You should read this discussion together with the Financial Statements, related
Notes and other financial information included elsewhere in this Form 10-K. The
following discussion contains assumptions, estimates and other forward-looking
statements that involve a number of risks and uncertainties, including those
discussed elsewhere in this Form 10-K. These risks could cause our actual
results to differ materially from those anticipated in these forward-looking
statements.
This discussion is intended to further the reader's understanding of the
Company's financial condition and results of operations and should be read in
conjunction with the Company's financial statements and related notes included
elsewhere herein. This discussion also contains forward-looking statements. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of the risks and uncertainties set forth
elsewhere in this Annual Report and in the Company's other SEC filings. Readers
are cautioned not to place undue reliance on any forward-looking statements,
which speak only as of the date hereof. The Company is not party to any
transactions that would be considered "off balance sheet" pursuant to disclosure
requirements under Item 303(c) of Regulation S-K.
Overview
The Company is a non-operating holding company. Historically, the Company has
been involved and invested in gaming and vending businesses, the focus of which
was on the entertainment, travel and leisure industries. Current management
acquired control of the Company through purchase of preferred shares in July
2021 and is in the process of identifying operating businesses that are
potential candidates for acquisition.
Critical Accounting Policies
The relevant accounting policies are listed below.
Basis of Accounting
The basis is United States generally accepted accounting principles.
4
Cash and Cash Equivalents
The Company considers all short-term investments with a maturity of three months
or less at the date of purchase to be cash and cash equivalents.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Advertising
Advertising costs are expensed when incurred. The Company incurred $0 of sales
and marketing expenses, including advertising, for the years ended December 31,
2022 and December 31, 2021.
Comprehensive Income (Loss)
Net income (loss) is equal to comprehensive income (loss).
Income Taxes
H.R. 1 (the "Tax Reform Law"), effective for tax years beginning on or after
January 1, 2018, except for certain provisions, resulting in significant changes
to existing United States tax law, including various provisions that are
expected to impact the Company. The Tax Reform Law reduced the federal corporate
tax rate from 34% to 21% effective January 1, 2018 for the Company.
At December 31, 2022 and 2021, the Company had net operating losses ("NOL") for
income tax purposes. The Company has NOL carry-forwards for Federal income tax
purposes of $2.54 million and $2.44 million at December 31, 2022 and 2021,
respectively. No tax benefit was reported with respect to these NOL
carry-forwards in the accompanying financial statements because the Company
believes the realization of the Company's deferred tax of approximately $0.51
million as of December 31, 2022, was not considered more likely than not and
accordingly, the potential tax benefits of the net loss carry-forwards are fully
offset by a full valuation allowance.
Components of deferred tax assets as of December 31, 2022 and 2021 are as
follows:
2022 2021
Net deferred tax assets - Non-current:
Expected income tax benefit from NOL carry-forwards $ 534,276 $ 511,583
Less: valuation allowance
(534,276 ) (511,583 )
Deferred tax assets, net of valuation allowance $ - $ -
5
Income Tax Provision in the Statements of Operations
A reconciliation of the consolidated federal statutory income tax rate and the
effective income tax rate as a percentage of income before income taxes for the
years ended December 31, 2022 and 2021 is as follows:
2022 2021
Federal statutory income tax expense (benefit) rate (21.00% ) (21.00 )
State statutory income tax (benefit) rate, net of
effect of state income tax deductible to federal
income tax (No state operations) -% -%
Change in valuation allowance on net operating loss
carry-forwards 21.00% 21.00%
Effective income tax rate 0.00% 0.00%
Year end
The Company's fiscal year-end is December 31.
Recent Accounting Pronouncements
In January 2020, the FASB issued ASU 2020-01 to clarify the interaction of the
accounting for equity securities under ASC 321 and investments accounted for
under the equity method of accounting in ASC 323 and the accounting for certain
forward contracts and purchased options accounted for under ASC 815. With
respect to the interactions between ASC 321 and ASC 323, the amendments clarify
that an entity should consider observable transactions that require it to either
apply or discontinue the equity method of accounting when applying the
measurement alternative in ASC 321, immediately before applying or upon
discontinuing the equity method of accounting. With respect to forward contracts
or purchased options to purchase securities, the amendments clarify that when
applying the guidance in ASC 815-10-15-141(a), an entity should not consider
whether upon the settlement of the forward contract or exercise of the purchased
option, individually or with existing investments, the underlying securities
would be accounted for under the equity method in ASC 323 or the fair value
option in accordance with ASC 825. The ASU is effective for interim and annual
reporting periods beginning after December 15, 2020. Early adoption is
permitted, including adoption in any interim period. The adoption of this
standard did not have a material impact on the Company's financial statements.
In November 2019, the FASB issued ASU No. 2019-08, Compensation - Stock
Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606),
Codification Improvements - Share-Based Consideration Payable to a Customer. The
amendments in this Update require that an entity measure and classify
share-based payment awards granted to a customer by applying the guidance in
Topic 718. The amount recorded as a reduction of the transaction price is
required to be measured on the basis of the grant-date fair value of the
share-based payment award in accordance with Topic 718. The grant date is the
date at which a grantor (supplier) and a grantee (customer) reach a mutual
understanding of the key terms and conditions of a share-based payment award.
For entities that have not yet adopted the amendments in Update 2018-07, the
amendments in this Update are effective for (1) public business entities in
fiscal years beginning after December 15, 2019, and interim periods within those
fiscal years, and (2) other than public business entities in fiscal years
beginning after December 15, 2019, and interim periods within fiscal years
beginning after December 15, 2020. The Company is evaluating the impact of this
on its consolidated financial statements.
6
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for
Income Taxes, which simplifies the accounting for income taxes, eliminates
certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects
of the current guidance to promote consistent application among reporting
entities. The guidance is effective for fiscal years beginning after
December 15, 2020, and interim periods within those fiscal years, with early
adoption permitted. Upon adoption, the Company must apply certain aspects of
this standard retrospectively for all periods presented while other aspects are
applied on a modified retrospective basis through a cumulative-effect adjustment
to retained earnings as of the beginning of the fiscal year of adoption. The
Company is evaluating the impact of this on its consolidated financial
statements.
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 financial statements and related
disclosures when adopted.
In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260),
Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock
Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity's Own
Equity (Subtopic 815-40), ("ASU 2021-04"). This ASU reduces diversity in an
issuer's accounting for modifications or exchanges of freestanding
equity-classified written call options (for example, warrants) that remain
equity classified after modification or exchange. This ASU provides guidance for
a modification or an exchange of a freestanding equity-classified written call
option that is not within the scope of another Topic. It specifically addresses:
(1) how an entity should treat a modification of the terms or conditions or an
exchange of a freestanding equity-classified written call option that remains
equity classified after modification or exchange; (2) how an entity should
measure the effect of a modification or an exchange of a freestanding
equity-classified written call option that remains equity classified after
modification or exchange; and (3) how an entity should recognize the effect of a
modification or an exchange of a freestanding equity-classified written call
option that remains equity classified after modification or exchange. This ASU
is effective for all entities for fiscal years beginning after December 15,
2021. An entity should apply the amendments prospectively to modifications or
exchanges occurring on or after the effective date of the amendments. Early
adoption is permitted, including adoption in an interim period. The adoption of
ASU 2021-04 on January 1, 2022 did not have a material impact on the Company's
condensed financial statements or disclosures.
Management believes that other recent accounting pronouncements issued by the
FASB, including its Emerging Issues Task Force, the American Institute of
Certified Public Accountants, and the Securities and Exchange Commission do not
have a material impact on the Company's present or near future financial
statements.
7
Results of Operations
Capitalization
The following table sets forth, as of December 31, 2022 and 2021, the
capitalization of TechCom, Inc. on an actual basis. This table should be read in
conjunction with the more detailed financial statements and notes thereto
included elsewhere herein.
December 31, 2022 Actual:
Preferred stock, $0.0001 par; 1,000,000 shares issued and
outstanding at December 31, 2022
$ 100
Common stock, $0.00001 par; 64,990,254 shares issued and
outstanding at December 31, 2022
650
Additional paid-in capital 2,418,816
Deficit accumulated during development stage (2,544,174 )
Total stockholders' equity (deficit) $ (124,608 )December 31, 2021 Actual:
Preferred stock, $0.0001 par; 1,000,000 shares issued and
outstanding at December 31, 2021
$ 100
Common stock, $0.00001 par; 64,990,254 shares issued and
outstanding at December 31, 2021
650
Additional paid-in capital 2,418,816
Deficit accumulated during development stage (2,436,110 )
Total stockholders' equity (deficit) $ (16,544 )Results of Operations for the years ended December 31, 2022 and December 31,
2021
For the year ended December 31, 2022 and 2021, we had no revenue.
Costs of revenue during these same periods were $0.
For the years ended December 31, 2022 and December 31, 2021, professional and
administrative expenses were $108,064 and $90,708, respectively. These costs
were primarily the costs for the daily operations and legal services.
For the years ended December 31, 2022 and 2021, professional expenses were
$52,446 and $83,380. The professional fee expenses in 2022 and 2021 were mainly
due to SEC filing preparations.
For the years ended December 31, 2022 and December 31, 2021, general and
administrative expenses were $55,618 and $7,328. Costs incurred were primarily
SEC filings and stock records service fees. The significant increase of general
and administrative expenses was due to hiring the former owner team as their
management company assumed the responsibilities of CEO and CFO.
8
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the liquidation of liabilities in the normal course of business. The
Company currently has no operations and has a stockholders deficit of $124,608
with an accumulated deficit of $2,544,174. The Company intends to find a merger
target in the form of an operating entity. The Company cannot be certain that it
will be successful in this strategy.
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Summary of any product research and development that we will perform for the
term of our plan of operation
The Company is a shell company with no operations and does not have specific
products. Our research and development will depend on a future merger with an
operational company or companies.
Expected purchase or sale of plant and significant equipment
We do not anticipate the purchase or sale of any plant or significant equipment;
as such, items are not required by us at this time.
Significant changes in the number of employees
As of December 31, 2022, we did not have any paid employees. We are dependent
upon our officers and directors for our future business development. As our
operations expand, we anticipate that we need to hire additional employees,
consultants and professionals; however, the exact number is not certain at this
time.
Liquidity and Capital Resources
As of December 31 2022, we had cash of $0.
A critical component of our operating plan impacting our continued existence is
our ability to obtain additional capital through additional equity and/or debt
financing.
We have limited financial resources available, which has had an adverse impact
on our liquidity, activities and operations. These limitations have adversely
affected our ability to obtain certain projects and pursue additional business.
Without realization of additional capital, it would be unlikely for us to
continue as a going concern. In order for us to remain a going concern, we will
need to obtain additional capital. Additional working capital may be sought
through additional debt or equity private placements, additional notes payable
to banks or related parties (officers, directors or stockholders), from other
funding sources at market rates of interest, or a combination of these. The
ability to raise necessary financing will depend on many factors, including the
nature and prospects of any business to be acquired and the economic and market
conditions prevailing at the time financing is sought. No assurances can be
given that any necessary financing can be obtained on terms favorable to us, or
at all.
In addition, the Company hired a consulting company which consists of the former
principal shareholders to manage the Company and for these managers to continue
to serve as CEO and CFO. The fees were $48,000 in 2022.
Future funding could result in potentially dilutive issuances of equity
securities, the incurrence of debt, contingent liabilities and/or amortization
expenses related to goodwill and other intangible assets, which could materially
adversely affect our business, results of operations and financial condition.
Any future acquisitions of other businesses, technologies, services or products
might require us to obtain additional equity or debt financing, which might not
be available on terms favorable to us, or at all, and such financing, if
available, might be dilutive.
9
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.
Critical Accounting Policies and Estimates
Revenue Recognition: We recognize revenue from product sales once all of the
following criteria for revenue recognition have been met: pervasive evidence
that an agreement exists; the services have been rendered; the fee is fixed and
determinable and not subject to refund or adjustment; and collection of the
amount due is reasonable assured.
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