Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021
OR
☐TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO ___________
COMMISSION FILE NO. 000-52103
NOCERA, INC.
(Exact name of registrant as specified in charter)
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
3F (Building B), No. 185, Sec. 1, Datong Rd., Xizhi Dist., New Taipei City221, 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:
Title of each class Name of each exchange on which registered
N/A N/A
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
Common Stock, $0.001 par value.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No☒
The aggregate market value
of the registrant’s issued and outstanding shares of common stock held by non-affiliates of the registrant as of June 30, 2021
based on $4.98 per share, the price at which the registrant’s common stock was last sold on June 30, 2021, was approximately
$17,489,581.
There were 10,707,150 shares
outstanding of the registrant’s common stock, par value $0.001 per share, as of March 21, 2022.
NOCERA, INC.
TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2021
PART I 1
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 6
ITEM 1B. UNRESOLVED STAFF COMMENTS 18
ITEM 2. PROPERTIES 18
ITEM 3. LEGAL PROCEEDINGS 18
ITEM 4. MINE SAFETY DISCLOSURES 18
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA 19
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 29
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 30
ITEM 9A. CONTROLS AND PROCEDURES 30
ITEM 9B. OTHER INFORMATION 32
ITEM 9C DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS [●]
PART III 33
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 33
ITEM 11. EXECUTIVE COMPENSATION 35
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 37
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 38
SIGNATURES 39
EXHIBIT INDEX
INDEX TO FINANCIAL STATEMENTS F-1
In this Annual Report on Form 10-K, unless otherwise
stated or as the context otherwise requires, references to “Nocera, Inc.,” “Nocera,” the “Company,”
“we,” “us,” “our” and similar references refer to Nocera, Inc., a Nevada corporation. Our logo and
other trademarks or service marks of the Company appearing in this Annual Report on Form 10-K are the property of Nocera, Inc.
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking
statements that involve assumptions, and describe our future plans, strategies, and expectations. Such statements are generally identifiable
by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“believe,” “intend,” or “project” or the negative of these words or other variations on these words
or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be
no assurance that these expectations will be achieved or accomplished.
Such forward-looking statements include statements
regarding, among other things, (a) the potential markets for our products, our potential profitability, and cash flows, (b) our growth
strategies, (c) anticipated trends in our industry, (d) our future financing plans and (e) our anticipated needs for working capital.
This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance,
or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking
statements. These statements may be found under “Item 1. Business” and “Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations,” as well as in this Annual Report on Form 10-K generally. Actual events or results
may differ materially from those discussed in forward-looking statements as a result of various factors as described in this Annual Report
on Form 10-K generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained
in this Annual Report on Form 10-K will in fact occur. In addition to the information expressly required to be included in this filing,
we will provide such further material information, if any, as may be necessary to ensure that the required statements, in light of the
circumstances under which they are made, are not misleading.
Although forward-looking statements in this Annual
Report on Form 10-K reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and
unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those
discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Annual Report on Form 10-K. We assume no obligation to update any forward-looking statements in order
to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K, other than as may be required by
applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed
with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business,
financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying
assumptions prove incorrect, our actual results may vary materially from those expected or projected.
ii
PART I
ITEM 1. BUSINESS
Business Overview
Nocera is a United States public company headquartered
in Taiwan engaged in the manufacturing of aquaculture equipment, construction of aquaculture facilities, managing and operating aquaculture
facilities and consulting for third party operators of aquaculture facilities. We provide land-based recirculation aquaculture systems
(“RASs”) for fish farming. Our primary business operations consist of the design, development and production of RASs large
scale fish tank systems, for fish farms along with expert consulting, technology transfer, and aquaculture project management services
to new and existing aquaculture management business services.
Corporate History
Nocera, Inc. was incorporated in the State of
Nevada on February 1, 2002, and is based in New Taipei City, Taiwan.
Reverse Merger
Effective December 31, 2018, Nocera completed
a reverse merger transaction pursuant to an Agreement and Plan of Merger (the “Agreement”) with (i) GSI, (ii) GSI’s
stockholders, Yin-Chieh (“Jeff”) Cheng and Zhang Bi, 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 Stockholders
transferred to Nocera all of the GSI Shares in exchange for the issuance of 10,000,000 shares of Nocera’s common stock. As a result
of the reverse merger, GSI became Nocera’s wholly-owned subsidiary and Mr. Cheng and Zhang Bi, the former stockholders of GSI, became
Nocera’s controlling stockholders. 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 assets or operations.
In anticipation of the reverse merger, GSI undertook
a reorganization and became the 100% holding company of Guizhou Grand Smooth Technology Ltd (“GZ GST”) and GSI Guizhou Wan
Feng Hu Intelligent Aquatic Technology Co. Limited (“GZ WFH”), which were all controlled by the same stockholders before and
after the reorganization, pursuant to a series of contractual agreements (the “GZ WFH VIE Agreements”). As a result, GSI,
through GZ GST, was determined to be the primary beneficiary of GZ WFH and GZ WFH became a variable interest entity of GSI. Accordingly,
GSI consolidated GZ WFH’s operations, assets and liabilities.
GZ WFH was incorporated in Xingyi City, Guizhou
Province, People’s Republic of China (PRC) on October 25, 2017, and was engaged in providing fish farming containers service, which
integrated sales, installments, and maintenance of aquaculture equipment.
Divestiture of GZ WFH
On September 21, 2020, Nocera terminated its relationship
with GZ WFH and its management, and the GZ WFH Agreements between the parties were terminated as well.
Subsequently on October 8, 2020, Zhang Bi and
GZ WFH entered into a Settlement Agreement and Release with the Company 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 settlement
agreement. The consideration for the settlement 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, and the 4,750,000 shares of common stock of Nocera owned by Zhang Bi were
cancelled.
The VIE Agreements with XFC
On December 31, 2020, Nocera exchanged 700,000
shares of the Company’s 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.
On December 31, 2020, Nocera and XFC, a
domestic funded limited liability company registered in Taiwan (R.O.C.), entered into a series of contractual agreements whereby Nocera
agreed to provide technical consulting and related services to XFC. As a result, Nocera has been determined to be the primary beneficiary
of XFC, and XFC became a variable interest entity (“VIE”) of Nocera.
The VIE structure was adopted mainly because we
engage in business in an industry that prohibits foreign investment (e.g., construction) and of which requires special licenses in Taiwan.
We are not currently planning to engage in business in mainland China or Hong Kong, and as a result, we are not currently required to
obtain any special licenses in mainland China or Hong Kong. Nocera has entered into the following contractual arrangements with a stockholder
of XFC, that enable the Company to (1) have the power to direct the activities that most significantly affects the economic performance
of XFC, and (2) receive the economic benefits of XFC that could be significant to XFC. The Company is fully and exclusively responsible
for the management of XFC, assumes all of the risk of losses of XFC and has the exclusive right to exercise all voting rights of XFC’s
stockholder. Therefore, in accordance with ASC 810 “Consolidation,” the Company is considered the primary beneficiary of XFC
and has consolidated XFC’s assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial
statements.
XFC will
shift focus to support the construction activities of RASs fish farms of our clients and the development of the Company-owned and operated
fish farms.
Corporate Structure
We conduct our operations through (i) XFC; and
(ii) Nocera Taiwan Branch, an unincorporated division of the Company (“NTB”). The Company’s other subsidiaries, GSI,
which wholly-owns GZ GST, are dormant and currently do not have any operations. However, GZ GST may be involved with RASs manufacturing
in the near future.
We acquired GSI in a reverse merger on December
31, 2018. Prior to the merger, we were a “shell company” as defined under Rule 12b-2 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act). GSI is the parent holding company of GZ GST, which was incorporated on November 13, 2018, as a wholly
foreign-owned enterprise established in the PRC. Both GSI and GZ GZT are currently dormant and do not conduct any operations. The Company
currently does not conduct any operations in China or Hong Kong.
In December 2020, Nocera added XFC as a VIE. Under
the laws of Taiwan, foreign investments are typically restricted or prohibited with respect to the operation of certain businesses in
Taiwan (e.g., construction). As a result, it was necessary for us to add XFC as a VIE in order to obtain a Class A construction license
to construct indoor RASs and solar sharing fish farms. Without this license, we would not be able to conduct this critical part of our
business in Taiwan. XFC has obtained a Class A construction license in Taiwan and we plan to use XFC for the investment in, and the construction
of, indoor RASs and solar sharing fish farms. The Company is now looking for opportunities to expand into the U.S. by building fish farms
or transforming existing ones into high-tech and solar sharing enterprises.
NTB was established on January 14, 2021 in Taiwan.
In October 2021, Nocera began its eel trading business in response to domestic demands created by the COVID-19 lockdown. NTB currently
procures and sells eel in Taiwan and plans to trade other types of seafood, such as tilapia and milkfish, in the near future.
Significant Products & Services
The Company manufactures, sells, and installs
RASs for land-based fish farms. Originally, our systems were designed and constructed from used marine shipping containers. The Company
then developed its next generation of RASs, a cylindrical shaped tank that holds approximately 15,000 U.S. gallons of water, which the
Company believes make them among the largest systems in the market.
There are several significant benefits to our
RASs:
· the system provides a controlled and “traceable” environment;
Nocera’s RASs include the fish tank, circulation
and filtration systems.
Nocera Land-based RASs Overview
Height / width 1.5m/10m
Main composition of our tank Environmental-friendly PE
Yield per growing season (Tilapia) 11,000 lbs.
Price per RASs Total Solution $35,000 USD
The Company’s RASs can raise both freshwater
and saltwater fish, as well as a variety of crustaceans.
Nocera Recirculating Aquaculture System
The Company also provides consulting services
to aquaculture projects, where we offer design innovation and RAS expertise to increase revenue, while decreasing operating expenses,
allowing clients to operate more efficiently while increasing production. Additionally, we show clients how to operate more strategically
by diversifying the species of fish raised to meet market demands. Our equipment enhances the management of fish farms by reducing the
incidence of disease among the fish populations, while reducing water pollution from inland fish farms.
Market Overview
Global fish consumption has long been on the rise
at a rate higher than any other source of animal protein, and the trend is expected to continue. With overfishing already threatening
the earth’s marine ecosystem, it is anticipated that a significantly larger proportion of fish consumption would be farm-raised
instead of wild-caught in the future.
Also, the trade conflict between the U.S. and
China has led to a greater demand for non-Chinese origin seafood products from the U.S. market.
On a broader perspective, as the world rapidly
begins a transition towards net zero carbon emissions in response to the ever-more pressing threat of climate change, it is foreseeable
that solar energy will be the go-to option for many countries as a new source of green energy.
We believe that the RASs, with its proven advantage
in producing more fish in a more cost-effective and environmentally friendly manner while offering greater location flexibility and the
potential for a “solar-fish sharing mode,” is a perfect solution to address the opportunities highlighted above.
Consulting Services
We also provide consulting services and solutions
for aquaculture projects. We currently provide such services in Taiwan and intend to expand into other international markets and the United
States to increase revenues and operate more efficiently. Our consultants use their RASs expertise to help customers increase production
and operate more strategically by branching into new diversified aquaculture species, and importantly, reducing water pollution and decreasing
the disease problems of fisheries.
The Company plans to provide the following service
offerings:
Strategy
We plan to focus on countries with a growing population
and growing demand for food. By 2050, we will need to double the global food supply to feed the world’s growing population1.
There is a growing need for new ways to produce high-quality local fish without putting more pressure on our natural ecosystems. Like
Taiwan, there are also many countries with a growing population and growing demand for high-protein food. We plan to go global through
building demo sites promoting our RASs and selling our price-competitive systems in these countries to meet their demand for food and
to satisfy their desire for a greener environment.
In January 2021, we moved our operation and market
focus from China to Taiwan. In 2021, we established a Nocera Taiwan Branch to focus on customers in a variety of sectors, such as individual
investors, government supported or funded companies, and international customers. We have received interest from areas like Japan, Thailand,
Jordan, South Africa and the United States.
During the year ended December 31, 2021 and 2020,
the net sales were approximately $9.9 million and approximately $1.2 million, respectively.
Construction Services
Nocera is the only provider of RAS solar power
energy sharing and construction services in Taiwan. In 2021, Nocera acquired XFC to support the construction activities for the clients
of Nocera and develop Taiwan fish farm segmentation.
Customers
In 2021, we intend to target customers in a variety
of markets (e.g., Japan, Taiwan, Thailand, Jordan, South Africa and the United States), such as individual investors, government supported
or funded companies and other types of international customers. In addition, an increasing amount of Chinese state and local offices are
faced with environmental challenges in public waters and are under regulatory directives and political pressure to reduce water pollution,
so our potential target customers are significant. During the year ended December 31, 2021 and 2020, the net sales were approximately
$9.9 million and approximately $1.2 million, respectively.
______________________
1 The exchange rate as of December
31, 2021 was approximately $1.00 per 6.370 RMB.
Suppliers
We intend to purchase raw materials and parts
and equipment from third parties locally in Taiwan and build and sell them to customers. We are not directly involved in the production
or manufacturing of readily available equipment, and we do not take a risk in the repair and maintenance of the equipment because of the
manufacturer’s maintenance policy. We have identified and sourced multiple suppliers in Taiwan, and our relationships with suppliers
are generally good. We expect that our suppliers will be able to meet the anticipated demand for our products in the foreseeable future.
There can be no assurance that our suppliers will continue to meet our needs, particularly as we ramp up our expansion into the U.S. and
other markets around the world.
Competition
The market for aquaculture projects and services
is highly competitive. Many of the producers and sellers are large entities that have significantly greater resources than we have. Therefore,
we signed VIE contracts to partner with XFC to use their local resources in Taixi township, Taiwan (R.O.C.) to develop land-based RAS
fish farms in Taiwan and hopefully gain more of a competitive advantage. We also compete with small suppliers which provide smaller alternative
aquaculture solutions regionally but due to the size of our projects, we believe that we should have a better price point.
Trademarks and Patents
None.
Sales and Marketing
Nocera intends to create a brand and by its creation
of the brand, offer unique and better incentives to the consumers. Our target market is not only limited to the direct processing plants;
instead, consumers will be informed about the uniqueness of the fish product, and the important health benefits of fish protein.
Further, Nocera plans to increase the species
selection and product form through the investment of the additional 500 tanks; among all we plan to build a hatchery system by collaborating
with professionals to promote and maintain healthy, self-sustaining populations of fish and other aquatic species. We are aiming for the
direct wholesale option, including live hauling, restaurants, supermarkets and specialty stores. More importantly, the distribution channel
will move towards online marketing as well to achieve a greater market share.
Manufacturing Operations
Currently, the Company manufactures RASs through
its branch office in Taiwan and may manufacture RASs through its Chinese subsidiaries. Additionally, Nocera provides consulting services
regarding RAS technology transfer and aquaculture project management services to the customers in Taiwan.
Government Regulation
We are subject to many varying laws and regulations
in Taiwan and throughout the world, including, without limitation, those related to privacy, data protection, intellectual property, consumer
protection, e-commerce, marketing, advertising, messaging, rights of publicity, health and safety, employment and labor, product liability,
accessibility, competition, and taxation. These laws and regulations are constantly evolving and may be interpreted, applied, created,
or amended in a manner that could harm our current or future business and operations. In addition, it is possible that certain governments
may seek to block or limit our products and services or otherwise impose other restrictions that may affect the accessibility or usability
of any or all of our products and services for an extended period of time or indefinitely.
Our properties and operations are subject to a
number of environmental, health and safety laws and regulations in each of the jurisdictions in which we operate. Under certain of these
laws and regulations, we may be subject to joint and several liability for environmental investigations and cleanups, including at properties
that we currently or previously owned or operated, or at sites at which waste we generated was disposed, even if the contamination was
not caused by us or was legal at the time it occurred.
We are also subject to laws regulating consumer
products in the jurisdictions in which we sell our products. In the United States for instance, certain of our products are subject to
the U.S. Consumer Product Safety Act, under which the U.S. Consumer Product Safety Commission may exclude products from the market that
are found to be unsafe or hazardous, require repair, replacement or refund of products, impose fines for noncompliance with requirements
and impose fines for failure to timely notify them of potential safety hazards.
Also, with respect to the potential sale of eel
and any other seafood into the United States, we are subject to extensive regulation, including, among other things, the Food, Drug and
Cosmetic Act, as amended by the Food Safety Modernization Act (“FSMA”), the Public Health Security and Bioterrorism Preparedness
and Response Act of 2002, and the rules and regulations promulgated thereunder by the U.S. Food and Drug Administration (the “FDA”).
The FSMA was enacted in order to aid the effective prevention of food safety issues in the food supply. This comprehensive and evolving
regulatory program impacts how food is grown, packed, processed, shipped and imported into the United States and it governs compliance
with Good Manufacturing Practices regulations. The FDA has finalized seven major rules to implement FSMA, recognizing that ensuring the
safety of the food supply is a shared responsibility among many different points in the global supply chain. The FSMA rules are designed
to make clear specific actions that must be taken at each of these points to prevent contamination. Some aspects of these laws use a strict
liability standard for imposing sanctions on corporate behavior. If we fail to comply with applicable laws and regulations, we may be
subject to civil remedies, including fines, injunctions, recalls, or seizures, and criminal sanctions, any of which could impact our results
of operations.
In addition, the Nutrition Labeling and Education
Act of 1990 prescribes the format and content of certain information required to appear on the labels of food products.
Our operations and products are also subject to
state and local regulation, including the registration and licensing of plants, enforcement by state health agencies of various state
standards, and the registration and inspection of facilities. Compliance with federal, state and local regulation is costly and time-consuming.
Enforcement actions for violations of federal, state, and local regulations may include seizure and condemnation of products, cease and
desist orders, injunctions or monetary penalties. We believe that our practices are sufficient to maintain compliance with applicable
government regulations.
We are subject to certain regulations by the U.S.
Federal Trade Commission. Advertising of our products is subject to such regulation pursuant to the Federal Trade Commission Act and the
regulations promulgated thereunder.
We are also subject to certain health and safety
regulations, including regulations issued pursuant to the Occupational Safety and Health Act. These regulations require us to comply with
certain manufacturing, health, and safety standards to protect our employees from accidents.
Our business depends in part on environmental
regulations and programs of Taiwan that promote cleaner water sources to restore clean water back to people. Our customers may be encouraged
with incentives by the local governments relating to aquaculture investment. The approvals of land, licenses or permits, are required
from relevant central and local government authorities. In addition, from time to time, relevant government authorities may impose new
regulations at a local level regulating fish farming. We believe that we have skills to help our customers obtain all necessary licenses,
registrations and permits to comply with all requirements necessary to allow our customers and investors to conduct aquaculture business
in Taiwan.
Legal Proceedings
We are currently not a party to any legal or administrative
proceedings and are not aware of any pending or threatened legal or administrative proceedings against us in all material aspects. We
may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
Property
We do not own any real property.
Seasonality
Since the global growing demand from aquaculture
production along with the decreasing production from wild fisheries and our fish farming systems provide a controlled and traceable environment
for species, our business rarely suffers a seasonal impact.
Employees
As of December 31, 2021, we have a total of 10
employees, including both part-time and full-time. We are compliant with local prevailing wage, contractor licensing, and have good relations
with our employees.
Corporation Information
Our principal executive offices are located at
3F (Building B), No. 185, Sec. 1, Datong Rd., Xizhi Dist., New Taipei City 221, Taiwan (R.O.C.). Our telephone number at this address
is (886)-910-163-358.
Available Information
Our website address is www.nocera.company.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, any amendments to those reports, proxy and
registration statements filed or furnished with the SEC, are available free of charge through our website. We make these materials available
through our website as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to,
the SEC. These materials can be accessed through the “Investors” section of our website. The information contained in, or
that can be accessed through, our website is not part of this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS
Our business is subject to many risks and uncertainties,
which may affect our future financial performance. If any of the events or circumstances described below occur, our business and financial
performance could be adversely affected, our actual results could differ materially from our expectations, and the price of our securities
could decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertainties
not currently known to us or that we currently do not believe are material that may adversely affect our business and financial performance.
The statements contained in this Annual Report on Form 10-K that are not historic facts are forward-looking statements that are subject
to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking
statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed.
In that case, the trading price of our securities could decline, and investors in our securities may lose all or part of their investment.
Risks Related to Our Business
Our business may be materially adversely
affected by the coronavirus (COVID-19) outbreak.
The current outbreak of COVID-19 has globally
resulted in loss of life, business closures, restrictions on travel, and widespread cancellation of social gatherings. The extent to which
the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted at this
time, including:
· new information which may emerge concerning the severity of the disease;
· the duration and spread of the outbreak;
· other business disruptions that affect our workforce;
· the impact on capital and financial markets; and
In addition, the current outbreak of COVID-19
has resulted in a widespread global health crisis and adversely affected global economies and financial markets, and similar public health
threats could do so in the future.
Substantially all our revenues are concentrated
in Taiwan pending expansion into other international markets. Consequently, our results of operations will likely be adversely, and may
be materially affected, to the extent that the COVID-19 pandemic or any epidemic harms Taiwan’s economy and society and the global
economy in general. Any potential impact to our results will depend on, to a large extent, future developments and new information that
may emerge regarding the duration and severity of the COVID-19 pandemic and the actions taken by government authorities and other entities
to contain the COVID-19 pandemic or treat its impact, almost all of which are beyond our control. If the disruptions posed by the COVID-19
pandemic or other matters of global concern continue for an extensive period of time, the operations of our business may be materially
adversely affected.
To the extent the COVID-19 pandemic or a similar
public health threat has an impact on our business, it is likely to also have the effect of heightening many of the other risks described
in this “Risk Factors” section.
We have a limited operating history in an
evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
The Company has a limited operating history on
which to base an evaluation of its business and prospects. The Company is subject to all the risks inherent in a small company seeking
to develop, market and distribute new services, particularly companies in evolving markets. The likelihood of the Company’s success
must be considered, in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with
the development, introduction, marketing and distribution of new products and services in a competitive environment.
Such risks for the Company include, but are not
limited to, dependence on the success and acceptance of the Company’s services and the management of growth. In view of the Company’s
limited operating history, the Company believes that period-to-period comparisons of its operating results are not necessarily meaningful
and should not be relied upon as an indication of future performance.
The Company is therefore subject to many of the
risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial,
and other resources and lack of revenues.
If we fail to raise capital when needed
it will have a material adverse effect on the Company’s business, financial condition and results of operations.
The Company has limited revenue-producing operations
and will require proceeds from future offerings to execute its full business plan. A failure to raise capital when needed would have a
material adverse effect on the Company’s business, financial condition and results of operations. In addition, debt and other debt
financing may involve a pledge of assets and may be senior to interests of equity holders. Any debt financing secured in the future could
involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more
difficult for the Company to obtain additional capital or to pursue business opportunities, including potential acquisitions. If adequate
funds are not obtained, the Company may be required to reduce, curtail or discontinue operations.
Our ability to obtain additional capital on acceptable
terms is subject to a variety of uncertainties, including:
· investors’ perception of, and demand for, our securities;
· our future results of operations, financial condition and cash flow.
The Company’s failure to successfully
market its brands could result in adverse financial consequences.
The Company believes that continuing to strengthen
its brands is critical to achieving widespread acceptance of the Company, particularly in light of the competitive nature of the Company’s
market in which it operates. Promoting and positioning its brands will depend largely on the success of the Company’s marketing
efforts and the ability of the Company to provide high quality services. There can be no assurance that brand promotion activities will
yield increased revenues or that any such revenues would offset the expenses incurred by the Company in building its brand. If the Company
fails to promote and maintain its brand or incurs substantial expenses in an attempt to promote and maintain its brand or if the Company’s
existing or future strategic relationships fail to promote the Company’s brand or increase brand awareness, the Company’s
business, results of operations and financial condition would be materially adversely affected.
We may not generate the same level of revenues
from general construction projects.
Our revenues for the year ended December 31, 2021
and for the year ended December 31, 2020 were approximately $10 million and $1 million, respectively. There was one customer, The
Fifth District Management Office of Taiwan Water Corporation, who represented approximately 58% of the Company’s total revenue for
the year ended December 31, 2021, and two customers (JC Development Co., Ltd (“JCD”) and Pan Li) who represented 96% of the
Company’s total revenue for the prior year period. These customers are not located in mainland China or Hong Kong. Our future plan
of operations is to shift away from general construction services to the construction of fish and solar power farms. There can be no guarantee
that such shift in operations will generate the same levels of revenues previously generated through our VIE.
There is no assurance that the Company will
be profitable.
There is no assurance that we will earn profits
in the future, or that profitability will be sustained. There is no assurance that future revenues will be sufficient to generate the
funds required to continue our business development and marketing activities. If we do not have sufficient capital to fund our operations,
we may be required to reduce our sales and marketing efforts or forego certain business opportunities.
The Company may not have the ability to
manage its growth.
The Company anticipates that significant expansion
will be required to address potential growth in its customer base and market opportunities. The Company’s anticipated expansion
is expected to place a significant strain on the Company’s management, operational and financial resources. To manage any material
growth of its operations and personnel, the Company may be required to improve existing operational and financial systems, procedures
and controls and to expand, train and manage its employee base. There can be no assurance that the Company’s planned personnel,
systems, procedures and controls will be adequate to support the Company’s future operations, that management will be able to hire,
train, retain, motivate and manage required personnel or that the Company’s management will be able to successfully identify, manage
and exploit existing and potential market opportunities. If the Company is unable to manage growth effectively, its business, prospects,
financial condition and results of operations may be materially adversely affected.
We will need additional financing in order
to grow our business.
From time to time, in order to expand operations
to meet customer demand, the Company will need to incur additional capital expenditures. These capital expenditures are intended to be
funded from third party sources, including the incurring of debt and/or the sale of additional equity securities. In addition to requiring
additional financing to fund capital expenditures, the Company may require additional financing to fund working capital, research and
development, sales and marketing, general and administrative expenditures, and operating losses. The incurrence of debt creates additional
financial leverage and therefore an increase in the financial risk of the Company’s operations. The sale of additional equity securities
will be dilutive to the interests of current equity holders. In addition, there can be no assurance that such additional financing, whether
debt or equity, will be available to the Company or that it will be available on acceptable commercial terms. Any inability to secure
such additional financing on appropriate terms could have a materially adverse impact on the business, financial condition and operating
results of the Company.
We rely on our executive officers.
The Company’s success is dependent on our
current executive officers. The Company’s success also depends in large part on the continued service of its key operational and
management personnel. The Company faces intense competition from its competitors, customers and other companies throughout the industry.
The loss of any our executive officers, specifically Mr. Yin-Chieh (“Jeff”) Cheng, our CEO, or any failure on the Company’s
part to hire, train and retain a sufficient number of qualified professionals could impair the business of the Company.
We rely on the performance of highly skilled
personnel, and if we are unable to attract, retain and motivate well-qualified employees, our business could be harmed.
The Company is, and will be, heavily dependent
on the skill, acumen and services of the management and other employees of the Company. Our future success depends on our continuing ability
to attract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals are in high demand, and we may
incur significant costs to attract them. In addition, the loss of any of our senior management or key employees could materially adversely
affect our ability to execute our business plan, and we may not be able to find adequate replacements. We cannot ensure that we will be
able to retain the services of any members of our senior management or other key employees. If we do not succeed in attracting well-qualified
employees or retaining and motivating existing employees, our business could be harmed.
We may have inadvertently violated Section
13(k) of the Exchange Act (implementing Section 402 of the Sarbanes-Oxley Act of 2002) and may be subject to sanctions as a result.
Section 13(k) of the Exchange Act provides that
it is unlawful for a company that has a class of securities registered under Section 12 of the Exchange Act to, directly or indirectly,
including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director or executive officer
of the Company. In 2019, the Company did not have a corporate bank account established in Hong Kong or the U.S., and certain funds that
were supposed to be deposited into such corporate bank account were instead deposited into the personal bank account of our principal
stockholder as well as Chairman of the Board of Directors of the Company (“Board”), President, Chief Executive Officer and
Director, Yin-Chieh Cheng, which was considered to be a personal loan made by the Company to Yin-Chieh Cheng and may have violated Section
13(k) of the Exchange Act. The receivable was repaid to us in January 2020. Issuers that are found to have violated Section 13(k) of the
Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The
imposition of any of such sanctions on us could have a material adverse effect on our business, financial position, results of operations
or cash flows.
Future acquisitions may have an adverse
effect on our ability to manage our business.
Selective acquisitions currently form part of
our strategy to further expand our business. If we are presented with appropriate opportunities, we may acquire additional businesses,
services or products that are complementary to our core business. Future acquisitions and the subsequent integration of new companies
into ours would require significant attention from our management. Future acquisitions would also expose us to potential risks, including
risks associated with the assimilation of new operations, services and personnel, unforeseen or hidden liabilities, the diversion of resources
from our existing businesses and technologies, the inability to generate sufficient revenue to offset the costs and expenses of acquisitions
and potential loss of, or harm to, relationships with employees as a result of integration of new businesses. The diversion of our management’s
attention and any difficulties encountered in any integration process could have a material adverse effect on our ability to manage our
business.
The value of seafood which the Company sells
(e.g., eel) is subject to fluctuation which may result in volatility of our results of operations and the value of an investment in the
Company.
Our business is partly dependent upon the sale
of eel which value is subject to fluctuation and which value greatly fluctuates. Our net sales and operating results vary significantly
due to the volatility of the value of eel and any other seafood that we sell which may result in the volatility of the market price of
our common stock.
We are highly susceptible to changes in
market demand for the types of seafood for which our recirculating aquaculture systems are used.
A significant portion of our revenues are derived
from constructing recirculating aquaculture systems for fish farming. We therefore are highly susceptible to changes in market demand
for the seafood for which our systems are used, which may be impacted by factors over which we have limited or no control. Factors that
could lead to a decline in market demand for seafood in general and specifically the type of fish farmed using our systems include economic
conditions and evolving consumer preferences. A substantial downturn in market demand for such seafood may have a material adverse effect
on our business and on our results of operations.
A portion of our revenues are derived from
a single product, eel, and therefore we are highly susceptible to changes in market demand, which may be affected by factors over which
we have limited or no control.
Approximately 30% of our revenues are derived
from a single product, eel. We therefore are highly susceptible to changes in market demand, which may be impacted by factors over which
we have limited or no control. Factors that could lead to a decline in market demand for eel include economic conditions and evolving
consumer preferences. A substantial downturn in market demand for eel may have a material adverse effect on our business and on our results
of operations.
There are risks associated with outsourced
production that may result in a decrease in our profit.
The possibility of delivery delays, product defects
and other production-side risks stemming from outsourcers cannot be eliminated. In particular, inadequate production capacity among outsourced
manufacturers could result in the Company being unable to supply enough product amid periods of high product demand, the opportunity costs
of which could be substantial.
We have limited insurance coverage.
We do not have any business liability, disruption
or litigation insurance coverage for our operations in Taiwan. Any uninsured occurrence of loss or litigation or business disruption may
result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.
Competitors and potential competitors may
develop products and technologies that make ours obsolete or garner greater market share than ours.
Our ability to compete successfully will depend
on our ability to demonstrate that our products are superior to and/or less expensive than other products available in the market. Some
of our competitors have the benefit of marketing their products under brand names that have better market recognition than ours or have
stronger marketing and distribution channels than we do. Increased competition as to any of our products could result in price reduction,
reduced margins and loss of market share, which could negatively affect our profitability.
Certain of our competitors may benefit from government
support and other incentives that are not available to us. As a result, our competitors may be able to develop competing and/or superior
products and compete more aggressively and sustain that competition over a longer period of time than we can. As more companies develop
new intellectual property in our markets, a competitor could acquire patent or other rights that may limit our ability to successfully
market our product.
We may produce products of inferior quality
which would cause us to lose customers.
Although we make an effort to ensure the quality
of our RASs, they could from time to time contain defects, anomalies or malfunctions that are undetectable at the time of shipment, installation
and initial testing. These defects, anomalies or malfunctions could be discovered after our products are shipped to customers and installed
and tested at the site, resulting in the return or exchange of our products or discontinuation of the use of our products, which could
negatively impact our operating results.
If our technologies or products are stolen,
misappropriated, or reverse engineered, others could use the technologies to produce competing technologies or products.
Third parties, including our collaborators, contractors,
and others involved in our business often have access to our technologies. If our technologies or products were stolen, misappropriated,
or reverse engineered, they could be used by other parties that may be able to reproduce our technologies or products using our technologies
for their own commercial gain. If this were to occur, it would be difficult for us to challenge this type of use, especially since we
do not own any patents or other intellectual property rights with respect to our technologies and products.
We are subject to certain risks by virtue
of our international operations.
We mainly operate in Taiwan and plan to expand
in other international countries and in the United States. We expect to expand our operations significantly by accessing new markets abroad
and expanding our services offerings. Our ability to manage our business and conduct our operations in other international countries and
in the United States requires considerable management attention and resources and is subject to the particular challenges of supporting
a growing business in an environment of multiple languages, cultures, customs, legal systems, alternative dispute systems, regulatory
systems and commercial infrastructures. Furthermore, in most international markets, we would not be the first entrant, and our competitors
may be better positioned than we are to succeed. Expanding in other international countries and in the United States may subject us to
risks that we have either not faced before or increase our exposure to risks that we currently face, including risks associated with: