ZRCN 10-Q
ZRCN Inc. (ZRCN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________to____________________________
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered under Section 12(b) of the Exchange Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.0001 per share
(Title of class)
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.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | 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
☐
shares of common stock were issued and outstanding as of April 21, 2022.
HARMONY ENERGY TECHNOLOGIES CORPORATION
Form 10-Q
For the Fiscal Quarter Ended March 31, 2022
TABLE OF CONTENTS
| Page | ||
| Part I | ||
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 7 |
| Item 4. | Controls and Procedures | 7 |
| Part II | ||
| Item 1. | Legal Proceedings | 7 |
| Item 1A. | Risk Factors | 7 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 7 |
| Item 3. | Defaults Upon Senior Securities | 7 |
| Item 4. | Mine Safety Disclosures | 8 |
| Item 5. | Other Information | 8 |
| Item 6. | Exhibits | 8 |
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
| 1 |
HARMONY ENERGY TECHNOLOGIES CORPORATION
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2022
| Note | March 31, 2022 | December 31, 2021 | ||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash | ||||||||||
| VAT recoverable | ||||||||||
| Prepaid expenses and other assets | ||||||||||
| Inventory | ||||||||||
| Total Current Assets | ||||||||||
| Non-Current Assets: | ||||||||||
| Equipment | 6 | |||||||||
| Total Assets | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable and accrued liabilities | ||||||||||
| Loan payable | 7 | |||||||||
| Loan from related parties | 9 | |||||||||
| Total Liabilities | ||||||||||
| Stockholders’ Equity: | ||||||||||
| Share capital | 5 | |||||||||
| Additional paid in capital | 5 | |||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||||
| Total Stockholders’ Equity | ( | ) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity | ||||||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
Approved on behalf of the Board
| “Christian Guilbaud”, Director | “Kenneth Charles Grainger”, Director |
| F-1 |
HARMONY ENERGY TECHNOLOGIES CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME
For the three-month periods ended March 31, 2022 and 2021
| (in US Dollars) | ||||||||||
| Three-month periods ended | ||||||||||
| Note | March 31, 2022 | March 31, 2021 | ||||||||
| Cost of goods sold | - | ( | ) | |||||||
| Gross Profit | - | ( | ) | |||||||
| Operating Expenses | ||||||||||
| Research and development | ( | ) | ( | ) | ||||||
| Professional and management fees | ( | ) | ( | ) | ||||||
| Office and general | 8 | ( | ) | ( | ) | |||||
| Stock based compensation | 5 | - | ( | ) | ||||||
| Depreciation | 6 | ( | ) | ( | ) | |||||
| Financial expenses | ( | ) | ||||||||
| Total Operating Expenses | ( | ) | ( | ) | ||||||
| Operating Income (Loss) | ( | ) | ( | ) | ||||||
| Other Income (Expenses) | ||||||||||
| Interest income | - | |||||||||
| Foreign exchange loss | ( | ) | ( | ) | ||||||
| Loss, Net of Income Tax | ( | ) | ( | ) | ||||||
| Foreign currency translation differences of foreign operations | ( | ) | ||||||||
| Net Loss and Other Comprehensive Loss | ( | ) | ( | ) | ||||||
| Basic net income per share | ( | ) | ( | ) | ||||||
| Weighted average number of common shares outstanding | ||||||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
| F-2 |
HARMONY ENERGY TECHNOLOGIES CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
As of March 31, 2022
| (in US Dollars) | ||||||||||||||||||||||||||||
| Note | Number of Common Share | Par Value | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||
| Balance - January 1, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Shares issued for private placement | 5 | - | - | |||||||||||||||||||||||||
| Shares issued for debt settlement | 9 | - | - | |||||||||||||||||||||||||
| Shares issued to Officers and Consultants as compensation | 5 | - | - | |||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||
| Foreign currency translation differences of foreign operations | - | - | - | - | ||||||||||||||||||||||||
| Balance - March 31, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance - January 1, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||
| Foreign currency translation differences of foreign operations | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||
| Balance - March 31, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
| F-3 |
HARMONY ENERGY TECHNOLOGIES CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three-month periods ended March 31, 2022 and 2021
| (in US Dollars) | ||||||||||||
| Three-month periods ended | ||||||||||||
| Note | March 31, 2022 | March 31, 2021 | ||||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||
| Non-cash items: | ||||||||||||
| Interest income | - | ( | ) | |||||||||
| Stock based compensation | 5 | - | ||||||||||
| Depreciation | 6 | |||||||||||
| Interest expense | ( | ) | ||||||||||
| Rent expense | - | |||||||||||
| Loss on foreign exchange gain and loss | - | |||||||||||
| Exchange differences on translation from functional to presentation currency | ( | ) | ||||||||||
| Change in non-cash working capital items | ||||||||||||
| Prepaid expenses and other assets | ( | ) | ||||||||||
| Accounts payable and accrued liabilities | ||||||||||||
| Deferred revenue | - | ( | ) | |||||||||
| Cash Flow from Operating Activities | ( | ) | ( | ) | ||||||||
| INVESTING ACTIVITIES | ||||||||||||
| Repayment received from other party | 6 | - | ||||||||||
| Cash Flow from Investing Activities | - | |||||||||||
| FINANCING ACTIVITIES | ||||||||||||
| Proceeds from private placement | 5 | - | ||||||||||
| Lease payment | - | ( | ) | |||||||||
| Cash Flow from Financing Activities | - | |||||||||||
| Net change in cash during the period | ( | ) | ( | ) | ||||||||
| Cash, beginning of period | ||||||||||||
| Cash, end of period | ||||||||||||
The accompanying notes are an integral part of the interim condensed consolidated financial statements.
| F-4 |
HARMONY ENERGY TECHNOLOGIES CORPORATION
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in United States Dollars)
For the three months periods ended March 31, 2022 and 2021
NOTE 1. NATURE OF OPERATION
On June 19, 2018, Harmony Energy Technologies Corporation (“Harmony” or “Company”) was registered under the General Corporation Law of the State of Delaware, USA. Harmony’s registered office is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware, USA 19808. The Company’s common shares have not listed or quoted on any market at this moment.
On January 14, 2019, the Company completed the acquisition of the energy business which was spun out from Golden Share Resources Corporation (“Golden Share”). In exchange, the Company issued common shares (“Harmony Shares”) to Golden Share, which was distributed to Golden Share’s shareholders on the basis of one Harmony Share for each 10 Golden Share common shares held as of the close of business on January 3, 2019.
On September 1, 2020, the Company completed the acquisition of Shenzhen Smarten Technology Co., Ltd. (“Smarten”).
NOTE 2. GOING CONCERN ASSUMPTION
These financial statements have been prepared on the basis of the going concern assumption which contemplates that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations.
The
Company has not yet determined when its energy business can generate income or cash flows. As of March 31, 2022, the Company has an accumulated
deficit of $
The Company’s ability to continue as a going concern is dependent upon its ability to raise additional fund to further develop the energy business and continued support of suppliers and creditors. Even if the Company has been successful in the past in doing so, there is no assurance that it will manage to obtain additional financing in the future.
The carrying amounts of assets, liabilities and expenses presented in the financial statements and the classification used in the statement of financial position have not been adjusted as would be required if the going concern assumption was not appropriate. Those adjustments could be material.
NOTE 3. SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
These interim condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”)
The financial statements have been approved and authorized for issue by the Board of Directors on May 12, 2022.
| F-5 |
Basis of consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Shenzhen Smarten Technology Co., Ltd. (“Smarten”). Smarten is a company registered in China. All significant intercompany accounts and transactions have been eliminated in consolidation.
Business combinations
We account for the acquisition of Smarten as a business combination under the acquisition method of accounting, which that the acquired assets and the liabilities assumed be recorded at their acquisition date at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Acquisition-related costs are expensed as incurred in the consolidated financial statements. Significant judgments are used in determining the estimated fair values assigned to the assets acquired and liabilities assumed and in determining estimates of useful lives of long-lived assets acquired. Estimates of the fair values of assets acquired and liabilities assumed are based upon assumptions believed to be reasonable, and when appropriate, include assistance from independent third-party appraisal firms. While we use our best estimates and assumptions to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Overpayments are best addressed through subsequent impairment testing of goodwill. However, when there is evidence to suggest that the business combination transaction is not an exchange of equal values, such overpayments should be expensed at acquisition date.
Functional and presentation currency
The financial statements are presented in United States dollars, which is also the functional currency of the Company. The functional currency of Smarten is Chinese Renminbi Yuan (“CNY”).
Foreign currency transactions and balances
In respect of transactions denominated in currencies other than the Company and its subsidiaries’ functional currencies, the monetary assets and liabilities are remeasured at the period end rates. Revenue and expenses are re-measured at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these transactions are recognized in the consolidated statements of operations.
When the Company translates the financial statements of subsidiaries from their functional currency to presentation currency, assets and liabilities are translated into United States dollars at the exchange rate in effect at the balance sheet date. Share capital, contributed surplus, other comprehensive (loss) income, and accumulated deficits are translated into United States dollars at historical exchange rates. Revenues and expenses are translated into United States dollars at the average exchange rate for the year. Foreign exchange gains and losses on translation are included in other comprehensive (loss) income.
Right-of-use assets & lease liabilities
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date according to ASC 842 Leases. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the initial amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received.
Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the right-of-use assets are depreciated on a straight-line basis over the shorter of the estimated useful life and the lease term. Right-of-use assets are subject to impairment.
| F-6 |
At the commencement date of the lease, the Company recognizes a lease liability measured at the present value of lease payments to be made over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate.
Currently, the Company only have the leases with terms of 12 months or less, the Company elects to not recognize lease assets and liabilities, instead recognize lease expense on a straight-line basis, generally, over the term of the lease.
Cash
Cash consists of cash on hand and deposits in banks with no restrictions.
Inventories
Inventories are stated at the lower of the cost or net realizable value and include raw materials, work in progress and finished goods. Cost is determined as follows: Raw Materials and Work in Progress (“WIP”) – Cost is determined on a standard cost basis utilizing the weighted average cost of historical purchases, which approximates actual cost. The cost of WIP and finished goods includes the cost of raw materials and the applicable share of the cost of labor and fixed and variable production overheads.
The Company regularly evaluates the value of inventory based on a combination of factors including the following: historical usage rates, product end of life dates, technological obsolescence and product introductions. The Company includes demonstration units within inventories. Proceeds from the sale of demonstration units are recorded as revenue.
Equipment
Equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation commences when the asset is available for use and is charged to the consolidated statements of net loss on a straight-line basis over the useful life of the asset as outlined below:
| Equipment | ||||
| Furniture and fixtures |
When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheets, and any resulting gain or loss is reflected in the consolidated statements of operations.
Revenue recognition
The Company adopted Accounting Standards Codification (“ASC”) 606 “Revenue from contract with customers” (“ASC 606”) on June 19,2018 (the incorporation date) using the modified retrospective method for all contracts not completed as of the date of adoption.
The Company generates revenue from the sales of its products. According to ASC 606, revenue is recognized based on the following five steps: (1) identification of the contract(s) with the customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; and (4) allocation of the transaction price to the separate performance obligations in the contract; and (5) recognition of revenue when (or as) the entity satisfies a performance obligation.
Cost of goods sold
For product sales, the costs of goods sold are recognized upon shipment to the customer or distributor.
| F-7 |
Impairment of long-lived assets
The
Company accounts for the impairment of long-lived assets in accordance with FASB, Accounting Standards Codification (“ASC”)
360-10, “Accounting for the Impairment of Long-Lived Assets”. This standard requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the assets’ carrying amounts may not be recoverable. For assets
that are to be held and used, impairment is assessed when the estimated undiscounted cash flows associated with the asset or group of
assets is less than their carrying values. If impairment exists, an adjustment is made to write the asset down to its fair value, and
a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values,
discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of the carrying
value and estimated net realizable value. During the three months period ended March 31, 2022 and 2021, there was
Fair value measurement
Financial assets and financial liabilities are initially recognized at fair value when the Company becomes a party to the contractual provision of the financial instrument. Subsequently, all financial instruments are measured at amortized cost using the effective interest method.
The financial instruments of the Company consist of cash, accounts receivable, loan receivable, accounts payable and accrued liabilities, loan payable, and lease liability. The fair value of the financial instruments approximates their carrying values due to their short-term nature.
The Company measures the fair value of its financial assets and liabilities using the fair value hierarchy. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The new standard is effective for fiscal years beginning after December 15, 2019 (i.e., a January 1, 2020 effective date), with early adoption permitted for fiscal years beginning after December 15, 2018. The Company adopted the standard on January 1, 2019.
Income taxes
Income tax expense is the total of the current year’s income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
A
tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in
a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is
| F-8 |
Equity
Share capital represents the par value of shares issued and the residual amount received upon the share issuance less the share issue expenses net of any tax benefits on the earnings underlying these share issue expenses are recorded as additional paid in capital.
Stock-based compensation
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated statements of operations.
The fair value of stock options (“options”) on the grant date is estimated using the Black-Scholes option-pricing model using the single-option approach. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including the option’s expected term and the price volatility of the underlying stock, to determine the fair value of the award. The Company recognizes compensation expenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards. The Company has made a policy choice to account for forfeitures when they occur.
Stock options granted to non-employees are based on the fair value on the grant date and re-measured at the end of each reporting period based on the fair value until the earlier of the options being fully vested and completion of the performance obligations. These are subject to a service vesting condition and are recognized on a straight-line method over the requisite service period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based on historical pre-vesting forfeitures.
The Company computes loss per share in accordance with ASC Topic 260, “Earnings Per Share” (“ASC 260”) and related guidance, which requires two calculations of loss attributable to the Company’s shareholders per share to be disclosed: basic and diluted. Diluted loss per share is the same as basic loss per share for the years in which the Company had a net loss because the inclusion of outstanding common stock equivalents would be anti-dilutive.
Recently issued accounting standards not yet adopted
In April 2020, Financial Accounting Standards Board (the “FASB”) issued a Staff Question-and-Answer Document (Q&A): ASC Topic 842 and ASC Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, that focuses on the application of the lease guidance for lease concessions related solely to the effects of COVID-19. The FASB issued the guidelines to reduce the burden and complexity for companies to account for such lease concessions (e.g., rent abatements or other economic incentives) under current lease accounting rules due to COVID-19 by providing certain practical expedients that can be used. This guidance can be applied immediately. The Company anticipates that the adoption of the guidance will not have a material impact on the Company’s consolidated financial statements.
In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04 - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC Topic 848). This authoritative guidance provides optional relief for companies preparing for the discontinuation of interest rates such as LIBOR, which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. This guidance can be applied for a limited time, as of the beginning of the interim period that includes March 12, 2020 or any date thereafter, through December 31, 2022. The guidance may no longer be applied after December 31, 2022. In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clarify that all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR, or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC Topic 848. The Company is currently assessing the impact of applying this guidance as well as when to adopt this guidance.
| F-9 |
In February 2020, the FASB issued authoritative guidance (ASU 2020-02 – Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842)) that amends and clarifies Topic 326 and Topic 842. For Topic 326, the codification was updated to include the SEC staff interpretations associated with registrants engaged in lending activities. ASC Topic 326 is effective for annual periods beginning after January 1, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of applying this guidance on its financial instruments, such as accounts receivable.
NOTE 4. ESTIMATES, JUDGMENTS AND ASSUMPTIONS
The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, the implicit interest rate used to record lease liabilities, allowance for doubtful accounts, inventory valuation, the valuation and measurement of deferred tax assets and liabilities, useful lives of property and equipment, valuation of acquired assets and assumed liabilities, recognition of intangible assets and goodwill for the business combination. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.
Judgments
The following are significant judgments in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Acquisition of Smarten
The Corporation accounted as business combinations by using acquisition method when the control was transferred to the Corporation. The Company measured the identifiable assets and liabilities assumed at their fair value at the acquisition date. Acquisition related costs are recognized in profit or loss as incurred.
The management assessed that the acquisition of Smarten is a business acquisition. The Company obtained the control of Smarten on January 1, 2020 and deemed Smarten as the wholly owned subsidiary of the Company since then.
Going concern
The evaluation of the Company’s ability to continue as a going concern, to raise additional financing in order to cover its operating expenses and its obligations for the incoming year requires significant judgment based on past experience and other assumptions including the probability that future events are considered reasonable according to circumstances. Please refer to Note 2 for further information.
Estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below:
Expected Credit Loss on the accounts receivable and the loan receivable
Accounts receivable and loan receivable was assessed for the expected credit loss at each reporting date. Expected credit loss represents management’s best estimate and assumptions based on actual credit loss experience and informed credit assessment, and also takes into consideration forward-looking information.
| F-10 |
Fair value of the shares issued for acquisition of Smarten
The Company’s shares are not quoted in an active market, therefore the fair value of the Company’s issued shares to Smarten is based on valuation methods and techniques generally recognized as standard within the industry in which observable data have been used to the extent practicable. Changes in assumptions about these factors could affect the reported fair value of the shares issued for acquisition of Smarten.
Business acquisition of Smarten
In a business combination, the Corporation may acquire assets and assume certain liabilities of an acquired entity. Estimates are made as to the fair value of property and equipment, intangible assets, and goodwill, among other items. In certain circumstances, such as the valuation of property and equipment, intangible assets and goodwill acquired, the Corporation may rely on independent third-party valuators. The determination of these fair values involves a variety of assumptions, include revenue growth rates, expected operating income, discount rates, and earnings multiples.
Income taxes
The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. If changes were made to management’s assessment regarding the Company’s ability to use future tax deductions, the Company would adjust future income tax provisions or recoveries.
NOTE 5. SHARE CAPITAL
Share capital
The share capital of the Company consists only of fully paid common shares. The Company has been authorized to issue up to fifty million () of common shares with a par value of $ per share.
Transactions on share capital
| Number of Shares | Unit Price | Fair Value | ||||||||||
| Outstanding as of January 1, 2021 | ||||||||||||
| Shares issued for private placement (i)(ii)(iii) | ||||||||||||
| Shares issued for debt settlement (iv) | ||||||||||||
| Shares issued to Officers and Consultants as compensation (v) | ||||||||||||
| Outstanding as of December 31, 2021 | ||||||||||||
| Outstanding as of March 31, 2022 | ||||||||||||
| (i) | |
| (ii) |
| F-11 |
| (iii) | |
| (iv) | |
| (v) |
Warrants
The following table shows the change in warrants and outstanding warrants.
| Number of Warrants | Exercise Price | Fair Value | Weighted Average Remaining Life (Years) | Expiry Date | ||||||||||||||
| Outstanding as of December 31, 2019 | ||||||||||||||||||
| Issued for private placement | ||||||||||||||||||
| Outstanding as of December 31, 2020 | ||||||||||||||||||
| Issued for private placement | ||||||||||||||||||
| Issued for private placement | ||||||||||||||||||
| Issued for private placement | ||||||||||||||||||
| Outstanding as of December 31, 2021 | ||||||||||||||||||
| Warrants expired | ( | ) | ( | ) | ||||||||||||||
| Outstanding as of December 31, 2020 | ||||||||||||||||||
The value of the warrants was calculated using the Black-Scholes model and the assumptions at grant date and period end date were as follows:
| (i) | Risk-free interest rate: - , which is based on the Bank of Canada benchmark bonds yield 3 years rate in effect at the time of grant for bonds with maturity dates at the estimated term of the warrants |
| (ii) | Expected volatility: - , which is based on the Company’s historical stock prices |
| (iii) | Expected life: |
| (iv) | Expected dividends: $ |
| F-12 |
NOTE 6. EQUIPMENT
| COST | Computer and Office Equipment | Total | ||||||
| Balance - December 31, 2021 | ||||||||
| Foreign currency translation differences | ||||||||
| Balance - March 31, 2022 | ||||||||
| Accumulated Depreciation | Computer and Office Equipment | Total | ||||||
| Balance - December 31, 2021 | ||||||||
| Amortization | ||||||||
| Balance - March 31, 2022 | ||||||||
| Net Book Value | Computer and Office Equipment | Total | ||||||
| Balance - December 31, 2021 | ||||||||
| Balance - March 31, 2022 | ||||||||
NOTE 7. LOAN PAYABLES
The Company has entered into the following loan agreements since January 1, 2020.
| a. | In
January 2020, Smarten entered into an agreement of six-month unsecured loans for $ |
| b. | In
January 2020, Smarten entered into another agreement of six-month unsecured loans for $ |
| c. | In
May 2020, Smarten entered into another agreement of six-month unsecured loans for $ |
| d. | In
August 2020, Smarten entered into another six-month unsecured loan agreement for $ |
During
the year ended December 31, 2020, the Company has accrued interest of $
| e. | In
July 2020, Smarten entered into a loan agreement with the President & CEO of Harmony for a loan of $ |
| f. | In
September 2020, the Company entered into an agreement with one of former directors, Ms. Nan
Du, who is the original shareholder of Smarten, to settle the unpaid cash consideration of
$
In February 2022, Ms. Du waived all the interest and agreed to receive payment when Harmony cash position is sufficient upon Harmony’s decision. |
| F-13 |
NOTE 8. OFFICE AND GENERAL BY NATURE
| Three months periods ended | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| Salaries and benefits expenses | ||||||||
| Office rent and related expenses | ||||||||
| Transfer agent fee | ||||||||
| Regulatory fee | ||||||||
| Others | - | |||||||
| Total | ||||||||
NOTE 9. RELATED PARTIES
The Company considers its related parties to consist of key members or former members of its management personnel (including all officers and directors), their close family members, and companies controlled or significantly influenced by such individuals; and reporting shareholders and their affiliates which may exert significant influence over the Company’s activities.
During the three months period ended March 31, 2022, the Company has the following related party transactions:
| - | A
company owned by the President and CEO provides consulting and administrative services to the Company. The Company recorded $ |
| - | The
Company recorded $ |
| - | The
Company made a cash payment of $ |
During
the three-month period ended March 31, 2021, the Company settled accounts payable with CEO and CFO for an aggregate amount of $
In
July 2020, Smarten entered into a loan agreement with the President & CEO of Harmony for a loan of $
NOTE 10. CAPITAL MANAGEMENT
The Company’s capital management objectives are:
| – | to ensure the Company’s ability to continue as a going concern; | |
| – | to increase the value of the Company’s assets; and | |
| – | to provide an adequate return to shareholders of the Company. |
These objectives will be achieved by selling its tested vanadium electrolyte with licensed technology, revenue generated from Smarten.
The Company monitors capital on the basis of the carrying amount of equity. Capital for the reporting periods under review is summarized in the statement of changes in equity (deficit).
| F-14 |
The Company sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may return capital to shareholders, issue new shares, or sell assets. When financing conditions are not optimal, the Company may enter into option agreements or other solutions to continue its activities or may slow its activities until conditions improve.
No changes were made in the objectives, policies and processes for managing capital during the reporting periods.
NOTE 11. FINANCIAL INSTRUMENT RISKS
The Company is exposed to various risks in relation to financial instruments. The Company’s financial assets and liabilities by category are summarized in Note 3. The main types of risks the Company is exposed are credit risk and liquidity risk. The Company does not use financial assets for speculative purposes.
No changes were made in the objectives, policies and processes related to financial instrument risk management during the reported periods.
Credit risk
Credit risk is the risk that another party to a financial instrument will cause a financial loss for the Company by failing to discharge an obligation. The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets at the reporting date, as summarized below:
| As of | March 31, 2022 | March 31, 2021 | ||||||
| Cash | ||||||||
| VAT recoverable | ||||||||
| Loan to related parties | ||||||||
| Total | ||||||||
The credit risk regarding cash is considered to be negligible because the counterparty is a reputable bank with an investment grade external credit rating.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Liquidity risk management serves to maintain a sufficient amount of cash and to ensure that the Company has financing sources such as private and public investments for a sufficient amount.
Over the past period, the Company has financed its business development commitments, its working capital requirements and acquisitions through private placement. As of March 31, 2022, the Company did not have sufficient cash to pay its accounts payable and accrued liabilities which have contractual maturities within twelve months.
Foreign currency risk
Foreign currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company functional currency is the United States dollars and major purchases are transacted in United States dollars. The Company’s foreign currency risk arises primarily with respect to its loan is denominated in CNY.
| F-15 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. For example, statements in this Form 10-Q regarding the potential future impact of the COVID-19 pandemic on the Company’s business and results of operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”) under the heading “Risk Factors.” The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Each of the terms the “Company” and “Harmony” as used herein refers collectively to Harmony Energy Technologies Corporation. and its wholly owned subsidiary, unless otherwise stated.
The following discussion should be read in conjunction with the 2021 Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.
Available Information
The Company periodically provides certain information for investors on its corporate website, www.hetcusa.com. This includes press releases and other information about financial performance, information on environmental, social and corporate governance matters, and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-Q is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
Quarterly Highlights
COVID-19 Update
The COVID-19 pandemic has had, and continues to have, a significant impact around the world, prompting governments and businesses to take unprecedented measures. The COVID-19 pandemic has at times significantly curtailed global economic activity and caused significant disruption in global supply chains. The COVID-19 pandemic and the measures taken by many in response have affected and could in the future materially impact the Company’s business, results of operations and financial condition.
During the first quarter of 2022, aspects of the Company’s business continued to be affected by the COVID-19 pandemic. At times, certain of the Company’s component suppliers and logistical service providers have experienced disruptions, resulting in business and product development delays.
The extent of the continuing impact of the COVID-19 pandemic on the Company’s operational and financial performance is uncertain and will depend on many factors outside the Company’s control, including the timing, extent, trajectory and duration of the pandemic, the emergence of new variants, the development, availability, distribution and effectiveness of vaccines and treatments, the imposition of protective public safety measures, and the impact of the pandemic on the global economy and demand for consumer products. Refer to Part I, Item 1A of the 2021 Form 10-K under the heading “Risk Factors” for more information.
| 2 |
After many delays due to the COVID-19 Pandemic, the Company finally switched the focus to Trial Sales from Trial Production. During this quarter, the Company first arranged 6 pieces of its Power Station for certain users for testing. And the Company arranged the first shipment of 24 pieces of its Power Station into the US as the inventory for Trial Sales.
RESULTS OF OPERATIONS
During the three months period ended March 31, 2022, the Company’s selected financial information as the following. All the data is presented in United States dollars.
Financial Position Analysis
The information presented as of March 31, 2022, December 31, 2021 and 2020 represents the information of Harmony Energy Technologies Corporation.
| March 31, 2022 | December 31, 2021 | December 31, 2020 | ||||||||||
| Assets | 153,963 | 224,341 | 265,881 | |||||||||
| Liabilities | 759,042 | 788,557 | 879,788 | |||||||||
| Equity | (605,079 | ) | (564,216 | ) | (613,907 | ) | ||||||
Assets
The total assets on March 31, 2022 were $153,963 compared to $224,341 on December 31, 2021, a decrease of $70,378. During the three months period ended March 31, 2022, the cash on hand and prepaid expense decreased $65,558 and $5,254, respectively.
Liabilities
Total liabilities on March 31, 2022 were $759,042 while $788,557 on December 31, 2021, the decrease of $29,515 were mainly because the Company increased accounts payable and accrued liability of $42,081, which was offset by the decrease of 71,596 of loan payable and loan from related parties. In February 2022, one of lender waived all the accrued interest of $84,968 (CNY540,000) and lower the loan payable.
Equity
Total equity on March 31, 2022 was deficit of $605,079 compared to deficit of $564,216 on December 31, 2021, a decrease of $40,863, which was mainly by the net loss of $40,394 during the three months period ended March 31, 2022.
| 3 |
Operating Results Analysis
Readers are invited to take into consideration of the operation results of Harmony for the three months periods ended March 31, 2022 and 2021.
| Three-month periods ended | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| Cost of goods sold | - | (5,398 | ) | |||||
| Gross Profit | - | (5,398 | ) | |||||
| Operating Expenses | ||||||||
| Research and development | (15,304 | ) | (8,805 | ) | ||||
| Professional and management fees | (67,373 | ) | (46,886 | ) | ||||
| Office and general | (19,971 | ) | (23,279 | ) | ||||
| Stock based compensation | - | (2,000 | ) | |||||
| Depreciation | (149 | ) | (4,155 | ) | ||||
| Financial expenses | 63,628 | (31,392 | ) | |||||
| Total Operating Expenses | (39,169 | ) | (116,517 | ) | ||||
| Operating Income (Loss) | (39,169 | ) | (121,915 | ) | ||||
| Other Income (Expenses) | ||||||||
| Interest income | - | 512 | ||||||
| Foreign exchange loss | (1,225 | ) | (2,761 | ) | ||||
| Loss, Net of Income Tax | (40,394 | ) | (124,164 | ) | ||||
| Foreign currency translation differences of foreign operations | (469 | ) | 1,804 | |||||
| Net Loss and Other Comprehensive Loss | (40,863 | ) | (122,360 | ) | ||||
| Basic net income per share | (0.002 | ) | (0.01 | ) | ||||
| Weighted average number of common shares outstanding | 19,780,079 | 11,037,635 | ||||||
The above net loss for three months period ended March 31, 2022 and 2021 is composed as the following:
Sales revenue and gross margin
The company has not been able to generate any meaningful sales revenue during the three months period March 31, 2022 and 2021, which the Company spent $5,398 for the sample testing.
Research and development
For the three-month periods ended March 31, 2022 and 2021, the Company incurred R&D expenditures $15,304 and $8,805, respectively, including the salaries of researchers and materials.
Administrative expenses, professional and management fee
Comparing the two comparable periods of the three months period ended March 31, 2022 and 2021, the Company decreased administrative expenses of $3,308, which major caused from increased salary expenditure which offset by decrease of the office rental. The detailed administrative expenses were presented in the following table.
| Three months period ended | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| Salaries and benefits expenses | 12,537 | 8,806 | ||||||
| Office rent and related expenses | 4,298 | 11,289 | ||||||
| Transfer agent fee | 2,686 | 2,533 | ||||||
| Regulatory fee | 450 | 225 | ||||||
| Others | - | 426 | ||||||
| Total | 19,971 | 23,279 | ||||||
| 4 |
Financial expenses
During the three months period ended March 31, 2022 and 2021, the Company accrued $21,745 for the 4 unsecured loan agreements with accumulate principal of $576,611, which the interest expense was offset by the interest waived of $84,968 by one of the lender; The Company accrued $31,262 interest expense for the 5 unsecured loans with accumulate principal of $618,384 during the three months period ended March 31, 2021.
Non-operation item
During the three months ended December 31, 2021, the Company accrued interest income of $498 for the short-term unsecured loans agreement with Golden Share and received a full payment in February 2021.
Other comprehensive income (loss)
The other comprehensive income (loss) records the unrealized foreign exchange gain (loss) resulted from translating Smarten’s financial data into US dollars. During the three months period ended March 31, 2022, the Company recorded $469 foreign exchange loss due to the unfavorable shift in foreign exchange rate.
Cash Flow Analysis
| Three months period ended | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| Operating activities | (65,558 | ) | (68,567 | ) | ||||
| Investing activities | - | 44,025 | ||||||
| Financing activities | - | 7,200 | ||||||
Operating Activities
During the three months period ended March 31, 2022, the operating activities used cash flows of $65,558 and ,, compared to $68,567 for the comparable periods in 2021. The cash was spent for the general operation activities and R&D.
Investing Activities
During the three-month period ended March 31, 2021, the Company received full loan payment as $44,025, which the Company did not have any investing activity during the three months period ended March 31, 2022.
Financing Activities
During the three-month period ended March 31, 2021, the Company received $20,000 cash from private placement at $0.10 per unit, which was offset by the lease payment of $12,800, while the Company did not have any financing activity during the three months period ended March 31, 2022.
Quarterly Results Trend (In Thousands of $)
The following table presented the operating results for each of the last eight quarters. Management considers that the information for each of those quarters was determined in the same way as for our audited financial statements for the year ended December 31, 2021.
| 2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||
| Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Revenue | - | - | - | - | - | - | - | 40 | ||||||||||||||||||||||||
| Net loss and other comprehensive loss | (41 | ) | (278 | ) | (332 | ) | (110 | ) | (122 | ) | (279 | ) | (164 | ) | (114 | ) | ||||||||||||||||
| Basic and diluted net loss per common share | - | (0.01 | ) | (0.02 | ) | (0.01 | ) | (0.01 | ) | (0.05 | ) | (0.03 | ) | (0.02 | ) | |||||||||||||||||
| 5 |
Liquidity, Capital Resources and Sources of Financing
The Company has operating losses currently. To date, the Company has been financed primarily through private placements and unsecured loans.
As of March 31, 2022, the Company had a cash position of $53,799 and the Company has a deficit working capital of $607,066. The Company believes it will not have sufficient liquidity to fund its operations and capital needs for the next 12 months and consequently intends to raise capital to generate cash in sufficient amounts to meet its planned business objectives, while the Company does not have any commitments.
Information on Outstanding Securities
The following table sets out the number of common shares and warrants outstanding as of the date hereof:
| Common shares issued and outstanding | 19,780,079 | |||
| Potential issuance of common shares | ||||
| Warrants | 4,581,880 | |||
| Stock options | - | |||
| Fully diluted shares | 24,361,959 |
Related Party Transactions
The Company has not entered into any other related party transaction except the disclosure in Note 9 of the interim condensed consolidated financial statements for the three months period ended March 31, 2022.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Estimates, Judgments and Assumptions
The Company prepares its financial statements in accordance with US GAAP, which require management to make estimates and assumptions that affect the amounts of its assets and liabilities, the information provided with regard to future assets and liabilities as well as the amounts of revenues and expenses for the relevant periods. Readers are invited to refer to the Note 4 of the financial statements for the year ended December 31, 2021 for details.
Future Changes in Accounting Policies
At the date of authorization of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the Financial Accounting Standards Board (FASB) but are not yet effective and have not been adopted early by the Company.
Management anticipates that all the relevant pronouncements will be adopted in the Company’s accounting policies for the first period beginning after the effective date of the pronouncement. Readers are invited to refer to the financial statements for the year ended December 31, 2021 for a full description of these new standards.
Going Concern Assumption
The Company’s financial statements were prepared according to the US GAAP and under the going concern assumption. They do not reflect adjustments that should be made to the book value of assets and liabilities, the reported amounts of income and expenses and the classification of balance sheet postings if the going concern assumption was unfounded. These adjustments could be important.
| 6 |
Risks related to financial instruments
Capital market conditions and other unforeseeable events may impact the Company’s ability to finance and develop its projects.
The Company intends to continue the evaluation and development of its energy business subject to the availability of financing on acceptable terms. The Company intends to finance these activities either through existing financial resources or through additional equity or quasi-equity financing. However, there can be no assurance that the Company will be able to raise such additional equity.
All filings we make with the Securities and Exchange Commission (“SEC”), Additional information on the Company can be found on EDGAR of the Securities and Exchange Commission (www.sec.gov/edgar.shtml).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the Company’s market risk during the first three months of 2022. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2021 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of March 26, 2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the first quarter of 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in legal proceeding or be subject to claims arising in the ordinary course of our business. As of this Form 10-Q, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.
Item 1A. Risk Factors
The Company’s business, reputation, results of operations and financial condition can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the 2021 Form 10-K under the heading “Risk Factors.” When any one or more of these risks materialize from time to time, the Company’s business, reputation, results of operations and financial condition can be materially and adversely affected. There have been no material changes to the Company’s risk factors since the 2021 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
| 7 |
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
| 31.1* | Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer. |
| 31.2* | Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer. |
| 32.1* | Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer. |
| 101** | Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. |
| 104** | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |
*Filed herewith.
| 8 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| May 12, 2022 | Harmony Energy Technologies Corporation | |
| By: | /s/ Nick Zeng | |
| Nick Zeng | ||
| Chief Executive Officer | ||
| 9 |