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 100% of SEATech CVC Sdn. Bhd. and SEATech Ventures Sdn. Bhd. respectively , which both companies are in Malaysia, as part of our business development initiative. Currently, our physical office is in B-23A-02, G-Vestor Tower, Pavilion Embassy, 200, Jalan Ampang, 50450 Kuala Lumpur, Malaysia. SEATech Group business activities are mainly 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. As part of our expansion plan, on September 20, 2022 Greenpro Capital Corp. (NASDAQ: GRNQ) appointed SEATech Ventures (HK) Limited as a listing sponsor to engage potential token issuers to list on Green-X, the World’s first Shariah-Compliant ESG (environment, social and governance) Digital Asset Exchange (“DAX”) in Labuan, Malaysia. According to global consulting firm BCG, the asset tokenization market will grow 50 times from US$310 billion in this year, to US$16.1 trillion by 2030, driven by demand from a wide range of investors for greater access to private markets (Source: World Economic Forum – Global Agenda Council, BCG Analysis) . As a DAX listing sponsor, SEATech Ventures (HK) Limited focus on digital/physical asset-backed companies in the STO (security token offering) listing on Green-X. 13 Results of Operations Revenues for the year ended December 31, 2023 and 2022 The Company generated revenue of $328,340 and $548,095 for the year ended December 31, 2023 and 2022. The revenue represented income from provision of business mentoring, nurturing and incubation services relating to client businesses and corporate development advisory services. A decrease of revenue was due to lower revenue deal flow during the year ended December 31, 2023. Cost of Revenue and Gross Margin For the year ended December 31, 2023 and 2022, cost incurred in providing corporate development advisory services is $251,700 and $454,053. The decrease of cost of revenue is associated with the decrease in revenue for the year ended December 31, 2023. The Company generates gross profits of $76,640 and $94,042 for the year ended December 31, 2023 and 2022. Selling and Distribution Expenses Selling and distribution expenses for the year ended December 31, 2023 and 2022 amounted to $835 and $7,613 respectively. These expenses comprised expenses on website and website maintenance, marketing and networking event. The decrease of selling and distribution expenses is associated with lesser marketing expenses incurred for the year ended December 31, 2023. General and Administrative Expenses General and administrative expenses for the year ended December 31, 2023 and 2022 amounted to $378,634 and $182,522 respectively. These expenses are comprised of salary, professional fee, compliance fee, office and operation expenses. The increase of general and administrative expenses is mainly due to the provision for credit loss allowance for the year ended December 31, 2023. Other Income The Company recorded an amount of $0 and $1,936 as other income for the year ended December 31, 2023 and 2022 respectively. This income is derived from the foreign exchange gain. Net Loss and Net Loss Margin The net loss was $302,829 for the year ended December 31, 2023 as compared to $94,157 for the year ended December 31, 2022. The increase in net loss of $208,672 was contributed to the higher general and administrative expenses incurred for the year ended December 31, 2023. Taking into the loss for the year ended December 31, 2023, the accumulated loss for the Company has increased from $594,080 to $896,909. Liquidity and Capital Resources As of December 31, 2023, we had cash and cash equivalents of $29,392. We expect increased levels of operations going forward will result in more significant cash flow and in turn working capital. 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, 2023 and 2022, net cash used in operating activities was $124,661 and $59,529. The cash used in operating activities was mainly for payment of sales and marketing and general and administrative expenses. 14 Cash Provided by Financing Activities For the year ended December 31, 2023, net cash provided by financing activities was $20,000. For the year ended December 31, 2022, net cash provided by financing activities was $0. The financing cash flow performance primarily reflects the share subscription received in advance. Cash (Used in) / Provided by Investing Activities For the financial year ended December 31, 2023, the net cash used in investing activities was $650. For the financial year ended December 31, 2022, the net cash provided by investing activities was $200. The investing cash flow performance primarily reflects the investment in other companies. Credit Facilities We do not have any credit facilities or other access to bank credit. Critical Accounting Policies and Estimates 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. 15 Accounts receivable Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make an adjustment to the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. 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. 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. 16 Foreign currencies translation The reporting currency of the Company and its subsidiaries in Labuan and Hong Kong, are United States Dollars (“US$”), while its subsidiaries in Malaysia, maintains the 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 and the equity accounts are translated at historical rates . 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$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. Translation of amounts from MYR and HK$ into US$1 has been made at the following exchange rates for the respective periods: As of and for the year ended December 31, 2023 2022 Year-end MYR : US$1 exchange rate 4.59 4.40 Year-average MYR: US$1 exchange rate 4.56 4.40 Year-end HK$ : US$1 exchange rate 7.81 7.81 Year-average HK$ : US$1 exchange rate 7.83 7.83 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. 17 Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements 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.