Full Press Release Details
NATURAL LIFE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
| March 31, 2021 | September 30, 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 1,040,607 | $ | 53,106 | ||||
| Accounts receivable, net | 8,869,747 | 5,771,008 | ||||||
| Inventories, net | 1,446,516 | 1,016,442 | ||||||
| Advance to suppliers, net | 1,894,359 | 3,491,145 | ||||||
| Deferred initial public offering costs | 984,162 | 510,079 | ||||||
| Prepaid expenses and other current assets | 106,786 | 7,434 | ||||||
| TOTAL CURRENT ASSETS | 14,342,177 | 10,840,214 | ||||||
| Property, plant and equipment, net | 14,590,470 | 14,171,963 | ||||||
| Intangible assets, net | 144,126 | 140,993 | ||||||
| Right-of-use lease assets, net | 229,532 | |||||||
| Deferred tax assets, net | 37,032 | 49,059 | ||||||
| TOTAL ASSETS | $ | 29,343,337 | $ | 25,202,229 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short-term loans | $ | 1,823,215 | $ | 1,289,081 | ||||
| Current portion of long-term loans | 2,318,528 | 1,227,346 | ||||||
| Third party loans | - | 690,327 | ||||||
| Accounts payable | 577,311 | 1,288,629 | ||||||
| Due to related parties | 1,019,128 | 2,322,990 | ||||||
| Taxes payable | 5,688,786 | 4,402,625 | ||||||
| Accrued expenses and other current liabilities | 1,275,936 | 442,582 | ||||||
| Finance lease liabilities, current | 148,983 | 33,389 | ||||||
| Operating lease liability, current | 57,051 | |||||||
| TOTAL CURRENT LIABILITIES | $ | 12,908,938 | $ | 11,696,969 | ||||
| Long-term loans | 2,106,180 | 2,482,251 | ||||||
| Finance lease liabilities, noncurrent | 110,499 | - | ||||||
| Operating lease liability, noncurrent | 176,701 | - | ||||||
| TOTAL LIABILITIES | 15,302,318 | 14,179,220 | ||||||
| COMMITMENTS AND CONTINGENCIES EQUITY | ||||||||
| Ordinary shares, $0.0001 par value, 500,000,000 shares authorized, 5,800,000 shares issued and outstanding as of March 31, 2021 and September 30, 2020 * | $ | 580 | $ | 580 | ||||
| Additional paid in capital | 5,567,873 | 5,251,205 | ||||||
| Statutory reserve | 579,922 | 579,922 | ||||||
| Retained earnings | 7,384,071 | 5,072,672 | ||||||
| Accumulated other comprehensive income (loss) | 15,421 | (388,102 | ) | |||||
| TOTAL BON NATURAL LIFE LIMITED SHAREHOLDERS' EQUITY | 13,547,867 | 10,516,277 | ||||||
| Non-controlling interest | 493,152 | 506,732 | ||||||
| Total equity | 14,041,019 | 11,023,009 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 29,343,337 | $ | 25,202,229 |
restated for effect of 1-for-3 shares reverse split, see Note 14.
accompanying notes are an integral part of these unaudited condensed consolidated financial statements
NATURAL LIFE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
| For the six months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| REVENUE | $ | 11,698,830 | $ | 7,149,785 | ||||
| COST OF REVENUE | (8,325,148 | ) | (4,597,617 | ) | ||||
| GROSS PROFIT | 3,373,682 | 2,552,168 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling expenses | (52,666 | ) | (59,765 | ) | ||||
| General and administrative expenses | (679,635 | ) | (811,799 | ) | ||||
| Research and development expenses | (106,998 | ) | (128,481 | ) | ||||
| Total operating expenses | (839,299 | ) | (1,000,045 | ) | ||||
| INCOME FROM OPERATIONS | 2,534,383 | 1,552,123 | ||||||
| OTHER INCOME (EXPENSES) | ||||||||
| Interest income | 294 | 451 | ||||||
| Interest expense | (197,168 | ) | (172,913 | ) | ||||
| Unrealized foreign transaction exchange gain (loss) | (65,691 | ) | (4,300 | ) | ||||
| Government subsidies | 446,910 | 332,418 | ||||||
| Other income | 41,548 | 136,482 | ||||||
| Total other income (expenses) | 225,893 | 292,138 | ||||||
| INCOME BEFORE INCOME TAX PROVISION | 2,760,276 | 1,844,261 | ||||||
| INCOME TAX PROVISION | (465,077 | ) | (249,766 | ) | ||||
| NET INCOME | 2,295,199 | 1,594,495 | ||||||
| Less: net income (loss) attributable to non-controlling interest | (16,200 | ) | 61,317 | |||||
| NET INCOME ATTRIBUTABLE TO BON NATURAL LIFE LIMITED | 2,311,399 | 1,533,178 | ||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
| Total foreign currency translation adjustment | 406,143 | 32,468 | ||||||
| TOTAL COMPREHENSIVE INCOME | 2,701,342 | 1,626,963 | ||||||
| Less: comprehensive income (loss) attributable to non-controlling interest | (13,580 | ) | 59,939 | |||||
| COMPREHENSIVE INCOME ATTRIBUTABLE TO BON NATURAL LIFE LIMITED | $ | 2,714,922 | $ | 1,567,024 | ||||
| EARNINGS PER SHARE | ||||||||
| Basic and diluted | $ | 0.40 | $ | 0.30 | ||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||||||
| Basic and diluted* | 5,800,000 | 5,166,667 |
Retrospectively restated for effect of reverse split.
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NATURAL LIFE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
THE SIX MONTHS ENDED MARCH 31, 2021 AND 2020
| Common shares | Additional paid-in | Statutory | Retained | Accumulated other comprehensive | Total shareholders' | Non- controlling | Total | |||||||||||||||||||||||||||||
| Shares* | Amount | capital | reserve | earnings | loss | equity | interest | equity | ||||||||||||||||||||||||||||
| Balance at September 30, 2019 | 5,166,667 | $ | 517 | $ | 5,040,156 | $ | 257,409 | $ | 2,368,512 | $ | (828,243 | ) | $ | 6,838,351 | $ | 424,995 | $ | 7,263,346 | ||||||||||||||||||
| Net income (loss) | - | - | - | - | 1,533,178 | - | 1,533,178 | 61,317 | 1,594,495 | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 33,846 | 33,846 | (1,378 | ) | 32,468 | ||||||||||||||||||||||||||
| Balance at March 31, 2020 | 5,166,667 | $ | 517 | $ | 5,040,156 | $ | 257,409 | $ | 3,901,690 | $ | (794,397 | ) | $ | 8,405,375 | $ | 484,934 | $ | 8,890,309 | ||||||||||||||||||
| Balance at September 30, 2020 | 5,800,000 | $ | 580 | $ | 5,251,205 | $ | 579,922 | $ | 5,072,672 | $ | (388,102 | ) | $ | 10,516,277 | $ | 506,732 | $ | 11,023,009 | ||||||||||||||||||
| Net income (loss) | - | - | - | - | 2,311,399 | - | 2,311,399 | (16,200 | ) | 2,295,199 | ||||||||||||||||||||||||||
| Amortization of share-based compensation | - | - | 316,668 | - | - | - | 316,668 | - | 316,668 | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 403,523 | 403,523 | 2,620 | 406,143 | |||||||||||||||||||||||||||
| Balance at March 31, 2021 | 5,800,000 | $ | 580 | $ | 5,567,873 | $ | 579,922 | $ | 7,384,071 | $ | 15,421 | $ | 13,547,867 | $ | 493,152 | $ | 14,041,019 |
Retrospectively restated for effect of 1-for-3 shares reverse split, see Note 14.
accompanying notes are an integral part of these unaudited condensed consolidated financial statements
NATURAL LIFE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the six months ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 2,295,199 | $ | 1,594,495 | ||||
| Adjustments to reconcile net income to cash provided by operating activities | ||||||||
| Allowance for doubtful accounts | 6,323 | 23,316 | ||||||
| Depreciation and amortization | 117,888 | 134,457 | ||||||
| Deferred income tax | 13,879 | (19,459 | ) | |||||
| Amortization of operating lease right-of-use assets | 26,195 | - | ||||||
| Unrealized foreign currency exchange loss | 65,691 | 4,300 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,898,493 | ) | (410,656 | ) | ||||
| Inventories | (391,958 | ) | 482,914 | |||||
| Advance to suppliers | 1,738,442 | (1,787,999 | ) | |||||
| Prepaid expenses and other current assets | (99,108 | ) | 17,251 | |||||
| Accounts payable | (760,103 | ) | (809,818 | ) | ||||
| Operating lease liabilities | (21,975 | ) | - | |||||
| Taxes payable | 1,120,847 | 905,514 | ||||||
| Accrued expenses and other current liabilities | 786,942 | 412,845 | ||||||
| Net cash provided by operating activities | 1,999,769 | 547,160 | ||||||
| Cash flows from investing activities | ||||||||
| Purchase of property and equipment | (715 | ) | (26,957 | ) | ||||
| Capital expenditures on construction-in-progress | - | (403,911 | ) | |||||
| Net cash used in investing activities | (715 | ) | (430,868 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from short-term loans | 943,517 | 601,833 | ||||||
| Proceeds from long-term loans | 685,067 | 41,001 | ||||||
| Repayment of short-term loans | (457,729 | ) | (1,211,475 | ) | ||||
| Repayment of long-term loans | (109,382 | ) | - | |||||
| Proceeds from (repayment of) borrowings from related parties | (1,391,813 | ) | 393,367 | |||||
| Proceeds from (repayment of) third party loans | (716,574 | ) | 76,797 | |||||
| Principal payment from (repayment of) finance lease | 254,970 | (195,863 | ) | |||||
| Payment for deferred initial public offering costs | (155,557 | ) | (42,705 | ) | ||||
| Net cash used in financing activities | (947,501 | ) | (337,045 | ) | ||||
| Effect of changes of foreign exchange rates on cash | (64,052 | ) | 15,605 | |||||
| Net increase (decrease) in cash | 987,501 | (205,148 | ) | |||||
| Cash, beginning of year | 53,106 | 293,771 | ||||||
| Cash, end of year | $ | 1,040,607 | $ | 88,623 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest expense | $ | 215,268 | $ | 172,913 | ||||
| Cash paid for income tax | $ | 1,424 | $ | - | ||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Amortization of share-based compensation for initial public offering services | $ | 316,668 | $ | - | ||||
| Right-of-use assets obtained in exchange for operating lease obligations | 255,811 | - |
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NATURAL LIFE LIMITED AND SUBSIDIARIES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 - ORGANIZATION AND BUSINESS DESCRIPTION
Natural Life Limited ("Bon Natural" or the "Company"), through its wholly-owned subsidiaries and entities controlled
through contractual arrangements, is engaged in the research and development, manufacturing and sales of functional active ingredients
extracted from natural herb plants which are widely used by manufacturer customers in the functional food, personal care, cosmetic and
pharmaceutical industries. The Company sells its products to customers located in both Chinese and international markets.
Natural Life Limited was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on December
Natural owns 100% equity interest of Tea Essence Limited ("Tea Essence"), an entity incorporated on January 9, 2020 in accordance
with the laws and regulations in Hong Kong.
Cell and Molecule Information Technology Limited. ("Xi'an CMIT") was formed on April 9, 2020, as a Wholly Foreign-Owned
Enterprise ("WOFE") in the People's Republic of China ("PRC").
Natural, Tea Essence and Xi'an CMIT are currently not engaging in any active business operations and merely acting as holding companies.
to the reorganization described below, Mr. Yongwei Hu, the chairman of the board of directors and the chief executive officer of the
Company, was the controlling shareholder of Xi'an App-Chem Bio(Tech) Co., Ltd. ("Xi'an App-Chem"), an entity
incorporated on April 23, 2006 in accordance with PRC laws. Xi'an App-Chem owns 100% of the equity interests of the following subsidiaries:
(1) Shaanxi App-Chem Health Industry Co., Ltd. ("App-Chem Health") was incorporated on April 17, 2006 in Tongchuan City in
accordance with PRC laws; (2), Shaanxi App-Chem Ag-tech Co., Ltd ("App-Chem Ag-tech") was incorporated on April 19, 2013
in Dali County, Shaanxi Province in accordance with PRC laws; (3) Xi'an Yanhuang TCM Medical Research & Development Co., Ltd
("Xi'an YH") was incorporated on September 15, 2009 in Xi'an City in accordance with PRC laws; (4) Balikun Tianmei
Bio(Tech) Co., Ltd. ("Balikun") was incorporated on December 16, 2016 in Balikun City in accordance with PRC laws; (5) App-Chem
Bio (Tech) (Guangzhou) Co., Ltd. ("App-Chem Guangzhou") was incorporated on April 27, 2018 in Guangzhou City in accordance
with PRC laws and (6) Tongchuan Dietary Therapy Health Technology Co., Ltd. ("Tongchuan DT") was incorporated on May 22,
2017 in Tongchuan City in accordance with PRC laws.
addition, Xi'an App-Chem also owns majority of the equity interest in the following two entities: Xi'an Dietary Therapy Medical
Technology Co., Ltd ("Xi'an DT") was incorporated on April 24, 2015 in accordance with PRC laws, with 75% equity ownership
interest owned by Xi'an App-Chem; Tianjin Yonghexiang Bio(Tech) Co., Ltd. ("Tianjin YHX") was incorporated on September
16, 2019 in accordance with PRC laws, with 51% equity ownership interest owned by Xi'an App-Chem. On March 11, 2020, Xi'an
App-Chem established a new 100% controlled subsidiary, Gansu Baimeikang Bioengineering Co., Ltd. ("Gansu BMK"). The above-listed
entities are collectively referred to as the "Bon Operating Companies" below.
reorganization of our legal structure ("Reorganization") was completed on May 28, 2020. The reorganization involved the incorporation
of Bon Natural Life, Tea Essence and Xi'an CMIT, and entering into certain contractual arrangements between Xi'an CMIT, the
shareholders of Bon Operating Companies and the Bon Operating Companies.
NATURAL LIFE LIMITED AND SUBSIDIARIES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 - ORGANIZATION AND BUSINESS DESCRIPTION (continued)
the Company became the ultimate holding company of Tea Essence, Xi'an CMIT and Bon Operating Companies.
May 28, 2020, Xi'an CMIT entered into a series of contractual arrangements with the shareholders of the Bon Operating Companies.
These agreements include, Exclusive Service Agreement, Share Pledge Agreement, Proxy Agreement, Exclusive Option Agreement, Powers of
Attorney, Spousal Consent Letter, and Loan Agreement intended to guarantee the exercise of the Exclusive Option Agreements and Spouse
Consents (collectively the "VIE Agreements"). Pursuant to the VIE Agreements, Xi'an CMIT has the exclusive right to
provide to the Bon Operating Companies consulting services related to business operations including technical and management consulting
services. The VIE Agreements are designed to provide Xi'an CMIT with the power, rights, and obligations equivalent in all material
respects to those it would possess as the sole equity holder of each of the Bon Operating Companies, including absolute control rights
and the rights to the assets, property, and revenue of each of the Bon Operating Companies. As a result of our direct ownership in Xi'an
CMIT and the VIE Agreements, we believe that the Bon Operating Companies should be treated as Variable Interest Entities ("VIEs")
under the Statement of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
810 Consolidation and we are regarded as the primary beneficiary of our VIEs. We treat our VIEs as our consolidated entities under U.S.
GAAP. The Company, together with its wholly owned subsidiaries and its VIEs, is effectively controlled by the same shareholders before
and after the Reorganization and therefore the Reorganization is considered as a recapitalization of entities under common control. The
consolidation of the Company, its subsidiaries, and its VIEs has been accounted for at historical cost and prepared on the basis as if
the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated
financial statements. Upon the completion of the Reorganization, the Company has subsidiaries in countries and jurisdictions in the PRC
and Hong Kong. Details of the subsidiaries of the Company as of March 31, 2021 were set out below:
| Name of Entity | Date of Incorporation | Place of Incorporation | % of Ownership | Principal Activities | ||||
| Bon Natural Life | December 11, 2019 | Cayman Islands | Parent, 100% | Investment holding | ||||
| Tea Essence | January 9, 2020 | Hong Kong | 100% | Investment holding | ||||
| Xi'an CMIT | April 9, 2020 | Xi'an City, PRC | 100% | WOFE, Investment holding | ||||
| VIE of the Company: | ||||||||
| Xi'an App- Chem Bio (Tech) | April 23, 2006 | Xi'an City, PRC | VIE | General administration and sales of the Company's products to customers | ||||
| Bon Operating Companies (owned by VIE) | ||||||||
| App-Chem Health | April 17, 2006 | Tongchuan City, PRC | 100% owned by VIE | Product manufacturing | ||||
| App-Chem Ag-tech | April 19, 2013 | Dali County, PRC | 100% owned by VIE | Registered owner of land with an area of 12,904 square meters, no other business activities | ||||
| Xi'an YH | September 15, 2009 | Xi'an City, PRC | 100% owned by VIE | Research and development of product | ||||
| Balikun | December 16, 2016 | Balikun City, PRC | 100% owned by VIE | No active business operation | ||||
| App-Chem Guangzhou | April 27, 2018 | Guangzhou City, PRC | 100% owned by VIE | Raw material purchase | ||||
| Tongchuan DT | May 22, 2017 | Tongchuan City, PRC | 100% owned by VIE | Product manufacturing | ||||
| Gansu BMK | March 11, 2020 | Jiuquan City, PRC | 100% owned by VIE | Raw material purchase | ||||
| Xi'an DT | April 24, 2015 | Xi'an City, PRC | 75% owned by VIE | Research and development of product | ||||
| Tianjin YHX | September 16, 2019 | Tianjin City, PRC | 51% owned by VIE | Raw material purchase |
NATURAL LIFE LIMITED AND SUBSIDIARIES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 - ORGANIZATION AND BUSINESS DESCRIPTION (continued)
VIE contractual arrangements
Company's main operating entities, Xi'an App-Chem, and Shaanxi App-Chem Health (or the "Bon Operating Companies"
as referred above), are controlled through contractual arrangements in lieu of direct equity ownership by the Company.
VIE is an entity which has a total equity investment that is insufficient to finance its activities without additional subordinated financial
support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right
to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest
holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary of, and must consolidate,
CMIT is deemed to have a controlling financial interest in and be the primary beneficiary of the Bon Operating Companies because it has
both of the following characteristics:
| The power to direct activities of the Bon Operating Companies that most significantly impact such entities' economic performance, and | ||
| The obligation to absorb losses of, and the right to receive benefits from, the Bon Operating Companies that could potentially be significant to such entities. |
to these contractual arrangements, the Bon Operating Companies shall pay service fees equal to all of their net profit after tax payments
to Xi'an CMIT. At the same time, Xi'an CMIT is obligated to absorb all of their losses. Such contractual arrangements are
designed so that the operations of the Bon Operating Companies are solely for the benefit of Xi'an CMTI and ultimately, the Company.
associated with the VIE structure
Company believes that the contractual arrangements with its VIE and the shareholders of its VIE are in compliance with PRC laws and regulations
and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company's ability to enforce the contractual
arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC
| revoke the business and operating licenses of the Company's PRC subsidiary and VIE; | ||
| discontinue or restrict the operations of any related-party transactions between the Company's PRC subsidiary and VIE; | ||
| limit the Company's business expansion in China by way of entering into contractual arrangements; | ||
| impose fines or other requirements with which the Company's PRC subsidiary and VIEs may not be able to comply; | ||
| require the Company or the Company's PRC subsidiary and VIE to restructure the relevant ownership structure or operations; or | ||
| restrict or prohibit the Company's use of the proceeds from public offering to finance the Company's business and operations in China. |
NATURAL LIFE LIMITED AND SUBSIDIARIES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 - ORGANIZATION AND BUSINESS DESCRIPTION (continued)
Company's ability to conduct its financial service businesses may be negatively affected if the PRC government were to carry out