UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023

☐ 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.: 001-41434

NOCERA, INC.

(Exact name of registrant as specified in charter)

Nevada		16-1626611
(State or other jurisdiction of incorporation)		(IRS Employer Identification No.)

3F (Building B), No. 185, Sec. 1,Datong Rd., Xizhi Dist., New Taipei City 221, Taiwan (R.O.C.)

(Address of principal executive offices and zip code)

(886)-910-163-358

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	NCRA	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
		Emerging growth company ☒

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

There were 10,019,295 shares outstanding of the registrant’s common stock, par value $0.001 per share, as of August 21, 2023.

TABLE OF CONTENTS

Cautionary Statement Regarding Forward-Looking Statements		3

PART I	FINANCIAL INFORMATION	4

ITEM 1.	INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	4
	INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS	4
	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS	5
	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
	INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	7
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	23
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	38
ITEM 4.	CONTROLS AND PROCEDURES	38

PART II	OTHER INFORMATION	40

ITEM 1.	LEGAL PROCEEDINGS	40
ITEM 1A.	RISK FACTORS	40
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	40
ITEM 4	MINE SAFETY DISCLOSURES	40
ITEM 5	OTHER INFORMATION	40
ITEM 6	EXHIBITS	41

SIGNATURES		42

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential” and “continue” or the negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees of future performance. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of their dates.

We cannot predict all the risks and uncertainties that may impact our business, financial condition or results of operations. Accordingly, the forward-looking statements in this Quarterly Report on Form 10-Q should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or projected future results of our operations, including statements about potential acquisition or merger targets, strategies or plans; business strategies; prospects; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results; and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to a variety of factors and risks, including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2022 initially filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023.

Many of those risks and factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

PART I FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

NOCERA, INC.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars except for Number of Shares)


	June 30, 2023			December 31, 2022
	(Unaudited)			(Audited)

ASSETS
Current assets
Cash and cash equivalents	$	1,116,183		$	2,906,074
Accounts receivable, net		201,069			209,777
Inventories, net		86,282			91,781
Advance to suppliers		1,732			1,732
Prepaid expenses and other assets, net		7,923			27,470
Financial assets at fair value through profit or loss		203,199			–
Total current assets		1,616,388			3,236,834
Deferred tax assets, net		22,426			22,703
Property and equipment, net		1,625,608			844,613
Intangible assets - customer relations		122,281			130,434
Goodwill		3,905,735			3,905,735
Other non-current asset		4,664			–
Total assets		7,297,102			8,140,319
LIABILITIES AND EQUITY
Liabilities
Current liabilities
Accounts payable		–			2,631
Other payables and accrued liabilities		32,290			38,388
Advance receipts		388			42,880
Due to related parties		17,295			18,919
Warrant liability		1,179,768			1,179,768
Long-term secured other borrowing – current portion		169,434			214,913
Dividend payable		22,312			22,312
Income tax payable		1,818			1,920
Total current liabilities		1,423,305			1,521,731
Deferred tax liabilities, net		–			–
Long-term secured other borrowing		394,404			436,341
Total liabilities		1,817,709			1,958,072
Commitments and contingencies		–			–
Equity
Common stock ($0.001 par value; authorized 200,000,000 shares; 9,693,587 shares and 9,243,587 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)		9,693			9,243
Preferred stock ($0.001 par value; authorized 10,000,000 shares; Series A Preferred Stock, 2,000,000 authorized, 80,000 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)		80			80
Additional paid-in capital		21,138,123			20,484,518
Statutory and other reserves		191,219			191,219
(Accumulated losses) retained earnings		(16,046,483	)		(14,747,461	)
Accumulated other comprehensive loss		84,000			103,594
Total stockholders’ equity		5,376,632			6,041,193
Non-controlling interests		102,761			141,054
Total equity		5,479,393			6,182,247
Total liabilities and equity	$	7,297,102		$	8,140,319

See notes to the condensed consolidated financial statements which are an integral part of these unaudited condensed financial statements.

NOCERA, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in US Dollars except for Number of Shares)

(UNAUDITED)


	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
	$			$			$			$
Net sales		5,327,181			2,184,613			9,165,044			5,103,658
Cost of sales		(5,289,946	)		(2,131,064	)		(9,059,153	)		(4,994,867	)
Gross profit		37,235			53,549			105,891			108,791

Operating expenses
General and administrative expenses		(368,667	)		(437,364	)		(1,428,004	)		(1,298,317	)
Total operating expenses		(368,667	)		(437,364	)		(1,428,004	)		(1,298,317	)

Loss from operations		(331,432	)		(383,815	)		(1,322,113	)		(1,189,526	)

Other income (expense)		(880	)		1,999			(12,388	)		1,999
Loss before income taxes		(332,312	)		(381,816	)		(1,334,501	)		(1,187,527	)

Income tax expense		–			(2,161	)		–			(2,170	)
Net loss		(332,312	)		(383,977	)		(1,334,501	)		(1,189,697	)

Less: Net loss attributable to non-controlling interests		(20,938	)		–			(35,479	)		–
Net loss attributable to the company		(311,374	)		(383,977	)		(1,299,022	)		(1,189,697	)

Comprehensive (loss) income
Net loss		(332,312	)		(383,977	)		(1,334,501	)		(1,189,697	)
Foreign currency translation gain (loss)		42,882			148,457			19,594			19,226
Total comprehensive loss		(289,430	)		(235,520	)		(1,314,907	)		(1,170,471	)

Less: comprehensive loss attributable to non-controlling interest		(8,533	)		–			(23,413	)		–
Comprehensive loss attributable to the Company		(280,897	)		(235,520	)		(1,291,494	)		(1,170,471	)

Loss per share
Basic		(0.0321	)		(0.1129	)		(0.1368	)		(0.1669	)
Diluted		(0.0321	)		(0.1129	)		(0.1368	)		(0.1669	)

Weighted average number of common shares outstanding
Basic		9,693,587			7,138,587			9,494,692			7,128,642
Diluted		9,693,587			7,138,587			9,494,692			7,128,642

See notes to the condensed consolidated financial statements which are an integral part of these unaudited condensed financial statements.

NOCERA, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars except for Number of Shares)

(UNAUDITED)


	Six months ended June 30,
	2023			2022
	$			$
Cash flows from operating activities:
Net loss		(1,334,501	)		(1,189,697	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation expenses		81,608			1,241
Amortization of intangible assets		8,152			–
Gain on fair value change of financial assets at FVTPL		(3,199	)		–
Consultancy services settled by equities		521,100			503,000
Share-based compensation		132,955			206,476
Changes in operating assets and liabilities:
Accounts receivable, net		4,273			188,761
Inventories		1,343			853,902
Advance to suppliers		–			27,085
Prepaid expenses and other assets, net		(2,054	)		239,331
Goodwill		–			–
Other non-current assets		(4,865	)		46,613
Notes payable		–			(81,062	)
Accounts payable		(2,631	)		(31,405	)
Advance receipts		(42,492	)		(581,885	)
Other payables and accrued liabilities		(9,387	)		(119,920	)
Income tax payable		(190	)		(356,181	)
Amount due from a related party		–			(348,107	)
Net cash used in operating activities		(649,888	)		(641,848	)

Cash flows from investing activities:
Purchase of property and equipment		(857,870	)		–
Purchase of financial assets at FVTPL		(200,000	)		–
Net cash used in investing activities		(1,057,870	)		–

Cash flows from financing activities:
Other borrowing		(81,034	)		(26,845	)
Net cash used in financing activities		(81,034	)		(26,845	)

Effect of exchange rate changes on cash and cash equivalents		(1,100	)		(175,220	)
Net decrease in cash and cash equivalents		(1,789,891	)		(843,913	)
Cash and cash equivalents at beginning of period		2,906,074			2,444,009
Cash and cash equivalents at end of period		1,116,183			1,600,096

Supplemental disclosures of cash flow information
Cash paid for interest expenses		–			–
Cash paid for Income taxes		–			–

See notes to the condensed consolidated financial statements which are an integral part of these unaudited condensed financial statements.

NOCERA, INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Stated in US Dollars except Number of Shares)

(UNAUDITED)


	Common Stock				Preferred stock				Additional Paid-in		Statutory and other		Retained			Accumulated Other Compre- hensive			Total Nocera Inc.’s Stockholders’ Equity			Non- controlling			Total Stockholders’ Equity
	Stock		Amount		Stock		Amount		Capital		Reserves		Earnings			Loss			(Deficit)			Interests			(Deficit)
			$				$		$		$		$			$			$			$			$
Balance, January 1, 2022		7,071,920		7,072		80,000		80		14,476,240		191,219		(9,918,553	)		13,906			4,769,964			–			4,769,964
Consultancy services settled by equities		66,667		66		–		–		502,934		–		–			–			503,000			–			503,000
Foreign currency translation adjustments		–		–		–		–		–		–		–			129,231			129,231			–			129,231
Share-based compensation		–		–		–		–		103,155		–		–			–			103,155			–			103,155
Net loss		–		–		–		–		–		–		(805,720	)		–			(805,720	)		–			(805,720	)
Balance, March 31, 2022		7,138,587		7,138		80,000		80		15,082,329		191,219		(10,724,273	)		143,137			4,699,630			–			4,699,630
Foreign currency translation adjustments		–		–		–		–		–		–		–			(148,457	)		(148,457	)		–			(148,457	)
Share-based compensation		–		–		–		–		103,322		–		–			–			103,322			–			103,322
Net loss		–		–		–		–		–		–		(383,977	)		–			(383,977	)		–			(383,977	)
Balance, June 30, 2022		7,138,587		7,138		80,000		80		15,185,651		191,219		(11,108,250	)		(5,320	)		4,270,518			–			4,270,518


Balance, January 1, 2023		9,243,587		9,243		80,000		80		20,484,518		191,219		(14,747,461	)		103,594			6,041,193			141,054			6,182,247
Foreign currency translation Adjustments		–		–		–		–		–		–		–			23,627			23,627			(339	)		23,288
Share-based compensation		–		–		–		–		103,155		–		–			–			103,155			–			103,155
Consultancy services settled by equities		450,000		450		–		–		520,650		–		–			–			521,100			–			521,100
Net loss		–		–		–		–		–		–		(987,648	)		–			(987,648	)		(14,541	)		(1,002,189	)
Balance, March 31, 2023		9,693,587		9,693		80,000		80		21,108,323		191,219		(15,735,109	)		127,221			5,701,427			126,174			5,827,601
Foreign currency translation adjustments		–		–		–		–		–		–		–			(43,221	)		(43,221	)		(2,475	)		(45,696	)
Share-based compensation		–		–		–		–		29,800		–		–			–			29,800			–			29,800
Net loss		–		–		–		–		–		–		(311,374	)		–			(311,374	)		(20,938	)		(332,312	)
Balance, June 30, 2023		9,693,587		9,693		80,000		80		21,138,123		191,219		(16,046,483	)		84,000			5,376,632			102,761			5,479,393

See notes to the condensed consolidated financial statements which are an integral part of these unaudited condensed financial statements.

NOCERA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 PRINCIPAL ACTIVITIES AND ORGANIZATION

The consolidated financial statements include the financial statements of Nocera, Inc. (“Nocera” or the “Company”) and its subsidiaries, Grand Smooth Inc. Limited (“GSI”) and Guizhou Grand Smooth Technology Ltd. (“GZ GST” or “WFOE”), and Meixin Institutional Food Development Co., Ltd. (“Meixin”) that is controlled through contractual arrangements. The Company, GSI, GZ GST and Mexin are collectively referred to as the “Company.”

Nocera was incorporated in the State of Nevada on February 1, 2002 and is based in New Taipei City, Taiwan (R.O.C.). It did not engage in any operations and was dormant from its inception until its reverse merger with GSI on December 31, 2018.

Reverse Merger

Effective December 31, 2018, Nocera completed a reverse merger transaction (the “Transaction”) pursuant to an Agreement and Plan of Merger (the “Agreement”), with (i) GSI, (ii) GSI’s shareholders, Yin-Chieh Cheng and Bi Zhang, who together owned shares constituting 100% of the issued and outstanding ordinary shares of GSI (the “GSI Shares”) and (iii) GSI Acquisition Corp. Under the terms of the Agreement, the GSI Shareholders transferred to Nocera all of the GSI Shares in exchange for the issuance of 10,000,000 shares (the “Shares”) of Nocera’s common stock (the “Share Exchange”). As a result of the reverse merger, GSI became Nocera’s wholly-owned subsidiary and Yin-Chieh Cheng and Bi Zhang, the former shareholders of GSI, became Nocera’s controlling shareholders. The share exchange transaction with GSI was treated as a reverse merger, with GSI as the accounting acquirer and Nocera as the acquired party.

GSI is a limited company established under the laws and regulations of Hong Kong on August 1, 2014, and is a holding company without any operations.

GZ WFH was incorporated in Xingyi City, Guizhou Province, People’s Republic of China (“PRC”) on October 25, 2017, and is engaged in providing fish farming containers service, which integrates sales, installments, and maintenance of aquaculture equipment. The registered capital of GZ WFH is RMB$5,000,000 (equal to US$733,138).

On November 13, 2018, GSI incorporated GZ GST in PRC with registered capital of US$15,000.

Divestiture

On September 21, 2020, the Company filed a Current Report on Form 8-K outlining the lack of communication that led to the termination by Nocera of its relationship with its former variable interest entity, Guizhou Wan Feng Hu Intelligent Aquatic Technology Co. Limited (“GZ WFH”) and its management, and termination of the variable interest entity agreements between the parties.

Subsequently on October 8, 2020, Zhang Bi and GZ WFH entered into a Settlement Agreement and Release with Nocera wherein all claims as to GZ WFH’s debt (claim to shares in Nocera or GZ GST) were compromised, settled, and otherwise resolved as to any and all claims or causes of action whatsoever against Nocera for any matter, action, or representation as to Nocera, and any debt to ownership of Nocera or GZ GST up to the date of the agreement. The consideration for the agreement was mutual waiver of any and all claims against each other and GZ GST, and GZ WFH (including Zhang Bi) waived any claims to Nocera stock, meaning the 4,750,000 shares of common stock of Nocera owned by Zhang Bi were cancelled as part of the agreement. The Settlement Agreement and Release is attached hereto as Exhibit 10.8.

The VIE Agreements

On December 31, 2020, we exchanged 466,667 (post-split) shares of our restricted common stock to stockholders of Xin Feng Construction Co., Ltd., a Taiwan limited liability company (“XFC”), in exchange for 100% controlling interest in XFC. We also entered into contractual arrangements with a stockholder of XFC, that enabled us to have the power to direct the activities that most significantly affects the economic performance of XFC and receive the economic benefits of XFC that could be significant to XFC. On November 30, 2022, we entered into a Purchase of Business Agreement with Han-Chieh Shih (the “Purchaser”), in which we sold our controlling interest of XFC, to the Purchaser for a total purchase cash price of $300,000 (the “XFC Sale”). The closing of the XFC Sale occurred on November 30, 2022 and the XFC variable interest entity (“VIE”) agreements were terminated in connection with the XFC Sale.

The VIE Agreements with Meixin

On September 7, 2022, we entered into a series of contractual agreements (collectively, the “Meixin VIE Agreements”) with the majority stockholder (the “Selling Stockholder”) of Meixin Institutional Food Development Co., Ltd., a Taiwan corporation and a food processing and catering company (“Meixin”), and Meixin, of which we purchased 80% controlling interest of Meixin for $4,300,000. The Meixin VIE Agreements essentially confer control and management of Meixin as well as substantially all of the economic benefits of the Selling Stockholder in Meixin to Nocera.

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these financial statements do not include all of the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 31, 2023.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair presentation of the Company’s unaudited condensed consolidated financial position as of June 30, 2023, its consolidated results of operations for the six months ended June 30, 2023, cash flows for the six months ended June 30, 2023 and change in equity for the six months ended June 30, 2023, as applicable, have been made. Operating results for the six months ended June 30, 2023 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2021 or any future periods.

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company conducts credit evaluations of its customers and suppliers and generally does not require collateral or other security from them. The Company evaluates its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

There were four customers who represent 97% of the Company’s total revenue for the six months ended June 30, 2022. There were five customers who represent 99% of the Company’s total revenue for the six months ended June 30, 2023.

The following table sets forth a summary of single customers who represent 10% or more of the Company’s total accounts receivable, net:


	June 30, 2023		December 31, 2022
	(Unaudited)		(Audited)
Percentage of the Company’s accounts receivable
Customer A		50.58%		50.83%
Customer B		16.33%		31.82%
Customer C		11.88%		14.73%
Customer D		20.18%		–
		98.96%		97.38%

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, the Company applies the following steps:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligation in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

The Company recognizes revenue when (or as) the Company satisfies performance obligations by transferring promised goods or services to its customers. Revenue is measured at the transaction price which is based on the amount of consideration that the Company expects to receive in exchange for transferring the promised goods or services to its customers. Contracts with customers are comprised of invoices and written contracts.

The Company does not have arrangements for returns from customers. The Company has no sales incentive programs.

The Company provides goods, maintenance service warranties for the goods sold with a period varying from 18 months to 72 months, a majority of which are 18 months, and exclusive sales agency license to its customers. For performance obligation related to providing products, the Company expects to recognize the revenue according to the delivery of products. For performance obligation related to maintenance service warranties, the Company expects to recognize the revenue on a ratable basis using a time-based output method. The performance obligations are typically satisfied as services are rendered on a straight-line basis over the contract term, which is generally for 18 months as a majority of the maintenance service warranties periods provided are 18 months. For performance obligation related to exclusive agency licenses, the Company recognizes the revenue ratably upon the satisfaction over the estimated economic life of the license.

The Company does not have amounts of contract assets since revenue is recognized as control of goods is transferred. The contract liabilities consist of advance payments from customers and deferred revenue. Advance payments from customers are expected to be recognized as revenue within 12 months. Deferred revenue is expected to be recognized as revenue within 12 months.

Recent Accounting Pronouncements

The FASB issued several updates during the period, none of these standards are either applicable to the Company or require adoption at a future date and none are expected to have a material impact on the consolidated financial statements upon adoption.

Note 3 ACCOUNTS RECEIVABLE, NET

As of June 30, 2023 and December 31, 2022, accounts receivable consisted of the following:

Schedule of accounts receivable
	June 30, 2023		December 31, 2022
	(Unaudited)		(Audited)
	$		$
Accounts receivable		201,069		209,777
Less: Allowance for doubtful accounts		–		–
Total		201,069		209,777

For the six months ended June 30, 2023 and for the year ended December 31, 2022, the Company has recorded provision for doubtful accounts of nil.

Note 4 INVENTORIES

As of June 30, 2023 and December 31, 2022, inventories consisted of the following:

Schedule of inventory
	June 30, 2023		December 31, 2022
	(Unaudited)		(Audited)
	$		$
Raw materials		86,282		91,781
Total		86,282		91,781

Note 5 PREPAID EXPENSES AND OTHER ASSETS, NET


	June 30, 2023		December 31, 2022
	(Unaudited)		(Audited)
	$		$
Other receivables from third party		7,923		27,470
Prepaid expenses and other assets, net		7,923		27,470

Note 6 PROPERTY AND EQUIPMENT, NET

As of June 30, 2023 and December 31, 2022, property and equipment consisted of the following:

Schedule of property and equipment
	June 30, 2023			December 31, 2022
	(Unaudited)			(Audited)
	$			$
Land		877,870			–
Equipment		893,090			903,867
Less: Accumulated depreciation		(145,352	)		(59,254	)
Property and equipment, net		1,625,608			844,613

On November 18, 2022, the Company paid US$20,000 for deposit to purchase 229 contiguous acres of land located in Montgomery County, Alabama to build RASs on that land for fish farming. On February 16, 2023, the Company paid US$857,870 and the land acquisition was completed.

Depreciation expenses for the six months ended June 30, 2023 and 2022 were $81,608 and $1,241, respectively, and $36,880 and $454 for the three months ended June 30, 2023 and 2022, respectively.

Note 7 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

The fair value of each investment in equity instrument to be measured at fair value through profit or loss is as follows:


	June 30, 2023		December 31, 2022
	(Unaudited)		(Audited)
Financial assets mandatorily measured at fair value through profit or loss	$		$

Funds		203,199		–
Total		203,199		–

Current		–		–
Non-Current		203,199		–
Total		203,199		–

Net gain of $3,199 was recognized under changes in fair value of financial assets at fair value through profit or loss in the consolidated statement of profit or loss for the period ended June 30, 2023.

As of June 30, 2023, no financial assets at fair value through profit or loss were pledged with banks as collaterals.

Note 8 GOODWILL

As of June 30, 2023 and December 31, 2022, goodwill consisted of the following:

Goodwill

Schedule of goodwill
	June 30, 2023		December 31, 2022
	(Unaudited)		(Audited)
	$		$
Goodwill - Meixin		3,905,735		3,905,735
Less: Accumulated amortization		–		–
Goodwill, net		3,905,735		3,905,735

Customer relations

Schedule of customer relations
	June 30,			December 31,
	2023			2022
	(Unaudited)			(Audited)
	$			$
Acquisitions		135,325			135,325
Translation/ Adjustments		–			–
Less: Accumulated amortization		(13,044	)		(4,891	)
Less: Impairment		–			–
Customer relations, net		122,281			130,434

Note 9 OTHER BORROWINGS

Other loans consisted of the following:

Schedule of other loans
	June 30, 2023		December 31, 2022
	(Unaudited)		(Audited)

Secured loan from Chailease Finance Co., Ltd wholly repayable within 1 year	$	169,434	$	214,913
Total secured loan wholly repayable within 1 year		169,434		214,913

Secured loan from Chailease Finance Co., Ltd wholly repayable more than 1 year		394,404		436,341
Total	$	563,838	$	651,254

As of December 31, 2022, the outstanding loan from Chailease Finance Co., Ltd of $651,254 (or TWD 20,000,000) with annual interest rate of 6% was secured by pledging the timely deposit in Sunny Bank (Xizhi Branch) of $500,000, and denominated in TWD for a term of 24 months. This facility of credit limit of TWD 20,000,000 was obtained on December 19, 2022 and will be expired on December 16, 2024.

Note 10 WARRANTS

On April 1, 2021, the Company entered into a securities purchase agreement with certain investors for an aggregate of 80,000 shares of its preferred stock at a per share purchase price of $2.50. As part of the transaction, the investors received one Class C warrant and one Class D warrant for the subscription of each preferred share. The Class C warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $2.50 per share exercisable for 36 months from the date of inception. The Class D warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $5.00 per share exercisable for 36 months from the date of inception. The subscription was completed on August 10, 2021.

On September 27, 2021, the Company entered into another securities purchase agreement with the same investors, pursuant to which the Company issued in a registered direct offering, an aggregate of 48,000 shares of common stock of the Company at a per share purchase price of $2.50. In addition, the investors also received one Class C warrant and one Class D warrant for the subscription of each preferred share. The Class C warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $2.50 per share exercisable for 36 months from the date of inception. The Class D warrants consist of the right to purchase up to 80,000 shares of the Company’s common stock at an exercise price of $5.00 per share exercisable for 36 months from the date of inception.

Public Offering

In connection with a firm commitment underwritten public offering (the “Public Offering”) pursuant to a registration statement on Form S-1, amended (File No. 333-264059), originally filed with the SEC on April 1, 2022, and declared effective by the SEC on August 10, 2022, the Company sold an aggregate of 1,880,000 units (the “Units”). Each Unit consisted of one share of common stock and a warrant to purchase two shares of common stock. Each warrant underlying the Units was exercisable from the date of issuance until the fifth anniversary of the issuance date for $3.85 per share of Common Stock (110% of the public offering price per Unit), subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the common stock as described in the warrants. The Public Offering closed on August 15, 2022, and the Company received total gross proceeds of $6.58 million. After deducting the underwriting commissions, discounts, and offering expenses, the Company received net proceeds of approximately $5.3 million

In connection with the Public Offering and pursuant to the underwriting agreement between us and the underwriters named therein, we granted the underwriters a 45-day option to purchase up to 282,000 additional shares of common stock and warrants, equivalent to 15% of the Units sold in the Public Offering, at the public offering price per Unit, less underwriting discounts and commissions, to cover over-allotments, if any. On September 23, 2022, the underwriters exercised their option to purchase an additional 282,000 warrants from us for gross proceeds of $2,820. The warrants were issued to the underwriters on September 26, 2022.

On November 14, 2022, the exercise price of the warrants was decreased to $1.925. Under the terms of the warrants, the exercise price was to be decreased to the greater of (i) $1.925, which represented 50% of the original exercise price; and (ii) 100% of the last volume weighted average price immediately preceding the 90^th calendar day following the initial issuance date (the “Reset Exercise Price”) if, on the date that is 90 calendar days immediately following the initial issuance date, the Reset Exercise Price is less than the original $3.85 exercise price on that date.

The Reset Exercise Price remains subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Common Stock as described in the Warrants.

Reverse Split

In connection with the Public Offering, on August 11, 2022, the Company effected a 2:3 reverse stock split for each share of common stock issued and outstanding. As a result of reverse stock split, the shares of common stock issuable upon the conversion of Class C warrant decreased from 80,000 shares to 53,334 shares for $3.75 per share and Class D warrant decreased from 80,000 shares to 53,334 shares for $7.50 per share.

Schedule of assumptions used
Appraisal Date (Inception Date)	Class C Warrant August 10, 2021		Class D Warrant August 10, 2021
(Unaudited)
	$		$
Market price per share (USD/share)		1.47		0.66
Exercise price (USD/price)		2.50		5.00
Risk free rate		0.14%		0.14%
Dividend yield		0.00%		0.00%
Expected term/ Contractual life (years)		1.39		1.39
Expected volatility		56.36%		56.36%

Appraisal Date (Inception Date)	Class C Warrant September 27, 2021		Class D Warrant September 27, 2021
(Unaudited)
	$		$
Market price per share (USD/share)		1.71		0.73
Exercise price (USD/price)		2.50		5.00
Risk free rate		0.15%		0.15%
Dividend yield		0.00%		0.00%
Expected term/ Contractual life (years)		1.26		1.26
Expected volatility		52.93%		52.93%

The following is a reconciliation of the beginning and ending balances of warrants liability measured at fair value on a recurring basis using Level 3 inputs:

Schedule of Warranty Liability
	June 30, 2022		December 31, 2022
	$		$
Balance at the beginning of period		1,179,768		312,320
Warrants issued to investors		–		754,303
Warrants redeemed		–		113,145
Fair value change of warrants included in earnings		–		–
Total		1,179,768		1,179,768

The following is a summary of the warrant activity:

Number of

Warrants

Average

Exercise Price

Weighted

Average

Remaining

Contractual

Term in

Years

Outstanding at January 1, 2023

2,418,000

2.12

4.73

Exercisable at January 1, 2023

2,418,000

2.12

4.73

Granted

–

Exercised / surrendered

–

Expired

–

Outstanding at June 30, 2023

2,418,000

2.12

4.73

Exercisable at June 30, 2023

2,418,000

2.12

4.73

Note 11 LEASES

The Company has two non-cancelable lease agreements for certain of the office and accommodation as well as fish farming containers for research and develop advanced technology for water circulation applying in fishery with original lease periods expiring between 2022 and 2023. The lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. The Company recognizes rental expense on a straight-line basis over the lease term.

The components of lease expense for the six months ended June 30, 2023 and June 30, 2022 were as follows:


	Statement of Income Location	Six months ended June 30, 2023		Six months ended June 30, 2022
		(Unaudited)		(Unaudited)
		$		$
Lease Costs
Operating lease expense	General and administrative expenses		32,131		22,976
Total net lease costs			32,131		22,976

Maturity of lease liabilities under our non-cancelable operating leases as of December 31, 2022 and June 30, 2023 are US$ nil.

Note 12 OTHER PAYABLES AND ACCRUED LIABILITIES

Schedule of payables
		June 30, 2023		December 31, 2022
		(Unaudited)
		$		$

Salary payable			822		861
Others	<

SEC Form 10-Q filed by Nocera Inc.