Sincerity Applied Materials Holdings Corp 10-Q for FY2022 Q1
Sincerity Applied Materials Holdings Corp. (SINC)
About this 10-Q
Sincerity Applied Materials Holdings Corp filed this 10-Q on May 11, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $13.88K
- down 55.4% from $31.1K a year earlier
- Net income
- $6687
- up 9.3% from net income of $6120 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from _______ to _______
Commission File Number:
(Exact name of registrant as specified in its charter)
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| (Address of principal executive offices) | (Zip Code) |
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(Registrant’s telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g)
of the Act:
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller reporting company | ||||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of May 11, 2022, there were shares of the registrant’s common stock, par value $0.001 per share, issued and outstanding.
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
TABLE OF CONTENTS
| PAGE | ||
| PART I - FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 23 |
| Item 4. | Controls and Procedures | 23 |
| PART II - OTHER INFORMATION | 24 | |
| Item 1. | Legal Proceedings | 24 |
| Item 1A. | Risk Factors | 24 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
| Item 3. | Defaults Upon Senior Securities | 24 |
| Item 4. | Mine Safety Disclosures | 24 |
| Item 5. | Other Information | 24 |
| Item 6. | Exhibits | 24 |
| SIGNATURES | 25 | |
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Balance Sheets
As at March 31, 2022 (Not Reviewed) and December 31, 2021 (Not Audited)
| March 31, 2022 | December 31, 2021 | ||||||||||
| Note | $ | $ | |||||||||
| (Not Reviewed) | (Not Audited) | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | 4 | ||||||||||
| Accounts receivables | 5 | ||||||||||
| Related party loan | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net of accumulated depreciation and amortization | 6 | ||||||||||
| Deferred tax asset | 10 | ||||||||||
| Total non-current assets | |||||||||||
| Total assets | |||||||||||
| Liabilities and Stockholders’ Equity/(Deficit) | |||||||||||
| Liabilities | |||||||||||
| Accounts payables | |||||||||||
| Accrued and other liabilities | 7 | ||||||||||
| Long-term debt – current position | 8 | ||||||||||
| Line of credit | 9 | ||||||||||
| Total current liabilities | |||||||||||
| Long-term debt – non-current position | 8 | ||||||||||
| Total non-current liabilities | |||||||||||
| Total liabilities | |||||||||||
| Equity | |||||||||||
| Preferred stock | |||||||||||
Authorized: $ Issued and outstanding: nil preferred shares | |||||||||||
| Common stock | |||||||||||
Authorized: $ par value, shares authorized Issued and outstanding: and , respectively | |||||||||||
| Additional paid in capital | |||||||||||
| Adjustments to equity to reflect retroactive application of reverse acquisition of accounting | ( | ) | ( | ) | |||||||
| Accumulated losses | ( | ) | ( | ) | |||||||
| Foreign currency translation differences | 11 | ||||||||||
| Total stockholders’ surplus/(deficit) | |||||||||||
| Total liabilities and stockholders’ equity | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Statement of Operations
For the three months ended March 31, 2021 and 2020 (Not Reviewed)
| Three Months ended March | |||||||||||
| 2022 | 2021 | ||||||||||
| Note | $ | $ | |||||||||
| (Not Reviewed) | (Not Reviewed) | ||||||||||
| Revenue | |||||||||||
| Sales | |||||||||||
| Cost of sales | ( | ) | |||||||||
| Gross profit | |||||||||||
| Operating expenses | |||||||||||
| Depreciation and amortization | |||||||||||
| Selling, general and administrative expenses | |||||||||||
| Professional service fees | |||||||||||
| Total operating expenses | |||||||||||
| Profit/(Loss) from operations | |||||||||||
| Other income/(expenses) | |||||||||||
| Other income | |||||||||||
| Interest expense | ( | ) | ( | ) | |||||||
| Foreign currency transaction gain/(loss) | ( | ) | |||||||||
| Total other income/(expenses) | |||||||||||
| Income/(loss) from continuing operations before income tax expenses | |||||||||||
| Income tax benefit/(expense) | 10 | ( | ) | ( | ) | ||||||
| Net income/(loss) after income tax expense for the period | |||||||||||
| Other comprehensive income/(loss) | |||||||||||
| Exchange differences arising on translation of foreign operations | |||||||||||
| Other comprehensive income/(loss) | |||||||||||
| Total comprehensive loss for the period | |||||||||||
| Net (loss)/gain per share | |||||||||||
| Basic and diluted | |||||||||||
| Weighted average number of common stock outstanding | |||||||||||
| Basic and diluted | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Statement of Changes in Stockholders’ Equity / (Deficit)
For the three months ended March 31, 2022 and 2021 (Not Reviewed)
| Common Stock | ||||||||||||||||||||||||||||
| Shares | Amount | Additional Paid in Capital | Other Comprehensive Earnings | Accumulated Losses | Adjustments to equity to reflect retroactive application of reverse acquisition accounting | Total (Deficit) /Equity | ||||||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Income after income tax expense for the year | – | |||||||||||||||||||||||||||
| Other comprehensive income for the year | – | |||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| Income after income tax expense for the year | – | |||||||||||||||||||||||||||
| Other comprehensive income for the year | – | |||||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 5 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Statement of Cash Flows
For the three months ended March 31, 2022 and 2021 (Not Reviewed)
| Three Months ended March | ||||||||
| 2022 | 2021 | |||||||
| $ | $ | |||||||
| (Not Reviewed) | (Not Reviewed) | |||||||
| Cash flows from operating activities: | ||||||||
| Net Profit/(loss) | ||||||||
| Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| FBT employee contribution | ||||||||
| Net difference on foreign exchange | ( | ) | ||||||
| (Increase)/decrease in trade and other receivables | ( | ) | ||||||
| Increase/(decrease) in trade and other payables | ( | ) | ( | ) | ||||
| Decrease in other liabilities | ||||||||
| (Increase)/decrease in deferred tax asset | ( | ) | ||||||
| Net cash provided by/(used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Advances to related entities | ||||||||
| Net cash used in investing activities | ||||||||
| Cash flows from financing activities | ||||||||
| Repayment of borrowings | ( | ) | ||||||
| Repayment of advances from related entities | ( | ) | ||||||
| Payment of finance lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided by/(used in) financing activities | ( | ) | ( | ) | ||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ( | |||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| Cash and cash equivalents at the beginning of period | ||||||||
| Cash and cash equivalents at the end of period | ||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 6 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| 1.1 | Nature of Operations |
Sincerity Applied Material Holdings Corp (the “Company’’) is a specialized provider of technologically advanced packing materials for the automotive, packaging, building & construction, and engineering industries, with headquarters located near Melbourne, Australia. The Company’s primary customer is an unrelated entity with global operations that accounts for approximately 80% - 90% of The Company’s revenue, and The Company’s primary suppliers are in China and Malaysia.
| 1.2 | Basis of Accounting |
The accompanying financial statements include the accounts of Sincerity Applied Material Holdings Corp which is a company domiciled in Australia. These financial statements have been prepared in accordance with the accounting principles generally accepted in the United States (“GAAP”) and Regulation S-X published by the US Securities and Exchange Commission (the “SEC”). Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on the prior period net income, accumulated deficit, net assets, or total shareholders’ deficit. The Company has evaluated events or transactions through the date of issuance of this report in conjunction with the preparation of these consolidated financial statements. All amounts presented are in US dollars, unless otherwise noted.
The financial statements, except for cash flow information, have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the financial statements have been rounded to the nearest dollar.
| 1.3 | Going Concern Basis |
The financial statements have been prepared on the going concern basis, which assumes continuity of normal business activities and the realization of assets and the settlement of liabilities in the ordinary course of business.
At March 31,2022, the company had a
current asset deficiency of $
Despite the current asset deficiency, the company has prepared the financial statements on a going concern basis that contemplates the continuity of normal business activity, realization of assets and settlement of liabilities at the amounts recorded in the financial statements in the ordinary course of business.
| 7 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
The company believes that there are reasonable grounds to support the fact that it will be able to pay its debts as and when they become due and payable. In forming this opinion, the Group has considered the following factors:
| (i) | The company entered into a Securities Purchase Agreement (“SPA”) with ONE44 CAPITAL, LLC, a Nevada limited liability company (“Purchaser”), pursuant to which we issued and sold to the Purchaser a convertible promissory note, dated April 6, 2022, in the principal amount of $ | |
| (ii) |
The company entered into a Securities
Purchase Agreement (“SPA”) with 1800 DIAGONAL LENDING LLC, a Virginia limited liability company, f/k/a Sixth Street Lending,
LLC (“Purchaser”), pursuant to which we issued and sold to the Purchaser a convertible promissory note, dated May 4, 2022,
in the principal amount of $
The term sheet also includes optional additional tranches of financing of up to $900,000 during the term of the note subject to further agreement with the purchaser; and
| |
| (iii) | The company has been streamlining its operation by reducing operation costs. |
If the Company is unable to continue as a going concern it may be required to realize its assets and extinguish its liabilities other than in the ordinary course of business at amounts different from those stated in the financial statements.
The financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.
| 1.4 | Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. 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 reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
| 1.5 | Foreign Currency Translation |
The functional currency of the Company
is its local currency, the Australian dollar (AUD). The financial statements of the Company have been translated into U.S. dollars (USD).
All balance sheet accounts, other than those in stockholder’s deficiency, which are translated, based on historical rates accumulated
over time, have been translated using the exchange rate in effect at the balance sheet date. Income statement amounts have been translated
using the average exchange rate in effect for the period ended March 31, 2022. Accumulated net translation adjustments have been reported
separately in other comprehensive loss in the financial statements. Foreign currency translation adjustments resulted in a gain of $
| 8 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 1.6 | Cash and Cash Equivalents and Concentration of Credit Risk |
The Company considers all highly liquid short term investments with original maturities of three months or less at the date of acquisition to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short term nature of these instruments.
The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are held in several Australian bank accounts. The Company regularly assesses the level of credit risk we are exposed to and whether there are better ways of managing credit risk. The Company invests its cash and cash equivalents with reputable financial institutions. The Company has not incurred any losses related to these deposits.
| 1.7 | Accounts Receivable |
The Company carries its accounts receivable
at cost less an allowance for doubtful accounts. The Company evaluates its accounts receivable on a regular basis and establishes an allowance
for doubtful accounts, when deemed necessary, based on a history of past write- offs and collections and current credit conditions. A
receivable is considered past-due based either on contractual terms or payment history. Accounts are written off as uncollectible after
collection efforts have failed. In addition, The Company does not generally charge interest on past-due accounts or require collateral.
It is at least reasonably possible that changes may occur in the near term that would affect management’s estimate of the allowance
for doubtful accounts. At March 31, 2022, management determined that
| 1.8 | Property and Equipment |
Property and equipment are recorded at cost. Costs of renewal and improvements that substantially extend the useful lives of assets are capitalized. Maintenance and repair costs are expensed when incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally five years.
Derecognition
An item of plant and equipment is derecognized upon disposal or when no further economic benefits are expected from its use or disposal.
| 1.9 | Payables |
Payables are carried at amortized cost and, due to their short-term nature, they are not discounted. They represent liabilities for goods and services provided to the Company prior to the end of the financial period that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
| 9 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 1.10 | Provisions |
Provisions are recognized when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
| 1.11 | Leases |
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset – but not the legal ownership – are transferred to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalized by recognizing an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognized as expenses on a straight-line basis over the lease term.
| 1.12 | Loans and Borrowings |
All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
| 1.13 | Revenue Recognition |
The Company recognizes revenue when the goods are delivered at the port of shipment by the supplier, the price is fixed or determinable, and collectability is reasonably assured.
Interest revenue is recognized using the effective interest method, which for floating rate financial assets is the rate inherent in the instrument.
All revenue is stated net of the amount of goods and services tax.
| 10 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 1.14 | Income Tax |
We account for income taxes using the asset and liability method, under which the current income tax expense or benefit is the amount of income tax expected to be payable or refundable in the current year. Deferred tax assets and liabilities are recorded for the estimated future tax consequences of temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled.
We evaluate the realizability of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of our deferred tax assets will not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
We account for the uncertainty in income tax components based on tax positions taken or expected to be taken in a tax return. To recognize a benefit, a tax position must be more likely than not to be sustained upon examination by taxing authorities. We do not recognize tax benefits that have a less than 50 percent likelihood of being sustained. Our policy is to recognize interest and tax penalties related to unrecognized tax benefits in income tax expense; no interest or tax penalties on uncertain tax benefits have been recorded through March 31, 2022.
| 1.15 | Goods and Services Tax (GST) |
Revenues, expenses and assets are recognized net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities, which are recoverable from or payable to the ATO, are presented as operating cash flows included in receipts from customers or payments to suppliers.
| 1.16 | Impairment of Long-Lived Assets |
The Company reviews long-lived assets, including fixed assets, for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is present when the sum of undiscounted estimated future cash flows expected to result from use of the asset is less than carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the asset. During the period ended March 31, 2022, no impairment losses were recognized for long-lived assets.
| 11 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 1.17 | Stock-Based Compensation |
The Company recognizes all employee share-based compensation as a cost in the consolidated financial statements. Equity-classified awards principally related to stock options, restricted stock units (“RSUs”) and performance stock units (“PSU”), are measured at the grant date fair value of the award. The Company determines grant date fair value of stock option awards using the Black-Scholes option-pricing model. The fair value of restricted stock awards is determined using the closing price of the Company’s common stock on the grant date. For service based vesting grants, expense is recognized over the requisite service period based on the number of options or shares expected to ultimately vest. For performance based vesting grants, expense is recognized over the requisite period until the performance obligation is met, assuming that it is probable. No expense is recognized for performance-based grants until it is probable the vesting criteria will be satisfied. Forfeitures are estimated at the date of grant and revised when actual or expected forfeiture activity differs materially from original estimates.
Stock-based payments to non-employees are re-measured at each reporting date and recognized as services are rendered, generally on a straight-line basis. The Company believes that the fair values of these awards are more reliably measurable than the fair values of the services rendered.
| 1.18 | Earnings (Loss) per Common Share |
Basic earnings (loss) per common share is computed by dividing income or losses available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is computed similar to basic net income or losses per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and of the additional common shares were dilutive. Diluted earnings (loss) per common share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under if –converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).
| 1.19 | Accumulated Other Comprehensive Income (Loss) |
Comprehensive income (loss) is presented net of applicable income taxes in the accompanying consolidated statements of stockholders’ equity and comprehensive income (loss). Other comprehensive income (loss) is comprised of revenues, expenses, gains, and losses that under GAAP are reported as separate components of stockholders’ equity instead of net income (loss).
| 1.20 | Recently Issued Accounting Standards |
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. The Company currently does not have any recent accounting pronouncements that they are studying and feel may be applicable.
| 12 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 1.21 | Reverse Acquisition Accounting |
In accordance with “reverse acquisition” accounting treatment, our historical financial statements as of period ends, and for periods ended, prior to the Acquisition will be replaced with the historical financial statements of Sincerity Australia Pty Ltd (“SAPL”), prior to the Acquisition, in all future filings with the SEC. Consequently retroactive adjustments have been made to the equity balances of SAPL to reflect the equity balances of the legal parent company Sincerity Applied Materials Holdings Corp as required under ASC 805 and the application of reverse acquisition accounting.
| 1.22 | COVID-19 |
The outbreak of the novel strain of coronavirus (“COVID-19”) and the ongoing pandemic, has resulted in governments worldwide enacting various emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, border shutdowns, self-imposed quarantine periods, closing of non-essential businesses and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. In addition, global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions.
To date, the COVID-19 pandemic had a material negative impact on the Group’s results of operations with reduced orders from its customers and the Group having to apply for government assistance where available.
| 2. | Critical Accounting Estimates and Judgements |
The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company.
Key Estimates
| (i) | Useful lives |
The Company determines the estimated useful lives and related depreciation and amortization charges for its property and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
| (ii) | Income tax |
The Company is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
| 13 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
Key Judgements
| (i) | Provision for impairment of receivables |
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors’ financial position.
| (ii) | Impairment |
The Company assessed that no indicators of impairment existed at the reporting date and as such no impairment testing was performed.
| 3. | Segment Information |
The consolidated entity operates predominantly in one industry and one geographical segment, those being sales of technical advanced plastics materials in Australia, respectively.
| 4. | Cash and Cash Equivalents |
Cash at the end of the financial periods as shown in the statement of cash flows is reconciled to items in the balance sheets as follows:
| Schedule of cash and cash equivalents | ||||||||
March 31, 2022 | December 31, 2021 | |||||||
| Cash at bank | $ | $ | ||||||
| Petty Cash | ||||||||
| $ | $ | |||||||
| 5. | Account Receivables and Other Assets |
| Schedule of account receivables and other assets | ||||||||
March 31, 2022 | December 31, 2021 | |||||||
| Current | ||||||||
| Account Receivables | $ | $ | ||||||
| Account Receivables and Other Assets | $ | $ | ||||||
| 14 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 6. | Property, Plant and Equipment |
| Schedule of property, plant and equipment | ||||||||||
| March 31,2022 | December 31, 2021 | Estimated Useful Lives | ||||||||
| Vehicles | $ | $ | ||||||||
| Office equipment and furniture and fixtures | ||||||||||
| Less: accumulated depreciation | ||||||||||
| Total, net of accumulated depreciation | $ | $ | ||||||||
| 7. | Accrued and Other Liabilities |
| Schedule of accrued and other liabilities | ||||||||
| March 31, 2021 | December 31, 2021 | |||||||
| Current | ||||||||
| Accrued expenses | $ | $ | ||||||
| $ | $ | |||||||
| 8. | Long-term debt |
The Company has a chattel mortgage
outstanding at March 31, 2022 secured by a motor vehicle requiring
| Schedule of long-term debt | ||||||||
| March 31, 2022 | December 31,2021 | |||||||
| Chattel mortgage | $ | $ | ||||||
| Less: current portion | ||||||||
| Long-term debt - non-current position | $ | $ | ||||||
Maturities of long-term debt at March 31, 2022 for each of the next five years and in the aggregate, are as follows:
| Schedule of maturities of long-term debt | ||||||||
| March 31, 2022 | December 31,2021 | |||||||
| Next 12 months | $ | $ | ||||||
| 2 years | ||||||||
| Total long term debt | $ | $ | ||||||
| 15 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 9. | Line of credit |
| Schedule of line of credit | ||||||||
| March 31, 2022 | December 31,2021 | |||||||
| Business Loan | $ | $ | ||||||
| Business Credit Card | ||||||||
| Short-term borrowing | ||||||||
| $ | $ | |||||||
The Company has a total $950,000 (AUD)
bank credit line (approximately $
| 10. | Income Tax Expense |
| (a) | The components of tax (expense)/income comprise: |
| Schedule of components of tax (expense)/income | ||||||||
| March 31, 2022 | March 31,2021 | |||||||
| Current tax | ||||||||
| - Australia | $ | $ | ||||||
| - US | ||||||||
| Total | $ | $ | ||||||
| (b) | The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax as follows: |
Profit/(loss) from continuing operations before income tax expense:
| Schedule of reconciled to income tax expense | ||||||||
| - Australia | $ | |||||||
| - US | ( | ) | ||||||
| Total | $ |
Income tax expense/(credit) at statutory rate:
| - Australia | $ | $ | ||||||
| - US | ( | ) | ||||||
| - Hong Kong | ||||||||
| Total | $ | $ |
| 16 |
| 10. | Income Tax Expense (continued) |
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
| Other non-allowable items | $ | $ | ( | ) | ||||
| Valuation allowance | ||||||||
| Consolidated income tax expense/(income) | $ | $ | ( | ) |
On December 22, 2017, new tax reform legislation in the U.S., known as the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law. At March 31, 2022, the Company has not yet completed its accounting assessment for the tax effects of the enactment of the Act; however, as described below, the Company has made a reasonable estimate of the effects on the existing deferred tax balances.
As a result of the lower enacted corporate tax rate, the Company has remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The provisional amount recorded related to the remeasurement of our tax balance was $Nil that is fully offset by accumulated losses from earlier periods.
Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has provisionally determined that there is no deferred tax benefit or expense with respect to the remeasurement of certain deferred tax assets and liabilities due to the full valuation allowance against net deferred tax assets. The Company is still analyzing certain aspects of the Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Additional analysis of the law and the impact to the Company will be performed and any impact will be recorded in the respective quarter in 2022.
| 11. | Other Comprehensive Earnings |
| Schedule of other comprehensive earnings | ||||||||
| March 31, 2022 | March 31,2021 | |||||||
| Foreign currency translation reserve | $ | $ | ||||||
| 12. | Capital and Leasing Commitments |
There was no capital or leasing expenditure at March 31, 2022.
| 13. | Contingencies |
From time to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, we are not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Furthermore, as of the date of this quarterly, our management is not aware of any proceedings to which any of our directors, officers, or affiliates, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
| 17 |
| 14. | Related Party Transactions |
| (a) | Subsidiary |
Sincerity Australia Pty Ltd which is incorporated in Australia and Prana Hong Kong Limited which is incorporated in Hong Kong are wholly owned subsidiaries of Sincerity Applied Materials Holdings Corp. Prana Hong Kong Limited is under process of de-registration.
| (b) | Outstanding balances with related parties |
The following balances are outstanding at reporting date in relation to transactions with related parties:
| Schedule of related party transactions | ||||||||
March 31, 2022 | December 31, 2021 | |||||||
| Loan to Stockholder | $ | $ | ||||||
| Three Months ended March | ||||||||
| 2022 | 2021 | |||||||
| Purchase from Shanghai Sincerity Co Ltd | $ | $ | ||||||
| 15. | Events After the Reporting Period |
There has not arisen in the interval between the end of the financial period and the date of these financial statements any other item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operation of the company, the results of those operations, or the state of affairs of the company, in future financial years except for:
| (a) | On August 5, 2021, the New York County Supreme Court has granted Section 3(a)(10) of the Securities Acto fo 1933 as amended exempts the offer and sale of securities in certain exchange transactions from the registration statement requirements in the case of Infinity Fund LLC v Sincerity Applied Materials Holdings Corp. |
| (b) |
On August 20, 2020, the Group has entered into a stock purchase agreement with Simcor (Jiangsu) Materials Technology Ltd (SMTL), a company formed in the Peoples Republic of China with its registered address at No 67, Yanzhen East Rd, Niutang, Wujin, Changzhou, Jiangsu, China. SMTL will sell to the group 2,000,000 ordinary shares to the Group for a consideration of USD 2,500,000. SMTL also will issue and sell to the Group 5,000,000 ordinary shares for a consideration of USD 4,500,000.
The Group has issued a USD 7,000,000 promissory note to the shareholder of SMTL and assigned the debt to Infinity Fund LLC for the same amount of USD 7,000,000 subject to the granting of Section 3(a)(10) of the Securities Act of 1933 as described in Note 15(a). This transaction has not been settled and accounted for at the date of this report. |
| 18 |
| (c) |
In April 2022, 48,079,730 issued securities to the Zhang Family Trust were cancelled and 2,600,000 Preferred A shares issued to the Zhang Family Trust. | |
| (d) | The company entered into a Securities Purchase Agreement (“SPA”) with ONE44 CAPITAL, LLC, a Nevada limited liability company (“Purchaser”), pursuant to which we issued and sold to the Purchaser a convertible promissory note, dated April 6, 2022, in the principal amount of $120,000 (the “Note”). The Note contains an original issue discount amount of $9,000 and legal fees payable to ONE44’s legal counsel of $6,000. The maturity date of the Note is April 6, 2023. | |
| (e) | The company entered into a Securities Purchase Agreement (“SPA”) with 1800 DIAGONAL LENDING LLC, a Virginia limited liability company, f/k/a Sixth Street Lending, LLC (“Purchaser”), pursuant to which we issued and sold to the Purchaser a convertible promissory note, dated May 4, 2022, in the principal amount of $68,750 (the “Note”). The Note contains legal fees payable to Purchaser’s legal counsel of $3,000 and to Purchaser a due diligence fee of $750. The maturity date of the Note is May 4, 2023 (the “Maturity Date”). | |
| The term sheet also includes optional additional tranches of financing of up to $900,000 during the term of the note subject to further agreement with the purchaser. |
| 19 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following management’s discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this report. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.
The following discussion highlights the Company’s results of operations and the principal factors that have affected our financial condition, as well as our liquidity and capital resources for the periods described, provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company’s unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.
Company Overview
We are a supplier of technologically advanced plastics and other solutions for the packaging industry and other industries primarily serving major end users and distributors in Australia, Asia and the Middle East. Our products have applications in the areas of packaging, agriculture, automotive and transportation, paint and coating, construction, personal care and hygiene, electronics, pharmaceutical, energy and natural resources, plastics and rubber and leather. Our principal products are high quality, breathable plastic film and modified atmosphere packaging used in the packaging of perishable foods.
In 2021, through the acquisition target SMCOR, SINC expands deeper into our existing customer based in EV, 5G, computer chips and medical industries. In addition, the pandemic boosts the demand for covid related medical material and SINC boosted vaccine related production capacity through SIMCOR.
| Three Months ended March | |||||||||||
| 2022 | 2021 | ||||||||||
| Note | $ | $ | |||||||||
| (Not Reviewed) | (Not Reviewed) | ||||||||||
| Revenue | |||||||||||
| Sales | 13,878 | 31,096 | |||||||||
| Cost of sales | – | (25,821 | |||||||||
| Gross profit | 13,878 | 5,275 | |||||||||
| Operating expenses | |||||||||||
| Depreciation and amortization | 2,147 | 2,292 | |||||||||
| Selling, general and administrative expenses | 1,925 | 2,661 | |||||||||
| Professional service fees | 1,058 | 158 | |||||||||
| Total operating expenses | 5,130 | 5,111 | |||||||||
| Profit/(Loss) from operations | 8,748 | 164 | |||||||||
| Other income/(expenses) | |||||||||||
| Other income | – | 11,749 | |||||||||
| Interest expense | (1,402 | ) | (1,553 | ||||||||
| Foreign currency transaction loss | 2,219 | (2,090 | |||||||||
| Total other income/(expenses) | 817 | 8,106 | |||||||||
| Income/(loss) from continuing operations before income tax expenses | 9,565 | 8,270 | |||||||||
| Income tax benefit/(expense) | 10 | (2,878 | ) | (2,150 | ) | ||||||
| Net income/(loss) after income tax expense for the period | 6,687 | 6,120 | |||||||||
| Other comprehensive income/(loss) | |||||||||||
| Exchange differences arising on translation of foreign operations | 19,472 | 10,434 | |||||||||
| Other comprehensive income/(loss) | 19,472 | 10,434 | |||||||||
| Total comprehensive loss for the period | 26,159 | 16,554 | |||||||||
| 20 |
Revenues
Revenue was $13k for the three months ended March 31, 2022, compared to $31k for the three months ended March 31, 2021, a decrease of $18k. The decrease can be attributed to timing and quantity of orders by our customers and the type of products they purchase, which can vary in margin.
Selling, general and administrative expenses
Selling, general and administrative expenses was $1.9k for the three months ended March 31, 2022, compared to $2.3k for the three months ended March 31, 2021. The amount incurred is similar to the same quarter of 2021 given the level of business activities.
Employee expenses
No employee expenses were incurred for the 3 months ended March 31, 2022 and March 31, 2021.
Professional service fees
Professional service fees were minimal for the three months ended March 31, 2022 and 2021. The lower professional service fees incurred for the 3 months ended March 31, 2022 and 2021 was to due to reduced consultant costs.
Other Income and Expenses
The decrease in other income and expenses was due to the financial assistance from the Australian Government in response to the effects of COVID-19 has ceased in 2021 and foreign currency transaction loss due to the appreciation of the Australian dollar against the US Dollar.
Liquidity and Capital Resources
At March 31,2022, the company had a current asset deficiency of $115,619 and net asset surplus of $77,021 (December 31, 2021 current asset deficiency of $40,846 and net asset surplus of $143,761). The Company reported an after tax income of $6,687 for the year (March 31, 2021 after tax income: $6,120).
Our primary uses of cash have been for operations. The main sources of cash have been sales to customers.
The Company believes that cash flow from operations will be sufficient to sustain its current level of operations for at least the next one month of operations.
| 21 |
As of March 31, 2021, we had cash and cash equivalent of approximately $3,000, which might not be sufficient to fund our operating and capital needs in the short term. The Company has been seeking funding from various sources as discussed below:
| (i) | The company entered into a Securities Purchase Agreement (“SPA”) with ONE44 CAPITAL, LLC, a Nevada limited liability company (“Purchaser”), pursuant to which we issued and sold to the Purchaser a convertible promissory note, dated April 6, 2022, in the principal amount of $120,000 (the “Note”). The Note contains an original issue discount amount of $9,000 and legal fees payable to ONE44’s legal counsel of $6,000. The maturity date of the Note is April 6, 2023; |
| (ii) |
The company entered into a Securities Purchase Agreement (“SPA”) with 1800 DIAGONAL LENDING LLC, a Virginia limited liability company, f/k/a Sixth Street Lending, LLC (“Purchaser”), pursuant to which we issued and sold to the Purchaser a convertible promissory note, dated May 4, 2022, in the principal amount of $68,750 (the “Note”). The Note contains legal fees payable to Purchaser’s legal counsel of $3,000 and to Purchaser a due diligence fee of $750. The maturity date of the Note is May 4, 2023 (the “Maturity Date”).
The term sheet also includes optional additional tranches of financing of up to $900,000 during the term of the note subject to further agreement with the purchaser; and
|
| (iii) | The company has been streamlining its operation by reducing operation costs. |
In the three months ended March 31, 2022, the net cash generated used in operating activities primarily reflects the profit from operations of approximately $7,000 with approximately $11,000 in changes in operating assets and liabilities, offset amortization and depreciation of approximately $2,000 that had no effect on cash flows.
Net cash generated used for investing activities was $nil for the three months ended March 31, 2022.
Net cash used in financing activities was approximately $17,000 for the three months ended March 31, 2022 compared to approximately $13,000 used in financial activities for the three months ended March 31, 2021 and receipt from related parties for the three months ended March 31, 2022.
Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company.
| 22 |
Key Estimates
| (i) | Useful lives |
The Company determines the estimated useful lives and related depreciation and amortization charges for its property and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.
| (ii) | Income tax |
The Company is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipated tax audit issues based on the Company’s current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
Key Judgements
| (i) | Provision for impairment of receivables |
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors’ financial position.
| (ii) | Impairment |
The Company assessed that no indicators of impairment existed at the reporting date and as such no impairment testing was performed.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer as appropriate, to allow timely decisions regarding required disclosure. At the end of the quarter ended March 31, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) and Rule 15d-15(e) under the 1934 Act. Based on this evaluation, management concluded that as of March 31, 2022 our disclosure controls and procedures were not effective due to material weaknesses resulting from our internal controls and procedures including (1) lack of a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) lack of an audit committee financial expert (as such term is defined in Item 407(d)(5)(ii) of Regulation S-K) on our board of directors; (3) inadequate segregation of duties consistent with control objectives; and (4) ineffective controls over period end financial disclosure and reporting processes.
Changes in Internal Controls
During the quarter ended March 31, 2022, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
| 23 |
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, we are not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Furthermore, as of the date of this Quarterly Report, our management is not aware of any proceedings to which any of our directors, officers, or affiliates, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There are no unregistered sales of equity securities during the period covered by this report that were not previously reported in a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
This Form 10-Q for the 3 months ended March 31, 2022 has not been reviewed by its independent auditor, ShineWing Australia. The company will submit an amended Form 10-Q upon the completion of the review.
Item 6. Exhibits.
| Exhibit Number | Exhibit Description | |
| 31.1 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | |
| 31.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | |
| 32.1* | CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 32.2* | CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act | |
| 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 in inline XBRL, and included in exhibit 101). |
* Furnished herewith.
| 24 |
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SINCERITY APPLIED MATERIALS HOLDINGS CORP. | ||
| May 11, 2022 | By: | /s/ Yiwen Zhang |
|
Yiwen Zhang Chief Executive Officer (Principal Executive Officer) | ||
| May 11, 2022 | By: | /s/ Chris Lim |
|
Chris Lim Chief Financial Officer (Principal Financial and Accounting Officer) | ||
| 25 |
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Yiwen Zhang, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Sincerity Applied Materials Holdings Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Sincerity Applied Materials Holdings Corp. | |||
| Dated: May 11, 2022 | By: | /s/ Yiwen Zhang | |
| Yiwen Zhang | |||
| Chief Executive Officer | |||
| (Principal Executive Officer) | |||
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Chris Lim, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Sincerity Applied Materials Holdings Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Sincerity Applied Materials Holdings Corp. | |||
| Dated: May 11, 2022 | By: | /s/ Chris Lim | |
| Chris Lim | |||
| Chief Financial Officer | |||
| (Principal Financial Officer and Principal Accounting Officer) | |||
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT of 2002
In connection with the Quarterly Report of Sincerity Applied Materials Holdings Corp. (the “Company”) on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), Yiwen Zhang, Chief Executive Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Quarterly Report, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| 2. | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Sincerity Applied Materials Holdings Corp. | |||
| Dated: May 11, 2022 | By: | /s/ Yiwen Zhang | |
| Yiwen Zhang | |||
| Chief Executive Officer | |||
| (Principal Executive Officer) | |||
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT of 2002
In connection with the Quarterly Report of Sincerity Applied Materials Holdings Corp. (the “Company”) on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), Chris Lim, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Quarterly Report, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| 2. | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Sincerity Applied Materials Holdings Corp. | |||
| Dated: May 11, 2022 | By: | /s/ Chris Lim | |
| Chris Lim | |||
| Chief Financial Officer | |||
| (Principal Accounting Officer) | |||