You should refer to Item 1A. “Risk Factors” section of this Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements. Unless the context requires otherwise, references to “Harmony,” “we,” “us,” “our,” and “Company,” refer to Harmony Energy Technologies Corporation and its subsidiaries.
Our forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other factors that may cause our actual future results, performance, or achievements to differ materially from any future results expressed or implied in this Annual Report. Reported results should not be considered an indication of future performance.
Because some of these risks and uncertainties cannot be predicted or quantified and some are beyond our control, you should not rely on our forward-looking statements as predictions of future events. More information about potential risks and uncertainties that could affect our business and financial results is included in the section of this Annual Report titled “Risk Factors” and our other filings with the U.S. Securities and Exchange Commission (“SEC”), which are available on the SEC’s web site at www.sec.gov. Moreover, we operate in a very competitive and rapidly changing environment; new risks and uncertainties may emerge from time to time and it is not possible for us to predict all risks nor identify all uncertainties. The events and circumstances reflected in our forward-looking statements might not be achieved and actual results could differ materially from those projected in the forward-looking statements. Except as otherwise noted, all forward-looking statements are made as of the date we file this Annual Report, and are based on information and estimates available to us at this time. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. Except as required by law, Harmony assumes no obligation to update any of the statements in this Annual Report whether as a result of any new information, future events, changed circumstances, or otherwise. You should read this Annual Report with the understanding that our actual future results, performance, events, and circumstances might be materially different from what we expect.
ITEM 1. BUSINESS
Overview
Harmony Energy Technologies Corporation is a startup engaged in designing, developing and marketing the energy storage products (battery systems) in the US market. The Company’s fiscal year is December 31. On June 19, 2018, Harmony was incorporated in the State of Delaware, USA. Shenzhen Smarten Technology Co., Ltd., (“Smarten”) is the wholly owned subsidiary of the Company. Smarten manages supply chain and performs quality assurance. Our products are manufactured by outsourcing partners that are located in China.
On December 27, 2021, the Company filed Registration Statement on Form 10-12G. On February 10, 2022, the Company filed Amendment No. 1 to Registration Statement on Form 10-12G/A. As of this Form 10-K, the Company is working on the Amendment No. 2 to Registration Statement on Form 10-12G/A.
Our Product
The Power Station (“PS”) is a small lithium-ion based battery system which is designed for personal and/or residential emergency applications during power outages. The PS provides both AC and DC power for short-term use. The PS can be recharged from grid and solar power. The Company has received the necessary certifications including FCC, RoHS to sell the product in the United Sates.
Markets and Distribution
The Company’s customers are primarily the consumers. The Company sells its products directly to consumers through its online stores and its direct sales force. We strive to deliver a pleasant experience to our clients.
Competition
The markets for the Company’s products are highly competitive, and are characterized by aggressive price competition and resulting downward pressure on gross margins, frequent introduction of new products, short product life cycles, evolving industry standards, continual improvement in product price and performance characteristics, rapid adoption of technological advancements by competitors, and price sensitivity on the part of consumers. Many of the Company’s competitors seek to compete primarily through aggressive pricing and very low cost structures.
The Company’s ability to compete successfully depends heavily on ensuring the continuing and timely introduction of innovative new products to the marketplace. Principal competitive factors important to the Company include price, product features, relative price and performance, product quality and reliability, design innovation, marketing and distribution capability, customer service, and our reputation.
The Company is a startup, new to the marketplace. Many of our competitors have been in business longer and with greater financial accessibility than us.
Supply Chain
The Company’s products are manufactured by outsourcing partners that are located in China.
Smarten manages supply chain and perform quality assurance.
Research and Development
Because the industries in which the Company competes are characterized by rapid technological advances, the Company’s ability to compete successfully depends heavily upon its ability to ensure a continual and timely flow of competitive products to the marketplace.
In addition to the PS, the Company is in early R&D phase for possible new products. The Company will continue to assess its strategies as R&D progresses.
Intellectual Property
The Company currently holds a collection of intellectual property rights relating to certain aspects of its products. This includes patents, copyrights, trademarks and other forms of intellectual property rights.
Although the Company believes the ownership of such intellectual property rights is an important factor in its business and that its success does depend in part on such ownership, the Company relies primarily on the innovative skills, technical competence and marketing abilities of its personnel.
While the Company uses reasonable efforts to protect its trade and business secrets, the Company cannot assure that its employees, consultants, contractors or advisors will not, unintentionally or willfully, disclose the Company’s trade secrets to competitors or other third parties.
In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, the Company’s competitors may independently develop equivalent knowledge, methods and know-how. If the Company is unable to defend the Company’s trade secrets from others use, or if the Company’s competitors develop equivalent knowledge, it could have a material adverse effect on the Company’s business. Any infringement of the Company’s proprietary rights could result in significant litigation costs, and any failure to adequately protect the Company’s proprietary rights could result in the Company’s competitors offering similar products, potentially resulting in loss of a competitive advantage and decreased revenue. Existing patent, copyright, trademark and trade secret laws afford only limited protection. In addition, the laws of some foreign countries do not protect the Company’s proprietary rights to the same extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company’s proprietary rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company’s trade secrets could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to protect the Company’s trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources and could materially adversely affect the Company’s future operating results.
The People
As a new startup, we believe in the people. The Company strives to build a talented, motivated, and dedicated team. As of December 31, 2021, the Company had 4 full-time equivalent employees.
Available Information
The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the U.S. Securities and Exchange Commission (the “SEC”). Such reports and other information filed by the Company with the SEC are available free of charge at www.hetcusa.com when such reports are available on the SEC’s website. The Company periodically provides other information for investors on its website, www.hetcusa.com. This includes press releases and other information about financial performance, information on environmental, social and corporate governance and details related to the Company’s annual meeting of shareholders. The information contained on the websites referenced in this Form 10-K is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
Item 1A. Risk Factors
The Company’s business, results of operations and financial condition, reputation as well as the price of the Company’s stock, can be affected by a number of factors, whether currently known or unknown, including those described below. When any one or more of these risks materialize from time to time, the Company’s business, results of operations and financial condition, as well as the price of the Company’s stock, can be materially and adversely affected.
Because of the following factors, as well as other factors affecting the Company’s results of operations and financial condition, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. This discussion of risk factors contains forward-looking statements.
This section should be read in conjunction with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K.
General Risks
The Company is a startup with a limited operating history. The Company has not been able to generate any revenue from its operations. The Company cannot determine when it can generate revenue, or positive cash flow. The Company will require additional funding to be able to develop the business and to meet ongoing requirements for general operations.
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources, such as debts or equity financing. The lack of additional capital resulting from the inability to generate cash flow from operations, or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business.
These factors indicate that material uncertainties exist which may cast significant doubt regarding the Company’s ability to continue as a going concern, and as a result, our shareholders could lose their entire investment.
Risks Related to COVID-19
The Company’s business, results of operations and financial condition, as well as the price of the Company’s stock, have been adversely affected and could in the future be materially adversely affected by the COVID-19 pandemic.
COVID-19 has had, and continues to have, a significant impact around the world, prompting governments and businesses to take unprecedented measures in response. Such measures have included restrictions on travel and business operations, temporary closures of businesses, and quarantine etc. The COVID-19 pandemic has at times significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets.
The COVID-19 pandemic and the measures taken by many countries in response have adversely affected and could in the future materially adversely impact the Company’s business, results of operations and financial condition, as well as the price of the Company’s stock. During the course of the pandemic, certain of the Company’s suppliers, manufacturing partners and logistical service providers have experienced disruptions, resulting in supply shortages that affected our business development, and similar disruptions could occur in the future.