TGRP TRON Group Inc (PK)

Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our consolidated unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean TRON Group Inc., unless otherwise indicated.

Corporate Overview

We were incorporated under the name Plush Corporation on October 20, 2015, under the laws of the State of Nevada. Our business consisted of designing, marketing and selling luxury accessories for men online. Management has decided not to pursue this line of business, and has discontinued operations involving luxury accessories.

November 3, 2016, a majority of stockholders of our company and our board of directors approved a change of name of our company from Plush Corp. to TRON Group Inc., an increase to authorized capital from 75,000,000 shares of common stock, par value $0.001 to 500,000,000 shares of common stock, par value $0.001 and a forward stock split of our issued and outstanding shares of common stock on a basis of one (1) old share for twenty (20) new shares of common stock.

A Certificate of Amendment increasing our authorized capital and changing the name of our company was filed with the Nevada Secretary of State with an effective date of December 6, 2016.

The name change and forward stock split became effective with the OTC Markets at the opening of trading on December 28, 2016, and our trading symbol was changed to “TGRP”.

On January 26, 2018, TRON Group Inc. entered into a Share Exchange Agreement to acquired 6,401,500 shares of capital stock of Talk Focus Sdn Bhd (“Talk Focus”) and in exchange issued 3,329,385 restricted shares of its Common Stock at $0.25 per share in acquiring 64.015% in the equity shares of Talk Focus (the “Reverse Merger”) from Eric Yap, the director of TRON Group Inc. Upon completion of the Share Exchange Transaction, the Company’s major shareholder, Eric Yap, also the prior shareholder of Talk Focus then owned approximately 51.05% of the Common Stock of TGRP.

The acquisition of Talk Focus was accounted for as a recapitalization effected by a share exchange, wherein Talk Focus is considered the acquirer for accounting and financial reporting purposes (legal acquiree) with no adjustment to the historical basis of its assets and liabilities. Talk Focus’s Shareholders become the majority shareholders and have control of the Company. TRON Group Inc. was a non-operating public shell prior to the acquisition and as a result of the acquisition of Talk Focus, the Company is no longer a shell company. Pursuant to Securities and Exchange Commission (“SEC”) rules, the merger or acquisition of a private operating company into a non-operating public shell with nominal net assets is considered a capital transaction in substance, rather than a business combination. The historical financial statements for periods prior to December 31, 2016 are those of Talk Focus except that the equity section and earnings per share have been retroactively restated to reflect the recapitalization.

The Company is organized for investment holding and its principal place of operation is located at K-2-8, 2 ^nd  floor, Jalan Kuchai Maju 10, Kuchai Entrepreneurs Park, Jalan 1/127 Kuchai Lama, 58200 Kuala Lumpur.

Currently, the Company, through its subsidiaries, is principally engaged in the provision of telecommunication related services in Malaysia.

Summary of the Company’s subsidiaries

Results of Operations

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

The following comparative analysis on results of operations was based primarily on the comparative audited consolidated financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our revenues are derived mainly from our active company, Talk Focus Sdn Bhd’s mobile telecommunication services. 

Three months ended March 31, 2018 compared to three months ended March 31, 2017.

Revenue has dropped significantly by 48% to $310,183 in the quarter ended March 31, 2018 as compared to $ 600,199 in the quarter ended March 31, 2017 in prior year mainly due to substantially lower sales during the 2018 quarter.

Cost of revenue has dropped significantly by 63% to $176,581 in the quarter ended March 31, 2018 from $487,909 in the quarter ended March 31, 2017. This is caused by signing a new agreement with much lower cost with the main supplier on June 1, 2017.

For the three months ended March 31, 2018 and 2017, our net loss has not changed much due to higher margin achieved in the current quarter caused by signing a new agreement with much lower cost with the main supplier on June 1, 2017.

Liquidity and Capital Resources

The following table provides selected financial data about our company as of March 31, 2018 and March 31, 2017, respectively.

On March 31, 2018, our Company’s cash balance was $84,682 and current assets were $680,353. On December 31, 2017, our Company’s cash balance was $99,730 and total assets were $408,110. Current assets increases mainly due to increase in trade and other receivables amounting to $292,690 and reduction in cash and inventories amounting to $15,048 and $5,399 respectively.

On March 31, 2018, our Company had current liabilities of $10,568,518, compared with total liabilities of $9,618,637 as at December 31, 2017. The increase is due to mainly to the increase in account payable by $469,548 and advances from a related party amounting to $480,333.

On March 31, 2018, our Company had working capital deficiency of $9,888,165 compared with working capital deficiency of $9,210,527 as at December 31, 2017. The increase in working capital was primarily attributed to an increase in liabilities and prepaid expenses as explained above.

Cash Flow from Operating Activities

During the three months ended March 31, 2018, our Company used $91,937 in operating activities, compared to $53,111 net cash generated from operating activities during the three months ended March 31, 2017. The cash used in operating activities for the three months ended March 31 2018, was attributed to a loss of $225,292 and decrease in payables and liabilities.

Cash Flow from Investing Activities

During the three months ended March 31, 2018, the cash used in investing activities increases mainly attributable to increased purchase of equipment during the period.

Cash Flow from Financing Activities

During the three months ended March 31, 2018, our Company received $555,868 from financing activities compared to $87,671 received from financing activities during the three months ended March 31, 2017. The cash flow for financing activities for the three months ended March 31, 2018 was due to advances from a related party.

Plan of Operation and Funding

We expect that working capital requirements will continue to be funded through a combination of our existing funds, loans from officers, and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.

Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We have and will continue to seek to obtain short-term loans from our officers and directors, although no future arrangement for additional loans has been made. We do not have any agreements with our officers and directors concerning these loans. We do not have any arrangements in place for any future equity financing.

Off-Balance Sheet Arrangements

We have no 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, and capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.