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ITEM 2.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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GENERAL NOTE
A 1-for-100 reverse stock split (the “Reverse
Stock Split”) of our common stock (the “Common Stock”) became effective with the State of Nevada on July 6,
2020 and with the Financial Industry Regulatory Authority and in the market on July 23, 2020 (the “Effective Date”).
Unless expressly stated herein, all share amounts of our Common Stock presented in this report have been adjusted to reflect the
Reverse Stock Split.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This document contains “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact
are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to,
any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management
for future operations; any statements concerning proposed new services or developments; any statements regarding future economic
conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include
the words “may,” “could,” “will,” “estimate,” “intend,” “continue,”
“believe,” “expect”, “anticipate”, “hope” or other similar words. These forward-looking
statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose
material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any
forward-looking statement.
Although we believe that the expectations
reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected
or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any
forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these
risks and uncertainties include, but are not limited to:
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risks related to our ability to meet our financial obligations
in the agreement for us to make certain investments over time in Hukui Biotechnology Corporation (“Hukui”) ;
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risks related to our ability to identify, pursue and commence
a reverse merger and/or a possible operating business in combination with our investment in Hukui;
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our ability to obtain adequate funding to commence our medical
test kit and equipment business, and meet our operating expenses on a current basis;
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delays in our ability to obtain any necessary business licenses
and permits, and commence business operations, whether as a result of the COVID-19 pandemic or otherwise;
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general economic uncertainty, whether as a result of the COVID-19
pandemic or otherwise;
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current and longer-term economic and other impacts of the COVID-19
pandemic on our operations, results of operations and financial condition, including without limitation changes in consumer
spending patterns for non-essential products, resulting from the economic crisis caused by lockdown, shelter-in-place, stay-at-home
or similar orders instituted as a result of the pandemic, or otherwise.
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Overview
In 2019 and through early 2020, we had
planned to restart our original enzyme products business, by importing enzyme supplements from the United States for sale in Taiwan.
However, due to the COVID-19 pandemic, all non-COVID-19 related matters, including obtaining an import license from Taiwan’s
Ministry of Economic Affairs and the Taiwan Food and Drug Administration (“FDA”), were delayed or were taking longer
than usual in Taiwan beginning in late-January 2020. For various reasons, including the fact that, without a reasonably foreseeable
end of the pandemic and Taiwan government resources being shifted to dealing with the pandemic, we decided to abandon the plan
to restart our enzyme products business.
In May 2020, we announced that we were
in the preliminary stage of developing a new business plan to sell and distribute physiological sea water and nasal spray in Taiwan
and the United States. However, after exploring this possible business as a result of several factors, including but not limited
to difficulties in commencing a new business during the ongoing COVID-19 pandemic, in September 2020 we announced that we will
not pursue the nasal spray business.
We are currently exploring business opportunities
for products with high demand since the advent of the COVID-19 pandemic in the areas of medical test kits and personal protection
equipment (“PPE”). We are exploring marketing two COVID-19 rapid test kits which will be useful during the pandemic
period, as well as a medical mask, medical-grade gloves and possibly other PPE.
In late September 2020, we announced that
Hukui and we had entered into a Series C Preferred Shares Subscription Agreement dated September 23, 2020 (the “Hukui Agreement”),
pursuant to which we have agreed to purchase an aggregate 200,000 shares of Hukui’s Series C Preferred Stock (“Series
C Preferred Shares”) at $10.00 per share, for an aggregate investment of $2,000,000.
We will purchase the Series C Preferred
Shares in three tranches, through a date on or before June 30, 2022, as follows:
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The first tranche is 80,000 Series C Preferred Shares in the
amount of $800,000 (the “First Tranche Investment”), which shares we purchased on December 15, 2020 (the “First
Tranche Closing”);
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The second tranche is 60,000 Series C Preferred Shares in the
amount of $600,000 (the “Second Tranche Investment”), such shares to be purchased by us on or before June 30,
2021 (the “Second Tranche Closing”); and
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The third tranche is 60,000 Series C Preferred Shares in the
amount of $600,000 (the “Third Tranche Investment”), such shares to be purchased by us on or before June 30, 2022
(the “Third Tranche Closing”).
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If Hukui does not achieve further milestones
or meet further conditions, we will have the option either to (i) abandon the Second Tranche Investment and/or the Third Tranche
Investment, or (ii) waive the failure of Hukui to meet such conditions and proceed with the Second Tranche Investment and/or the
Third Tranche Investment.
Notwithstanding the foregoing, management
and the Board of Directors may amend or abandon at any time our current intended investment in Hukui and/or develop a business
plan for a new business that we would operate and/or engage in a reverse merger with another company.
If we do not actively pursue and implement
our current plan of operations to operate a business or engage in a reverse merger with another company, we may be obligated to
register and operate as an investment company under the Investment Company Act of 1940 as a result of our investment in Hukui.
Regardless of which overall business strategy
we pursue – starting our own operating business, engaging in a reverse merger or being an investment company – we
will continue to need capital to meet our expenses, primarily overhead and the professional fees related to the cost of compliance
as a reporting company. We must also raise funds to meet our obligation to invest $0.6 million in Hukui in the Second Tranche
Investment on or before June 30, 2021. There are no commitments in place to fund any such business or fund the Second Tranche
Investment and no guarantee can be given that we will be able to secure such funding on terms that are favorable to us, or at
all.
For the fiscal year ended September 30,
2020, Jui Pin (John) Lin, our President and Chief Executive Officer, provided such capital periodically in the form of loans in
the aggregate principal amount of $120,410. On December 28, 2020, we repaid Mr. Lin $65,410 of the principal amount of loans due
and payable plus accrued interest in the amount of $1,162, for a total of $66,572. On January 5, 2021, we repaid Mr. Lin $20,000
of the principal amount of another such loan due and payable plus accrued interest in the amount of $403, for a total of $20,403.
All amounts owed by us to Mr. Lin were repaid as of March 31, 2021.
In the six months ended March 31, 2021,
another stockholder loaned us $30,000. The loan matured on April 9, 2021. The principal amount of the loan, together with accrued
and unpaid interest, was convertible, at the option of the lender, into shares of our Common Stock at a rate of $0.01 per share.
On April 9, 2021, the lender converted the $30,000 principal amount of this loan, together with accrued and unpaid in the amount
of $858, into 3,085,809 shares of our Common Stock.
We may also raise equity, debt, convertible
debt or a combination of any of the foregoing, from other parties for the capital we may need for any of the purposes specified
in this report. There is no agreement in place between the Company and Mr. Lin, the other shareholder or anyone else, for such
capital to continue to be made available to us as needed, and we cannot guarantee that any such capital will continue to be available
to us on favorable terms, or at all, in the future.
Plan of Operations
The following plan of operations is
tentative and subject to change, including but not limited to delays we are facing, and expect to continue to face, dealing with
governmental agencies and other regulators as a result of reduced operations resulting from the COVID-19 pandemic. Management
and the Board of Directors may amend or abandon at any time our new plan of operations, which itself in an early phase.
We are currently exploring business opportunities
for products with high demand since the advent of the COVID-19 pandemic in the areas of medical test kits and PPE. We are exploring
marketing two COVID-19 rapid test kits which will be useful during the pandemic period, as well as a medical mask, medical-grade
gloves and possibly other PPE. The primary marketing period for the rapid test kits would be during the pandemic itself, while
the medical mask, medical-grade gloves and other PPE may still be in demand after the pandemic but with lesser demand. The rapid
test method and kits are similar to those already on the market. The manufacturers are working on regulatory review and approval
to be accepted by the market and potential clients. We plan to initiate the business plan of the distribution and sale of the
medical test kits and PPE discussed below within the next six months, subject to adequate funding, regulatory approval and other
factors, some of which are beyond our control.
We may require up to approximately $2.2
million to commence the medical test kit and PPE business. We do not have the funds available to commence the medical test kits
and PPE business and will have to raise capital in order to do so. There are no commitments in place for such capital and no assurance
can be given that we can raise such capital on terms that are favorable to us, or at all.
Medical Test Kits
2019-nCoV IgG/IgM Antibody Rapid Test.
The 2019-nCoV IgG/IgM Antibody Rapid Test is a rapid immuno-chromatographic assay for the simultaneous detection of IgG and
IgM antibodies to 2019-nCoV virus in human whole blood, serum or plasma. The assay is used as a screening test for 2019-nCoV viral
infection and as an aid for differential diagnosis of acute phase infections or previous infections. We are currently communicating
with one or more manufacturers in Taiwan for distribution of the rapid test in the United States.
Vstrip COVID-19 Antigen Rapid Test.
The Vstrip COVID-19 Antigen Rapid Test is a rapid in vitro immunochromatographic assay intended for the qualitative detection
of nucleocapsid protein antigen from SARS-CoV-2 in nasopharyngeal swab from individuals who are suspected of COVID-19 by their
healthcare provider within the first five days of the onset of symptoms. We are currently communicating with one or more manufacturers
in Taiwan for future distribution of the rapid test in the United States.
We do not have any agreement in place
at this time with any manufacturer of either the antibody rapid test or the antigen rapid test.
PPE
3-Ply Medical Grade Mask. The medical-grade
face mask is intended to be worn to protect against the spread or transmission of infectious germs during surgical interventions
in operating theatres and other medical facilities. The main aim is to protect the patient against infectious germs. We are currently
communicating with one or more manufacturers in Taiwan for future distribution of the masks in the United States. We do not have
any agreement in place at this time with any manufacturer of the masks.
Nitrile Powder Free Examination Gloves.
The nitrile powder-free medical grade gloves are intended to be used to prevent cross-contamination for general medical use.
We have communicated with a manufacturer in Malaysia for proposed distribution of such gloves in the United States.
Manufacturing
We do have our own manufacturing plants
for the above mentioned products. We have contacted manufacturers with whom our management has previous relations. If we are successful
in our negotiations, we will purchase the test kits and/or masks, gloves and any other PPE directly from the manufacturers for
sale in the United States.
We currently estimate that we may spend
up to approximately $1 million to purchase the products that we would sell in the United States, as part of the total $2.2 million
budget to commence the medical test kits and PPE business.
Marketing
We plan to distribute the PPE through
online sales platform and distributors in the United States to sell the products in retail stores. We understand from the manufacturers
that the mask and gloves have already received U.S. Food and Drug Administration (“FDA”) approval. We understand that
the manufacturers of the rapid test kits have applied for, but not yet received, FDA approval. We will explore the market and
sales channels beginning in this pre-operational period. We are still developing a more detailed marketing timeline for the PPE.
We currently estimate that we may spend
up to approximately $1.2 million on various operational expenses, including marketing costs, which may include sampling giveaway/testing,
on-line marketing and printed marketing materials, as part of the total $2.2 million budget to commence the medical test kits
and PPE business.
Competition
The antigen and antibody rapid test kits
are relatively new in the market. With vaccines being rolled out worldwide, we believe the demand for test kits will increase,
since many businesses, including airlines, and many places, including tourist destinations, will require negative COVID tests,
not just proof of vaccination, for the foreseeable future. Nonetheless, we will face significant competition from other manufacturers
of rapid antigen and antibody tests, including Abbott Laboratories, Access Bio, Inc. and Babson Diagnostics, Inc., many of which
companies have been in business longer than we have and have substantially larger resources than we have.
The mask, gloves, and other possible PPE
have an extremely low barrier to entry and have a highly fragmented market. Masks, gloves, and other PPE are currently being widely
sold in the market under many different trade names. Therefore, we will face intense competition in the marketing of masks with
many companies, including Honeywell, 3M Company and Kimberley-Clark Corporation, a number of which have been in business much
longer than we have and have substantially greater financial and other resources than we have. Major competitors of gloves manufacturers
includes Associated Bag, Caroline Glove Co., First Choice Industrial Supply Company, and various other companies, many of which
have been in the business much longer than we have and have substantially greater financial and other resources than we have.
Regulation
In order to sell the rapid test kits in
the United States, FDA approval is required. We believe that the manufacturers to whom we are speaking have applied for FDA approval
for their rapid test kits and are awaiting approval.
In order to sell medical-grade masks
and gloves, and possibly other PPE, in the United States, FDA approval is required. We believe that the manufacturers to whom
we are speaking have received FDA approval for their masks and other PPE.
Intellectual Property
As distributors of other parties’
products, we do not believe that we have any protectable intellectual property for the test kits, medical masks, or medical gloves.
Results of Operations
Three-Month Period Ended March
31, 2021 compared to the Three-Month Period Ended March 31, 2020
Revenues
We did not generate any revenues during
the three-month period ended March 31, 2021 and 2020.
Operating Expenses
We incurred total operating expenses of
$86,875 and $81,796 for the three-month periods ended March 31, 2021 and 2020, respectively. Our operating expenses consist of
legal fees, other professional fees, payroll expenses, rent, bank charges, and transfer agent fees. The increase in operating
expenses for the three-month period ended March 31, 2021 compared to the same period ended in 2020 was primarily due to increase
in legal fees and payroll expenses.
Net Loss
As a result of the above, our net loss
increased from $81,795 in the three-month period ended March 31, 2020 to $87,045 in the same period ended in 2021.
Six-Month Period Ended March
31, 2021 compared to the Six-Month Period Ended March 31, 2020
Revenues
We did not generate any revenues during
the six-month period ended March 31, 2021 and 2020.
Operating Expenses
We incurred total operating expenses of
$163,575 and $154,814 for the six-month periods ended March 31, 2021 and 2020, respectively. Our operating expenses consist of
legal fees, other professional fees, payroll expenses, rent, bank charges, and transfer agent fees. The increase in operating
expenses for the six-month period ended March 31, 2021 compared to the same period ended in 2020 was primarily due to increase
in legal fees and payroll expenses.
Net Loss
As a result of the above, our net loss
increased from $154,899 in the six-month period ended March 31, 2020 to $164,928 in the same period ended in 2021.
Effect of the COVID-19 Pandemic on our Business
While our liquidity and capital resources
are severely limited and present serious obstacles to starting a business or continuing to meet or obligations to invest in Hukui,
these limitations are unrelated to the COVID-19 pandemic and resulting global economic crisis.
We have been affected by the pandemic
to the extent that it was one of a number of contributing factors in our decision to change our plan of operations from restarting
our enzyme products business to selling the nasal spray product and then deciding not to pursue the nasal spray product business,
although the first of those two decisions was largely made prior to the full impact of the COVID-19 pandemic. Our personnel are
in Taiwan, which has been relatively less affected by the pandemic compared to many other countries in Asia, Europe and the United
States. Nonetheless, we expect to experience delays in obtaining business licenses and permits, and any other governmental approvals
that may be required for a future business, since government offices are continuing to work with reduced staff during the pandemic.
Nonetheless, depending upon the extent
and duration of the pandemic and the resulting global economic crisis, these conditions may have an adverse impact on our ability
to raise capital and commence any business we may pursue. Depending upon possible changes in consumer demand, shopping and spending
habits as a result of the pandemic and the resulting global economic crisis, we may also face challenges of consumer acceptance
if and when we start to market any products.
Liquidity and Capital Resources
Working Capital
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March 31,
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September 30,
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2021
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2020
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Current Assets
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$
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66,316
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$
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18,092
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Current Liabilities
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227,141
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371,035
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Working Capital Deficit
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$
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(160,825
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$
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(352,943
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As of March 31, 2021, we had current assets
of $66,316 and a working capital deficit of $160,825. In comparison, as of September 30, 2020, we had cash and cash equivalents
of $18,092 and a working capital deficit of $352,943.
As of March 31, 2021, we had total assets
of $866,316, compared with total assets of $18,092 at September 30, 2020. The increase in total assets was primarily due to increase
in cash and cash equivalent from the private offering of our Common Stock and investment, which was completed in December of 2020.
We had $227,141 in total current liabilities
as of March 31, 2021, consisting of $130,722 in accounts payable, $1,787 in accrued expenses, $64,632 due to related parties,
and $30,000 in note payable. This is compared to total current liabilities of $371,035 as of September 30, 2020, which included
$129,154 in accounts payable, $25,436 in accrued expenses, $96,035 due to related parties and $120,410 in notes payable –
related party. The increase in due to related parties was primarily due to unpaid compensation to officers and directors.
During the six months ended March 31,
2021, one of our shareholders loaned us the principal amount of $30,000 (the “October 2020 Loan”), primarily to pay
our expenses. The October 2020 Loan bears simple interest at a rate of 4% per annum and is payable as to both principal and interest
on the Maturity Date of April 9, 2021. On the Maturity Date, the noteholder converted the outstanding principal, together
with accrued and unpaid interest into 3,059,836 shares of the Company’s Common Stock at a rate of $0.01 per share.
We had a total stockholders’ equity
of $639,175 and an accumulated deficit of $8,323,317 as of March 31, 2021. In comparison, we had a total stockholders’ deficiency
of $352,943 and an accumulated deficit of $8,158,389 as of September 30, 2020
On December 15, 2020, we completed a private
offering of our Common Stock. We sold 107,000,000 shares of our Common Stock to 34 individuals at a purchase price of $0.01 per
share, for gross proceeds of $1,070,000 before allocating certain expenses associated with the offering in the amount of $5,852
as adjusted paid-in capital.
Effective March 31, 2021, we issued an
aggregate 6,399,965 shares of our Common Stock to certain of our directors, officers, employees and independent consultants, who
converted accrued and unpaid compensation in the aggregate amount of $94,398. Of this amount, (i) $37,998 was with respect to
amounts accrued during fiscal year 2020 and was converted at a rate of $0.05 per share into an aggregate 759,965 shares of our
Common Stock; and (ii) $56,400 was with respect to amount accrued during fiscal year 2021 through March 31, 2021 and was converted
at a rate of $0.01 per share into an aggregate 5,640,000 shares of our Common Stock.
Reverse Stock Split
On June 23, 2020, our Board of Directors
approved the Reverse Stock Split of our Common Stock, at a ratio of 1-for-100, as of the Effective Date. The Effective Date of
the Reverse Stock Split with the Secretary of State of the State of Nevada was 9:00 a.m. on July 6, 2020 and July 23, 2020 with
the Financial Industry Regulatory Authority and in the marketplace.
On the Effective Date, the total number
of shares of our Common Stock held by each shareholder was converted automatically into the number of whole shares of Common Stock
equal to (i) the number of issued and outstanding shares of Common Stock held by such shareholder immediately prior to the
Reverse Stock Split, divided by (ii) 100.
No fractional shares were issued in connection
with the Reverse Stock Split, and no cash or other consideration was be paid. Instead, we issued one whole share of the post-Reverse
Stock Split Common Stock to any shareholder who otherwise would have received a fractional share as a result of the Reverse Stock
Split.
We are authorized to issue 10,000,000,000
shares of Common Stock and that number did not change as a result of the Reverse Stock Split.
Cash Flows
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Six months
ended
March 31,
2021
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Six months
ended
March 31,
2020
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Cash flows used in operating activities
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$
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(132,341
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$
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(118,230
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Cash flows used in investing activities
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(800,000
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)
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-
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Cash flows provided by financing activities
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973,738
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-
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Net increase (decrease) in cash during period
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$
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41,397
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$
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(118,230
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)
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During the six-month period ended March
31, 2021, we used $132,341 of cash in operating activities which was attributable primarily to our net loss of $164,928 offset
by change in operating assets and liabilities of $32,587. In comparison, during the six-month period ended March 31, 2020, we
used $118,230 of cash in operating activities which was attributable to our net loss of $154,899 and the change in operating assets
and liabilities of $36,669.
With respect to our investing activities,
we used $800,000 in payment for investment made to Hukui during the six months ended March 31, 2021. We did not have investing
cash flow activities for the six months ended March 31, 2020.
During the six-month period ended March
31, 2021, we had total cash inflow of $973,738 from financing activities. We repaid $120,410 to notes payable–related party,
which our President and Chief Executive Officer, Jui Pin Lin, previously loaned us. We received $30,000 from note payable as loan
from a shareholder of the Company. We received $1,064,148, net of directly associated expenses, including legal, transfer agent,
and printing and delivery expenses, from private offering of our Common Stock, which was completed in December 2020. For accounting
purpose, we recorded the net proceeds from private offering instead of the gross amount of $1,070,000.
There is substantial doubt that we can
continue as an ongoing business for the next twelve months unless we obtain additional capital to pay our expenses as they become
due. We do not anticipate any significant additional revenue until and unless we begin to execute on our plan of operations involving
the start of our new nasal spray business. There is no assurance that we will ever reach that stage. The condensed consolidated
financial statements presented herein do not include any adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary in the event that we cannot continue as a going
concern.
Our ability to continue as a going concern
is dependent upon our ability to successfully execute our business plan and generate profitable operations in the future, and,
until and unless we achieve that, to obtain the necessary financing to meet our obligations and repay our liabilities arising
from normal business operation as and when they become due. Management intends to finance operating costs for the foreseeable
future with the issuance of equity and/or debt. While we have received certain loans from our President and Chief Executive Officer,
Jui Pin (John) Lin, there is no standing commitment from Mr. Lin, or any person, for any such capital and there can be no assurances
that capital will be available to us on favorable terms, or at all. Our failure to obtain adequate funding would be detrimental
to us and result in the inability to execute our plan of operations, or even having to cease operations completely.
To date, our capital requirements have
primarily been funded by shareholders through the purchase of our Common Stock in private offerings and short-term borrowings
from our President and another shareholder. We currently estimate that we will need to raise additional capital of approximately
$2,800,000, consisting of up to $2,200,000 to start our new medical test kits and PPE business over the next nine months and $600,000
for the Second Tranche Investment in Hukui. We may also need to raise additional capital for corporate expenses. We are exploring
options of raising additional capital through issuing more Common Stock or other securities, including debt and debt convertible
into Common Stock. There are no agreements, arrangements or understandings in place with respect to raising any additional
capital from any person. There can be no assurance that we will be able to raise such capital when and as needed on terms that
are favorable to us, or at all.
Contractual Obligations
We do not have material contractual obligations
and commitments. We only have one lease that is renewed on a month-to-month basis.
Off-Balance Sheet Arrangements
We have not entered into any other financial
guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our condensed
consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an
unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest
in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging
or research and development services with us.
Critical accounting policies and estimates
Our discussion and analysis of our financial
condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those
related to bad debts, inventories, recovery of long-lived assets, income taxes, and the valuation of equity transactions. We base
our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported
amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions
or conditions. For the six-month periods ended March 31, 2021 and 2020, no significant estimates and assumptions have been made
in the condensed consolidated financial statements. The following are some of the critical accounting policies in relation to
the preparation of the condensed consolidated financial statements. For a full summary of our critical accounting policies, please
refer to Note 2 of Notes to Condensed Consolidated Financial Statements.
Foreign currency translation
The financial statements of our subsidiary
denominated in currencies other than the USD are translated into USD using the closing rate method. The balance sheet items are
translated into USD using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated
at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the
average exchange rate for the period. All exchange differences are recorded in stockholders’ equity (deficiency).
Stock-Based Compensation
We account for stock-based compensation
in which we obtain employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock
Compensation, which requires us to expense the cost of employee services received in exchange for an award of equity instruments
based on the grant date fair value of such instruments over the vesting period.
We also adopted FASB ASC Topic 505-50,
Equity-Based Payments to Non-Employees, to account for equity instruments issued to parties other than employees for acquiring
goods or services. Such awards for services are recorded at either the fair value of the consideration received or the fair value
of the instruments issued in exchange for such services, whichever is more reliably measurable.
Recent accounting pronouncements
We do not expect that the adoption of
recently issued accounting pronouncements will have a material impact on its financial position, results of operations, or cash
flows. For a full summary of recent accounting pronouncements, please refer to Note 2 of Notes to Condensed Consolidated
Financial Statements.
Currency exchange rates
Our functional currency is the USD, and
the functional currency of our operations is the TWD. It is anticipated that all of our sales will be denominated in TWD. As a
result, changes in the relative values of USD and TWD affect our reported amounts of revenues and profit (or loss) as the results
of our operations are translated into USD for reporting purposes. In particular, fluctuations in currency exchange rates could
have a significant impact on our financial stability. Fluctuations in exchange rates between the USD and the TWD would also affect
our gross and net profit margins and could result in foreign exchange and operating losses.
Our exposure to foreign exchange risk
primarily relates to currency gains or losses resulting from timing differences between the signing of sales contracts and the
settling of these contracts. Furthermore, we translate monetary assets and liabilities denominated in other currencies into TWD,
the functional currency of our operations. Our results of operations and cash flow are translated at average exchange rates during
the period, and assets and liabilities are translated at the unified exchange rate at the end of the period. Translation adjustments
resulting from this process are included in accumulated other comprehensive income in our statement of shareholders’ equity.
We have not used any forward contracts, currency options or borrowings to hedge our exposure to foreign currency exchange risk.
We cannot predict the impact of future exchange rate fluctuations on our results of operations and may incur net foreign currency
losses in the future.
To the extent that we hold assets denominated
in USD, any appreciation of the TWD against the USD could result in a charge in our statement of operations and a reduction in
the value of our USD-denominated assets. On the other hand, a decline in the value of the TWD against the USD could reduce the
USD equivalent amounts of our financial results.
For financial reporting purposes, the
financial statements of the Company’s Singapore subsidiary, which are prepared using the SGD, are translated into the Company’s
reporting currency, USD. Assets and liabilities are translated using the exchange rate on the balance sheet date, which was 0.7437
and 0.7325 as of March 31, 2021 and September 30, 2020, respectively. Revenue and expenses are translated using average exchange
rates prevailing during each reporting period. The 0.7468 and 0.7278average exchange rates were used to translate revenues and
expenses for the six months ended March 31, 2021 and 2020, respectively. Stockholders’ equity (deficiency) is translated
at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other
comprehensive income (loss) in stockholders’ equity (deficiency).