美国
证券交易委员会
华盛顿特区 20549
表单
修正案编号1
截至季度的报告期
或
根据1934年证券交易法
过渡期间从 _______ 到 ___________
委员会文件编号：
(注册人名称与章程中所示一致)
| (州或其他注册辖区) | (美国国税局雇主识别号) |
(主要执行办公室地址和邮政编码)
(
(注册人电话号码，包括 区号)
根据该法第12（b）条注册的证券：无
| 每个类别的标题 | 交易标的 | 每个交易所的名称 注册于 |
| 本 |
请用勾选标记指示注册人（1）在过去12个月（或注册人需要提交此类报告的较短时期）内是否已提交《证券交易法》第13条或第15（d）条要求提交的所有报告，以及（2）在过去90天内是否遵守此类提交要求。
请勾选确认注册人是否在过去12个月内（或在注册人被要求提交此类文件的较短期间内）根据S-T规则405（本章第232.405节）提交了每一个必须提交的互动数据文件。
请在选择项中标记是否为大型加速文件提交者、加速文件提交者、非加速文件提交人、小型报告公司或新兴成长型公司。请参阅证券交易所法规则12亿.2中“大型加速文件提交者”、“加速文件提交者”、“小型报告公司”和“新兴成长型公司”的定义。
| 大型加速报告公司 ☐ | 加速报告公司 ☐ | |
| 较小报告公司 | ||
| 成长型企业 |
如果是新兴成长型企业，则可以通过勾选标记表示注册人已选定不使用符合交易所法第13(a)条规定的任何新的或修改后的财务会计准则的延长过渡期来符合要求。
请勾选是否 注册人是空壳公司（根据《法案》第120亿.2条的定义）。
是 ☐ 否
截至2024年11月14日，注册人的普通股总共有 截至2024年11月14日，注册人的普通股流通在外股票数，面值每股$0.001。
说明性通知
Nocera, Inc.，内华达州的一家公司（”公司”）， 正在提交本修正案（”修正案”）转到截至9月30日的10-Q表季度报告， 2024 年，最初向美国证券交易委员会提交（”秒”）于 2024 年 11 月 14 日（”原创 备案”），修改和更新某些披露以回应美国证券交易委员会的评论，并进一步澄清以下内容 公司的财务报表和相关附注。
根据适用的SEC规则， 本修正案包括根据《2002年萨班斯-豪利法》的第302和906节， 我们首席执行官和信安金融及会计官所需的新认证，经过修订。
除上述描述外，本表格10-Q/A 并不修改、更新或改变原始申请中包含的任何其他项目或披露，因此，本表格10-Q/A不反映或声称反映原始申请日期后发生的任何信息或事件，也不修改或更新那些受后续事件影响的披露。因此，本表格10-Q/A应与原始申请及公司向证券交易委员会的其他申请一起阅读。
目录
| 关于前瞻性声明的警示声明 | 4 | |
| 第一部分 | 财务信息 | 5 |
| 项目 1。 | interim 减缩合并基本报表（未经审计） | 5 |
| interim 减缩合并资产负债表截至2024年9月30日（未经审计）和2023年12月31日（已审计） | 5 | |
| interim 减缩合并运营和综合损失基本报表截至2024年9月30日的九个月期间（未经审计），截至2024年9月30日的三个月期间（未经审计） | 6 | |
| interim 减缩现金流量表截至2024年9月30日的九个月期间（未经审计） | 7 | |
| 截至2024年9月30日的九个月期间股东权益变动的临时简要报表（未经审计） | 8 | |
| 简要合并基本报表的附注（未经审计） | 9 | |
| 项目 2。 | 管理层关于财务状况和经营成果的讨论与分析 | 27 |
| 项目3。 | 关于市场风险的定量和定性披露 | 44 |
| 项目4。 | 控件和程序 | 44 |
| 第二部分 | 其他信息 | 46 |
| 项目 1。 | 法律程序 | 46 |
| 项目 1A. | 风险因素 | 46 |
| 项目 2 | 未注册的股票证券销售及收益使用 | 46 |
| 项目 3 | 高级证券的默认情况 | 46 |
| 事项 4 | 矿山安全披露 | 46 |
| 事项 5 | 其他信息 | 46 |
| 事项 6 | 附件 | 49 |
| 签名 | 50 | |
| 3 |
警示 关于前瞻性声明的说明
本10-Q表季度报告包含 “前瞻性 声明” 根据1995年《私人证券诉讼改革法》、1933年《证券法》第27A条的定义， 经修订，以及经修订的1934年《证券交易法》（“交易法”）第21E条。前瞻性陈述 讨论非历史事实的问题。由于前瞻性陈述讨论未来的事件或状况，因此前瞻性陈述可能包括 诸如 “预测”、“相信”、“估计”、“打算”、“可以”、“应该” 之类的词语 “会”、“可能”、“寻找”、“计划”、“可能”、“将”、“期望”， “预测”、“预测”、“项目”、“预测”、“潜力” 和 “继续” 或其否定词或类似的表达。前瞻性陈述仅代表其发表之日，基于各种 基本假设和当前对未来的预期，不能保证未来的表现。此类陈述涉及 可能导致我们实际业绩、活动水平、绩效或成就的已知和未知风险、不确定性和其他因素 与此类前瞻性陈述所表达或暗示的经营业绩或计划存在重大差异。 你是 提醒不要过分依赖这些前瞻性陈述，这些陈述仅代表其发布日期。
我们无法预测所有可能影响我们业务、财务状况或运营结果的风险和不确定性。因此，本季度的前瞻性声明 在10-Q表格中不应被视为对这些声明中所述结果或条件将会发生的表述，也不应被视为我们的目标和计划将会实现，我们对于这些前瞻性声明的准确性或完整性不承担任何责任。这些前瞻性声明在此季度的10-Q表格中分布在各个地方 并包括有关我们运营可能或预测未来结果的信息，包括关于潜在收购或合并目标、战略或计划；业务战略；前景；未来现金流；融资计划；管理层的计划和目标； 关于未来收购、未来现金需求、未来运营、业务计划和未来财务结果的任何其他声明；以及任何其他非历史事实的声明。
这些前瞻性声明代表我们对未来事件的意图、计划、期望、假设和信念，受各种因素和风险的影响，包括但不限于我们在“风险因素”部分所述的内容。我们于2023年12月31日结束的财年在提交给证券交易委员会（“SEC”）的于2024年4月1日提交的10-K表格的第I项第1A项下所列的部分。许多这些风险和因素都超出了我们的控制范围，可能导致实际结果与该前瞻性声明所表达或暗示的结果有显著不同。考虑到这些风险、不确定性和假设，前瞻性陈述所描述的事件可能不会发生或会发生在不同的程度或时间上，与我们已经描述的不同。请注意，不应过度依赖这些前瞻性声明，它们仅于本季度10-Q报告的发布日期有关。所有随后撰写和口头发表的前瞻性声明，涉及本季度10-Q报告中的其他事项，并可归属于我们或任何代表我们行事的人，均明确地整体上受到本季度10-Q报告中包含或所提到的警示性声明的限制。
这些风险和因素中的许多超出了我们的控制范围，可能导致实际结果与这些前瞻性声明所表达或暗示的结果有重大差异。考虑到这些风险、不确定性和假设，前瞻性声明中描述的事件可能不会发生，或者可能以不同的程度或在不同的时间发生。请注意，不要对这些前瞻性声明过度依赖，这些声明仅在本季度报告（表格10-Q）日期时有效。与本季度报告（表格10-Q）中讨论的其他事务相关的所有后续书面和口头前瞻性声明，以及归因于我们或代表我们行事的任何人的声明，均在其全部范围内受到本季度报告（表格10-Q）中包含或提到的警示性声明的明确限定。
除非法律要求，我们没有义务更新或修订任何前瞻性声明，无论是由于新信息、未来事件、事件的变化、条件、情况或假设的变化，或其他原因。
| 4 |
第一部分 财务信息
项目 1. 合并基本报表
诺凯拉公司
中期简明合并资产负债表
(以美元计价，除了股票数量之外)
9月30日 2024 | 12月31日， 2023 | |||||||
| (未经审计) | (已审计) | |||||||
| 资产 | ||||||||
| 流动资产 | ||||||||
| 现金及现金等价物 | $ | $ | ||||||
| 应收账款，净额 | ||||||||
| 存货，净额 | ||||||||
| 预付款项给供应商 | ||||||||
| 预付费用及其他资产，净额 | ||||||||
| 以公允价值计量且通过利润或损失确认的金融资产 | ||||||||
| 总流动资产 | ||||||||
| 投资 | ||||||||
| 物业及设备（净额） | ||||||||
| 无形资产 - 客户关系 | ||||||||
| 商誉 | ||||||||
| 其他非流动资产 | ||||||||
| 总资产 | $ | $ | ||||||
| 负债和权益 | ||||||||
| 负债 | ||||||||
| 流动负债 | ||||||||
| 应付账款 | $ | $ | ||||||
| 其他应付款和应计费用 | ||||||||
| 预付款 | ||||||||
| 由于关联方 | ||||||||
| Warrants负债 | ||||||||
| 长期担保其他借款 - 当前部分 | ||||||||
| 应付股息 | ||||||||
| 应付所得税 | ||||||||
| 总流动负债 | ||||||||
| 递延所得税负债，净额 | ||||||||
| 开多保证的其他借款 | ||||||||
| 总负债 | ||||||||
| 承诺和或有事项（注20） | ||||||||
| 股权 | ||||||||
| 普通股（$ 面值; 授权 股； 股份和 截至2024年9月30日和2023年12月31日的已发行和流通的股票数量) | ||||||||
| 优先股（$ 面值; 授权 股份；A系列优先股， 授权， 截至2024年9月30日和2023年12月31日的已发行和流通的股票数量) | ||||||||
| 额外实收资本 (1) | ||||||||
| 法定储备和其他储备 | ||||||||
| 累计亏损 | ( | ) | ( | ) | ||||
| 累计其他综合损失 | ( | ) | ||||||
| Nocera, Inc. 的股东权益总额 | ||||||||
| 非控股权益 | ||||||||
| 总权益 | ||||||||
| 总负债及权益 | $ | $ | ||||||
请参阅与这些未经审计的简明基本报表密切相关的简明合并基本报表的附注。
| 5 |
诺凯拉公司
截至2023年10月的 临时合并财务报表 运营和全面亏损
(以美元计价，除了股票数量之外)
(未经审计)
| 截至三个月 9月30日 | 截至九个月 9月30日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (未经审计) | (已审计) | (未经审计) | (已审计) | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| 净销售额 | ||||||||||||||||
| 销售成本 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 毛利润 | ||||||||||||||||
| 营业费用 | ||||||||||||||||
| 一般及行政费用 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 总营业费用 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 运营损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入（费用） | ( | ) | ( | ) | ||||||||||||
| 税前亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得税费用 | ( | ) | ||||||||||||||
| 净损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 减少：归属非控制性利益的净损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 归属于公司的净亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 综合（损失）收益 | ||||||||||||||||
| 净损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 外币翻译收益（损失） | ( | ) | ||||||||||||||
| 总综合损失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 减：归属于非控股权益的综合亏损 | ( | ) | ( | ) | ( | ) | ||||||||||
| 归属于公司的综合亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 每股损失 | ||||||||||||||||
| 基本 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 稀释 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 普通股加权平均流通股数 | ||||||||||||||||
| 基本 | ||||||||||||||||
| 稀释 | ||||||||||||||||
请参阅与这些未经审计的简明基本报表密切相关的简明合并基本报表的附注。
| 6 |
诺凯拉公司
临时简明合并现金流量表
(以美元计价，除了股票数量之外)
(未经审计)
| 截至9月30日的九个月 | ||||||||
| 2024 | 2023 | |||||||
| (未经审计) | (已审计) | |||||||
| $ | $ | |||||||
| 经营活动产生的现金流： | ||||||||
| 净损失 | ( | ) | ( | ) | ||||
| 净利润与用于经营活动的净现金之间的调整： | ||||||||
| 折旧费用 | ||||||||
| 无形资产摊销 | ||||||||
| 交易性金融资产公允价值变动收益 | ( | ) | ( | ) | ||||
| 以股权结算的咨询服务 | ||||||||
| 基于股份的薪酬 | ||||||||
| 经营资产和负债的变动： | ||||||||
| 应收账款 | ( | ) | ||||||
| 存货 | ( | ) | ||||||
| 预付费用及其他资产，净额 | ( | ) | ( | ) | ||||
| 其他非流动资产 | ( | ) | ( | ) | ||||
| 应付账款 | ( | ) | ||||||
| 预付款 | ( | ) | ||||||
| 其他应付款和应计费用 | ||||||||
| 应付所得税 | ( | ) | ||||||
| 净现金流出活动 | ( | ) | ( | ) | ||||
| 投资活动的现金流： | ||||||||
| 购买房地产和设备 | ( | ) | ( | ) | ||||
| 以公平价值计入损益的金融资产购买 | ( | ) | ( | ) | ||||
| 以公允价值计量且其变动计入当期损益的金融资产处置收益 | ||||||||
| 收购子公司获得的现金 | ||||||||
| 投资活动提供的（使用的）净现金 | ( | ) | ||||||
| 融资活动产生的现金流: | ||||||||
| 偿还短期银行贷款 | ( | ) | ( | ) | ||||
| 融资活动产生的净现金（使用）/提供 | ( | ) | ( | ) | ||||
| 汇率变化对现金及现金等价物的影响 | ( | ) | ( | ) | ||||
| 现金及现金等价物净减少 | ( | ) | ( | ) | ||||
| 期初的现金及现金等价物 | ||||||||
| 期末现金及现金等价物 | ||||||||
| 现金流信息的补充披露 | ||||||||
| 支付的利息费用 | ||||||||
| 支付的所得税现金 | ||||||||
请参阅与这些未经审计的简明基本报表密切相关的简明合并基本报表的附注。
| 7 |
诺凯拉公司
临时简明合并股东权益变动表
(以美元计，除股数外)
(未经审计)
| 普通股 | 优先股 | 额外 实缴 | 法定的 和 其他 | 累计 | 累计 其他 全面 | 总计 诺塞拉公司（Nocera Inc.）的 股东的 | 非- 控制 | 总计 股东的 | |||||||||||||||||||||||||
| 股票 | 金额 | 股票 | 金额 | 资本 | 储备 | 亏损 | Loss | 股权 | 兴趣 | 股权 | |||||||||||||||||||||||
| 截至2023年1月1日的余额 | ( | ) | |||||||||||||||||||||||||||||||
| 外币翻译调整 | – | – | ( | ) | |||||||||||||||||||||||||||||
| 基于股份的薪酬 | – | – | |||||||||||||||||||||||||||||||
| 以股权结算的咨询服务 | – | ||||||||||||||||||||||||||||||||
| 净损失 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 截至2023年3月31日的余额 | ( | ) | |||||||||||||||||||||||||||||||
| 外币翻译调整 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 基于股份的薪酬 | – | – | |||||||||||||||||||||||||||||||
| 净损失 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 截至2023年6月30日的余额 | ( | ) | |||||||||||||||||||||||||||||||
| 外币翻译调整 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 基于股份的薪酬 | – | – | |||||||||||||||||||||||||||||||
| 普通股发行 | – | ||||||||||||||||||||||||||||||||
| 净损失 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 截至2023年9月30日的余额 | ( | ) | |||||||||||||||||||||||||||||||
| 截至2024年1月1日的余额 | ( | ) | |||||||||||||||||||||||||||||||
| 外币翻译调整 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 普通股发行 | – | ||||||||||||||||||||||||||||||||
| 基于股份的薪酬 | – | – | |||||||||||||||||||||||||||||||
| 净损失 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 截至2024年3月31日的余额 | ( | ) | |||||||||||||||||||||||||||||||
| 外币翻译调整 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 普通股发行 | – | ||||||||||||||||||||||||||||||||
| 基于股份的薪酬 | – | – | |||||||||||||||||||||||||||||||
| 净损失 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 截至2024年6月30日的余额 | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| 外币翻译调整 | – | – | |||||||||||||||||||||||||||||||
| 普通股发行 | – | ||||||||||||||||||||||||||||||||
| 基于股份的薪酬 | – | – | |||||||||||||||||||||||||||||||
| 净损失 | – | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| 截至2024年9月30日的余额 | ( | ) | ( | ) | |||||||||||||||||||||||||||||
请参阅与这些未经审计的简明基本报表密切相关的简明合并基本报表的附注。
| 8 |
诺凯拉公司
合并基本报表附注 （未经审计）
注意事项 主要活动和组织
合并基本报表包括 Nocera, Inc.（“Nocera”或“公司”）及其子公司，Grand Smooth Inc. Limited（“GSI”）和贵州大顺科技有限公司（“GZ GST”或“WFOE”），以及通过合同安排控制的美心机构食品 发展有限公司（“美心”）。公司、GSI、GZ GST和美心统称为“公司”
Nocera于2002年2月1日在内华达州注册成立， 总部位于台湾新北市。自成立以来没有进行任何经营活动， 直到2018年12月31日与GSI进行反向合并时才开始活跃。
反向合并
自2018年12月31日起，Nocera完成了反向合并交易（称为“交易”），根据合并协议和计划（称为“协议”），与(i) GSI，(ii) GSI的股东Yin-Chieh Cheng和Bi Zhang，他们共同拥有GSI已发行和流通普通股的100%（称为“GSI股票”），以及(iii) GSI收购公司。根据协议条款，GSI股东将所有GSI股票转让给Nocera，以换取发行的10,000,000股Nocera普通股（称为“股票交换”）。由于反向合并，GSI成为Nocera的全资子公司，前GSI股东Yin-Chieh Cheng和Bi Zhang成为Nocera的控股股东。与GSI的股票交换交易被视为反向合并，GSI作为会计收购方，Nocera作为被收购方。
GSI是一家根据香港法律和法规于2014年8月1日成立的有限公司，是一家没有任何运营的控股公司。
GZ WFH于2017年10月25日在中国（"PRC"）贵州省兴义市注册成立，致力于提供鱼类养殖业容器服务，集销售、分期付款和水产养殖设备的维护于一体。GZ WFH的注册资本为人民币5,000,000元（相当于733,138美元）。
2018年11月13日，GSI在中国注册了GZ GST，注册资本为15,000美元。
剥离
随后，在2020年9月21日，公司提交了一份关于Nocera与其前变量利益实体贵州万丰护智水产科技有限公司（“GZ WFH”）及其管理方之间关系缺乏沟通的《当前报告表格8-k》 ，并解除了双方之间关于变量利益实体的协议。
随后在2020年10月8日，张碧与GZ WFH与Nocera签署了一份和解协议和释义，其中GZ WFH的债务（对Nocera或GZ GST的股份索赔）被妥协、解决，并且对任何针对Nocera的任何事项、行动或陈述的所有索赔或诉因均得到了处理，并且任何债务对Nocera或GZ GST的所有权在协议签署之日前均被解决。该协议的对价是双方及GZ GST相互放弃任何和所有索赔，而GZ WFH（包括张碧）放弃对Nocera股票的任何索赔，这意味着张碧所持有的4,750,000股Nocera普通股在协议中被取消。和解协议和释义作为附件10.8附在此处。
| 9 |
The VIE Agreements with XFC
截至2020年12月31日，我们进行了交易， （拆分后）
我们将我们限制性普通股的股份转让给了台湾有限责任公司“欣丰施工股份有限公司”（“XFC”）的股东，
以换取XFC的100%控股权。我们还与XFC的一位股东签订了合同协议，使我们能够拥有主导决定XFC经济绩效的活动的权力，并获得对XFC的重要经济利益。2022年11月30日，我们与汉杰．施（“买方”）签署了一项业务购买协议，
在该协议中，我们将对XFC的控股权出售给买方，总购买现金价格为$
The VIE Agreements with Meixin
On September 7, 2022, we entered into a series
of contractual agreements (collectively, the “Meixin VIE Agreements”) with the majority stockholder (the “Selling Stockholder”)
of Meixin Institutional Food Development Co., Ltd., a Taiwan corporation and a food processing and catering company (“Meixin”),
and Meixin, of which we purchased
The VIE Agreements with Xinca
On January 31, 2024, we entered into a Variable
Interest Entity Purchase Agreement (“Xinca Purchase Agreement”) with Zhejiang Xinca Mutual Entertainment Culture Media Co.,
Ltd. (“Xinca”), a domestic funded limited liability company registered in China (P.R.C). The Xinca Purchase Agreement was
entered into by our wholly-owned subsidiary and foreign enterprise, Shanghai Nocera Culture Co., Ltd. (“WFOE”), through a
series of contractual agreements (“VIE Agreements”), in which we exchanged shares of our restricted common stock
for a
The VIE Agreements with SY Culture
On April 14, 2024, we entered into a Variable
Interest Entity Purchase Agreement with Hangzhou SY Culture Media Co. Ltd. (“SY Culture”),
a domestic funded limited liability company registered in China (P.R.C). The SY Culture Purchase Agreement was entered into by our wholly-owned
subsidiary and foreign enterprise, Gui Zhou Grand Smooth Technology Ltd. (“WFOE”), through a series of contractual agreements
(“VIE Agreements”), in which we exchanged shares of our restricted common stock for a
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICY
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on September 30, 2024.
In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair presentation of the Company’s unaudited condensed consolidated financial position as of September 30, 2024, its consolidated results of operations for the nine months ended September 30, 2024, cash flows for the nine months ended September 30, 2024 and change in equity for the nine months ended September 30, 2024, as applicable, have been made. Operating results for the nine months ended September 30, 2024 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2024 or any future periods.
| 10 |
Concentrations of Credit Risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company conducts credit evaluations of its customers and suppliers and generally does not require collateral or other security from them. The Company evaluates its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
There were seven customers who represent
The following table sets forth a summary of single customers who represent 10% or more of the Company’s total accounts receivable, net:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| Percentage of the Company’s accounts receivable | ||||||||
| Customer A | ||||||||
| Customer B | ||||||||
| Customer C | ||||||||
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following steps:
| · | Step 1: Identify the contract(s) with a customer | |
| · | Step 2: Identify the performance obligations in the contract | |
| · | Step 3: Determine the transaction price | |
| · | Step 4: Allocate the transaction price to the performance obligation in the contract | |
| · | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation |
| 11 |
The Company recognizes revenue when (or as) the Company satisfies performance obligations by transferring promised goods or services to its customers. Revenue is measured at the transaction price which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods or services to its customers. Contracts with customers are comprised of invoices and written contracts.
The Company does not have arrangements for returns from customers. The Company has no sales incentive programs.
The Company provides goods, maintenance service warranties for goods sold with a period varying from 18 months to 72 months, a majority of which are 18 months, and an exclusive sales agency license to its customers. For performance obligations related to providing products, the Company expects to recognize the revenue according to the delivery of products. For performance obligation related to maintenance service warranties, the Company expects to recognize the revenue on a ratable basis using a time-based output method. The performance obligations are typically satisfied as services are rendered on a straight-line basis over the contract term, which is generally for 18 months as a majority of the maintenance service warranties periods provided are 18 months. For performance obligation related to exclusive agency license, the Company recognizes the revenue ratably upon the satisfaction over the estimated economic life of the license.
The Company does not have amounts of contract assets since revenue is recognized as control of goods is transferred. The contract liabilities consist of advance payments from customers and deferred revenue. Advance payments from customers are expected to be recognized as revenue within 12 months. Deferred revenue is expected to be recognized as revenue within 12 months.
Recent Accounting Pronouncements
The FASB issued several updates during the period, none of these standards are either applicable to the Company or require adoption at a future date and none are expected to have a material impact on the consolidated financial statements upon adoption.
Note 3 ACCOUNTS RECEIVABLE
As of September 30, 2024 and December 31, 2023, accounts receivable consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Accounts receivable | ||||||||
| Less: Allowance for doubtful | ||||||||
| Total | ||||||||
For the nine months ended September 30, 2024 and for the year ended December 31, 2023, the Company has recorded provision for doubtful accounts of .
| 12 |
Note 4 INVENTORIES
As of September 30, 2024 and December 31, 2023, inventories consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Raw materials | ||||||||
| Total | ||||||||
Inventory balances as of September 30, 2024, and September 30, 2023,
were $
Note 5 PREPAID EXPENSES AND OTHER ASSETS, NET
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Other receivables from third party | ||||||||
| Prepaid expenses and other assets, net | ||||||||
Other receivables as of September 30, 2024
and 2023 were $
Note 6 PROPERTY AND EQUIPMENT, NET
As of September 30, 2024 and December 31, 2023, property and equipment consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
Depreciation expenses for the nine months ended
September 30, 2024 and 2023 were $
| 13 |
Note 7 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The fair value of each investment in equity instrument to be measured at fair value through profit or loss is as follows:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| Financial assets mandatorily measured at fair value through profit or loss | $ | $ | ||||||
| Funds | ||||||||
| Total | ||||||||
| Current | ||||||||
| Non-Current | ||||||||
| Total | ||||||||
Net gain of $
Note 8 GOODWILL
As of September 30, 2024 and December 31, 2023, goodwill consisted of the following:
Goodwill
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Goodwill - Meixin | ||||||||
| Goodwill - Xinca | ||||||||
| Goodwill – SY Culture | ||||||||
| Less: Impairment | ( | ) | ( | ) | ||||
| Goodwill, net | ||||||||
| 14 |
Customer relations
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Balance b/f | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Customer relations, net | ||||||||
Note 9 OTHER NON-CURRENT ASSETS
As of September 30, 2024 and December 31, 2023, other non-current assets consisted of the following:
| Schedule of other non-current assets | September 30, 2024 |
December 31, 2023 | ||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Other Non-current Assets | ||||||||
| Prepaid Rent Expense | ||||||||
| Deferred Expenses | ||||||||
| Total other non-current assets | ||||||||
The prepaid rent expenses are leases, rent, equipment, and fees and deferred expenses include e-commerce live streamer contracts’ service expenses.
The prepaid rent expenses pertain to our offices
located in Hangzhou, China, which serve our e-commerce business operations. The expense covers monthly rent totaling $
Note 10 OTHER BORROWINGS
Others loans consisted of the following:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Secured loan from Chailease Finance Co., Ltd wholly repayable within 1 year | ||||||||
| Total secured loan wholly repayable within 1 year | ||||||||
| Secured loan from Chailease Finance Co., Ltd wholly repayable more than 1 year | ||||||||
| Total | ||||||||
The loan has been repaid in full.
Note 11 WARRANTS
On April 1, 2021, the Company entered into a securities
purchase agreement with certain investors for an aggregate of 80,000 shares of its preferred stock at a per share purchase price of $2.50.
As part of the transaction, the investors received one Class C warrant and one Class D warrant for the subscription of each preferred
share. The Class C warrants consist of the right to purchase up to
On September 27, 2021, the Company entered into
another securities purchase agreement with the same investors, pursuant to which the Company issued in a registered direct offering, an
aggregate of 48,000 shares of common stock of the Company at a per share purchase price of $2.50. In addition, the investors also received
one Class C warrant and one Class D warrant for the subscription of each preferred share. The Class C warrants consist of the right to
purchase up to
| 15 |
Public Offering
In connection with a firm commitment underwritten
public offering (the “Public Offering”) pursuant to a registration statement on Form S-1, amended (File No. 333-264059), originally
filed with the SEC on April 1, 2022, and declared effective by the SEC on August 10, 2022, the Company sold an aggregate of
units (the “Units”). Each Unit consisted of one share of common stock and a warrant to purchase two shares of common stock.
Each warrant underlying the Units was exercisable from the date of issuance until the fifth anniversary of the issuance date for $3.85
per share of Common Stock (110% of the public offering price per Unit), subject to adjustment in the event of stock dividends, stock splits,
stock combinations, reclassifications, reorganizations or similar events affecting the common stock as described in the warrants. The
Public Offering closed on August 15, 2022, and the Company received total gross proceeds of $
In connection with the Public Offering and pursuant
to the underwriting agreement between us and the underwriters named therein, we granted the underwriters a 45-day option to purchase up
to 282,000 additional shares of common stock and warrants, equivalent to 15% of the Units sold in the Public Offering, at the public offering
price per Unit, less underwriting discounts and commissions, to cover over-allotments, if any. On September 23, 2022, the underwriters
exercised their option to purchase an additional
On November 14, 2022, the exercise price of the warrants was decreased to $1.925. Under the terms of the warrants, the exercise price was to be decreased to the greater of (i) $1.925, which represented 50% of the original exercise price; and (ii) 100% of the last volume weighted average price immediately preceding the 90th calendar day following the initial issuance date (the “Reset Exercise Price”) if, on the date that is 90 calendar days immediately following the initial issuance date, the Reset Exercise Price is less than the original $3.85 exercise price on that date.
The Reset Exercise Price remains subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Common Stock as described in the Warrants.
Reverse Split
In connection with the Public Offering, on August
11, 2022, the Company effected a
| Appraisal Date (Inception Date) | C Warrant 2021 | D Warrant 2021 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| $ | $ | |||||||
| Market price per share (USD/share) | ||||||||
| Exercise price (USD/price) | ||||||||
| Risk free rate | ||||||||
| Dividend yield | ||||||||
| Expected term/ Contractual life (years) | ||||||||
| Expected volatility | ||||||||
| 16 |
| Appraisal Date (Inception Date) | C Warrant September 27, 2021 | D Warrant September 27, 2021 | ||||||
| (Unaudited) | (Unaudited) | |||||||
| $ | $ | |||||||
| Market price per share (USD/share) | ||||||||
| Exercise price (USD/price) | ||||||||
| Risk free rate | ||||||||
| Dividend yield | ||||||||
| Expected term/ Contractual life (years) | ||||||||
| Expected volatility | ||||||||
The following is a reconciliation of the beginning and ending balances of warrants liability measured at fair value on a recurring basis using Level 3 inputs:
| September 30, 2024 | December 31, 2023 | |||||||
| $ | $ | |||||||
| Balance at the beginning of period | ||||||||
| Warrants issued to investors | ||||||||
| Warrants redeemed | ||||||||
| Fair value change of warrants included in earnings | ||||||||
| Total | ||||||||
The following is a summary of the warrant activity:
Number of Warrants | Average Exercise Price | Weighted Average Remaining Contractual Term in Years | ||||||||||
| Outstanding at January 1, 2024 | ||||||||||||
| Exercisable at January 1, 2024 | ||||||||||||
| Granted | – | |||||||||||
| Exercised / surrendered | – | |||||||||||
| Expired | – | |||||||||||
| Outstanding at September 30, 2024 | ||||||||||||
| Exercisable at September 30, 2024 | ||||||||||||
| 17 |
Note 12 LEASES
The Company has two non-cancelable lease agreements for certain of the office and accommodation as well as fish farming containers for research and develop advanced technology for water circulation applying in fishery with original lease periods expiring between 2023 and 2024. The lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. The Company recognizes rental expense on a straight-line basis over the lease term.
The components of lease expense for the nine months ended September 30, 2024 and September 30, 2023 were as follows:
| Statement of Income Location | Nine months ended September 30, 2024 | Nine months ended September 30, 2023 | ||||||||
| (Unaudited) | (Audited) | |||||||||
| $ | $ | |||||||||
| Lease Costs | ||||||||||
| Operating lease expense | General and administrative expenses | |||||||||
| Total net lease costs | ||||||||||
Maturity of lease liabilities under our non-cancelable operating leases as of December 31, 2023 and September 30, 2024 are .
Note 13 OTHER PAYABLES AND ACCRUED LIABILITIES
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Salary payable | ||||||||
| Others | ||||||||
| Total | ||||||||
Note 14 INCOME TAXES
The Company and its subsidiary, and the consolidated VIE file tax returns separately.
1) Value-added tax (“VAT”)
PRC
Pursuant to the Provisional Regulation of the
PRC on VAT and the related implementing rules, all entities and individuals (“taxpayers”) that are engaged in the sale of
products in the PRC are generally required to pay VAT, at a rate of which was changed from
| 18 |
Taiwan
Pursuant to the Value-added and Non-value-added
Business Tax Act and the related implementing rules, all entities and individuals (“taxpayers”) that are engaged in the sale
of products in the Taiwan are generally required to pay VAT, at a rate of
2) Income tax
United States
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into legislation. The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 34% to 21%, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax.
On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to provide guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. The Company has completed the assessment of the income tax effect of the Tax Act and there were no adjustments recorded to the provisional amounts.
The Coronavirus Aid, Relief and Economy Security Act (the “CARES Act”) was signed into law on 27 March 2020. The CARES Act temporarily eliminates the 80% taxable income limitation (as enacted under the Tax Cuts and Jobs Act of 2017) for NOL deductions for 2018-2020 tax years and reinstated NOL carrybacks for the 2018-2020 tax years. Moreover, the CARES Act also temporarily increases the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year. Lastly, the Tax Act technical correction classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactively as if it was included in the Tax Act at the time of enactment. The Company does not anticipate a significant tax impact on its financial statements and will continue to examine the impact the CARES Act may have on its business.
The Company evaluated the Global Intangible Low
Taxed Income (“GILTI”) inclusion on current earnings and profits of greater than 10% owned foreign controlled corporations.
The Company has evaluated whether it has additional provision amount resulted by the GILTI inclusion on current earnings and profits of
its foreign controlled corporations. The law also provides that corporate taxpayers may benefit from a 50% reduction in the GILTI inclusion,
which effectively reduces the 21% U.S. corporate tax rate on the foreign income to an effective rate of
The reverse merger was completed on December 31,
2018 and the tax losses of US subsidiary was not in the scope as of December 31, 2018. As of December 31, 2019, net operating loss carried
forward which was available to offset future taxable income for the Company in the United States was $
Hong Kong
The HK tax reform has introduced two-tiered profits tax rates for corporations. Under the two-tiered profits tax rates regime, the profits tax rate for the first HK$2 million (approximately $257,931) of assessable profits will be lowered to 8.25% (half of the rate specified in Schedule 8 to the Inland Revenue Ordinance (IRO)) for corporations. Assessable profits above HK$2 million (approximately $257,931) will continue to be subject to the rate of 16.5% for corporations. The Company assessed that the HK entity will not earn a profit greater than HK$2 million (approximately $257,931), it is subject to a corporate income tax rate of 8.25%.
| 19 |
As of December 31, 2022, the Company’s subsidiary in Hong Kong had net operating loss carry forwards available to offset future taxable income. The net operating losses will be carryforward indefinitely under Hong Kong Profits Tax regulation. There is a full valuation allowance applied against these loss carry forward as management determined it was not more likely than not that these net operating losses would be utilized in the foreseeable future.
PRC
WFOE and the consolidated VIE established in the
PRC are subject to the PRC statutory income tax rate of
In accordance with the relevant tax laws and regulations of the PRC, a company registered in the PRC is subject to income taxes within the PRC at the applicable tax rate on taxable income. All the PRC subsidiaries were subject to income tax at a rate of 25% for the year ended December 31, 2022. According to PRC tax regulations, the PRC net operating loss can generally carry forward for no longer than five years starting from the year subsequent to the year in which the loss was incurred.
Taiwan
The Company’s loss before income taxes is primarily derived from the operations in Taiwan and income tax expense is primarily incurred in Taiwan.
As a result of amendments to the “Taiwan Income Tax Act” enacted by the Office of the President of Taiwan on February 7, 2018, the statutory income tax rate increased from 17% to 20% and the undistributed earning tax, or a surtax, decreased from 10% to 5% effective from January 1, 2018. As a result, the statutory income tax rate in Taiwan is 20% for the years ended August 31, 2021 and 2020. An additional surtax, of which rate was reduced from 10% to 5% being applied to the Company starting from September 1, 2018, is assessed on undistributed income for the entities in Taiwan, but only to the extent such income is not distributed or set aside as a legal reserve before the end of the following year. The 5% surtax is recorded in the period the income is earned, and the reduction in the surtax liability is recognized in the period the distribution to stockholders or the setting aside of legal reserve is finalized in the following year.
The components of the income tax expense are:
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Current | ( | ) | ||||||||||||||
| Deferred | ||||||||||||||||
| Total income tax expense | ( | ) | ||||||||||||||
The reconciliation of income taxes expenses computed at the Taiwan statutory tax rate (2021: at PRC statutory rate) applicable to income tax expense is as follows:
Nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Taiwan (2021-PRC) income tax statutory rate | ||||||||
| Tax effect of non-deductible expenses | ( | ) | ( | ) | ||||
| Tax effect of stock-based compensation | % | ) | % | ) | ||||
| Tax effect of non-taxable income | ||||||||
| Impact of different tax rates in other jurisdictions | ( | ) | ( | ) | ||||
| Others | ||||||||
| Changes in valuation allowance | ( | ) | ( | ) | ||||
| Effective tax rate | ||||||||
| 20 |
3) Deferred tax assets (liabilities), net
The tax effects of temporary differences representing deferred income tax assets and liabilities result principally from the following:
September 30, 2024 | December 31, 2023 | |||||||
| $ | $ | |||||||
| Deferred tax assets | ||||||||
| Tax loss carried forward | ||||||||
| Allowance for doubtful receivables | ||||||||
| Total deferred tax assets | ||||||||
| Reversal of deferred tax assets | ||||||||
| Valuation allowance | ||||||||
| Total deferred tax assets, net |
September 30, 2024 | December 31, 2023 | |||||||
| $ | $ | |||||||
| Deferred tax liabilities | ||||||||
| Property and equipment, difference in depreciation | ||||||||
| Deferred tax liabilities, net |
The valuation allowance as of September 30, 2024 and December 31, 2023 was primarily provided for the deferred income tax assets if it is more likely than not that these items will expire before the Company is able to realize its benefits, or that the future deductibility is uncertain. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment. The movement for the valuation allowance is as follows.
September 30, 2024 | December 31, 2023 | |||||||
| $ | $ | |||||||
| Balance at beginning of the year | ||||||||
| Additions of valuation allowance | ||||||||
| Reductions of valuation allowance | ||||||||
| Balance at the end of the year | ||||||||
| 21 |
PRC Withholding Tax on Dividends
The current PRC Enterprise Income Tax Law imposes a 10% withholding income tax for dividends distributed by foreign-invested enterprises to their immediate holding companies outside the PRC. A lower withholding tax rate will be applied if there is a tax treaty arrangement between the PRC and the jurisdiction of the foreign holding company. Distributions to holding companies in Hong Kong that satisfy certain requirements specified by PRC tax authorities, for example, will be subject to a 5% withholding tax rate.
As of December 31, 2022, the Company had not recorded any withholding tax on the retained earnings of its foreign-invested enterprises in the PRC, since the Company had intended to reinvest its earnings to potentially continue its business in mainland China, namely the manufacturing of the RASs through GZ GST, and its foreign-invested enterprises do not intend to declare dividends to their immediate foreign holding companies.
As of September 30, 2024, the Company had not recorded any withholding tax on the retained earnings of its foreign-invested enterprises in the PRC, and the Company decided not to reinvest its earnings since it is not continuing its business in mainland China, and its foreign-invested enterprises do not intend to declare dividends to their immediate foreign holding companies.
Note 15 RELATED PARTY BALANCES AND TRANSACTIONS
Due to related parties
The balance due to related parties was as follows:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Mr. Yin-Chieh Cheng | ||||||||
| Mountain Share Transfer, LLC (1) | ||||||||
| Total | ||||||||
Sales
The balance of sales with a related party was as following:
| Related Party Categories | September 30, 2024 | December 31, 2023 | ||||||||
| (Unaudited) | (Audited) | |||||||||
| $ | $ | |||||||||
| Grand Smooth Corporation Limited (2) | Same director | |||||||||
| Total | ||||||||||
| 22 |
The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, price and terms were determined in accordance with mutual agreements.
Note:
| (1) | |
| (2) |
Note 16 COMMON STOCK
The Company’s authorized number of common
stock is shares with par value of $ each. On August 11, 2022, the Company effected a
On August 11, 2022, the Company’s common
stock commenced trading on The Nasdaq Capital Market under the symbol “NCRA” on a post-reverse stock split basis. During the
public offering, common stocks, at par value $0.001 each, were issued at the offering price $3.5 each. The Company received
total gross proceeds of $
All number of shares, share amounts and per share data presented in the accompanying unaudited consolidated financial statements and related notes have been retroactively restated to reflect the reverse merger transaction and subsequent issuance of shares stated above, except for authorized shares of common stock, which were not affected.
On December 27, 2018, Nocera granted Mr. Yin-Chieh
Cheng quarterly option awards of Series A warrants for 20 quarters (i.e., 5 years) for a total of
On June 1, 2020, Nocera granted Mr. Shun-Chih
Chuang and Mr. Hsien-Wen Yu
On June 1, 2020, Nocera granted Mr. Michael A.
Littman
| 23 |
On December 1, 2021, Nocera granted Mr. Shun-Chih
Chuang and Mr. Hsien-Wen Yu
On December 31, 2021, the Company issued an aggregate of shares of common stock to Mr. Shun-Chih Chuang and a total of five consultants in consideration for services rendered.
On August 11, 2022, the Company effected a 2:3 reverse stock split for each share of common stock issued and outstanding. The result of reverse stock split over the common stock issuable upon exercise of the following outstanding securities as of September 30, 2022 is listed below:
Before Reverse Stock Split | After Reverse Stock Split | |||||||
| Series A Warrant | ||||||||
| Class A Warrants | ||||||||
| Class B Warrants | ||||||||
| Class C Warrants | ||||||||
| Class D Warrants | ||||||||
| 2018 Stock Option and Award Incentive Plan | ||||||||
| Total reverse stock split | ||||||||
On December 22, 2022, the Company issued and shares of common stock to Chen-Chun Chung and TraDigital respectively in consideration for services rendered.
On March 22, 2023, the Company issued shares of common stock to Hanover International, Inc. respectively in consideration for services rendered.
On July 31, 2023, Nocera granted Mr. Andy Chin-An Jin restricted shares of common stock, of which vests at the end of every three month period after July 31, 2023 in equal installments over the period of one year, subject to the employment for services as Chief Executive Officer. On December 5, 2023, the Company issued shares of our common stock to our Chief Executive Officer, Andy Chin-An Jin.
On October 11, 2023, the Company issued shares of common stock to Mr. Nick Chang in consideration of service rendered as a consultant for three years.
The estimated fair value of share-based compensation for employees is recognized as a charge against income on a ratable basis over the requisite service period, which is generally the vesting period of the award. The fair value of stock option grant was estimated on the date of grant using the Black-Scholes option pricing model under the following assumptions:
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| Dividend yield | N/A | N/A | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Volatility | % | % | ||||||
| 24 |
The Company estimated the grant date fair value of time-based stock option awards using the Black-Scholes option valuation model, which requires assumptions involving an estimate of the fair value of the underlying common stock on the date of grant, the expected term of the options, volatility, discount rate and dividend yield. The Company calculated expected option terms based on the “simplified” method for “plain vanilla” options due to the limited exercise information. The “simplified method” calculates the expected term as the average of the vesting term and the original contractual term of the options. The Company calculated volatility using the average adjusted volatility of quick companies feature of Capital IQ for a period of time reflective of the expected option term, while the discount rate was estimated using the interest rate for a treasury note with the same contractual term as the options granted. Dividend yield is estimated at our current dividend rate, which adjusts for any known future changes in the rate.
For the nine months ended September 30, 2024 and year ended December 31, 2023, $ and $ share-based compensation expenses was recognized into additional paid-in capital of the Company, respectively.
As of September 30, 2024, total unrecognized compensation cost related to unvested share-based compensation awards was $. This amount is expected to be recognized as stock-based compensation expense in the Company’s consolidated statements of operations and comprehensive income over the remaining vesting period.
Note 18 PREFERRED STOCK
In August 2021, the Company issued shares of preferred shares of $ each at an issue price of $ per share to certain investors credited as fully paid. The preferred shares are non-voting and non-redeemable. The holder of the preferred shares will have priority over the holders of ordinary shares of the Company on the assets and funds of the Company available for distribution in a distribution of assets on liquidation, winding up or dissolution of the Company. The holder of the preferred shares shall not have the right to attend or vote at any general meeting of the Company (except a general meeting for winding up of the Company or a resolution is to be proposed which if passed would vary or abrogate the rights or privileges of such holder).
On August 11, 2022, the Company effected a
The following table sets forth the computation of basic and diluted (loss) income per common share for the three and nine months ended September 30, 2024 and 2023.
For three months ended September 30, | For nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss attributable to the Company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| - Basic | ||||||||||||||||
| - Diluted | ||||||||||||||||
| Loss per share: | ||||||||||||||||
| - Basic | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| - Diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
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Note 20 COMMITMENTS AND CONTINGENCIES
Lease Commitment
The Company has entered into operating lease agreement for warehouse and processing plant. Future minimum lease payments under non-cancellable operating leases with initial terms within one year is included in Note 12.
The total future minimum lease payments under non-cancellable short-term leases as of September 30, 2024 are payable as follows:
| Future minimum lease payments | Lease Commitment | |||
| $ | ||||
| Within 1 year | ||||
| Total | ||||
Note 21 BUSINESS COMBINATION
Schedule of acquired assets and liabilities
Zhejiang Xinca Mutual Entertainment Culture Media Co., Ltd.
On January 31, 2024, the Company acquired 100% shares of Xinca. The fair values of assets acquired and liabilities assumed were as follows:
| Cash and bank balance | $ | |||
| Other receivables | ||||
| Prepaid rent expense | ||||
| Goodwill | ||||
| Plant and equipment, net | ||||
| Depreciation | ( | ) | ||
| Advanced from customers | ( | ) | ||
| Long-term secured bank loan | ( | ) | ||
| Other payables and accrued liabilities | ( | ) | ||
| Net assets value | ||||
| Purchases price | $ | |||
Hangzhou SY Culture Media Co. Ltd.
On April 14, 2024, the Company acquired 100% shares of SY Culture. The fair values of assets acquired and liabilities assumed were as follows:
| Cash and bank balance | $ | |||
| Other receivables | ||||
| Advance to supplier | ||||
| Investment | ||||
| Other payables and accrued liabilities | ( | ) | ||
| Net assets value | ||||
| Purchases price | $ | |||
Note 22 SUBSEQUENT EVENT
The Company has evaluated subsequent events through the issuance date of the unaudited condensed consolidated financial statements. On October 21, 2024, the Company filed a Form S-3 registration statement, which has not yet become effective. This registration statement allows for the offering and sale of up to $50,000,000 in various securities, including preferred stock, common stock, debt securities, or warrants, either separately or in units. These securities may be offered in one or more transactions at prices and terms to be determined at the time of each offering. The debt securities and warrants are convertible, exercisable, or exchangeable into common stock, preferred stock, or additional debt securities, and the preferred stock may be convertible into or exchangeable for common stock. Other than this event, no additional subsequent events have been identified that would require adjustment or further disclosure in the consolidated financial statements.
| 26 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATING AND FINANCIAL RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In addition, our unaudited consolidated financial statements and the financial data included in this Quarterly Report on Form 10-Q reflect our reorganization and have been prepared as if our current corporate structure had been in place throughout the relevant periods. Actual results could differ materially from those projected in the forward-looking statements. For additional information regarding these and other risks and uncertainties, please see the items listed under the section captioned “Cautionary Statement Regarding Forward-Looking Statements” herein and the section captioned “Risk Factors” as well as any other cautionary language contained in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024. Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this Quarterly Report on Form 10-Q.
Operations Overview
As of December 31, 2019, we provide land-based recirculation aquaculture systems for fish farming. Our primary business operations consist of the design, development and production of RASs large scale fish tank systems, for fish farms along with expert consulting, technology transfer and aquaculture project management services to new and existing aquaculture management business services. Through our branch office, we also procure and sell eel in Taiwan. In addition, as of December 2022, we sell food items, including our signature seafood porridge bowl, through our flagship bento box store located at the Ning Xia Night Market in the Datong District of Taipei City, Taiwan.
In October 2020, the government of Taiwan began supporting the Green Power and Solar Sharing Fish Farms initiative. In view of the opportunities resulting from this initiative, in October 2020, Nocera ceased all of its operations in China and moved all of its technology and back-office operations to Taiwan. We now only operate out of Taiwan.
Our current mission is to provide consulting services and solutions in aquaculture projects to reduce water pollution and decrease the disease problems of fisheries. Our goal is to become a global leader in the land-based aquaculture business. We are now poised to grow our existing operations in Taiwan and expand into the development and management of land-based fish farms in Taiwan and North and South America. We do not currently have any intentions of conducting operations in China or Hong Kong.
Effective December 31, 2020, we entered into a series of contractual agreements with Xin Feng Construction Co., Ltd., a funded limited liability company registered in Taiwan (R.O.C.), whereby we agreed to provide technical consulting and related services to XFC. On November 30, 2022, we entered into a Purchase of Business Agreement with Han-Chieh Shih, in which we sold our controlling interest of XFC, to the Purchaser for a total purchase cash price of $300,000. The closing of the XFC Sale occurred on November 30, 2022 and the XFC VIE agreements were terminated in connection with the XFC Sale. As of the filing date of this Annual Report on Form 10-K, we have no intention of providing services to construct indoor RASs and solar sharing fish farms in Taiwan.
As of September 30, 2021, we launched our first RAS demo site in Taiwan and engaged the demo site into the testing phase to raise eel. Currently, we are promoting our RASs in Taiwan and looking for opportunities to cooperate with local solar energy industry and to expand our business into the U.S. We believe the U.S. is a potentially lucrative market to penetrate.
On September 7, 2022, we entered into a series of contractual agreements with the majority stockholder of Meixin Institutional Food Development Co., Ltd., a Taiwan corporation and a food processing and catering company, and Meixin, of which we purchased 80% controlling interest of Meixin for $4,300,000. The Meixin VIE Agreements essentially confer control and management of Meixin as well as substantially all of the economic benefits of the Selling Stockholder in Meixin to us. As a result, we have been determined to be the primary beneficiary of Meixin and Meixin became our VIE.
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On June 1, 2023, Gui Zhou Grand Smooth Technology Ltd. (“GZ GST”), one of our wholly owned subsidiaries, entered into that certain Share Purchase Agreement dated as of June 1, 2023, as amended, with Zhe Jiang Xin Shui Hu Digital Information, Ltd. (“Zhe Jiang”), pursuant to which GZ GST acquired all of the issued and outstanding equity securities of Zhe Jiang from the stockholders of Zhe Jiang (the “Zhe Jiang Acquisition”) in exchange for the issuance of 1,500,000 shares of our common stock, par value $0.001 per share. During the initial transaction process and our performing due diligence for the closing, we observed that time constraints have led to certain complexities and challenges in consummating the Acquisition within the originally planned timeframe. We are actively working with Zhe Jiang to resolve such complexities and challenges and will file a Current Report on Form 8-K if and when the Zhe Jiang Acquisition is consummated.
On January 31, 2024, we entered into a Variable Interest Entity Purchase Agreement (“Xinca Purchase Agreement”) with Zhejiang Xinca Mutual Entertainment Culture Media Co., Ltd., a domestic funded limited liability company registered in China (P.R.C). The Xinca Purchase Agreement was entered into by our wholly-owned subsidiary and foreign enterprise, Shanghai Nocera Culture Co., Ltd. (“WFOE”), through a series of contractual agreements (“VIE Agreements”), in which we exchanged 1,800,000 shares of our restricted common stock for a 100% controlling interest in Xinca. As a result, the Company has been determined to be the primary beneficiary of Xinca and Xinca became a variable interest entity (“VIE”) of the Company.
On April 14, 2024, we entered into a Variable Interest Entity Purchase Agreement with Hangzhou SY Culture Media Co. Ltd. (“SY Culture”), a domestic funded limited liability company registered in China (P.R.C). The SY Culture Purchase Agreement was entered into by our wholly-owned subsidiary and foreign enterprise, Gui Zhou Grand Smooth Technology Ltd. (“WFOE”), through a series of contractual agreements (“VIE Agreements”), in which we exchanged 600,000 shares of our restricted common stock for a 100% controlling interest in SY Culture. As a result, the Company has been determined to be the primary beneficiary of SY Culture and SY Culture became a variable interest entity (“VIE”) of the Company.
We employ a sales and marketing strategy targeting Taiwan government-supported solar fish farms. We are planning on expanding our sales and marketing model through the use of online marketing, data intelligence, and the establishment of a distributor network. The online marketing and data intelligence is designed to generate sales leads internationally outside of Taiwan that can be directed to our sales department for further follow-up.
We plan to sell and develop fish farms in Taiwan, the U.S. and Brazil. We expect to sell over five thousand tanks in the next five years. Our production facility is to be established in Taiwan, and we plan to sell the systems into the Americas and European countries as well.
We also intend to expend the fish farming demo sites in Taiwan by adding 20 units of RAS eel farming equipment with outsourcing construction services and build the catfish farm in the U.S. by the end of 2024 to promote our fish farming systems to the global market. We are expecting more customers from various countries actively inquiring about our equipment. As of February 16, 2023, we completed the acquisition of 229 acres of land in Montgomery County, Alabama, of which we intend to build RASs on that land for fish farming. As of September 30, 2024, we are still ensuring all requirements and evaluations are being thoroughly addressed prior to constructing any RASs on the Alabama land. Simultaneously, the design of the RAS equipment is underway, progressing in alignment with the project’s timeline. Both aspects are being managed concurrently to maintain project efficiency and coherence. We plan to enhance market penetration through the establishment of our own fish farms and diversify revenue streams through various sales channels.
Key Factors Affecting our Performance
As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.
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Known Trends and Uncertainties
Inflation
Prices of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices in the component materials for our goods may impact the availability, the quality and the price of our products, as suppliers search for alternatives to existing materials and increase the prices they charge. Our suppliers may also fail to provide consistent quality of product as they may substitute lower cost materials to maintain pricing levels. Nocera’s cost base also reflects significant elements for freight, including fuel, which significantly increased due to the effects of coronavirus (COVID-19), Russia’s illegal military invasion of Ukraine and the conflicts in the Middle East. Rapid and significant changes in commodity prices such as fuel and plastic may negatively affect our profit margins if Nocera is unable to mitigate any inflationary increases through various customer pricing actions and cost reduction initiatives.
Geopolitical Conditions
Our operations could be disrupted by geopolitical conditions, trade disputes, international boycotts and sanctions, political and social instability, acts of war, terrorist activity or other similar events. From time to time, we could have a large revenue stream associated with a particular customer or a large number of customers located in a particular geographic region. Decreased demand from a discrete event impacting a specific customer, industry, or region in which we have a concentrated exposure could negatively impact our results of operations.
In February 2022, Russia initiated significant military action against Ukraine. Russia’s invasion, the responses of countries and political bodies to Russia’s actions, and the potential for wider conflict may increase financial market volatility and could have adverse effects on regional and global economic markets, including the markets for certain securities and commodities. Following Russia’s actions, various countries, including the United States, Canada, the United Kingdom, Germany and France, as well as the European Union, issued broad-ranging economic sanctions against Russia. The sanctions consist of the prohibition of trading in certain Russian securities and engaging in certain private transactions, the prohibition of doing business with certain Russian corporate entities, large financial institutions, officials and persons and the freezing of Russian assets. The sanctions include a possible commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications, commonly called “SWIFT,” the electronic network that connects banks globally, and imposed restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. A number of large corporations and U.S. states have also announced plans to curtail business dealings with certain Russian businesses.
The imposition of the current sanctions (and potential imposition of further sanctions in response to continued Russian military activity) and other actions undertaken by countries and businesses may adversely impact various sectors of the Russian economy, and the military action has severe impacts on the Ukrainian economy, including its exports and food production. The duration of ongoing hostilities and corresponding sanctions and related events cannot be predicted and may result in a negative impact on the markets and thereby may negatively impact our business, financial condition and results of operation.
In addition, while we do not have any direct operations or significant sales in the Middle East, geopolitical tensions and ongoing conflicts in the region, particularly between Israel and Hamas, may lead to global economic instability and fluctuating energy prices that could materially affect our business. It is not possible to predict the broader consequences of the Israel-Hamas war, including related geopolitical tensions, and the measures and actions taken by other countries in respect thereof, which could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. While it is difficult to predict the impact of any of the foregoing, the Israel-Hamas war may increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
| 29 |
Foreign Currency
Our reporting currency is the U.S. dollar and our operations in Taiwan use their local currency as their functional currencies. Substantially all of our revenue and expenses are in NT dollars. We are subject to the effects of exchange rate fluctuations with respect to any of such currency. For example, the value of the NT dollar depends to a large extent on Taiwan government policies and Taiwan’s domestic and international economic and political developments, as well as supply and demand in the local market.
The income statements of our operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations. We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars in consolidation.
Effects of COVID-19
COVID-19 has globally resulted in the loss of life, business closures, restrictions on travel and widespread cancellation of social gatherings. The extent to which COVID-19 impacts our business will depend on future developments, which are highly uncertain and cannot be predicted at this time, including:
| · | new information which may emerge concerning the severity of the disease; | |
| · | the duration and spread of any future COVID-19 outbreaks; | |
| · | the severity of travel restrictions imposed by geographic areas in which we operate, mandatory or voluntary business closures, if any; | |
| · | regulatory actions taken in response to any future COVID-19 outbreaks which may impact merchant operations, consumer and merchant pricing, and our product offerings; | |
| · | other business disruptions that affect our workforce; | |
| · | the impact on capital and financial markets; and | |
| · | actions taken throughout the world, including in markets in which we operate, to contain any future COVID-19 outbreak or treat its impact. |
In addition, any future outbreak of COVID-19 may result in a widespread global health crisis and adversely affected global economies and financial markets, and similar public health threats could do so in the future.
Since 2021, substantially all our revenues are concentrated in Taiwan pending expansion into other international markets. Consequently, our results of operations will likely be adversely materially affected to the extent that any COVID-19 outbreak or any epidemic harms Taiwan’s economy and society and the global economy in general. Any potential impact to our results will depend on to a large extent, future developments and new information that may emerge regarding the duration and severity of any future COVID-19 outbreak and the actions taken by government authorities and other entities to contain any future COVID-19 outbreak or treat its impact, almost all of which are beyond our control. If the disruptions posed by any future COVID-19 outbreak or other matters of global concern continue for an extensive period of time, the operations of our business may be materially adversely affected.
To the extent any future COVID-19 outbreak or a similar public health threat has an impact on our business, it is likely to also have the effect of heightening many of the other risks described in the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 initially filed with the SEC on April 1, 2024.
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Seasonality
Since the global growing demand for aquaculture production along with the decreasing production from wild fisheries, our fish farming systems provide a controlled and traceable environment for fish species, and therefore our business rarely suffers a seasonal impact.
Critical Accounting Policies, Estimates and Assumptions
We prepare our financial statements in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the financial reporting period. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our financial statements.
The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates.
The accounting principles we utilized in preparing our consolidated financial statements conform in all material respects to GAAP.
Reclassification
Certain prior period amounts have been reclassified to conform with current year presentation.
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 amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the allowance for doubtful receivables; the useful lives of property and equipment and intangible assets; impairment of long-lived assets; recoverability of the carrying amount of inventory; fair value of financial instruments; provisional amounts based on reasonable estimates for certain income tax effects of the Tax Cuts and Jobs Act (the “Tax Act”) and the assessment of deferred tax assets or liabilities. These estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain and unpredictable. Actual results could differ from these estimates.
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Financial Assets
The classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Regular way purchases or sales of financial assets are recognized and derecognized on a trade date or settlement date basis for which financial assets were classified in the same way, respectively. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
| a) | Category of financial assets and measurement |
Financial assets are classified into the following categories: financial assets at FVTPL, investments in debt instruments and equity instruments at FVTOCI, and financial assets at amortized cost.
| 1) | Financial asset at FVTPL | |
| For certain financial assets which include debt instruments that do not meet the criteria of amortized cost or FVTOCI, it is mandatorily required to measure them at FVTPL. Any gain or loss arising from remeasurement is recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest earned on the financial asset. | ||
| 2) | Investments in debt instruments at FVTOCI | |
|
Debt instruments with contractual terms specifying that cash flows are solely payments of principal and interest on the principal amount outstanding, together with objective of collecting contractual cash flows and selling the financial assets, are measured at FVTOCI.
Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment gains or losses on investments in debt instruments at FVTOCI are recognized in profit or loss. Other changes in the carrying amount of these debt instruments are recognized in other comprehensive income and will be reclassified to profit or loss when these debt instruments are disposed. | ||
| 3) | Investments in equity instruments at FVTOCI | |
|
On initial recognition, we may irrevocably designate investments in equity investments that is not held for trading as at FVTOCI.
Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity.
Dividends on these investments in equity instruments at FVTOCI are recognized in profit or loss when our right to receive the dividends is established, unless our rights clearly represent a recovery of part of the cost of the investment. |
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| 4) | Measured at amortized cost | |
|
Cash and cash equivalents, commercial paper, debt instrument investments, notes and accounts receivable (including related parties), other receivables, refundable deposits and temporary payments (including those classified under other current assets and other noncurrent assets) are measured at amortized cost.
Debt instruments with contractual terms specifying that cash flows are solely payments of principal and interest on the principal amount outstanding, together with objective of holding financial assets in order to collect contractual cash flows, are measured at amortized cost.
Subsequent to initial recognition, financial assets measured at amortized cost are measured at amortized cost, which equals to carrying amount determined by the effective interest method less any impairment loss. |
| b) | Impairment of financial assets |
At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable) and for investments in debt instruments that are measured at FVTOCI.
The loss allowance for accounts receivable is measured at an amount equal to lifetime expected credit losses. For financial assets at amortized cost and investments in debt instruments that are measured at FVTOCI, when the credit risk on the financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from possible default events of a financial instrument within 12 months after the reporting date. If, on the other hand, there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from all possible default events over the expected life of a financial instrument.
We recognize an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.
| c) | Derecognition of financial assets |
We derecognize a financial asset only when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset to another entity.
On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.
Fair Value Measurement
We apply ASC Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value and expands financial statement disclosure requirements for fair value measurements.
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ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability.
ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:
| · | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | |
| · | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs are valuation technique inputs that reflect our own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
Our management is responsible for determining the assets acquired, liabilities assumed and intangibles identified as of the acquisition date and considered a number of factors including valuations from an independent appraiser.
When available, we use quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, we measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.
Cash and Cash Equivalents
Cash and cash equivalents include all cash on hand and cash in bank with no restrictions. The balance of cash as of September 30, 2024 and 2023 were $586,424 and $1,116,183, respectively.
Accounts Receivable, Net
Accounts receivable are stated at the original amount less an allowance for doubtful accounts, if any, based on a review of all outstanding amounts at period end. An allowance is also made when there is objective evidence that we will not be able to collect all amounts due according to the original terms of the receivables. We analyze the aging of the customer accounts, coverage of credit insurance, customer concentrations, customer credit-worthiness, historical and current economic trends and changes in its customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts.
Prepaid Expenses and Other Assets, Net
Prepaid expense and other assets, net consist of receivable from prepaid rent, etc. Management reviews its receivable balance each reporting period to determine if an allowance for doubtful accounts is required. An allowance for doubtful account is recorded in the period in which loss is determined to be probable based on an assessment of specific evidence indicating doubtful collection, historical experience, account balance aging, and prevailing economic conditions. Bad debts are written off against the allowance after all collection efforts have ceased.
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Inventories
Inventories are stated at lower of cost or net realizable value. Cost is determined using the weighted average method. Inventories include raw materials, work in progress and finished goods. The variable production overhead is allocated to each unit of product on the basis of the actual use of the production facilities. The allocation of fixed production overhead to the costs of conversion is based on the normal capacity of the production facilities.
Where there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down to net realizable value.
Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Maintenance, repairs, and betterments, including replacement of minor items, are charged to expense; major additions to physical properties are capitalized.
Depreciation of property and equipment is provided using the straight-line method over their estimated useful lives, which are shown as follows.
| Useful life | |
| Leasehold improvements | Shorter of the remaining lease terms and estimated useful lives |
| Land | Indefinite, as per land titles |
| Furniture and fixture | 5 years |
| Equipment | 3 years |
| Machinery | 5 years |
| Vehicle | 5 years |
Upon sale or disposal, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to income.
Business Combination
For a business combination, the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree are recognized at the acquisition date and measured at their fair values as of that date. In a business combination achieved in stages, the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, are recognized at the full amounts of their fair values. In a bargain purchase in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree, that excess in earnings is recognized as a gain attributable to the acquirer.
Deferred tax liability and assets are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 740-10.
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Variable Interest Entity
A variable interest entity (“VIE”) is an entity (investee) in which the investor has obtained a controlling interest even if it has less than a majority of voting rights, according to the Financial Accounting Standards Board (FASB). A VIE is subject to consolidation if a VIE meets one of the following three criteria as elaborated in ASC Topic 810-10, Consolidation:
| (a) | equity-at-risk is not sufficient to support the entity’s activities; | |
| (b) | as a group, the equity-at-risk holders cannot control the entity; or | |
| (c) | the economics do not coincide with the voting interest. |
If a firm is the primary beneficiary of a VIE, the holdings must be disclosed on the balance sheet. The primary beneficiary is defined as the person or company with the majority of variable interests. A corporation formed, owned, and operated by two or more businesses (ventures) as a separate and discrete business or project (venture) for their mutual benefit is defined as a joint venture.
Goodwill and Intangible Assets
We recognize goodwill in accordance with ASC 350, Intangibles—Goodwill and Other. Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized. Goodwill is tested for impairment annually as of October 1st of each year, and is tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment charge for goodwill is recognized only when the estimated fair value of a reporting unit, including goodwill, is less than its carrying amount.
We recognize intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Acquired intangible assets subject to amortization are stated at cost and are amortized using the straight-line method over the estimated useful lives of the assets. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually.
The estimates of fair value are based on the best information available as of the date of the assessment, which primarily incorporates management assumptions about expected future cash flows. Although these assets are not currently impaired, there can be no assurance that future impairments will not occur.
Share-Based Compensation
We determine our share-based compensation in accordance with ASC 718, Compensation—Stock Compensation (ASC 718), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees based on the grant date fair value of the award.
Determining the appropriate fair value model and calculating the fair value of phantom award grants requires the input of subjective assumptions. We use the Black-Scholes pricing model to value our phantom awards. Share-based compensation expense is calculated using our best estimates, which involve inherent uncertainties and the application of management’s judgment. Significant estimates include our expected volatility. If different estimates and assumptions had been used, our phantom unit valuations could be significantly different and related share-based compensation expense may be materially impacted.
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The Black-Scholes pricing model requires inputs such as the risk-free interest rate, expected term, expected volatility and expected dividend yield. We base the risk-free interest rate that we use in the Black-Scholes pricing model on zero coupon U.S. Treasury instruments with maturities similar to the expected term of the award being valued. The expected term of phantom awards is estimated from the vesting period of the award and represents the weighted average period that our phantom awards are expected to be outstanding. We estimated the volatility based on the historic volatility of our guideline companies, which we feel best represent our Company. We have never paid and do not anticipate paying any cash dividends in the foreseeable future and, therefore, we use an expected dividend yield of zero in the pricing model. We account for forfeitures as they occur.
In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair presentation of our unaudited condensed consolidated financial position as of September 30, 2024, consolidated results of operations for the period ended September 30, 2024, cash flows for the year period ended September 30, 2024 and change in equity for the period ended September 30, 2024, as applicable, have been made.
Critical accounting policies are those that we consider the most critical to understanding our financial condition and results of operations.
Impairment of Long-lived Assets
We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, we measure impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, we would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets.
Commitments and Contingencies
In the normal course of business, we are subject to contingencies, including legal proceedings and claims arising out of our business that relate to a wide range of matters, such as government investigations and tax matters. We recognize a liability for such contingency if we determine it is probable that a loss has occurred and a reasonable estimate of the loss can be made. We may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.
Revenue Recognition
We have early adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified ASC 606 on January 1, 2017.
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, we apply the following steps:
| · | Step 1: Identify the contract(s) with a customer | |
| · | Step 2: Identify the performance obligations in the contract | |
| · | Step 3: Determine the transaction price | |
| · | Step 4: Allocate the transaction price to the performance obligation in the contract | |
| · | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation |
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We considered revenue is recognized when (or as) we satisfy performance obligations by transferring a promised goods and provide maintenance service to a customer. Revenue is measured at the transaction price which is based on the amount of consideration that we expect to receive in exchange for transferring the promised goods and providing maintenance service to the customer. Contracts with customers are comprised of invoices, and written contracts.
We do not have arrangements for returns from customers. We have no sales incentive programs.
We provide goods, maintenance service warranties for the goods sold with a period varying from 18 months to 72 months, with the majority of the periods being 18 months, and exclusive sales agency license to its customers. For performance obligation related to providing products, we expect to recognize the revenue according to the delivery of products. For performance obligation related to maintenance service warranties, we expect to recognize the revenue on a ratable basis using a time-based output method. The performance obligations are typically satisfied as services are rendered on a straight-line basis over the contract term, which is generally for 18 months as a majority of the maintenance service warranties periods provided are 18 months. For performance obligation related to exclusive agency license, we recognize the revenue ratably upon the satisfaction over the estimated economic life of the license.
We do not have amounts of contract assets since revenue is recognized as control of goods is transferred. The contract liabilities consist of advance payments from customers and deferred revenue. Advance payments from customers are expected to be recognized as revenue within 12 months. Deferred revenue is expected to be recognized as revenue within 12 months.
Cost of Sales
Cost of sales consists primarily of material costs, labor costs, depreciation, and related expenses, which are directly attributable to the production of the product. Write-down of inventories to lower of cost or net realizable value is also recorded in cost of sales.
Income Taxes
We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Leases
In February 2016, the FASB issued ASU 2016-12, Leases (ASC Topic 842), which amends the lease requirements in ASC Topic 840, Leases. Under the new lease accounting standard, a lessee will be required to recognize a right-of-use asset and lease liability for most leases on the balance sheet. The new standard also modifies the classification criteria and accounting for sales-type and direct financing leases, and enhances the disclosure requirements. Leases will continue to be classified as either finance or operating leases.
We adopted ASC Topic 842 using the modified retrospective transition method effective January 1, 2019. There was no cumulative effect of initially applying ASC Topic 842 that required an adjustment to the opening retained earnings on the adoption date nor revision of the balances in comparative periods. As a result of the adoption, we recognized a lease liability and right-of-use asset for each of our existing lease arrangement. The adoption of the new lease standard does not have a material impact on our consolidated income statement or our consolidated statement of cash flow.
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Uncertain Tax Positions
We account for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. We record interest and penalties on uncertain tax provisions as income tax expense. There were no uncertain tax positions as of September 30, 2024 and 2023, and we have no accrued interest or penalties related to uncertain tax positions. We do not believe that the unrecognized tax benefits will change over the next twelve months.
Comprehensive (Loss) Income
Comprehensive income or loss is comprised of the our net (loss) income and other comprehensive income or loss. The component of other comprehensive income or loss consists solely of foreign currency translation adjustments, net of the income tax effect.
Foreign Currency Translation and Transactions
Our reporting currency is the United States dollar (“US$”). The functional currency of our VIE in Taiwan is the New Taiwan dollar (“NT”), and the functional currency of our Hong Kong subsidiary is Hong Kong dollars (“HK$”). The functional currency of PRC companies is the Renminbi (“RMB”). In the consolidated financial statements, the financial information of our subsidiary and the consolidated VIE has been translated into US$. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, except for changes in accumulated deficit during the year which is the result of income statement translation process, and revenue, expense, gains or losses are translated using the average exchange rate during the year. Translation adjustments are reported as foreign currency translation adjustments and are shown as a separate component of other comprehensive income or loss in the consolidated statements of changes in equity and comprehensive (loss) income. The exchange rates as of September 30, 2024 and 2023 are 7.1268 and 7.2258, respectively. The annual average exchange rates for the year ended December 31, 2023 and 2022 are 7.0423 and 6.7208, respectively.
(Loss) Earnings per Share
Basic (loss) earnings per share is computed by dividing net (loss) income attributable to holders of common stock by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.
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Results of Operations
The following table sets forth the consolidated statements of operations of the Company for the three and nine months ended September 30, 2024 and 2023.
Consolidated Statements of Operations
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (Unaudited) | (Audited) | (Unaudited) | (Audited) | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net sales | 1,363,101 | 7,283,281 | 13,016,093 | 16,448,325 | ||||||||||||
| Cost of sales | (1,328,970 | ) | (7,321,912 | ) | (12,852,214 | ) | (16,291,065 | ) | ||||||||
| Gross profit | 34,131 | 51,369 | 163,879 | 157,260 | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | (335,202 | ) | (319,762 | ) | (1,219,608 | ) | (1,747,766 | ) | ||||||||
| Total operating expenses | (335,202 | ) | (319,762 | ) | (1,219,608 | ) | (1,747,766 | ) | ||||||||
| Loss from operations | (301,071 | ) | (268,393 | ) | (1,055,729 | ) | (1,590,506 | ) | ||||||||
| Other income (expense) | 2,180 | (4,385 | ) | 16,046 | (16,773 | ) | ||||||||||
| Loss before income taxes | (298,891 | ) | (272,778 | ) | (1,039,683 | ) | (1,607,279 | ) | ||||||||
| Income tax expense | 509 | – | (121,871 | ) | – | |||||||||||
| Net loss | (298,382 | ) | (272,778 | ) | (1,161,554 | ) | (1,607,279 | ) | ||||||||
| Less: Net loss attributable to non-controlling interests | (12,964 | ) | (8,719 | ) | (35,438 | ) | (44,198 | ) | ||||||||
| Net loss attributable to the company | (285,418 | ) | (264,059 | ) | (1,126,116 | ) | (1,563,081 | ) | ||||||||
| Comprehensive (loss) income | ||||||||||||||||
| Net loss | (298,382 | ) | (272,778 | ) | (1,161,554 | ) | (1,607,279 | ) | ||||||||
| Foreign currency translation gain (loss) | (12,144 | ) | 42,482 | 190,263 | 62,076 | |||||||||||
| Total comprehensive loss | (310,526 | ) | (230,296 | ) | (971,291 | ) | (1,545,203 | ) | ||||||||
| Less: comprehensive loss attributable to non-controlling interest | (11,755 | ) | 11,037 | (38,390 | ) | (12,376 | ) | |||||||||
| Comprehensive loss attributable to the Company | (298,771 | ) | (241,333 | ) | (932,901 | ) | (1,532,827 | ) | ||||||||
| Loss per share | ||||||||||||||||
| Basic | (0.0210 | ) | (0.0264 | ) | (0.0865 | ) | (0.1611 | ) | ||||||||
| Diluted | (0.0210 | ) | (0.0264 | ) | (0.0865 | ) | (0.1611 | ) | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic | 13,607,097 | 10,019,125 | 13,017,717 | 9,703,101 | ||||||||||||
| Diluted | 13,607,097 | 10,019,125 | 13,017,717 | 9,703,101 | ||||||||||||
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Revenue
Revenue for the three months ended September 30, 2024 was $1,363,101, compared to $7,283,281 for the comparable period in 2023. The revenue for the three months ended September 30, 2024 was mostly decreased from the Nocera fish trading business with slow fish market in Taiwan and Meixin catering business with revenues of $0.2 million and $0.14 million, respectively. For the three months ended September 30, 2024, SY Culture and Xinca generated $188 and $40,324, respectively.
Revenue for the nine months ended September 30, 2024 was $13,016,093, compared to $16,448,325 for the comparable period in 2023. The revenue for the nine months ended September 30, 2024 was mostly decreased from the Nocera fish trading business with slow fish market in Taiwan and Meixin catering business with revenues of $7.9 million and $4.8 million, respectively. For the nine months ended September 30, 2024, SY Culture and Xinca generated generated $65,410 and $211,056, respectively.
| · | Fish Trading Business: For the nine months ended June 30, 2024, the fish trading business decreased in both volume and price, the volume decreased from 700 tons to 521 tons for the comparable period in 2023 and 2024. The average selling price of eels also decreased, from $15.54 to $15.35 per kilogram for the comparable period in 2023 and 2024. | |
| · | Catering Business: For the nine months ended June 30, 2024, the catering business separated into two lines of operations. The bento box business volume decreased from 66,217 to 64,275 boxes with average price decreased from $3.89 to $3.75 per box for the comparable period in 2023 and 2024. The fruit and vegetable processing service and sales volume decreased from 316,073 kilograms to 305,638 kilograms in volume with average prices decreased from $16.39 to $15.38 per kilograms for the comparable period in 2023 and 2024. |
For the nine months ended September 30, 2024, our foreign currency translation gain was $190,263.
Gross profit
Gross profit for the three months ended September 30, 2024 was $34,131, compared to $51,369 for the comparable period in 2023. The decrease was primarily due to the decrease in sales from NTB’s fish trading business for the three months ended September 30, 2024.
Gross profit for the nine months ended September 30, 2024 was $163,879, compared to $157,260 for the comparable period in 2023. The increase was primarily because there was an increase in demands of the sales through e-commerce business for nine months ended September 30, 2024.
General and administrative expenses
General and administrative expenses were $335,202, for the three months ended September 30, 2024, compared to approximately $319,762 for the comparable period in 2023. This increase was primarily due to the increase of consulting fees and salary expenses for the three months ended September 30, 2024.
General and administrative expenses were $1,219,608, for the nine months ended September 30, 2024, compared to approximately $1,747,766 for the comparable period in 2023. This decrease was primarily due to the decrease of consulting fees, audit fees, and legal fees for the nine months ended September 30, 2024.
Other expense
Other income was $2,180, for the three months ended September 30, 2024, compared to other expense of $4,385 for the comparable period in 2023. The other income was interest revenue of bank deposits. The other expense was interest expense for a bank loan. The increase was mainly the effect of interest expense recognized for the three months ended September 30, 2024.
Other income was $16,046, for the nine months ended September 30, 2024, compared to other expense of $16,773 for the comparable period in 2023. The other income was interest revenue of bank deposits and gains from foreign currency translation. The other expense was interest expense for a bank loan.
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Income tax expense
During the nine months ended September 30, 2024, we recorded an income tax expense of $121,871 compared to income tax expense of $ nil for the comparable period in 2023. The increase of income tax expense occurs by making profit of fish sales by Taiwan National Taxation Bureau for the period ended September 30, 2024.
Net income attributable to the Company
Net loss attributable to us (excluding net loss attributable to non-controlling interest) for the three months ended September 30, 2024 was $285,418 compared to net loss attributable to us (excluding net loss attributable to non-controlling interest) of $264,059 for the comparable period in 2023. Margins remained similar profit margin for three months ended September 30, 2024.
Net loss attributable to the Company (excluding net loss attributable to non-controlling interest) for the nine months ended September 30, 2024 was $1,126,116, compared to a net loss attributable to the Company (excluding net loss attributable to non-controlling interest) of $1,563,081 for the comparable period in 2023. The decrease was primarily due to the decrease of General and administrative expenses for the nine months ended September 30, 2024.
Liquidity and Capital Resources
The Company had net cash used by operating activities for the period ended September 30, 2024 and the cash balance was $372,270 as of September 30, 2024 with net current liabilities of $1,176,035 and stockholders’ equity of $4,636,456. The Company believes its current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet its working capital requirements for at least one year from the date of issuance of the accompanying consolidated financial statements. The Company continues to control its cash expenses as a percentage of expected revenue on an annual basis and thus may use its cash balances in the short-term to invest in revenue growth. Based on current internal projections, the Company believes it has and/or will generate sufficient cash for its operational needs, for at least one year from the date of issuance of the accompanying consolidated financial statements. Management is also focused on growing the Company’s existing product offering, as well as its customer base, to increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying consolidated financial statements.
To date, we have funded our operations through revenues, loans from our officers, and the issuance of equity securities. We obtained a financial support letter from Mr. Yin-Chieh Cheng, our former President, Chief Executive Officer, Chairman of the Board and principal stockholder.
Since the net asset balance as of September 30, 2024, was $1,213,638, management has evaluated its ability to continue as a going concern. While acknowledging the risks of potential delisting, current liabilities exceeding current assets, and operating cash flow deficits, management has implemented plans to secure funding, reduce costs, and improve liquidity. Based on these factors, management has concluded there is no substantial doubt about the Company’s ability to continue as a going concern.
The following table provides detailed information about our net cash flows for the periods indicated:
For the nine months ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| Net cash used in operating activities | (909,563 | ) | (1,052,084 | ) | ||||
| Net cash provided by (used in) investing activities | 667,804 | (430,883 | ) | |||||
| Net cash (used in)/provided by financing activities | (478,361 | ) | (122,507 | ) | ||||
| Effect of the exchange rate change on cash | (137,190 | ) | (19,342 | ) | ||||
| Decrease in cash | (857,310 | ) | (1,624,816 | ) | ||||
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Net cash used in operating activities
Net cash used in operating activities amounted to $909,563 for the nine months ended September 30, 2024. This reflected a net loss of $1,161,554, depreciation of $112,096 and share-based compensation of $45,498.
Net cash used in operating activities amounted to $1,052,084 for the nine months ended September 30, 2023. This reflected a net loss of $1,607,279, consultancy services settled by equities of $521,100, depreciation of $ 109,953 and share-based compensation of $148,288.
Net cash used in investing activities
Net cash provided by investing activities was $667,804 for the year ended September 30, 2024, which were primarily attributable to the proceeds from disposal of financial assets at fair value through profit and loss.
Net cash used in investing activities was $430,883 for the year ended September 30, 2023, which were primarily attributable to the purchase of land and investment funds.
Net cash used in/provided by financing activities
Net cash used in financing activities amounted to $478,361 for the nine months ended September 30, 2024, which was repayment of bank loans and acquisition of subsidiaries.
Net cash provided by financing activities amounted to $122,507 for the nine months ended September 30, 2023, which was provided by the issuance of our common stock.
Since we plan to build our land-based fish farming demo sites in Taiwan, the U.S. and Brazil to promote our fish farming systems to the global market, we expect that we will require additional capital, which includes construction costs, marketing costs, operation costs, etc., to meet our long-term operating requirements. We expect to obtain financing from shareholders or raise additional capital through, among other things, the sale of equity or debt securities. The shareholders are committed to provide additional financing required when we try to raise additional capital from third party investors or banks. However, there can be no assurance that we will be successful in raising this additional capital.
Business Combinations
We account for business acquisitions in accordance with ASC 805, Business Combinations. We measure the cost of an acquisition as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. We record goodwill for the excess of (i) the total costs of acquisition, fair value of any non-controlling interests and acquisition date fair value of any previously held equity interest in the acquired business over (ii) the fair value of the identifiable net assets of the acquired business.
The acquisition method of accounting requires us to exercise judgment and make estimates and assumptions based on available information regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation allowances, liabilities related to uncertain tax positions and contingencies. We must also refine these estimates over a one-year measurement period, to reflect any new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair value of assets and liabilities in connection with an acquisition, these adjustments could materially impact our results of operations and financial position. Estimates and assumptions that we must make in estimating the fair value of future acquired technology, user lists and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be accelerated or slowed, which could materially impact our results of operations.
Recently Issued Accounting Pronouncements
Please refer to the Note 2 above.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer performed an evaluation (the “Evaluation”) of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide a reasonable level of assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, due to the presence of material weaknesses described below, our disclosure controls and procedures were ineffective.
The following material weaknesses in our disclosure controls and procedures at September 30, 2024 were:
| · | we did not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act of 2002; | |
| · | there were insufficient monitoring and review controls over the financial reporting closing process, including the lack of individuals with current knowledge of GAAP that led to the restatement of our previously issued financial statements; and | |
| · | inadequate segregation of duties. |
We believe that these material weaknesses primarily relate, in part, to our lack of sufficient staff with appropriate training in GAAP and SEC rules and regulations with respect to financial reporting functions, and the lack of robust accounting systems, as well as the lack of sufficient resources to hire such staff and implement these accounting systems.
We expect to remediate these material weaknesses in the second half of 2024. However, we may discover additional material weaknesses that may require additional time and resources to remediate. Our remediation process includes, but not limited to:
| · | Investing in information technology systems to enhance our operational and financial reporting and internal controls. | |
| · | Enhancing the organizational structure to support financial reporting processes and internal controls. | |
| · | Providing guidance, education and training to employees relating to our accounting policies and procedures. | |
| · | Further developing and documenting detailed policies and procedures regarding business processes for significant accounts, critical accounting policies and critical accounting estimates. | |
| · | Establishing effective general controls over information technology systems to ensure that information produced can be relied upon by process level controls is relevant and reliable. |
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Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within our Company and our consolidated subsidiaries to disclose material information otherwise required to be set forth in our periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.
Changes in Internal Control Over Financial Reporting
During the quarter ended September 30, 2024, we took several actions to correct past material weaknesses, including, but not limited to, establishing an audit committee of our Board comprised of three independent directors, adding experienced accounting and financial personnel and retaining third-party consultants to review our internal controls and recommend improvements. However, we may need to take additional measures to fully mitigate these issues, and the measures we have taken, and expect to take, to improve our internal controls may not be sufficient to (1) address the issues identified, (2) ensure that our internal controls are effective or (3) ensure that the identified material weakness or other material weaknesses will not result in a material misstatement of our annual or interim financial statements.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We were not subject to any legal proceedings during the nine months ended September 30, 2024 and there are currently no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on April 1, 2024.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
| · | On April 14, 2024, Gui Zhou Grand Smooth Technology Ltd. (“GZ GST”), one of our wholly owned subsidiaries, entered into the Equity Purchase Agreement dated as of April 14, 2024, with Hangzhou SY Culture Media Co. Ltd. (“SY Culture”), pursuant to which GZ GST acquired all of the issued and outstanding equity securities of SY Culture from the stockholders of SY Culture in exchange for the issuance of 600,000 unregistered shares of the Company’s common stock, par value $0.001 per share. |
The issuance of the capital stock listed above was deemed exempt from registration under Section 4(a)(2) of the Securities Act, as amended (the “Securities Act”) or Regulation D promulgated thereunder in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipient of such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Changes in Accountant
On October 16, 2024, the auditor of the Company, Centurion ZD CPA & Co. (“CZD”), resigned as the Company’s independent registered public accounting firm. CZD’s audit report on the Company’s financial statements as of and for the fiscal years ended December 31, 2023 and December 31, 2022 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles except that such audit report did include an explanatory paragraph regarding the Company’s ability to continue as a going concern.
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During the Company’s two most recent fiscal years, there were no disagreements with CZD on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of CZD, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report.
We furnished a copy of this disclosure to CZD and requested CZD to furnish us with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. We have included CZD’s letter as Exhibit 16.1 below in this Form 10-Q.
On October 16, 2024, the Company’s Audit Committee approved, and the Company’s Board ratified, the engagement of Enrome LLP (the “New Auditor”), and appointed the New Auditor as the Company’s independent registered public accounting firm as of October 16, 2024. During the past two fiscal years ended December 31, 2022 and 2023, and the subsequent interim period through October 16, 2024, neither the Company nor anyone on the Company’s behalf consulted with the New Auditor with respect to either (i)(a) the application of accounting principles to a specified transaction, either completed or proposed, or (b) the type of audit opinion that might be rendered on financial statements, and no written report nor oral advice was provided to the Company that the New Auditor concluded was an important factor that the Company consider in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any other matter that was the subject of a “disagreement” or a “reportable event” (as these terms are defined in Item 304(a)(1) of Regulation S-K and the related instructions).
Nasdaq Compliance
On September 17, 2024, the Company received a deficiency letter (the “Nasdaq Letter”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price of the Company’s shares of common stock, $0.001 par value per share (“Common Stock”), had not been maintained at the minimum required closing bid price of at least $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).
The Nasdaq Letter did not result in the immediate delisting of the Company’s Common Stock, and the Company’s Common Stock continues to trade uninterrupted on The Nasdaq Capital Market under the symbol “NCRA”.
In accordance with the listing rules of Nasdaq, the Company has been given 180 calendar days, or until March 17, 2025 (the “Compliance Date”), to regain compliance with the Bid Price Rule. If at any time before the Compliance Date, the closing bid price of the Company’s Common Stock is at least $1.00 per share for a minimum of ten consecutive business days, Nasdaq will provide written notification to the Company that it complies with the Bid Price Rule. If the Company is unable to regain compliance before the Compliance Date, the Company may be eligible for an additional 180 calendar days to satisfy the Bid Price Rule. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market with the exception of the Bid Price Rule, and will need to provide written notice of its intention to cure the deficiency during such additional compliance period, by effecting a reverse stock split, if necessary. If it appears to Nasdaq staff that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible for the additional compliance period, and the Company does not regain compliance by the Compliance Date, Nasdaq will provide written notification to the Company that its Common Stock is subject to delisting. At that time, the Company may appeal the delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules. However, there can be no assurance that, if the Company does appeal the delisting determination by Nasdaq to the panel, such appeal would be successful.
The Company intends to actively monitor the closing bid price of its Common Stock and, as appropriate, will consider available options to regain compliance with the Bid Price Rule. There can be no assurance that the Company will be able to regain compliance with the Bid Price Rule, secure an additional 180 calendar days to satisfy the Bid Price Rule or will otherwise be in compliance with other Nasdaq listing criteria and that the Company will be able to maintain its listing with Nasdaq.
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Holding Foreign Companies Accountable Act
On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements under the Holding Foreign Companies Accountable Act (the “HFCAA”), pursuant to which the SEC will identify a “Commission-Identified Issuer” if an issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the Public Company Accounting Oversight Board (the “PCAOB”) has determined it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, and will then impose a trading prohibition on an issuer after it is identified as and remains a Commission-Identified Issuer for three consecutive years. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by one or more authorities in such jurisdictions. Since the Company’s auditor is located in Hong Kong, the Company’s auditor is included on a list of audit firms the PCAOB determined it is unable to inspect or investigate completely because of a position taken by one or more authorities in Hong Kong, and is therefore subject to the PCAOB’s determination. In May 2022, the Company was added to the SEC’s conclusive lists of issuers identified under the HFCAA, or a Commission-Identified Issuer. Therefore, the Company will be delisted and its securities will be prohibited from being traded “over-the-counter” if it remains identified as a Commission-Identified Issuer for three consecutive years. If the Company’s securities are unable to be listed on another securities exchange by then, such a delisting or prohibition of trading would substantially impair your ability to sell or purchase the Company’s securities when you wish to do so, and the risk and uncertainty associated with a potential delisting or prohibition of trading would have a negative impact on the price of the Company’s securities. The Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), passed by the U.S. Senate and if enacted, would require Commission-Identified Issuers to comply with the PCAOB audits within two consecutive years instead of three consecutive years. In light of the PRC government’s recent expansion of authority in Hong Kong, there are risks and uncertainties which the Company cannot foresee for the time being, and rules and regulations in China can change quickly with little or no advance notice.
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ITEM 6. EXHIBITS
| (a) | The following exhibits are filed herewith or incorporated by reference herein: |
| Exhibit No. | Description | Previously Filed and Incorporated by Reference Herein | ||
| 10.1 | Equity Purchase Agreement dated as of April 14, 2024, by and between Gui Zhou Smooth Technology Ltd. And Hangzhou SY Culture Media Co. Ltd. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on April 16, 2024). | * | ||
| 16.1 | Letter from Centurion ZD CPA & Co. regarding change in certifying accountant (incorporated by reference to Exhibit 16.1 to the Current Report on Form 8-K filed on October 16, 2024). | |||
| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of the President and Chief Executive Officer of Nocera, Inc. | * | ||
| 31.2 | Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of Nocera, Inc. | * | ||
| 32.1 | Section 1350 Certification of the President and Chief Executive Officer of Nocera, Inc. | ** | ||
| 32.2 | Section 1350 Certification of the Chief Financial Officer of Nocera, Inc. | ** | ||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | * | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | * | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | * | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | * | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | * | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | * | ||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | * |
___________________________
|
* ** |
Furnished herewith. Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise specifically stated in such filing. |
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SIGNATURES
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 hereunto duly authorized.
| NOCERA, INC. | ||
Date: December 16, 2024 |
By: | /s/ Andy Ching-An Jin |
| Name: | Andy Ching-An Jin | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
Date: December 16, 2024 |
By: | /s/ Shun-Chih Chuang |
| Name: | Shun-Chih Chuang | |
| Title: | Chief Financial Officer | |
| (Principal Financial Officer) | ||
| (Principal Accounting Officer) |
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