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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 4/12/22 Folkup Development Inc. 10-Q 9/30/21 58:3M Discount Edgar/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 502K
2: EX-31.1 Certification -- §302 - SOA'02 HTML 21K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 21K
4: EX-32.1 Certification -- §906 - SOA'02 HTML 17K
5: EX-32.2 Certification -- §906 - SOA'02 HTML 17K
11: R1 Cover HTML 68K
12: R2 Condensed Consolidated Balance Sheets HTML 134K
13: R3 Condensed Consolidated Balance Sheets HTML 25K
(Parenthetical)
14: R4 Condensed Consolidated Statements of Operations HTML 89K
(Unaudited)
15: R5 Condensed Consolidated Statements of Comprehensive HTML 43K
Loss (Unaudited)
16: R6 Condensed Consolidated Statements of Cash Flows HTML 98K
(Unaudited)
17: R7 Condensed Consolidated Statements of Changes in HTML 65K
Stockholders Deficit (Unaudited)
18: R8 Description of Business and Organization HTML 33K
19: R9 Going Concern Uncertainties HTML 21K
20: R10 Summary of Signifcant Accounting Policies HTML 66K
21: R11 Disposal of A Subsidiary HTML 19K
22: R12 Amounts Due to A Director and Related Companies HTML 18K
23: R13 Lease HTML 28K
24: R14 Long-Term Investments HTML 20K
25: R15 Borrowings HTML 31K
26: R16 Stockholders Deficit HTML 23K
27: R17 Income Tax HTML 39K
28: R18 Related Party Transactions HTML 21K
29: R19 Concentrations of Risk HTML 22K
30: R20 Commitments and Contingencies HTML 19K
31: R21 Subsequent Events HTML 19K
32: R22 Summary of Signifcant Accounting Policies HTML 96K
(Policies)
33: R23 Summary of Significant Accounting Policies HTML 27K
(Tables)
34: R24 Lease (Tables) HTML 28K
35: R25 Borrowings (Tables) HTML 29K
36: R26 Income Tax (Tables) HTML 35K
37: R27 Description of Business and Organization (Details) HTML 42K
38: R28 Going Concern Uncertainties (Details Narrative) HTML 21K
39: R29 Summary of Signifcant Accounting Policies HTML 25K
(Details)
40: R30 Summary of Signifcant Accounting Policies (Details HTML 19K
1)
41: R31 Summary of Signifcant Accounting Policies (Details HTML 20K
Narrative)
42: R32 Disposal of A Subsidiary (Details Narrative) HTML 24K
43: R33 Lease (Details) HTML 18K
44: R34 Lease (Details 1) HTML 22K
45: R35 Lease (Details Narrative) HTML 25K
46: R36 Borrowings (Details) HTML 29K
47: R37 Borrowings (Details Narrative) HTML 23K
48: R38 Stockholders Deficit (Details Narrative) HTML 25K
49: R39 Income Tax (Details) HTML 32K
50: R40 Income Tax (Details 1) HTML 22K
51: R41 Income Tax (Details Narrative) HTML 25K
52: R42 Related Party Transactions (Details Narrative) HTML 18K
53: R43 Concentrations of Risk (Details Narrative) HTML 22K
56: XML IDEA XML File -- Filing Summary XML 98K
54: XML XBRL Instance -- fldi_10q_htm XML 637K
55: EXCEL IDEA Workbook of Financial Reports XLSX 59K
8: EX-101.CAL XBRL Calculations -- fldi-20210930_cal XML 127K
10: EX-101.DEF XBRL Definitions -- fldi-20210930_def XML 152K
7: EX-101.LAB XBRL Labels -- fldi-20210930_lab XML 513K
9: EX-101.PRE XBRL Presentations -- fldi-20210930_pre XML 385K
6: EX-101.SCH XBRL Schema -- fldi-20210930 XSD 104K
57: JSON XBRL Instance as JSON Data -- MetaLinks 219± 286K
58: ZIP XBRL Zipped Folder -- 0001477932-22-002237-xbrl Zip 95K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM i 10-Q
(MARK ONE)
i ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended i September 30, 2021
OR
i ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission File No. i 333-216921
i FOLKUP DEVELOPMENT INC. |
(Exact name of registrant as specified in its charter) |
i Nevada | i 32-0499929 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
i Unit 17-18, 23/F, i Metropole Square
i 2 On Yiu Street, Sha Tin
i New Territories, i Hong Kong
(Address of principal executive offices, zip code)
+ i 852 i 3487-6330
(Registrant’s telephone number, including area code)
___________________________________________________________
(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 of each exchange on which registered |
|
|
|
Indicate by check mark whether the issuer (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. i 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 and post such files). i Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
i Non-accelerated filer | ☒ | Smaller reporting company | i ☒ |
| Emerging growth company | i ☒ | |
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. i ☒
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act): Yes i ☐ 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. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 11, 2022, there were i 9,800,000 shares of common stock, $0.001 par value per share, outstanding.
FOLKUP DEVELOPMENT INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2021
| 2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Folkup Development, Inc., a Nevada corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things, current regulatory conditions in China and Hong Kong, demand for our products, market and customer acceptance, competition, pricing, the exercise of the control over us by Hak Yiu Ng, our need for additional financing, the Company’s President, a director and majority shareholder, and development difficulties, as well as general industry and market conditions and growth rates and general economic conditions; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).
Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
| 3 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
|
|
|
|
| ||||
|
| (Unaudited) |
|
| (Audited) |
| ||
ASSETS |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | i 1,928,616 |
|
| $ | i 160,594 |
|
Accounts and retention receivables |
|
| i 1,163,523 |
|
|
| i 83,169 |
|
Deposits, prepayments and other receivables |
|
| i 311,064 |
|
|
| i 1,031,566 |
|
Purchase deposits |
|
| i 2,735,868 |
|
|
| i 1,800,332 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
| i 6,139,071 |
|
|
| i 3,075,661 |
|
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
Energy assets |
|
| i - |
|
|
| i 285,236 |
|
Long-term investment |
|
| i 458,601 |
|
|
| i - |
|
Plant and equipment |
|
| i 380,730 |
|
|
| i 64,161 |
|
Right-of-use assets |
|
| i 81,300 |
|
|
| i 157,379 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ | i 7,059,702 |
|
| $ | i 3,582,437 |
|
|
|
|
|
|
|
|
|
|
LIABILTIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Contract liabilities |
| $ | i 4,528,479 |
|
| $ | i 2,158,374 |
|
Accounts payable |
|
| i 372,270 |
|
|
| i 1,100,268 |
|
Accrued liabilities and other payables |
|
| i 234,212 |
|
|
| i 129,393 |
|
Operating lease liabilities |
|
| i 34,738 |
|
|
| i 88,537 |
|
Bank and other borrowings |
|
| i 1,961,272 |
|
|
| i 588,279 |
|
Amounts due to related parties |
|
| i 1,561,117 |
|
|
| i 825,329 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
| i 8,692,088 |
|
|
| i 4,890,180 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
| i 46,960 |
|
|
| i 68,961 |
|
Bank and other borrowings |
|
| i 1,590,557 |
|
|
| i 180,662 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
| i 10,329,605 |
|
|
| i 5,139,803 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
| i - |
|
|
| i - |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
Common stock, $ i 0.001 par value; i 75,000,000 shares authorized; i 9,800,000 shares issued and outstanding |
|
| i 9,800 |
|
|
| i 9,800 |
|
Additional paid in capital |
|
| i 351,583 |
|
|
| i 351,583 |
|
Accumulated other comprehensive loss |
|
| i 5,592 |
|
|
| ( i 7,120 | ) |
Accumulated deficit |
|
| ( i 3,609,783 | ) |
|
| ( i 1,906,054 | ) |
|
|
|
|
|
|
|
|
|
Total deficit of Folkup Development Inc. |
|
| ( i 3,242,808 | ) |
|
| ( i 1,551,791 | ) |
Non-controlling interest |
|
| ( i 27,095 | ) |
|
| ( i 5,575 | ) |
|
|
|
|
|
|
|
|
|
Total deficit |
|
| ( i 3,269,903 | ) |
|
| ( i 1,557,366 | ) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| $ | i 7,059,702 |
|
| $ | i 3,582,437 |
|
See accompanying notes to condensed consolidated financial statements.
| 4 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue, net |
| $ | i 573,258 |
|
| $ | i 410,187 |
|
| $ | i 1,919,812 |
|
| $ | i 1,704,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
| ( i 472,266 | ) |
|
| ( i 342,745 | ) |
|
| ( i 1,143,352 | ) |
|
| ( i 1,435,139 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| i 100,992 |
|
|
| i 67,442 |
|
|
| i 776,460 |
|
|
| i 269,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing expenses |
|
| i 254,167 |
|
|
| i 237,068 |
|
|
| i 430,800 |
|
|
| i 555,334 |
|
General and administrative expenses |
|
| i 589,325 |
|
|
| i 234,823 |
|
|
| i 1,178,415 |
|
|
| i 641,661 |
|
Professional fee |
|
| i 919,300 |
|
|
| i 14,188 |
|
|
| i 985,192 |
|
|
| i 173,442 |
|
Total operating expenses |
|
| i 1,762,792 |
|
|
| i 486,079 |
|
|
| i 2,594,407 |
|
|
| i 1,370,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of subsidiary |
|
|
|
|
|
|
|
|
|
| i 103,746 |
|
|
|
|
|
Sundry income |
|
| i - |
|
|
| i 40,735 |
|
|
| i - |
|
|
| i 80,991 |
|
Interest income |
|
| i 2 |
|
|
| i - |
|
|
| i 6 |
|
|
| i 6 |
|
Interest expenses |
|
| ( i 48,207 | ) |
|
| ( i 37,456 | ) |
|
| ( i 134,439 | ) |
|
| ( i 39,845 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other (expenses) income |
|
| ( i 48,205 | ) |
|
| i 3,279 |
|
|
| ( i 30,687 | ) |
|
| i 41,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES |
|
| ( i 1,710,005 | ) |
|
| ( i 415,358 | ) |
|
| ( i 1,848,634 | ) |
|
| ( i 1,059,489 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
| ( i 5,859 | ) |
|
| i - |
|
|
| ( i 5,859 | ) |
|
| i - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
| ( i 1,715,864 | ) |
|
| ( i 415,358 | ) |
|
| ( i 1,854,493 | ) |
|
| ( i 1,059,489 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to non-controlling interests |
|
| ( i 9,913 | ) |
|
| ( i 9,930 | ) |
|
| ( i 21,599 | ) |
|
| ( i 9,930 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to stockholders of Folkup Development Inc. |
| $ | ( i 1,705,951 | ) |
| $ | ( i 405,428 | ) |
| $ | ( i 1,832,894 | ) |
| $ | ( i 1,049,559 | ) |
See accompanying notes to condensed consolidated financial statements.
| 5 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Three months ended September 30, |
|
| Nine months ended September 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
NET LOSS |
| $ | ( i 1,705,951 | ) |
| $ | ( i 405,428 | ) |
| $ | ( i 1,832,894 | ) |
| $ | ( i 1,049,559 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss) |
|
| i 8,404 |
|
|
| i 1,646 |
|
|
| i 12,653 |
|
|
| ( i 4,216 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss |
|
| ( i 1,697,547 | ) |
|
| ( i 403,782 | ) |
|
| ( i 1,820,241 | ) |
|
| ( i 1,053,775 | ) |
Less: Comprehensive (gain) loss attributable to non-controlling interests |
|
| i 65 |
|
|
| ( i 10 | ) |
|
| i 79 |
|
|
| ( i 10 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss attributable to stockholders of Folkup Development Inc. |
| $ | ( i 1,697,482 | ) |
| $ | ( i 403,792 | ) |
| $ | ( i 1,820,162 | ) |
| $ | ( i 1,053,785 | ) |
See accompanying notes to condensed consolidated financial statements.
| 6 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
(Unaudited)
|
| Nine months ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net loss |
| $ | ( i 1,854,493 | ) |
| $ | ( i 1,059,489 | ) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
|
Depreciation of plant and equipment |
|
| i 53,863 |
|
|
| i 5,170 |
|
Depreciation of energy assets |
|
| i 24,204 |
|
|
| i - |
|
Depreciation of right-of-use assets |
|
| i 75,581 |
|
|
| i 53,714 |
|
Gain on disposal of a subsidiary |
|
| ( i 103,746 | ) |
|
| i - |
|
Non-cash lease expenses |
|
| i 3,491 |
|
|
| i 2,699 |
|
|
|
|
|
|
|
|
|
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts and retention receivables |
|
| ( i 1,080,354 | ) |
|
| i 106,713 |
|
Deposits, prepayments and other receivables |
|
| i 629,057 |
|
|
| ( i 628,574 | ) |
Contract assets |
|
| ( i 935,536 | ) |
|
| ( i 698,363 | ) |
Contract liabilities |
|
| i 2,370,105 |
|
|
| i 732,729 |
|
Accounts payables |
|
| ( i 405,022 | ) |
|
| i - |
|
Accrued liabilities and other payables |
|
| i 104,819 |
|
|
| i 768,329 |
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
| ( i 1,118,031 | ) |
|
| ( i 717,072 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of plant and equipment |
|
| ( i 367,496 | ) |
|
| ( i 5,634 | ) |
Purchases of energy assets |
|
| ( i 189,400 | ) |
|
| i - |
|
Purchases of long-term investments |
|
| ( i 128,418 | ) |
|
| i - |
|
Proceed from disposal of a subsidiary |
|
| i 451,753 |
|
|
| i - |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
| ( i 233,561 | ) |
|
| ( i 5,634 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Advance from a director |
|
| i 625,932 |
|
|
| ( i 1,448 | ) |
Advance from related companies |
|
| i 109,856 |
|
|
| i - |
|
Payment of lease liabilities |
|
| ( i 78,791 | ) |
|
| ( i 55,684 | ) |
Proceed from borrowings |
|
| i 3,072,236 |
|
|
| i 769,203 |
|
Repayment of borrowings |
|
| ( i 616,169 | ) |
|
| i - |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
| i 3,113,064 |
|
|
| i 712,071 |
|
|
|
|
|
|
|
|
|
|
Effect on exchange rate change on cash and cash equivalents |
|
| i 6,550 |
|
|
| ( i 4,317 | ) |
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
| i 1,768,022 |
|
|
| ( i 14,952 | ) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
| i 160,594 |
|
|
| i 243,641 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
| $ | i 1,928,616 |
|
| $ | i 228,689 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Cash paid for tax |
| $ | i - |
|
| $ | i - |
|
Cash paid for interest |
| $ | i 130,948 |
|
| $ | i 39,845 |
|
See accompanying notes to condensed consolidated financial statements.
| 7 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
|
| Three and Nine Months ended September 30, 2021 and 2020 |
| |||||||||||||||||||||||||
|
| Common stock |
|
| Additional paid-in |
|
| Accumulated other comprehensive (loss) |
|
| Accumulated |
|
| Non-controlling |
|
| Total stockholders’ |
| ||||||||||
|
| No. of shares |
|
| Amount |
|
| capital |
|
| income |
|
| losses |
|
| interest |
|
| deficit |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance as of January 1, 2021 |
|
| i 9,800,000 |
|
| $ | i 9,800 |
|
| $ | i 351,583 |
|
| $ | ( i 7,120 | ) |
| $ | ( i 1,906,054 | ) |
| $ | ( i 5,575 | ) |
| $ | ( i 1,557,366 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 4,042 |
|
|
| i - |
|
|
| i 25 |
|
|
| i 4,067 |
|
Net loss for the period |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 30,934 | ) |
|
| ( i 4,280 | ) |
|
| ( i 35,214 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021 |
|
| i 9,800,000 |
|
| $ | i 9,800 |
|
| $ | i 351,583 |
|
| $ | ( i 3,078 | ) |
| $ | ( i 1,936,988 | ) |
| $ | ( i 9,830 | ) |
| $ | ( i 1,588,513 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposal of a subsidiary |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 59 |
|
|
| i 129,165 |
|
|
| i - |
|
|
| i 129,224 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 207 |
|
|
| i - |
|
|
| ( i 11 | ) |
|
| i 196 |
|
Net loss for the period |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 96,009 | ) |
|
| ( i 7,406 | ) |
|
| ( i 103,415 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021 |
|
| i 9,800,000 |
|
| $ | i 9,800 |
|
| $ | i 351,583 |
|
| $ | ( i 2,812 | ) |
| $ | ( i 1,903,832 | ) |
| $ | ( i 17,247 | ) |
| $ | ( i 1,562,508 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 8,404 |
|
|
| i - |
|
|
| i 65 |
|
|
| i 8,469 |
|
Net loss for the period |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 1,705,951 | ) |
|
| ( i 9,913 | ) |
|
| ( i 1,715,864 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2021 |
|
| i 9,800,000 |
|
| $ | i 9,800 |
|
| $ | i 351,583 |
|
| $ | i 5,592 |
|
| $ | ( i 3,609,783 | ) |
| $ | ( i 27,095 | ) |
| $ | ( i 3,269,903 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2020 |
|
| i 6,000,000 |
|
| $ | i 6,000 |
|
| $ | i 351,583 |
|
| $ | ( i 3,760 | ) |
| $ | ( i 1,000,733 | ) |
| $ | i - |
|
| $ | ( i 646,910 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 3,457 | ) |
|
| i - |
|
|
| i - |
|
|
| ( i 3,457 | ) |
Net loss for the period |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 212,107 | ) |
|
| i - |
|
|
| ( i 212,107 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2020 |
|
| i 6,000,000 |
|
| $ | i 6,000 |
|
| $ | i 351,583 |
|
| $ | ( i 7,217 | ) |
| $ | ( i 1,212,840 | ) |
| $ | i - |
|
| $ | ( i 862,474 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 2,405 | ) |
|
| i - |
|
|
| i - |
|
|
| ( i 2,405 | ) |
Net loss for the period |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 432,024 | ) |
|
| i - |
|
|
| ( i 432,024 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2020 |
|
| i 6,000,000 |
|
| $ | i 6,000 |
|
| $ | i 351,583 |
|
| $ | ( i 9,622 | ) |
| $ | ( i 1,644,864 | ) |
| $ | i - |
|
| $ | ( i 1,296,903 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of a subsidiary |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| i 129 |
|
|
| i 129 |
|
Foreign currency translation adjustment |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i 1,656 |
|
|
|
|
|
|
| ( i 10 | ) |
|
| i 1,646 |
|
Net loss for the period |
|
| - |
|
|
| i - |
|
|
| i - |
|
|
| i - |
|
|
| ( i 405,428 | ) |
|
| ( i 9,930 | ) |
|
| ( i 415,358 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2020 |
|
| i 6,000,000 |
|
| $ | i 6,000 |
|
| $ | i 351,583 |
|
| $ | ( i 7,966 | ) |
| $ | ( i 2,050,292 | ) |
| $ | ( i 9,811 | ) |
| $ | ( i 1,710,486 | ) |
See accompanying notes to condensed consolidated financial statements.
| 8 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
i
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
Folkup Development Inc. (“the Company” or “FLDI”) was incorporated on July 5, 2016 under the laws of the State of Nevada. The Company through its subsidiaries, mainly provides the renewable energy products and solutions to the customers in Hong Kong.
Description of subsidiaries
Name |
| Place of incorporation and kind of legal entity |
| Principal activities |
| Particulars of registered/ paid up share capital |
| Effective interest held |
|
|
|
|
|
|
|
|
|
Powertech Holdings Company Limited |
| i British Virgin Islands |
| i Investment holding |
| i 5,209,000 ordinary shares at par value of US$0.0001 |
| i 100% |
|
|
|
|
|
|
|
|
|
SinoPower Holdings International Co. Limited |
| i Hong Kong |
| i Sales and marketing |
| i 1,000 ordinary shares for HK$1,000 |
| i 100% |
|
|
|
|
|
|
|
|
|
SinoPower Solar Energy Engineering Co. Limited |
| i Hong Kong |
| i Solar-related projects |
| i 10,000 ordinary shares for HK$10,000 |
| i 100% |
|
|
|
|
|
|
|
|
|
Sinopower Holding (Hong Kong) Co. Limited |
| i Hong Kong |
| i Engineering design, installation and construction of solar power system and project development |
| i 1,000,000,000 ordinary shares for HK$10,000,001 |
| i 100% |
|
|
|
|
|
|
|
|
|
SolarPower Investment Company Limited (formerly Byconcept Hong Kong Co. Limited) |
| i Hong Kong |
| i Dormant |
| i 10,000 ordinary shares for HK$10,000 |
| i 100% |
|
|
|
|
|
|
|
|
|
SinoPower Solar Energy Co. Limited |
| i Hong Kong |
| i Dormant |
| i 10,000 ordinary shares for HK$10,000 |
| i 100% |
|
|
|
|
|
|
|
|
|
HongKong Hydroponics Company Limited |
| i Hong Kong |
| i Operation of hydroponics projects |
| i 10,000 ordinary shares for HK$10,000 |
| i 90% |
The Company and its subsidiaries are hereinafter referred to as (the “Company”).
| 9 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
i
2. GOING CONCERN UNCERTAINTIES
The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company has suffered from continuing loss from its inception, with an accumulated deficit of $ i 3,609,783 and working capital deficit of $ i 2,553,017, at September 30, 2021. In addition, with respect to the ongoing and evolving coronavirus (COVID-19) outbreak, which was designated as a pandemic by the World Health Organization on March 11, 2020, the outbreak has caused substantial disruption in international economies and global trades and if repercussions of the outbreak are prolonged, could have a significant adverse impact on the Company’s business.
The continuation of the Company as a going concern through September 30, 2022 is dependent upon the continued financial support from its stockholders. Management believes the Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.
These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
/i
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.
· | Basis of presentation |
i
These accompanying condensed consolidated financial statements have been prepared in U.S. Dollars in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the interim period ended September 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2021.
· | Use of estimates and assumptions |
i
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the years reported. Actual results may differ from these estimates.
· | Basis of consolidation |
i
The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
· | Cash and cash equivalents |
i
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
/
| 10 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
· | Accounts receivable |
i
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. At the end of fiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2021 and December 31, 2020, there was no allowance for doubtful accounts.
Included in accounts receivables are retention receivables of $ i 1,163,523 and $ i 83,169 as of September 30, 2021 and December 31, 2020. Retention receivables are interest-free and recoverable at the end of the retention period of one to two years.
/
· | Energy assets |
i
Energy assets consist of cost of materials, outside contract services, deposits and project development costs incurred in connection with the construction of renewable energy plants which owned by the Company. These amounts are capitalized and amortized to cost of revenues in the consolidated statements of operations on a straight-line basis over the lives of the related assets or the terms of the related contracts.
Routine maintenance costs are expensed as incurred in the condensed consolidated statements of operations to the extent that such maintenance do not extend the life of the asset.
· | Plant and equipment |
i
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
i
|
| Expected useful lives |
Solar Panel |
| i 25 years |
Leasehold improvement |
| i 5 years |
Office equipment |
| i 5 years |
Furniture and fixtures |
| i 5 years |
Motor vehicle |
| i 2 years |
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Depreciation expense for the three months ended September 30, 2021 and 2020 were $ i 43,742 and $ i 1,955, respectively.
Depreciation expense for the nine months ended September 30, 2021 and 2020 were $ i 53,863 and $ i 5,170, respectively.
| 11 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
· | Revenue recognition |
i
The Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
| • | identify the contract with a customer; |
| • | identify the performance obligations in the contract; |
| • | determine the transaction price; |
| • | allocate the transaction price to performance obligations in the contract; and |
| • | recognize revenue as the performance obligation is satisfied. |
The Company recognizes revenue when or as it satisfies a performance by transferring a good or service to the customer at a point in time, generally upon the completion of the projects under fixed price contracts. Under these fixed price contracts, the Company receives an agreed-upon amount for providing products and services specified in the contract, a profit or loss is recognized depending on whether actual costs are more or less than the agreed upon amount.
Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed as of the reporting date on contracts with customers. The contract assets are transferred to receivables when the rights become unconditional. The Company has contract assets on contracts that are generally long-term and have revenues that are recognized upon the completion.
Contract liabilities primarily relate to billings and payments received in advance of revenue recognized. As of September 30, 2021 and December 31, 2020, the Company received cash consideration from customers before the performance obligations were satisfied.
· | Cost of revenue |
i
Cost of revenue consists primarily of raw materials, the fees paid to contractors and labor costs, which are directly attributable to the construction of solar-related projects.
· | Income taxes |
i
The Company adopted the ASC 740 Income tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the condensed consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
| 12 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
· | Uncertain tax positions |
i
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the nine months ended September 30, 2021 and 2020.
· | Foreign currencies translation |
i
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 condensed consolidated statement of operations.
The reporting currency of the Company is United States Dollar ("US$") and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, the Company is operating in Hong Kong and maintains its books and record in its local currency, Hong Kong Dollars (“HKD”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
Translation of amounts from HKD into US$ has been made at the following exchange rates for the period ended September 30, 2021 and 2020:
i
|
| 2021 |
|
| 2020 |
| ||
Period-end HKD:US$ exchange rate |
|
| i 0.128420 |
|
|
| i 0.129028 |
|
Period average HKD:US$ exchange rate |
|
| i 0.128744 |
|
|
| i 0.128899 |
|
· | Comprehensive income |
i
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
· | Leases |
i
The Company adopted Topic 842, Leases (“ASC 842”), using the modified retrospective approach through a cumulative-effect adjustment and utilizing the effective date of January 1, 2020 as its date of initial application, with prior periods unchanged and presented in accordance with the previous guidance in Topic 840, Leases (“ASC 840”).
| 13 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (“ROU”) assets, lease liabilities and long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued lease payments. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.
Lease expense is recognized on a straight-line basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited to the expected lease term.
The Company has elected a practical expedient to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.
· | Related parties |
i
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
| 14 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
· | Commitments and contingencies |
i
The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
· | Fair value of financial instruments |
i
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Level 1 |
| Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
|
|
Level 2 |
| Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
|
|
Level 3 |
| Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
| 15 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts and retention receivables, deposits, prepayments and other receivables, amount due from a director, contract assets and liabilities, accrued liabilities and other payables, operating lease liabilities and amount due to a director, approximate their fair values because of the short maturity of these instruments.
· | Recent accounting pronouncements |
i
From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes.” The standard is expected to reduce cost and complexity related to accounting for income taxes. The new guidance eliminates certain exceptions and clarifies and amends existing guidance to promote consistent application among reporting entities. Depending on the amended guidance within this standard, adoption is to be applied on a retrospective, modified retrospective or prospective basis. The Company adopted this standard effective January 1, 2021, and the adoption did not have a material effect on the Company’s consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, “Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The new guidance clarifies the interactions between accounting standards that apply to equity investments without readily determinable fair values. Specifically, it addresses the accounting for the transition into and out of the equity method. The Company adopted this standard effective January 1, 2021 on a prospective basis, and the adoption did not have a material effect on the Company’s consolidated financial statements.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
i
4. DISPOSAL OF A SUBSIDIARY
On June 22, 2021, the Company consummated the sale of its wholly-owned subsidiary, SinoPower Solar Investment Co. Limited (“Sinopower Solar”), to First Gain Global Limited (“First Gain”), a subsidiary of Kings Stone Energy Group, which is listed on Hong Kong Stock Exchange. The transaction was made pursuant to that certain Agreement for Sale and Purchase, dated May 31, 2021, by and among Sinopower Solar (HongKong) Co. Limited, Ng Hak Yiu and First Gain, under which First Gain purchased all of the equity securities of Sinopower Solar for consideration of HKG$ i 8,000,000, or approximately US$ i 1,030,000.
The Company’s subsidiary, Sinopower Solar Energy Engineering Co. Limited (“SPSE”) is a contractor for the design, supply and build of solar power systems to Sinopower Solar, and SPSE will continue providing such services to Sinopower Solar.
As a result, the Company recorded a gain of $ i 103,746 from the disposal of a subsidiary for the nine months ended September 30, 2021.
/
| 16 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
i
5. AMOUNTS DUE TO A DIRECTOR AND RELATED COMPANIES
As of September 30, 2021 and December 31, 2020, the Company’s director and a related company made temporary advances to the Company for its working capital, which is unsecured, interest-free and has no fixed terms of repayment.
i
6. LEASE
As of September 30, 2021 and December 31, 2020, the Company entered into two workshops under operating lease with a lease term of i 2 to i 3.5 years, commencing from November, 2019.
Right of use assets and lease liability – right of use are as follows:
/i
|
|
|
|
| ||||
|
|
|
|
|
|
| ||
Right-of-use assets |
| $ | i 81,300 |
|
| $ | i 157,379 |
|
The lease liability – right of use is as follows:
i
|
|
|
|
| ||||
|
|
|
|
|
|
| ||
Current portion |
| $ | i 34,738 |
|
| $ | i 88,537 |
|
Non-current portion |
|
| i 46,960 |
|
|
| i 68,961 |
|
|
|
|
|
|
|
|
|
|
Total |
| $ | i 81,698 |
|
| $ | i 157,498 |
|
The weighted average discount rate for the operating lease is i 2.75%.
As of September 30, 2021, the operating lease payment of $ i 36,985 will become mature in the next i 12 months.
i
7. LONG-TERM INVESTMENTS
The Company purchased insurance on the life of a key executive officer, Mr. NG Hak Yiu, the director of the Company. As a beneficiary, the Company receives the cash surrender value if the policy is terminated and, upon death of the insured, receives all benefits payable.
The life insurance is stated at the cash surrender value of the contract.
i
8. BORROWINGS
As of September 30, 2021 and December 31, 2020, the borrowings consisted of the followings:
i
|
|
|
|
| ||||
|
|
|
|
|
|
| ||
Bank loans |
| $ | i 2,055,151 |
|
| $ | i 253,005 |
|
Other borrowings |
|
| i 1,496,678 |
|
|
| i 515,936 |
|
|
|
|
|
|
|
|
|
|
Total |
|
| i 3,551,829 |
|
|
| i 768,941 |
|
|
|
|
|
|
|
|
|
|
Current portion |
|
| i 1,961,272 |
|
|
| i 588,279 |
|
Non-current portion |
|
| i 1,590,557 |
|
|
| i 180,662 |
|
|
|
|
|
|
|
|
|
|
|
| $ | i 3,551,829 |
|
| $ | i 768,941 |
|
| 17 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The borrowings were obtained from two financial institutions in Hong Kong which bear interest ranging from i 2.75% to i 20.25% per annum and repayable in i 12 to i 96 monthly installments.
At September 30, 2021, the borrowings of the Company were secured by:
· | Personal guarantee by the directors of the Company; |
|
|
· | Security over the insurance policy of the Company’s director; and |
|
|
· | Legal charge over the leasehold land and buildings owned by the Company’s director and a related party, Mr. Ng Hak Yiu and Mr. Lo Man Hoi. |
i
9. STOCKHOLDERS’ DEFICIT
Common stock
The Company has i 75,000,000, $ i 0.001 par value shares of common stock authorized.
Issued and outstanding shares
As of September 30, 2021 and December 31, 2020, the Company has a total of i 9,800,000 and i 9,800,000 shares of its common stock issued and outstanding.
/i
10. INCOME TAX
The Company is subject to taxes in the governing jurisdictions in which its subsidiaries operate. The effective tax rate in the period presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate, as follows:
United States
The Company is registered in the State of Nevada and is subject to the tax laws of United States.
The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from i 35% to i 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to its results of operations for the periods presented. Deferred tax asset is not provided for as the tax losses may not be able to carry forward after a change in substantial ownership of the Company in November 2020.
BVI
Under the current BVI law, the Company is not subject to tax on income.
/
| 18 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Hong Kong
The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from i 8.25% to i 16.5% on the estimated assessable profits arising in Hong Kong during the current year, after deducting a tax concession for the tax year. The reconciliation of income tax rate to the effective income tax rate for the period ended September 30, 2021 and 2020 is as follows:
i
|
| Nine months ended September 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Loss before income taxes |
| $ | ( i 1,848,634 | ) |
| $ | ( i 1,059,489 | ) |
Statutory income tax rate |
|
| i 16.5 | % |
|
| i 16.5 | % |
Income tax expense at statutory rate |
|
| ( i 305,025 | ) |
|
| ( i 174,816 | ) |
Understated previous years income taxes |
|
| i 5,859 |
|
|
|
|
|
Net operating loss against valuation allowance |
|
| i 305,025 |
|
|
| i 174,816 |
|
Income tax expense |
| $ | i 5,859 |
|
| $ | i - |
|
The following table sets forth the significant components of the deferred tax assets of the Company as of September 30, 2021 and December 31, 2020:
i
|
|
|
|
| ||||
|
|
|
|
|
|
| ||
Deferred tax assets: |
|
|
|
|
|
| ||
Net operating loss carryforwards |
| $ | i 453,173 |
|
| $ | i 148,148 |
|
Less: valuation allowance |
|
| ( i 453,173 | ) |
|
| ( i 148,148 | ) |
Deferred tax assets, net |
| $ | i - |
|
| $ | i - |
|
As of September 30, 2021, the operation in Hong Kong incurred $ i 2,746,503 of cumulative net operating losses which can be carried forward to offset future taxable income at no expiry. The Company has provided for a full valuation allowance against the deferred tax assets of $ i 453,173 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.
i
11. RELATED PARTY TRANSACTIONS
From time to time, the director of the Company advanced funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and have no fixed terms of repayment.
For the nine months ended September 30, 2021 and 2020, the Company purchased materials amounted to $ i 0 and $ i 57,815, respectively, from its related company, Powerwatt Engineering Company Limited.
Also, for the nine months ended September 30, 2021 and 2020, the Company was granted with the right to use the patents to their products at no fee charge by its related companies, which were controlled by the director of the Company. The management determined that such cost was nominal and did not recognize the patent expense in its financial statements.
Apart from the transactions and balances detailed elsewhere in these accompanying condensed consolidated financial statements, the Company has no other significant or material related party transactions during the periods presented.
/
| 19 |
| Table of Contents |
FOLKUP DEVELOPMENT INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
i
12. CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
For the three months ended September 30, 2021, there is one single customer who accounts for i 47.1% of the Company’s revenues with $ i 269,066 accounts receivable as at September 30, 2021.
For the nine months ended September 30, 2021, there is one single customer who accounts for i 14.0% of the Company's revenues with $269,066 accounts receivable as at September 30, 2021.
For the three and nine months ended September 30, 2020, there is one single customer who accounts for i 65.6% and i 29.6% of the Company’s revenues, respectively with no accounts receivable as at September 30, 2020.
(b) Economic and political risk
The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.
(c) Exchange rate risk
The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
(d) Interest rate risk
As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.
The Company’s interest-rate risk arises from bank and other borrowings. The Company manages interest rate risk by varying the issuance and maturity dates variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of September 30, 2021, bank and other borrowings were at fixed rates.
/i
13. COMMITMENTS AND CONTINGENCIES
As of September 30, 2021, the Company has no material commitments or contingencies.
i
14. 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 issued the unaudited condensed consolidated financial statements. During the period, the Company had the following material subsequent events.
| 20 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This quarterly report and other reports filed by Folkup Development Inc. (“we”, “us”, “our,” or the “Company”), from time to time contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates.
OVERVIEW
The Company was incorporated in the State of Nevada on July 5, 2016, and established a fiscal year end of November 30.
On June 26, 2020, Milena Topolac Tomovic, the then major shareholder, entered into a Stock Purchase Agreement with Hak Yiu Ng (“New Majority Shareholder”) wherein Milena Topolac Tomovic sold 3,000,000 shares of the Company’s common stock, representing approximately 78.9% of all issued and outstanding shares to Mr. Wu.
Effective from July 6, 2020, Milena Topolac Tomovic resigned as a director, and from the offices of President, Secretary and Treasurer of, the Company. Immediately prior to such resignation, Ms. Topolac Tomovic, as the sole member of the board of directors at such time, appointed Hak Yiu Ng as a director, and as President, Secretary and Treasurer of the Company. Mr. Wu is currently the Company’s sole officer and director.
Giving effect to the transactions under the Stock Purchase Agreement, Mr. Wu is now the beneficial holder of 3,000,000 shares of common stock, or 78.9%, of the issued and outstanding shares of common stock of the Company.
| 21 |
| Table of Contents |
Going Concern
To date the Company has little operations or revenues and consequently has incurred recurring losses from operations. No revenues are anticipated until we complete the financing we endeavor to obtain and implement our initial business plan. The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.
The Company plans to raise additional funds through debt or equity offerings. We have no assurance that future financing will materialize. If that financing is not available, we may be unable to continue. Management believes that if we are successful in raising $750,000, we will be able to generate sales revenue within the following twelve months thereof. However, if such public financing is not available, we could fail to satisfy our future cash requirements. We have no assurance that future financing will materialize. If that financing is not available we may be unable to continue. Management believes that if subsequent private placements are successful, we will be able to generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.
If we are unsuccessful in raising the additional proceeds through a private placement offering we will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, the Company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in the Company having to seek capital from other sources such as debt financing, which may not even be available to the Company. However, if such financing were available, because we are a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in our common stock would lose all of their investment.
PLAN OF OPERATION
We are a corporation in its early stage of development and have not yet generated or realized any revenues from our business. In the next 12 months, we plan to increase our revenues by garnering more customers. The Company intends to develop a renewable energy service business in Hong Kong.
Insurance
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
Employees; Identification of Certain Significant Employees.
We are a startup company and currently do not have employees other than Hak Yiu Ng, our sole officer and director. We intend to hire employees on an as needed basis.
Offices
Our business address is at Unit 17-18, 23/F, Metropole Square, 2 On Yiu Street, Sha Tin, New Territories, Hong Kong. We do not pay any lease and there is no agreement to pay any lease in the future. Our telephone number is (852) 3487 6330.
Government Regulation
We will be required to comply with all regulations, rules, and directives of governmental authorities and agencies applicable to our business in any jurisdiction which we would conduct activities. We do not believe that regulation will have a material impact on the way we conduct our business.
| 22 |
| Table of Contents |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Comparison of the Three Months Ended September 30, 2021 and 2020
The following table sets forth certain operational data for the periods indicated:
|
| Three Months Ended |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Revenues, net |
| $ | 573,258 |
|
| $ | 410,187 |
|
Cost of revenue |
|
| (472,266 | ) |
|
| (342,745 | ) |
Gross profit |
|
| 100,992 |
|
|
| 67,442 |
|
Sales and marketing expenses |
|
| (254,167 | ) |
|
| (237,068 | ) |
General and administrative expenses |
|
| (1,508,625 | ) |
|
| (249,011 | ) |
Total operating expenses |
|
| (1,762,792 | ) |
|
| (486,079 | ) |
Total other (expenses) income |
|
| (48,205 | ) |
|
| 3,279 |
|
Loss Before Income Taxes |
|
| (1,710,005 | ) |
|
| (415,358 | ) |
Income tax expense |
|
| (5,859 | ) |
|
| - |
|
Net loss |
|
| (1,715,864 | ) |
|
| (415,358 | ) |
Revenue. We generated revenues of $573,258 and $410,187 for the three months ended September 30, 2021 and 2020. The increase is revenue is attributable to the completion of renewable energy projects and solutions during 2021, whose contracts were entered into during 2020.
During the three months ended September 30, 2021 and 2020, there was one single customer who accounted for 47.1% and 65.6% of our total net revenues, respectively.
Cost of Revenue. Cost of revenue included material supplies, labor and sub-contractor fees. The increase of cost of revenue is attributable to the launch of renewable energy projects and solutions.
Gross Profit. We achieved a gross profit of $100,992 and $67,442 for the three months ended September 30, 2021 and 2020, respectively. The increase in gross profit is primarily attributable to the completion of renewable energy projects and solutions during 2021 fiscal quarter.
Sales and Marketing Expenses (“S&M”). We incurred S&M expenses of $254,167 and $237,068 for the three months ended September 30, 2021 and 2020, respectively. The decrease in S&M is primarily attributable to less marketing expense compared to the launch of our renewable energy projects and solutions.
General and Administrative Expenses (“G&A”). We incurred G&A expenses of $1,508,625 and $249,011 for the three months ended September 30, 2021 and 2020, respectively. The increase in G&A is primarily attributable to the legal and professional fee paid for the professional services.
Other (Expenses) Income, We incurred net other expenses of $48,205 and net other income of $3,279 for the three months ended December 31, 2021 and 2020, respectively. Our net other (expenses) income for the three months ended September 30, 2021 and 2020 consisted primarily of loan interest, interest on lease liabilities, interest income and government anti-epidemic fund.
Income Tax Expense. We recorded income tax expense of $5,859 and $0 for the three months ended September 30, 2021 and 2020. No income expense was incurred for the three months ended September 30, 2021 and 2020.
Net Loss. During the three months ended September 30, 2021, we incurred a net loss of $1,715,864, as compared to $415,358 for the three months ended September 30, 2020.
Comparison of the Nine Months Ended September 30, 2021 and 2020
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| Table of Contents |
The following table sets forth certain operational data for the periods indicated:
|
| Nine Months Ended |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Revenues, net |
| $ | 1,919,812 |
|
| $ | 1,704,935 |
|
Cost of revenue |
|
| (1,143,352 | ) |
|
| (1,435,139 | ) |
Gross profit |
|
| 776,460 |
|
|
| 269,796 |
|
Sales and marketing expenses |
|
| (430,800 | ) |
|
| (555,334 | ) |
General and administrative expenses |
|
| (2,163,607 | ) |
|
| (815,103 | ) |
Total operating expenses |
|
| (2,594,407 | ) |
|
| (1,370,437 | ) |
Total other income |
|
| (30,687 | ) |
|
| 41,152 |
|
Loss Before Income Taxes |
|
| (1,848,634 | ) |
|
| (1,059,489 | ) |
Income tax expense |
|
| (5,859 | ) |
|
| - |
|
Net loss |
|
| (1,854,493 | ) |
|
| (1,059,489 | ) |
Revenue. We generated revenues of $1,919,812 and $1,704,935 for the nine months ended September 30, 2021 and 2020. The increase is revenue is attributable to the completion of renewable energy projects and solutions during 2021, whose contracts were entered into during 2020.
During the nine months ended September 30, 2021, there was one single customer who accounted for 14% or more of our total net revenues.
During the nine months ended September 30, 2020, there was one single customer who accounted for 29.6% of our total net revenues.
Cost of Revenue. Cost of revenue included material supplies, labor and sub-contractor fees. The increase of cost of revenue is attributable to the launch of renewable energy projects and solutions.
Gross Profit. We achieved a gross profit of $776,460 and $269,796 for the nine months ended September 30, 2021 and 2020, respectively. The increase in gross profit is primarily attributable to the completion of renewable energy projects and solutions during 2021 fiscal quarter.
Sales and Marketing Expenses (“S&M”). We incurred S&M expenses of $430,800 and $555,334 for the nine months ended September 30, 2021 and 2020, respectively. The decrease in S&M is primarily attributable to less marketing expense compared to the launch of our renewable energy projects and solutions.
General and Administrative Expenses (“G&A”). We incurred G&A expenses of $2,163,607 and $815,103 for the nine months ended September 30, 2021 and 2020, respectively. The increase in G&A is primarily attributable to the legal and professional fee paid for the professional services.
Other (Expenses) Income, net. We incurred net other expenses of $30,687 and net other income of $41,152 for the nine months ended September 30, 2021 and 2020, respectively. Our net other (expenses) income for the nine months ended September 30, 2021 and 2020 consisted primarily of loan interest, interest on lease liabilities, interest income, gain on disposal of a subsidiary and government anti-epidemic fund.
Income Tax Expense. We recorded income tax expense of $5.859 and $0 for the nine months ended September 30, 2021 and 2020. No income expense was incurred for the nine months ended September 30, 2021 and 2020.
Net Loss. During the nine months ended September 30, 2021, we incurred a net loss of $1,854,493 as compared to $1,059,489 for the nine months ended September 30, 2020.
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| Table of Contents |
Liquidity and Capital Resources and Cash Requirements
As of September 30, 2021, we had cash and cash equivalents of $1,928,616, deposits, prepayments and other receivables of $311,064, contract assets of $2,735,868 and accounts and retention receivables of $1,163,523.
As of December 31, 2020, we had cash and cash equivalents of $160,594, accounts and retention receivables of $83,169, deposits, prepayments and other receivables of $1,031,566, and contract assets of $1,800,332.
We believe that our current cash and other sources of liquidity discussed below are adequate to support general operations for at least the next 12 months.
|
| Nine Months Ended |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Net cash used in operating activities |
| $ | (1,118,031 | ) |
| $ | (717,072 | ) |
Net cash used in investing activities |
|
| (233,561 | ) |
|
| (5,634 | ) |
Net cash provided by financing activities |
|
| 3,113,064 |
|
|
| 712,071 |
|
Net Cash Used In Operating Activities.
For the nine months ended September 30, 2021, net cash used in operating activities was $1,118,031, which consisted primarily of a net loss of $1,854,493, offset by an increase in accounts and retention receivables of $1,854,493, a decrease in deposits, prepayments and other receivables of $629,057, an increase in contract assets of $935,536, an increase in contract liabilities of $2,370,105, an increase in accrued liabilities and other payables of $104,819, a decrease in accounts payables of $405,022, depreciation of plant and equipment of $53,863, non-cash lease expenses of $3,491, depreciation of right-of-use assets of $75,581, depreciation of energy assets of $24,204 and gain on disposal of a subsidiary of $103,746.
For the nine months ended September 30, 2020, net cash used in operating activities was $717,072, which consisted primarily of a net loss of $1,059,489, offset by a decrease in accounts and retention receivables of $106,713, an increase in deposits, prepayments and other receivables of $628,574, an increase in contract assets of $698,363, an increase in contract liabilities of $732,729, an increase in accrued liabilities and other payables of $768,329, depreciation of plant and equipment of $5,170, non-cash expenses of $2,699 and depreciation of right-of-use assets of $53,714.
We expect to continue to rely on cash generated through financing from our existing shareholders and private placements of our securities, however, to finance our operations and future acquisitions.
Net Cash Used In Investing Activities.
For the nine months ended September 30, 2021, net cash used in investing activities was $233,561, consisting primarily of purchases of plant and equipment of $367,496, purchases of energy assets of $189,400, purchases of long-term investments of $128,418 and proceed from disposal of a subsidiary of $451,753.
For the nine months ended September 30, 2020, net cash used in investing activities was $5,634, consisting primarily of purchases of plant and equipment of $5,634.
Net Cash Provided By Financing Activities.
For the nine months ended September 30, 2021, net cash provided by financing activities was $3,113,064, consisting primarily of advances from a director of $625,932, advance from related companies of $109,856, payment of lease liabilities of $78,791, repayment of bank borrowings of $3,072,236 and proceed from bank borrowings of $616,169.
For the nine months ended September 30, 2020, net cash provided by financing activities was $712,071, consisting primarily of repayment to a director of $1,448, payment of lease liabilities of $55,684 and proceed from bank and other borrowings of $769,203.
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Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Subsequent Events
None through date of this filing.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 3.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures
Our management, with the participation of our President and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on that evaluation, our President and our Chief Financial Officer concluded that, as of September 30, 2021, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules, regulations and forms, and (ii) that such information is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
Our management, with the participation of the President and Chief Financial Officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during this quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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| Table of Contents |
The Company is not currently subject to any legal proceedings. From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant. There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of operations.
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
None.
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| Table of Contents |
(a) The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.
Number |
| Description |
|
|
|
| ||
| ||
| ||
| ||
| ||
| ||
| ||
101.INS* |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 Labels Linkbase Document.+ |
101.PRE* |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document.+ |
104* |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).+ |
_______________
(1) | Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-216921), filed with the Securities and Exchange Commission on March 24, 2017. |
(2) | Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 333-216921) dated filed with the Securities and Exchange Commission on November 27, 2020. |
+ XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
| 28 |
| Table of Contents |
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.
FOLKUP DEVELOPMENT INC. | |||
|
|
|
|
Date: April 11, 2022 | By: | /s/ Hak Yiu Ng | |
Name: | |||
Title: | President (principal executive officer) | ||
Date: April 11, 2022 | By: | ||
Name: | |||
Title: | Chief Financial Officer (principal accounting officer and principal financial officer) |
29 |
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 9/30/22 | ||||
| Filed on: | 4/12/22 | |||
| 4/11/22 | ||||
| 12/31/21 | NT 10-K | |||
| For Period end: | 9/30/21 | |||
| 6/30/21 | 10-Q, NT 10-Q | |||
| 6/22/21 | 8-K | |||
| 5/31/21 | ||||
| 3/31/21 | 10-K, 10-Q, NT 10-Q | |||
| 1/1/21 | ||||
| 12/31/20 | 10-K, 10-K/A | |||
| 11/27/20 | 8-K | |||
| 9/30/20 | ||||
| 7/6/20 | ||||
| 6/30/20 | ||||
| 6/26/20 | ||||
| 3/31/20 | ||||
| 3/11/20 | ||||
| 1/1/20 | ||||
| 1/1/18 | ||||
| 3/24/17 | S-1 | |||
| 7/5/16 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/27/20 Folkup Development Inc. 8-K:1,2,3,5 9/25/20 7:1.8M Discount Edgar/FA 3/24/17 Folkup Development Inc. S-1 5:1.9M |