When used in this Annual Report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act
regarding events, conditions, and financial trends that may affect our future
plans of operations, business strategy, operating results, and financial
position. Persons reviewing this Annual Report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and actual results may differ materially from
those included within the forward-looking statements as a result of various
factors. Such factors are discussed further below under "Trends and
Uncertainties," and also include general economic factors and conditions that
may directly or indirectly impact our financial condition or results of
operations. See the caption "Forward-Looking Statements" at the forepart of this
Annual Report.
16
Overview of Current and Planned Business Operations
Through Sanyi Group, we are engaged in providing wellness services that include
acupressure/reflexology, massage therapy and cupping. We offer various types of
massage therapy, such as Swedish, deep tissue and hot stone oil, among others,
all as discussed in Part I, Item 1. Business, above. We primarily rely on our
promotional activities and our shopping centre location in attracting new
customers and maintaining our current customers.
We have identified future partners from strategic cities in China to help us
exploit and expand to the Chinese market for our wellness services in the major
cities of China, including Guangzhou, Shenzhen, Fujian, Sichuan, Beijing,
Shanghai for fiscal 2023, though these plans are subject to the uncertainties
related to the Covid-19 pandemic and other factors, including but not limited to
obtaining the required funding for.
On March 11, 2020, the World Health Organisation declared the coronavirus
outbreak as a pandemic owing to its rapid spread across the globe. A series of
precautionary and control measures have been and continue to be implemented
across the world by reason of this declaration and the recent furtherance of the
pandemic attributable to variants of the coronavirus outbreak.
The Australian Government Authority imposed a Movement Control Order related to
the Covid-19 pandemic (the "MCO") on February 27, 2020. It implemented various
MCO's to include travel restrictions and lockdowns to curb the spread of the
Covid-19 outbreak in Australia, which have resulted in material adverse effects
on Australia's economy since 2020 and currently, with variants that continue to
pose increased public exposure around the world. On July 6, 2022, border
restrictions for people travelling to and from Australia were lifted; and on
October 13, 2022, the mandatory isolation of people with Covid-19 ended in
Victoria, along with the state of emergency declared by the Victorian Government
in 2020.
June, 30, June,30, June, 30, June, 30,
2022 2021 2020 2019
US$ US$ US$ US$
Revenue 262,537 201,854 183,857 249,253
Operating expenses:
Payroll and employee related
expense 94,196 ) (110,502 ) (99,411 ) (130,852 )
Occupancy expenses - - - (68,146 )
Depreciation expense - - (67,950 ) (7,416 )
Depreciation on right-of-use assets (64,884 ) (66,756 ) (55,013 ) -
Finance cost (11,378 ) (13,703 ) (12,730 ) -
Motor vehicle expenses - - (816 ) (3,550 )
General and administrative expenses (110,253 ) (48,264 ) (24,200 ) (34,026 )
Total Operating expenses
(280,711 ) (239,225 ) (260,120 ) (243,990 )
Income/(loss) from operations (18,174 ) (37,371 ) (76,263 ) 5,263
Other income 60,206 92,759 18,925 -
Interest income 79 197 115 433
Income/(deficit) from continuing
operations before income tax
expenses 42,111 55,585 (57,223 ) 5,696
Income tax expense - - - (826 )
Net income/(deficit) after income
tax expense for the year 42,111 55,585 (57,223 ) 4,870
Exchange differences arising on
translation of foreign operations (3,765 ) (6,943 ) (876 ) 394
Total comprehensive
income/(deficit) for the year 38,346 48,642 (58,099 ) 5,264
We have accounted for the impact of the pandemic and its consequential effects
on our results of operations in our consolidated financial statements for the
fiscal years ended June 30, 2022, 2021, and 2020. The Covid-19 pandemic has had
a negative impact on our performance for these financial years due to travel and
movement restrictions and other precautionary measures imposed by the relevant
local authorities. Our revenue and the profit for the fiscal years ended June
30, 2021, and 2020, has dropped significantly.
17
Results of Operations
Comparison of the Fiscal Year Ended June 30, 2022, to the Fiscal Year Ended June
30, 2021
Revenue
For the fiscal year ended June 30, 2022, we had $262,537 in revenue compared to
$201,854 for the fiscal year ended June 30, 2021, which is an increase of
$60,683 from the previous year. The revenue increase is mainly due to the
Australian Government Authority starting to allow occasional people movement and
the removal of Covid-19 lockdowns allowing our wellness centre to be open for
business. The opening of our business operation and the cessation of the
lockdown supported a higher revenue.
Payroll and employee related expense
For the fiscal year ended June 30, 2022, our payroll and employee related
expense decreased by US$16,306 to US$94,196 as compared to the fiscal year ended
June 30, 2021, of US$110,502. There was a period of approximately two (2) months
whereby the wellness center was closed as requested by the Australia Government
Authority's MCO. As employees are employed on an hourly basis, no staff was
reported working during that period. The MCO lead to reduced staff costs
incurred for that period and thus reduced payroll cost in the fiscal year ended
June 30, 2022.
Depreciation on right-of-use assets
Depreciation expense was US$64,884 for the fiscal year ended June 30, 2022, as
compared to fiscal year ended June 30, 2021, of US$66,756, a decrease of
US$1,872, arising from foreign exchange translation.
General and Administrative Expenses
For the fiscal year ended June 30, 2022, general and administrative expense
increased by US$61,989 to US$110,253, compared to the fiscal year ended June 30,
2021, of US$37,611 The increase in expense resulted from high professional fees
paid in the quarter ended March 31, 2022. Also, the impact of Covid-19 began to
diminish in 2022; accordingly, general and administrative expense increased.
Net Income/ (deficit) after tax
Even though our revenue has slowly recovered from the pandemic, our net income
still decreased by US$13,474, mainly due to the reduces in Covid-19's subsidized
in the year.
Comparison of the Three Months Ended March 31, 2022, to the Three Months Ended
March 31, 2021
Revenue
For the three months ended March 31, 2022, we had revenue of US$77,768, as
compared to the three months ended March 31, 2021, amounting to US$69,577, or an
increase of US$8,191. The increase in revenue resulted from the recovery of
Australian economy and resuming of business activities in Australia as the
Covid-19 pandemic MCO ended.
Payroll and employee related expense
For the three months ended March 31, 2022, our payroll and employee related
expense was US$27,687, as compared to the three months ended March 31, 2021,
amounting to US$36,444, a decrease of US$8,757. The payroll and employee related
expense including superannuation contribution (employee benefits), employee
membership fees, labour hiring costs and staff amenities were lower too. There
were reduces in headcount for the period ended March 31, 2022, as compared to
headcount for the period ended March 31, 2021, which accounted for this
decrease.
18
Depreciation on right-of-use assets
For the three months ended March 31, 2022, the depreciation on right-of-use
assets decreased by US$1,088, compared to the three months ended March 31, 2021,
of US$17,273, a decrease to US$16,185 for three months ended March 31, 2022.
This decrease was due to fluctuating exchange rate of the U.S Dollar against
Australian Dollar.
General and Administrative Expenses
For the three months ended March 31, 2022, general and administrative expense
increased by US$11,747, from the three months ended March 31, 2022, of
US$15,572, compared to the three months ended March 31, 2021, of US$3,825. The
increased expense resulted from professional fee charges for preparing audit
required documents.
Operating Expenses
For the three months ended March 31, 2021, our operating expenses were
US$57,542, compared to the three months ended March 31, 2022, of US$59,444.
Operating expenses consisted of payroll and employee related expenses,
depreciation on right-of-use assets, and general and administrative expenses.
Net income after income tax
For the three months ended March 31, 2022, we had a net income after income tax
of US$15,550, compared to the three months ended March 31, 2021, of US$27,142.
Comparison of the Nine Months Ended March 31, 2022, to the Nine Months Ended
March 31, 2021
Revenue
For the nine months ended March 31, 2022, we had revenue of US$178,608, compared
to the nine months ended March 31, 2021 amounting to US$137,302, or an increase
of US$41,306. Our business increased rapidly in late half year of 2021 when the
Australian Government lifted its MCO lockdown, though some safety movement
restriction remained. The revenue increase in 2022 is mainly the result of the
Covid-19 pandemic easing and the related restrictions being primarily removed.
Payroll and employee related expense
For the nine months ended March 31, 2022, our payroll and employee related
expense was US$63,844, compared to the nine months ended March 31, 2021, of
US$77,740, or a decrease of US$13,896. The payroll and employee related expense
including superannuation contribution, employee membership fees, labour hiring
costs and staff amenities were lower too. The number of headcounts reduced from
five (5) staff members as at March 31, 2021, to three (3) as at March 31, 2022.
Depreciation on right-of-use assets
For the nine months ended March 31, 2022, the depreciation on right-of-use
assets decreased by US$683 to US$48,895, compared to the nine months ended March
31, 2021, of US$49,578. This decrease was due to fluctuating exchange rate of
the U.S Dollar against Australian Dollar.
General and Administrative Expenses
For the nine months ended March 31, 2022, general and administrative expense
increased by US$10,141 with US$25,597 for the period ended March 31, 2022,
compared to the nine months ended March 31, 2021, of US$15,456. The increase in
expense resulted from high professional fees paid in the quarter ended March 31,
2022. Also, the impact of Covid-19 began to diminish in 2022; accordingly,
general and administrative expense increased.
Operating Expenses
For the nine months ended March 31, 2021, our operating expenses were
US$142,774, compared to the nine months ended March 31, 2022, of US$138,336.
Operating expenses consisted of payroll and employee related expenses,
depreciation on right-of-use assets, and general and administrative expenses.
19
Net income after income tax
For the nine months ended March 31, 2022, we had a net income after income tax
of US$59,700 compared to the nine months ended March 31, 2021, of US$57,443.
Comparison of the Three Months Ended December 31, 2021, to the Three Months
Ended December 31, 2020
Revenue
For the three months ended December 31, 2021, we had revenue of US$75,991,
compared to the three months ended December 31, 2020, of US$54,194, with an
increase of US$21,797. Our business increased rapidly in late half year of 2021
when the Australian Government lifted its MCO lockdown, though some safety
movement restriction remained.
Payroll and employee related expense
For the three months ended December 31, 2021, our payroll and employee related
expense was US$23,439, compared to the three months ended December 31, 2020, of
US$24,016, or a decrease of US$577. The payroll and employee related expense
including superannuation contribution, employee membership fees, labour hiring
costs and staff amenities. These costs were also lower for the three month ended
December 31, 2021.
Depreciation on right-of-use Assets
For the three months ended December 31, 2021, the depreciation on right-of-use
assets decreased by US$38 to US$16,285, compared to the three months ended
December 31, 2020, of US$16,323. This decrease was due to fluctuating exchange
rate of the U.S Dollar against Australian Dollar.
General and Administrative Expenses
For the three months ended December 31, 2021, general and administrative expense
increased by US$3,282, or US$5,608, compared to the three months ended December
31, 2020, of US$2,326. The increase resulted from increased accounting fees for
the period ended December 31, 2021.
Operating Expenses
For the three months ended December 31, 2021, our operating expenses were
US$45,332, compared to the three months ended December 31, 2020, of US$42,665.
Operating expenses consisted of payroll and employee related expenses,
depreciation on right-of-use assets and general and administrative expenses.
Net Income
For the three months ended December 31, 2021, we had a net income after income
tax of US$40,058 compared to the three months ended December 31, 2020, of
US$28,100. The revenue increase in 2022 was mainly the result of the Covid-19
pandemic easing and the related restrictions being primarily removed.
Comparison of the Six Months Ended December 31, 2021, to the Six Months Ended
December 31, 2020
Revenue
For the six months ended December 31, 2021, we had revenue of US$100,840,
compared to the six months ended December 31, 2020, of US$67,725, or an increase
of US$33,115. Our business increased rapidly in late half year of 2021 when the
Australian Government lifted its MCO lockdown, though some safety movement
restriction remained.
20
Payroll and employee related expense
For the six months ended December 31, 2021, our payroll and employee related
expense was US$36,157, compared to the six months ended December 31, 2020, of
US$41,296, or a decrease of US$5,139. The payroll and employee related expense
including superannuation contribution, employee membership fees, labour hiring
costs and staff amenities. These costs were also lower for the six month ended
December 31, 2021.
Depreciation on right-of-use assets
For the six months ended December 31, 2021, the depreciation on right-of-use
assets increased by US$405 to US$32,710, compared to the six months ended
December 31, 2020, of US$32,305. This increase was due to fluctuating exchange
rate of the U.S Dollar against Australian Dollar.
General and Administrative Expenses
For the six months ended December 31, 2021, the general and administrative
expense amounting to US$10,025, decreased by US$1,606, compared to the six
months ended December 31, 2020, of US$11,631. The decrease in general and
administrative expenses resulted from management imposing tight controls on cost
saving in order to increase liquidity and cashflow.
Operating Expenses
For the six months ended December 31, 2021, our operating expenses were
US$78,892, compared to the six months ended December 31, 2020, of US$85,232.
Operating expenses consisted of payroll and employee related expenses,
depreciation on right-of-use assets, and general and administrative expenses.
Net Income after income tax
For the six months ended December 31, 2021, we had a net income after income tax
of US$44,150, compared to the six months ended December 31, 2020, of US$30,301.
The decrease was primarily due to the effects of the Covid-19 pandemic and the
MCO in 2020.
Comparison of the Three Months Ended September 30, 2021, to the Three Months
Ended September 30, 2020
Revenue
For the three months ended September 30, 2021, we had revenue of US$24,849,
compared to the three months ended September 30, 2020, of US$13,531, or an
increase of US$11,318. Our business increased in late half year of 2021 when the
Australian Government lifted up its MCO lockdown, while some safety movement
restriction remained.
Payroll and employee related expense
For the three months ended September 30, 2021, our payroll and employee related
expense was US$12,718, compared to the three months ended September 30, 2020, of
US$17,280, or a decrease of US$4,562. The payroll and employee related expense
including superannuation contribution, employee membership fees, labour hiring
costs and staff amenities. These differences resulted from reduced headcount and
tighter cost controls.
Depreciation right-of-use assets
For the three months ended September 30, 2021, the depreciation right-of-use
assets amounting to US$16,425. The cost had increased by US$443, compared to the
three months ended September 31, 2020, of US$15,982. This increase was due to
the fluctuating exchange rate of the U.S Dollar against Australian Dollar.
General and Administrative Expenses
For the three months ended September 30, 2021, general and administrative
expense amounting to US$4,417, had decreased by US$4,888, compared to the three
months ended September 30, 2020, of US$9,305. The decrease in general and
administrative expenses were not the direct cost of running the wellness center;
and management had imposed tight control on cost savings in order to increase
liquidity and cashflow.
21
Operating Expenses
For the three months ended September 30, 2021, our operating expenses were
US$33,560, compared to the three months ended September 30, 2020, of US$42,567.
Operating expenses consisted of payroll and employee related expenses,
depreciation on right-of-use assets, and general and administrative expenses.
Net Income after tax
For the three months ended September 30, 2021, we had a net income after income
tax of US$4,092 compared to the three months ended September 30, 2020, US$2,201.
The decrease was primarily due to the effects of the Covid-19 pandemic and the
MCO in 2020.
Comparison of the Fiscal Year Ended June 30, 2021, to the Fiscal Year Ended June
30, 2020
Revenue
For the fiscal year ended June 30, 2021, we had US$201,854 in revenue compared
to US$183,857 for the fiscal year ended June 30, 2020, which is an increase of
US$17,997 from the previous year. The Covid-19 outbreak in the fiscal year ended
June 30, 2020, had an adverse effect on our business performances and overall
affect our business operations. There were increasing Covid-19 cases reported in
the Victoria boundaries, and the Australia Government Authority imposed
lockdowns and movement restrictions. However, in the fiscal year ended June 30,
2021, these cases had been tightly controlled and local authorities had lifted
the MCO lockdown. The business operations resumed, and we were able to generate
increase revenue in fiscal 2021.
Payroll and employee related expense
For the fiscal year ended June 30, 2021, our payroll and employee related
expense amounting to US$110,502, increased by US$11,091, compared to the fiscal
year ended June 30, 2020, of US$99,411. As the Covid-19 pandemic lockdown was
removed by the Australian Government Authority and as our wellness centre was
re-opened for business, we incurred a higher running cost during this operation
period. The payroll and employee related expense included superannuation
contribution, employee membership fee, labour hiring costs and staff amenities.
Occupancy Expense
Upon adoption of ASU 842 on July 1, 2019, all occupancy expenses have been
capitalized whereby lease assets and liabilities are recognized at the present
value of the future lease payments at the lease commencement date.
Depreciation Expense
For the fiscal year ended June 30, 2021, we had no depreciation expense compared
to fiscal year ended June 30, 2020, in which we had US$67,950 in depreciation
expense. All of our fixed assets were fully depreciated in the previous fiscal
year, which is why there was no depreciation expense in 2021.
Depreciation on right-of-use assets
Upon adoption of right-of-use asset and leasing liabilities on July 1 2019, the
depreciation of US$55,013 was recognized in the fiscal year ended June 30, 2020,
of US$66,756 for the fiscal year ended June 30, 2021, or an increase of
US$11,743 arising from foreign exchange translation.
General and Administrative Expenses
For the fiscal year ended June 30, 2021, general and administrative expense
increased by US$24,064 to US$48,264, compared to the fiscal year ended June 30,
2020, of US$24,200. During the Covid-19 pandemic duration, the Australian
Government Authority relaxed the MCO lockdown period allowing outlets to be
opened for business, causing higher expenditures, such as utilities, shop
supplies and higher professional expenses, along with inflation in Australia and
the fluctuating exchange rate of the U.S. Dollar against Australian Dollar
during this period.
22
Operating Expenses
For the fiscal year ended June 30, 2021, we had total operating expenses of
US$239,225, compared to the fiscal year ended June 30, 2020, of US$260,120.
Operating expenses consisted of payroll and employee related expense, occupancy
expense, depreciation on right-of-use assets, finance cost and general and
administrative expenses.
Other Comprehensive Income/Loss
For the fiscal year ended June 30, 2021, we had a total comprehensive income of
US$48,642 after the loss from the currency exchange rate of US$6,943, compared
to the fiscal year ended June 30, 2020, where we had a total comprehensive loss
of (US$58,099), after the loss from the currency exchange rate of US$876.
Comparison of the Fiscal Year Ended June 30, 2020, to the Fiscal Year Ended June
30, 2019
Revenue
For the fiscal year ended June 30, 2020, we had revenue of US$183,857, compared
to fiscal ended June 30, 2019, of US$249,253, or a decrease of US$65,396. The
lower revenue resulted from our wellness centre not being fully open for
business for the year caused by the Covid-19 pandemic whereby the Australian
Government Authority implemented very frequent lockdown periods and restrictions
on people's movement under its MCO.
Payroll and employee related expense
For the fiscal year ended June 30, 2020, our payroll and employee related
expense was US$99,411, compared to the fiscal year ended June 30, 2019, of
US$130,852, or a decrease of US$31,441. The payroll and employee related
expense, including superannuation contribution, employee membership fees, labour
hiring costs and staff amenities were lower too.
Occupancy Expense
For the fiscal year ended June 30, 2020, all occupancy expenses had been
capitalized calculated based on the net present value. Thus no occupancy
expenses was recognized for year 2020.
Depreciation Expense
For the fiscal year ended June 30, 2020, the depreciation expense increased by
US$60,534 to US$67,950, compared to the fiscal year ended June 30, 2019, of
US$7,416. This increase was due to an instant asset written-off under accounting
policy. Renovation to the centre was performed and fully depreciated during the
fiscal year of June 30, 2020.
General and Administrative Expenses
For the fiscal year ended June 30, 2020, general and administrative expense
decreased by US$9,826 to US$24,200, compared to the fiscal year ended June 30,
2019, of US$34,026. The lower expense resulted from our wellness centre being
closed for a much longer period during the Covid-19 pandemic as Australian
Government Authority imposed longer and frequent shutdown periods and restricted
people movement.
Operating Expenses
For the fiscal year ended June 30, 2020, our operating expenses were US$260,120,
compared to the fiscal year ended June 30, 2019, of US$243,990. Operating
expenses consisted of payroll and employee related expenses, occupancy expense,
depreciation expense, depreciation on right-of-use assets, finance cost, motor
vehicle expense and general and administrative expenses.
Other Comprehensive Income/Loss
For the fiscal year ended June 30, 2020, we had a total comprehensive loss of
(US$58,099) after the loss from currency exchange rate of US$876 compared to the
fiscal year ended June 30, 2019, or a total comprehensive income of US$5,264,
after the income from currency exchange rate of US$394.
23
Liquidity and Capital Resources
At June 30, 2022, we had a net tangible asset of US$10,452 (June 30, 2021 net
liability of US$27,894). We reported an after tax income of US$38,488 for the
fiscal year ended June 30, 2022 (June 30, 2021 after tax income of US$48,642).
Summary of Significant Accounting Policies
The consolidated financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the United States of
America and are presented in U.S. dollars. The Company's fiscal year end is June
30.
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles 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 periods discussed. Actual results could differ from those estimates.
Foreign Currency Translation
The functional currency of our foreign subsidiary is its local currency. Assets
and liabilities of the foreign subsidiary are translated into U.S. dollars at
period-end exchange rates, stockholders' equity is translated at the historical
rates and the consolidated statement of operations and cash flows are translated
at average exchange rates during the reporting periods. Resulting translation
adjustments are recorded in accumulated other comprehensive income, a separate
component of stockholders' equity. A component of accumulated other
comprehensive income will be released into income when the Company executes a
partial or complete sale of an investment in a foreign subsidiary or a group of
assets of a foreign subsidiary considered a business and/or when the Company no
longer holds a controlling financial interest in a foreign subsidiary or group
of assets of a foreign subsidiary considered a business.
Transactions denominated in currencies other than the local currency are
recorded based on exchange rates at the time such transactions arise. Subsequent
changes in exchange rates result in foreign currency transaction gains and
losses that are reflected in results of operations as unrealized (based on
period end translation) and realized (upon settlement of the transactions) and
reported under other general expenses in the consolidated statement of
operations.
Fair Value of Financial Instrument
The Company's financial instruments exposed to concentrations of credit risk
consist primarily of cash and cash equivalents. Cash and cash equivalents are
held in several Australian bank accounts and time deposit accounts. We regularly
assesses the level of credit risk we are exposed to and whether there are better
ways of managing credit risk. We invests our cash and cash equivalents with
reputable financial institutions. The Company has not incurred any losses
related to these deposits.
Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until
realization is more likely than not. The Company has adopted ASC 740-10-50
"Accounting for Income Taxes" as of its inception. Pursuant to the standard, the
Company is required to compute tax asset benefits for initial years of operating
losses carried forward.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC
260-10-4-5, "Earnings per Share." The standard requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income statement.
Basic EPS is computed by dividing net income (loss) available to common
shareholders (numerator) by the weighted average number of common shares
outstanding (denominator) during the periods discussed. Diluted EPS gives effect
to all dilutive potential common shares outstanding during the periods
discussed, including stock options, using the treasury stock method, and
convertible preferred stock, using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential common shares if their effect is
anti-dilutive.
Recent accounting Pronouncements
ASU 2016-02, Leases (Topic 842). ASC 842 requires companies to generally
recognize operating and financing lease liabilities and corresponding ROU assets
on their balance sheet. Leases will be classified as finance or operating
leases, with classification affecting the pattern and classification of expense
recognition in the consolidated statements of operation. Effective in year 2020,
the Company adopted this new standard prospectively using a modified
retrospective transition approach.
24
The Company elected the package of practical expedients permitted under the
transition guidance of the new standard, which allowed the Company to carry
forward its historical assessment on whether a contract is or contains a lease,
lease classification, and initial direct costs. Upon adoption in year 2020, the
Company recognized ROU assets and lease liability of $437.2 thousand. The
adoption of ASC 842 did not have a material impact to Company's consolidated
statements of operations and cash flows from operations.
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments. This standard update, along with
subsequent ASUs, replaces the incurred loss impairment methodology with an
expected credit loss model for which a company recognizes an allowance based on
the estimate of expected credit loss. The Company adopted the standard in year
2020 on a modified retrospective basis. The adoption of the new standard did not
have a material impact on the Company's consolidated financial statements.
Recent accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting
Standards Update No. 2014-09, Revenue from Contracts with Customers ("ASU
2014-09") or ("ASC Topic 606"), which supersedes nearly all existing revenue
recognition guidance under U.S. GAAP. The new guidance provides a five-step
process for recognizing revenue that depicts the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The new
guidance also requires expanded qualitative and quantitative disclosures related
to the nature, amount, timing and uncertainty of revenue and cash flows arising
from contracts with customers. The new guidance is effective for public
companies with annual reporting periods beginning after December 31, 2017, and
is to be applied either retrospectively to each prior reporting period presented
or retrospectively with the cumulative effect of initially applying it
recognized at the date of initial adoption. Early adoption is permitted for all
entities but not before the original effective date for public entities. The
Company adopted ASC Topic 606 in year 2019.
The FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic
740), which is intended to simplify various aspects related to accounting for
income taxes. The new standard is effective for the Company in year 2021. The
Company is currently evaluating the impact of the new standard on its
consolidated financial statements and related disclosures but does not expect it
to have a material impact.
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AREM PACIFIC CORPORATION 