of mentorship programs. 13 Results of Operations Revenues for the year ended December 31, 2021 and 2020 The Company generated revenue of $383,240 and $250,600 for the year ended December 31, 2021 and 2020. The revenue represented income from provision of business mentoring, nurturing and incubation services relating to client businesses and corporate development advisory services Cost of Revenue and Gross Margin For the year ended December 31, 2021 and 2020, cost incurred in providing corporate development advisory services is $307,700 and $233,400. The Company generates gross profits of $75,540 and $17,200 for the year ended December 31, 2021 and 2020. Selling and Distribution Expenses Selling and distribution expenses for the year ended December 31, 2021 and 2020 amounted to $3,079 and $6,049 respectively. These expenses comprised expenses on website and website maintenance, marketing and networking event. General and Administrative Expenses General and administrative expenses for the year ended December 31, 2021 and 2020 amounted to $175,657 and $122,314 respectively. These expenses are comprised of salary, consultancy fees for listing advisory, professional fee, compliance fee, office and operation expenses and depreciation. Other Income The Company recorded an amount of $1,546 and $3,977 as other income for the year ended December 31, 2021 and 2020 respectively. This income is derived from the foreign exchange gain. Net Loss and Net Loss Margin The net loss for the year was $101,650, for the year ended December 31, 2021 as compared to $107,186 for the year ended December 31, 2020. The decrease in net loss of $5,536 was contributed to the higher gross profit generate from sales. Taking into the loss for the year ended December 31, 2021, the accumulated loss for the Company has increased from $398,537 to $499,923. Liquidity and Capital Resources As of December 31, 2021, we had cash and cash equivalents of $192,286. We expect increased levels of operations going forward will result in more significant cash flow and in turn working. We depend substantially on operating activities to provide us with the liquidity and capital resources we need to meet our working capital requirements and to make capital investments in connection with ongoing operations. Cash Used in Operating Activities For the year ended December 31, 2021 and 2020, net cash used in operating activities was $85,051 and $401,710. The cash used in operating activities was mainly for payment of sales and marketing and general and administrative expenses. Cash Used in Financing Activities For the year ended December 31, 2021, net cash provided by financing activities was $300. For the year ended December 31, 2020, net cash provided by financing activities was $343,200. The financing cash flow performance primarily reflects the borrowing repayment to director and advance borrowing to related party. 14 Cash Used in Investing Activities For the financial year ended December 31, 2021 and 2020, the net cash used in investing activities was $4,250 and $0. The investing cash flow performance primarily reflects the investment in other companies in the ICT industry. Credit Facilities We do not have any credit facilities or other access to bank credit. Critical Accounting Policies and Estimates Basis of presentation The consolidated financial statements for SEATech Ventures Corp. and its subsidiaries for the year ended December 31, 2021 is prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of SEATech Ventures Corp. and its wholly owned subsidiaries, SEATech Ventures Corp. and SEATech Ventures (HK) Limited. Intercompany accounts and transactions have been eliminated on consolidation. The Company has adopted December 31 as its fiscal year end. Basis of consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated upon consolidation. Use of estimates Management uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheets, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates. 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. Revenue recognition Financial Accounting Standards Board, or FASB, issued ASC 606. The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue. The Company derives its revenue from provision of business mentoring, nurturing, incubating and corporate development advisory services to ICT and technology-based companies. 15 Cost of revenue Cost of revenue includes the cost of services and product in providing business mentoring, nurturing, incubating and corporate development advisory services Income taxes Income taxes are determined in accordance with the provisions of ASC Topic 740, “ Income Taxes ” (“ASC Topic 740”). Under this 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 basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any 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. ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. Net income/(loss) per share The Company calculates net loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. Foreign currencies translation The reporting currency of the Company and its subsidiaries in Labuan and Hong Kong, are United States Dollars (“US$”), while its subsidiary in Malaysia, maintains its books and record in Ringgit Malaysia (“MYR”), being the primary currency of the economic environment in which these entities operate. 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 statements of operations. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. Foreign currencies translation (cont’d) 16 Translation of amounts from RM and HK$ into US$1 has been made at the following exchange rates for the respective periods: As of and for the year ended December 31, 2021 2020 Year-end RM : US$1 exchange rate 4.17 4.02 Year-average RM: US$1 exchange rate 4.14 4.08 Year-end HK$ : US$1 exchange rate 7.80 7.75 Year-average HK$ : US$1 exchange rate 7.77 7.75 Related parties Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence. Fair value of financial instruments: The carrying value of the Company’s financial instruments: cash and cash equivalents, accounts payable and accrued liabilities, and amount due to a director approximate at their fair values because of the short-term nature of these financial instruments. The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Recent accounting pronouncements The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do 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. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements 17 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this item are located in PART IV of this Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.