UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION☒Quarterly Report pursuant to Section 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OFof the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 2011endedOctober 31, 2019
[ ] TRANSITION REPORT PURSUANT TO SECTION
☐Transition Report pursuant to 13 ORor 15(d) OF THE SECURITIES EXCHANGE ACT OFof the Securities Exchange Act of 1934
For the transition period from ____________to _____________________ to __________
Commission File Number: 000-53432333-233674
TEC TECHNOLOGY, INC.
Telidyne, Inc.
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)its charter)
Delaware | 82-5139000 | |
(State or other jurisdiction of | ||
incorporation or organization) | (IRS Employer Identification No.) | |
112 W 34 St., Ste 18006 New York, NY 10016 | ||
(Address of principal executive offices) |
Xinqiao Industrial ParkJingde County, Anhui ProvinceShenzhen 242600People’s Republic of China(Address of principal executive offices, Zip Code)
(646) 383-3700 |
(Registrant’s telephone number) |
(Former name, former address and former fiscal year, if changed since last report) |
(+86) 755 8323-2722(Registrant’s telephone number, including area code)
_____________________________________________________(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[ x ] No[ ]days Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes[ x ] No[ ]Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “small reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
☐Large accelerated filer | ☐Accelerated filer |
☐Non-accelerated filer | ☒Smaller reporting company |
☐Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[ ]Yes ☐ No [ x ]☒
The
State the number of shares outstanding of each of the issuer’s classes of common stock, as of August 15, 2011 isthe latest practicable date: 5,000,264 common shares as follows:of December 9, 2019.
Securities registered pursuant to Section 12(b) of the Act: None.
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TABLE OF CONTENTS | ||||
Page | ||||
PART I – FINANCIAL INFORMATION | ||||
Item | Financial Statements (unaudited) | |||
Item | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||
Item | Quantitative and Qualitative Disclosures About Market Risk | |||
Item | Controls and Procedures | |||
PART II | ||||
– OTHER INFORMATION | ||||
Item | Legal Proceedings | |||
Item | Risk Factors | |||
Item | Unregistered Sales of Equity Securities and Use of Proceeds | |||
Item | Defaults Upon Senior Securities | |||
Item | Mine Safety Disclosure | |||
Item | Other Information | |||
Item | Exhibits |
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2 |
PART I
- FINANCIAL INFORMATION
1
TEC TECHNOLOGY, INC.Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
June 30, 2011 | December 31, 2010 | |||||
(Unaudited) | (Audited) | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 2,698,412 | $ | 2,526,710 | ||
Restricted cash | 109,466 | 1,164,598 | ||||
Accounts receivable, net of allowance for doubtful accounts | 16,456,571 | 14,356,352 | ||||
Inventory | 6,923,196 | 5,235,074 | ||||
Deposits and prepaid expenses | 3,085,776 | 5,439,579 | ||||
Other receivables | 2,769,207 | 1,626,039 | ||||
Taxes recoverable | 1,294 | 2,389 | ||||
Total current assets | 32,043,922 | 30,350,741 | ||||
Property and equipment | ||||||
Property and equipment, net of accumulated depreciation | 3,818,984 | 3,790,765 | ||||
Land use rights, net of accumulated amortization | 7,990,892 | 2,071,771 | ||||
Construction in progress | 935,947 | 473,355 | ||||
12,745,823 | 6,335,891 | |||||
Total assets | $ | 44,789,745 | $ | 36,686,632 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable | $ | 7,713,005 | $ | 8,313,633 | ||
Other payables and accrued expenses | 5,253,965 | 3,494,358 | ||||
Taxes payables | 91,026 | 44,608 | ||||
Customer deposits | 33,339 | 80,331 | ||||
Short term borrowings | 19,136,662 | 12,938,582 | ||||
32,227,997 | 24,871,512 | |||||
Commitments and contingencies | - | - | ||||
Stockholders' equity | ||||||
Preferred stock: 10,000,000 authorized, none issued and outstanding $0.001 par value | ||||||
Common stock: 300,000,000 authorized $0.001 par value 30,181,552 shares issued and outstanding June 30, 2011 and December 31, 2010, respectively | $ | 30,182 | $ | 30,182 | ||
Additional paid in capital | 1,105,454 | 1,024,891 | ||||
Retained earnings | 10,443,848 | 10,077,006 | ||||
Accumulated other comprehensive income | 982,264 | 683,041 | ||||
Total stockholders' equity | 12,561,748 | 11,815,120 | ||||
Total liabilities and stockholders' equity | $ | 44,789,745 | $ | 36,686,632 |
See accompanying notes of these consolidatedOur condensed financial statements
F - 1
TEC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months | Three months | Six months | Six months | |||||||||
ended | ended | ended | ended | |||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | |||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
Revenues | $ | 4,770,019 | $ | 9,427,220 | $ | 8,195,144 | $ | 14,606,979 | ||||
Cost of goods sold | 3,368,433 | 6,443,918 | 5,784,261 | 9,957,895 | ||||||||
Gross profit | 1,401,586 | 2,983,302 | 2,410,883 | 4,649,084 | ||||||||
Selling and marketing expenses | (418,562 | ) | (486,367 | ) | (626,369 | ) | (789,867 | ) | ||||
General and administrative expenses | (632,421 | ) | (363,402 | ) | (893,192 | ) | (644,948 | ) | ||||
Net income from operations | 350,603 | 2,133,533 | 891,322 | 3,214,269 | ||||||||
Other income (expenses) | ||||||||||||
Government grant | 216,987 | 179,417 | 216,987 | 179,417 | ||||||||
Other income | - | 13,694 | 13,695 | |||||||||
Interest expense | (414,264 | ) | (292,217 | ) | (660,177 | ) | (679,560 | ) | ||||
Net other income (expenses) | (197,277 | ) | (99,106 | ) | (443,190 | ) | (486,448 | ) | ||||
Net income before provision for income taxes | 153,326 | 2,034,427 | 448,132 | 2,727,821 | ||||||||
Provision for income taxes | (31,802 | ) | (209,868 | ) | (81,290 | ) | (386,861 | ) | ||||
Net income | 121,524 | 1,824,559 | 366,842 | 2,340,960 | ||||||||
Other comprehensive income (loss) | ||||||||||||
Foreign currency translation gain (loss) | 217,077 | 20,048 | 299,163 | 40,986 | ||||||||
Comprehensive income | $ | 338,601 | $ | 1,844,607 | $ | 666,005 | $ | 2,381,946 | ||||
Weighted average numbers of common shares | ||||||||||||
Basic | 30,181,882 | 22,856,798 | 30,181,882 | 22,856,798 | ||||||||
Diluted | 30,181,882 | 22,859,798 | 30,181,882 | 22,856,798 | ||||||||
Earnings per share | ||||||||||||
Basic | $ | 0.01 | $ | 0.08 | $ | 0.01 | $ | 0.10 | ||||
Diluted | $ | 0.01 | $ | 0.08 | $ | 0.01 | $ | 0.10 |
See accompanying notes of these consolidated financial statements included in this Form 10-Q are as follows:
F - 2
TEC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months | Six months | |||||
ended | ended | |||||
June 30, 2011 | June 30, 2010 | |||||
(Unaudited) | (Unaudited) | |||||
Cash flows from operating activities | ||||||
Net income for the period | $ | 366,842 | $ | 2,340,960 | ||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||
Depreciation | 167,769 | 129,824 | ||||
Loss on disposal of property and equipment | 534 | - | ||||
Amortization of land use rights | 21,993 | 21,127 | ||||
Stock based compensation | 93,800 | - | ||||
Changes in operating assets and liabilities | ||||||
Decrease in restricted cash | 1,055,132 | - | ||||
Increase in inventory | (1,688,122 | ) | (2,716,346 | ) | ||
(Increase)/decrease in deposits and prepaid expenses | (1,275,095 | ) | 635,351 | |||
Increase in accounts receivable | (2,100,219 | ) | (8,703,430 | ) | ||
(Increase) decrease in other receivables | (2,104,730 | ) | 2,119,014 | |||
Decrease in taxes recoverable | 1,095 | 4,889 | ||||
Increase/(decrease) in taxes payable | 46,418 | (919,366 | ) | |||
(Decrease) increase in accounts payable | (600,628 | ) | 7,410,164 | |||
Decrease in customer deposits | (46,992 | ) | (51,711 | ) | ||
Increase in other payables and accrued expenses | 1,759,607 | 1,885,976 | ||||
Net cash (used in) provided by operating activities | (4,302,596 | ) | 2,156,452 | |||
Cash flows from investing activities | ||||||
Purchases of property and equipment | (91,561 | ) | (455,446 | ) | ||
Proceeds from sale of property and equipment | 5,345 | |||||
Payment for construction in progress | (462,592 | ) | - | |||
Payment for purchase of land use rights | (2,188,275 | ) | - | |||
Net cash used in investing activities | (2,737,083 | ) | (455,446 | ) | ||
Cash flows from financing activities | ||||||
Common stock issued | - | 10,987 | ||||
Additional paid in capital raised | - | 10,521 | ||||
Proceeds from short term borrowings | 7,000,447 | |||||
Repayment of short term borrowings | (1,098,370 | ) | (176,384 | ) | ||
Net cash provided by (used in) financing activities | 5,902,077 | (154,876 | ) | |||
Effects on exchange rate changes on cash | 1,309,304 | 789 | ||||
Increase in cash and cash equivalents | 171,702 | 1,546,919 | ||||
Cash and cash equivalents, beginning of period | 2,526,710 | 161,133 | ||||
Cash and cash equivalents, end of period | 2,698,412 | 1,708,052 | ||||
Supplementary disclosures of cash flow information: | ||||||
Cash paid for interest | 897,620 | 679,560 | ||||
Cash paid for income taxes | 2,196,414 | 386,861 | ||||
Non cash financing activities | ||||||
Issuance of warrant | 94,120 | - | ||||
Capital contributed by directors through assumption of debt | 80,563 | - | ||||
Non cash investing activities | ||||||
Transfer from deposits and prepaid expenses to acquire land use rights | ||||||
- Acquisition of land use rights | 3,628,868 | - |
See accompanying notes of these consolidated financial statements
F - 3
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-1 | Condensed Balance Sheets as of October 31, 2019 (unaudited) and January 31, 2019; | |
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F - 4
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F - 6
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-4 | Condensed Statements of Cash Flows for the | |
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F - 7
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F – 8
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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TELIDYNE, INC.
BALANCE SHEETS
October 31, 2019 | January 31, 2019 | ||||||
Unaudited | Audited | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash | $ | 3,341 | $ | 6,069 | |||
Total current assets | 3,341 | 6,069 | |||||
Property and equipment: | |||||||
Furniture & Fixtures, net | 341 | 487 | |||||
Total Property and equipment | 341 | 487 | |||||
Other Assets | |||||||
Long term Prepayment | 3,600 | 3,600 | |||||
Total assets | $ | 7,282 | $ | 10,156 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts Payable | 4,717 | — | |||||
Accrued Expenses | — | $ | 20,000 | ||||
Total current liabilities | 4,717 | 20,000 | |||||
Long term Liabilities | |||||||
Note Payable to Owner | 111,747 | 104,497 | |||||
Total liabilities | 116,464 | 124,497 | |||||
Shareholders' Deficits | |||||||
Common stock: par value; $0.0001 per share, 60,000,000 shares authorized, 5,000,264 shares par value 0.0001 per share outstanding at 10/31/2019 and 4,500,264 shares, par value 0.0001 per share outstanding at 01/31/2019 | 500 | 450 | |||||
Preferred stock, par value $0.0001 per share 10,000,000 shares authorized,1,000,000 series A shares outstanding at 10/31/2019, 1,000,000 series C shares outstanding at 01/31/2018 | 100 | 100 | |||||
Additional Paid-in capital | 26,806 | 12,356 | |||||
Accumulated Deficits | $ | (136,588 | ) | $ | (127,247) | ||
Total shareholders' deficits | (109,182 | ) | (114,341) | ||||
Total liabilities and shareholders' deficits | $ | 7,282 | $ | 10,156 |
The accompanying notes are an integral part of these unaudited financial statements.
F-1 |
TELIDYNE, INC.
STATEMENTS OF OPERATIONS
For the Nine Months Ended October 31, | |||||||
2019 | 2018 | ||||||
UNAUDITED | UNAUDITED | ||||||
Sales | $ | 10,094 | $ | 0 | |||
Cost of Sales | 4,717 | 0 | |||||
Gross Margin | 5,377 | 0 | |||||
Selling, general and administrative expenses | 14,718 | 62,075 | |||||
Operating Loss | (9,341 | ) | (62,075) | ||||
Loss before provision for Income Taxes | (9,341 | ) | (62,075) | ||||
Provision for income taxes | 0 | 0 | |||||
Net Loss | $ | (9,341 | ) | $ | (62,075) | ||
Loss per weighted average share: | $ | 0.000 | $ | 0.000 | |||
Weighted Average number of shares | 4,915,264 | 3,382,764 | |||||
The accompanying notes are an integral part of these unaudited financial statements.
F-2 |
TELIDYNE, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT, UNAUDITED
Preferred Stock Series C & A | Preferred Stock Par Value | Common Stock | |||||||||||||||||||||||||
Number of Shares | Stock | Number of Shares | Par Value $0.0001 | Additional Paid-In Capital | Accumulated Deficits | Total Shareholders' Equity/Deficit | |||||||||||||||||||||
Balance at January 31, 2018 | 1,000,000 | 100 | 300,181,552 | 3,018 | (1,712 | ) | (11,106 | ) | (9,700) | ||||||||||||||||||
Common Stock Reverse Split, March 22, 2018 | 30,264 | 3 | 3,115 | ||||||||||||||||||||||||
Sale of Stock | 1,000,000 | 100 | 4,470,000 | 447 | 10,953 | 11,500 | |||||||||||||||||||||
Retire Pref. C Stock | (1,000,000 | ) | (100 | ) | |||||||||||||||||||||||
Net loss for Six Months | |||||||||||||||||||||||||||
Ended July 31, 2018 | (2,450 | ) | |||||||||||||||||||||||||
Balance at July 31, 2018 | 1,000,000 | 100 | 4,500,264 | 450 | 12,356 | (13,556 | ) | (650) | |||||||||||||||||||
Net Loss for FY 2018 | — | — | — | — | — | (116,141 | ) | (116,141) | |||||||||||||||||||
Balance at January 31, 2019 | 1,000,000 | 100 | 4,500,264 | 450 | 12,356 | (127,247 | ) | (114,341) | |||||||||||||||||||
Sale of Stock | 500,000 | 50 | 14,450 | 14,500 | |||||||||||||||||||||||
Net loss for Nine Months | (9,341 | ) | |||||||||||||||||||||||||
Balance at October 31, 2019 | 1,000,000 | 100 | 5,000,264 | 500 | 26,806 | (136,588 | ) | (109,182) |
The accompanying notes are an integral part of these unaudited financial statements.
F-3 |
TELIDYNE, INC.
STATEMENTS OF CASH FLOWS
For Nine Months Ended October 31, | |||||||
2019 | 2018 | ||||||
UNAUDITED | UNAUDITED | ||||||
Cash flows from operating activities | |||||||
Net Loss | $ | (9,341 | ) | (62,075) | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation | 146 | — | |||||
Deposits | — | (3,300) | |||||
Accrued expenses | (15,283 | ) | 0 | ||||
Net cash used in operating activities | (24,478 | ) | (65,375) | ||||
Cash flows from financing activities | |||||||
Net loans from shareholders | 7,250 | 61,375 | |||||
Proceeds from sale of common stock | 14,500 | 11,500 | |||||
Net cash provided by financing activities | 21,750 | 72,875 | |||||
Net increase in cash | (2,728 | ) | 7,500 | ||||
Cash beginning of period | 6,069 | 0 | |||||
Cash end of period | $ | 3,341 | $ | 7,500 |
The accompanying notes are an integral part of these unaudited financial statements.
F-4 |
TELIDYNE, INC.
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
For the Nine Months Ended OCTOBER 31, 2019
1.0 BUSINESS ORGANIZATION
Telidyne Inc. (formerly known as TEC technology, Inc.) was incorporated on December 5, 2011 in the State of Nevada (the “Company”).
On July 25, 2012, the Company divested all three of its wholly owned subsidiaries, which conducted 100% of the Company’s operations, which include the following: (i) TEC Technology Limited, Hong Kong, (ii) Anhui TEC Tower Co., Limited, PRC, and (iii) Zhejiang TEC Tower Co., Limited, PRC. Thus, subsequent to that date, the Company had no subsidiaries and no operations going forward.
On March 22, 2018 Company changed its name to Telidyne Inc. and carried out a reverse split of its common stock, par value $0.001, at a ratio of one-for-one thousand. This reverse stock split became effective on March 22, 2018 and, unless otherwise indicated, all share amounts, per share data, share prices, and conversion rates set forth in this Report and the accompanying financial statements have, where applicable, been adjusted retroactively to reflect this reverse stock split of 1000: 1.
On March 24, 2018 the Company started developing software to provide technologies and platforms to a wide variety of companies to disrupt the ecommerce with blockchain technology. The Company has developed a mobileApp named ‘Telibit” that facilitates peer to peer payments and third party payments. The Company has started generating revenues through software development work for various clients.
Telidyne develops platforms for Global Smart Contracts. A Smart Contract utilizes blockchain technology and is essentially a digital agreement between two parties that automatically executes itself. Smart contracts can be of any variety between two or more parties such as (i) amounts to be paid, (ii) the transfer of documents (iii) the selling of a product and (iv) the consumption of a commodity such as power. In ecommerce, such smart contracts allow direct transactions between sellers and buyers without the need for a middle man.
The Company has offices located at 112 W 34 St, Ste 18006, New York, NY 10120.
On January 18, 2019, the Company re-domiciled from Nevada to Delaware through a Holding Company Reorganization in accordance with section 251(g) of the Delaware general Corporation Law (“DGCL”). In accordance with Section 251(g) of the DGCL, the issuer, Telidyne Inc., the Nevada Company, as previously constituted (the “Predecessor”) became a direct wholly owned subsidiary of a newly formed Delaware corporation, Telidyne Inc. (the “Holding Company”), which became the successor issuer. In other words, the Holding Company is now the public entity.
In accordance with section 251(g) of the DGCL, Telidyne Merger Corporation (“Merger Co”), another newly formed Delaware corporation and, prior to the Holding Company Reorganization, was a wholly owned subsidiary of the Holding Company, merged with and into the Predecessor, with Merger Co surviving the Merger as a direct wholly owned subsidiary of the Holding Company and Predecessor losing its existence, (the “Merger”); however as of the effective time of the Merger, the designation, rights, powers and preferences of the Predecessor company’s common stock immediately before the Merger became the same as those of the common stock of the Holding Company. Thus in accordance with section 251(g) of the CGCL Holding Company Reorganization all of the outstanding shares of common stock of the Predecessor were automatically converted into identical shares of the common stock of the Holding Company on a one-for-one basis, and the Predecessor’s existing stockholders and other equity holders became stockholders and equity holders, as applicable of the Holding Company in the same amounts and percentages as they were in the Predecessor prior to the Holding Company Reorganization. The executive officers and the board of directors of the Holding Company are the same as those of the Predecessor in effect immediately prior to the Holding Company Reorganization.
F-5 |
2.0 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. The accounting policies confirm to the general accepted accounting principles in the United States of America and have been consistently applied in the preparation thereof. The Company has adopted January 31 as its fiscal year end.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect that reported amounts of revenues and expenses during the reporting period. Actual events and results could differ from those assumptions and estimates.
Cash & Cash Equivalents
Cash and cash equivalents include short-term liquid investments that are readily convertible to cash and have original maturities of nine months or less.
Fixed Assets
Furniture, Fixtures, Property and Equipment are stated at cost and are depreciated using the straight-line method over five years. Leasehold improvements are amortized over the shorter of the useful life or the remaining lease term. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are reflected in operations. Expenditures for maintenance and repairs are charged to operations as incurred. Renewals and betterments are capitalized. Depreciation expense for nine months ended October 31, 2019 was $146 and $0.0 for nine months ended October 31, 2018.
Capitalized Cost of external use Software
The Company capitalizes certain costs incurred to purchase or create external-use software in accordance with FASB Accounting Standards Codification (ASC) Topic 985. To date, such costs have included external direct costs of materials and services incurred in the development of software for selling. We expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached. Technological feasibility is typically reached once a viable prototype is achieved that meets the criteria for capitalization. Once the capitalization criteria have been met, such costs are classified as software and are amortized on a straight-line basis over five years once the software has been put into use. Subsequent additions, modifications, or upgrades to software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred.
F-6 |
Revenue Recognition
Adoption of ASC 606
The Company adopted ASC 606 “Revenue from Contracts with Customers”, using the modified retrospective approach for all of its contracts. In accordance with ASC 606, revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company’s contract with customers do not include significant financing component and any variable consideration.
The Company does not believe that significant management judgements are involved in revenue recognition, but the amount and timing of the Company’s revenues could be different for any period if management made different judgments or utilized different estimates. Generally, the Company recognizes revenue under ASC Topic 606 for its performance obligation. The sales of software services are derived principally from developing custom software for customers, the Company recognizes revenue upon the delivery of products to the customers, which is when the goods delivered to the users’ designated address and it is probable that the Company will collect the payments. The Company plays the role of principal, according to ASC Topic 606 since Company is primarily responsible for fulfilling the obligation to provide the specified good and services and also controls the good s and services before they are transferred to the customer.
Cost of sales
The Company recognizes cost of sales as the accumulated total costs used to create a product or service, which has been sold. These costs included direct labor and salaries, direct materials and direct overhead involved in generating the sale. Presently, the Company issues contract to a related entity who carried out all the work for the required services under an order received from a customer by the Company.
Basic and Diluted Earnings per Share
Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of stock warrants and convertible notes. Diluted earnings per share is calculated using the weighted-average number of common shares outstanding during the period after consideration of the dilutive effect of any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to lack of dilutive items in the Company.
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the current reporting periods.
F-7 |
Fair Value of Financial Instruments
ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The three levels of valuation hierarchy are defined as follows:
● | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. | |
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F - 9
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F - 10
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F - 11
TEC TECHNOLOGY, INC.Stock-based compensation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Three months ended | Three months ended | Six months ended | Six months ended | ||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||||
Customer A | 47.21% | 41.18% | 53.55% | 37.71% | |||||||||
Customer B | 15.73% | - | 15.73% | - | |||||||||
Customer C | 27.04% | - | 15.67% | - | |||||||||
Customer D | - | - | 8.41% | - | |||||||||
Customer E | 9.46% | - | 5.48% | - | |||||||||
Customer F | 0.51% | - | - | - | |||||||||
Customer G | - | 38.60% | - | 24.85% | |||||||||
Customer H | - | - | - | 10.33% | |||||||||
Customer I | - | - | - | 10.22% | |||||||||
Customer J | - | 12.44% | - | 8.01% | |||||||||
Customer K | - | 2.91% | - | - | |||||||||
Customer L | - | 2.35% | - | - | |||||||||
99.95% | 97.48% | 98.84% | 91.12% |
F - 12
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe Company records compensation expense associated with stock options and other forms of employee and non-employee equity compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation”, formerly referenced as SFAS 123R, “Share-Based Payment”. The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing formula and a single option approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
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June 30, 2011 | December 31, 2010 | ||||||
Customer A | 26.91% | 31.46% | |||||
Customer B | 13.38% | 9.89% | |||||
Customer C | 10.30% | - | |||||
Customer D | 9.79% | 16.73% | |||||
Customer E | 9.69% | 12.57% | |||||
Customer F | - | 7.82% | |||||
70.07% | 78.47% |
During the nine months ended October 31, 2019 and 2018, the Company incurred $-0- and $-0- in stock-based compensation expense.
Other
The Company is subject to substantial risks and uncertainties inherent in starting a new business. There are no assurances that the Company will be able to generate sufficient revenues or obtain sufficient funding necessary to continue in business.
3.0 INCOME TAXES
The Company did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because it has experienced operating losses. When it is more likely than not that a tax asset cannot be realized through future income, the Company must take a full valuation allowance for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carryforwards, because management has determined that it is more likely than not that the Company will not earn income sufficient to realize the deferred tax assets during the carryforward period.
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F-8 |
F - 14
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the year ended December 31, 2018, or during the prior three years applicable under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns have been appropriately filed by the Company.
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F - 15
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F - 15
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F - 16
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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% | |||||
Effect of operating losses | (21 | ||||
Provision for income taxes is as follows:
Three months ended | Three months ended | Six months ended | Six months ended | ||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||||
Income tax | |||||||||||||
HGHN - US corporate tax | $ | - | $ | - | $ | - | $ | - | |||||
TECT - Hong Kong profits tax | - | - | - | - | |||||||||
ATEC - China EIT | 31,802 | 209,868 | 81,290 | 386,861 | |||||||||
ZTEC and STT - China EIT | - | - | - | - | |||||||||
Deferred tax | - | - | - | - | |||||||||
$ | 31,802 | $ | 209,868 | $ | 81,290 | $ | 386,861 |
F - 17
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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June 30, 2011 | December 31, 2010 | ||||||
Cash and bank balances | $ | 2,698,412 | $ | 2,526,710 |
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June 30, 2011 | December 31, 2010 | ||||||
within 3 months | $ | 10,636,788 | $ | 13,658,262 | |||
over 3 months and within 6 months | 3,897,660 | 356,438 | |||||
over 6 months and within 1 year | 1,909,187 | 343,298 | |||||
over 1 year | 100,936 | 68,354 | |||||
16,544,571 | 14,426,352 | ||||||
Less: Allowance for doubtful accounts | (70,000 | ) | (70,000 | ) | |||
$ | 16,474,571 | $ | 14,356,352 |
Accounts receivable includes the amounts of $5,557,348 (12.31.2010: $3,151,959) that were factored to the Industrial and Commercial Bank, PRC and China Construction Bank, PRC for collection.
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June 30, 2011 | December 31, 2010 | ||||||
Raw materials | $ | 1,788,574 | $ | 2,590,642 | |||
Consumables | 52,678 | - | |||||
Work in progress | 5,081,944 | 2,644,432 | |||||
$ | 6,923,196 | $ | 5,235,074 |
F - 18
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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June 30, 2011 | December 31, 2010 | ||||||
Guarantee and utility deposits | $ | 961,562 | $ | 828,170 | |||
Deposit for acquistion of land use rights | - | 518,753 | |||||
Land levelling, design fees and stamp duty prepaid expenses | - | 3,110,145 | |||||
Prepaid expenses | 332,523 | 91,091 | |||||
Advances to suppliers and services providers | 710,935 | 874,436 | |||||
Prepayment for purchase of property and equipment | 744,885 | 2,269 | |||||
Advances to logistic service providers | 335,871 | 14,715 | |||||
$ | 3,085,776 | $ | 5,439,579 |
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June 30, 2011 | December 31, 2010 | ||||||
Due from employees | $ | 1,366,369 | $ | 963,416 | |||
Due from third parties | 1,402,838 | 661,156 | |||||
Others | - | 1,467 | |||||
$ | 2,769,207 | $ | 1,626,039 |
Due from employees are the amounts advanced for business transactions on behalf of the Company and will be reconciled on the completion of the business transactions. Due from third parties are unsecured advances, interest free and without fixed terms of repayment and are for specific business purposes.
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June 30, 2011 | December 31, 2010 | ||||||
VAT recoverable | $ | 1,294 | $ | 2,389 |
F - 19
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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June 30, 2011 | December 31, 2010 | ||||||
Buildings | $ | 2,727,010 | $ | 2,584,596 | |||
Plant and machinery | 1,271,792 | 1,351,729 | |||||
Furniture, fixtures and office equipment | 309,805 | 123,716 | |||||
Motor vehicles | 257,376 | 294,812 | |||||
4,565,983 | 4,354,853 | ||||||
Less: Accumulated depreciation | (746,999 | ) | (564,088 | ) | |||
Net book value | $ | 3,818,984 | $ | 3,790,765 |
Depreciation expense was $87,718 and $69,326 for the three months ended June 30, 2011 and 2010, respectively. Depreciation expense was $167,769 and $129,824 for the six months ended June 30, 2011 and 2010, respectively.
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June 30, 2011 | December 31, 2010 | ||||||
Cost | $ | 8,122,093 | $ | 2,178,255 | |||
Less: Accumulated amortization | (131,201 | ) | (106,484 | ) | |||
Net book value | $ | 7,990,892 | $ | 2,071,771 |
Land use rights are amortized on the straight line basis over their respective lease periods. The lease period of land use rights located in an industrial park zone is 50 years.
Amortization expense was $10,932 and $10,564 for the three months ended June 30, 2011 and 2010, respectively. Amortization expense was $10,932 and $10,564 for the six months ended June 30, 2011 and 2010, respectively
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June 30, 2011 | December 31, 2010 | ||||||
Construction of office building and workshops | $ | 935,947 | $ | 473,355 |
F - 20
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. | OTHER PAYABLES AND ACCRUED EXPENSES | ||||||
June 30, 2011 | December 31, 2010 | ||||||
Due to former sole stockholder and his affiliates | $ | 3,249,273 | $ | 2,789,568 | |||
Due to third parties | 1,701,897 | 603,824 | |||||
Due to employees | 198,104 | 8,359 | |||||
Accrued expenses | 104,691 | 92,607 | |||||
$ | 5,253,965 | $ | 3,494,358 |
Due to former sole stockholder and his affiliates, due to third parties and employees are unsecured, interest free and without a fixed term of repayment and are for unspecific business purposes.
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June 30, 2011 | December 31, 2010 | ||||||
Enterprise income tax payable | $ | 31,921 | $ | 42,557 | |||
VAT payable | 52,800 | - | |||||
Individual income tax payable | 6,305 | 2,051 | |||||
$ | 91,026 | $ | 44,608 |
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Interest rate | Maturity date | June 30, 2011 | December 31, 2010 | ||||||||||||
Industrial and Commercial Bank, | From September 16, | ||||||||||||||
Longshou Branch, PRC | 6.06% - 6.66% | 2011 to March 23, 2012 | $ | 3,937,115 | * | $ | 3,864,182 | ||||||||
China Merchant Bank, Heifei branch, PRC | 6.94% | October 29, 2011 | 1,547,000 | + | 1,512,400 | ||||||||||
China Everbright Bank, Heifei branch, PRC | 5.56% | November 22, 2011 | 4,641,000 | 4,537,200 | |||||||||||
Huishang Bank, Xuancheng branch, PRC | 7.88% | February 16, 2011 | 2,011,100 | * | 3,024,800 | ||||||||||
Huishang Bank, Xuancheng branch, PRC | 8.20% | April 11, 2012 | 4,641,000 | * | - | ||||||||||
China Construction Bank, Jingde branch, PRC | 5.85% | November 3, 2011 | 2,359,447 | - | |||||||||||
$ | 19,136,662 | $ | 12,938,582 |
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F - 21
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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June 30, 2011 | December 31, 2010 | ||||||
Liquidated damages for - investment relation service with CCG | $ | 90,000 | $ | 90,000 |
F - 22
TEC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Number of shares | ||||||||||
Exercise Price | ||||||||||
entitled to purchase | Expiration date | |||||||||
Issued June 15, 2010 | 80,000 | $ | 2.00 | June 15, 2015 | ||||||
Balance as of June 30, 2011 | 80,000 | $ | 2.00 | |||||||
Warrants exercised | - | 2.00 | ||||||||
Warrants expired | - | 2.00 | ||||||||
Total outstanding as of June 30, 2011 | 80,000 | 2.00 | June 15, 2015 |
.Utilizing the Black Scholes option-pricing model, the share based compensation expense for the three months ended June 30, 2011 and 2010; the amounts were $39,628 and $0, respectively. The share based compensation expense for the six months ended June 30, 2011 and 2010; the amounts were $93,800 and $0, respectively.
F - 23
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Three months ended | Three months ended | Six months ended | Six months ended | ||||||||||
June 30, 2011 | June 30, 2010 | June 30, 2011 | June 30, 2010 | ||||||||||
Domestic sales | |||||||||||||
Communication towers | $ | 2,702,957 | $ | 3,935,310 | $ | 4,837,967 | $ | 7,077,759 | |||||
Electricity supply towers | 2,064,890 | 5,150,696 | 2,629,828 | 6,925,361 | |||||||||
4,767,847 | 9,086,006 | 7,467,795 | 14,003,120 | ||||||||||
Export sales | |||||||||||||
Communication towers | - | 223,727 | 716,702 | 236,098 | |||||||||
Electricity supply towers | 2,053 | 117,487 | 2,044 | 367,761 | |||||||||
2,053 | 341,214 | 718,746 | 603,859 | ||||||||||
Technical service income | 119 | - | 8,603 | - | |||||||||
$ | 4,770,019 | $ | 9,427,220 | $ | 8,195,144 | $ | 14,606,979 |
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Net deferred tax assets consist of the following:
F - 24
October 31, 2019 | January 31, 2019 | ||||||
Net operating loss carry forward | $ | 136,588 | $ | 127,247 | |||
Valuation allowance | (136,588 | ) | (127,247) | ||||
Net deferred tax asset | $ | — | $ | — |
A reconciliation of income taxes computed at the statutory rate is as follows:
Year ended October 31, | |||||||
2019 | 2018 | ||||||
Tax at statutory rate (21%) | $ | 136,588 | $ | 62,075 | |||
Increase in valuation allowance | (136,588 | ) | (62,075) | ||||
Income tax expenses | $ | — | $ | — |
The Company did not pay any income taxes during the nine months ended October 31, 2019 or 2018.
4.0 SHAREHOLDERS’ DEFICIT
The shareholders’ deficit of the Company was ($109,182) and $($62,075) on October 31, 2019 and October 31, 2018, respectively.
Common & Preferred Stock
Common Stock
The Company’s common stock trades on OTC market under the symbol “TLDN”. The Company is authorized to issue 60,000,000 shares of common stock, $0.0001 par value. The Company issued 500,000 shares of restricted common stock on February 22, 2019 to a third party. As of October 31, 2019, there were 5,000,264 shares issued and outstanding and at January 31, 2019, there were 4,500,264 shares issued and outstanding.
Special Note Regarding Forward Looking Statements
Series A Preferred Stock
The Company is authorized to issue 10,000,000 shares of Preferred stock par value $0.0001 per share. Except as otherwise provided by law, the shares of the stock of the Corporation, regardless of the class, may be issued by the Corporation from time to time in such amounts and designations, for such consideration and for such corporate purposes as the Board of Directors may from time to time determine. As of October 31, 2019, there were 1,000,000 shares of Series A preferred shares, par value $0.0001 per share, issued and outstanding.
As per the designation of Series A Preferred stock, each issued and outstanding Series A Preferred Share shall be entitled to the number of votes equal to the result of: (i) the number of shares of common stock of the Company issued and outstanding at the time of such vote multiplied by 1.1; divided by (ii) the total number of Series A Preferred Shares issued and outstanding at the time of such vote, at each meeting of shareholders of the Company with respect to any and all matters presented to the shareholders of the Company for their action or consideration, including the election of directors. Holders of Series A Preferred Shares shall vote together with the holders of Common Shares as a single class in all matters where holders of common stock will vote.
On January 24, 2019, the Company issued 1,000,000 shares of series A Preferred shares to its Chairman & CEO, Aron Govil, in consideration for his valuable services to the Company during the past fiscal year.
5.0 HOLDING COMPANY REORGANIZATION
On January 18, 2019, the Company completed a Holding Company Reorganization in accordance with section 251(g) of the Delaware general Corporation Law (“DGCL”). In accordance with Section 251(g) of the DGCL, Telidyne Inc. a newly incorporated Delaware corporation (the “Holding Company”) became the successor issuer of Telidyne Inc., the Nevada Company, as previously constituted (the “Predecessor”). In other words, the Holding Company is now the public entity.
In additionaccordance with section 251(g) of the DGCL, Telidyne Merger Corporation (“Merger Co”), another newly formed Delaware corporation and, prior to the Holding Company Reorganization, was a wholly owned subsidiary of the Holding Company, merged with and into the Predecessor, with Merger Co surviving the Merger as a direct wholly owned subsidiary of the Holding Company and Predecessor losing its existence, (the “Merger”); however as of the effective time of the Merger, the designation, rights, powers and preferences of the Predecessor company’s common stock immediately before the Merger became the same as those of the common stock of the Holding Company. Thus in accordance with section 251(g) of the CGCL, after the Holding Company Reorganization all of the outstanding shares of common stock of the Predecessor were automatically converted into identical shares of the common stock of the Holding Company on a one-for-one basis, and the Predecessor’s existing stockholders and other equity holders became stockholders and equity holders, as applicable of the Holding Company in the same amounts and percentages as they were in the Predecessor prior to the Holding Company Reorganization. The executive officers and the board of directors of the Holding Company are the same as those of the Predecessor in effect immediately prior to the Holding Company Reorganization.
6.0 RELATED PARTIES
The financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. The disclosures include: a. the nature of the relationship(s) involved b. 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. amounts 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.
F-10 |
The Company rents its offices from its Chairman on a month to month basis at a rent of $250.00 per quarter. The Company can terminate this agreement at any time without prior notice or any liability.
The Company outsources software services on a project by project basis to Cemtrex Technologies Pvt Ltd, a subsidiary of Cemtrex Inc., an entity which is controlled by Aron Govil.
Aron Govil, the major shareholder of the Company has provided a loan of $111,747 to the Company as of October 31, 2019. This loan is non-interest bearing and is due upon demand by the shareholder.
7.0GOING CONCERN AND LIQUIDITY
The accompanying financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future and, thus, do not include any adjustments relating to the recoverability and classification of assets and liabilities that may be necessary if the Company is unable to continue as a going concern. However, the Company's ability to continue as a going concern is dependent upon generating profitable operations in the future and obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.
The Company has incurred operating losses since Company has not had any sales. The Company has made investment in the development of a completely new mobile App Telibit, which expenses have caused the Company to incur operating losses. Cash losses over the past several years have been financed by funds provided by the shareholder.
Notwithstanding ongoing investment plans, the Company will likely require additional financing over the next twelve months to implement its planned business objectives and strategies. Accordingly, and in light of the Company's historic and continuing losses, there is substantial doubt about the Company's ability to continue as a going concern.
8.0SUBSEQUENT EVENTS
The Company will evaluate subsequent events through the date when the financial statements were issued. It is the Company’s policy to disclose subsequent information that it feels is important to the context of the financial statements. Company continues to market it mobile App Telibit and get more subscribers. There are no other subsequent events.
F-11 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements, other than purely historical information, this report contains forward-lookingincluding estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use1934. These forward-looking statements generally are identified by the words such as “believe,” “expect,” “anticipate,“believes,” “project,” “target,“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “optimistic,“may,” “intend,“will,” “aim,“would,” “will” or“will be,” “will continue,” “will likely result,” and similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that anyexpressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are not guaranteesincluding this statement for purposes of future performancecomplying with those safe-harbor provisions. Forward-looking statements are based on current expectations and involveassumptions that are subject to risks and uncertainties including those identified in Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2010, as well as assumptions, which if they were to ever materialize or prove incorrect, couldmay cause theactual results of the Company to differ materially from those expressedthe forward-looking statements. Our ability to predict results or implied bythe actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements.
Readers are urged to carefully reviewstatements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt
Overview
Telidyne Inc. ("Telidyne" or the "Company") is a technology platform company offering digital and mobile payments on behalf of consumers and merchants worldwide through its proprietary mobile App payment platform TELIBIT.
Telidyne’s mobile payment platform enables our users to advise interested partiessend and receive payments. We are also developing a two-sided network where both merchants and consumers can have Telibit accounts with a digital wallet balance functionality. Our payment service enables the completion of payments on our Payments Platform on behalf of our mobile App users. We offer our users the risksflexibility to use their digital wallet account to make payment to each other for goods and factors that may affectservices, as well as to transfer and withdraw funds. We enable consumers to add funds into their digital wallet safely using a variety of funding sources, including a bank account or a credit or debit card. Our Telibit platform also makes it easier for friends and family to transfer funds to each other for peer to peer transfers.
Our revenues are earned by charging fees for completing payment transactions for our users and other payment-related services. We do not charge users any fees to fund or withdraw from their digital Telibit account; however, we generate revenue from consumers on use of our credit card other value-added services which include peer to peer borrowing. We also plan to generate revenue from advertising on our mobile app.
Results of Operations for the Three and Nine Months Ended October 31, 2019 and 2018
Revenues
Our total revenue reported for the three months ended October 31, 2019 was $5,505.00 , an increase from $0 for the same period ended 2018. Our total revenue reported for the nine months ended October 31, 2019 was $10,094.00, an increase from $0 for the same period ended 2018.
The revenues we had for the nine months ended October 31, 2019 were predominantly from customers for software services.
We had a gross profit for the three months ended October 31, 2019 of $2,551, or approximately 46% of revenues. We had a gross profit for the nine months ended October 31, 2019 of $5,377, or approximately 53% of revenues. We hope to achieve increased revenues once we establish sales channels for our products and services and implement our business financial condition and resultsstrategies as described above. If we are unable to obtain financing, however, the implementation of operations and prospects. The forward-looking statements made in this report speak only as of the date hereofour business strategies will be frustrated and we disclaim any obligation, except as required by law,could go out of business.
4 |
Operating Expenses
Operating expenses increased to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
Use of Terms
Except where the context otherwise requires and$8,945 for the purposesthree months ended October 31, 2019 from $59,625 for the three months ended October 31, 2018. Operating expenses decreased to $14,718 for the nine months ended October 31, 2019 from $62,075 for the nine months ended October 31, 2018.
Our operating expenses for nine months ended October 31, 2019 mainly consisted of this report only:
legal and accounting fees, as compared with 2018 for the “Company,” “we,” “us,”same period where we had software developments expenses for TELIBIT mobile App.
We anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to administrative and “our” refer tooperating costs associated with our business activities and the combined business of TEC Technology, Inc., a Delaware corporation, and its consolidated subsidiaries, TEC HK, TEC Tower, ZTEC and STT;
“TEC HK” refers to TEC Technology Limited, a Hong Kong limited company;
“TEC Tower” refers to Anhui TEC Tower Co., Ltd., a PRC limited company;
“ZTEC” refers to Zhejiang TEC Tower Co., Ltd., a PRC limited company;
“STT” refers to Shuncheng Taida Technology Co., Ltd., a PRC limited company;
“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
“PRC” and “China” refer to the People’s Republic of China;
“SEC” refers to the Securities and Exchange Commission;
“Exchange Act” refersprofessional fees associated with our reporting obligations under the Securities Exchange Act of 1934, as amended;1934.
“Securities Act” refers to the Securities Act of 1933, as amended;
“Renminbi” and “RMB” refer to the legal currency of China; andNet Loss
“U.S. dollars,” “dollars” and “$” refer to the legal currency of the United States.
Overview of our Business
We are primarily engaged in the design, production and salehad a net loss of transmission towers and related products used in high voltage electric power transmission and wireless communications. We sell our tower products to prime contractors on large transmission projects for electric utility companies or telecommunications service providers, who are developing and constructing projects for end customers. Our electric transmission towers currently support 35kv, 110kv, 220kv, and 500kv transmission lines and we plan to build towers that support Ultra High Voltage (UHV) tower lines of 750+kv DC or 1000+kv AC transmission lines. Our wireless communication towers include single-tube towers, 4-strut towers and roof top towers$6,394 for the 2G, 3G,three months ended October 31, 2019, compared to a net loss of $59,625 for the three months ended October 31, 2018. We had a net loss of $9,341 for the nine months ended October 31, 2019, compared to a net loss of $62,075 for the nine months ended October 31, 2018.
Liquidity and microwave market.Capital Resources
As of October 31, 2019, we had total current assets of $3,341 and total current liabilities of $4,717. We planhad working deficit of ($1,376) as of October 31, 2019.
Operating activities used $24,478 in cash for the nine months ended October 31, 2019, as compared with $65,375 in cash for the same period ended 2018. Our negative operating cash flow for 2019 was mainly the result of low revenues , as compared with 2018 where we had expenses related to expand our businessmobile App development.
Financing activities provided $21,750 in cash for the near future to enternine months ended October 31, 2019, as compared with $72,875 in cash for the communication base station system integration market and to offer tower installation and maintenance services. Our towers are primarily made of steel, but some contain aluminum or other alloy materials.
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Our revenues currently are, and historically have been, generatedsame period ended 2018. In 2019, the positive financing cash flow was from the sale of our tower products. In the future,stock and in 2018 it resulted from shareholder loans.
Because of our limited operating history, it is difficult to predict our capital needs on a monthly, quarterly or annual basis. We will have no capital available to us if we expectare unable to offer installation and technical servicesraise money from this offering or find alternate forms of financing, which we do not have in place at this time.
There can be no assurance that we believe will generate anbe successful in raising additional revenue stream; however,funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
Our plan specifies a minimum amount of $100,000 in additional operating capital to operate for the next twelve months. If we are unable to raise $100,000 from this offering, our business will continue to operate with no marketing and additional development work for at least 10 months before we could be forced to suspend our operations or go out of business. Our long term growth plan calls for a raise of $15,000,000 to fund our growth plans. If we are unable to raise this money, our growth plans will be frustrated. There can be no assurance that this offering will be successful. You may lose your entire investment.
Off-Balance Sheet Arrangements
As of October 31, 2019, there were no off-balance sheet arrangements.
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Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of our company as a going concern. However, our revenues for the period from inception to October 31, 2019 has not been able to support our operating expenses. We have not yet generated materialcompleted our efforts to establish a stabilized source of revenues from such services.sufficient to cover operating costs over an extended period of time.
Our headquarters
Management anticipates that we will be dependent, for the near future on additional investment capital to fund operating expenses. We intend to position the company so that we may be able to raise additional funds through the capital markets. In light of management’s efforts, there are locatedno assurances that we will be successful in Anhui Province in southeastern Chinathis or any of our endeavors or become financially viable and our international sales network is primarily operated from our branch officescontinue as a going concern.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Shenzhen Special Economic ZoneManagement Discussion and Beijing.
Second Quarter Financial Performance Highlights
Analysis. The following summarizes certain key financial information for the second quarter of 2011:
Revenues: Revenues were $4.77 million for the three months ended June 30, 2011,SEC indicated that a decrease of $4.66 million, or 49.4%, from $9.43 million for the same period last year.
Gross Profit and Margin: Gross profit was $1.40 million for the three months ended June 30, 2011, a decrease of $1.58 million, or 53.0%, from $2.98 million for the same period last year. Gross margin was 29.38% for the three months ended June 30, 2011, as compared to 31.65% for the same period last year.
Net Income:Net income was $121,524 for the three months ended June 30, 2011, a decrease of $1.70 million, or 93%, from $1.82 million for the same period of last year.
Fully diluted net income per share: Fully diluted net income per share for the three months ended June 30, 2011 was $0.01, as compared to $0.08 for the same period last year.
Results of Operations
Comparison of Three Months Ended June 30, 2011 and June 30, 2010
The following table shows key components of our results of operations during the three months ended June 30, 2011 and 2010, in“critical accounting policy” is one which is both dollars and as a percentage of our revenues.
Three Months Ended | Three Months Ended | |||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||
Percent of | Percent of | |||||||||||
Dollars | Revenues | Dollars | Revenues | |||||||||
Revenues | $ | 4,770,019 | 100% | $ | 9,427,220 | 100% | ||||||
Cost of good sold | 3,368,433 | 70.62% | 6,443,918 | 68.35% | ||||||||
Gross profit | 1,401,586 | 29.38% | 2,983,302 | 31.65% | ||||||||
Selling and marketing expenses | (418,562 | ) | (8.77% | ) | (486,367 | ) | (5.16)% | |||||
General and administrative expenses | (632,421 | ) | (13.26% | ) | (363,402 | ) | (3.85)% | |||||
Net income from operations | 350,603 | 7.35% | 2,133,533 | 22.63% | ||||||||
Other income (expenses) | ||||||||||||
Government grant | 216,987 | 4.55% | 179,417 | 1.90% | ||||||||
Other income | - | - | 13,694 | 0.15% | ||||||||
Interest expense | (414,264 | ) | (8.68% | ) | (292,217 | ) | (3.10)% | |||||
Net other income (expenses) | (197,277 | ) | (4.14% | ) | (99,106 | ) | (1.05)% | |||||
Net income before provision for income taxes | 153,326 | 3.21% | 2,034,427 | 21.58% | ||||||||
Provision for income taxes | (31,802 | ) | (0.67% | ) | (209,868 | ) | (2.23)% | |||||
Net income | 121,524 | 2.55% | 1,824,559 | 19.35% | ||||||||
Foreign currency translation gain | 217,077 | 4.55% | 20,048 | 0.21% | ||||||||
Comprehensive income | $ | 338,601 | 7.10% | $ | 1,844,607 | 19.57% |
Revenues. Our revenues are mainly generated from sales of our tower products. Our revenues decreased $4.66 million, or 49.4%, to $4.77 million for the three months ended June 30, 2011 from $9.43 million during the same period in 2010. For the three month period ended June 30, 2011, approximately 43.3% of our revenues were generated from sales to customers in the energy industry and approximately 56.7% were generated from sales to communications industry customers. The period-over-period decrease in revenues resulted mainly from a decrease of approximately 60.8% in sales revenue generated by sales of energy transmission towers comparedimportant to the same period in 2010,portrayal of a company’s financial condition and a decrease of approximately 35.0% in sales revenue generated by sales of communications towers. In the second quarter of 2011, the price of tower products in China markedly decreased due to the rising steel prices, competition, decreased demandresults, and other factors. We also reserved capacity and inventory for anticipated orders from overseas customers which may require immediate production and delivery. As overseas orders generally tend to offer higher prices, we made a strategic decision to forego some domestic orders with comparatively lower prices in the second quarter 2011 and redeployed personnel and resources to maintain our production lines, train new employees and prepare for the anticipated overseas orders. Because our targeted overseas customers decided to postpone the production and delivery of products, our sales and revenues decreased in the three months ended June 30, 2011 as compared to the same period last year. We expect to start generating revenues from our overseas orders in the third quarter of 2011.
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Cost of goods sold. Our cost of goods sold includes the direct costs of our raw materials, primarily steel, as well as the cost of labor and overhead. Our cost of goods sold decreased $3.07 million,requires management’s most difficult, subjective or 47.73%, to $3.37 million in the three months ended June 30, 2011, from $6.44 million during the same period in 2010. The decrease in cost of goods sold was mainly due to the decrease in sales volume and revenues. As a percentage of revenues, our cost of goods sold increased to 70.62% in the three months ended June 30, 2011 from 68.35% for the same period last year, mainly because of the continuing increase of the price of steel, which is our primary raw material. Some orders produced during this quarter were priced in the previous fiscal quarter prior to the increase in the cost of raw materials, so previously priced orders did not reflect the increased cost of raw materials, compressed our margins and resulted in an increased percentage of cost of goods sold. We are closely monitoring our pricing policy in an effort to reduce the risk of inflation and fluctuation of raw material prices.
Gross profit and gross margin. Our gross profit is equal to the difference between our revenue and our cost of goods sold. Our gross profit decreased $1.58 million, or 53.02%, to $1.4 million in the three months ended June 30, 2011, from $2.98 million during the same period in 2010. The decrease was mainly due to the decrease of sales and revenues. Gross profit as a percentage of revenue (gross margin) was 29.38% and 31.65% for three months ended June 30, 2011 and 2010, respectively. The decrease in gross margin was mainly due to the increased price of steel as discussed above.
Selling and marketing expenses. Our selling and marketing expenses consist primarily of compensation and benefits to our sales and marketing staff, sales commission, cost of advertising, promotion, business travel, after-sale support, transportation costs and other sales related costs. Our selling and marketing expenses decreased $67,805, or 13.94%, to $418,562 in the three months ended June 30, 2011, from $486,367 during the same period in 2010. Such decrease was largely attributable to reduced operations in our sales and marketing department.
General and administrative expenses. General and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional advisor fees, bad debts reserve and other expenses incurred in connection with general operations. Our general and administrative expenses increased $269,019, or 74.03%, to $632,421 in the three months ended June 30, 2011, from $363,402 during the same period in 2010. Such increase was mainly attributable to expenses associated with being a public company.
Interest expense.Interest expense increase $122,047, or 41.76%, to $414,264 for the three months ended June 30, 2011, from $292,217 during the same period in 2010. Such increase was mainly due to the increase in our outstanding short term loans and annual interest rate.
Income before income taxes. Our income before income taxes decreased $1.88 million, or 92.46%, to $153,326 in the three months ended June 30, 2011, from $2.03 million during the same period in 2010,complex judgments, often as a result of the factors described above.need to make estimates about the effect of matters that are inherently uncertain.
Provision for income taxes.
Our income tax provisions decreased $178,066, or 84.84%, to $31,802accounting policies are discussed in the three months ended June 30, 2011, from $209,868 duringfootnotes to our financial statements included in this report.
Recently Issued Accounting Pronouncements
We do not expect the same period in 2010, mainly dueadoption of recently issued accounting pronouncements to decrease in taxable income.
Net income. We generatedhave a net income of $121,524 in the three months ended June 30, 2011, a decrease of $1.70 million, or 93.33%, from $1.82 million during the same period in 2010, as a cumulative effect of all factors discussed above.
Comparison of Six Months Ended June 30, 2011 and June 30, 2010
The following table shows key components ofsignificant impact on our results of operations, during the six months ended June 30, 2011 and 2010, in both dollars and as a percentage of our revenues.financial position or cash flow.
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Six Months Ended | Six Months Ended | |||||||||||
June 30, 2011 | June 30, 2010 | |||||||||||
Percent of | Percent of | |||||||||||
Dollars | Revenues | Dollars | Revenues | |||||||||
Revenues | $ | 8,195,144 | 100% | $ | 14,606,979 | 100% | ||||||
Cost of good sold | 5,784,261 | 70.58% | 9,957,895 | 68.17% | ||||||||
Gross profit | 2,410,883 | 29.42% | 4,649,084 | 31.83% | ||||||||
Selling and marketing expenses | (626,369 | ) | (7.64% | ) | (789,867 | ) | (5.41)% | |||||
General and administrative expenses | (893,192 | ) | (10.90% | ) | (644,948 | ) | (4.42)% | |||||
Net income from operations | 891,322 | 10.88% | 3,214,269 | 22.01% | ||||||||
Other income (expenses) | ||||||||||||
Government grant | 216,987 | 2.65% | 179,417 | 1.23% | ||||||||
Other income | - | - | 13,695 | 0.09% | ||||||||
Interest expense | (660,177 | ) | (8.06% | ) | (679,560 | ) | (4.65)% | |||||
Net other income (expenses) | (443,190 | ) | (5.14% | ) | (486,448 | ) | (3.33)% | |||||
Net income before provision for income taxes | 448,132 | 5.47% | 2,727,821 | 18.67% | ||||||||
Provision for income taxes | (81,290 | ) | (0.99% | ) | (386,861 | ) | (2.65)% | |||||
Net income | 366,842 | 4.48% | 2,340,960 | 16.03% | ||||||||
Foreign currency translation gain | 299,163 | 3.65% | 40,096 | 0.27% | ||||||||
Comprehensive income | $ | 666,005 | 8.13% | $ | 2,381,056 | 16.30% |
Revenues. Our revenues decreased $6.41 million, or 43.89%, to $8.20 million for the six months ended June 30, 2011 from $14.61 million during the same period in 2010. For the six month period ended June 30, 2011, approximately 32.12% of our revenues were generated from sales to customers in the energy industry and approximately 67.78% were generated from sales to communications industry customers. The period-over-period decrease in revenues resulted mainly from a decrease of approximately 63.91% in sales revenue generated by sales of energy transmission towers compared to the same period in 2010, and a decrease of approximately 24.05% in sales revenue generated by sales of communications towers. In the first half of 2011, the price of tower products in China markedly decreased due to the rising steel prices, competition, decreased demand and other factors. We also reserved capacity and inventory for anticipated orders from overseas customers which may require immediate production and delivery. As overseas orders generally tend to offer higher prices, we made a strategic decision to forego some domestic orders with comparatively lower prices in the first half of 2011 and redeployed personnel and resources to maintain our production lines, train new employees and prepare for the anticipated overseas orders. Because our targeted overseas customers decided to postpone the production and delivery of products, our sales and revenues decreased in the six months ended June 30, 2011 as compared to the same period last year.
Cost of goods sold. Our cost of goods sold decreased $4.17 million, or 41.87%, to $5.78 million in the six months ended June 30, 2011, from $9.96 million during the same period in 2010. The decrease in cost of goods sold was mainly due to the decrease in sales volume and revenues. As a percentage of revenues, our cost of goods sold increased to 70.58% in the six months ended June 30, 2011 from 68.17% for the same period last year, mainly because the price of steel increased. We are closely monitoring our pricing policy in an effort to reduce the risk of inflation and fluctuation of raw material prices.
Gross profit and gross margin. Our gross profit decreased $2.24 million, or 48.17%, to $2.41 million in the six months ended June 30, 2011, from $4.65 million during the same period in 2010. The decrease was mainly due to the decrease of sales and revenues. Gross profit as a percentage of revenue (gross margin) was 29.42% and 31.83% for six months ended June 30, 2011 and 2010, respectively. The decrease in gross margin was mainly due to the increased price of steel as discussed above.
Selling and marketing expenses. Our selling and marketing expenses decreased $163,498, or 20.25%, to $626,369 in the six months ended June 30, 2011, from $789,867 during the same period in 2010. Such decrease was largely attributable to reduced operations in our sales and marketing department.
General and administrative expenses. Our general and administrative expenses decreased $248,244, or 38.49%, to $893,192 in the six months ended June 30, 2011, from $644,948 during the same period in 2010. Such increase was primarily attributable to expenses associated with being a public company.
Interest expense.Interest expense decreased $19,383, or 2.85%, to $660,177 for the six months ended June 30, 2011, from $679,560 during the same period in 2010. Such decrease was mainly due to the lower interest expenses in the first quarter of 2011. Our total outstanding short-term bank loan was $11.9 million and $19.0 million as of March 31, 2011 and June 30, 2011, respectively.
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Income before income taxes. Our income before income taxes decreased $2.28 million, or 83.57%, to $448,132 in the six months ended June 30, 2011, from $2.73 million during the same period in 2010, as a result of the factors described above.
Provision for income taxes. Our income tax provisions decreased $305,571, or 84.33%, to $81,290 in the six months ended June 30, 2011, from $386,861 during the same period in 2010, mainly due to decrease in taxable income.
Net income. We generated a net income of $366,842 in the six months ended June 30, 2011, a decrease of $1.97 million, or 84.33%, from $2.34 million during the same period in 2010, as a cumulative effect of all factors discussed above.
Liquidity and Capital Resources
As of June 30, 2011, we had cash and cash equivalents of approximately $2.70 million, primarily consisting of cash on hand and demand deposits. The following table provides a summary of our net cash flows from operating, investing, and financing activities.
Cash Flow
Six Months Ended June 30, | ||||||
2011 | 2010 | |||||
Net cash (used in) provided by operating activities | $ | (4,302,596 | ) | $ | 2,156,452 | |
Net cash (used in) investing activities | (2,737,083 | ) | (455,446 | ) | ||
Net cash provided by (used in) financing activities | 5,902,077 | (154,876 | ) | |||
Effects of exchange rate changes in cash | 1,309,304 | 789 | ||||
Net increase in cash and cash equivalents | 171,702 | 1,546,919 | ||||
Cash and cash equivalents at beginning of the period | 2,526,710 | 161,133 | ||||
Cash and cash equivalent at end of the period | $ | 2,698,412 | $ | 1,708,052 |
Operating Activities
Net cash used in operating activities was $4.30 million for the six months ended June 30, 2011, as compared to net cash provided by operating activities of $2.16 million for the same period in 2010. The increase in net cash used in operating activities was primarily attributable to the outflow associated with increase in accounts receivable, other receivables, inventory and deposits and prepaid expenses levels which more than offset the cash inflow associated with the increase in other payable and accrued expenses and decrease in restricted cash in the six months ended June 30, 2011. We increased our inventory reserve level in anticipation of the increased orders in the coming quarters. In addition, our strategic decision to reduce our production this period by turning down comparatively lower margin domestic orders also contributed to the increased inventory.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2011 was $2.74 million, as compared to $455,446 during the same period in 2010. We spent approximately $2.18 million as installment payment for land use right and approximately $462,592 in construction of our Zhejiang facilities and Anhui administration office, and upgrade of our production facilities.
Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2011 was $5.90 million, as compared to net cash used in financing activities of $154,876 for the same period in 2010. The increase in net cash provided by financing activities was mainly attributable to a $5.90 million increase in net short term borrowings.
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Loan Commitments
As of June 30, 2011, we did not hold any long-term loans. Our short-term bank loans, totaling $19.0 million, are as follows:
Bank | Amount | Interest | Maturity Date | Duration | ||||||||
(in millions)* | Rate | |||||||||||
Industrial and Commercial Bank, Longshou Branch | $ | 0.3 | 6.06% | March 22, 2012 | 12 months | |||||||
Industrial and Commercial Bank, Longshou Branch | 0.4 | 6.16% | September 16, 2011 | 6 months | ||||||||
Industrial and Commercial Bank, Longshou Branch | 0.8 | 6.16% | September 16, 2011 | 6 months | ||||||||
Industrial and Commercial Bank, Longshou Branch | 0.3 | 6.67% | March 21, 2012 | 12 months | ||||||||
Industrial and Commercial Bank, Longshou Branch | 0.9 | 6.67% | March 23, 2012 | 12 months | ||||||||
Industrial and Commercial Bank, Longshou Branch | 1.2 | 6.44% | December 15, 2011 | 6 months | ||||||||
Huishang Bank, Xuancheng Branch | 2.0 | 7.88% | February 16, 2012 | 12 months | ||||||||
Huishang Bank, Xuancheng Branch | 4.6 | 8.20% | April 11, 2012 | 12 months | ||||||||
China Merchants Bank, Hefei Branch | 1.5 | 6.94% | October 29, 2011 | 12 months | ||||||||
China Construction Bank, Jingde Branch | 2.4 | 5.85% | May 3, 2011 | 6 months | ||||||||
China Everbright Bank, Hefei Branch | 4.6 | 5.56% | November 22, 2011 | 12 months | ||||||||
Total | $ | 19.0 |
* Calculated based on the exchange rate of $1 = RMB 6.46*
Capital Expenditures
Our capital expenditures for the six months ended June 30, 2011 and 2010 were approximately $6.37 million and $0.46 million, respectively, representing the total amount of investment activities.
To date, we have financed our operations primarily through cash flows from operations, augmented by short-term bank loans and equity contributions by our stockholders. We believe that our cash on hand and cash flow from operations will meet a portion of our present cash needs and we will require additional cash resources to meet our expected capital expenditures and working capital requirements for the next 12 months. We may, however, in the future, require additional cash resources due to changed business conditions, implementation of our strategy to expand our marketing efforts and increase brand awareness, or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
Inflation
Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in the Chinese economy and our industry and continually maintain effective cost controls in operations.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.
Seasonality
Our operating results and operating cash flows historically have been subject to seasonal variations. Our revenues usually increase over each quarter of the calendar year with the first quarter usually the slowest quarter because fewer projects are undertaken during and around the Chinese spring festival.
Critical Accounting Policies
Critical accounting policies are those we believe are most important to portraying our financial conditions and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
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Recent Accounting Pronouncements
See Note 3 to our unaudited consolidated financial statements included elsewhere in this report.
Not Applicable.Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are not required to provide the information required by this Item.
Evaluation of
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(e), our management hasWe carried out an evaluation with the participation and under the supervision of our Chief Executive Officer, Mr. Chun Lu, and Chief Financial Officer, Mr. Yuhua Yang, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2011.October 31, 2019. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the date of this evaluation, Messrs. Lu and Yang, determined that, because of the material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the year ended DecemberOctober 31, 2010, which we are still in the process of remediating as of June 30, 2011,2019, our disclosure controls and procedures were not effective. Investors are directedeffective due to Item 9Athe presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of October 31, 2019, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
Our Company plans to take steps to enhance and improve the design of our Annual Report on Form 10-Kinternal controls over financial reporting. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending January 31, 2020: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the year ended December 31, 2010 forcosts of implementing the description of these weaknesses.changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Changes in Internal Control over Financial Reporting
We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.
During its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2010, our management concluded that we still need to hire qualified accounting personnel and enhance the supervision, monitoring and review of the financial statements preparation processes. Although our accounting staff is professional and experienced in accounting requirements and procedures generally accepted in the PRC, management has determined that they require additional training and assistance in U.S. GAAP. We are actively searching for additional personnel with relevant accounting experience, skills and knowledge in the preparation of financial statements in accordance with of U.S. GAAP and financial reporting disclosure requirements under SEC rules. In addition, we plan to establish an audit committee and appoint qualified committee members to strengthen our internal control over financial reporting.
Other than the foregoing changes, thereThere were no changes in our internal controlscontrol over financial reporting during the second quarter of 2011three months ended October 31, 2019 that have materially affected, or are reasonablyreasonable likely to materially affect, our internal control over financial reporting.
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PART II
– OTHER INFORMATION
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business.
We are currentlynot a party to any material pending legal proceeding. We are not aware of any suchpending legal proceedingsproceeding to which any of our officers, directors, or claims that we believe willany beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse affect on our business, financial condition or operating results.to us.
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Not Applicable.Item 1A: Risk Factors
We are not required to provide the information required by this Item.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
None.
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosure
N/A
We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.
The following exhibits are filed as part of this report or incorporated by reference:Item 5. Other Information
None
Exhibit Number | Description of Exhibit | |
31.1 | ||
31.2 | ||
32.1 | ||
The following materials from the | ||
|
* Furnished
** | Provided herewith |
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SIGNATURES
In accordance with Section 13 or 15(d)the requirements of the Securities and Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Telidyne, Inc. | ||
Date: | ||
December 30, 2019 | ||
By: | /s/ | |
Title: | Principal Executive | |
Principal Accounting Officer and Director |
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