Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended December 31, 2021

 

or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission File Number 333-235700

 

SYNERGY EMPIRE LIMITED

(Exact name of registrant issuer as specified in its charter)

 

Nevada		38-4096727
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

No.19 Jalan 12/118B, Desa Tun Razak, 56100, Kuala Lumpur, Malaysia.

 

Address of principal executive offices, including zip code

 

+(60)3 - 9171 2828

 

Registrant’s phone 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 on 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.

 

Yes ☒ No ☐

 

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).

 

Yes ☒ No ☐

 

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 ☐	Non-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 Rule12b-2 of the Exchange Act).

 

Yes ☐ No ☒

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 

N/A

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class		Outstanding shares as of February 7, 2022
Common Stock, $0.0001 par value		1,000,000

 

 

 

 

TABLE OF CONTENTS

 

			Page
PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS:
	Condensed Consolidated Balance Sheets as of December 31, 2021 (unaudited) and March 31, 2021 (audited)		F-1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended December 31, 2021 and 2020 (unaudited)		F-2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended December 31, 2021 and 2020 (unaudited)		F-3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2021 and 2020 (unaudited)		F-4
	Notes to the Unaudited Condensed Consolidated Financial Statements		F-5 – F-15
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		3
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		5
ITEM 4.	CONTROLS AND PROCEDURES		5
PART II	OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS		6
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		6
ITEM 3	DEFAULTS UPON SENIOR SECURITIES		6
ITEM 4	MINE SAFETY DISCLOSURES		6
ITEM 5	OTHER INFORMATION		6
ITEM 6	EXHIBITS		6
SIGNATURES			7

 

2

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial statements

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF December 31, 2021 AND MARCH 31, 2021

(Currency expressed in United States Dollars (“US$”), except for number of share)

 

		As of December 31, 2021				As of March 31, 2021
		(Unaudited)				(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	61,704			$	345,161
Trade receivables, net			-				739
Prepaid expenses and deposits			25,523				26,387
Inventories			18,004				11,482
TOTAL CURRENT ASSETS		$	105,231			$	383,769
NON-CURRENT ASSETS
Operating lease right of use asset, net			263,429				308,918
Plant and equipment, net			312,946				328,245
Intangible asset, net			1,470				-
TOTAL ASSETS		$	683,076			$	1,020,932
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	10,273			$	8,857
Accrued expenses and other payables			74,023				170,449
Operating lease liability			70,082				63,493
Bank borrowing			16,687				15,559
Amount due to a director			1,008,775				894,480
TOTAL CURRENT LIABILITIES		$	1,179,840			$	1,152,838
NON-CURRENT LIABILITIES
Operating lease liability			197,939				249,142
Bank borrowing			12,967				25,836
TOTAL LIABILITIES		$	1,390,746			$	1,427,816
STOCKHOLDERS’ EQUITY
Preferred stock – Par value $0.0001; Authorized: 500,000 None issued and outstanding							-
Common stock – Par value $0.0001; Authorized: 5,000,000 Issued and outstanding: 1,000,000 shares as of December 31, 2021 and March 31, 2021 respectively			100				100
Additional paid-in capital			784,083				784,083
Accumulated other comprehensive loss			(30,112	)			(34,804	)
Accumulated deficit			(1,461,741	)			(1,156,263	)
TOTAL STOCKHOLDERS’ DEFICIT		$	(707,670	)		$	(406,884	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	683,076			$	1,020,932

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

F-1

 

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

		2021				2020				2021				2020
		Three months ended December 31,								Nine months ended December 31,
		2021				2020				2021				2020
REVENUE		$	54,521			$	14,258			$	82,404			$	153,721
COST AND EXPENSES:
Cost of revenue			(15,753	)			(12,265	)			(26,474	)			(54,249	)
General and administrative expenses			(134,112	)			(119,816	)			(393,377	)			(312,345	)
Total operating costs and expenses			(149,865	)			(132,081	)			(419,851	)			(366,594	)
Loss from operations			(95,344	)			(117,823	)			(337,447	)			(212,873	)
Other income, Net			10,453				39,538				31,969				52,867
Loss before income tax			(84,891	)			(78,285	)			(305,478	)			(160,006	)
Income tax expense			-				-				-				-
Net Loss			(84,891	)			(78,285	)			(305,478	)			(160,006	)
Foreign currency translation income/ (loss)			(4,455	)			(32,861	)			4,692				(65,083	)
Total comprehensive loss		$	(89,346	)		$	(111,146	)		$	(300,786	)		$	(225,089	)
NET LOSS PER SHARE, BASIC AND DILUTED		$	(0.08	)		$	(0.09	)		$	(0.31	)		$	(0.18	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED			1,000,000				903,261				1,000,000				901,091

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

F-2

 

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

		NUMBER OF Shares				Amount				Additional Paid-in Capital				Accumulated DEFICIT				Accumulated comprehensive loss				Total STOCKHOLDERS EQUITY
		Common Stock
		NUMBER OF Shares				Amount				Additional Paid-in Capital				Accumulated DEFICIT				Accumulated comprehensive loss				Total STOCKHOLDERS EQUITY
Balance as of April 1, 2021			1,000,000			$	100			$	784,083			$	(1,156,263	)		$	(34,804	)		$	(406,884	)
Net loss for the period			-				-				-				(106,431	)			-				(106,431	)
Foreign currency translation			-				-				-				-				2,302				2,302
Balance as of June 30, 2021			1,000,000			$	100			$	784,083			$	(1,262,694	)		$	(32,502	)		$	(511,013	)
Net loss for the period			-				-				-				(114,156	)			-				(114,156	)
Foreign currency translation gain			-				-				-				-				6,845				6,845
Balance as of September 30, 2021			1,000,000			$	100			$	784,083			$	(1,376,850	)		$	(25,657	)		$	(618,324	)
Net loss for the period			-				-				-				(84,891	)			-				(84,891	)
Foreign currency translation loss			-				-				-				-				(4,455	)			(4,455	)
Issuance of share of common stock
Issuance of share of common stock, shares
Balance as of December 31, 2021			1,000,000			$	100			$	784,083			$	(1,461,741	)		$	(30,112	)		$	(707,670	)

 

		Common Stock
		NUMBER OF Shares				Amount				Additional Paid-in Capital				Accumulated DEFICIT				Accumulated comprehensive loss				Total STOCKHOLDERS DEFICIT
Balance as of April 1, 2020			900,000			$	90			$	284,093			$	(1,144,401	)		$	(2,109	)		$	(862,327	)
Net loss for the period			-				-				-				(24,755	)			-				(24,755	)
Foreign currency translation loss			-				-				-				-				(5,552	)			(5,552	)
Balance as of June 30, 2020			900,000			$	90			$	284,093			$	(1,169,156	)		$	(7,661	)		$	(892,634	)
Net loss for the period			-				-				-				(56,966	)			-				(56,966	)
Foreign currency translation loss			-				-				-				-				(26,670	)			(26,670	)
Balance as of September 30, 2020			900,000			$	90			$	284,093			$	(1,226,122	)		$	(34,331	)		$	(976,270	)
Issuance of share of common stock			100,000				10				499,990				-				-				500,000
Net loss for the period			-				-				-				(78,285	)			-				(78,285	)
Foreign currency translation loss			-				-				-				-				(32,861	)			(32,861	)
Foreign currency translation gain (loss)			-				-				-				-				(32,861	)			(32,861	)
Balance as of December 31, 2020			1,000,000			$	100			$	784,083				(1,304,407	)			(67,192	)			(587,416	)

 

See accompanying notes to consolidated financial statements

 

F-3

 

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

		2021				2020
		For the Nine Months Ended December 31
		2021				2020
		(Unaudited)				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(305,478	)		$	(160,006	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization expenses			107,880				71,599
Disposal of fixed assets			-				(8,667	)
Bad debts written off			736
Changes in operating assets and liabilities:
(Increase)/Decrease in inventories			(6,597	)			9,381
Increase in prepaid expenses			718				(16,859	)
Decrease in accounts payable			1,467				(4,691	)
Decrease in accrued liabilities			(95,676	)			(29,223	)
Change in operating lease liability			(48,025	)			(48,719	)
Net cash flows used in operating activities		$	(344,975	)		$	(187,185	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment			(45,380	)			(2,013	)
Application of trademark			(1,577	)			-
Sale proceeds from disposal of plant and equipment			-				10,255
Net cash flows (used in)/provided by investing activities		$	(46,957	)		$	8,242
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of share of common stock			-				500,000
Repayment to from related parties			-				(17,720	)
Advance from directors			118,802				244,789
Principal repayments of bank loan			(11,524	)			(2,202	)
Net cash flows provided by financing activities		$	107,278			$	724,867
Effect of exchange rate changes in cash and cash equivalents		$	1,197			$	4,537
Net changes in cash and cash equivalents			(283,457	)			550,461
Cash and cash equivalents, beginning of year			345,161				87,492
CASH AND CASH EQUIVALENTS, END OF YEAR		$	61,704			$	637,953
SUPPLEMENTAL CASH FLOWS INFORMATION
Initial recognition of operating lease right-of-use assets and operating lease obligations upon adoption of ASC Topic 842			-				62,890
Income taxes paid		$	-			$	-
Interest paid		$	2,536			$	3,998

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

F-4

 

 

SYNERGY EMPIRE LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2021 AND 2020

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

1. ORGANIZATION AND BUSINESS BACKGROUND

 

Synergy Empire Limited (“the Company”) was incorporated under the laws of the State of Nevada on October 17, 2018. We have historically conducted our business through Lucky Star F&B Sdn. Bhd. and SH Dessert Sdn. Bhd, both are private limited liability company, incorporated in Malaysia.

 

On January 16, 2019, the Company acquired 100% of the equity interests of Synergy Empire Holding Limited, a company incorporated in Republic of the Marshall Islands (“Synergy Empire Marshall”).

 

On December 31, 2018, Synergy Empire Marshall acquired 100% of Synergy Empire Limited, a limited liability company incorporated in Hong Kong (“Synergy Empire HK”).

 

On February 21, 2019, Synergy Empire HK acquired 100% of the equity interests of Lucky Star F&B Sdn. Bhd., a limited liability company incorporated in Malaysia (“Lucky Star”).

 

Lucky Star acquired 100% of the equity interests of SH Dessert Sdn. Bhd., a limited liability company incorporated in Malaysia (“SH Dessert”) by Lucky Star on February 19, 2016.

 

On February 26, 2021, Synergy Empire Marshall acquired 100% of Lucky Star F&B Sdn. Bhd from Synergy Empire HK. Subsequently on March 31, 2021, Mr. Leong Will Liam acquired 100% of Synergy Empire HK, as such Synergy Empire HK is no longer a subsidiary of the Company.

 

Mr. Leong Will Liam is the common director and major shareholder of the Company, Synergy Empire Marshall, Synergy Empire HK, Lucky Star and SH Dessert.

 

The Company, through its wholly owned subsidiaries, produce and distribute high quality dessert through Lucky Star and operate two restaurants through SH Dessert. Details of the Company’s subsidiaries:

 

 SCHEDULE OF COMPANY'S SUBSIDIARIES

No.			Company Name		Domicile and Date of Incorporation		Particulars of Issued Capital		Principal Activities
1			Synergy Empire Holding Limited		Marshall Islands, October 22, 2018		1 Share of Ordinary Share, US$1 each		Investment Holding
2			Lucky Star F&B Sdn. Bhd.		Malaysia, February 9, 2010		100,000 Share of Ordinary Share, MYR1 each		Dessert Producer and Distributor
3			SH Dessert Sdn. Bhd.		Malaysia, February 19, 2016		100 Share of Ordinary Share, MYR1 each		Restaurant Operator

 

F-5

 

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

These accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

The accompanying financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and balances were eliminated in consolidation.

 

Below is the organization chart of the Group.

 

 

 

Use of Estimates

 

In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.

 

Cash and Cash Equivalents

 

The Company considers short-term, highly liquid investments with an original maturity of 90 days or less to be cash equivalents.

 

Our deposit in Malaysia is currently deposit in Public Bank Berhad and Standard Chartered Bank (Malaysia) Berhad, and there is a Perbadanan Insurans Deposit Malaysia protects our eligible deposits held with bank in Malaysia which is members of the Scheme. The scheme will pay a compensation up to a limit of Malaysia Ringgit (“MYR”) 250,000 per deposit per member bank, which is equivalent to $60,010 if the aforementioned banks fails.

 

Plant and Equipment

 

Plant and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following periods:

 SCHEDULE OF DEPRECIATION AND AMORTIZATION PERIODS OF PLANT AND EQUIPMENT

Asset Categories		Depreciation Periods
Renovation		over the remaining lease period
Office and kitchen equipment		10 years
Motor vehicle		5 years
Furniture and fittings		10 years

 

Intangible Asset

 

Intangible assets are stated at cost, with amortization provided using the straight-line method over the following periods:

 SCHEDULE OF AMORTIZATION PERIOD OF INTANGIBLE ASSET

Asset Categories		Amortization Periods
Trademark		10 years

 

F-6

 

 

Inventories

 

Inventories consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using the first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of revenue in the consolidated statements of operations and comprehensive income (loss).

 

Revenue recognition

 

Revenue is generated through sale of goods and delivery services. Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods and services. The Company applies the following five-step model in order to determine this amount:

 

(i) identification of the promised goods and services in the contract;

 

(ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract;

 

(iii) measurement of the transaction price, including the constraint on variable consideration;

 

(iv) allocation of the transaction price to the performance obligations; and

 

(v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Company records revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company records revenue from the sale of product upon shipment or delivery of the products to the customer. The Company doesn’t allow return of the products purchased or refund unless the food delivered is spoilt.

 

Cost of revenue

 

Cost of revenue includes the purchase cost of raw material for manufacturing and distribute to customers and packing materials. It includes purchasing and receiving costs, internal transfer costs, other costs of distribution network, opening and closing inventory net off discount received and return outwards in cost of revenue.

 

Income tax expense

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclosed in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company conducts major businesses in Malaysia and is subject to tax in their own jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.

 

F-7

 

 

Foreign currencies translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations and comprehensive income (loss).

 

The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company’s subsidiary maintains its books and record in the respective local currency, Hong Kong Dollars (“HK$”) and Malaysian Ringgits (“MYR”), which is the respective functional currency as being the primary currency of the economic environment in which the entity operates.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income.

 

Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective periods:

 SCHEDULE OF EXCHANGE RATE TRANSLATION OF AMOUNTS FROM LOCAL CURRENCY

		For the nine months ended December 31
		2021				2020
Period-end MYR : US$1 exchange rate			4.17				4.02
Period-average MYR : US$1 exchange rate			4.16				4.19
Period-end/Period-average HK$ : US$1 exchange rate			7.75				7.75

 

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Fair value of financial instruments

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, trade receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.

 

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

Level 1 : Observable inputs such as quoted prices in active markets;

 

Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

As of December 31, 2021 and 2020, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.

 

Net Income/(Loss) per Share

 

The Company calculates net income/(loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

 

F-8

 

 

Recently Issued Accounting Standards

 

Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

3. GOING CONCERN UNCERTAINTIES

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The company having accumulated deficit of $1,461,741 and $1,156,263 as of December 31, 2021 and March 31, 2021, respectively.

 

For the nine months ended December 31, 2021 and 2020, the Company suffered from a net loss of $305,478 and $160,006 respectively.

 

For the nine months ended December 31, 2021 and 2020, the Company recorded operating cash outflows of $344,975 and $187,185 in operating activities respectively.

 

Furthermore, the Company recorded a negative working capital of $1,074,609 and $707,252 as of as of December 31, 2021 and March 31, 2021 respectively.

 

The Company’s cash position is not significant to support the Company’s daily operations. While the Company believes in the viability of its strategy and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and the ability to acquire financial support from its shareholder.

 

These and other factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that financial statements are issued. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.

 

4. PREPAID EXPENSES AND DEPOSITS

 SCHEDULE OF PREPAID EXPENSES AND DEPOSITS

		As of December 31,2021 (Unaudited)				As of March 31, 2021 (Audited)
Rental deposits		$	22,251			$	23,951
Other deposits			1,690				-
Prepaid expenses			952				1,017
Other receivables			630				1,419
Total		$	25,523			$	26,387

 

The rental deposits represent the deposit of the tenancy agreements.

 

Other deposits consist of deposit of copy machine, coffee machine and security deposits.

 

Prepaid expenses represent the deposit payments of public utilities, such as electricity, telephone, and water supplies.

 

Other receivables represent outstanding payment due from delivery platform.

 

5. INVENTORIES

 SCHEDULE OF INVENTORIES

		As of December 31, 2021 (Unaudited)				As of March 31, 2021 (Audited)
Raw material, at cost		$	18,004			$	11,482

 

F-9

 

 

6. PLANT AND EQUIPMENT

 SCHEDULE OF PLANT AND EQUIPMENT

		As of December 31, 2021 (Unaudited)				As of March 31, 2021 (Audited)
Renovation		$	363,780			$	354,963
Office equipment			41,427				21,741
Kitchen equipment			30,071				15,457
Motor vehicle			11,762				11,828
Total plant and equipment		$	447,040			$	403,989
Less: Accumulated depreciation			(134,094	)			(75,744	)
Total plant and equipment		$	312,946			$	328,245

 

For the nine months ended December 31, 2021, the Company has invested $14,720 in kitchen equipment, $13,588 in renovations and $17,072 in office equipment respectively.

 

For the nine months ended December 31, 2020, the Company had invested $2,013 into kitchen equipment and made written off renovation of approximately $1,001 and office equipment of approximately $1,411 due to closure of restaurant outlets, recorded a loss of $576 and $1,012 respectively. In addition, the Company also dispose $32,326 worth of fully depreciated motor vehicle at cost for a consideration of $10,255 towards the Company.

 

Depreciation expenses for three and nine months ended December 31, 2021 amounted to $58,852 and $19,861 respectively.

 

Depreciation expenses for three and nine months ended December 31, 2020 amounted to $7,174 and $21,050 respectively.

 

7. INTANGIBLE ASSET

 SCHEDULE OF INTANGIBLE ASSET

		As of December 31, 2021 (Unaudited)				As of March 31, 2021 (Audited)
Trademark		$	1,575			$	-
Less: Accumulated depreciation			105				-
Total		$	1,470			$	-

 

On May 11, 2021, the Company was granted approval by Intellectual Property Corporation of Malaysia for trademark application with 10 years validity with an aggregate cost of $1,575, filed by Lucky Star under class 30 and 43.

 

Amortization expenses for the nine months ended December 31, 2021 amounted to $105.

 

No amortization expenses have been incurred for the nine months ended December 31, 2020.

 

8. ACCRUED EXPENSES AND OTHER PAYABLES

 SCHEDULE OF ACCRUED EXPENSES AND OTHER PAYABLES

		As of December 31, 2021 (Unaudited)				As of March 31, 2021 (Audited)
Accrued expenses		$	35,633			$	35,066
Other payables			38,390				135,383
Total		$	74,023			$	170,449

 

Accrued expenses consist of accrued salary, rental, utilities bills, other expenses and professional fee.

 

Other payable consist of outstanding marketing expenses and sales, service tax payable and advances from employees for temporary petty cash usage.

 

F-10

 

 

9. AMOUNT DUE TO A DIRECTOR

 

As of March 31, 2021, the Company has an outstanding loan payable to Mr. Leong Will Liam amounted $894,480. Of which including an amount due to Synergy Empire HK, amounted $24,822.

 

For the nine months ended December 31, 2021, Mr. Leong Will Liam further advanced $118,802 to the Company for working capital purpose.

 

As of December 31, 2021, the Company has an outstanding loan payable to Mr. Leong Will Liam amounted $1,008,775, of which including an amount due to Synergy Empire HK, amounted $24,822.

 

Both aforementioned loans are unsecured, non-interest bearing and payable on demand.

 SCHEDULE OF AMOUNT DUE TO DIRECTORS

Amount due to director, Mr. Leong Will Liam thru Synergy Empire HK
Balance as of March 31, 2021			24,822
Advancement for the nine months ended December 31, 2021			118,802
Foreign currency translation			(4,507	)
Balance as of December 31, 2021			24,822

 

Amount due to director, Mr. Leong Will Liam directly
Balance as of March 31, 2021			869,658
Advancement for the nine months ended December 31, 2021			118,802
Foreign currency translation			(4,507	)
Balance as of December 31, 2021			983,953

 

10. BANK BORROWING

 

On January 25, 2017, Lucky Star F&B Sdn. Bhd., a wholly owned subsidiary of the Company has acquired a business loan from Standard Chartered Saadiq Berhad, a bank incorporated in Malaysia, amounted to MYR342,834 (approximately $82,293) at annual interest rate of 6.00% accrued in arrear, for a repayment period of 72 months with interest bearing monthly installment of MYR6,500 (approximately $1,560) which is the sole bank borrowing by the Company.

 

The outstanding balance of business loan as of December 31 and March 31, 2021 can be summarized as follow:

 SUMMARY OF OUTSTANDING BALANCE OF BUSINESS LOANS

		As of December 31, 2021 (Unaudited)				As of March 31, 2021 (Audited)
Bank borrowing (Current portion)		$	16,687			$	15,559
Bank borrowing (Non-current portion)			12,967				25,836
Total		$	29,654			$	41,395

 

For the nine months ended December 31, 2021, the Company repaid $11,508.

 

On April 1, 2020, Standard Chartered Saadiq Berhad announced to provide loan deferment to borrower for a period 6 months in supporting of Malaysia National Bank to ease financial pressure as a result of movement control order promulgated by Malaysia Government to contain the outbreak of COVID-19.

 

Pursuant to the announcement, no instalment is required, and no penalty will be imposed during the 6 months period however additional non-compounding interest will continue to accrue. As such, the Company has incurred additional interest of $2,455 interest expenses.

 

For the nine months ended December 31, 2020, the Company repaid $2,202 while incurring additional $2,455 interest in loan deferment.

 

F-11

 

 

Maturities of the loan for each of the five years and thereafter are as follows:

 SCHEDULE OF MATURITIES OF LOAN

Year ending March 31
2022			$	4,020
2023			$	17,092
2024			$	8,542
Total			$	29,654

 

11. LEASE - RIGHT-OF-USE ASSET AND LEASE LIABILITIES

 SCHEDULE OF OPERATING LEASE RIGHT-OF-USE AND LEASE LIABILITIES

Right-Of-Use Assets
Balance as of March 31, 2021			308,918
Amortization for the nine months ended December 31, 2021			(48,858	)
Adjustment for discount rate			5,103
Foreign exchange translation			(1,734	)
Balance as of December 31, 2021			263,429

 

For the nine months ended December 31, 2021 and 2020, the amortization of the operating lease right of use asset amounted $48,922 and $50,549, respectively.

 

Lease Liability
Balance as of March 31, 2021			312,635
Imputed interest			12,312
Gross repayment			(60,274	)
Foreign exchange translation			3,348
Balance as of December 31, 2021			268,021
Lease liability current portion			(70,082	)
Lease liability non-current portion		$	197,939

 

Maturities of operating lease obligation as follow:

 SCHEDULE OF MATURITIES OF OPERATING LEASE OBLIGATION

Year ending
March 31, 2022			16,955
March 31, 2023			71,348
March 31, 2024			75,558
March 31, 2025			68,871
March 31, 2026			35,289
Total		$	268,021

 

Other information:

 SCHEDULE OF LEASE OTHER INFORMATION

		For the nine months ended December 31
		2021				2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow to operating lease		$	61,251			$	56,683
Right-of-use assets obtained in exchange for operating lease liabilities			-				63,062
Remaining lease term for operating lease (years)			3.65				4.50
Weighted average discount rate for operating lease			5.70	%			6.65	%

 

F-12

 

 

12. CONCENTRATION OF RISK

 

(a)	Major Customers

 

For the three and nine months ended December 31, 2021 and 2020, there was no customer who accounted for 10% or more of the Company’s revenues nor with significant outstanding receivables.

 

(b)	Major Suppliers

 

For the three and nine months ended December 31, 2021 and 2020, there was no supplier who accounted for 10% or more of the Company’s purchases nor with significant outstanding payables.

 

13. INCOME TAXES

 

The income / (loss) before income taxes of the Company for the nine months ended December 31, 2021 and 2020 were comprised of the following:

 SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAXES

		For the nine months ended December 31
		2021				2020
Tax jurisdictions from:
– Local		$	(23,806	)		$	10,930
– Foreign, representing:
Marshall Islands (non-taxable jurisdiction)			-				(1,142	)
Hong Kong			-				(613	)
Malaysia			(281,672	)			(169,181	)
Loss before income taxes		$	(305,478	)		$	(160,006	)

 

F-13

 

 

Provision for income taxes consisted of the following:

 SUMMARY OF PROVISION FOR INCOME TAX

			As of December 31, 2021				As of March 31, 2021
Current:
– Local		$	-			$	-
– Foreign:
Marshall Islands (non-taxable jurisdiction)			-				-
Hong Kong			-				-
Malaysia			-				-
Deferred:
– Local			-				-
– Foreign			-				-
		$	-			$	-

 

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. During the periods presented, the Company has a number of subsidiaries that operates in different countries and is subject to tax in the jurisdictions in which its subsidiaries operate, as follows:

 

United States of America

 

The Tax Act reduces the U.S. statutory corporate tax rate from 35% to 21% for our tax years beginning in 2018. The Company is registered in the State of Nevada and is subject to United States of America tax law. As of December 31, 2021, the operations in the United States of America incurred $160,238 of cumulative net operating losses (NOL’s) which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2041, if unutilized. The Company has provided for a full valuation allowance of approximately $33,650 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Malaysia

 

Lucky Star F&B Sdn. Bhd. and SH Desserts Sdn. Bhd. are subject to the Malaysia Corporate Tax Laws at a two tier corporate income tax rate based on amount of paid up capital. The tax rate for year of assessment 2021 for company with paid-up capital of MYR 2,500,000 (approximately $601,554) or less and that are not part of a group containing a company exceeding this capitalization threshold is 17% on the first MYR 600,000 (approximately $144,373) taxable profit with the remaining balance being taxed at 24%.

 

For the nine months ended December 31, 2021, Lucky Star F&B Sdn. Bhd. and SH Desserts Sdn. Bhd. incurred a loss of $172,434 and $109,060 respectively, which can be carried forward for seven years to offset its taxable income.

 

As of December 31, 2021, the operations in Malaysia incurred $1,297,970 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss can be carried forward for seven years. The Company has provided for a full valuation allowance against the deferred tax assets of $220,655 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

F-14

 

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2021 and March 31, 2021:

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

		As of				As of
		December 31, 2020				March 31, 2020
Deferred tax assets:
Net operating loss carryforwards		$				$
– United States of America			33,650				28,691
– Marshall Islands							-
– Malaysia			220,655				172,801
			254,305				201,452
Less: valuation allowance			(254,305	)			(201,452	)
Deferred tax assets		$	-			$	-

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $254,305 as of December 31, 2021.

 

14. STOCKHOLDERS’ EQUITY

 

On October 17, 2018, the founder of the Company, Mr. Leong Will Liam purchased 900,000 shares of restricted common stock of the Company at $0.03 per share for the Company’s initial working capital. Each share was with a par value of $0.0001. All proceeds received are used for the Company’s working capital.

 

On January 21, 2019, CBA Capital Holdings Sdn. Bhd. waived an interest-free loan of $257,183 in Lucky Star F&B Sdn. Bhd., our wholly own subsidiary, as contribution and recorded in additional paid in capital. CBA Capital Holdings Sdn. Bhd. is wholly owned by our Director, Mr. Leong Will Liam.

 

On December 30, 2020, the Company resolved to close the offering from the registration statement on Form S-1/A, dated February 25, 2020, that had been declared effective by the Securities and Exchange Commission on March 10, 2020. The Offering resulting in 100,000 shares of common stock being sold at $5.00 per share for a total of $500,000. The proceed of $500,000 will become the capital for our expansion, pursuant to the use of proceed stated in the aforementioned Form S-1/A.

 

As of December 31, 2021, the Company had 1,000,000 shares of common stock issued and outstanding with 5,000,000 authorized share capital.

 

15. FOREIGN CURRENCY EXCHANGE RATE

 

The Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company could post the same amount of income for two comparable periods and because of the fluctuating exchange rate post higher or lower income depending on exchange rate converted into US$ at the end of the financial year. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

 

16. SUBSEQUENT EVENTS

 

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 financial statements are issued, the Company has evaluated all events or transactions that occurred after December 31, 2021 up through the date the Company presented these unaudited financial statements.

 

F-15

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K dated June 29, 2021, for the year ended March 31, 2021 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

 

Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

 

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

Overview

 

We share the same business plan as that of our subsidiaries. We are engaged in the production and sale of food products, specifically dessert created and sold through various restaurants that we operate in Malaysia. We sell our goods under our brand name “Sweet Hut.” We have two dessert restaurant and one central kitchen.

 

It is worth highlighting that, on 15 June 2021, Malaysia Government introduced a four-phase National Recovery Plan (herein and after referred the “NRP”) to help the country emerge from the COVID-19 pandemic and its economic fallout. As each phase is based on the number of new cases, people requiring ICU treatment, and vaccination rates, it can be extended, or moved on to the next phase, whenever possible.

 

Phase 1 - Conditions are the same as “total lockdown” launched from 1 June 2021. No social gatherings, dine-in eating at restaurants, interstate travel and non-essential services are permitted. Any remaining workplaces are required to have their workers work from their homes. Phase 1 ended on September 10, 2021 for states the Company restaurant operates in and on October 1, 2021, entire nation move to phase 2.

 

Phase 2 – Allows Dine-in, gathering up to 5 people for fully vaccinated individual or 2 people for non-vaccinated individual including off-mask activities. Phase 2 ended on October 1, 2021 for states the Company restaurant operates in.

 

Phase 3 – Allow gathering up to 8 people for fully vaccinated individual or 5 people for non-vaccinated individual, all economic sectors will be allowed, excluding those with large crowds such as conventions and bars. Phase 3 ended on October 18, 2021 for states the Company restaurant operates in.

 

Phase 4 – No headcount restriction on gathering.

 

The Company’s central kitchen and two restaurants were and will continue to operate throughout each phases of NRP.

 

Results of Operations

 

		Three months ended December 31								Nine months ended December 31
		2021				2020				2021				2020
Dine-In and Take Away Revenue		$	39,265			$	8,667			$	47,083			$	96,901
Percentage towards Total Revenue			72.02	%			60.79	%			57.14	%			63.04	%
Delivery Revenue		$	15,256			$	5,591			$	35,321			$	56,820
Percentage towards Total Revenue			27.98	%			39.21	%			42.86	%			36.96	%
Total Revenue		$	54,521			$	14,258			$	82,404			$	153,721
Total Cost of Sales		$	(15,753	)		$	(12,265	)		$	(26,474	)		$	(54,249	)
Total Gross Profit		$	38,768			$	1,993			$	55,930			$	99,472
Gross Profit Margin			71.11	%			13.98	%			67.87	%			64.71	%

 

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Revenue for the Three Months ended December 31, 2021 and 2020

 

Dine-in and take away revenue improved from $8,667 for the three months ended December 31, 2020 to $39,265 for the three months ended December 31, 2021.

 

Delivery revenue improved from $5,591 for the three months ended December 31, 2020 to $15,256 for the three months ended December 31, 2021.

 

Total revenue improved from $14,258 for the three months ended December 31, 2020 to $54,521 for the three months ended December 31, 2021, primarily due to improvement in dine-in and take away revenue as a result of the relaxation NRP, which previously discourage nearby residents to travel beyond restricted area for dining and take away thusly.

 

Revenue for the Nine Months ended December 31, 2021 and 2020

 

Dine-in and take away revenue decrease from $96,901 for the nine months ended December 31, 2020 to $47,083 for the nine months ended December 31, 2021.

 

Delivery revenue decrease from $56,820 for the nine months ended December 31, 2020 to $35,321 for the nine months ended December 31, 2021.

 

Total revenue decrease from $153,721 for the nine months ended December 31, 2020 to $82,404 for the nine months ended December 31, 2021. Declination in dine-in revenue primarily due to the implementation NRP, which discourage nearby residents to travel beyond restricted area for dining and take away thusly.

 

The Company expect, through relaxation of dine-in and gathering restriction, should expect a slow but gradual recovery in consumer confidence in consumption in public space, and revenue of the Company thusly.

 

Gross Profit

 

The Company gross profit margin has improved significantly from 13.98% for the three months ended December 31, 2020 to 71.11% for the three months ended December 31, 2021 as the Company encounter significant wastage for the three months ended December 31, 2020 during NRP early phases period.

 

Meanwhile, gross profit margin improved marginally from 64.71% for the nine months ended December 31, 2020 to 67.87% for the nine months ended December 31, 2021.

 

As a result, gross profit for the three months ended December 31, 2020 increased from $1,993 to $38,768 for the three months ended December 31, 2021, while gross profit for the nine months ended December 31, 2020 decreased from $99,472 to $55,930 for the nine months ended December 31, 2021.

 

General and Administrative Expenses

 

For the nine months ended December 31, 2021 and 2020, the Company has incurred a general and administrative expenses of $393,377 and $312,345 respectively. Of which primarily consist of salary, lease expenses, utilities, depreciation, professional fees and repair and maintenance and advertisement and promotions.

 

		Nine months ended December 31
Primary expenses		2021				2020
Salary and salary related expenses		$	181,180			$	168,688
Percentage towards General and Administrative Expenses			46.06	%			54.01	%
Lease expenses		$	61,251			$	56,683
Percentage towards General and Administrative Expenses			15.57	%			18.15	%
Utility expenses		$	21,156			$	25,273
Percentage towards General and Administrative Expenses			5.38	%			8.09	%
Depreciation expenses		$	58,958			$	21,050
Percentage towards General and Administrative Expenses			14.99	%			6.74	%
Professional expenses		$	30,545			$	13,963
Percentage towards General and Administrative Expenses			7.76	%			4.47	%
Repair and maintenance expenses		$	10,674			$	4,709
Percentage towards General and Administrative Expenses			2.71	%			1.51	%
Compliance expenses		$	4,938			$	4,096
Percentage towards general and administrative expenses			1.26	%			1.31	%
Advertisement and promotion expenses		$	-			$	954
Percentage towards General and Administrative Expenses			-	%			0.31	%
Total primary expenses		$	368,702			$	295,416
Percentage towards General and Administrative Expenses			94.73	%			95.06	%
Miscellaneous expenses		$	24,675			$	16,929
Percentage towards General and Administrative Expenses			6.27	%			5.42	%
Total General and Administrative Expenses		$	393,377			$	312,345

 

Net Loss

 

For the nine months ended December 31, 2021 and 2020, the Company has incurred a net loss of $300,786 and $160,006 respectively.

 

Foreign Currency Exposure

 

The Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company could post the same amount of income for two comparable periods and because of the fluctuating exchange rate post higher or lower income depending on exchange rate converted into US$ at the end of the financial year. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

 

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Liquidity and Capital Resources

 

Cash Used In Operating Activities

 

For the nine months ended December 31, 2021, the Company has used $344,975 in operating activities caused by net loss from operating, increase in inventories, prepayment, decrease in account payable, accrued liabilities and lease liability offsetting by depreciation.

 

For the nine months ended December 31, 2020, the Company has used $187,185 in operating activities primarily caused by net loss from operating, loss on disposal of fixed assets, increase in prepayment and decrease in trade payable and other payable and change in operating lease liability contra by depreciation, decrease in inventories.

 

Cash Used in Investing Activities

 

The Company has invested $46,957 in investing activity for the acquisition of new kitchen equipment, office equipment, renovation and application of trademark for the nine months ended December 31, 2021.

 

The Company has invested $2,013 for the acquisition of new kitchen equipment and received $10,255 from disposing fully depreciated motor vehicle, netting a $8,242 net proceed from investing cash flow for the nine months ended December 31, 2020.

 

Cash Provided by Financing Activities

 

For the nine months ended December 31, 2021, the Company received $118,802 of advances from director and repaid $11,524 to bank loan.

 

For the nine months ended December 31, 2020, the Company received $724,867 from financing cash flow primarily consist of advances from director and issuance of shares of common stock pursuant to our public offering contra by repayment of bank loan and advancement to related party.

 

Off-balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of December 31, 2021.

 

Contractual Obligations

 

As of December 31, 2021, the Company has no contractual obligations involved.

 

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

ITEM 4 CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures:

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2021. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of December 31, 2021, our disclosure controls and procedures were not effective: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties and effective risk assessment; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines; and (4) lack of internal audit function due to the fact that the Company lacks qualified resources to perform the internal audit functions properly and that the scope and effectiveness of the internal audit function are yet to be developed.

 

Changes in Internal Control Over Financial Reporting:

 

There were no changes in our internal control over financial reporting during the quarter ending December 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

 

Item 1A. Risk Factors

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

(a) None.

 

(b) None.

 

(c) None.

 

Item 3. Defaults Upon Senior Securities

 

(a) None.

 

(b) None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits

 

31.1		Rule 13(a)-14(a) / 15(d)-14(a) Certification of principal executive officer and principal financial officer
32.1		Section 1350 Certification of principal executive officer and principal financial officer
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	SYNERGY EMPIRE LIMITED
	(Name of Registrant)
Date: February 7, 2022
	By:	/s/ Law Jia Ming
	Name:	Law Jia Ming
	Title:	Chief Executive Officer, Chief Financial Officer

 

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