10-Q 1 f10q0322_genufoodenergy.htm QUARTERLY REPORT
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022

 

Commission File Number 000-56112

 

GENUFOOD ENERGY ENZYMES CORP.

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

1108 S. Baldwin Avenue, Suite 107

Arcadia, California 91007

(Address of principal executive offices, including zip code.)

 

(855) 707-2077

(Telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of Each Class   Trading Symbol(s)   Name of Each Exchange on Which Registered
N/A   N/A   N/A

 

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 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, 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 Rule 12b-2 of the Exchange Act). YES    NO ☐

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 299,686,921 shares as of May 12, 2022

 

 

 

 

 

 

GENUFOOD ENERGY ENZYMES CORP.

 

FORM 10-Q FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2022

 

TABLE OF CONTENTS

 

      Page
Number
  PART I. FINANCIAL INFORMATION    
       
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS   1
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   17
ITEM 4. CONTROLS AND PROCEDURES   17
       
  PART II. OTHER INFORMATION    
       
ITEM 1. LEGAL PROCEEDINGS   19
ITEM 1A. RISK FACTORS   19
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES   19
ITEM 4. MINE SAFETY DISCLOSURES   19
ITEM 5. OTHER INFORMATION   19
ITEM 6. EXHIBITS   20

 

i

 

 

PART I

FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

GENUFOOD ENERGY ENZYMES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   As of   As of 
   March 31,   September 30, 
   2022   2021 
   (Unaudited)      
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $242,965   $9,271 
Prepayment   20,886    25,773 
Total Current Assets   263,851    35,044 
           
Investment   -    350,000 
           
Total Assets  $263,851   $385,044 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Accounts payable  $97,441   $100,746 
Accrued expenses   -    1,590 
Due to related parties   52,525    3,010 
Total Current Liabilities   149,966    105,346 
           
Commitment and contingencies (Note 11)   27,726    26,226 
           
STOCKHOLDERS’ EQUITY          
Common stock; $0.001 par value; 10,000,000,000 shares authorized; 299,686,921 and 299,686,921 shares issued and outstanding as of March 31, 2022 and September 30, 2021, respectively   299,687    299,687 
Additional paid-in capital   16,911,770    16,911,770 
Discount on common stock   (7,241,581)   (7,241,581)
Accumulated other comprehensive loss   (193,585)   (193,583)
Accumulated deficit   (9,690,132)   (9,522,821)
Total Stockholders’ Equity   86,159    253,472 
           
Total Liabilities and Stockholders’ Equity  $263,851   $385,044 

 

1

 

 

GENUFOOD ENERGY ENZYMES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 

 

   For the Three Months Ended
March 31,
   For the Six Months Ended
March 31,
 
   2022   2021   2022   2021 
REVENUE  $
-
   $
-
   $-   $- 
                     
OPERATING EXPENSES                    
General and administrative expenses   62,085    86,875    165,425    163,575 
Total operating expenses   62,085    86,875    165,425    163,575 
                     
LOSS FROM OPERATIONS   (62,085)   (86,875)   (165,425)   (163,575)
                     
OTHER INCOME (EXPENSE)                    
Interest income (expense)   2    (521)   3    (1,693)
Foreign currency income (loss)   4    (431)   6    (442)
Other non-operating income (expenses), net   (1,145)   1,582    (1,895)   1,582 
Total other (expense) income   (1,139)   630    (1,886)   (553)
                     
Loss before income taxes   (63,224)   (86,245)   (167,311)   (164,128)
                     
Income tax expense   
-
    800    
-
    800 
                     
NET LOSS  $(63,224)  $(87,045)  $(167,311)  $(164,928)
                     
OTHER COMPREHENSIVE INCOME (LOSS)                    
Foreign currency transaction adjustments   6    1,783    (2)   (1,500)
                     
COMPREHENSIVE LOSS  $(63,218)  $(85,262)  $(167,313)  $(166,428)
                     
BASIC & DILUTED LOSS PER SHARE  $
   $
*
   $
   $
 
                     
WEIGHTED AVERAGE NUMBER OF ORGINARY SHARES-BASIC & DILUTED   299,686,921    211,083,120    299,686,921    168,753,920 

 

 

 

*Less than $0.01 per share

 

2

 

 

GENUFOOD ENERGY ENZYMES CORPORATION

CONDENSED CONSOILDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2022 AND 2021

(UNAUDITED)

 

                  Accumulated     
   Common Stock   Additional   Discount on       Other   Total 
   Number of      Paid-in-   common   Accumulated   Comprehensive   Stockholder’s 
   Shares   Amount   Capital   stock   Deficit   Income (loss)   Equity 
BALANCE AT DECEMBER 31, 2021   299,686,921   $299,687   $16,911,770   $(7,241,581)  $(9,626,908)  $(193,591)  $149,377 
Foreign Currency Translation adjustment                            6    6 
Net Loss                       (63,224)        (63,224)
BALANCE AT MARCH 31, 2022   299,686,921   $299,687   $16,911,770   $(7,241,581)  $(9,690,132)  $(193,585)  $86,159 

 

                   Accumulated     
   Common Stock   Additional   Discount on       Other   Total 
   Number of       Paid-in-   common   Accumulated   Comprehensive   Stockholder’s 
   Shares   Amount   Capital   stock   Deficit   Income (loss)   Equity 
BALANCE AT DECEMBER 31, 2020   211,083,120   $211,083   $16,092,127   $(7,241,581)  $(8,236,272)  $(195,318)  $630,039 
Issuance of Common Stock for Debt Conversion – Director and Officers   5,121,889    5122    70,972                   76,094 
Issuance of Common Stock for Debt Conversion – Consultants   1,278,076    1278    17,026                   18,304 
Foreign Currency Translation adjustment                            1,783    1,783 
Net Loss                       (87,045)        (87,045)
BALANCE AT MARCH 31, 2021   217,483,085   $217,483   $16,180,125   $(7,241,581)  $(8,323,317)  $(193,535)  $639,175 

 

                   Accumulated     
   Common Stock   Additional   Discount on       Other   Total 
   Number of       Paid-in-   common   Accumulated   Comprehensive   Stockholder’s 
   Shares   Amount   Capital   stock   Deficit   Income (loss)   Equity 
BALANCE AT SEPTEMBER 30, 2021   299,686,921   $299,687   $16,911,770   $(7,241,581)  $(9,522,821)  $(193,583)  $253,472 
Foreign Currency Translation adjustment                            (2)   (2)
Net Loss                       (167,311)        (167,311)
BALANCE AT MARCH 31, 2022   299,686,921   $299,687   $16,911,770   $(7,241,581)  $(9,690,132)  $(193,585)  $86,159 

 

                    Accumulated     
   Common Stock   Additional   Discount on        Other   Total 
   Number of       Paid-in-   common    Accumulated   Comprehensive   Stockholder’s 
   Shares   Amount   Capital   stock    Deficit   Income (loss)   Equity 
BALANCE AT SEPTEMBER 30, 2020   104,083,120   $104,083   $15,134,979   $(7,241,581)   $(8,158,389)  $(192,035)  $(352,943)
Shares issued   107,000,000    107,000    957,148                    1,064,148 
Issuance of Common Stock for Debt Conversion – Director and Officers   5,121,889    5,122    70,972                    76,094 
Issuance of Common Stock for Debt Conversion – Consultants   1,278,076    1,278    17,026                    18,304 
Foreign Currency Translation adjustment                             (1,500)   (1,500)
Net Loss                        (164,928)        (164,928)
BALANCE AT MARCH 31, 2021   217,483,085   $217,483   $16,180,125   $(7,241,581)   $(8,323,317)  $(193,535)  $639,175 

 

3

 

 

GENUFOOD ENERGY ENZYMES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   For the Six Months Ended 
   March 31, 
   2022   2021 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(167,311)  $(164,928)
Adjustments to reconcile net loss to net cash used in operating activities:          
Commitment and contingencies   

1,500 

    
-
 
Change in operating assets and liabilities:          
Prepayment   4,887    (6,340)
Due from related parties   
-
    (487)
Accounts payable   (3,307)   1,044 
Accrued expenses   (1,590)   (5,345)
Due to related parties   49,515    43,715 
Net cash used in operating activities   (116,306)   (132,341)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Payment for Hukui investment   
-
    (800,000)
Proceeds from sale of Hukui investment   350,000    
-
 
Net cash provided by (used in) financing activities   350,000    (800,000)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Payment to note payable – related party   
-
    (120,410)
Proceeds from note payable   
-
    30,000 
Proceeds from issuance of common stock   
-
    1,064,148 
Net cash provided by financing activities   
-
    973,738 
           
EFFECT OF EXCHANGE RATE CHANGES ON CASH   
-
    
-
 
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   233,694    41,397 
           
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD   9,271    18,092 
           
CASH AND CASH EQUIVALENTS - END OF PERIOD   $242,965    $59,489 
           
SUPPLEMENTAL DISCLOSURE OF CASHFLOW INFORMATION          
Cash paid for interest  $
-
   $2,271 
Cash paid for income taxes  $
-
   $800 
           
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Issuance of Common Stock for Debt Conversion – Director and Officers  $
-
   $76,094 
Issuance of Common Stock for Debt Conversion – Consultants   
-
    18,304 
Total  $
-
   $94,398 

 

4

 

 

GENUFOOD ENERGY ENZYMES CORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1 – GENERAL ORGANIZATION AND BUSINESS

 

Genufood Energy Enzymes Corp., USA (the “Company” or “GEEC”) was incorporated under the laws of the State of Nevada on June 21, 2010. On February 13, 2012 GEEC incorporated a wholly-owned subsidiary company, Genufood Enzymes (S) Pte Ltd (“GESPL”) in Singapore.

 

The Company is currently a shell company.

 

Since its inception, the Company has always been in the development stage and never generated significant revenues. At this time, the Company does not have specific plan to commence any particular new business. The Company’s focus will be to consider either or both of a possible business combination, which may include but not be limited to a reverse merger, with another operating business, or commencing a business of its own.

 

The Company made two investments in Hukui Biotechnology Corporation (“Hukui”) by purchasing 80,000 shares of Hukui’s Series C Preferred Stock for $800,000 on December 15, 2020; and purchasing 60,000 shares of Hukui’s Series C Preferred Stock for $600,000 on June 25, 2021. The Company, an individual and resident of the Republic of China (the “Purchaser”), and Hukui, entered into a Stock Purchase Agreement dated as of November 17, 2021, pursuant to which the Company agreed to sell these 140,000 shares of Hukui’s Series C Preferred Stock (the “Hukui Shares”) to the Purchaser for $350,000 in cash, or $2.50 per share. The sale of the Hukui Shares closed on November 19, 2021.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The accompanying condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending September 30, 2022. These condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021.

 

Principle of Consolidation

 

The condensed consolidated financial statements include the accounts of GEEC and its wholly-owned subsidiary GESPL. All significant inter-company accounts and transactions have been eliminated in consolidation. The wholly-owned subsidiary of the Company did not have business activities during the six months ended March 31, 2022 and 2021.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with US 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For the six months ended March 31, 2022 and 2021, no significant estimates and assumptions have been made in the consolidated financial statements.

 

Concentrations of Credit Risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, to the extent balances exceeded limits that were insured by the Federal Deposit Insurance Corporation. The Company does not require collateral and maintains reserves for potential credit losses. Such losses have historically been immaterial and have been within management’s expectations.

 

5

 

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with original maturities of three months or less when acquired to be cash equivalents. As of March 31, 2022 and September 30, 2021, the Company did not have cash equivalents. The Company’s cash was denominated in United States Dollars (“USD”) or New Taiwan Dollars (“TWD”) and was placed with banks in the United States of America and Taiwan.

 

Fair Value of Financial Instruments

 

The Company 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 inputs are quoted prices available for identical assets and liabilities in active markets.
     
  Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data.
     
  Level 3 inputs are less observable and reflect our own assumptions.

 

The Company’s financial instruments consist principally of cash and cash equivalents, accounts payable and accrued expenses, due to related parties, and notes payable. The carrying amounts of such financial instruments in the accompanying condensed consolidated balance sheets approximate their fair values due to their relatively short-term nature. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.

 

Foreign Currency Translation and Transactions

 

The reporting and functional currency of GEEC is the USD. The functional currency of GESPL, a wholly owned subsidiary of GEEC, is the Singapore Dollar (“SGD”).

 

For financial reporting purposes, the financial statements of the Company’s Singapore subsidiary, which are prepared using the SGD, are translated into the Company’s reporting currency, USD. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.7381 and 0.7368 as of March 31, 2022 and September 30, 2021, respectively. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The 0.7383 and 0.7468 average exchange rates were used to translate revenues and expenses for the six months ended March 31, 2022 and 2021, respectively. Stockholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive loss in stockholders’ equity.

 

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 transactions. The resulting exchange difference, presented as foreign currency transaction loss, is included in the accompanying consolidated statements of operations.

 

Business Segments

 

The Company operates in only one segment.

 

Net Income (Loss) Per Share

 

The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic 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. There were no potential dilutive debt or equity instruments issued and outstanding at any time during the six months ended March 31, 2022 and 2021.

 

6

 

 

Discounts on Common Stock

 

Common stock issued lower than the Company’s par value is treated as common stock issued under discounts. The portion of the discount is shown separately as a deduction from the Company’s account of common stock on the Company’s condensed consolidated financial statements.

 

Stock-Based Compensation

 

The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.

 

The Company also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability 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 bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The 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. A valuation allowance is recorded to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized.

 

The Company considers positive and negative evidence when determining whether a portion or all of its deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused, and its tax planning strategies. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, the Company has considered possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies, and (iv) specific known trend of profits expected to be reflected within the industry.

 

The Company recognizes a tax benefit associated with an uncertain tax position when, in its judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the Company initially and subsequently measures the tax benefit as the largest amount that the Company judges to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The Company’s liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Company’s effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management. The Company classifies interest and penalties recognized on the liability for unrecognized tax benefits as income tax expense.

 

There were no current and deferred income tax provision recorded for the six months ended March 31, 2022 and 2021 since the Company is in developing stage and did not generate any revenues in the two fiscal periods.

 

7

 

 

Recent Accounting Pronouncements

 

The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs” or “ASU”) on the Company’s consolidated financial statements. Updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations. Recently issued ASUs that the Company feels may be applicable to the Company are as follows:

 

In August 2020, the FASB issued Accounting Standards Update No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The subtitle is Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU addresses complex financial instruments that have characteristics of both debt and equity. The application of this ASU would reduce the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models would result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. To date, no such bifurcation has been necessary. Management is evaluating the potential impact. This ASU becomes effective for fiscal years after December 15, 2023.

 

In March 2020, the FASB issued Accounting Standards Update No. 2020-03, Codification Improvements to Financial Instruments. There are seven issues addressed in this update. Issues 1 through 5 were clarifications and codifications of previous updates. Issue 3 relates only to depository and lending institutions and therefore would not be applicable to the Company. Issue 6 was a clarification on determining the contractual term of a net investment in a lease for purposes of measuring expected credit losses, an issue not applicable to the Company. Issue 7 relates to the regaining control of financial assets sold and the recordation of an allowance for credit losses. The amendment related to issues 1, 2, 4 and 5 become effective immediately upon adoption of the update. Issue 3 becomes effective for fiscal years beginning after December 15, 2019. Issues 6 and 7 become effective on varying dates that relate to the dates of adoption other updates. Management’s initial analysis is that it does not believe the new guidance will substantially impact the Company’s financial statements.

 

NOTE 3 – GOING CONCERN

 

As of March 31, 2022 and September 30, 2021, the Company had an accumulated deficit of $9,690,132 and $9,522,821, respectively. To date, the Company’s cash flow requirements have been primarily met through proceeds received from sales of Common Stock. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

 

The Company sold the 140,000 Hukui Shares for $350,000 cash on November 19, 2021. The proceeds will be used for operation expenses. Management believes that these funds are sufficient to fund the Company’s expenses for at least the next 12 months.

 

NOTE 4 – INVESTMENT

 

Pursuant to that certain Series C Preferred Shares Subscription Agreement dated September 23, 2020 between the Company and Hukui (the “Hukui Agreement”), the Company agreed to purchase an aggregate 200,000 Series C Preferred Shares, at $10.00 per share, for an aggregate investment of $2,000,000, in a series of three closings from December 15, 2020 through June 30, 2022. On December 15, 2020, the Company purchased 80,000 shares of Series C Preferred Stock at $10.00 per share, for a total purchase price of $800,000; and on June 25, 2021, the Company purchased an additional 60,000 shares of Series C Preferred Stock at $10.00 per share, for a total purchase price of $600,000. The total $1,400,000 investment consists of less than 20% of Hukui’s total equity with no significant control over or influence on Hukui. The investment is recorded at cost.

 

On November 17, 2021, the Company entered into a stock purchase agreement to sell all 140,000 Hukui Shares at $2.50 per share for a total of $350,000, The sale was completed on November 19, 2021, resulting in loss of $1,050,000. The Company recognized impairment loss of the market value of the shares of $1,050,000 for the year ended September 30, 2021.

 

8

 

 

NOTE 5 – STOCKHOLDERS’ EQUITY

 

The Company is authorized under its articles of incorporation, as amended, to issue 10,000,000,000 shares of Common Stock, par value $0.001 per share.

 

Issuance of Common Stock

 

On December 15, 2020, the Company completed a private offering of its Common Stock. The Company sold 107,000,000 shares of its Common Stock to 34 individuals at a purchase price of $0.01 per share, for gross proceeds of $1,070,000, before allocating certain expenses associated with the offering in the amount of $5,852 as adjusted paid-in capital.

 

Effective March 31, 2021, the Company issued an aggregate 6,399,965 shares of its Common Stock to certain of its directors, officers, employees and a consultant, who converted accrued and unpaid compensation in the aggregate amount of $94,398. Of this amount, (i) $37,998 was with respect to amounts accrued during fiscal year 2020 and was converted at a rate of $0.05 per share into an aggregate 759,965 shares of its Common Stock; and (ii) $56,400 was with respect to amount accrued during fiscal year 2021 through March 31, 2021 and was converted at a rate of $0.01 per share into an aggregate 5,640,000 shares of its Common Stock.

 

During the year ended September 30, 2021, one of the Company’s shareholders made a loan to the Company in the principal amount of $30,000, primarily to pay our expenses. The loan bore simple interest at a rate of 4% per annum and was payable as to both principal and interest on the maturity date of April 9, 2021. On the maturity date, the holder of the note converted the outstanding principal, together with accrued and unpaid interest of $598, into 3,059,836 shares of the Company’s Common Stock, at the rate of $0.01 per share.

 

On June 15, 2021, the Company sold and issued 63,000,000 shares of Common Stock to 18 individuals, at purchase price of $0.01 per share, from a private offering of its Common Stock (the “Spring 2021 Offering”). The gross proceeds were $630,000, before allocating certain expenses associated with the offering in the amount of $7,230 as adjusted paid-in capital.

 

On July 15, 2021, the Company completed the Spring 2021 Offering of its Common Stock, on which date it sold and issued additional 10,000,000 shares of its Common Stock to five individuals at a purchase price of $0.01 per share, for gross proceeds of $100,000, before allocating certain expenses associated with the offering in the amount of $959 as adjusted paid-in capital.

 

Effective September 30, 2021, the Company issued an aggregate 6,144,000 shares of its Common Stock to certain of its directors, officers, employees and a consultant, who converted accrued and unpaid compensation in the aggregate amount of $61,440.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

Related Parties

 

Name of related parties   Relationship with the Company
Yi Lung (Oliver) Lin   Principal shareholder
Jui Pin (John) Lin   Principal shareholder, Director, Former President and Chief Executive Officer
Jia Tian (Jeffery) Lin   Former Chief Executive Officer
Wen-Piao (Jack) Lai   Director, Chief Executive Officer
Shao-Cheng (Will) Wang   Chief Financial Officer
Kuang Ming (James) Tsai   Director
Nan-Yao (Jake) Chan   Director
Hsin-Ta (Darren) Su   Director

 

9

 

 

Due to Related Parties

 

The Company’s due to related parties balances are as follows:

 

   March 31,
2022
   September 30,
2021
 
Kuang Ming (James) Tsai  $11,000   $1,000 
Jui Pin (John) Lin   500    1,510 
Jia Tian (Jeffery) Lin   2,500    
-
 
Shao-Cheng (Will) Wang   13,800    
-
 
Wen-Piao (Jack) Lai   13,500    
-
 
Hsin-Ta (Darren) Su   11,225    500 
Total  $52,525   $3,010 

 

The related party balances are unsecured, interest-free and due on demand.

 

NOTE 7 – INCOME TAXES

 

The Company has not generated any revenue from any source in the United States and had consolidated net loss for all the years since inception in 2010. Management believes GEEC does not have any U.S. income tax liability due. However, even though the Company does not have U.S. income tax liability, it may be required to file Form 5471 each year with the Internal Revenue Service (the “IRS”) of Department of Treasury. GEEC falls in the Category Five Filer (as a domestic corporation). The Company used to have subsidiaries: GEECIS in Sri Lanka that was established in May 2011, GESPL in Singapore that was established in February 2012, and GESTL in Thailand that was established in December 2014. The subsidiaries in Sri Lanka and Thailand were disposed in 2014 and 2016, respectively, and the Singapore subsidiary has been inactive since 2016.

 

During the fiscal year ended September 30, 2021, the IRS imposed a $25,000 penalty on the Company for failure to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, for the year ended September 30, 2020. The Company has engaged an outside professional advisor to seek for forgiveness of the penalty and interest thereon in the amount of $2,726, for a total of $27,726, which was still pending as of March 31, 2022.

 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

 

Operating lease commitments

 

The Company terminated its previous virtual office agreement in Los Angeles, California and has established a new virtual office in Arcadia, California. The new arrangement is on a month-to-month basis at a cost of $200 per month. As of March 31, 2022, the Company has no material commitments under operating leases.

 

During the fiscal year ended September 30, 2021, the IRS imposed a $25,000 penalty on the Company for failure to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, for the year ended September 30, 2020 (see Note 7).

 

NOTE 9 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date when the condensed consolidated financial statements were issued, and determined that no subsequent events occurred that would require adjustment to or disclosure in the condensed consolidated financial statements.

 

10

 

 

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

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect”, “anticipate”, “hope” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

 

risks related to our ability to identify, pursue and commence a reverse merger and/or a possible operating business;

 

our ability to obtain adequate funding to complete a reverse merger or commence a possible operating business and meet our operating expenses on a current basis;

 

general economic uncertainty, whether as a result of the COVID-19 pandemic or otherwise;

 

delays in our ability to obtain any necessary business licenses and permits, and commence business operations, whether as a result of the COVID-19 pandemic or otherwise; and

 

current and longer-term economic and other impacts of the COVID-19 pandemic on our operations, results of operations and financial condition, including without limitation changes in consumer spending patterns for non-essential products, resulting from the economic crisis caused by lockdown, shelter-in-place, stay-at-home or similar orders instituted as a result of the pandemic, or otherwise.

 

Overview

 

We have no operations or any specific plan to commence any particular business at this time. Our focus will be to consider either or both of a possible business combination, which may include but not be limited to a reverse merger, with another operating business, or commencing a business of our own, the industry and nature of which we have not identified. We reserve the right to further change our business plan at any time.

 

Regardless of which overall business strategy we pursue - starting an operating business or engaging in a reverse merger or other business combination - we will continue to need capital to meet our expenses, primarily overhead and the professional fees related to the cost of compliance as a reporting company. To do so, we may raise equity, debt, convertible debt or a combination of any of the foregoing. However, there are no commitments in place to fund our capital requirements and no guarantee can be given that we will be able to secure such funding on terms that are favorable to us, or at all.

 

11

 

 

Hukui Investment

 

Hukui Biotechnology Corporation (“Hukui”) and we entered into a Series C Preferred Shares Subscription Agreement dated September 23, 2020 (the “Hukui Agreement”), pursuant to which we agreed to purchase an aggregate 200,000 shares of Hukui’s Series C Preferred Stock (the “Series C Preferred Shares”) at $10.00 per share, for an aggregate investment of $2,000,000.

 

The Hukui Agreement provided that we would purchase the Series C Preferred Shares in three tranches, through a date on or before June 30, 2022, as follows:

 

The first tranche is 80,000 Series C Preferred Shares in the amount of $800,000 (the “First Tranche Investment”), such shares having been purchased by us on December 15, 2020 (the “First Tranche Closing”);

 

The second tranche is 60,000 Series C Preferred Shares in the amount of $600,000 (the “Second Tranche Investment”), such shares having been purchased by us on June 25, 2021 (the “Second Tranche Closing”); and

 

The third tranche is 60,000 Series C Preferred Shares in the amount of $600,000 (the “Third Tranche Investment”), such shares to have been purchased on or before June 30, 2022 (the “Third Tranche Closing”).

 

An individual and resident of the Republic of China (the “Purchaser”), Hukui and we entered into a Stock Purchase Agreement dated as of November 17, 2021 (the “Stock Purchase Agreement”), pursuant to which we agreed to sell the 140,000 shares of Hukui’s Series C Preferred Stock that we had purchased in the First Tranche Closing and the Second Tranche Closing (the “Hukui Shares”) to the Purchaser for $350,000 in cash, or $2.50 per share. The sale of the Hukui Shares closed on November 19, 2021.

 

On December 17, 2021, Hukui and we entered into an Agreement (the “Termination Agreement”) pursuant to which our obligation to make the Third Tranche Investment was terminated and the Hukui Agreement was terminated. As a result, we have no continuing contractual obligation to make any investment in Hukui.

 

Results of Operations

 

Three-Month Period Ended March 31, 2022 compared to the Three-Month Period Ended March 31, 2021

 

Revenues

 

We did not generate any revenues during the three-month period ended March 31, 2022 and 2021.

 

Operating Expenses

 

We incurred total operating expenses of $62,085 and $86,875 for the three-month period ended March 31, 2022 and 2021, respectively. Our operating expenses consist of legal fees, other professional fees, payroll expenses, rent, bank charges, and transfer agent fees. The decrease in operating expenses for the three-month period ended March 31, 2022 compared to the same period ended in 2021 was primarily due to decrease in legal fees and other professional fees related to the fundraising and investment.

 

Other expense

 

During the three-month period ended March 31, 2022, we incurred $1,139 other expenses mainly due to interest incurred for unpaid penalty from IRS. During the three-month period ended March 31, 2021, we incurred $630 other income mainly due to debt forgiveness and offsets with interest incurred for amount borrowed to fund operating expenses.

 

Net Loss

 

As a result of the above, our net loss decreased from $87,045 in the three-month period ended March 31, 2021 to $63,224 in the same period ended in 2022.

 

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Six-Month Period Ended March 31, 2022 compared to the Six-Month Period Ended March 31, 2021

 

Revenues

 

We did not generate any revenues during the six-month period ended March 31, 2022 and 2021.

 

Operating Expenses

 

We incurred total operating expenses of $165,425 and $163,575 for the six-month period ended March 31, 2022 and 2021, respectively. Our operating expenses consist of legal fees, other professional fees, payroll expenses, rent, bank charges, and transfer agent fees. The increase in operating expenses for the six-month period ended March 31, 2022 compared to the same period ended in 2021 was primarily due to increase in legal fees, payroll expenses, and other professional fees.

 

Other expense

 

During the six-month period ended March 31, 2022, we incurred $1,886 other expenses mainly due to interest incurred for unpaid penalty from IRS. During the six-month period ended March 31, 2021, we incurred $553 other expenses mainly due to interest incurred for amounts borrowed to fund operating expenses.

 

Net Loss

 

As a result of the above, our net loss increased from $164,928 in the six-month period ended March 31, 2021 to $167,311 in the same period ended in 2022.

 

Effect of the COVID-19 Pandemic on our Business

 

While our liquidity and capital resources are severely limited and present serious obstacles to starting a business, these limitations are unrelated to the COVID-19 pandemic and resulting global economic crisis.

 

Some of our personnel are in Taiwan, which has been relatively less affected by the pandemic compared to many other countries in Asia, Europe and the United States. However, even before an increase in the number of cases of COVID-19 in Taiwan, we experienced delays in obtaining business licenses and permits, and any other governmental approvals that might have been required for businesses that we previously considered commencing, since government offices have been working with reduced staff during the pandemic. We expect this situation to continue and possibly become more challenging depending upon the duration of the pandemic.

 

Depending upon the extent and duration of the pandemic in Taiwan and U.S., these conditions may have a prolonged adverse impact on our ability to raise capital and commence any business we may pursue.

 

Liquidity and Capital Resources

 

Working Capital

 

   March 31,   September 30, 
   2022   2021 
Current Assets  $263,851   $35,044 
Current Liabilities   149,966    105,346 
Working Capital (Deficit)  $113,885   $(70,302)

 

As of March 31, 2022, we had current assets of $263,851 and a working capital of $113,885. In comparison, as of September 30, 2021, we had current assets of $35,044 and a working capital deficit of $70,302.

 

13

 

 

As of March 31, 2022, we had total assets of $263,851, compared with total assets of $385,044 at September 30, 2021. The decrease in total assets was primarily due to cash spent in operating expenses after selling the 140,000 Hukui Shares for cash.

 

We had $149,966 in total current liabilities as of March 31, 2022, consisting of $97,441 in accounts payable and $52,525 in due to related parties, compared to total current liabilities of $105,346 as of September 30, 2021, consisting of $100,746 in accounts payable, $1,590 in accrued expenses, and $3,010 in due to related parties. The increase in due to related parties was primarily due to unpaid compensation to officers and directors.

 

We had total stockholders’ equity of $86,159 and an accumulated deficit of $9,690,132 as of March 31, 2022. In comparison, we had a total stockholders’ equity of $253,472 and an accumulated deficit of $9,522,821 as of September 30, 2021.

 

On December 15, 2020, we completed a private offering of our Common Stock. We sold 107,000,000 shares of our Common Stock to 34 individuals at a purchase price of $0.01 per share, for gross proceeds of $1,070,000 before allocating certain expenses associated with the offering in the amount of $5,852 as adjusted paid-in capital.

 

Effective March 31, 2021, we issued an aggregate 6,399,965 shares of our Common Stock to certain of our directors, officers, employees and independent consultants, who converted accrued and unpaid compensation in the aggregate amount of $94,398. Of this amount, (i) $37,998 was with respect to amounts accrued during fiscal year 2020 and was converted at a rate of $0.05 per share into an aggregate 759,965 shares of our Common Stock; and (ii) $56,400 was with respect to amount accrued during fiscal year 2021 through March 31, 2021 and was converted at a rate of $0.01 per share into an aggregate 5,640,000 shares of our Common Stock.

 

During the year ended September 30, 2021, one of our shareholders made a loan to us in the principal amount of $30,000 (the “October 2020 Loan”), primarily to pay our expenses. The October 2020 Loan bore simple interest at a rate of 4% per annum and was payable as to both principal and interest on the maturity date of April 9, 2021. On the maturity date, the holder of the note evidencing the October 2020 Loan converted the outstanding principal, together with accrued and unpaid interest of $598, into 3,059,836 shares of our Common Stock, at the rate of $0.01 per share.

 

On June 15, 2021, we sold and issued 63,000,000 shares of our Common Stock to 18 individuals at purchase price of $0.01 per share from in the Spring 2021 Offering. Gross proceeds were $630,000, before allocating certain expenses associated with the offering in the amount of $7,230 as adjusted paid-in capital.

 

On July 15, 2021, we completed the Spring 2021 Offering of its Common Stock, on which date we sold and issued an additional 10,000,000 shares of its Common Stock to five individuals at a purchase price of $0.01 per share, for gross proceeds of $100,000, before allocating certain expenses associated with the offering in the amount of $959 as adjusted paid-in-capital.

 

Cash Flows

 

   Six months
ended
March 31,
2022
   Six months
ended
March 31,
2021
 
Cash flows used in operating activities  $(116,306)  $(132,341)
Cash flows provided by (used in) investing activities   350,000    (800,000)
Cash flows provided by financing activities   -    973,738 
Net increase in cash during period  $233,694   $41,397 

 

During the six-month period ended March 31, 2022, we used $116,306 of cash in operating activities which was attributable primarily to our net loss of $167,311 offset by change in operating assets and liabilities of $51,005. In comparison, during the six-month period ended March 31, 2021, we used $132,341 of cash in operating activities which was attributable to our net loss of $164,928 and the change in operating assets and liabilities of $32,587.

 

14

 

 

With respect to our investing activities, we received $350,000 in payment for the sale of the 140,000 Hukui Shares during the six-month period ended March 31, 2022. During the six-month ended March 31, 2021, we used $800,000 for investment in Hukui.

 

During the six-month period ended March 31, 2022, we did not have any financing activity. During the six-month period ended March 31, 2021, we had total cash inflow of $973,738 from financing activities. We repaid $120,410 to notes payable – related party, which our former President and Chief Executive Officer, Jui Pin Lin, previously loaned us. We received $30,000 as a loan from a shareholder of the Company. We received $1,064,148 in net proceeds from a private offering of our Common Stock, which was completed in December 2020. For accounting purposes, we recorded the net proceeds from the private offering instead of the gross amount of $1,070,000.

 

There is substantial doubt that we can continue as an ongoing business for the next twelve months unless we obtain additional capital to pay our expenses as they become due. We do not anticipate any significant additional revenue until and unless we begin to execute on our plan of operations. There is no assurance that we will ever reach that stage. The condensed consolidated financial statements presented herein do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going concern.

 

Our ability to continue as a going concern is dependent upon our ability to successfully execute our business plan and generate profitable operations in the future, and, until and unless we achieve that, to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operation as and when they become due. To date, our capital requirements have primarily been funded by shareholders through the purchase of our Common Stock in private offerings and short-term borrowings from a former officer and another shareholder.

 

The Company sold the 140,000 Hukui Shares for $350,000 cash on November 19, 2021. The proceeds will be used for operation expenses. Management believes that these funds are sufficient to fund the Company’s expenses for at least the next 12 months.

 

Contractual Obligations

 

We do not have material contractual obligations and commitments. We only have one lease that is renewed on a month-to-month basis.

 

Off-Balance Sheet Arrangements

 

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our condensed consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

 

Critical accounting policies and estimates

 

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. For the six-month periods ended March 31, 2022 and 2021, no significant estimates and assumptions have been made in the condensed consolidated financial statements. The following are some of the critical accounting policies in relation to the preparation of the condensed consolidated financial statements. For a full summary of our critical accounting policies, please refer to Note 2 of Notes to Condensed Consolidated Financial Statements.

 

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Foreign currency translation

 

The financial statements of our subsidiary denominated in currencies other than the USD are translated into USD using the closing rate method. The balance sheet items are translated into USD using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. All exchange differences are recorded in stockholders’ equity.

 

Stock-Based Compensation

 

We account for stock-based compensation in which we obtain employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock Compensation, which requires us to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.

 

We also adopted FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring goods or services. Such awards for services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

 

Recent accounting pronouncements

 

We do not expect that the adoption of recently issued accounting pronouncements will have a material impact on its financial position, results of operations, or cash flows. For a full summary of recent accounting pronouncements, please refer to Note 2 of Notes to Condensed Consolidated Financial Statements.

 

Currency exchange rates

 

Our functional currency is the USD, and the functional currency of our operations is the TWD. It is anticipated that all of our sales will be denominated in TWD. As a result, changes in the relative values of USD and TWD affect our reported amounts of revenues and profit (or loss) as the results of our operations are translated into USD for reporting purposes. In particular, fluctuations in currency exchange rates could have a significant impact on our financial stability. Fluctuations in exchange rates between the USD and the TWD would also affect our gross and net profit margins and could result in foreign exchange and operating losses.

 

Our exposure to foreign exchange risk primarily relates to currency gains or losses resulting from timing differences between the signing of sales contracts and the settling of these contracts. Furthermore, we translate monetary assets and liabilities denominated in other currencies into TWD, the functional currency of our operations. Our results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the end of the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in our statement of shareholders’ equity. We have not used any forward contracts, currency options or borrowings to hedge our exposure to foreign currency exchange risk. We cannot predict the impact of future exchange rate fluctuations on our results of operations and may incur net foreign currency losses in the future.

 

To the extent that we hold assets denominated in USD, any appreciation of the TWD against the USD could result in a charge in our statement of operations and a reduction in the value of our USD-denominated assets. On the other hand, a decline in the value of the TWD against the USD could reduce the USD equivalent amounts of our financial results.

 

For financial reporting purposes, the financial statements of the Company’s Singapore subsidiary, which are prepared using the SGD, are translated into the Company’s reporting currency, USD. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.7381 and 0.7368 as of March 31, 2022 and September 30, 2021, respectively. Revenue and expenses are translated using average exchange rates prevailing during each reporting period. The 0.7383 and 0.7468 average exchange rates were used to translate revenues and expenses for the six months ended March 31, 2022 and 2021, respectively. Stockholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive loss in stockholders’ equity.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

 

Not required for smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Our disclosure controls and procedures are designed to ensure that the information relating to our Company, including our consolidated subsidiary, required to be disclosed in our reports filed with the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure. We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the evaluation date, our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting, as described below.

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the design and operating effectiveness of our internal controls over financial reporting based on the framework in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

 

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of evaluation date and identified the following material weaknesses:

 

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

 

Comingling of funds: We do not have adequate control of our petty cash, resulting in the comingling of our petty cash with the nominal account holder’s personal funds.

 

Lack of Adequate Staffing: We do not have adequate in-house accounting personnel and expertise in key positions, which resulted in overly relying on outside consultants in preparing financial statements and other required disclosures by the Securities and Exchange Commission.

 

Ineffective oversight: We do not exercise effective oversight and monitoring procedures designed and implemented to certain control activities.

 

Overly relied on outside professionals: We are unable to prepare internally financial statements and relied on outside professional consultants to prepare financial statements and adequate disclosures.

 

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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. As a result of the material weaknesses in internal control over financial reporting identified above, management concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2022 based on the criteria set forth in “Internal Control-Integrated Framework” issued by COSO.

 

Due to the nature of the material weaknesses, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected. The material weaknesses identified above either individually or in aggregation did not result in any identified misstatements or errors in the Company’s condensed consolidated financial statements at and for the six-month period ended March 31, 2022.

 

Management’s Plan for Remediation

 

Management has discussed the material weaknesses noted above with our independent registered public accounting firm. Management is committed to improving its internal controls and, subject to having adequate financial resources, intends to:

 

  increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties to monitor and review until there are sufficient personnel to segregate duties;

 

  consider providing professional courses for our key position personnel;

 

  hire additional employees to realize segregation of duties; and

 

  strengthen management monitoring control over accounting and financial statements preparation processing.

 

However, due to limitation of funds and personnel, we have so far been unable to begin to implement the plan to remediate the material weaknesses noted above and it is uncertain when we will be able to begin to implement the plan to remediate these material weaknesses.

 

Inherent Limitations on Effectiveness of Controls

 

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all control issues or misstatements. Accordingly, our controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our control system are met. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become adequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Changes in Internal Control

 

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

18

 

 

PART II

OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not currently a party to any lawsuit or proceeding, which, in the opinion of management, is likely to have a material adverse effect on us or our business.

 

ITEM 1A. RISK FACTORS

 

Not required of smaller reporting companies.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

19

 

 

ITEM 6. EXHIBITS

 

Exhibit No.   Description
31.1   Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
31.2   Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
32.1*   Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*   Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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 (formatted as Inline XBRL and contained in Exhibit 101).

 

 

* The certifications attached as Exhibits 32.1 and 32.2 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

20

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

  GENUFOOD ENERGY ENZYMES CORP.
     
Date: May 13, 2022 By: /s/ Wen-Piao Lai
    Wen-Piao Lai
 

 

President and Chief Executive Officer

   
By: /s/ Shao-Cheng Wang
    Shao-Cheng Wang
 

 

Chief Financial Officer

 

 

21

 

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