NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER
30, 2020 AND 2019
(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.
JTI
Financial Services Group Limited (“JTI” or the “Company”) 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”).
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER
30, 2020 AND 2019
(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
|
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, 2020 AND 2019
(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, 2020 and for the three months ended November 30, 2020 and 2019 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, 2020, 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, 2020, its interim
condensed consolidated results of operations and cash flows for the three months ended November 30, 2020 and 2019, 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, 2020, the Company has suffered recurring losses from operations, and records an accumulated deficit and a working
capital deficit of $757,828 and $306,546, 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.
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.
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, 2020 AND 2019
(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, 2020 and August 31, 2020, 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, 2020 AND 2019
(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, 2020 and 2019, no allowance for doubtful accounts has been made. As of November
30, 2020 and August 31, 2020, the Company has $461 and nil accounts receivable, respectively.
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, 2020 and August 31, 2020, 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,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Money lending
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Property agency services
|
|
|
-
|
|
|
|
-
|
|
|
Mortgage referral services
|
|
|
12,382
|
|
|
|
10,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
12,382
|
|
|
$
|
10,096
|
|
|
|
|
Three months ended November 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Revenue recognized over time
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Revenue recognized at a point in time
|
|
|
12,382
|
|
|
|
10,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
12,382
|
|
|
$
|
10,096
|
|
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER
30, 2020 AND 2019
(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, 2020 and August 31, 2020. 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, 2020 AND 2019
(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, 2020 AND 2019
(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,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Net (loss) profit
|
|
$
|
(62,360
|
)
|
|
$
|
15,510
|
|
|
Weighted average number of common shares outstanding - Basic and diluted
|
|
|
6,692,182
|
|
|
|
6,692,182
|
|
|
Net (loss) profit per share - Basic and diluted
|
|
$
|
(0.01
|
)
|
|
$
|
0.00
|
|
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
August 2018, the FASB issued ASU 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure
Requirements for Fair Value Measurement, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements
under ASC 820. This ASU is to be applied on a prospective basis for certain modified or new disclosure requirements, and all other
amendments in the standard are to be applied on a retrospective basis. The new standard is effective for interim and annual periods
beginning after December 15, 2019, with early adoption permitted. The new standard is effective for the Company on September 1,
2020 and the new standard did not have a material impact on the consolidated financial statements.
Accounting
Pronouncements Issued But Not Yet Adopted
In
May 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-05, which is an update to ASU Update No.
2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced
the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis,
replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit
Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale
debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis,
in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments
in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain
financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase
comparability of financial statement information by providing an option to align measurement methodologies for similar financial
assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments
in Update 2016-13 while still providing financial statement users with decision-useful information. ASU 2019-05 is effective for
“smaller reporting companies” for fiscal year beginning after December 15, 2022. The Company is currently evaluating
the impact of this new standard on its consolidated financial statements and related disclosures.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER
30, 2020 AND 2019
(Unaudited)
(In U.S. dollars except for number of
shares)
In
December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions
to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740
by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting
guidance but does not expect adoption will have a material impact on the Company’s unaudited consolidated financial statements
and related disclosures.
In
March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04
contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.
The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company continues
to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.
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”), which simplifies the accounting for certain financial instruments
with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible
preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires
entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible
debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments
and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing
certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require
entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition,
entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.
For
SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021
including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after
December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including
interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption
and cannot adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06
may have on its consolidated financial statements and related 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, 2020 AND 2019
(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, 2020 and August 31, 2020. The balance represented utility
deposits paid.
|
|
4.
|
ACCOUNTS PAYABLE, OTHER
PAYABLES AND ACCRUED LIABILITIES
|
|
|
|
November 30, 2020
|
|
|
August 31, 2020
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
6,574
|
|
|
$
|
2,371
|
|
|
Accrued expenses
|
|
|
10,747
|
|
|
|
14,202
|
|
|
|
|
$
|
17,321
|
|
|
$
|
16,573
|
|
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,
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
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, 2020 and 2019.
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 2019/20.
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,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Profit before provision for income taxes
|
|
$
|
(62,272
|
)
|
|
$
|
15,510
|
|
|
Statutory income tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
|
Income tax (credit) expense computed at statutory income tax rate
|
|
|
(13,077
|
)
|
|
|
3,257
|
|
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
Rate differential in different tax jurisdictions
|
|
|
1,193
|
|
|
|
(698
|
)
|
|
Non-deductible expenses
|
|
|
11,972
|
|
|
|
-
|
|
|
Tax effect of tax relief
|
|
|
-
|
|
|
|
(1,544
|
)
|
|
Tax effect of utilization of tax losses
|
|
|
-
|
|
|
|
(1,015
|
)
|
|
Income tax expenses
|
|
$
|
88
|
|
|
$
|
-
|
|
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER
30, 2020 AND 2019
(Unaudited)
(In U.S. dollars except for number of
shares)
The
net tax loss of the subsidiaries in Hong Kong of $596,370 as of November 30, 2020 and August 31, 2020, 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,
2020
|
|
|
August 31,
2020
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
Tax loss
|
|
$
|
98,401
|
|
|
$
|
98,401
|
|
|
Valuation allowance
|
|
|
(98,401
|
)
|
|
|
(98,401
|
)
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
6.
|
BALANCES
WITH RELATED PARTIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
November 30, 2020
|
|
August 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to a shareholder
|
|
|
|
|
|
|
|
|
|
|
Ace Vantage Investments Limited
|
|
(c)
|
|
$
|
230,913
|
|
$
|
173,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to a related company
|
|
|
|
|
|
|
|
|
|
|
Century Crown Investments Limited
|
|
|
|
$
|
74,317
|
|
$
|
56,317
|
|
|
Other payable
|
|
(a), (c)
|
|
|
56,317
|
|
|
56,317
|
|
|
Rental payable
|
|
(b)
|
|
|
18,000
|
|
|
-
|
|
|
|
|
|
|
$
|
74,317
|
|
$
|
56,317
|
|
|
|
(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. For the three months ended November 30, 2020
and 2019, the Company recorded $18,000 and nil rental expenses to Century Crown Investments Limited.
|
|
|
(c)
|
The
balances with the shareholder and related company detailed above as of November 30, 2020 and August 31, 2020 are unsecured, non-interest
bearing and repayable on demand.
|
For
the three months ended November 30, 2020, the Company recorded $11,763 (HK$91,755) service fees to High Flyers Info Limited, which
the Company executive director Mark Ko Chiu Yip was a director of High Flyers Info Limited for the period from May 7, 2020 to
September 15, 2020.
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER
30, 2020 AND 2019
(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, 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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of November 30, 2020
|
|
$
|
8,743
|
|
|
$
|
2,496
|
|
|
$
|
4,934
|
|
|
$
|
302
|
|
|
$
|
16,475
|
|
|
As of August 31, 2020
|
|
$
|
55
|
|
|
$
|
2,496
|
|
|
$
|
29
|
|
|
$
|
302
|
|
|
$
|
2,882
|
|
For the three months ended November 30, 2019
|
|
|
Money
lending
|
|
|
Property agency services
|
|
|
Mortgage referral services
|
|
|
Corporate unallocated (note)
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
10,096
|
|
|
$
|
-
|
|
|
$
|
10,096
|
|
|
Cost of revenue
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
10,096
|
|
|
|
-
|
|
|
|
10,096
|
|
|
General and administrative expense
|
|
|
(641
|
)
|
|
|
-
|
|
|
|
(740
|
)
|
|
|
-
|
|
|
|
(1,381
|
)
|
|
Profit (Loss) from operations
|
|
|
(641
|
)
|
|
|
-
|
|
|
|
9,356
|
|
|
|
-
|
|
|
|
8,715
|
|
|
Other income
|
|
|
641
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,154
|
|
|
|
6,795
|
|
|
Profit before income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
9,356
|
|
|
|
6,154
|
|
|
|
15,510
|
|
|
Income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Net profit
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
9,356
|
|
|
$
|
6,154
|
|
|
$
|
15,510
|
|
TEMIR CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER
30, 2020 AND 2019
(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 nil for the three months ended November 30, 2020 and 2019, 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. For the three months ended November 30, 2020 and 2019, the Company recorded $18,000
and nil rental payable to Century Crown Investments Limited.
As of November 30, 2020, the outstanding
lease is short-term lease. The total minimum future lease payments are $54,000 payable in the twelve months ending November 30,
2021.
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.
One
customer accounted for all of the Company’s income from mortgage referral services for the three months ended November 30,
2020 and 2019.
The
Company has evaluated subsequent events from November 30, 2020 to the date the financial statements were issued and has determined
that there are no items to disclose.
