NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
|
1.
|
TITLE, ORGANIZATION AND REORGANIZATION
|
TEMIR CORP. (“Temir” or
the “Company”) is a corporation established under the corporation laws in the State of Nevada on May 19, 2016. The Company
commenced operations in tourism. Temir Corp. was a travel agency that organized individual and group tours in Kyrgyzstan, such as cultural,
recreational, sport, business, ecotours and other travel tours. The company’s principal executive offices are located at 54 Frukovaya
Street, Bishkek, Kyrgyzstan 720027. On July 15, 2019, the Company’s principal office relocated to Room 1204-06, 12/F, 69 Jervois
Street, Sheung Wan, Hong Kong. On January 15, 2020, the Company’s principal office has been relocated to Suite 1802-03, 18/F, Strand
50, 50 Bonham Strand, Sheung Wan, Hong Kong. The management of Temir Corp is planning to restructure the Company’s business from
travel agency to a Fintech Company with major business focusing on financials services and using the internet, mobile devices, software
technology or cloud services to perform or connect with financial services.
On April 2, 2020, the Company as purchaser
and Ace Vantage Investments Limited (equally held by Mr. Roy Kong Hoi Chan (an executive director and president of the Company, “Mr.
Roy Chan”) and his father) as vendor (the “vendor”) entered into a sale and purchase agreement (the “Agreement”)
with respect to the acquisition (the “Transaction”) of the entire issued share capital of JTI Financial Services Group Limited
(“JTI”) for a consideration of $4,686,272, which would be satisfied by the allotment and issue of the shares of the Company.
Under the terms and conditions of the
Agreement, the Company offered, sold and issued 1,874,508 shares of common stock of the Company as consideration shares (the
“Consideration Shares”) at the issue price of $2.5 per Consideration Share for the acquisition of all the issued share capital
of JTI.
On June 30, 2020, pursuant to the amendment
to the Agreement, the parties agreed to adjust (i) the consideration of the Transaction from $4,686,272 to $10,295,455; and (ii) the number
of Consideration Shares from 1,874,508 shares to 4,118,182 shares. The effect of the issuance is that the Vendor will hold approximately
61.54% of the issued and outstanding shares of common stock of the Company.
Mr. Roy Chan, the founder of JTI, an
executive director and president of the Company, is the holder of 629,350 shares of common stock of the Company prior to the Transaction.
After the issue of 4,118,182 shares
of Temir, Ace Vantage holds 61.54% shareholding of Temir and Mr. Roy Chan and Mr. Chan Hip Fong (father of Mr Roy Chan) together hold
70.94%.
Upon completion of the Transactions
on July 6, 2020, Temir became interested in the entire equity interest in JTI, and as such, JTI became a wholly-owned subsidiary of Temir.
For financial accounting purposes, the share exchange was accounted for as a reverse acquisition by JTI, and resulted in a recapitalization,
with JTI being the accounting acquirer and Temir as the acquired entity.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
JTI was incorporated in Hong Kong,
China on February 8, 2019.
The Company through its subsidiaries
provide diversified financial services. JTI has four operating subsidiaries, namely, JTI Finance Limited (“JF”), Concept We
Mortgage Broker Limited (“CW”), JTI Property Agency Limited (“JP”) and JTI Asset Management Limited (“JA”)
and Temir Logistics Industrial Park Limited “Temir Logistics”) as an investment holding company.
On May 20, 2021, the Company, Hainan
Qicheng Asset Management Joint Stock Company (“Hainan”) and Temir Logistics entered into a sale and purchase agreement (“SPA”),
pursuant to which the Company shall issue 930,233 shares of the Company at a price of $21.5 per share, valued at $20,000,000 or in exchange
of 10% shareholding in Bac Giang International Logistics Co., Ltd. Bac Giang is a company incorporated in the Socialist Republic of Vietnam,
the principal business of which is to build and run a modern international logistics park in Bac Giang Province, Vietnam. 930,233 shares
of the Company were issued to the nominee of Hainan on June 8, 2021. Based on the SPA, 930,233 shares were issued within one month from
the signing date of SPA. The transfer of shares of Bac Giang will be completed within 3 years from the date of SPA.
Temir Logistics is a wholly owned subsidiary
of the Company, which is incorporated in Hong Kong on May 17, 20201, principally engaged in investment holding. It was intended to invest
in Bac Giang International Logistics Co., Ltd., which is in turn building and running an international logistics park in Bac Giang Province,
Vietnam.
On August 25, 2021, the Company, Hainan
and Temir Logistics entered into a SPA Termination agreement (the “Termination Agreement”) to terminate all of the rights
and obligation of the SPA entered on May 20, 2021 and to cancel the 930,233 shares issued to the nominee. 930,233 shares were cancelled
on September 16, 2021.
On May 5, 2021, (i) Direct Assistance
Limited, a wholly owned subsidiary of EFT Solutions Holdings Limited (a company listed on GEM of The Stock Exchange of Hong Kong Limited),
(ii) 2Go Investments Group Limited and (iii) JTI formed eDDA Solutions Limited (“eDDA”), a company incorporated in Hong Kong
with limited liability, which will be principally engaged in the business of sales and maintenance services for the electronic direct
debit authorization (“eDDA platform”). JTI has contributed share capital of $1 (HK$10), representing a 10% shareholding of
eDDA. eDDA has not commenced operations as of the date of approval of these financial statements.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
|
Company name
|
|
Place/date of incorporation
|
|
Principal activities
|
|
|
|
|
|
|
|
|
1.
|
JTI Finance Limited (“JF”)
|
|
Hong Kong, China/ December 29, 2011
|
|
Money lending
|
|
|
|
|
|
|
|
|
2.
|
Concept We Mortgage Broker Limited (“CW”)
|
|
Hong Kong, China / December 18, 2013
|
|
Mortgage broker providing mortgage related consultancy services
|
|
|
|
|
|
|
|
|
3.
|
JTI Property Agency Limited (“JP”)
|
|
Hong Kong, China/ December 21, 2011
|
|
Property agency
|
|
|
|
|
|
|
|
|
4.
|
JTI Asset Management Limited (“JA”)
|
|
Hong Kong, China/ May 2, 2017
|
|
General consulting services
|
|
|
|
|
|
|
|
|
5.
|
Temir Logistics Industrial Park Limited
|
|
Hong Kong, China/ May 17, 2021
|
|
Investment holding
|
The formation of JTI Financial Services
Group Limited was completed in March 2019. Upon incorporation, JTI issued 1 ordinary share at HK$1 to Mr. Roy Kong Hoi Chan. On March
20, 2019, JTI issued 9,999,999 shares of the Company to Ace Vantage Investments Limited (“Ace Vantage”) at a total cash consideration
of HK$3,509,999.65 ($450,000), resulting a total share capital of 10,000,000 shares at HK$3,510,000.65 ($450,000). Ace Vantage was 50%
owned by Mr. Roy Kong Hoi Chan and 50% owned by Mr. Chan Hip Fong, father of Mr. Roy Kong Hoi Chan. The Company is owned and controlled
by the same control group as JF, CW, JP and JA. On March 29, 2019, the beneficial shareholders of JF, CW, JP and JA exchanged 100% of
their shareholding of JF, CW, JP and JA for the shares of the Company (the “Share Exchange”). The Share Exchange has been
accounted for as a common control transaction. Other than its 100% ownership of JF, CW, JP and JA, JTI has no significant assets and no
other business operations.
JF was incorporated in Hong Kong, China
on December 29, 2011 as a company with limited liability. Upon incorporation, JF issued 1 ordinary share to Ace Vantage at HK$1. On March
29, 2019, Ace Vantage transferred 100% of their shareholding of JF to JTI.
CW was incorporated in Hong Kong, China
on December 18, 2013 as a company with limited liability. Upon incorporation, CW issued 10,000 ordinary shares to Century Crown Investment
Limited at HK$1 each. Century Crown Investment Limited was incorporated in Hong Kong, China and 100% held by Ace Vantage. On March 29,
2019, Century Crown Investment Limited transferred 100% of their shareholding of CW to JTI.
JP was incorporated in Hong Kong, China
on December 21, 2011 as a company with limited liability. Upon incorporation, JP issued 1 ordinary share to Ace Vantage at HK$1. On March
29, 2019, Ace Vantage transferred 100% of their shareholding of JP to JTI.
JA was incorporated in Hong Kong, China
on May 2, 2017 as a company with limited liability. Upon incorporation, JA issued 1 ordinary share to Ace Vantage at HK$1. On March 29,
2019, Ace Vantage transferred 100% of their shareholding of JA to JTI
The acquisition of JF, CW, JP and JA
by JTI has been accounted for as common control transactions in a manner similar to a pooling of interests and there was no recognition
of any goodwill or excess of the acquirers’ interest in the net fair value of the acquirees’ identifiable assets, liabilities
and contingent liabilities over cost at the time of the common control combinations. Therefore, these transactions were recorded at historical
cost with a reclassification of equity from retained profits to additional paid in capital to reflect the deemed value of consideration
given in the local jurisdiction and the capital structure of JF, CW, JP and JA. The consolidated financial statements of the Company include
all of the accounts of the Company and its subsidiaries, JF, CW, JP and JA for all periods presented. All material intercompany transactions
and balances have been eliminated in the consolidation.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis of presentation
The unaudited condensed financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The interim condensed financial information
as of November 30, 2021 and for the three months ended November 30, 2021 and 2020 have been prepared by the Company without audit, pursuant
to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in the financial statements
prepared in accordance with U.S. GAAP have not been included. The interim condensed financial statements are not necessarily indicative
of the results of operations for the full year. These interim condensed financial statements and related footnotes should be read in conjunction
with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10K for the year ended August
31, 2021, filed with the Securities and Exchange Commission.
In the opinion of management, all adjustments
(which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s interim
condensed consolidated financial position as of November 30, 2021, its interim condensed consolidated results of operations and cash flows
for the three months ended November 30, 2021 and 2020, as applicable, have been made.
Going concern
The
accompanying condensed consolidated financial statements have been prepared using the going
concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of
business.
As of November 30, 2021, the Company
has suffered recurring losses from operations, and records an accumulated deficit and a working capital deficit of $994,140 and $542,859,
respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon improving its profitability and the continuing financial support
from its shareholders or other debt or capital sources. Management believes the existing shareholders or external financing will provide
the additional cash to meet the Company’s obligations as they become due.
The continuation of the Company as
a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders or other debt
or capital sources. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s
obligations as they become due. No assurance can be given that any future financing, if needed, will be available or, if available, that
it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may
contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stock holders, in the
case of equity financing.
In March 2020, the World Health Organization
declared the outbreak of COVID-19 as a global pandemic, which continues to spread around the world. There is significant uncertainty around
the breadth and duration of business disruptions related to COVID-19, as well as its impact on the Hong Kong’s and global economy.
While it is difficult to estimate the financial impact of COVID-19 on the Company’s operations, management believes that COVID-19
could have a material impact on its financial results at this time, both current financial year and next financial year.
These
condensed consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able
to continue as a going concern.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
Use of estimates
Preparing financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. The more significant areas requiring the use of management’s estimates and assumptions relate to allowance
for doubtful accounts, impairment of long-lived assets and valuation allowance for deferred tax assets. Management bases its estimates
on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual
results may differ significantly from these estimates. In addition, different assumptions or circumstances could reasonably be expected
to yield different results.
Cash and cash equivalents
For purposes of the cash flow statements,
the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash
equivalents. Cash includes cash on hand and demand deposits in accounts maintained with financial institutions within the Hong Kong.
Loans receivable
Loans receivable primarily represent
loan amounts due from customers. Loans receivable are recorded at unpaid principal balances net of provision that reflects the Company’s
best estimate of the amounts that will not be collected. The loans receivable portfolio consists of business and personal loans. As of
November 30, 2021 and August 31, 2021, the Company has nil loans receivable.
Provision for loan losses
The provision for loan losses is increased
by charges to income and decreased by charge offs (net of recoveries). Recoveries represent subsequent collection of amounts previously
charged-off. The increase in provision for loan losses is the netting effect of “reversal” and “provision” for
both business and personal loans. If the ending balance of the provision for loan losses after any charge offs (net of recoveries) is
less than the beginning balance, it will be recorded as a “reversal”; if it is larger, it will be recorded as a “provision”
in the provision for loan loss. The netting amount of the “reversal” and the “provision” is presented in the statements
of operations and comprehensive income.
The provision consists of specific
and general components. The specific component consists of the amount of impairment related to loans that have been evaluated on an individual
basis, and the general component consists of the amount of impairment related to loans that have been evaluated on a collective basis.
Loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect
all amounts when due according to the contractual terms of the loan agreement. Loans for which the terms have been modified resulting
in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings (“TDRs”).
The Company recognizes a charge-off
when management determines that full repayment of a loan is not probable. The primary factor in making that determination is the potential
outcome of a lawsuit against the delinquent debtor. The Company will recognize a charge-off when the Company loses contact with the delinquent
borrower for more than nine months or when the court rules against the Company to seize the collateral asset of the delinquent debt from
either the guarantor or borrower. In addition, when the recoverability of the delinquent debt is highly unlikely, the senior management
team will go through a stringent procedure to approve a charge-off. Management estimates the provision balance required using past loan
loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values,
economic conditions, and other factors. Allocations of the provision may be made for specific loans, but the entire provision is available
for any loan that, in management’s judgment, should be charged-off.
The provision for loan losses is maintained
at a level believed to be reasonable by management to absorb probable losses inherent in the portfolio as of each balance sheet date.
The provision is based on factors such as the size and current risk characteristics of the portfolio, an assessment of individual loans
and actual loss, delinquency, and/or risk rating record within the portfolio. The Company evaluates its provision for loan losses on a
quarterly basis or more often as necessary.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
Interest and fee receivables
Interest and fee receivables are accrued
and credited to income as earned but not received. The Company determines a loan past due status by the number of days that have elapsed
since a borrower has failed to make a contractual interest or principal payment. Accrual of interest is generally discontinued when either
(i) reasonable doubt exists as to the full, timely collection of interest or principal or (ii) when a loan interest or principal becomes
past due by more than 90 days (The further extension of loan past due status is subject to management final approval and on case by case
basis). Additionally, any previously accrued but uncollected interest is reversed. Subsequent recognition of income occurs only to the
extent payment is received, subject to management’s assessment of the collectability of the remaining interest and principal. Loans
are generally restored to an accrual status when it is no longer delinquent and collectability of interest and principal is no longer
in doubt and past due interest is recognized at that time.
Accounts receivable
Accounts receivable are presented net
of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses. The Company reviews
the accounts receivable on a periodic basis and makes general and specific allowance when there is doubt as to the collectability of individual
balances. In evaluating the collectability of individual receivable balance, the Company considers many factors, including the age of
the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written
off after exhaustive efforts at collection. The Company only grants credit terms to established customers who are deemed to be financially
responsible. Credit periods to customers are within 90 days after customers received the purchased services. For the three months ended
November 30, 2021 and 2020, no allowance for doubtful accounts has been made.
Impairment of long-lived assets
The Company evaluates long lived assets for impairment at least annually
and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash
flows. Based on the existence of one or more indicators of impairment, the Company measures any impairment of long-lived assets by comparing
the asset’s estimated fair value with its carrying value, based on cash flow methodology. If the net book value of the asset exceeds
the related undiscounted cash flows, the asset is considered impaired and an impairment loss equal to an amount by which the carrying
value exceeds the fair value of the asset is recognized. As of November 30, 2021 and August 31, 2021, management believes there was no
impairment of long-lived assets.
Revenue recognition
Pursuant to the guidance of ASC Topic
606, revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of
consideration to which the Company expects to be entitled to in exchange for those goods or services. The Company follows the five steps
approach for revenue recognition under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations
in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract,
and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
The following table presents the Company’s
revenues disaggregated by revenue sources.
|
|
|
Three months ended
November 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Mortgage referral services
|
|
$
|
69,633
|
|
|
$
|
12,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
69,633
|
|
|
$
|
12,382
|
|
|
|
|
Three months ended
November 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Revenue recognized over time
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Revenue recognized at a point in time
|
|
|
69,633
|
|
|
|
12,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
69,633
|
|
|
$
|
12,382
|
|
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
Primary sources of the Company’s
revenues are as follows:
Interest on loan receivables is accrued
monthly in accordance with their contractual terms and recorded in accrued interest receivable. The Company does not charge prepayment
penalties. Additionally, any previously accrued but uncollected interest is reversed and accrual is discontinued, when either (i) reasonable
doubt exists as to the full, timely collection of interest or principal or (ii) when a loan becomes past due by more than 90 days.
|
|
(b)
|
Property agency services
|
The Company’s entitlement to agency
fee income includes an element of consideration that is variable or contingent on the outcome of future events. Actual agency fee income
to be received is dependent upon, among others, the completion of transaction between buyers and sellers, price concession based on customary
industry practice and payment plans chosen by the buyers.
The Company is required to estimate
the amount of consideration to which it will be entitled from the provision of property agency services. The estimated amount of variable
consideration will be included in the transaction price only to the extent that it is highly probable taking into consideration of the
risk of fallen through and price concession based on customary industry practice, that a significant reversal in the amount of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
|
|
(c)
|
Mortgage referral services
|
Referral fee is recognized as referral
services are provided to the customer.
The Company records a contract asset
when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company also records
a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. For all the periods presented,
the Company did not have any significant incremental costs of obtaining contracts with customers incurred and/or costs incurred in fulfilling
contracts with customers within the scope of ASC Topic 606, that shall be recognized as an asset and amortized to expenses in a pattern
that matches the timing of the revenue recognition of the related contract. The Company did not have any material unsatisfied performance
obligations, contract assets or liabilities as of November 30, 2021 and August 31, 2021. Revenue is recognized when the performance obligation
is fulfilled and the payment from customers is not contingent on a future event.
During all the periods presented, all
of the Company’s revenues are derived in Hong Kong.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
Income taxes
The Company accounts for income taxes
in accordance with the accounting standard issued by the Financial Accounting Standard Board (“FASB”) for income taxes. Under
the asset and liability method as required by this accounting standard, deferred income taxes are recognized for the tax consequences
of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The charge for taxation is based on the results for the reporting
period as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively
enacted by the balance sheet date. The effect on deferred income taxes of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred
tax asset will not be realized.
Foreign currency translation
The Company’s reporting currency
is the United States dollars (“U.S. dollars”). The financial records of the Company and its subsidiaries in Hong Kong are
maintained in Hong Kong dollars (“HKD”), which is the functional currency of these entities.
Monetary assets and liabilities denominated
in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of
exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical
exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional
currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the
consolidated statements of operations.
Assets and liabilities are translated
into the reporting currency at the rates of exchange ruling at the balance sheet date. Equity accounts are translated at historical exchange
rates. Revenues, expenses, gain and loss are translated using the average rate of exchange in effect during the reporting period. Translation
adjustments are reported and shown as a separate component of other comprehensive income in the consolidated statements of changes in
equity and the consolidated statements of comprehensive income.
During the periods presented, HKD is
pegged to the U.S. dollar within a narrow range.
Fair value of financial
instruments
The carrying value of the Company’s
financial instruments (excluding non-current bank borrowings and obligation under finance lease): cash, short-term bank borrowings, other
loan, balances with a director and holding company and other payables approximate their fair values because of the short-term nature of
these financial instruments.
Management believes, based on the current
market prices or interest rates for similar debt instruments, the fair value of the Company’s non-current bank borrowings and obligation
under finance lease approximates the carrying amount.
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
|
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
Net (loss) profit per
share
The Company calculates net profit (loss)
per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the
net income/(loss) by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed
similar to basic profit/(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.
The following table presents a reconciliation of basic and diluted net profit (loss) per share:
|
|
|
Three months ended
November 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(31,810
|
)
|
|
$
|
(62,360
|
)
|
|
Weighted average number of common shares outstanding - Basic and diluted
|
|
|
6,692,182
|
|
|
|
6,692,182
|
|
|
Net loss per share - Basic and diluted
|
|
$
|
(0.00
|
)*
|
|
$
|
(0.01
|
)
|
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.
Recent accounting pronouncements
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting
Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying
the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain
exceptions and enhances and simplifies various aspects of the income tax accounting guidance in ASC 740. The Company adopted ASU 2019-12
on September 1, 2021. The adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation
or disclosures.
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 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models.
Upon adoption of ASU 2020-06, convertible debt proceeds, unless issued with a substantial premium or an embedded conversion feature that
is not clearly and closely related to the host contract, will no longer be allocated between debt and equity components. This modification
will reduce the issue discount and result in less non-cash interest expense in financial statements. ASU 2020-06 also updates the earnings
per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. For
contracts in an entity’s own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features
that are accounted for as derivatives under the current guidance due to a failure to meet the settlement assessment by removing the requirements
to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted,
and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted,
but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year. The Company
adopted ASU 2020-06 effective September 1, 2021. The adoption of ASU 2020-06 did not have any impact on the Company’s consolidated
financial statement presentation or disclosures.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
Accounting Pronouncements Issued
But Not Yet Adopted
In June 2016, the FASB issued ASU No.
2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable
forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets
measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. As a smaller reporting company, ASU 2016-13
will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. The Company is currently
evaluating the impact that the adoption of ASU 2016-13 will have on its consolidated financial statement presentations and disclosures.
In May 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): Issuer’s Accounting for
Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides
guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified
written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument
for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the
modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition
model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt
origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective
for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should
apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early
adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an
interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption
of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement presentation or disclosures.
Except for the above-mentioned pronouncements,
there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements
of operations and cash flows.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
|
3.
|
PREPAID EXPENSES, DEPOSITS AND OTHER CURRENT ASSETS
|
Prepaid expenses, deposits and other
current assets were $302 as of November 30, 2021 and August 31, 2021. The balance represented utility deposits paid.
|
4.
|
ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUED LIABILITIES
|
|
|
|
November 30,
2021
|
|
|
August 31,
2021
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
50,923
|
|
|
$
|
45,239
|
|
|
Accrued expenses
|
|
|
10,199
|
|
|
|
37,610
|
|
|
|
|
$
|
61,122
|
|
|
$
|
82,849
|
|
Accrued expenses represented payables
for professional and consulting fees.
|
5.
|
INCOME TAXES, DEFERRED TAX ASSETS
|
(a) Income taxes in the consolidated
statements of comprehensive income (loss)
The Company’s provision for income
tax expense consisted of:
|
|
|
Three months ended
November 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses – Hong Kong
|
|
$
|
-
|
|
|
$
|
88
|
|
|
Deferred income tax benefit
|
|
|
-
|
|
|
|
-
|
|
|
Income tax expense
|
|
$
|
-
|
|
|
$
|
88
|
|
United States of Tax
The Company is incorporated in the
State of Nevada and is subject to the U.S. federal tax and state tax. The Tax Cuts and Jobs Act of (“TCJ Act”) was signed
into law in December 2017, and among its many provisions, it imposed a mandatory one-time transition tax on undistributed international
earnings and reduced the U.S. corporate income tax rate to 21%, effective January 1, 2018. No provision for income taxes in the United
States has been made as the Company had no taxable income for the three months ended November 30, 2021 and 2020.
Hong Kong Tax
The Company’s subsidiaries in
Hong Kong and are subject to Hong Kong taxation at 16.5% on estimated assessable profit derived from their activities conducted in Hong
Kong subject to a waiver of 100% of the profits tax under a cap of $2,564 (HK$20,000) for year of assessment 2020/21.
A reconciliation of the provision for
income taxes determined at the statutory income tax rate to the Company’s income taxes is as follows:
|
|
|
Three months ended November 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
$
|
(31,810
|
)
|
|
$
|
(62,272
|
)
|
|
Statutory income tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
|
Income tax (credit) expense computed at statutory income tax rate
|
|
|
(6,680
|
)
|
|
|
(13,077
|
)
|
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
Rate differential in different tax jurisdictions
|
|
|
972
|
|
|
|
1,193
|
|
|
Non-deductible expenses
|
|
|
5,931
|
|
|
|
11,972
|
|
|
Tax effect of utilization of tax losses
|
|
|
(223
|
)
|
|
|
-
|
|
|
Income tax expenses
|
|
$
|
-
|
|
|
$
|
88
|
|
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
The net tax loss of the subsidiaries
in Hong Kong of $666,844 and $667,067 as of November 30, 2021 and August 31, 2021, available for offset against future profits, may be
carried forward indefinitely. Management believes it is more likely than not that the Company will not realize these potential tax benefits
as these operations will not generate operating profits in the foreseeable future. As a result, a valuation allowance was provided against
the full amount of the potential tax benefits.
(b) Deferred tax assets
|
|
|
November 30,
2021
|
|
|
August 31,
2021
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
Tax loss
|
|
$
|
109,843
|
|
|
$
|
110,066
|
|
|
Valuation allowance
|
|
|
(109,843
|
)
|
|
|
(110,066
|
)
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
6.
|
BALANCES WITH RELATED PARTIES
|
|
|
|
Note
|
|
November 30,
2021
|
|
August 31,
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to a shareholder
|
|
|
|
|
|
|
|
|
|
|
Ace Vantage Investments Limited
|
|
(c)
|
|
$
|
319,730
|
|
$
|
316,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to a related company
|
|
|
|
|
|
|
|
|
|
|
Century Crown Investments Limited
|
|
(a)
|
|
$
|
|
|
$
|
|
|
|
- Other payable
|
|
|
|
|
124,891
|
|
|
91,988
|
|
|
- Rental payable
|
|
(b)
|
|
|
90,000
|
|
|
72,000
|
|
|
|
|
(a) (c)
|
|
$
|
214,891
|
|
$
|
163,988
|
|
|
|
(a)
|
Mr. Roy Kong Hoi Chan, the Company’s President, is a director of and ultimately holding 50% interest in Century Crown Investments Limited. Century Crown Investments Limited is a wholly-owned subsidiary of Ace Vantage Investments Limited.
|
|
|
(b)
|
On August 20, 2020, the Company has entered into a sub-lease agreement with Century Crown Investments Limited for office space in Hong Kong for the period of one year from September 1, 2020 at $6,000 per month.
On August 20, 2021, the Company has renewed the sub-lease agreement with Century Crown Investments Limited for office space in Hong Kong for the period of one year from September 1, 2021 at $6,000 per month.
For the three months ended November 30, 2021 and 2020, the Company recorded $18,000 and $18,000 rental expenses to Century Crown Investments Limited.
|
|
|
(c)
|
The balances with the shareholder and related company detailed above as of November 30, 2021 and August 31, 2021 are unsecured, non-interest bearing and repayable on demand.
|
For the three months ended November
30, 2021 and 2020, the Company recorded $65,977 (HK$514,622) $11,763 (HK$91,755) service fees to High Flyers Info Limited, respectively.
The executive director of the Company Mark Ko Chiu Yip was a director of High Flyers Info Limited for the period from May 7, 2020 to September
15, 2020.
Included in the accounts payable $50,923
and $24,747 as of November 30, 2021 and August 31, 2021, respectively, were payable to High Flyers Info Limited.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
The Company’s segments are business
units that offer different products and services and are reviewed separately by the chief operating decision maker (the “CODM”),
or the decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Company’s
Chief Executive Officer.
For the three months ended November 30, 2021
|
|
|
Money
lending
|
|
|
Property
agency
services
|
|
|
Mortgage
referral
services
|
|
|
Corporate unallocated
(note)
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
69,633
|
|
|
$
|
-
|
|
|
$
|
69,633
|
|
|
Cost of revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
(65,977
|
)
|
|
|
-
|
|
|
|
(65,977
|
)
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
3,656
|
|
|
|
-
|
|
|
|
3,656
|
|
|
General and administrative expense
|
|
|
(18,944
|
)
|
|
|
-
|
|
|
|
(3,672
|
)
|
|
|
(12,850
|
)
|
|
|
(35,466
|
)
|
|
Loss from operations
|
|
|
(18,944
|
)
|
|
|
-
|
|
|
|
(16
|
)
|
|
|
(12,850
|
)
|
|
|
(31,810
|
)
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Loss before income tax
|
|
|
(18,944
|
)
|
|
|
-
|
|
|
|
(16
|
)
|
|
|
(12,850
|
)
|
|
|
(31,810
|
)
|
|
Income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net loss
|
|
$
|
(18,944
|
)
|
|
$
|
-
|
|
|
$
|
(16
|
)
|
|
$
|
(12,850
|
)
|
|
$
|
(31,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of November 30, 2021
|
|
$
|
173
|
|
|
$
|
677
|
|
|
$
|
51,732
|
|
|
$
|
303
|
|
|
$
|
52,885
|
|
|
As of August 31, 2021
|
|
$
|
155
|
|
|
$
|
2,111
|
|
|
$
|
49,340
|
|
|
$
|
303
|
|
|
$
|
51,509
|
|
For the three months ended November
30, 2020
|
|
|
Money
lending
|
|
|
Property
agency
services
|
|
|
Mortgage
referral
services
|
|
|
Corporate unallocated
(note)
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
12,382
|
|
|
$
|
-
|
|
|
$
|
12,382
|
|
|
Cost of revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,763
|
)
|
|
|
-
|
|
|
|
(11,763
|
)
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
619
|
|
|
|
-
|
|
|
|
619
|
|
|
General and administrative expense
|
|
|
(25,853
|
)
|
|
|
-
|
|
|
|
(1,227
|
)
|
|
|
(35,811
|
)
|
|
|
(62,891
|
)
|
|
Loss from operations
|
|
|
(25,853
|
)
|
|
|
-
|
|
|
|
(608
|
)
|
|
|
(35,811
|
)
|
|
|
(62,272
|
)
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Loss before income tax
|
|
|
(25,853
|
)
|
|
|
-
|
|
|
|
(608
|
)
|
|
|
(35,811
|
)
|
|
|
(62,272
|
)
|
|
Income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
(88
|
)
|
|
|
-
|
|
|
|
(88
|
)
|
|
Net loss
|
|
$
|
(25,853
|
)
|
|
$
|
-
|
|
|
$
|
(696
|
)
|
|
$
|
(35,811
|
)
|
|
$
|
(62,360
|
)
|
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30,
2021 AND 2020
(Unaudited)
(In U.S. dollars except for number of shares)
|
8.
|
COMMITMENTS AND CONTINGENCIES
|
Lease Commitments
The Company as lessee
The Company’s rental expense
was $18,000 and $18,000 for the three months ended November 30, 2021 and 2020, respectively.
On August 20, 2020, the Company has
entered into a sub-lease agreement with Century Crown Investments Limited for office space in Hong Kong for the period of one year from
September 1, 2020 at $6,000 per month.
On August 20, 2021, the Company renewed
the sub-lease agreement with Century Crown Investments Limited for office space in Hong Kong for the period of one year from September
1, 2021 at $6,000 per month.
For the three months ended November
30, 2021 and 2020, the Company recorded $18,000 and $18,000 rental payable to Century Crown Investments Limited.
As of November 30, 2021, the outstanding
lease is short-term lease. The total minimum future lease payments are $54,000 payable in the twelve months ending November 30, 2022.
Credit risk
Credit risk is one of the most significant
risks for the Company’s business and arise principally in lending activities.
Credit risk is controlled by the application
of credit approvals, limits and monitoring procedures. The Company manages credit risk through in-house research and analysis of the economy
primarily in Hong Kong and the underlying obligors and transaction structures. To minimize credit risk, the Company requires collateral
in the form of rights to cash, securities or property and equipment.
The Company conducts credit evaluations
of customers and generally does not require collateral or other security from its customers.
Liquidity risk
The Company is also exposed to liquidity
risk which is risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs.
Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Company
will turn to other financial institutions and the owners to obtain short-term funding to meet the liquidity shortage.
Concentration risk
For all the periods presented, all
of the Company’s assets were located in Hong Kong.
Two customers accounted for 100% (95%
and 5%) of the Company’s income from mortgage referral services for the three months ended November 30, 2021. One customer accounted
for all of the Company’s income from mortgage referral services for the three months ended November 30, 2020.
One customer accounted for all of the
Company’s accounts receivable as of November 30, 2021. Two customers accounted for 100% (57% and 43%) of the Company’s accounts
receivable as of August 31, 2021.
One supplier accounted for all of the
Company’s cost of revenue for the three months ended November 30, 2021 and 2020.
One supplier accounted for all of the
Company’s accounts payable as of November 30, 2021 and two suppliers accounted for 98% (55% and 43%) of the Company’s accounts
payable as of August 31, 2021.
The Company has evaluated subsequent
events from November 30, 2021 to the date the financial statements were issued and has determined that there are no items to disclose.
