Sino Green Land Corp. 10-K

ITEM 1A. RISK FACTORS Risks Related to our Business There is substantial doubt about Sino Green Land’s ability to continue as a going concern. For the year ended June 30, 2024, Sino Green Land incurred a net loss of $798,804 and used cash in operating activities of $ 752,278. These factors raise substantial doubt about the Sino Green Land’s ability to continue as a going concern within one year after the date the financial statements are issued. In addition, Sino Green Land’s independent registered public accounting firm, in their report on Sino Green Land’s June 30, 2024, audited financial statements, raised substantial doubt about the Sino Green Land’s ability to continue as a going concern. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing. We have identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting. We identified material weaknesses in our internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The material weaknesses identified include (i) the Company did not maintain a functioning independent audit committee and did not maintain an independent board; (ii) the Company had inadequate segregation of duties; and (iii) the Company had an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock. Any major disruption at our waste treatment plants, such as a breakdown of machinery, power or utilities shortage, could adversely affect our business, financial conditions, results of operations. Our business is dependent on the uninterrupted operation of our waste treatment plants. If the use or efficiency of our waste treatment plants is hampered or disrupted due to power or water shortages or breakdowns, or if our machinery and equipment is damaged due to accident, fire or other natural disasters, our ability to process plastic recycle products and deliver our products in a timely manner, and thus our ability to generate revenue, may be materially affected. Furthermore, our waste treatment processes require a stable source of electricity, and there is no guarantee that the local electricity supply would be sufficiently reliable or stable for consumption at all times. If we are unable to manage or reduce periods of interruption of power supply, our waste treatment capacities at our waste treatment plants may be limited, delayed or halted, which could have an adverse effect on our business, operations, financial performance, financial condition, results of operations. Furthermore, in the case of a breakdown or failure in our machinery or equipment, suitable replacements of relevant machinery may not be readily available in the market in a timely manner or at all. Any disruptions affecting our waste treatment plants may lead to delays in fulfilling contract obligations, and our business, operations, financial performance, financial condition, and results of operations may be materially and adversely affected. Our success is dependent on the continuous efforts of our key management and operation personnel, and we may not be able to find suitable replacement in case of loss of service of any of them. The Company’s success also will depend in large part on the continued service of its key operational and management personnel, including executive staff, research and development, engineering, marketing and sales staff. Most specifically, including Ms. Wo Kuk Ching, our Chairman, CEO and Executive Director, Mr. Luo Xiong, our Vice president who oversees new partnerships, as well as implementation of our methodology, partnership retention, overall management and future growth. We rely on the expertise and experience of our key management personnel in developing business strategies, managing business operations and maintaining relationships with our customers. While there had been no key management and operation personnel who left us during these years, there is no assurance that there will be no such incidents in the future. If we lose the services of any of our key management personnel, we may not be able to find a suitable replacement with comparable knowledge and experience in a timely manner, and our business, operations, financial performance, financial condition, results of operations may be materially and adversely affected. We rely on foreign workers for our operations Our Company presently operates in a labor intensive industry and we depend on foreign labor for our predominantly manual operations such as manual sorting of collected waste. As at the date of this report, we had a total of 21 employees, out of which 9 were foreign workers. We are subject to certain approvals for employment of foreign workers and have obtained letters of approval by the Ministry of Home Affairs of Malaysia. As advised by our legal advisers as to Malaysia law, there is no fixed quota on the number of foreign workers we can employ or any pre-determined foreign workers to local workers ratio as mandated by the Ministry of Home Affairs of Malaysia as the approval for intake of foreign workers is based on the actual requirement of the employer. Such an approval is applied by the employer on an as-needed basis. As such, we can increase the quota of foreign workers as long as an application for intake of foreign workers is first submitted to, and approval for such application is obtained from, the Ministry of Home Affairs of Malaysia. We have been in compliance with the relevant laws and regulations governing the employment of foreign workers in all material respects during these years. While our Directors confirmed that we had fully complied with the relevant laws and regulations relating to foreign workers in all material respects during these years, there is no assurance that the Malaysian government will not impose additional conditions or restrictions on the intake of foreign workers allowed or change the foreign worker policy or the laws and regulations relating to foreign workers, and we may not be able to replace our foreign workers with local workers, or we may have to incur additional cost for recruiting local workers. This may in turn materially and adversely affect our business, operations, financial performance, financial condition, results of operations. Further, any increase in competition for foreign workers, especially skilled workers, will also increase the general labour wages paid by us to our foreign workers, which will have an adverse impact on our costs of operations and may in turn materially and adversely affect our results of operations. 8 We generally do not enter into long-term agreements with our customers. If we fail to retain our existing customers or attract new customers, our business, financial conditions and results of operations may be materially and adversely affected. We do not enter into long-term agreements with most of our customers, and our customers have no obligation to engage us again for future to purchase recycled products from us as it is the industry practice to not enter into such long-term agreements with our customers. There is no assurance that our current or future agreements, with our major customers can be negotiated on terms and prices equivalent to or more favourable than current terms and prices. If we fail to retain our existing customers or attract new customers, our revenue and profitability, which is dependent on the number and scale of recycle products that we are able to sell, may be materially and adversely affected. Cross Border Sales Transactions Cross-border sales transactions carry a risk of changes in import tax and/or duties related to the import and export of our product, which can result in pricing changes, which will affect revenues and earnings. Cross border sales transactions carry other risks including, but not limited to, changing regulations, wait times, customs inspection and lost or damaged product. We will need to raise funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations. We will need to seek funds soon, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances or a combination of these approaches. Raising funds in the current economic environment may present additional challenges. It is not certain that we have accounted for all costs and expenses of future development and regulatory compliance. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favourable or if we have specific strategic considerations. Our future growth may be limited. The Company’s ability to achieve its expansion objectives and to manage its growth effectively depends upon a variety of factors, including the Company’s ability to further develop use of methodology, to attract and retain skilled employees, to successfully position and market the Company, to protect its existing intellectual property, to capitalize on the potential opportunities it is pursuing with third parties, and sufficient funding. To accommodate growth and compete effectively, the Company will need working capital to maintain adequate operating levels, develop additional procedures and controls and increase, train, motivate and manage its work force. There is no assurance that the Company’s personnel, systems, procedures and controls will be adequate to support its potential future operations. We are dependent on third parties for the supply of raw materials. Our continuing success depends on the availability, cost and quality of the raw materials for the Plastic recycle products. The cost of raw materials amounted to approximately MYR8.1 million, and MYR2.03 million respectively, representing approximately 77% and 53% of our cost of sales for FY2024 and FY2023 respectively. Cost of raw materials refers to cost incurred by our Company to purchase recoverable items from our suppliers, which is the key components of cost of sales attributable to the recycled products segment. The increase in cost of raw materials from MYR8.1 million in FY2024 to MYR2.03 million in FY2023 was mainly due to the sales increase and new machinery testing. We generally do not enter into any agreements with our suppliers other than on a purchase order basis. The prices and supply of raw materials depend on factors beyond our control, including economic conditions, competition, availability of quality suppliers, production levels and transportation costs in Malaysia and Overseas. There is no assurance that there will not be such incidents in the future. If we are unable to procure the required raw materials from our suppliers in a timely manner (for example, as a result of the suspension of operations or liquidation or bankruptcy of the supplier), or if the cost of raw materials exceeds our budgeted cost, or if any of our key suppliers is unable to continue providing the raw materials we need or fail to supply the necessary raw materials at prices and on terms and conditions we consider acceptable, and we are unable to find suitable replacement of the suppliers nor pass on the additional costs to our customers, there may be a material and adverse effect on our business, operations, financial performance, financial condition, results of operations. We may not be successful in our potential business combinations. The Company may, in the future, pursue acquisitions of other complementary businesses and technology licensing arrangements. The Company may also pursue strategic alliances and joint ventures that leverage its core products and industry experience to expand its product offerings and geographic presence. The Company has limited experience with respect to acquiring other companies and limited experience with respect to forming collaborations, strategic alliances and joint ventures. 9 If the Company were to make any acquisitions, it may not be able to integrate these acquisitions successfully into its existing business and could assume unknown or contingent liabilities. Any future acquisitions the Company makes, could also result in large and immediate write-offs or the incurrence of debt and contingent liabilities, any of which could harm the Company’s operating results. Integrating an acquired company also may require management resources that otherwise would be available for ongoing development of the Company’s existing business. We are required to comply with applicable laws and regulations. Arising from the operations of our Company, we are required to comply with laws and regulations applicable to, among others, workplace safety, employment of foreign workers, environment and road traffic. In the event that we fail to comply with any of the applicable laws and regulations, we may be subject to penalties imposed by the authorities which include, but are not limited to, being fined and/or issued with remedial or stop-work orders which may materially and adversely affect our business, operations, financial performance, financial condition, results of operations. We are imposed to environmental liability. Our business operations are subject to environmental laws and regulations, in particular on the emission, discharge or deposit of waste into the environment pursuant to the laws of Malaysia. Though we had no material non-compliance with applicable environmental laws and regulations, as these laws and regulations may continue to evolve, there is no assurance that we will continue to be in compliance with all the applicable laws and regulations, and we may incur additional costs in complying with such laws and regulations. Any violation of the relevant environmental laws and regulations may lead to substantial fines, clean-up costs and environmental liabilities or even suspension of operations that could materially and adversely affect our business, operations, financial performance, financial condition, results of operations. We intend to expand our capacity by capital investment in new machinery and system, which may result in an increase in depreciation expenses, plant and machinery operating costs, repair and maintenance costs and cash flow used in investing activities. In order to secure more customers in Malaysia and overseas and expand the scale of our operations and customer base, our Directors intend to apply an aggregate of approximately MYR10 million (equivalent to approximately US$2.3 million) in capital investment in facilities, plants, machineries and/or equipment to enhance production efficiency and capacities. As a result, our cash flow used in investing activities is expected to increase, and assuming all other things remain unchanged and such investment have been fully deployed, our depreciation expenses, plant and machinery operating costs and repair and maintenance costs will increase and this may in turn have a material adverse effect on our business, operations, financial performance, financial condition, results of operations. Any further disruptions from an uptick in new infections related to COVID-19 may materially harm out business prospects. Further upticks in infection, and the related enforcement of governmental restrictions would materially hinder our ability to grow, as it would make it could interrupt our supply chain, as well as the financial condition of our intended customer base. We may need further financing for our existing business and future growth. We may require additional funding for our existing business and growth plans. We have estimated our funding requirements in order to implement our growth plans. In the event that the costs of implementing our growth plans exceed our funding estimates significantly or that we come across opportunities to grow through expansion plans which cannot be predicted at this juncture, and our funds generated from our operations prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements. We will consider obtaining such funding from new issuance of equity, debt instruments and/or external bank borrowings, as appropriate. In addition, we may need to obtain additional equity or debt financing for other business opportunities that our Group deems favourable to our future growth and prospects. Funding through the new issuance of equity may lead to a dilution in the interests of the Shareholders. An increase in debt financing may be accompanied by conditions that restrict our ability to pay dividends or require us to seek lenders’ consent for payment of dividends, or restrict our freedom to operate our business by requiring lenders’ consent for certain corporate actions. In addition, there is no assurance that we will be able to obtain additional financing on terms that are favourable and acceptable. If we are not able to secure adequate financing, our business and growth may be negatively affected. 10 Risks Related to Our Operation in Malaysia The development of the industry we operate in is highly dependent on the Malaysian government’s environmental protection policies, which may change from time to time. As a business operating in Malaysia, we are subject to the laws and regulations of Malaysia, which can be complex and evolve rapidly. The Malaysian government has the power to exercise significant oversight and discretion over the conduct of our business, and the environmental regulations to which we are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in Malaysia are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives in Malaysia may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may: ● Delay or impede our development, ● Result in negative publicity or increase our operating costs, ● Require significant management time and attention, and ● Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected as well as materially decrease the value of our common stock. Changes in Malaysian economic, political and social conditions, as well as government policies, may affect our businesses and the industry we operate in. Our major assets and business operations are located in Malaysia. Therefore, our business, operations, financial performance, financial condition and results of operations are significantly exposed to the economic, political and social conditions in Malaysia as well as government policies, which in turn may impact our customers in Malaysia who buy our recycle products from us. There is no assurance that the demand for our products in Malaysia will not decrease in the future. For instance, an economic downturn in Malaysia may lead to a decrease in the demand for our products in the market, thereby materially and adversely affecting our business, financial conditions and results of operations. Further, any changes in the policies implemented by the government of Malaysia which may result in currency and interest rate fluctuations, inflation, capital restrictions, price and wage controls, expropriation and changes in taxes and duties detrimental to our business may materially affect our operations, financial performance and future growth. Unfavourable changes in the social, economic and political conditions of Malaysia or in the Malaysian government policies in the future may have a negative impact on our operations and business in Malaysia, which will in turn adversely affect the overall financial performance of our Company. In addition, Malaysia foreign exchange control may limit our ability to utilise our cash effectively and affect our ability to receive dividends and other payments from our Malaysian subsidiaries. We are subject to currency conversion and exchange rate risk. Since a substantial amount of our income and profit is denominated in MYR, any fluctuations in the value of MYR may adversely affect the amount of dividends, if any, payable to the Shares in S$ to our Shareholders. There is no assurance that the Malaysian government will not impose more restrictive or additional foreign exchange controls. Any imposition, variation or removal of exchange controls may lead to less independence in the Malaysian government’s conduct of its domestic monetary policy and increased exposure of the Malaysia economy to the potential risks and vulnerability of external developments in the international markets. 11 Furthermore, fluctuations in the value of MYR against other currencies will create foreign currency translation gains or losses and may have an adverse effect on our business, operations, financial performance, financial condition and results of operations. Any imposition, variation or removal of foreign exchange controls may adversely affect the value, translated or converted into S$, of our net assets, earnings or any declared dividends. Consequently, this may adversely affect our ability to pay dividends or satisfy other foreign exchange requirements. We are subject to the foreign exchange legislation and regulations in Malaysia. Local and foreign investors are subject to Foreign Exchange Administration Rules in Malaysia. The legislations in Malaysia governing exchange control are the Financial Services Act 2013 (“FSA”) and Islamic Financial Services Act 2013 (“IFSA”). In exercise of the power conferred by the FSA and IFSA, Bank Negara Malaysia, which is the central bank of Malaysia (“Bank Negara”), has issued Foreign Exchange Administration Notices (“FEA Notices”) which embody its general permissions and directions. The FEA Notices read together with Schedule 14 of the FSA and IFSA set out the circumstances in which the specific approval of the Bank Negara must be obtained by residents and non-residents to remit funds to and from Malaysia. The FEA Notices are reviewed regularly by Bank Negara in line with the changing environment. As at the Latest Practicable Date, foreign investors are free to repatriate capital, divestment proceeds, profits, dividends, rental, fees and interests arising from investments in Malaysia provided that the repatriation is made in foreign currency. Any future restriction by the FEA Notices on repatriation of funds may limit our ability on dividends distribution to the Shareholders from business operations in Malaysia. However, there is no assurance that the relevant rules and regulations on foreign exchange control in Malaysia will not change. In the event that there is any adverse change in the foreign exchange rules and regulations relating to the borrowing or repatriation of foreign currency, our business and results of operation may be materially and adversely affected. Risks Related to the Market for our Stock The OTC and share value. Our Common Stock trades over the counter, which may deprive stockholders of the full value of their shares. Our stock is quoted via the Over-The-Counter (“OTC”) Pink Sheets under the ticker symbol “SGLA”. Therefore, our Common Stock is expected to have fewer market makers, lower trading volumes, and larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock Exchange or the NASDAQ Stock Market. These factors may result in higher price volatility and less market liquidity for our Common Stock. Low market price A low market price would severely limit the potential market for our Common Stock. Our Common Stock is expected to trade at a price substantially below $5.00 per share, subjecting trading in the stock to certain Commission rules requiring additional disclosures by broker-dealers. These rules generally apply to any non-NASDAQ equity security that has a market price share of less than $5.00 per share, subject to certain exceptions (a “penny stock”). Such rules require the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and institutional or wealthy investors. For these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale. The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Such information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. The additional burdens imposed upon broker-dealers by such requirements could discourage broker-dealers from effecting transactions in our Common Stock. 12 Lack of market and state blue sky laws Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws. The holders of our shares of Common Stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading on the OTC, investors should consider any secondary market for our securities to be a limited one. We intend to seek coverage and publication of information regarding our Company in an accepted publication which permits a “manual exemption.” This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer’s balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment Service, and Best’s Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont, and Wisconsin. Accordingly, our shares of Common Stock should be considered totally illiquid, which inhibits investors’ ability to resell their shares. Penny Stock Regulations Our shares of common stock are subject to the “penny stock” rules of the Securities Exchange Act of 1934 and various rules under this Act. In general terms, “penny stock” is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules provide that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC, issued by a registered investment company, and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer’s net tangible assets or revenues. In the last case, the issuer’s net tangible assets must exceed $3,000,000 if in continuous operation for at least three years or $5,000,000 if in operation for less than three years, or the issuer’s average revenues for each of the past three years must exceed $6,000,000. Rule 144 Risks Sales of our Common Stock under Rule 144 could reduce the price of our stock. There are 10,000,000 issued and outstanding shares of our Common Stock held by affiliates that Rule 144 of the Securities Act defines as restricted securities. These shares will be subject to the resale restrictions of Rule 144, since we have ceased being deemed a “shell company”. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least nine months, may not sell more than 1.0% of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of Common Stock under Rule 144 could reduce prevailing market prices for our securities. No audit or compensation committee Because we do not have an audit or compensation committee, stockholders will have to rely on our entire Board of Directors, none of which are independent, to perform these functions. We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by our Board of Directors as a whole. No members of our Board of Directors are independent directors. Thus, there is a potential conflict in that Board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions. 13 Security laws exposure We are subject to compliance with securities laws, which exposes us to potential liabilities, including potential rescission rights. We may offer to sell our shares of our Common Stock to investors pursuant to certain exemptions from the registration requirements of the Securities Act, as well as those of various state securities laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors and making the offering. We may not seek any legal opinion to the effect that any such offering would be exempt from registration under any federal or state law. Instead, we may elect to relay upon the operative facts as the basis for such exemption, including information provided by investor themselves. If any such offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be offered without registration in reliance on the partial pre-emption from the registration or qualification provisions of such state statutes under the National Securities Markets Improvement Act of 1996. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which we have relied, we may become subject to significant fines and penalties imposed by the Commission and state securities agencies. ITEM 1B. UNRESOLVED STAFF COMMENTS We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. ITEM 2. PROPERTIES Our mailing address and global operations are situated at No. 3 & 5, Jalan Hi Tech 7/7, Kawasan Perindustrian Hi Tech 7, 43500 Semenyih, Selangor, Malaysia. ITEM 3. LEGAL PROCEEDINGS None ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 14 PART II