EDGAR 10-K Filing

Company CIK: 1622996
Filing Year: 2021
Filename: 1622996_10-K_2021_0001640334-21-000767.json

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ITEM 1. BUSINESS
Item 1. Business
Since January 30, 2017, following a change of control, we have been engaged in the business of developing and marketing nutritional products that promote wellness and a healthy lifestyle. Our business to date has involved the purchase of products from three suppliers in the Republic of China. We sell product in bulk to companies who may use our products as ingredients in their products or sell the products they purchase from us to their own customers. All of our sales for the years ended December 31, 2020 and 2019 were made to one customer, and all of these sales were made in the first quarter of 2020 and the fourth quarter of 2019.
All of our sales to date have been sales of cordyceps related products and, in the quarter ended June 30, 2018, we sold metallothionein MT-3 elizer. Cordyceps is a fungus that is used in traditional Chinese medicine. Cordyceps sinensis has been described as a medicine in old Chinese medical books and Tibetan medicine. It is a rare combination of a caterpillar and a fungus and found at altitudes above 4500m in Sikkim. Metallothionein MT-3 elizer is a protein that, in powder form, is used in health supplements. The encoded protein in metallothionein MT-3 is considered a growth inhibitory factor, and reduced levels of the protein are observed in the brains of individuals with some metal-linked neurodegenerative disorders such as Alzheimer’s disease. We do not make any claims as to the potential benefits of any of our products. We have not sold metallothionein MT-3 elizer since the quarter ended June 30, 2018, and we do not have any orders for metallothionein MT-3 elizer. We cannot assure you that we will be able to sell metallothionein MT-3 elizer in the future. Our inventory at December 31, 2020 is for cordyceps products. We may also seek to market other products which we see as complimentary to our present products; however, we have not entered into negotiations with respect to the distribution of other products and we cannot assure you that we will be able to market any other products.
We believe that our failure to sell products during the last nine months of 2020 resulted substantially from the COVID - 19 pandemic and actions taken by governments to address the pandemic. We believe our failure to generate sales reflects a downturn in the market in the People’s Republic of China (“PRC”) for cordyseps products, and we cannot assure you that the market will improve. We also cannot assure you the political instability in Hong Kong will not affect our sales, since our customers in 2017 and 2018 were Hong Kong-based customers who sold their products in the PRC, and none of these customers has made purchases from us since the quarter ended December 31, 2018. We cannot assure you that these factors will not affect our ability to generate revenues in the future and, to the extent that any of these factors affects our ability to generate revenue, we may not be able to continue in business.
During the year ended September 30, 2019, we sold Cordycepin and cordyceps powder to two customers, who accounted for 94% and 6% of our revenue. We did not sell any metallothionein MT-3 elizer products. All sales during the year ended December 30, 2020 were made in the first quarter of the year, and we did not have any sales during the second, third or fourth quarter of the year. In January 2020, we changed our fiscal year from the year ended September 30 to the calendar year. During the quarter and the year ended December 31, 2019, we generated modest sales which is from sale to one customer who was not a customer during prior periods. All of our revenue for the year ended December 31, 2020 represents sales to this same customer. We purchased all of our Cordycepin and cordyceps powder from one supplier for the year ended December 30, 2019 and a difference supplier for the year ended December 31, 2020. Our sales are sales of our product in bulk to companies who may use our products as ingredients in their products or sell the products they purchased from us to their own customers. We have not sold metallothionein MT-3 elizer since the quarter ended June 30, 2018.
Implications of Being an Emerging Growth Company
As a company with less than US$1.07 billion in revenue for the last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards.
We will remain an emerging growth company until the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering. Since we completed our initial public offering in 2016, we will cease to be an emerging growth company after December 31, 2021. However, as long as we remain a smaller reporting company, we will be able to take advantage of most of the reduced reporting requirements. We will continue to qualify as a “smaller reporting company” for so long as we have either (i) a public float (i.e., the market value of common equity held by non-affiliates) of less than $250 million as of the last business day of our most recently completed second fiscal quarter or (ii) annual revenues of less than $100 million and a public float of less than $700 million.
Our Organization
We are a Nevada corporation incorporated on September 24, 2014 under the name Killer Waves Hawaii, Inc. On January 30, 2017, we changed our corporate name to Acro Biomedical Co., Ltd. Our address is 12175 Visionary Way, Suite 1160, Fishers, Indiana 46038, telephone (317) 286-6788. Our corporate website is http://acrobiomedicalco.com. Information on or derived from our website or any other website is not part of this annual report.
Proposed Business
To date, all of our sales were made by our chief executive officer, who is our only employee. We plan to develop a marketing program pursuant to which we will seek to:
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market raw materials to customers, primarily in Hong Kong, who would use our products as an ingredient on their products;
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enter into agreements with customers pursuant to which we would develop and supply products which include our ingredients and which meet the specifications of the customer;
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develop one or more products which we would sell to retail outlets which would sell our products to their customers or sell the products directly to retail customers as on-line sales.
We do not presently have either a marketing staff or any manufacturing facilities. We intend to develop a marketing staff by hiring a marketing manager and engaging independent sales representatives or hiring sales and marketing and sales personnel or a combination of independent representatives and sales staff. We cannot assure you that we will be able to engage the necessary qualified personnel or to implement an effective marketing program.
Initially, we intend to focus on marketing our products to companies in the Hong Kong and Republic of China markets. To date all of our sales have been sales of products which we purchased from our suppliers. In order to market products which would be based our or our customer’s specifications, we would need to provide our potential customers with evidence that we have the capacity to develop and manufacture the products that meet both the customer’s quality specifications and delivery requirements and comply with all government requirements. Since we anticipate that the products we sell will be marketed as over the counter health supplements, both the manufacturing facility, the product and the marketing materials may have to comply with all applicable government regulations in the country in which the products are sold.
We do not presently have any manufacturing operations. To the extent that we obtain purchase orders for products, we would need to negotiate an agreement with a qualified manufacturer acceptable to the customer that can deliver the products in accordance with the customer’s specifications, including any required product warranties, and all applicable government regulations and at the customer’s cost set forth in the purchase order. We cannot assure you that we will be able to generate any orders for products until and unless we have shown the ability to produce and deliver products of the type that the customer.
At present, we do not have any products that can be sold at retail. We may seek to develop our own proprietary products or we may have a supplier provide us with their products on a private label basis or we may sell a manufacturer’s brand. We cannot assure you that we can develop products, obtain products on a private-label basis or sell any products at retail. To the extent that we are selling products to consumers, whether directly through the Internet, or through retail outlets, we will need to comply with all applicable government regulations in each country in which we sell the products. In this connection, we are considering marketing products in the United States. We presently intend to sell our products in the United States through distributors who sell other non-prescription products and who will be responsible for compliance with the applicable regulations of the United States Food and Drug Administration (the “FDA”). We also plan to market our products using the internet through a website that we plan to set up. As of the date of this annual report, we do not have any distribution agreements and we have not established a website. We cannot assure you that we will be successful in establishing any marketing program or establishing a website in the United States.
We anticipate that for any products we sell pursuant to an agreement with our customer we will incur liability in the event that the product does not comply with the customer’s specifications or in the event of any product recall. We intend to provide in our agreement with the customer that the customer will be responsible for compliance with all laws applicable to the marketing, sale and labeling of the product. If we sell any products at retail, whether through the Internet or through retail outlets, it will be our responsibility to comply with all government regulations relation to manufacture, marketing, sale and labeling of the products. We will also incur liability in the event of any product recall. The cost of any liability which we may incur may be significant and, if we are found to be liable for any product noncompliance or product recall, we may not be able to continue in business.
Our business plan is in the preliminary stages, and we will require significant funding to implement our business plan, with no assurance that we can or will be successful in developing and implementing our business plan. If we are not able to implement our business plan, our business may be materially impaired.
Source of Supply
During the year ended December 31, 2020, we purchased inventory of Cordycepin and cordyceps powder, from one supplier, Aublog Inc., a Taiwan-based company. In the year ended December 31, 2019, we purchased all of our Cordycepin and cordyceps powder from Biospring, Inc., another supplier which is also a Taiwan-based company. We do not have any long-term supply contracts with any supplier, as a result of which our suppliers have no obligation to sell products to us.
Our inventory of $938,000 at December 31, 2020 and our inventory of $878,560 at December 31, 2019 consisted of Cordycepin and cordyceps powder. To the extent that we are not able to sell our inventory, our working capital and financial condition will be materially impaired.
We do not plan to establish manufacturing facilities. We have engaged in initial discussions with potential contract manufacturers in the Republic of China (“Taiwan”) but, as of the date of this annual report, we do not have a formal or informal understanding with any contract manufacturer. If we are able to negotiate acceptable terms for a contract manufacturer to manufacture our products, we would source the raw materials and have the raw materials shipped to the manufacturer who would them customize the product to meet our or our customer’s specifications. However, any product that we may sell may bear the brand names of the manufacturer rather than our brand name. If we are not able to negotiate an agreement with a contract manufacturer, we may buy finished products from a manufacturer, which we anticipate would have the manufacturer’s brand names. Even if we engage a contract manufacturer, we may still buy a manufacturer’s brand products either from our contract manufacturer or another supplier. Our ability to negotiation a contract with a supplier may be affected by both the modest level of sales for the year as well as our lack of substantial sales. We cannot assure you that we will be able to develop the necessary relationships with suppliers or contract manufacturers on reasonable terms. Our inability to enter into an agreement with a contract manufacturer may materially impair our ability to implement our business plan.
We do not have any arrangement with any supplier to provide us with product for us to sell nor do we have arrangement with suppliers to manufacture products in accordance with specification from potential customers.
Marketing and Sales
All of our marketing and sales activities to date have been conducted by our chief executive officer, Pao-Chi Chu, who is our only employee and who provides his services on a part-time basis. All sales to date were made by our chief executive officer. We intend to implement a marketing program as described under Item 1. Business - Proposed Business
We only had one customer, King Life Biotech Co., LTD, a Taiwan-based company, for the years ended December 31, 2020 and 2019, which was not a customer in prior years. We do not have any long-term contracts with any customer. We ship products pursuant to purchase orders placed by the customers.
Effects of COVID-19
Since our products are purchased by customers in Taiwan and Hong Kong either as one ingredient of a product to be sold to their customers in China or for resale to their customers, our business may be impacted by the effects of the COVID-19 pandemic as it effects manufacturers in Taiwan and Hong Kong and their customers in China. We believe that our failure to generate sales in the second, third and fourth quarters of 2020 significantly resulted from the effects of the COVID-19 pandemic and these factors may continue to affect our ability to sell our products. Factors relating to the COVID-19 pandemic which may affect the market for our products include, but are not limited to, the following.
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The effect of COVID-19 on the ability of our customers and potential customers to manufacture products;
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The financial health of our potential customers;
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Since our customers may use our products as an ingredient in their products, the ability of the customer to obtain other ingredients may affect their willingness or ability to purchase our product.
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The ability of our customers to ship their products to China and the ability of their customers to distribute product to retail markets;
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The willingness or ability of the ultimate purchaser in China to purchase products with our ingredients and their perception as to whether the products may have beneficial effects to them;
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The extent to which quarantine affects the willingness or ability of consumers to purchase products with our ingredients;
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The perceived benefit, if any, to consumers of products with our ingredients;
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If we seek to market our product in the United States, our ability or the ability of our distributors to comply with, and the effects of, all applicable laws and regulations adopted to address the pandemic in the United States;
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The extent to which the purchase or products with our ingredients is a low priority item for a population whose disposable income may have decreased as a result of COVID-19 and the steps taken by the Chinese government to curb the spread of infection.
Government Regulations
In the event that we seek to market and sell our products in the United States, we will be subject to various laws and regulations. The United States Federal Food, Drug, and Cosmetic Act defines a dietary ingredient as a vitamin, mineral, herb or other botanical, amino acid, dietary substance for use by man to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of the preceding substances. Unlike drugs, supplements are not intended to treat, diagnose, prevent, or cure diseases, which means that supplements cannot make claims as to health benefits. Claims like these can only legitimately be made for drugs, not dietary supplements. Dietary supplements include such ingredients as vitamins, minerals, herbs, amino acids, and enzymes. Dietary supplements are marketed in forms such as tablets, capsules, softgels, gelcaps, powders, and liquids. Cordyceps is considered a dietary supplement.
The United States Food and Drug Administration regulates both finished dietary supplement products and dietary ingredients. The FDA regulates dietary supplements under a different set of regulations than those covering “conventional” foods and drug products. Under the Dietary Supplement Health and Education Act of 1994, manufacturers and distributors of dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated or misbranded. That means that these firms are responsible for evaluating the safety and labeling of their products before marketing to ensure that they meet all the requirements of Dietary Supplement Health and Education Act and FDA regulations. The FDA is responsible for taking action against any adulterated or misbranded dietary supplement product after it reaches the market.
The Dietary Supplement and Nonprescription Drug Consumer Protection Act requires manufacturers, packers or distributors whose name appears on the product label of a dietary supplement to include contact information on the product label for consumers to use in reporting adverse events associated with the product’s use and to notify the FDA of any serious adverse event report within 15 business days of receiving such report. However, the reporting of an event is not an admission that the product caused the adverse event.
If we engage in business in the United States, we will be subject to a variety of other regulations, including those relating to health, safety, bioterrorism, environmental, cybersecurity, taxes, labor and employment, import and export, and environmental. These regulations may require significant financial and operational resources to ensure compliance, and we cannot assure you we will able to be in compliance.
We do not presently sell products for retail sale to consumers although we may, to the extent that we implement our proposed business plan, develop products which are designed and packaged for consumer use. Our customers presently purchase our products in bulk and may use our products as ingredients in their products. Countries into which our products are sold have regulations relating to the marketing, labeling and claims for dietary supplements. Since we do not presently sell products in form for use by consumers, our customers must comply with applicable government regulations. Our present and recent former customers are located in Taiwan or Hong Kong, which have laws concerning the ingredients in products sold for consumption, including the purity of the ingredients. If products which include our products as ingredients are sold in Hong Kong or any other country, the products may be subject to the food and supplement regulations of the country. We do not make any of the products we sell. To the extent a claim arises either as a result of the use by a consumer of products which contain our ingredients or a government agency raises questions about the purity of ingredients purchased from us, we may incur liability for any adverse reactions to the products purchased by consumers or failures of our products to conform to the stated purity of our products and we cannot assure you that we will be able to claim over against our supplier. If we sell products that are designed and packaged for use by consumers, we may be subject to laws relating to such products, including the purity and labeling of the products and any other regulations that may be applicable.
If we sell products for consumer use in any country, we will be subject to the laws of that country. Each country has laws relating to products that are marketed as dietary supplements, including laws relating to the products and which describe the extent that products subject to the applicable laws, including the purity of the ingredients and marketing and labeling of products. We will need to comply with all applicable regulations and we may not be permitted to sell product in a country unless we have received prior approval from the applicable government agency.
Research and Development
We plan to conduct research and development with respect to our own proprietary products. However, we have not yet commenced any such activity and we have not developed any detailed plan to engage in such activities, and we cannot assure you that we develop or implement any research and development program. Our research and development activities may relate to cordyceps products to be sold in the United States, although we do not presently have any plans to sell products at retail in the United States. We cannot assure you that we will commence research and development activities in the near future, if at all, or that we will be able to develop proprietary products. We do not presently have any employees engaged in research and develop, and, if we embark on a research and development program, we may engage third parties to perform the research and development, and the third parties may be related to our chief executive officer.
Intellectual Property Rights
We do not have any patent or other intellectual property rights with respect to any products.
Competition
A number of companies market and sell cordyceps products in the United States, including Real Mushrooms, Bulk Supplements, Terrasoul SuperFoods; Mental Refreshment Nutrition, NOW Foods, Aloha Medicinals, Natures Elements and Swanson Premium. These products include cordyceps extract as well as products that include cordyceps along with other ingredients. Many, if not all, of these companies are better known and better capitalized than we are, and we cannot assure you that we will be able to compete successfully with these and other existing suppliers of cordyceps.
Employees
We have one employee, our chief executive officer and chief financial officer, Pao-Chi Chu, who works for us on a part-time basis.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in this report include 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. The risks set forth below are not the only risks facing us. Additional risks and uncertainties may exist that could also adversely affect our business, prospects or operations. 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 common stock could decline, and you may lose all or a significant part of your investment.
Risks Concerning our Business
We require significant funding for us to conduct our business.
At December 31, 2020, we had cash of $18,123. Our principal asset at that date was inventory of $938,000, which we purchased during 2020 and 2019, and our inventory, except for the inventory shipped during the three months ended March 31, 2020, has been unchanged since December 31, 2019. In order for us to continue in business, we will require significant additional capital either in the form of debt or equity. Because of the absence of any active trading market in our stock, our financial condition, our modest level of sales for the year ended December 31, 2020, all of which were made during the first quarter, as well as our lack of any history of operations, we may be unable to raise funds through the sale of equity securities.
We cannot assure you that we can operate profitably.
We incurred a loss of $117,453 on sales of $687,964 for the year ended December 31, 2020 and a loss of $371,604 on sales of $193,536 for the year ended December 31, 2019. Our gross margin was 23.2% for the year ended December 31, 2020 and 6.25% for the year ended December 30, 2019. We will not be able to operate profitably until and unless we are able to generate sufficient revenue so that our gross profit can cover our operating expenses. We cannot assure you that we be able to operate at a profit. We do not have any full-time employees and our chief executive officer, who provides his services on a part-time basis, has not received any salary. If we increase our operations and engage in selling, marketing and research and development activities, we will incur significant selling, general and administrative expenses. Unless we can significantly increase our revenue and gross profit or raise funds from other sources, including the sale or our equity securities, we may not be able to operate profitably. The lack of an active trading market in our common stock combined with our lack of sales and can materially impair our ability to raise money through the sale of equity securities. Further, to the extent that we are not able to sell our inventory before it becomes unsaleable because of its age, we would need to write off any unsaleable inventory which would materially impact our financial conditions, the results of our operations and our ability to raise funds.
Our financial statements include a going concern paragraph.
Our financial statements for the year ended December 31, 2020 includes a going concern paragraph. At December 31, 2020, we have approximately $18,000 in cash, had gross profit, which was significantly less than our operating expenses, and we incurred losses from our operations for the years ended December 30, 2020 and 2019. Although we hope to fund operations through increased sales and equity financing arrangements, our financial condition and the results of our operations as well as the lack of an active trading market in our stock and a market capitalization that is inconsistent with our financial performance make it less likely that we will be able to raise funds for capital expenditures, working capital and other cash requirements.
If we are not able to increase revenue and our customer base, we may not be able to operate profitably.
Through December 31, 2020, our revenue has primarily resulted from sales to four customers in Taiwan and Hong Kong, only one of which was a customer in the years ended December 31, 2020 and 2019. This customer did not make any purchases from us in prior periods. Our largest customers for the year ended September 30, 2018 did not purchase any product from us during the years ended December 31, 2020 or 2019. As a result, our sales decreased $6,660,500, or more than 83%, from the year ended September 30, 2018 to the year ended September 30, 2019. We do not have any long-term agreement with our customers and they may cease purchasing from us for any reason. Unless we are successful in generating revenue from other customers, our ability to operate will be impaired. Further, we believe that the nature of the market is such that we have little ability to improve our gross margin.
We believe that the decrease in our sales was affected by recent government efforts to politically stabilize Hong Kong.
Our revenue decreased from approximately $8.0 million for the year ended September 30, 2018 to approximately $1.4 million for the year ended September 30, 2019. We believe that the decrease in revenue in the year ended December 31, 2019, which we only generated revenue in the first quarter, resulted from political instability in Hong Kong, which has impacted our customers’ ability to sell products into the People’s Republic of China. We cannot assure you that conditions in Hong Kong will change in a manner in which our customers will purchase our products.
Our business may be impacted by the effects of the COVID-10 pandemic which has materially impacted the Chinese economy.
Since our products are purchased by customers in Taiwan and Hong Kong as one ingredient of a product to be sold to their customers in the China as well as for direct sale to customers, our business may be impacted by the effects of the COVID-19 pandemic as it effects manufacturers in Hong Kong and their customers in China. Since we had no sales during the second, third and fourth quarters of 2020 and the first, second and third quarters of 2019, we cannot predict the effect of COVID-19 on our business. Factors which may affect the market for our products include, but are not limited to, the following.
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The effect of COVID-19 on the ability of our customers and potential customers to manufacture products;
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The financial health of our potential customers;
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Since our customers use our products as an ingredient, the ability of the customer to obtain other ingredients may affect their willingness or ability to purchase our product.
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The ability of our customers to ship their products to China and the ability of their customers to distribute product to retail markets;
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The willingness or ability of the ultimate purchaser in China to purchase products with our ingredients and their perception as to whether the products may have beneficial effects to them;
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The extent to which quarantine affects the willingness or ability of consumers to purchase products with our ingredients;
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The perceived benefit, if any, to consumers of products with our ingredients;
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If we implement a marketing program in the United States, the effect of the pandemic and steps taken by the federal or state to address the pandemic, which could vary from state to state;
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The extent to which the purchase or products with our ingredients is a low priority item for a population whose disposable income may have decreased as a result of COVID-19 and the steps taken by the Chinese government to curb the spread of infection.
If we sell products or commence operations in the United States, we would be subject to government regulations in the United States.
If we sell products or commence operations in the United States, we would be subject to FDA regulations under the Dietary Supplement Health and Education Act, which generally provides a regulatory framework to help ensure safe, quality dietary supplements and the dissemination of accurate information about our products. The FDA does not generally regulate active ingredients in dietary supplements in the same manner as it regulates drugs unless the product makes claims, such as claims that a product may heal, mitigate, cure or prevent an illness, disease or malady, that may result in the product being subject to the restrictions and regulations imposed on drugs. If we commence operations in the United States, we would also be subject to government regulations that apply to business in general, including those relating to health, safety, bioterrorism, taxes, labor and employment, import and export, and the environment. At present, we do not have any business activities in the United States that require compliance with these regulations. However, at such time as we commence business in the United States, we may incur significant costs to comply with such regulations, and we cannot assure you we will able to be in compliance. Other countries in which we may operate may have similar regulations, and, to the extent that we conduct business or sell products in these countries, we will be subject to those regulations.
Since we sell our products to customers in Taiwan and Hong Kong, we may be subject Taiwan and Hong Kong laws and regulations relating to our products.
We do not sell products for retail sale to consumers. Our customers purchase our products in bulk and use our products as ingredients in their products and sell the products to customers. Countries into which our products are sold have regulations relating to the marketing, labeling and claims for dietary supplements. Since we do not sell products in form for use by consumers, our customers must comply with applicable government regulations. Our present customers are located in Taiwan and Hong Kong, which have laws concerning the ingredients in products sold for consumption, including the purity of the ingredients. If products which include our products as ingredients are sold in Taiwan, Hong Kong or any other country, including the PRC, the products may be subject to the food and supplement regulations of that country. We do not make any of the products we sell. To the extent a claim arises either as a result of the use by a consumer of products which contain our ingredients or a government agency raises questions about the purity of ingredients purchased from us, we may incur liability for any adverse reactions to the products purchased by consumers or failures of our products to conform to the stated purity of our products and we cannot assure you that we will be able to claim over against our supplier. Although we do not sell products in Taiwan, Hong Kong or any other country, we may be subject to liability or penalties in the event that our products do not have the purity which we claim We may, in the future, sell products that are designed and packaged for use by consumers, in which event we may be subject to laws relating to such products, including the purity and labeling of the products and any other regulations that may be applicable in the country in which the products are sold.
We need to develop additional sources of supply.
Our revenue through December 31, 2020 has been derived from the sale of products purchased from three suppliers, one of which accounted for all of our purchases in the year ended December 31, 2020, which were made after our sales in the first quarter of 2020, and another accounted for all of our purchases in the year ended December 31, 2019. We do not have any long-term agreements with any suppliers, and, accordingly, our suppliers have no contractual obligation to sell us product at a price which would enable us to generate an acceptable gross margin, if at all. We will need to develop additional sources of supply for both raw materials and any finished products which we may sell. Although we believe that alternative sources of supply of both raw materials and finished products are available, any difficulty or delay in identifying and entering into supply arrangements with suppliers could impair both our gross margins and our ability to operate profitably. Further, any shortage of raw materials or interruption of supply could also result in higher prices for those materials which we may be unable to pass on to our customers. We cannot assure you that, if we develop our business, our suppliers will be provide us with the quality of raw materials we need or the quantities we request or at a price we consider to be reasonable. Because we do not control the actual production of these raw materials, we are also subject to delays caused by interruption in production of materials based on conditions outside of our control, including weather, transportation interruptions, strikes, terrorism, natural disasters, or other catastrophic events.
We need to develop and maintain marketing and distribution channels.
We presently do not have any marketing or distribution arrangements. Our sales through December 31, 2020 were made by our chief executive officer. Unless we are able to hire qualified sales and marketing personnel and develop distribution channels to market and sell any products which we sell, we will not be able to generate sufficient revenue to enable us to operate profitably. We cannot assure you as to our ability to develop and maintain effective marketing and distribution channels or to operate profitably.
We may not have sufficient product liability insurance to protect us against any claims we may sustain.
We do not have any product liability insurance. Regardless of whether we manufacture products, we could face significant liabilities due to claims that the use of products we sell caused adverse reactions, regardless of whether we have the product manufactured for us or we purchase the product from a suppliers. We could be exposed to liability based on claims that, among others: our products contain contaminants; we provide consumers with inadequate instructions about product use; or we provide inadequate warning about side effects or interactions of our products with other substances. Even if we were to prevail in any such claims, the cost of litigation and settlement could be significant and could exceed any product liability coverage we may have. Although we intend to require any contract manufacturers to maintain product liability insurance, we cannot assure you that they will have adequate, if any, product liability insurance coverage. Since we do not have supply agreements with our present suppliers, we would have no contractual recourse against the suppliers in the event of any users should suffer adverse events following the use of products sold by us.
The market for our products is very competitive, and we may not be able to compete successfully.
The cordyceps market is highly competitive and a number of products are readily available. Most, if not all, of our competitors are substantially larger and have greater financial resources and name recognition than we do. Further, new products which may be developed or sold may increase the competitiveness of the market. We anticipate that we will be dependent, at least initially, primarily on cordyceps products. Many of our competitors offer a range of products and are not dependent on a market for cordyceps products, which can protect them in the event that the market for cordyceps products declines.
We have not conducted any study of the potential market for cordyceps-based or metallothionein products in the United States and we cannot assure you that there is a significant market for these products in the United States.
Although we have a general familiarity with the market for cordyceps products and metallothionein products in Asia, our business plan contemplates the sale of these products in the United States and possibly countries where there is a large Asian population. We have not conducted any study as to the market for cordyceps or metallothionein products in the United States and we cannot assure you that there is any significant market. Unless there is a significant market in the United States, we may not be able to operate profitably. We cannot assure you that there is a sufficient market in the United States to enable us to compete effectively or operate profitably or that, if a market exists for products of the type we sell, that we will be able to market our products successfully. Further, we have not sold any metallothionein products since the quarter ended June 30, 2018, and we do not have any orders for metallothionein MT-3 elizer. We cannot assure you that we will be able to sell metallothionein MT-3 elizer in the future
The market for cordyceps or metallothionein products may be affected by recalls or successful litigation arising from claimed adverse reactions to cordyceps products.
Any recall or lawsuits arising out of adverse reactions or perceived adverse reactions to cordyceps or metallothionein products or unfavorable comments in the press or social media could impair the market for our products, even if the recall, adverse reaction or unfavorable comments related to products manufactured and sold by other companies.
The market for our products may be dependent on public tastes, which can rapidly change.
The market for any type of supplements is subject to change in public tastes, which changes may be based on the factors described in the preceding Risk Factor or other changes in taste not relating to any specific incident or problem. Since our business plan is presently limited to cordyceps and metallothionein, products, we will be impacted more severely by changes in tastes than we would if we offered a range of different dietary supplements. We have not sold metallothionein products since the quarter ended June 30, 2018, and we cannot assure you that we will be able to to sell metallothionein products in the future. We cannot assure you that we will be able to develop, offer and sell any products other than cordyceps-based products or that any market that may exist will continue.
We may not be successful in any research and development activities in which we may engage.
We plan to engage in research and development activities with a view to developing cordyceps products to be sold in the United States. We have not commenced such activity and we cannot assure you that we will be able to commence any research and development activities. If we commence such activities, we cannot assure you that we will be successful in developing any product or that any product we may develop will be marketable in the United States or any other country or that we will not require regulatory approval for the sale of any such product in the United States or any other country in which we seek to market the product. If regulatory approval is required, compliance with such regulations may be very expensive and we cannot assure you that we will be able to obtain such approval. As a result, we may incur significant expenses in seeking to develop a product with no assurance that we can or will develop a marketable product.
We are dependent upon our chief executive officer.
We are dependent upon Pao-Chi Chu, our chief executive and financial officer, sole director and principal stockholder, who is our only employee and who works for us on a part-time basis. The loss of Mr. Chu would materially impair our ability to conduct our business. We do not have an employment agreement with Mr. Chu and we do not maintain key person life insurance on his life.
If we are unable to attract, train and retain technical and financial personnel, our business may be materially and adversely affected.
Our future success depends, to a significant extent, on our ability to attract, train and retain key management, marketing, sales, technical, product development and financial personnel. Recruiting and retaining capable personnel, particularly those with expertise in the natural supplement business are vital to our success. There is substantial competition for qualified personnel, and we cannot assure you we will be able to attract or retain our technical and financial personnel. If we are unable to attract and retain qualified employees, our business may be materially and adversely affected. Our financial condition, including the absence of sales in six out of the eight quarters of 2020 and 2019, and the absence of any significant market in our common stock may make it difficult for us to attract qualified personnel.
Our chief executive officer may have a conflict of interest.
Pao-Chi Chu, our chief executive officer, chief financial officer and principal stockholder, has served as the chairman of Mucho Biotech Co., Ltd., Mucho Furich Co., Ltd., and Mucho Biomedical Co., Ltd., companies engaged in applications of cordyceps since 2006. These companies are controlled by Mr. Chu. As a result, he may have a conflict of interest in allocating his time and available resources among us and the other companies in related fields which he controls. We cannot assure you that Mr. Chu will be able to allocate sufficient time and resources to our business to enable us to develop our business plan.
We may not be able to protect any intellectual property which we may develop.
We do not have any patents or other proprietary intellectual property. While we may seek patents for any intellectual property which we may develop, we cannot assure you that we will develop any patentable product or that we will be able to obtain patents or that, if we do obtain patents, other companies will not be able to design around our patents and develop competitive or superior products. We cannot assure you that we will be able to enforce any patent rights which we may obtain. Patent litigation is very expensive, and, if we do not have the financial resources to enforce through litigation any patents we may obtain, we may not be able to retain the value of the patents. We believe that much of our intellectual property will be in the nature of trade secrets. Although we will seek to protect our intellectual property rights through nondisclosure agreements, including non-disclosure agreement with our employees and consultants and other companies with which we may conduct business, we cannot assure you that the other parties to the non-disclosure agreements will comply with their obligations, and we may not be aware of any breach until the intellectual property has been disclosed to a third party. We may not be able enforce our rights under the non-disclosure agreements.
Risks Concerning our Common Stock
There is presently no active market for our common stock, which may make it difficult for you to sell your stock.
Our common stock is quoted on the OTCQB marketplace under the symbol ACBM. There is no active trading market for our common stock, and the OTC Markets website shows that there are many days on which there is no trading volume or very limited trading volume. Accordingly, even if a market develops, as to which we can give no assurance, there can be no assurance as to the liquidity of our common stock, the ability of holders of our common stock to sell our common stock, or the prices at which holders may be able to sell our common stock. Further, if a market develops, it is likely that there will not be any significant float, with the result that the reported bid and asked prices may have little relationship to the price you would pay if you wanted to buy shares or the price you would receive if you wanted to sell shares.
Because our common stock is a penny stock, you may have difficulty selling our common stock in the secondary trading market.
If a market for our common stock develops, our common stock is, and will likely to continue to be, a penny stock and therefore is subject to the rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks. The SEC rules may have the effect of reducing trading activity in our common stock making it more difficult for investors to purchase and sell their shares. The SEC’s rules require a broker or dealer proposing to effect a transaction in a penny stock to deliver the customer a risk disclosure document that provides certain information prescribed by the SEC, including, but not limited to, the nature and level of risks in the penny stock market. The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction. In addition, the SEC’s rules also require a broker or dealer to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction before completion of the transaction. The existence of the SEC’s rules may result in a lower trading volume of our common stock and lower trading prices. Further, some broker-dealers will not process transactions in penny stocks.
Our lack of internal controls over financial reporting may affect the market for and price of our common stock.
Our disclosure controls and our internal controls over financial reporting are not effective. We do not have the financial resources or personnel to develop or implement systems that would provide us with the necessary information on a timely basis so as to be able to implement financial controls. Our continued poor financial condition together with the fact that we have one part-time employee, who is both our chief executive officer and chief financial officer, makes it difficult for us to implement a system of internal controls over financial reporting, and we cannot assure you that we will be able to develop and implement the necessary controls. The absence of internal controls over financial reporting may inhibit investors from purchasing our shares and may make it more difficult for us to raise debt or equity financing.
Our lack of a full-time chief financial officer could affect our ability to develop financial controls, which could affect the market price for our common stock.
We do not have a full-time chief financial officer. At present, our chief executive officer, who does not have an accounting background, is also acting as our chief financial officer. We do not anticipate that we will be able to hire a qualified chief financial officer unless our financial condition improves significantly. The lack of an experienced chief financial officer, together with our lack of internal controls, may impair our ability to raise money through a debt or equity financing, the market for our common stock.
We do not have any independent directors.
We do not have any independent directors. Our sole director is Pao-Chi Chu, who is our chief executive officer, chief financial officer and principal stockholder. Because we have no independent director, we do not have any checks and balances on Mr. Chu, which may make it difficult for us to develop internal controls and to raise money in the financial markets.
Our stock price may be volatile and your investment in our common stock could suffer a decline in value.
As of the date of this report, there has been no active trading activity in our common stock. There can be no assurance that any significant market, or any market, will ever develop in our common stock. Because of the low public float and the lack of trading volume, any reported prices may not reflect the price at which you would be able to sell shares if you want to sell any shares you own or buy shares if you wish to buy share. Further, stocks with a low public float may be more subject to manipulation than a stock that has a significant public float. The price may fluctuate significantly in response to a number of factors, many of which are beyond our control. These factors include, but are not limited to, the following, in addition to the risks described above and general market and economic conditions:
·
our low stock price, which may result in a modest dollar purchase or sale of our common stock having a disproportionately large effect on the stock price;
·
the market’s perception as to our ability to generate revenue and positive cash flow or earnings;
·
changes in our or securities analysts’ estimate of our financial performance;
·
our ability or perceived ability to obtain necessary financing for our operations;
·
the perception of the future market for our products;
·
the anticipated or actual results of our operations;
·
changes in market valuations of other natural supplement companies;
·
any discrepancy between anticipated or projected results and actual results of our operations;
·
actions by third parties to either sell or purchase stock in quantities which would have a significant effect on our stock price; and
·
other factors not within our control.
Raising funds by issuing equity or convertible debt securities could dilute the net tangible book value of the common stock and impose restrictions on our working capital.
If we were to raise additional capital by issuing equity securities, either alone or in connection with a non-equity financing, the net tangible book value of the then outstanding common stock could decline. If the additional equity securities were issued at a per share price less than the market price, which is customary in the private placement of equity securities, the holders of the outstanding shares would suffer a dilution, which could be significant. We may have difficulty in raising funds through the sale of debt securities because of both our financial position, the lack of any collateral on which a lender may place a value, and the absence of any revenue or operations. If we are able to raise funds from the sale of debt securities, the lenders may impose restrictions on our operations and may impair our working capital as we service any such debt obligations. Further, it is not uncommon for investors who provide private funding to companies with weak financial positions, to require the issuer to issue convertible securities which are convertible at a discount to the market price at the time the convertible security is converted. Such securities typically have a materially adverse effect on the market price for the issuer’s stock.
Because of our chief executive officer’s stock ownership, he has the power to elect all directors and to approve any action requiring stockholder approval.
Mr. Pao-Chi Chu, our chief executive officer, owns 30,000,000 shares of common stock, representing approximately 62.8% of our outstanding common stock. As a result, Mr. Chu has the power, without the vote of any other stockholders, to elect all of our directors and take any action requiring stockholder approval, including any amendment to our certificate of incorporation, merger, sale of assets or other major corporate transaction.
We do not intend to pay any cash dividends in the foreseeable future. We have not paid any cash dividends on our common stock and do not intend to pay cash dividends on our common stock in the foreseeable future.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
We have a two-year lease for a storage facility in Hong Kong at a monthly rental of HK$16,500 (approximately $2,115). The lease expires in December 2021.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
None

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES.
Not Applicable
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock is listed on the OTCQB market under the symbol ACBM. Any quotations for our common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions
Stockholders of Record
As of March 19, 2021, we had 66 record holders of our common stock.
Transfer Agent
Cleartrust, LLC, 16540 Pointe Village Drive; Suite 210, Lutz, Florida 33558 is the transfer agent for our common stock.
Dividends
We have not paid any cash dividends to date and do not anticipate or contemplate paying dividends in the foreseeable future.
Securities Authorized for Issuance under Equity Compensation Agreements
The following table gives information concerning common stock that may be issued pursuant to equity compensation plans as of December 31, 2020.
Equity Compensation Agreements Information
Plan category
Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)
Weighted- average exercise price of outstanding options, warrants and rights ($)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (#)
Equity compensation plans approved by security holders
-
$ -
12,000,000
Equity compensation plans not approved by security holders (1)
-
$ -
-
Total
-
$ -
12,000,000
On August 7, 2020, the Company’s sole director adopted, and on August 8, 2020, the Company’s stockholders approved, the 2020 Long-Term Incentive Plan, pursuant to which a maximum of 12,000,000 shares of common stock may be issued pursuant to restricted stock grants, incentive stock options, non-qualified stock options and other equity-based incentives may be granted. Awards under the plan may be issued to employees, directors of the Company or its affiliates or consultants. As of the date of this report, no options, stock grants or other equity-based incentives have been granted pursuant to the plan. The plan is to be administered by a committee or, in the absence of a committee, by the board of directors. Since the Company has one director, Pao-Chi Chu, Mr. Chu, as the sole director, will administer the plan.
Recent sales of unregistered securities.
None.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA
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.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed in “Risk Factors” and elsewhere in this report.
Overview
Because we changed our fiscal year from the year ended September 30 to the calendar year by filing a transition report on Form 10-K on March 27, 2020, we are presenting information for the years ended December 31, 2020 and 2019, the three months ended December 31, 2019 and 2018.
Since January 30, 2017, following a change of control, we have been engaged in the business of developing and marketing nutritional products that promote wellness and a healthy lifestyle. Our business to date has involved the purchase of products from three suppliers in Taiwan and the sale of these products to four unrelated customers, one of which accounted for all of our sales in the years ended December 31, 2020 and 2019. We did not have any sales during the second, third and fourth quarters of 2020 and the first three quarters of 2019. We sell product in bulk to companies who may use our products as ingredients in their products or sell the products they purchase from us to their own customers.
All of our sales to date have been sales of cordyceps related products and, in the quarter ended June 30, 2018, metallothionein MT-3 elizer. Cordyceps is a fungus that is used in traditional Chinese medicine. Cordyceps sinensis has been described as a medicine in old Chinese medical books and Tibetan medicine. It is a rare combination of a caterpillar and a fungus and found at altitudes above 4500m in Sikkim. The encoded protein in metallothionein MT-3 is a growth inhibitory factor, and reduced levels of the protein are observed in the brains of individuals with some metal-linked neurodegenerative disorders such as Alzheimer’s disease. Our present inventory is for cordyseps products. We have not sold metallothionein MT-3 elizer since the quarter ended June 30, 2018 and we do not have any orders for metallothionein MT-3 elizer. We cannot assure you that we will be able to sell metallothionein MT-3 elizer in the future. We may also seek to market other products which we see as complimentary to our present products; however, we have not entered into negotiations with respect to the distribution of other products, and we cannot assure you that we will be able to market any other products.
All of our revenue for the years ended December 31, 2020 and 2019 represents sales to one customer which were made during the three months ended March 31, 2020 and the three months ended December 31, 2019. We believe that our failure to sell products in the second, third and fourth quarters of 2020 resulted substantially from the COVID - 19 pandemic and actions taken by governments to address the pandemic. We believe our failure to generate sales during the first three quarters of 2019 reflects a downturn in the market in the PRC for cordyseps products as well as the political conditions in Hong Kong, and we cannot assure you that the market will improve. We also cannot assure you the political instability in Hong Kong will not affect our sales, since our customers in 2017 and 2018 were Hong Kong based customers who sold their products in the PRC and none of these customers has made purchases from us since the quarter ended December 31, 2018. We cannot assure you that these factors will not affect our ability to generate revenues in the future and, to the extent that any of these factors affects our ability to generate revenue, we may not be able to continue in business.
At present, we have no full-time employees. Our only employee is our chief executive officer who work for us on a part-time basis. We face significant risks in implementing our business plan, as described under Item 1.Business - Proposed Business, including, but not limited to, our ability to raise the necessary financing either through the sale of debt or equity securities or through a loan facility, our ability to increase our customer base and supply chain, our ability to increase our gross margins, our ability to hire and retain qualified research and development, marketing and administrative personnel, our ability to develop products and to market in the United States and other western markets any products we may develop, our ability to comply with any government regulations relating to the manufacture, distribution and marketing any products we develop. We cannot assure you that we can or will develop any products or generate revenue or profits in the future.
Although our business plan initially contemplated that we would conduct research and development on our own proprietary products based on cordyceps sinensis, to date we have neither commenced such activities nor take any preliminary steps with respect to such activities. We do not presently have the funds necessary for us to engage in such activities, and we cannot assure you that we will be able to commence any research and development activities or that any such activities that we may undertake will be successful.
We require funds for our operations. At December 31, 2020, we had $18,123 in cash and cash equivalents, $938,000 of inventory of cordyceps products. Although we may seek to raise funds in the equity market, we have no agreements or understandings with respect to any funding and we can give no assurance as to the availability or terms of any such financing. Because of our financial condition, the lack of sales in the six out of eight quarters in 2020 and 2019, our reliance of sales primarily of one product, along with the absence of an active market for our stock and our market capitalization in relation to our financial performance, together with risk related to the COVID-19 pandemic and the political and legal situation in Hong Kong, it may be difficult for us to raise funds in the equity market, and, if we are able to raise funds our stockholders may suffer significant dilution.
To the extent that we implement our business plan, we anticipate that we will incur marketing and other expenses without any assurance that such expenses will generate any significant revenue or net income. Because of our cash position, we may use equity-based compensation for our employees and independent contractors. In August 2020, we adopted our 2020 long-term incentive plan, pursuant to which up to 12,000,000 shares can be issued. Because of our low cash position, we may rely on loans from stockholders or related parties, although we do not have any agreements or understandings at this time and we may issue equity to attract employees and consultants to help us develop our business plan.
Effects of COVID-19
Since our products are purchased by customers in Taiwan and Hong Kong primarily as one ingredient of a product to be sold to their customers, our business has been and may continue to be impacted by the effects of the COVID-19 pandemic and the actions taken by the governments of the PRC, Hong Kong and Taiwan as well as any other countries in which we may seek to sell products, as they effect manufacturers and their customers.
•
The effect of COVID-19 on the ability of our customers and potential customers to manufacture products.
•
The financial health of our potential customers.
•
Since our customers use our products as an ingredient in their products, the inability of the customer to obtain other ingredients may affect their willingness or ability to purchase our product.
•
The ability of our customers to ship their products to China and the ability of their customers to distribute product to retail markets.
•
The willingness or ability of the ultimate purchasers in the PRC and any other countries to which our customers sell products to purchase products with our ingredients and their perception as to whether the products may have beneficial effects to them.
•
The extent to which any quarantine which may be imposed affects the willingness or ability of consumers to purchase products with our ingredients.
•
The perceived benefit, if any, to consumers of products with our ingredients.
•
The extent to which the purchase of products with our ingredients is a low priority item for a population whose disposable income may have decreased as a result of COVID-19 and the steps taken by governments to curb the spread of infection.
Results of Operations
Years Ended December 31, 2020 and 2019.
For the year ended December 31, 2020, we had revenue of $687,964, representing sales to one customer in the first quarter of the year. Our gross profit was $159,404, and our gross margin was 23.2%. We had operating expenses of $289,867, primarily professional fees relating to our status as a public company and rent expense, interest expense of $5,082 and a net loss before income tax credit $135,545, an income tax credit of $18,092, and a net loss of $117,453, or $(0.00) per share (basic and diluted).
For the year ended December 31, 2019, we had revenues of $193,536, representing sales to one customer during the fourth quarter of the year, which was the same customer as our sole customer in 2020. Our gross profit was $12,096, and our gross margin was 6.25%. The difference in gross margin reflected a difference in the product mix of sales. We had operating expenses of $434,847, primarily professional fees related to our status as a public company and rent expense, interest expense of $1,983, a loss before income taxes of $424,734, an income tax credit of $53,130, and a net loss of $371,604 or $(0.01) per share (basic and diluted).
We imputed interest at the rate of 4% on the advances made to the Company by stockholders in the amount of $5,082 and $1,983 for the years ended December 31, 2020 and 2019, respectively.
Because of our dependence on a few customers, one of which accounted for all of our sales in 2020 and 2019, our revenue in any quarter is dependent upon both the timing of orders from customers and the delivery of products from our suppliers.
Three Months Ended December 31, 2019 and 2018
Our revenue for three months ended December 31, 2019 was $193,536, cost of revenue was $181,440, with a gross profit of $12,096 and a gross margin of 6.25%. Our revenue for the three months ended December 31, 2018 was $1,354,000, cost of revenue was $1,218,600, with a gross profit of $135,400 and a gross margin of 10%. We believe that the decrease in revenue resulted from political instability in Hong Kong, which has impacted our customers. The decrease in our gross margin reflected the product mix for sales made in the three months ended December 31, 2019.
Our operating expenses, consisting of selling, general and administrative expenses, for the three months ended December 31, 2019, were $87,529, as compared with $229,635 for the comparable period of 2018, which was primarily professional fees and, in the three months ended December 31, 2018, consulting fees. The consulting fees reflected stock based compensation paid to two consultants. The professional fees relate to expenses we incur as a result of our status as a public company. For the three months ended December 31, 2018, we had a tax credit of $19,941. We had no tax or tax credit for the three months ended December 31, 2019.
We imputed interest at the rate of 4% on the advances made to the Company by stockholders in the amount of $440 and $722 during the three months ended December 31, 2019 and 2018, respectively.
As a result of the foregoing, we had a net loss of $75,873, or $(0.00) per share (basic and diluted) for the three months ended December 31, 2019 as compared with a net loss of $75,016, or $(0.00) per share (basic and diluted) for the three months ended December 31, 2018 (basic and diluted).
Liquidity and Capital Resources
The following table sets forth information relating to our working capital at December 31, 2020 and 2019:
December 30,
December 31,
Change
Current assets
$ 973,353
$ 879,471
$ 93,882
Current liabilities
$ 312,185
$ 111,541
$ 200,644
Working capital
$ 661,168
$ 767,930
$ (106,762 )
The following is a summary of the statements of cash flows for the years ended December 30, 2020 and 2019 and the three months ended December 31, 2019 and 2018:
Years Ended
December 31,
Three Months Ended
December 31,
Cash provided by (used in) operating activities
$ (199,460 )
$ (59,709 )
$ 34,928
$ 174,329
Cash provided by investing activities
-
-
-
-
Cash provided by (used in) financing activities
216,672
23,013
(35,489 )
(137,870 )
Cash and cash equivalents end of year/period
18,123
37,607
Cash used in operating activities for the year ended December 31, 2020 reflected the net loss of $117,453, decreased primarily by an increase in inventory of $71,440, including an inventory deposit of $12,000. Cash used in operating activities for the year ended December 31, 2019 reflected the net loss of $371,604, increased by stock-based compensation of $148,395 and a decrease in inventory of $181,440.and an increase in deferred revenue of $37,464.
Cash provided by operating activities for the three months ended December 31, 2019 reflected the net loss of $75,873 increased primarily by a decrease in inventory of $181,440 and a decreased by deferred revenues of $78,536. Cash provided by operating activities for the three months ended December 31, 2018 reflected the net loss of $75,016, increased primarily by stock-based compensation of $151,694, decreased by deferred tax asset of $19,941, a decrease of $86,600 in inventories and a decrease of $30,000 in prepaid expenses.
Cash provided by financing activities for the year ended December 31, 2020 represented advances from related parties of $216,672. Cash provided by financing activities for the year ended December 31, 2019 represented advances from related parties of $118,014 offset by payments to related parties of $95,001.
Cash used in financing activities of $35,489 for the three months ended December 31, 2019 reflected advances from related parties of $14,511 and repayment to related parties of $50,000. Cash used in financing activities of $137,870 for the three months ended December 31, 2018 reflected payments to related parties of $141,336 and advances from related parties of $3,466.
For the three months ended December 31, 2019 our non-cash investing and financing activities of $46,310 representing the increase in the right of use assets and lease liability of $46,310. There were no non-cash investing or financing activities in the years ended December 31, 2020 or 2019 or the three months ended December 31, 2018
Going Concern
Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We had minimal cash as of December 31, 2020, had limited gross profit and incurred a loss from operations for the year ended December 31, 2020. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
We propose to fund operations through sales of our products and equity financing arrangements. However, because of the lack of sales and the absence of any active trading market for its common stock, the lack of independent directors, our financial condition and our lack of an operating history, we may not be able to raise funds for capital expenditures, working capital and other cash requirements and will have to rely on advances from a minority stockholder and our officer. If we cannot generate revenue from our products, we may not be able to continue in its business.
Critical Accounting Policies and Estimates
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. We had $18,123 and $911 in cash and cash equivalents at December 31, 2020 and 2019, respectively.
Inventories
Inventories consist primarily of finished goods. Inventories are valued at the lower of cost or net realizable value. We determine cost on the basis of first-in, first-out methods. We periodically review inventories for obsolescence and any inventories identified as obsolete are written down or written off. Although we believe that the assumptions we use to estimate inventory write-downs are reasonable, future changes in these assumptions could provide a significantly different result. No inventory markdown was recorded for the years ended December 31, 2020 and 2019.
Net Income (Loss) Per Share of Common Stock
We adopted ASC Topic 260, “Earnings per Share” which requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. Basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive. There were no potentially dilutive shares of common stock outstanding for the years ended December 31, 2020 and 2019 and the three months ended December 31, 2019 and 2018.
Concentrations of Credit Risk
Our financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables that we will likely incur in the near future. We place our cash and cash equivalents with financial institutions of high credit worthiness. At times, our cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits.
Stock-Based Compensation
We recognize compensation expense for stock-based compensation in accordance with ASC Topic 718. For employee and non-employee stock-based awards, we calculate the fair value of the award on the date of grant using the option-pricing model for stock options and the quoted price of its common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. We consider many factors when estimating expected forfeitures, including types of awards, employee class and historical experience.
Income Taxes
We use the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets, liabilities, the carry forward of operating losses and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Related Parties
We follow ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
Revenue Recognition
We recognize revenue in accordance with Topic 606, which requires revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. We apply the following five steps in order to determine the appropriate amount of revenue to be recognized as we fulfill our obligations under each of its agreements:
·
identify the contract with a customer;
·
identify the performance obligations in the contract;
·
determine the transaction price;
·
allocate the transaction price to performance obligations in the contract; and
·
recognize revenue as the performance obligation is satisfied.
We recognize revenue when products are delivered to customers in accordance with the written sales terms.
Recent Accounting Pronouncements
We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements start on Page.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NA

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2020, the end of the period covered by this annual report on Form 10-K. The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our chief executive officer and chief financial officer, who is the same person and our sole employee. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our chief executive officer and chief financial officer concluded that, due to our limited internal audit function and our very limited staff, our disclosure controls were not effective as of December 31, 2020, such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the chief executive officer/chief financial officer, as appropriate to allow timely decisions regarding disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2019. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. During our assessment of the effectiveness of internal control over financial reporting as of December 31, 2019, management identified material weaknesses related to (i) our internal audit functions (ii) inadequate levels of review of the financial statements and (iii) a lack of segregation of duties within accounting functions. Therefore, our internal controls over financial reporting were not effective as of December 31, 2020.
Management has determined that our internal controls contain material weaknesses due to the absence of segregation of duties, as well as lack of qualified accounting personnel and excessive reliance on third party consultants for accounting and a reliance on outside services for our accounting functions, financial reporting and related activities. The lack of any separation of duties, with the same person, who is our only employee who serves as both chief executive officer and chief financial officer, and who does not have an accounting background and serves on a part-time basis, makes it unlikely that we will be able to implement effective internal controls over financial reporting in the near future.
Due to our size and nature, segregation of all conflicting duties is not possible. However, to the extent possible, we plan to implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals if and when we have sufficient income to enable us to hire such individuals, and we cannot give any assurance that we will be able to hire such personnel. Our financial condition makes it difficult for us to implement a system of internal controls over financial reporting.
Until we generate significantly greater revenues and employ accounting personnel, it is doubtful that we will be able implement any system which provides us with any degree of internal controls over financial reporting. Due to the nature of this material weakness in our internal control over financial reporting, there is more than a remote likelihood that misstatements which could be material to our annual or interim financial statements could not be prevented or detected.
A material weakness (within the meaning of PCAOB Auditing Standard No. 5) 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 annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Changes in Internal Control over Financial Reporting.
During the year ended December 31, 2020, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table presents information with respect to our officers, directors:
Name
Age
Position(s)
Pao-Chi Chu
Chief executive officer, chief financial officer, president, secretary and director
Mr. Chu has been our chief executive officer, chief financial officer, president, secretary and a director since January 30, 2017. Mr. Chu has served as the chairman of Mucho Biotech Co., Ltd., Mucho Furich Co., Ltd., and Mucho Biomedical Co., Ltd., companies engaged in applications of cordyceps since 2006 and which are controlled by Mr. Chu. Mr. Chu has more than ten years of experience in the biotech industry with a focus on initiating the integration of cordyceps technology development, which includes cordyceps strains management, cordyceps cultivation, food processing and health products development. Mr. Chu is a graduate of Fu Jen Catholic University in Taipei, Taiwan.
Code of Ethics
We have not yet adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions, since we have been focusing our efforts on developing our business. We expect to adopt a code as we develop our business.
Committees of the Board of Directors
We do not have any committees of our board of directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires executive officers and directors of issuers whose securities are registered pursuant to the Securities Exchange Act and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of the our common stock and other equity securities, on Form 3, 4 and 5 respectively. Our chief executive officer was delinquent in filing a Form 3 upon the effectiveness of our registration pursuant to the Securities Exchange Act.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11: EXECUTIVE COMPENSATION
The following summary compensation table sets forth information concerning compensation for services rendered in all capacities during the years ended December 31, 2020 and 2019, earned by or paid to our executive officers.
Name and Principal Position
Period
Salary
($)
Bonus
Awards
($)
Stock
Awards
($)
Options/ Warrant Awards (1)
($)
Non-Equity
Plan
Compensation
($)
Nonqualified Deferred Earnings
($)
All
Other
Compensation
($)
Total
($)
Pao-Chi Chu
-
-
-
-
-
-
-
-
CEO, CFO and President
-
-
-
-
-
-
-
-
Employment Agreements
We have no employment agreements with Mr. Chu.
Pension Benefits
We currently have no plans that provide for payments or other benefits at, following, or in connection with retirement of our officers.
Outstanding Equity Awards at Fiscal Year-End
There are no outstanding equity awards at December 31, 2020.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table provides information as to shares of common stock beneficially owned as of March 29, 2021, by:
·
Each director;
·
Each current officer named in the summary compensation table;
·
Each person owning of record or known by us, based on information provided to us by the persons named below, at least 5% of our common stock; and
·
All directors and officers as a group.
For purposes of the following table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or sole or shared investment power with respect to a security, or any combination thereof, and the right to acquire such power (for example, through the exercise of options, warrants or convertible securities) within 60 days of March 29, 2021. None of the named beneficial owners held any options, warrants or convertible securities at March 29, 2021.
Name and Address of Beneficial Owner
Amount
and Nature
of
Beneficial Ownership
% of Class
Pao-Chi Chu
2F, No. 356, Dunhua S. Road, Da’an Dist
Taipei City 106, Taiwan, ROC
30,000,000
62.8 %
All officers and directors as a group (one individual)
30,000,000
62.8 %

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Transactions
At December 31, 2020, we owed $1,000 to our chief executive officer and $241,851 to a stockholder who is not a 5% stockholder for non-interest-bearing advances made to or on behalf of the Company. We have imputed interest at the rate of 4% on these advances, which, for the year ended December 31, 2020, was of $6 and $5,076, respectively.
Director Independence
We have no independent directors.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the fees billed by our independent accountants, Prager Metis, CPAs LLC for the years ended December 31, 2020 and 2019.
Year Ended December 31,
Audit fees
$ 33,250
$ 40,500
Audit-related fees
-
-
Tax fees
-
-
All other fees
$ 4,500
-
Audit fees consist of fees related to professional services rendered in connection with the audit and review of our annual financial statements.
All other fees relate to professional services rendered in connection our registration statements on Form S-8 and Form 10.
Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services and other services. Under our audit committee’s policy, pre-approval is generally provided for particular services or categories of services, including planned services, project based services and routine consultations. In addition, the audit committee may also pre-approve particular services on a case-by-case basis. Our board approved all services that our independent accountants provided to us in the past two fiscal years.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT
Exhibit No.
Description
3.1
Amended and Restated Articles of Incorporation of the Company.(1)
3.2
Bylaws of the Company. (1)
4.1
Description of the Company’s Common Stock(2)
10.1
Acro Biomedical Co., Lltd. 2020 Equity Incentive Plan(3)
31.1
Certification of Chief Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Schema Document
101.CAL
XBRL Taxonomy Calculation Document
101.DEF
XBRL Taxonomy Linkbase Document
101.LAB
XBRL Taxonomy Label Linkbase Document
101.PRE
XBRL Taxonomy Presentation Linkbase Document
______________
(1)
Filed as an exhibit to the Company’s report on Form 8-K, which was filed with the SEC on February 1, 2017.
(2)
Reference is made to the caption “Description of Registrant’s Securities to be Registered” in the Company’s Form 10 registration statement, which was filed with the SEC on September 8, 2020.
(3)
Filed as an exhibit to the Company’s report on Form 8-k, which was filed with the SEC on August 13, 2020.