SINCERITY APPLIED MATERIALS HOLDINGS CORP. The following management's discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this report. The management's discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under "Risk Factors" in this Form 10-K, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.
The following discussion highlights the Company's results of operations and the
principal factors that have affected our financial condition, as well as our
liquidity and capital resources for the periods described, and provides
information that management believes is relevant for an assessment and
understanding of the statements of financial condition and results of operations
presented herein. The following discussion and analysis are based on the
Company's audited financial statements contained in this Annual Report, which we
have prepared in accordance with
Basis of Presentation
The unaudited financial statements for our fiscal years ended
19 Company Overview
Through our wholly owned subsidiary,
SAPL's business was commenced in 2009 by
Over the past 3 years, SAPL has refocused its marketing efforts towards larger
resellers and distributors in
Presently SAPL receives more business from
SAPL will continue with the process of further vertical integration of its product range. Value adding packaging technology, such as breathable film, and ventilated stretch film, is expected to provide an innovative edge over our competition.
SAPL supplies Australian market with a well-diversified product range, while
commodity type provides a strong foundation of business grow, the value adding
innovations on each product will bring SAPL to the next level and expand for
beyond
Going Concern Basis
The financial statements have been prepared on the going concern basis, which assumes continuity of normal business activities and the realization of assets and the settlement of liabilities in the ordinary course of business.
At
Despite the current asset deficiency, the company has prepared the financial statements on a going concern basis that contemplates the continuity of normal business activity, realization of assets and settlement of liabilities at the amounts recorded in the financial statements in the ordinary course of business.
20
The company believes that there are reasonable grounds to support the fact that it will be able to pay its debts as and when they become due and payable. In forming this opinion, the Group has considered the following factors:
(i) The company has the ability to raise fund through private placements and
convertible notes;
(ii) The company is in negotiation to issue convertible notes to fund the
operation;
(iii) The company is in the process of finalizing the stock purchase agreement
with Simcor (Jiangsu) Materials Technology Ltd (SMTL), a company formed in
the Peoples Republic of China which the company is expected to be cash flow
positive; and
(iv) The company has been streamlining its operation by reducing operation costs.
If the Company is unable to continue as a going concern it may be required to realize its assets and extinguish its liabilities other than in the ordinary course of business at amounts different from those stated in the financial statements.
The financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.
Highlights
SAPL has successfully engineered two new range in ventilated packaging. One has
been adapted by one of the major supermarket retailers in
Strategy
In order to continue to grow its revenue, the Company is planning at expanding
its product lines with its key customers. The Company continuously looks at
innovating its product lines in order to create value for its customers and
generate higher margin. The Company is currently looking at expanding to other
markets outside of
The Company is constantly looking for value accretive merger and acquisition opportunities in order to increase its size to generate increase sales and opportunities for vertical and horizontal integration to improve business efficiency.
Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company.
Key Estimates (i) Useful lives
The Company determines the estimated useful lives and related depreciation and amortization charges for its property and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
21 (ii) Income tax
The Company is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipated tax audit issues based on the Company's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
Key Judgements (i) Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors' financial position.
(ii) Impairment
The Company assessed that no indicators of impairment existed at the reporting date and as such no impairment testing was performed.
22 Results of Operations
Fiscal Years Ended
The following table summarizes our historical consolidated financial statements
for the fiscal years ended
Unaudited Unaudited
2021 2020
Note $ $
Revenue
Sales 62,968 482,581
Cost of sales (21,372 ) (360,110 )
Gross profit 41,596 122,471
Operating expenses
Depreciation and amortization 6,684 4,095
Selling, general and administrative expenses 22,540 6,016
Employee expenses - -
Professional service fees 99,615 38,111
Repairs and maintenance - -
Chattel Mortgage charges - -
Total operating expenses 128,839 48,222
Income/(Loss) from operations (87,243 ) 74,249
Other income/(expenses)
Other income 29,457 49,934
Interest expense (5,995 ) (5,624 )
Other Finance Gain - -
Fair value adjustments on Convertible note - -
(Loss)/Gain on derivative financial instrument - -
Fair value adjustment of Warrant liabilities - -
Foreign currency transaction income/(loss) (7,657 ) 4,144
Total other income/(loss) 15,805 48,454
Income/(Loss) from continuing operations
before income tax expenses (71,438 ) 122,703
Income tax (expense)/benefit 11 10,112 (37,147 )
Net income/(loss) after income tax expense for
the period (61,326 ) 85,556
Other comprehensive income /(loss)
Exchange differences arising on translation of
foreign operations 15,928 (35,438 )
Other comprehensive income/(loss) 15,928 (35,438 )
Total comprehensive income/(loss) for the
period (45,398 ) 50,118
Net (loss)/gain per share
Basic and diluted - -
Weighted average number of common stock
outstanding
Basic and diluted 73,590,730 73,590,730
23
Revenues
Revenue was approximately
Selling, general and administrative expenses
Selling, general and administrative expenses were approximately
Employee expenses
Employee expenses were nil for the years ended
Professional service fees
Professional service fees were approximately
Other Income and Expenses
Other income and expenses was approximately
Financial Condition, Liquidity and Capital Resources
As at
Our primary uses of cash have been for operations. The main sources of cash have been from sales of our products to our customers.
The Company believes that cash flow from operations will be sufficient to sustain its current level of operations for at least the next twelve months of operations.
As of
(i) The company has the ability to raise fund through private placements and
convertible notes; and
(ii) The company has been streamlining its operation by reducing operation
costs.
Net cash generated for operating activities was approximately
24
Net cash used for investing activities of $nil in 2021 and 2020.
Net cash used for financing activities was approximately
© Edgar Online, source
