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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For The Quarterly Period Ended September 30, 2021

 

or

 

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

 

For the transition period from ____________ to ____________

 

Commission File Number 333-235700

 

SYNERGY EMPIRE LIMITED

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

 

Nevada   38-4096727

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

No.19 Jalan 12/118B, Desa Tun Razak, 56100, Kuala Lumpur, Malaysia.
Address of principal executive offices, including zip code

 

+(60)3 - 9171 2828
Registrant’s phone number, including area code

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name on each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer Accelerated Filer ☐ Non-accelerated Filer Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

 

Yes ☐ No

 

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

 

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

 

N/A

 

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

 

Class   Outstanding shares as of November 12, 2021
Common Stock, $0.0001 par value   1,000,000

 

 

 

 

 

 

TABLE OF CONTENTS

 

      Page
PART I FINANCIAL INFORMATION    
       
ITEM 1. FINANCIAL STATEMENTS:    
  Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and March 31, 2021 (audited)   F-1
  Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended September 30, 2021 and 2020 (unaudited)   F-2
  Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2021 and 2020 (unaudited)   F-3
  Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2021 and 2020 (unaudited)   F-4
  Notes to the Unaudited Condensed Consolidated Financial Statements   F-5 – F-15
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   3
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   6
ITEM 4. CONTROLS AND PROCEDURES   6
       
PART II OTHER INFORMATION    
       
ITEM 1 LEGAL PROCEEDINGS   7
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   7
ITEM 3 DEFAULTS UPON SENIOR SECURITIES   7
ITEM 4 MINE SAFETY DISCLOSURES   7
ITEM 5 OTHER INFORMATION   7
ITEM 6 EXHIBITS   7
SIGNATURES   8

 

  2  

 

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial statements

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2021 AND MARCH 31, 2021

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

 

             
   

As of

September 30, 2021

   

As of

March 31, 2021

 
      (Unaudited)       (Audited)  
ASSETS                
CURRENT ASSETS                
Cash and cash equivalents   $ 26,926     $ 345,161  
Trade receivables, net     731       739  
Prepaid expenses and deposits     26,806       26,387  
Inventories     15,306       11,482  
TOTAL CURRENT ASSETS   $ 69,769     $ 383,769  
                 
NON-CURRENT ASSETS                
Operating lease right of use asset, net     278,678       308,918  
Plant and equipment, net     317,645       328,245  
Intangible asset, net     1,503       -  
TOTAL ASSETS   $ 667,595     $ 1,020,932  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES                
Accounts payable   $ 7,944     $ 8,857  
Accrued expenses and other payables     69,230       170,449  
Operating lease liability     68,025       63,493  
Bank borrowing     16,208       15,559  
Amount due to a director     892,354       894,480  
TOTAL CURRENT LIABILITIES   $ 1,053,761     $ 1,152,838  
                 
NON-CURRENT LIABILITIES                
Operating lease liability     214,927       249,142  
Bank borrowing     17,231       25,836  
TOTAL LIABILITIES   $ 1,285,919     $ 1,427,816  
                 
STOCKHOLDERS’ EQUITY                
Preferred stock – Par value $0.0001; Authorized: 500,000 None issued and outstanding     -       -  
Common stock – Par value $0.0001; Authorized: 5,000,000 Issued and outstanding: 1,000,000 shares as of September 30, 2021 and March 31, 2021 respectively     100       100  
Additional paid-in capital     784,083       784,083  
Accumulated other comprehensive loss     (25,657 )     (34,804 )
Accumulated deficit     (1,376,850 )     (1,156,263 )
TOTAL STOCKHOLDERS’ DEFICIT   $ (618,324 )   $ (406,884 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 667,595     $ 1,020,932  

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

  F-1  

 

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

(Unaudited)

 

                                 
    Three months ended
September 30,
    Six months ended
September 30,
 
    2021     2020     2021     2020  
REVENUE   $ 16,837     $ 47,489     $ 27,883     $ 139,463  
                                 
COST AND EXPENSES:                                
Cost of revenue     (6,732 )     (17,485 )     (10,721 )     (41,984 )
General and administrative expenses     (137,397 )     (91,327 )     (259,265 )     (192,529 )
Total operating costs and expenses     (144,129 )     (108,812 )     (269,986 )     (234,513 )
Loss from operations     (127,292 )     (61,323 )     (242,103 )     (95,050 )
                                 
Other income, Net     13,136       4,357       21,516       13,329  
                                 
Loss before income tax     (114,156 )     (56,966 )     (220,587 )     (81,721 )
                                 
Income tax expense     -       -       -       -  
                                 
Net Loss     (114,156 )     (56,966 )     (220,587 )     (81,721 )
                                 
Foreign currency translation income/ (loss)     6,845       (26,670 )     9,147       (32,222 )
                                 
Total comprehensive loss   $ (107,311 )   $ (83,636 )   $ (211,440 )   $ (113,943 )
                                 
NET LOSS PER SHARE, BASIC AND DILUTED   $ (0.11 )   $ (0.06 )   $ (0.21 )   $ (0.09 )
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED     1,000,000       900,000       1,000,000       900,000  

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

  F-2  

 

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

(Unaudited)

 

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

 

    Common Stock                          
    NUMBER
OF
Shares
    Amount     Additional Paid-in Capital     Accumulated DEFICIT     Accumulated comprehensive loss     Total
STOCKHOLDERS
EQUITY
 
Balance as of April 1, 2020     900,000     $ 90     $ 284,093     $ (1,144,401 )   $ (2,109 )   $ (862,327 )
Net loss for the period     -       -       -       (24,755 )     -       (24,755 )
Foreign currency translation loss     -       -       -       -       (5,552 )     (5,552 )
Balance as of June 30, 2020     900,000     $ 90     $ 284,093     $ (1,169,156 )   $ (7,661 )   $ (892,634 )
Net loss for the period     -       -       -       (56,966 )     -       (56,966 )
Foreign currency translation loss     -       -       -       -       (26,670 )     (26,670 )
Balance as of September 30, 2020     900,000     $ 90     $ 284,093     $ (1,226,122 )   $ (34,331 )   $ (976,270 )

 

See accompanying notes to consolidated financial statements

 

  F-3  

 

 

SYNERGY EMPIRE LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR SIX MONTHS ENDED SEPTMEBER 30, 2021 AND 2020

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

 

                 
   

For the Six Months Ended,

September 30

 
    2021     2020  
    (Unaudited)     (Unaudited)  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (220,587 )   $ (81,721 )
                 
Adjustments to reconcile net loss to net cash used in operating activities                
Depreciation expenses     71,480       50,819  
Disposal of fixed assets     -       (10,121 )
Changes in operating assets and liabilities:                
(Increase)/Decrease in inventories     (3,970 )     1,981  
Increase in prepaid expenses     (687 )     (5,279 )
Decrease in accounts payable     (830 )     (2,136 )
Decrease in accrued liabilities     (100,285 )     (3,962 )
Change in operating lease liability     (31,824 )     (36,181 )
Net cash flows used in operating activities   $ (286,703 )   $ (86,600 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchase of plant and equipment     (31,659 )     (1,699 )
Application of trademark     (1,579 )     -  
Sale proceeds from disposal of plant and equipment     -       10,121  
Net cash flows (used in)/provided by investing activities   $ (33,238 )   $ 8,422  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Repayment to from related parties     -       (8,847 )
Advance from directors     5,984       88,511  
Principal repayments of bank loan     (7,590 )     1,290  
Net cash flows (used in)/provided by financing activities   $ (1,606 )   $ 80,954  
                 
Effect of exchange rate changes in cash and cash equivalents   $ 3,312     $ 2,244  
                 
Net changes in cash and cash equivalents     (318,235 )     5,020  
Cash and cash equivalents, beginning of year     345,161       87,492  
                 
CASH AND CASH EQUIVALENTS, END OF YEAR   $ 26,926     $ 92,512  
                 
SUPPLEMENTAL CASH FLOWS INFORMATION                
                 
Income taxes paid   $ -     $ -  
Interest paid   $ 1,794     $ 2,820  

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

  F-4  

 

 

SYNERGY EMPIRE LIMITED

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

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

 

1. ORGANIZATION AND BUSINESS BACKGROUND

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

  F-5  

 

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

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

 

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

 

Below is the organization chart of the Group.

 

 

Use of Estimates

 

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

 

Cash and Cash Equivalents

 

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

 

Our deposit in Malaysia is currently deposit in Public Bank Berhad and Standard Chartered Bank (Malaysia) Berhad, and there is a Perbadanan Insurans Deposit Malaysia protects our eligible deposits held with bank in Malaysia which is members of the Scheme. The scheme will pay a compensation up to a limit of Malaysia Ringgit (“MYR”) 250,000 per deposit per member bank, which is equivalent to $60,155 if the aforementioned banks fails.

 

Plant and Equipment

 

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

 

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

 

Intangible Asset

 

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

 

Asset Categories   Amortization Periods
Trademark   10 years

 

  F-6  

 

 

Inventories

 

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

 

Revenue recognition

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Cost of revenue

 

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

 

Income tax expense

 

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

 

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

 

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

 

  F-7  

 

 

Foreign currencies translation

 

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

 

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

 

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

 

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

 

   

For the six months ended

September 30

 
    2021     2020  
Period-end MYR : US$1 exchange rate     4.18       4.15  
Period-average MYR : US$1 exchange rate     4.16       4.25  

 

Related parties

 

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

 

Fair value of financial instruments

 

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

 

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

 

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

 

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

 

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

 

As of September 30, 2021 and 2020, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.

 

Net Income/(Loss) per Share

 

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

 

  F-8  

 

 

Recently Issued Accounting Standards

 

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

 

3. GOING CONCERN UNCERTAINTIES

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The company having accumulated deficit of $1,376,850 and $1,156,263 as of September 30, 2021 and March 31, 2021, respectively.

 

For the six months ended September 30, 2021 and 2020, the Company suffered from a net loss of $220,587 and $81,721 respectively.

 

For the six months ended September 30, 2021 and 2020, the Company recorded operating cash outflows of $286,703 and $86,600 in operating activities respectively.

 

Furthermore, the Company recorded a negative working capital of $983,992 and $769,069 as of as of September 30, 2021 and March 31, 2021 respectively.

 

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

 

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

 

4. PREPAID EXPENSES AND DEPOSITS

 

   

As of

September 30, 2021

(Unaudited)

   

As of

March 31, 2021

(Audited)

 
Rental deposits   $ 22,151     $ 23,951  
Other deposits     1,802       -  
Prepaid expenses     1,248       1,017  
Other receivables     1,605       1,419  
Total   $ 26,806     $ 26,387  

 

The rental deposits represent the deposit of the tenancy agreements.

 

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

 

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

 

Other receivables represent payment made on behalf of customers such as lorry rental and outstanding payment due from delivery platform.

 

5. INVENTORIES

 

   

As of

September 30, 2021

(Unaudited)

   

As of

March 31, 2021

(Audited)

 
Raw material, at cost   $ 15,306     $ 11,482  

 

  F-9  

 

 

6. PLANT AND EQUIPMENT

 

   

As of
September 30, 2021

(Unaudited)

   

As of

March 31, 2021

(Audited)

 
Renovation   $ 359,751     $ 354,963  
Office equipment     38,493       21,741  
Kitchen equipment     21,392       15,457  
Motor vehicle     11,709       11,828  
Total plant and equipment   $ 431,345     $ 403,989  
Less: Accumulated depreciation     (113,700 )     (75,744 )
Total plant and equipment   $ 317,645     $ 328,245  

 

For the six months ended September 30, 2021, the Company has invested $6,135 in kitchen equipment, $8,434 in renovations and $17,090 in office equipment respectively.

 

For the six months ended September 30, 2020, the Company had invested $1,699 into kitchen equipment and disposed motor vehicle amounted $31,294 which were fully depreciated for a consideration of $10,121.

 

Depreciation expenses for six months ended September 30, 2021 and 2020 amounted to $38,991 and $13,876 respectively.

 

7. INTANGIBLE ASSET

 

   

As of
September 30, 2021

(Unaudited)

   

As of

March 31, 2021

(Audited)

 
Trademark   $ 1,569     $ -  
Less: Accumulated depreciation     (66 )     -  
Total plant and equipment   $ 1,503     $ -  

 

On May 11, 2021, the Company was granted approval by Intellectual Property Corporation of Malaysia for trademark application with 10 years validity with an aggregate cost of $1,579, filed by Lucky Star under class 30 and 43, the $10 difference in capitalization cost against cash flow is due to foreign translation difference.

 

Amortization expenses for the six months ended September 30, 2021 amounted to $66.

 

No amortization expenses have been incurred for the six months ended September 30, 2020.

 

8. ACCRUED EXPENSES AND OTHER PAYABLES

 

   

As of

September 30, 2021

(Unaudited)

   

As of

March 31, 2021

(Audited)

 
Accrued expenses   $ 31,438     $ 35,066  
Other payables     37,792       135,383  
Total   $ 69,230     $ 170,449  

 

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

 

Other payable consist of outstanding marketing expenses and sales and service tax payable.

 

  F-10  

 

 

9. AMOUNT DUE TO A DIRECTOR

 

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

 

No transaction for the six months ended September 30, 2021, other than currency exchange fluctuation on balance outstanding.

 

As of September 30, 2021, the Company has an outstanding loan payable to Mr. Leong Will Liam amounted $892,354, of which including an amount due to Synergy Empire HK, amounted $24,822.

 

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

 

Amount due to director, Mr. Leong Will Liam thru Synergy Empire HK        
Balance as of March 31, 2021     24,822  
         
Foreign currency translation     -  
Balance as of September 30, 2021     24,822  

 

Amount due to director, Mr. Leong Will Liam directly        
Balance as of March 31, 2021     869,658  
Foreign currency translation     2,126  
Balance as of September 30, 2021     867,532  

 

10. BANK BORROWING

 

On January 25, 2017, Lucky Star F&B Sdn. Bhd., a wholly owned subsidiary of the Company has acquired a business loan from Standard Chartered Saadiq Berhad, a bank incorporated in Malaysia, amounted to MYR342,834 (approximately $82,493) at annual interest rate of 6.00% accrued in arrear, for a repayment period of 72 months with interest bearing monthly installment of MYR6,473 (approximately $1,558) which is the sole bank borrowing by the Company.

 

The outstanding balance of business loan as of September 30 and March 31, 2021 can be summarized as follow:

 

   

As of

September 30, 2021

(Unaudited)

   

As of

March 31, 2021

(Audited)

 
Bank borrowing (Current portion)   $ 16,208     $ 15,559  
Bank borrowing (Non-current portion)     17,231       25,836  
Total   $ 33,439     $ 41,395  

 

For the six months ended September 30, 2021, the Company repaid $7,590 while incurring additional $1,794 interest in loan deferment.

 

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

 

Pursuant to the announcement, no instalment is required, and no penalty will be imposed during the 6 months period however additional non-compounding interest will continue to accrue. As such, the Company has incurred additional interest of $2,820 interest expenses.

 

For the six months ended September 30, 2020, the Company repaid $1,319 while incurring additional $2,820 interest in loan deferment.

 

  F-11  

 

 

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

 

    1  
Year ending March 31      
2022   $ 7,902  
2023   $ 17,015  
2024   $ 8,522  
Total   $ 33,439  

 

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

 

Right-Of-Use Assets        
Balance as of March 31, 2021     308,918  
Amortization for the six months ended September 30, 2021     (32,423 )
Adjustment for discount rate     5,080  
Foreign exchange translation     (2,897 )
Balance as of September 30, 2021     278,678  

 

For the six months ended September 30, 2021 and 2020, the amortization of the operating lease right of use asset amounted $32,423 and $36,944, respectively.

 

Lease Liability        
Balance as of March 31, 2021     312,635  
Imputed interest     8,456  
Gross repayment     (40,280 )
Foreign exchange translation     2,141
Balance as of September 30, 2021     282,952  
Lease liability current portion     68,025  
Lease liability non-current portion   $ 214,927  

 

Maturities of operating lease obligation as follow:

 

      1  
Year ending        
March 31, 2022     33,020  
March 31, 2023     71,026  
March 31, 2024     75,217  
March 31, 2025     68,560  
March 31, 2026     35,129  
Total   $ 282,952  

 

Other information:

 

   

For the six months ended

September 30

 
    2021     2020  
Cash paid for amounts included in the measurement of lease liabilities:             -  
Operating cash flow to operating lease   $ 40,879     $ 40,390  
Right-of-use assets obtained in exchange for operating lease liabilities     -       -  
Remaining lease term for operating lease (years)     3.89       4.33  
Weighted average discount rate for operating lease     5.70 %     6.65 %

 

  F-12  

 

 

12. CONCENTRATION OF RISK

 

(a) Major Customers

 

For the three and six months ended September 30, 2021 and 2020, there was no customer who accounted for 10% or more of the Company’s revenues nor with significant outstanding receivables.

 

(b) Major Suppliers

 

For the three and six months ended September 30, 2021 and 2020, there was no supplier who accounted for 10% or more of the Company’s purchases nor with significant outstanding payables.

 

13. INCOME TAXES

 

The income / (loss) before income taxes of the Company for the six months ended September 30, 2021 and 2020 were comprised of the following:

 

   

For the six months ended

September 30

 
    2021     2020  
Tax jurisdictions from:                
– Local   $ (22,523 )   $ (6,108 )
                 
– Foreign, representing:                
Marshall Islands (non-taxable jurisdiction)     -       -  
Hong Kong     -       (129 )
Malaysia     (198,064 )     (75,484 )
Loss before income taxes   $ (220,587 )   $ (81,721 )

 

  F-13  

 

 

Provision for income taxes consisted of the following:

 

     

As of

September 30, 2021

     

As of

March 31, 2021

 
                 
Current:                
– Local   $ -     $ -  
– Foreign:                
Marshall Islands (non-taxable jurisdiction)     -       -  
Hong Kong     -       -  
Malaysia     -       -  
                 
Deferred:                
– Local     -       -  
– Foreign     -       -  
    $ -     $ -  

 

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

 

United States of America

 

The Tax Act reduces the U.S. statutory corporate tax rate from 35% to 21% for our tax years beginning in 2018. The Company is registered in the State of Nevada and is subject to United States of America tax law. As of September 30, 2021, the operations in the United States of America incurred $158,955 of cumulative net operating losses (NOL’s) which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2040, if unutilized. The Company has provided for a full valuation allowance of approximately $33,381 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

Malaysia

 

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

 

For the six months ended September 30, 2021, Lucky Star F&B Sdn. Bhd. and SH Desserts Sdn. Bhd. incurred a loss of $113,282 and $84,645 respectively, which can be carried forward for seven years to offset its taxable income.

 

As of September 30, 2021, the operations in Malaysia generated $1,214,403 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss can be carried forward for seven years. The Company has provided for a full valuation allowance against the deferred tax assets of $206,449 on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

  F-14  

 

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of September 30, 2021 and March 31, 2021:

 

    As of     As of  
    September 30, 2020     March 31, 2020  
Deferred tax assets:                
                 
Net operating loss carryforwards   $     $    
– United States of America     33,381       28,691  
– Marshall Islands     -       -  
– Malaysia     206,449       172,801  
      239,829       201,452  
Less: valuation allowance     (239,829 )     (201,452 )
Deferred tax assets   $ -     $ -  

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $239,829 as of September 30, 2021.

 

14. STOCKHOLDERS’ EQUITY

 

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

 

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

 

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

 

15. FOREIGN CURRENCY EXCHANGE RATE

 

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

 

16. SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2021 up through the date the Company presented these unaudited financial statements.

 

  F-15  

 

 

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

 

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

 

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

 

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

 

Overview

 

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

 

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

 

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

 

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

 

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

 

Phase 4 – No headcount restriction on gathering.

 

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

 

Results of Operations

 

For the six months ended September 30, 2021 and 2020, the Company has generated a revenue of $27,883 and $139,463, respectively, with a decrement of 80.00% Y-O-Y. Breakdown of revenue as following:

 

   

Three months ended

September 30

   

Six months ended

September 30

 
    2021     2020     2021     2020  
Dine-In and Take Away Revenue   $ 1,502     $ 30,316     $ 7,759     $ 88,905  
Percentage towards Total Revenue     8.92 %     63.84 %     27.83 %     63.75 %
                                 
Delivery Revenue   $ 15,335     $ 17,173     $ 20,124     $ 50,558  
Percentage towards Total Revenue     91.08 %     36.16 %     72.17 %     36.25 %
                                 
Total Revenue   $ 16,837     $ 47,489     $ 27,883     $ 139,463  
                                 
Total Cost of Sales   $ (6,732 )   $ (17,485 )   $ (10,721 )   $ (41,984 )
                                 
Total Gross Profit   $ 10,105     $ 30,004     $ 17,162     $ 97,479  
Gross Profit Margin     60.02 %     63.17 %     61.55 %     69.90 %

 

3

 

 

Revenue for the Three Months ended September 30, 2021 and 2020

 

Dine-in and take away revenue decline from $30,316 for the three months ended September 30, 2020 to $1,502 for the three months ended September 30, 2021 for a declination rate of approximately 95%. Declination in dine-in revenue primarily due to the implementation NRP, which discourage nearby residents to travel beyond restricted area for dining and take away thusly.

 

Delivery revenue decline from $17,173 for the three months ended September 30, 2020 to $15,335 for the three months ended September 30, 2020 for a declination rate of approximately 11%.

 

Total revenue declined from $47,489 for the three months ended September 30, 2020 to $16,837 for the three months ended September 30, 2021 for a declination rate of approximately 65% which primarily caused by declined in dine-in and take away revenue.

 

Revenue for the Six Months ended September 30, 2021 and 2020

 

Dine-in and take away decrease from $88,905 for the six months ended September 30, 2020 to $7,759 for the six months ended September 30, 2020, for a declination rate of 91%. Declination in dine-in revenue primarily due to the implementation NRP, which discourage nearby residents to travel beyond restricted area for dining and take away thusly.

 

Delivery revenue decrease from $50,558 for the six months ended September 30, 2020 to $30,434 for the six months ended September 30, 2021 for a declination rate of 60%.

 

Total revenue increased from $139,463 for the six months ended September 30, 2020 to $27,883 for the six months ended September 30, 2021 for a declination rate of 80%. Declination in revenue is primarily caused by declination in dine-in and take away revenue.

 

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

 

Gross Profit

 

The Company gross profit margin has decreased marginally from 63.17% for the three months ended September 30, 2020 to 60.02% for the three months ended September 30, 2021, while, gross profit margin decreased marginally from 69.90% for the six months ended September 30, 2020 to 61.55% for the six months ended September 30, 2021.

 

As a result, gross profit for the three months ended September 30, 2020 decreased from $30,004 to $10,105 for the three months ended September 30, 2021 for a declination rate of 66%, while gross profit for the six months ended September 30, 2020 decreased from $97,479 to $17,162 for the six months ended September 30, 2021 for a declination rate of 82%.

 

General and Administrative Expenses

 

For the six months ended September 30, 2021 and 2020, the Company has incurred a general and administrative expenses of $259,265 and $192,529 respectively. Of which primarily consist of salary, lease expenses, utilities, depreciation, professional fees and repair and maintenance and advertisement and promotions.

 

   

Six months ended

September 30

 
Primary expenses   2021     2020  
Salary and salary related expenses   $ 122,374     $ 114,218  
Percentage towards General and Administrative Expenses     47.20 %     56.35 %
                 
Lease expenses   $ 40,879     $ 41,152  
Percentage towards General and Administrative Expenses     15.77 %     20.31 %
                 
Utility expenses   $ 12,693     $ 17,758  
Percentage towards General and Administrative Expenses     4.90 %     8.76 %
                 
Depreciation expenses   $ 39,057     $ 13,876  
Percentage towards General and Administrative Expenses     15.06 %     6.85 %
                 
Professional expenses   $ 16,068     $ 5,000  
Percentage towards General and Administrative Expenses     6.20 %     2.47 %
                 
Repair and maintenance expenses   $ 6,093     $ 3,469  
Percentage towards General and Administrative Expenses     2.35 %     1.71 %
                 
Compliance expenses   $ 3,059     $ 1,415  
Percentage towards general and administrative expenses     1.18 %     0.70 %
                 
Advertisement and promotion expenses   $ -     $ 941  
Percentage towards General and Administrative Expenses     0.00 %     0.46 %
                 
Total primary expenses   $ 240,223     $ 197,829  
Percentage towards General and Administrative Expenses     92.66 %     97.62 %
                 
Miscellaneous expenses   $ 19,042     $ 4,821  
Percentage towards General and Administrative Expenses     7.34 %     2.38 %
                 
Gain on disposal of motor vehicle   $ -     $ (10,121 )
                 
Total General and Administrative Expenses   $ 259,265     $ 192,529  

 

Net Loss

 

For the six months ended September 30, 2021 and 2020, the Company has incurred a net loss of $220,587 and $81,721 respectively.

 

Foreign Currency Exposure

 

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

 

4

 

 

Liquidity and Capital Resources

 

Cash Used In Operating Activities

 

For the six months ended September 30, 2021, the Company has used $286,703 in operating activities caused by net loss from operating, increase in inventories, prepayment, decrease in account payable, accrued liabilities and lease liability contra by depreciation.

 

For the six months ended September 30, 2020, the Company has used $86,600 in operating activities primarily caused by net loss from operating, increase in prepayment and decrease in trade payable, other payable, lease liability and reclassification of gain from disposal of fixed assets to investing cashflow contra by depreciation and decrease in inventories.

 

Cash Used in Investing Activities

 

The Company has invested $33,238 in investing activity for the acquisition of new kitchen equipment, office equipment, renovation and application of trademark for the six months ended September 30, 2021.

 

The Company has invested $1,699 in investing activity for the acquisition of new kitchen equipment and received $10,121 from disposing fully depreciated motor vehicle, netting a $8,422 net proceed from investing cash flow for the six months ended September 30, 2020.

 

Cash Provided by Financing Activities

 

For the six months ended September 30, 2021, the Company received $5,984 of advances from director and repaid $7,590 to bank loan.

 

For the six months ended September 30, 2020, the Company received $80,954 from financing cash flow primarily consist of advances from director and increase in bank loan due compounding interest charged during MCO contra by repayment to officer.

 

Off-balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of September 30, 2021.

 

Contractual Obligations

 

As of September 30, 2021, the Company has no contractual obligations involved.

 

5

 

 

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4 CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures:

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2021. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of September 30, 2021, our disclosure controls and procedures were not effective: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties and effective risk assessment; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines; and (4) lack of internal audit function due to the fact that the Company lacks qualified resources to perform the internal audit functions properly and that the scope and effectiveness of the internal audit function are yet to be developed.

 

Changes in Internal Control Over Financial Reporting:

 

There were no changes in our internal control over financial reporting during the quarter ending September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

6

 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

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

 

Item 1A. Risk Factors

 

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

 

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

 

(a) None.

 

(b) None.

 

(c) None.

 

Item 3. Defaults Upon Senior Securities

 

(a) None.

 

(b) None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits

 

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

 

7

 

 

SIGNATURES

 

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

 

  SYNERGY EMPIRE LIMITED
  (Name of Registrant)
     
Date: November 12, 2021    
     
  By: /s/ Law Jia Ming
  Name:  Law Jia Ming
  Title: Chief Executive Officer, Chief Financial Officer

 

8

 

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