Sincerity Applied Materials Holdings Corp 10-Q/A for FY2019 Q2
Sincerity Applied Materials Holdings Corp. (SINC)
About this 10-Q/A
Sincerity Applied Materials Holdings Corp filed this 10-Q/A on April 27, 2023, covering the quarter ended June 30, 2019 (FY2019 Q2).
Headline figures
Quarter ended June 30, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $161.01K
- down 37.8% from $258.69K a year earlier
- Net loss
- $6030
- compared with net income of $1.42M a year earlier
- Diluted EPS
- $0.00
- compared with $0.03 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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(State or other jurisdiction of incorporation) |
(I.R.S. Employer Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
+
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
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 the 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 April 20, 2023, there were shares of the registrant’s common stock, $0.001 per value per share, issued and outstanding.
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019 (Unaudited)
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 | 25 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 28 |
| Item 4. | Controls and Procedures | 28 |
| PART II - OTHER INFORMATION | 29 | |
| Item 1. | Legal Proceedings | 29 |
| Item 1A. | Risk Factors | 29 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 |
| Item 3. | Defaults Upon Senior Securities | 29 |
| Item 4. | Mine Safety Disclosures | 29 |
| Item 5. | Other Information | 29 |
| Item 6. | Exhibits | 29 |
| SIGNATURES | 30 | |
| 2 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Balance Sheets
As at June 30, 2019 (Unaudited) and December 31, 2018
| Note | June 30, 2019 (Unaudited) $ | December 31, 2018 (Restated) $ | ||||||||
| Assets | ||||||||||
| Cash and cash equivalents | 4 | |||||||||
| Other assets | 5 | |||||||||
| Accounts receivables | 5 | |||||||||
| Total current assets | ||||||||||
| Property, plant and equipment, net of accumulated depreciation and amortization | 6 | |||||||||
| Deferred tax asset | 10 | |||||||||
| Related party loan | ||||||||||
| Total non-current assets | ||||||||||
| Total assets | ||||||||||
| Liabilities and Stockholders’ Equity/(Deficit) | ||||||||||
| Liabilities | ||||||||||
| Accounts payables | 11 | |||||||||
| 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 | |||||||||
| Line of credit – non-current position | 9 | |||||||||
| Total non-current liabilities | ||||||||||
| Total liabilities | ||||||||||
| Equity | ||||||||||
| Preferred stock | ||||||||||
| Authorized: $ | ||||||||||
| Common stock | ||||||||||
| Authorized: $
par value,
shares authorized Issued and outstanding: 73,540,000 and , respectively | ||||||||||
| Additional paid in capital | ||||||||||
| Accumulated losses | ( | ) | ( | ) | ||||||
| Foreign currency translation differences | ||||||||||
| Total stockholders’ surplus/(deficit) | ( | ) | ||||||||
| Total liabilities and stockholders’ equity | ||||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 3 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Statement of Operations
For the three months and the six months ended June 30, 2019 (Unaudited) and 2018
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| Note | 2019 $ (Unaudited) | 2018$ | 2019 $ (Unaudited) | 2018$ | ||||||||||||||
| Revenue | ||||||||||||||||||
| Sales | ||||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||
| Employee expenses | ||||||||||||||||||
| Professional service fees | ( | ) | ||||||||||||||||
| Repairs and maintenance | ||||||||||||||||||
| Total operating expenses | ( | ) | ||||||||||||||||
| Income / (Loss) from operations | ( | ) | ( | ) | ||||||||||||||
| Other income/(expenses) | ||||||||||||||||||
| Other income | ||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other Finance Gain | ||||||||||||||||||
| Discount on Convertible note | ||||||||||||||||||
| Loss on derivative financial instrument | ( | ) | ( | ) | ||||||||||||||
| Fair value adjustment of Warrant liabilities | ||||||||||||||||||
| Foreign currency transaction 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) | ||||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||||
| Other comprehensive income/(loss) | ( | ) | ( | ) | ||||||||||||||
| Total comprehensive income/(Loss) for the period | ( | ) | ( | ) | ||||||||||||||
| Net (loss)/gain per share | ||||||||||||||||||
| Basic and diluted | ||||||||||||||||||
| Weighted average number of common stock outstanding | ||||||||||||||||||
| Basic and diluted | ||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 4 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Statement of Changes in Stockholders’ Equity / (Deficit)
For the three and six months ended June 30, 2019 (Unaudited) and 2018
| Common Stock | Additional Paid in | Other Comprehensive | Accumulated | Total | ||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Losses | (Deficit)/Equity | |||||||||||||||||||
| Balance at December 31, 2018* | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Loss after income tax expense for the period | – | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss for the period | – | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2019 | ( | ) | ( | ) | ||||||||||||||||||||
| Loss after income tax expense for the period | ( | ) | ( | ) | ||||||||||||||||||||
| Other comprehensive income for the period | – | ( | ) | ( | ) | |||||||||||||||||||
| New Share issuance during the period (73,540k shares @USD 0.001/Share) | ||||||||||||||||||||||||
| Balance at June 30, 2019 (Unaudited) | ( | ) | ( | ) | ||||||||||||||||||||
| Balance at December 31, 2017 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Loss after income tax expense for period | – | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income for the period | – | |||||||||||||||||||||||
| New Share issuance during the period (75k shares @ USD 1.33333/Share) | ||||||||||||||||||||||||
| Balance at March 31, 2018 | ( | ) | ( | ) | ||||||||||||||||||||
| Income after income tax expense for the period | – | |||||||||||||||||||||||
| Other comprehensive income for the period | – | |||||||||||||||||||||||
| New Share issuance during the period (825k shares @ USD 1.33333/Share) | ||||||||||||||||||||||||
| New Share issuance during the period (30k shares @USD 2.00/Share) | ||||||||||||||||||||||||
| Balance at June 30, 2018 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
*A 1000:1 reverse stock split took place on November 13, 2018 reducing the common stock by 50,362,604.
See accompanying notes to unaudited condensed consolidated financial statements
| 5 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Consolidated Statement of Cash Flows
For the six months ended June 30, 2019 (Unaudited) and 2018
| Six months ended June 30, | ||||||||
| 2019 | ||||||||
| $ (Unaudited) | 2018 $ | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | ( | ) | ||||||
| Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| FBT employee contribution | ( | ) | ( | ) | ||||
| Share based payment | ||||||||
| Interest accrued on shareholder loan | ||||||||
| Derivative liability | ( | ) | ||||||
| Net difference on foreign exchange | ||||||||
| Net changes in operating assets and liabilities | ||||||||
| (decrease / (increase) in trade and other receivables | ( | ) | ||||||
| (Increase) in other assets | ( | ) | ( | ) | ||||
| Increase/(decrease) in trade and other payables | ( | ) | ||||||
| Increase/(decrease) in other liabilities | ||||||||
| Decrease in deferred tax asset | ||||||||
| Net cash (used in)/provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Payments for property, plant and equipment | ||||||||
| Net cash used in investing activities | ||||||||
| Cash flows from financing activities | ||||||||
| Proceeds from issue of common stock | ||||||||
| Settlement of Convertible notes | ( | ) | ||||||
| Repayment of advances from related entities | ( | ) | ||||||
| Payment of finance lease liabilities | ( | ) | ( | ) | ||||
| Net cash (used in)/ provide by financing activities | ( | ) | ||||||
| Net increase 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 | ||||||||
See accompanying notes to unaudited condensed consolidated financial statements
| 6 |
SINCERITY APPLIED MATERIALS HOLDINGS CORP.
Notes to Consolidated Statements
| 1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| 1.1 | Organization and Business Background |
Sincerity Applied Material Holdings Corp (the “Company”) was incorporated as a Nevada corporation on July 28, 2011. The Company is a specialized provider of technologically advanced packing materials for the automotive, packaging, building & construction, and engineering industries, with major operations located near Melbourne, and business address in Sydney, Australia. The Company's primary customers are unrelated entities, and The Company's primary suppliers are in China. The Company’s major operation can be performed online.
| Schedule Of Company's Major Operation | ||||
| Name | Background | Ownership | Registered Capital / Authorised Shares | Principal Activities |
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| 1.2 | Basis of Presentation and Consolidation |
The accompanying financial statements include the financial statements of the Company, and its subsidiary. The consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP) 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 consolidated financial statements include the accounts of Sincerity Applied Materials Holding Corp. and its subsidiary in which the Company has a controlling financial interest. All significant intercompany balances and transactions within the Company have been eliminated upon consolidation.
| 7 |
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 June 30, 2019, 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.
The company believes that there are reasonable grounds to support the fact that it will be able to pay its debts as and when they become due and payable. In forming this opinion, the Group has considered the following factors:
| (i) | The company has raised funds through loans with private investors and convertible notes; |
| (ii) | The New York County Supreme Court has granted Section 3(a)(10) of the Securities Act of 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.; |
| (iii) | The director will continue to support the Group by providing adequate financial assistance to enable the Group to continue its business operations as a going concern for at least the foreseeable future; and |
| (iv) | The company has been streamlining its operation by reducing operation costs. |
If the Company is unable to continue as a going concern it may be required to realize its assets and extinguish its liabilities other than in the ordinary course of business at amounts different from those stated in the financial statements.
The financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.
| 1.4 | Use of Estimates |
The preparation of consolidated 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. Significant estimates include the collectability of receivables, the useful lives of long-lived assets, assumptions used in assessing impairment of long-lived assets, valuation of accruals for expenses, deferred tax liabilities or asset, and valuation allowances.
| 1.5 | Foreign Currency Translation |
The functional currency of the Company is its local currency, the Australian dollar (AUD), while the reporting currency of the Company is in U.S. Dollar (USD). The financial statements of the Company have been translated into USD based on the criteria of ASC 830, Foreign Currency Translation.
| 8 |
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
| 1.6 | Cash and Cash Equivalents |
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions.
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.
Deposits up to AUD
| 1.7 | Concentration of Credit Risk |
The Company's financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents and receivables. 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.
| 1.8 | 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 June 30, 2019, the management determined that
| 1.9 | 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.
| 9 |
| 1.10 | 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.
| 1.11 | 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.
| 1.12 | 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 |
Revenue comprised of sales of goods and represents the amount of consideration the Company is entitled to upon the transfer of goods. Pursuant to FASB ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross Versus Net), the Company recorded revenue on a gross basis, net of surcharges and value added tax (“VAT”) of gross sales. The Company recorded revenue on a gross basis because the Company is the primary obligor of the sales arrangements has latitude in establishing prices, has discretion in suppliers’ selection and assumes credit risks on receivables on gross sales from customers.
The Company adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ÄSU- 2014-09”) using the full retrospective transition method. The Company’s adoption of ASU 2014-09 did not have a material impact on the amount and timing of revenue recognized in its consolidated financial statements. Pursuant to that, the Company recognizes revenue when the goods are delivered at the port of shipment by the supplier (at the point when the significant risks and rewards of ownership have been transferred), the price is fixed or determinable, and collectability is reasonably assured
The Company determines revenue recognition through the following steps:
| (i) | Identification of the contract, or contracts, with a customer; |
| (ii) | Identification of the performance obligations in the contract; |
| (iii) | Determination of the transaction price; |
| (iv) | Allocation of the transaction price to the performance obligations in the contract; and |
| (v) | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
Revenue is recognized when the Company satisfies its performance obligation under the contract by transferring the promised product to its customer that obtains control of the product and collection is reasonably assured. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. Most of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct.
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All revenue is stated net of the amount of goods and services tax.
| 1.14 | Accrued Product Liability |
The Company records accruals for product liability when deemed probable and estimable based on facts and circumstances, and prior claims experience. Accruals for product credit are valued based upon the Company’s prior claims experience, including defect goods, goods lost in transit. We have experienced insignificant amount of goods returned and claims from goods lost in transit from the past, our product liability is insignificant; therefore, management believes product liability accrual is negligible.
| 1.15 | 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 June 30, 2019. The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC Topic 740 provisions of Section 740-10-25 for the half year ended June 30, 2019.
We periodically review the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
| 1.16 | 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.
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| 1.17 | 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 year ended December 31, 2019, no impairment losses were recognized for long-lived assets.
In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property and equipment and intangible assets owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
| 1.18 | 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.
| 1.19 | 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).
| 1.20 | 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).
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| 1.21 | Recently Issued Accounting Standards |
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12 Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, to remove certain exceptions and improve consistency of application including, among other things, requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company adopted the amendments in this update during the current year. The Company believes the adoption did not have a material impact on its consolidated financial position and results of operations.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
Financial Instruments
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” (“ASU 2016-13”). ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is planning to adopt this standard in the first quarter of fiscal 2023. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2016-13 on its consolidated financial statements.
| 1.22 | Consolidation Accounting and Narrative |
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.
| 2. | Critical Accounting Estimates and Judgments |
The Directors evaluate estimates and judgments 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. 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.
| 13 |
| (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.
| (iii) | Fair value measure of shares issued, convertible notes payable and common stock warrants |
The calculation of the fair value of shares issued requires significant estimate to be made in regards to several variables. The estimations made are subject to variability that may alter the overall fair value determined.
Convertible notes payable are analyzed at issue date to determine balance sheet classification, issue discounts or premiums, and embedded or derivative features. Embedded or derivative features are evaluated in accordance with accounting guidance for derivative securities and, if the features give rise to separate accounting, we make an election to account for the convertible notes payable at cost or at fair value. If fair value accounting is elected, on the issue date we record the difference between the issue price of the convertible notes payable and the separated embedded derivative where applicable, and their respective fair values, where applicable, as a gain or loss in the consolidated statement of operations. We re-measure the fair value at each reporting date and record again (upon a decrease in fair value) or loss (upon an increase in fair value) for the change in fair value of each separate component being the convertible note payable and the embedded derivative where applicable. Fair value is determined using a Black-Scholes valuation model with; inputs to the model include the market value of the underlying stock, a life equal to the contractual life of the notes, incremental borrowing rates that correspond to debt with similar credit worthiness, estimated volatility based on the historical prices of our trading securities, and we make assumptions as to our abilities to test and commercialize our product(s), to obtain future financings when and if needed, and to comply with the terms and conditions of the notes. Following an analysis of their embedded and derivative features and a projection of the volatility of their effective interest rates under the cost method, we elected to utilize fair value accounting for the convertible notes payable, along with the separated embedded derivatives and we issued on during the years ended December 31, 2018 and 2017. Management believes the fair value method of accounting provides a more appropriate presentation of these liabilities than would be provided under the cost method.
In accordance with ASC 480 “Distinguishing Liabilities from Equity”, we record the fair value of warrants issued for the purchase of common stock as a liability since the warrants call for issuance of registered shares upon exercise, a condition that we may not be able to accommodate and which would then result in a net settlement of the warrants. Until the time the warrants are exercised or expire, the fair value is assessed at each reporting date utilizing a Black-Scholes valuation model and any change in value is recorded as a gain or loss component of other income (expense) in our consolidated statement of operations. Inputs to the valuation model are of the same nature as those used for our convertible notes payable and any separated embedded derivatives where applicable.
As such, we have written off the warrants in 2019 because between April, 2018 to June, 2018, the Company has agreed with its warrant holders to repurchase all the warrants with full payments resulting in no further obligations and liabilities thereunder.
On September 19, 2017, in conjunction with the closing of the Acquisition, we sold units of securities (the “Units”) in a private placement offering (the “September 2017 Offering”), at a purchase price of $ per Unit (the “Unit Offering Price”), each Unit consisting of:
| (a) | one 12% senior secured convertible promissory note (the “Note”) in the face (principal) amount
of $ |
| (b) | one warrant (the “Warrant”) exercisable for a period of five years representing the right to purchase shares of Common Stock. |
| 14 |
In June 2018, the company has cancelled the Note and Warrant due to the fact that:
| (a) | the company did not receive the full amount of $ |
| (b) | the $ |
| (c) | instead of the full amount being received, the balance of $ |
On November 9, 2017 we entered into a Securities Purchase Agreement with two persons, pursuant to which we sold:
| (a) | convertible promissory notes dated November 9, 2017 in the aggregate principal amount of $ |
| (b) | three-year Class A Warrants to purchase up to an aggregate of |
| (c) | three-year Class B Warrants to purchase up to an aggregate of |
On December 19, 2017 we entered into a Securities
Purchase Agreement with one person pursuant to which we sold a convertible promissory note in the principal amount of $
On January 9, 2018, we entered into a Securities
Purchase Agreement with one person pursuant to which we sold a convertible promissory note in the principal amount of $
Convertible note was settled on April 26, 2018 through an issuance of shares at USD per share, the fair value adjustments on convertible notes have been written off in 2019 due to the early repurchase of convertible notes and warrants. There was no gain or loss resulted from the repurchase of the convertible notes and warrants.
Key Judgements
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.
| 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 | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 | |||||||
| Cash at bank | $ | $ | ||||||
| Petty Cash | ||||||||
| $ | $ | |||||||
| 15 |
| 5. | Account Receivables and Other Assets |
| Schedule of account receivables and other assets | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 | |||||||
| Current | ||||||||
| Account Receivables | $ | $ | ||||||
| Deferred Expenditure | ||||||||
| Account Receivables and Other Assets | $ | $ | ||||||
Deferred expenditure represented deposits paid to supplier for order processing.
| 6. | Property, Plant and Equipment |
| Schedule of property, plant and equipment | ||||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 | Estimated Useful Lives | ||||||||
| Vehicles | $ | $ | ||||||||
| Office equipment and furniture and fixtures | ||||||||||
| Low value pool | ||||||||||
| Less: accumulated depreciation | ||||||||||
| Total, net of accumulated depreciation | $ | $ | ||||||||
| 7. | Accrued and Other Liabilities |
| Schedule of accrued and other liabilities | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 | |||||||
| Current | ||||||||
| Accrued expenses | $ | $ | ||||||
| Deferred income | ||||||||
| Director’s salary | ||||||||
| $ | $ | |||||||
Deferred Income represented deposits received
from customers for order processing but yet to fulfill the performance obligation. Accrued director’s salary of $
| 8. | Long-term debt |
The Company entered a chattel mortgage on August 22, 2018 and early
terminated the previous one. The chattel mortgage was secured by a motor vehicle requiring
| Schedule of long-term debt | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 | |||||||
| Chattel mortgage | $ | $ | ||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term debt - non-current position | $ | $ | ||||||
| 16 |
Maturities of long-term debt at June 30, 2019 for each of the next five years and in the aggregate, are as follows:
| Schedule of maturities of long-term debt | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 | |||||||
| Next 12 months | $ | $ | ||||||
| 2 years | ||||||||
| 3 years | ||||||||
| 4 years | ||||||||
| Total long term debt | $ | $ | ||||||
| 9. | Line of credit |
| Schedule of line of credit | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 (Restated) | |||||||
| Current | ||||||||
| Business Loan* | $ | $ | ||||||
| Business Credit Card | ||||||||
| Short-term borrowing** | ||||||||
| $ | $ | |||||||
Non-Current | ||||||||
| Business Loan* | $ | $ | ||||||
* The Company has a total
$950,000 (AUD) bank credit line (approximately $
The “mortgage loan”
was of $
** On September 19, 2017, pursuant to the terms of the Acquisition Agreement, all of the shares of stock of Sincerity Australia Pty Ltd. were exchanged for restricted shares of our Common Stock; in conjunction with the closing of the Acquisition, we sold units of securities in a private placement offering, at a purchase price of $ per Unit, each Unit consisting of:
| (i) | one 12% senior secured convertible promissory note in the face (principal) amount of $ |
| (ii) | one warrant exercisable for a period of five years representing the right to purchase shares of Common Stock. |
| 17 |
In June 2018, we cancelled
the Note and Warrant that was sold in the Offering on September 19, 2017 due to the fact that the Company did not receive the full amount
of $
| 10. | Income Tax Expense |
On December 22, 2017, new tax reform legislation in the U.S., known as the Tax Cuts and Jobs Act of 2017 (“Act”) was signed into law. At June 30, 2019, 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.
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 2019.
For the half year ended June 30, 2019, the operation
incurred $
| Schedule of reconciled to income tax expense | ||||||||
| 2019 | 2018 | |||||||
| Statutory income tax rate | ||||||||
| - Australia | ||||||||
| - US | ||||||||
| Profit/(loss) from continuing operations before income tax expense | ||||||||
| - Australia | $ | ( | ) | $ | ( | ) | ||
| - US | ( | ) | ||||||
| - Hong Kong | ( | ) | ||||||
| $ | ( | ) | $ | |||||
| Income tax expense/(credit) at statutory rate | ||||||||
| - Australia | $ | ( | ) | $ | ( | ) | ||
| - US | ( | ) | ||||||
| - Hong Kong | ( | ) | ||||||
| ( | ) | |||||||
| Change in valuation allowance | ( | ) | ||||||
| Consolidated income tax expense/(income) | $ | $ | ||||||
The Company has recorded a tax expense of $
| 18 |
| 11. | Accounts payables |
| Schedule of accounts payable | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 | |||||||
| Amount due to related party | $ | $ | ||||||
| Others | ||||||||
| Total accounts payables | $ | $ | ||||||
The amount is payable to a related party, Shanghai Sincerity Co Ltd of which the primary shareholder is the mother of James, the director
| 12. | Capital Commitments |
There was no capital expenditure commitment at June 30, 2019.
| 13. | Contingencies |
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations, except for the below.
There was a demand letter from CKR Law LLP (“CKR”) received in 2018 demanding payments and reimbursements which the Company is disputing. The Company has had no further correspondence with CKR since our last letter dated July 9, 2018.
| 14. | Related Party Transactions |
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include:
| · | affiliates of the Company; | |
| · | entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825-10-15, to be accounted for by the equity method by the investing entity; | |
| · | trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; | |
| · | principal owners of the Company; | |
| · | management of the Company; | |
| · | other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and | |
| · | other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. |
| 19 |
The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
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 | ||||||||
| June 30, 2019 (Unaudited) | December 31, 2018 (Restated) | |||||||
| Loan to Zhang Family Trust | $ | $ | ||||||
| Three months ended June 30, | ||||||||
| 2019 (Unaudited) | 2018 | |||||||
| Purchase from Shanghai Sincerity Co Ltd. | $ | $ | ||||||
| 15. | Equity |
Preferred Stock
Before and during 2019, there is no Preferred Stock authorized or issued.
Common Stock
On Feb 5, 2018, the Company issued shares of common stock at price of 1.33333/share to an investor under SPA.
On Mar 27, 2018, the company issued shares of common stock at price of 1.33333/share to an investor under SPA.
On April 26, 2018, the company issued shares of common stock at price of 2.00/share to an investor as part of convertible note prepayment settlement.
On May 28, 2018, the company issued shares of common stock at price of 1.33333/share to an investor under SPA.
On Nov 13, 2018, the company did a
On April 29, 2019, the company issued
shares of common stock at price of /share a number of non-U.S investors at a price of $0.001 per share for an aggregate of $
As of June 30, 2019, the company has authorized shares with par value of $, there were 73,540,000 shares newly issued and shares outstanding, respectively.
| 20 |
| 16. | Events After the Reporting Period |
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2019, up through the date the Company issued the audited consolidated financial statements.
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) | In August and September of 2020 the Company assigned certain debt to Infinity Fund LLC (“Infinity”) that it was unable to pay as follows: (i) $51,570, which was owed b to Shine Wing Australia Pty for auditing and review services performed for the Company, (ii) $53,796 owed to Chris Lim Accounting Solutions Pty Ltd for accounting services performed for the Company, and (iii) $7,000,000 owed to the shareholders of Simcor (Jiangsu) Materials Technology Ltd. (“SMTL”) for the acquisition of all of the outstanding shares of SMTL pursuant to a Stock Purchase Agreement and accompanying promissory note (collectively the “Assigned Debts”). |
The promissory note contained an acceleration clause giving the payee the right to declare the note immediately due and payable upon nonpayment. Upon assignment of the $7,000,000, Infinity declared the promissory note in default for nonpayment triggering the acceleration clause.
We were unable to make any payments against the Assigned Debts and on November 2, 2020, Infinity filed a formal complaint against the Company in the Supreme Court of the First Judicial District of New York, Civil Branch.
The Company and Infinity entered into a Settlement Agreement in the amount of $9,236,975 plus expenses of $27,500 on August 5, 2022, the date of the fairness hearing. The Settlement Agreement allows conversions at no discount of the market price, but 30% increase in shares for interest at the time the notice given should be payable regardless of how long the debenture remains outstanding. We reserved 10,000,000 shares of our common stock with our transfer agent such that there was sufficient shares to issue upon full conversion of the Assigned Debts. |
| (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 is a related party of the Company as the owner of SMTL is Ms. Leping Zhang, parent of the sole director of the Company. 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. The promissory note bear interest at a rate of 1% per annum. At the date of this report, the transaction is still pending settlement. The delay in closing this transaction was due to the OTC placing the Company on expect market on September 28, 2022. |
| (c) | Since the end of 2019, 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. The Company sourced their products from manufacturers from China and the lock down imposed by the Chinese government have an adverse impact on the supply chain globally. |
| To date, the COVID-19 pandemic has 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. |
| 21 |
| (d) | On July 31, 2020, the board of directors of the Company amended its stock designation and the Company is authorized to issue 10,000,000 shares of Series A Preferred Stock with par value of $0.0001. Each stock is entitled to 1,000 votes of common stock without dividend rights. |
On Oct 5, 2022, the Company issued 2,600,000 shares of Series A Preferred Stock to ZHANG Family Trust for proceeds of $260.
| (e) | On April 27, 2020, our controlling shareholder, Zhang Family Trust, cancelled 48,079,730 shares of restricted common stock voluntarily in preparation for up-listing. |
| (f) | On April 6, 2022, we 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 (the “Maturity Date”). The Note shall bear interest at a rate of 10% per annum, which interest may be paid by the Company to ONE44 in shares of common stock but shall not be payable until the Note becomes payable, whether at the Maturity Date or upon acceleration or by prepayment, as described in the Note. ONE44 has the option to convert all or any amount of the principal face amount of the Note, after the sixth month anniversary of the Note, and ending on the later of the Maturity Date and the date of payment of the Default Amount, as defined in the Note, is paid if an event of default occurs, for shares of the Company’s common stock at the then-applicable conversion price.
The conversion price for the Note shall be equal to the Conversion Price (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Conversion Price” shall mean 60% multiplied by the lowest trading price of the Company’s common stock as reported on the OTC Markets. Notwithstanding the foregoing, ONE44 shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by ONE44 and its affiliates, exceeds 4.99% of the outstanding shares of the Company’s common stock.
We have the right to prepay the Note within 60 days of the issuance date at a premium of 120% of all amounts owed to Purchaser and at a premium of 135% if prepaid more than 61 days but less than 120 days following the issuance date, and at a premium of 145% if prepaid more than 121 days but less than 180 days. We have no right to prepay the Note more than 180 days after the issuance date. |
| (g) | On May 4, 2022, we 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 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. | |
| The maturity date of the Note is May 4, 2023 (the “Maturity Date”). The Note shall bear interest at a rate of 8% per annum, which interest may be paid by the Company to Purchaser in shares of common stock but shall not be payable until the Note becomes payable, whether at the Maturity Date or upon acceleration or by prepayment, as described in the Note. Purchaser has the option to convert all or any amount of the principal face amount of the Note, after the sixth month anniversary of the Note, and ending on the later of the Maturity Date and the date of payment of the Default Amount, as defined in the Note, is paid if an event of default occurs, for shares of the Company’s common stock at the then-applicable conversion price. |
| 22 |
| The conversion price for the Note shall be equal to the Conversion Price (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Conversion Price” shall mean 65% multiplied by the lowest trading price of the Company’s common stock as reported on the OTC Markets. Notwithstanding the foregoing, Purchaser shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Purchaser and its affiliates, exceeds 4.99% of the outstanding shares of the Company’s common stock. | |
| We have the right to prepay the Note within 60 days of the issuance date at a premium of 120% of all amounts owed to Purchaser and at a premium of 125% if prepaid more than 61 days but less than 91 days following the issuance date, and at a premium of 130% if prepaid more than 91 days but less than 180 days. After the expiration of the Prepayment Periods set forth above, we may submit an Optional Prepayment Notice to the Purchaser. Upon receipt by the Purchaser of the Optional Prepayment Notice post Prepayment Periods, the prepayment shall be subject to the Purchaser’s and our agreement with respect to the applicable Prepayment Percentage. | |
| (h) | On June 17, 2022, we 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 $54,250 (the “Note”). The Note contains legal fees payable to Purchaser’s legal counsel of $3,000 and to Purchaser a due diligence fee of $1,250. |
| The maturity date of the Note is June 17, 2023 (the “Maturity Date”). The Note shall bear interest at a rate of 8% per annum, which interest may be paid by the Company to Purchaser in shares of common stock but shall not be payable until the Note becomes payable, whether at the Maturity Date or upon acceleration or by prepayment, as described in the Note. Purchaser has the option to convert all or any amount of the principal face amount of the Note, after the sixth month anniversary of the Note, and ending on the later of the Maturity Date and the date of payment of the Default Amount, as defined in the Note, is paid if an event of default occurs, for shares of the Company’s common stock at the then-applicable conversion price. | |
| The conversion price for the Note shall be equal to the Conversion Price (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary of the Company, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Conversion Price” shall mean 65% multiplied by the lowest trading price of the Company’s common stock as reported on the OTC Markets. Notwithstanding the foregoing, Purchaser shall be restricted from effecting a conversion if such conversion, along with other shares of the Company’s common stock beneficially owned by Purchaser and its affiliates, exceeds 4.99% of the outstanding shares of the Company’s common stock. | |
| We have the right to prepay the Note within 60 days of the issuance date at a premium of 120% of all amounts owed to Purchaser and at a premium of 125% if prepaid more than 61 days but less than 91 days following the issuance date, and at a premium of 130% if prepaid more than 91 days but less than 180 days. After the expiration of the Prepayment Periods set forth above, we may submit an Optional Prepayment Notice to the Purchaser. Upon receipt by the Purchaser of the Optional Prepayment Notice post Prepayment Periods, the prepayment shall be subject to the Purchaser’s and our agreement with respect to the applicable Prepayment Percentage. |
| (i) | On Mar 29, 2022, we entered into an agreement with SRAX, Inc, with an address at 2629 Townsgate Road, Suite 215, Westlake Village, CA 91361 (“Company”), pursuant to which we purchased the company’s platform (sequire) service and digital investor relations service, for an aggregate amount of $200,000. Fully paid by our restricted shares, issued on April 12, 2022 in the amount of 253,163 shares priced at 0.79/share. |
| 23 |
| (j) | On June 21, 2022, we entered into an agreement with John J Stewart, an individual located at 565 Fareham Court Castle Rock CO 80104 (The “consultant”), effective from July 1, 2022, pursuant to which we purchased the consultant’s service of corporate advisory activities relating to its up-listing from the OTC Markets to a major stock exchange in the United States, including, but not limited to, introduce to the company Family Offices, Investment Banking firms, Accredited Investors and other Investment Entities; and any other consulting or advisory services. The consultant will be paid with 20,000 restricted shares monthly for 6 months. |
| (k) | On June 22, 2022, we entered into an agreement with John J Stewart, an individual located at 565 Fareham Court Castle Rock CO 80104 (The “consultant”), effective from July 1, 2022, pursuant to which we purchased the consultant’s service of investor awareness including but not limited to, Telephone communications, social media, email distribution, meetings with personnel and any other forms of remote correspondence. The consultant will be paid $58,000 as initial payment and be reimbursed with an estimated cost between $4,000 to $15,000 monthly. The consultant is not a Registered Broker Dealer, and he does not represent himself nor conduct himself as a Broker Dealer in any transaction. The consultant does not offer investment advice and any Funding brought to companies is funding from Accredited Investors, as per SEC Rule 501. The consultant is acting as a Finder for the transaction for introductory purposes only. |
| (l) | On September 27,2022, the company entered into an agreement with B D Pacific Pty Ltd. (“BDPPL” or the "Company"), a company formed in Australia (ACN: 608 421 683) with its registered address at PO BOX 444, KENT TOWN DC SA 5071, Australia, pursuant to which we agree to acquire 100% of ownership with business performance-based warrants to the current shareholders and management. |
| As part of the agreement entered on September 27, 2022, we agree to purchase additional 1,000 newly issued shares of BDPPL at price of USD 500,000, which will be injected into the fully owned subsidiary, BDPPL, as working capital post-closing. |
| (m) | September 28, 2022, the Company was downgraded to the Expert Trading Market under SEC Rule 15c2-11. Quotations in Expert Market securities are restricted from public viewing. Only broker-dealers and professional or sophisticated investors are permitted to view quotations in Expert Market securities. |
| (n) | On November 3, 2022, the company borrowed USD 10,000 with interest rate of 15% per 90 days from Lewis L. Rich of 508 Westwood Bay Dr. Seneca, SC 29672 USA. USA. The collateral used for the borrowing is a motor vehicle that is valued at USD 90,000 at the time. |
| On November 3, 2022, the company borrowed USD 30,000 with interest rate of 15% per 90 days from John J Stewart of 565 Fareham Court, Castle, Co. 80104 USA. The collateral used is for the borrowing is a motor vehicle that is valued at USD 90,000 at the time. |
| (o) | On November 23, 2022, the company borrowed USD 10,000 with interest rate of 15% per 90 days from John J Stewart of 565 Fareham Court, Castle, Co. 80104 USA. The collateral used is for the borrowing is a motor vehicle that is valued at USD 90,000 at the time. |
| 24 |
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
Through our wholly owned subsidiary, Sincerity Australia Pty Ltd (“SAPL”), we primarily operate as a distributor and reseller of applied materials, particularly plastics, with an extensive network in China of high-quality suppliers for a wide range of both basic and high application polymer products ranging from generic construction materials to high end breathable stretch film and antibacterial sheeting. SAPL is based in Melbourne, Australia and distributes to a number of larger resellers and end users, including Visy Industries (trading as Pratt Group America in the USA), one of the world’s largest packaging and recycling groups.
SAPL’s business was commenced in 2009 by James Zhang, our Chairman, President and Chief Executive Officer and the son of the founder of (i) Changzhou Sincerity Plastics and Chemicals Technology Ltd. (“Sincerity China”), a well-established plastics and applied materials manufacturer with a 20-year operating history, based in Changzhou, China, and (ii) Shanghai Sincerity Co. Ltd., a Shanghai, China based company through which most of the products we purchase from Sincerity China are sourced and sold to us. SAPL originally commenced operations by supplying basic extruded plastic components (mouldings, auto interior components, kitchen splash backs etc.) to the Australian auto, retail and construction industries. In 2015, SAPL began importing specialty high quality plastic trays and film for use in fresh food packaging and distribution. The first major customer for this business was the Propac Group, leading supplier of plastic packaging materials to Coles, one of Australia’s 2 dominant supermarket chains.
Over the past 3 years, SAPL has refocused its marketing efforts towards larger resellers and distributors in Australia, allowing SAPL to build strong relationships with key industry players who acquire its products for their own distribution and reseller networks. Research and investment in addressing the key fresh food issue of plastic film “breathability” has created a unique technology platform whereby air circulation in packaged foods can be adjusted according to the type of food. This has the effect of prolonging shelf life, key to building relationship metrics within the food retailing industry. SAPL recently started to supply Visy Industries, with high technology, breathable plastic film for use in Visy Industries’ packaging supply contract with the other dominant player in Australia’s supermarket industry.
Presently all of SAPL’s revenue is derived from sales within the Australian market, however, due to the strong international presence of SAPL’s major customers such as Visy, particularly in the US, combined with the technology metrics of SAPL’s product range (breathable stretch film and antibacterial polymer products), it is expected that SAPL’s products will be increasingly utilized in global markets.
SAPL will continue with the process of further vertical integration of its product range. Value adding packaging technology, such as breathable film, and ventilated stretch film, is expected to provide an innovative edge over our competition. Rapid growth in demand from fresh fruit and vegetable packaging is already reflected through increasing sales to Visy Industries and will also allow SAPL to transition these new products to the global market.
| 25 |
SAPL supplies Australian market with a well-diversified product range, while commodity type provides a strong foundation of business grow, the value adding innovations on each product will bring SAPL to the next level and expand for beyond Australia.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
| Note | 2019 $ (Unaudited) | 2018$ | 2019 $ (Unaudited) | 2018$ | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Sales | 161,005 | 258,688 | 396,059 | 734,601 | ||||||||||||||||
| Cost of sales | (122,351 | ) | (234,155 | ) | (350,609 | ) | (687,163 | ) | ||||||||||||
| Gross profit | 38,654 | 24,533 | 45,450 | 47,438 | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Depreciation and amortization | 2,335 | 6,265 | 4,753 | 12,773 | ||||||||||||||||
| Selling, general and administrative expenses | 6,285 | 40,223 | 19,347 | 68,005 | ||||||||||||||||
| Employee expenses | – | – | 62,500 | 24,697 | ||||||||||||||||
| Professional service fees | 27,481 | (203,385 | ) | 46,492 | 173,222 | |||||||||||||||
| Repairs and maintenance | – | 31 | – | 31 | ||||||||||||||||
| Total operating expenses | 36,101 | (156,866 | ) | 133,092 | 278,728 | |||||||||||||||
| Income / (Loss) from operations | 2,553 | 181,399 | (87,642 | ) | (231,290 | ) | ||||||||||||||
| Other income/(expenses) | ||||||||||||||||||||
| Other income | 14,411 | 5,741 | 28,844 | 11,129 | ||||||||||||||||
| Interest expense | (11,335 | ) | (105,422 | ) | (22,804 | ) | (233,751 | ) | ||||||||||||
| Other Finance Gain | – | 624,654 | – | 614,679 | ||||||||||||||||
| Discount on Convertible note | – | 407,271 | – | 320,527 | ||||||||||||||||
| Loss on derivative financial instrument | – | (153,723 | ) | – | (23,469 | ) | ||||||||||||||
| Fair value adjustment of Warrant liabilities | – | 439,448 | – | 409,173 | ||||||||||||||||
| Foreign currency transaction loss | (7,451 | ) | (19,821 | ) | (7,317 | ) | (26,657 | ) | ||||||||||||
| Total other income/ (expenses) | (4,375 | ) | 1,198,148 | (1,277 | ) | 1,071,631 | ||||||||||||||
| Income/(Loss) from continuing operations before income tax expenses | (1,822 | ) | 1,379,547 | (88,919 | ) | 840,341 | ||||||||||||||
| Income tax benefit/(expense) | (4,207 | ) | 38,134 | (246 | ) | (7,816 | ) | |||||||||||||
| Net income/(Loss) after income tax expense for the period | (6,030 | ) | 1,417,681 | (89,165 | ) | 832,525 | ||||||||||||||
| Other comprehensive income /(loss) | ||||||||||||||||||||
| Exchange differences arising on translation of foreign operations | (1,106 | ) | 22,663 | (1,106 | ) | 36,373 | ||||||||||||||
| Other comprehensive income/(loss) | (1,106 | ) | 22,663 | (1,106 | ) | 36,373 | ||||||||||||||
| Total comprehensive income/(Loss) for the period | (7,136 | ) | 1,440,344 | (90,271 | ) | 868,898 | ||||||||||||||
| Net (loss)/gain per share | ||||||||||||||||||||
| Basic and diluted | – | 0.03 | – | 0.02 | ||||||||||||||||
| Weighted average number of common stock outstanding | ||||||||||||||||||||
| Basic and diluted | 73,590,730 | 49,932,015 | 73,590,730 | 49,731,704 | ||||||||||||||||
| 26 |
Revenues
Revenue was $396,059 for the six months ended June 30, 2019, compared to $734,601 for the six months ended June 30, 2018, a decrease of $338,542. 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 $19,347 for the six months ended June 30, 2019, compared to $68,005 for the six months ended June 30, 2018. In the six months ended June 30, 2018, international travels were undertaken for financing and operating matters that did not take place in the six months ended June 30, 2019.
Employee expenses
Director’s salary was accrued for the six months ended June 30, 2019, with the amount of $62,500.
Professional service fees
Professional service fees were $46,492 for the six months ended June 30, 2019, compared to $173,222 for the six months ended June 30, 2018. The $46,492 for the six months ended June 30, 2019 relates to professional service fees incurred relating to its operating activities.
Other Income and Expenses
Prior to the reverse acquisition that took place on September 19, 2017, other income and expense were relatively immaterial and primarily comprised of employee contribution to fringe benefits, interest income and freight income.
Following our issuance of convertible notes and warrants, the components of other income and expense also include interest expense on the notes and losses related to the changes in fair value of both the notes and warrants. This is due to the recording of the convertible notes at fair value upon issuance, which resulted in a non-recurring loss on issuance because their values exceeded the cash proceeds from issuance. We will remeasure the fair values of the notes and warrants at each future reporting date, and if those fair values change, will record a corresponding gain or loss. Accordingly, we expect other income and expense to fluctuate, and possibly fluctuate by a significant amount, in future periods by the gains or losses on changes in fair value until such time as the notes are either converted into common stock or repaid and the warrants are either exercised or expire. Also, we will accrue and record interest expense on the notes until they are either converted or repaid.
The decrease in other income and expenses was due to all the convertible notes and warrants being repurchased in 2018 and the company no longer needs to remeasure these financial instruments in 2019.
Liquidity and Capital Resources
As at June 30, 2019, we had a working capital deficit of $414,485 compared with a working capital deficit of $279,733 as at June 30, 2018.
Our primary uses of cash have been for operations. The main sources of cash have been from sales of our products to our customers.
The Company believes that cash flow from operations will be sufficient to sustain its current level of operations for at least the next three months of operations.
| 27 |
As of June 30, 2019, we had cash and cash equivalent of approximately $6,943, 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 has the ability to raise fund through private placements or convertible notes and has had prior success. The company is currently in discussion with financiers to raise more fund; |
| (ii) | The company is expected to increase its revenue by launching new products line during the year; |
| (iii) | The company constantly reduced costs to improve its financial performance. |
In the six months ended June 30, 2019, the net cash provided by operating activities primarily reflects the loss from operations of approximately $89,165 with approximately $119,391 in changes in operating assets and liabilities, offset by non-cash items of approximately $13,419 and amortization and depreciation of approximately $4,753 that had no effect on cash flows.
Net cash used for investing activities of approximately $nil and $nil for the six months ended June 30, 2019 and six months ended June 30, 2018, respectively.
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 June 30, 2019, 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 June 30, 2019 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 June 30, 2019, 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.
| 28 |
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.
There was a demand letter from CKR Law LLP (“CKR”) received in 2018 demanding payments and reimbursements which the Company is disputing. The Company has had no further correspondence with CKR since our last letter dated July 9, 2018.
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
None
Item 5. Other Information
This Form 10-Q/A for the 3 months ended June 30, 2019 has been reviewed by its independent auditor, J&S Associate PLT.
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 | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 29 |
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. | ||
| April 27, 2023 | By: | /s/ Yiwen Zhang |
|
Yiwen Zhang President, Chief Executive Officer, Chief Financial Officer and sole Director | ||
| 30 |
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/A 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: April 27, 2023 | By: | /s/ Yiwen Zhang |
|
Yiwen Zhang President, Chief Executive Officer, Chief Financial Officer and sole Director | ||
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, Yiwen Zhang, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q/A 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: April 27, 2023 | By: | /s/ Yiwen Zhang |
|
Yiwen Zhang President, Chief Executive Officer, Chief Financial Officer and sole Director | ||
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/A for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), Yiwen Zhang, 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: April 27, 2023 | By: | /s/ Yiwen Zhang |
| President, Chief Executive Officer, Chief Financial Officer and sole Director | ||
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/A for the period ended June 30, 2019 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: April 27, 2023 | By: | /s/ Yiwen Zhang |
|
Yiwen Zhang President, Chief Executive Officer, Chief Financial Officer and sole Director | ||