The following management's discussion and analysis should be read in conjunction with the historical financial statements and the related notes thereto contained in this report. The management's discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect" and the like, and/or future tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.
The following discussion highlights the Company's results of operations and the principal factors that have affected our financial condition, as well as our liquidity and capital resources for the periods described, provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the Company's unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance withUnited States generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto. Company Overview
We are a supplier of technologically advanced plastics and other solutions for the packaging industry and other industries primarily serving major end users and distributors inAustralia ,Asia and theMiddle East . Our products have applications in the areas of packaging, agriculture, automotive and transportation, paint and coating, construction, personal care and hygiene, electronics, pharmaceutical, energy and natural resources, plastics and rubber and leather. Our principal products are high quality, breathable plastic film and modified atmosphere packaging used in the packaging of perishable foods. In 2021, through the acquisition target SMCOR, SINC expands deeper into our existing customer based in EV, 5G, computer chips and medical industries. In addition, the pandemic boosts the demand for covid related medical material and SINC boosted vaccine related production capacity through SIMCOR. 20 Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 $ $ $ $ Note (not reviewed) (not reviewed) (not reviewed) (not reviewed) Revenue Sales 1,573 14,937 15,451 46,032 Cost of sales (7,279 ) (22,353 ) (7,279 ) (3,467 ) Gross profit (5,706 ) 37,290 8,172 42,565 Operating expenses Depreciation and amortization 1,963 2,284 4,110 4,576 Selling, general and administrative expenses 10,435 2,702 12,359 (5,363 ) Professional service fees 121,802 36,337 122,860 36,495 Total operating expenses 134,199 41,323 139,329 46,434 Income/(loss) from operations (139,905 ) (4,033 ) (131,158 ) (3,869 ) Other income/(expenses) Gain/(Loss) on Derivative Financial Instrument 27,217 - 27,217 - Other income - 3,092 - 14,842 Interest expense (7,299 ) (1,562 ) (8,700 ) (3,115 ) Foreign currency transaction loss (8,192 ) (3,000 (5,974 ) (5,090 ) Total other income/(expenses) 11,726 (1,470 ) 12,543 6,637 Income/(loss) from continuing operations before income tax expenses (128,179 ) (5,503 ) (118,614 ) 2,768 Income tax benefit/(expense) 11 14,169 (3,766 ) 11,291 (5,917 ) Net income/(loss) after income tax expense for the period (114,010 ) (9,269 ) (107,324 ) (3,149 ) Other comprehensive income/(loss) Exchange differences arising on translation of foreign operations (145,996 ) (1,181 ) (126,524 ) 9,253 Other comprehensive income/(loss) (145,996 ) (1,181 )) (126,524 ) 9,253 Total comprehensive income/(loss) for the period (260,007 ) (10,450 ) (233,848 ) 6,104 Revenues
Revenue was$2k for the three months endedJune 30, 2022 , compared to$15k for the three months endedJune 30, 2021 , a decrease of$13k . The decrease can be attributed to timing and quantity of orders by our customers and the type of products they purchase, which can vary in margin. 21
Selling, general and administrative expenses
Selling, general and administrative expenses was$10k for the three months endedJune 30, 2022 , compared to$3k for the three months endedJune 30, 2021 . This is due to over payments of listing and filing fees for the three month endedJune 30, 2022 . Employee expenses
No employee expense was an incurred for the 3 months ended
Professional service fees Professional service fees were$122k for the three months endedJune 30, 2022 , compared with$36k for the three months endedJune 30, 2021 . The increase is due to accounting fees and legal fees for issuance of convertible notes.
Other Income and Expenses
The change in other income and expenses was due the gain in derivative liabilities offset by increase interest from convertible notes and foreign currency loss.
Liquidity and Capital Resources
AtJune 30, 2022 , the Company had a current asset surplus of$555,925 and net asset of$751,615 (December 31, 2021 current asset deficiency of$143,761 and net asset$50,862 ). The Company reported an after tax loss of$114,010 for the three months endedJune 30, 2022 (June 30, 2021 after tax income:$9,269 ). Despite the current asset deficiency, the company has prepared the financial statements on a going concern basis that contemplates the continuity of normal business activity, realization of assets and settlement of liabilities at the amounts recorded in the financial statements in the ordinary course of business. The company believes that there are reasonable grounds to support the fact that it will be able to pay its debts as and when they become due and payable. In forming this opinion, the Group has considered the following factors:
(i) The company has the ability to raise fund through private placements
and convertible notes; and
(ii) The company has been streamlining its operation by reducing operation
costs; and In the six months endedJune 30, 2022 , the net cash provided by operating activities primarily reflects the loss from operations of approximately$107k with approximately$18k in changes in operating assets and liabilities, offset by non-cash items of approximately$6k and amortization and depreciation of approximately$4k that had no effect on cash flows.
Net cash used for investing activities of approximately $nil and $nil for the
six months ended
Net cash generated in financing activities was approximately$261k for the six months endedJune 30, 2022 compared to net cash used of approximately$36k for financial activities for the six months endedJune 30, 2021 . In the six months endedJune 30, 2022 , the Company raised funds through issuance of convertible notes and stock issuance offset by repayment of its finance lease liabilities and advances to related parties. 22
Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. Key Estimates (i) Useful lives
The Company determines the estimated useful lives and related depreciation and amortization charges for its property and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. (ii) Income tax The Company is subject to income taxes in the jurisdictions in which it operates. Significant judgment is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipated tax audit issues based on the Company's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.
(iii) Fair value measure of shares issued, convertible notes payable and common
stock warrants The calculation of the fair value of shares issued requires significant estimate to be made in regards to several variables. The estimations made are subject to variability that may alter the overall fair value determined. Key Judgments
(i) Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgment. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors' financial position.
(ii) Impairment
The Company assessed that no indicators of impairment existed at the reporting date and as such no impairment testing was performed.
© Edgar Online, source